USA. v. Commodity Acct. No. 549 54930, Saul Stone & Co

• Decision Date: 05 July 2000
• Docket Number: No. 99-1703,No. 549,549,99-1703
• Citation: 219 F.3d 595
• Parties: (7th Cir. 2000) United States of America, Plaintiff-Appellee, v. Commodity Account54930 at Saul Stone & Company, Defendant, Lars "Erik" Lindstrpm, Claimant-Appellant
• Court: U.S. Court of Appeals — Seventh Circuit

Page 595

219 F.3d 595 (7th Cir. 2000)

United States of America, Plaintiff-Appellee, v. Commodity Account No. 549 54930 at Saul Stone & Company, Defendant, Lars "Erik" Lindstrpm, Claimant-Appellant.

No. 99-1703

In the United States Court of Appeals For the Seventh Circuit

Argued April 21, 2000

Decided July 5, 2000

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division.

Before Bauer, Kanne and Evans, Circuit Judges.

Kanne, Circuit Judge.

Lars Erik Lindstrpm participated in a pyramid scheme defrauding hundreds of investors and was convicted by a Norwegian court of criminal fraud. Nevertheless, Lindstrpm pursued all available means to collect commissions that he allegedly earned on trades executed in connection with the criminal scheme, including contesting the federal forfeitures at issue here. Lindstrpm, however, failed to comply with the requirements of the Federal Rules of Civil Procedure for standing to challenge a government forfeiture, and the district court granted summary judgment in favor of the government. We affirm.

I. History

In 1994, Norwegian authorities began investigating a fraudulent scheme in which several conspirators, including Sture Stig S"derman, Torgbjprn Ertzaas and Lars Erik Lindstrpm, had obtained $17 million from 729 Norwegians to invest in American commodities markets. Under the corporate auspices of Nordisk Rvaruf"rmedling S"derman AB, the scheme promised investors a "guaranteed monthly profit" of 2 percent and vouched that the group would reimburse investors for disappointing returns. Marketing brochures assured investors of "the highest possible return without risking the clients' money" and "always sure profits." However, in classic pyramid scheme fashion, the only return investors received from the scheme came directly from the contributions of new investors, and almost all the invested funds eventually were lost through poor trading and malfeasance. For his part, Lindstrpm served as a trader for the scheme and invested a portion of the funds in the Chicago commodities exchange, using accounts at Merrill Lynch and Saul Stone & Co., including account number 549 54930 at Saul Stone & Co.

On April 26, 1996, S"derman, Ertzaas and Lindstrpm were indicted for gross fraud in Trondheim, Norway. Their trial began on September 9, 1996, and Lindstrpm fled the country sometime during the trial and returned to the United States as a fugitive. The trial finished without Lindstrpm on November 22, 1996, and all three defendants were eventually convicted in Norway of criminal fraud on January 13, 1997.

After his return to the United States, Lindstrpm had scrambled desperately to collect commissions that he allegedly earned on trades executed in connection with the scheme. First, he filed an action in Cook County Circuit Court to recover the commissions under the auspices of Authority, Ltd., a Bahamian shell company utilized in the scheme. However, the Bahamian government liquidated Authority, Ltd. and promptly placed it in receivership, thereby halting Lindstrpm's bid to recover the commissions. Still determined, Lindstrpm obtained a default judgment in the Bahamas for the commissions against Norwegian Futures & Options Fund, Ltd., yet another corporate entity involved in the investment scheme. Then, in early December 1996, he recorded the judgment in Cook County Circuit Court and won a garnishment order against the Saul Stone account.

Again, however, government intervention frustrated Lindstrpm's machinations. On December 20, 1996, citing the use of the Saul Stone account in connection with the fraudulent investment scheme, the federal government won a stay of Lindstrpm's garnishment order and filed a forfeiture complaint under 18 U.S.C. sec. 981 against the account in federal district court. On January 3, 1997, the government seized the $685,192.35 balance, and Lindstrpm filed an unverified claim asserting that he had "a judgment in his favor . . . now being approximately $180,000.00 with interest still accruing," evidenced by an attached copy of the Cook County garnishment order. Two years later on February 10, 1999, the district court granted the government's motion for summary judgment against Lindstrpm, finding that he lacked statutory standing to challenge the forfeiture because he had not verified his complaint nor filed an answer within twenty days of his claim.

Six months subsequently on August 19, 1999, the United States Marshal Service released Lindstrpm into Norwegian custody for extradition, in violation of our order temporarily staying Lindstrpm's extradition. While the government's conduct was the subject of our scrutiny beginning in Lindstrom v. Graber, 203 F.3d 470 (7th Cir. 2000), and culminating in our recent reprimand of the United States Attorney's Office, this matter did not involve the forfeiture of the Saul Stone account.

II. Analysis

To initiate a judicial forfeiture, the government must file a verified complaint describing with reasonable particularity the property that is subject to the action, the place of seizure and any allegations required by the statute pursuant to which the action is brought. See Fed. R. Civ. P. Supp., Rule C(2). Claimants to the property at risk of forfeiture must file a verified claim within ten days after process has been executed, stating the interest in the property by virtue of which the claimant demands restitution and a right to defend against the action, and must file an answer within twenty days after the filing of the claim. See Fed. R. Civ. P. Supp., Rule C(6). Lindstrpm filed a claim to the account but lacks standing to contest the...