Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca7-15-02258/USCOURTS-ca7-15-02258-0/pdf.json

Parties Involved:
Joshua N. Bowser
Not Party
Bradley W. Carlson
Appellant
United States of America
Appellee

Document Text:

In the

United States Court of Appeals

For the Seventh Circuit

No. 15Ȭ2258

UNITED STATES OF AMERICA,

PlaintiffȬAppellee,

v.

JOSHUA N. BOWSER, et al.,

Defendants.

APPEAL OF: BRADLEY W. CARLSON

Appeal from the United States District Court for the

Southern District of Indiana, Indianapolis Division.

No. 1:12ȬcrȬ00102ȬTWPȬDML — Tanya Walton Pratt, Judge.

ARGUED JANUARY 19, 2016 — DECIDED AUGUST 23, 2016

Before EASTERBROOK, ROVNER, and SYKES, Circuit Judges.

ROVNER, Circuit Judge. This appeal involves the governȬ

ment’s efforts to seize personal property bearing the insignia

oftheOutlawsMotorcycle Club (the “Outlaws”), andthe effort

of a representative ofthe Outlaws to intervene to preventthose

forfeitures.The forfeiture actions stemmedfrom criminal cases

brought against a number of Outlaws members, including all

members of the Indianapolis chapter of the Outlaws. As we

summarized in United States v. Knoll, 785 F.3d 1151, 1152–53

(7th Cir. 2015), “[t]his case began with a fortyȬnine count

Case: 15-2258 Document: 29 Filed: 08/23/2016 Pages: 12
2 No. 15Ȭ2258

indictment that charged fiftyȬone individuals (all members of

the Outlaws) with racketeering, mail and wire fraud, money

laundering, drug trafficking, extortion, running an illegal

gambling business, witness tampering and firearms offenses,

among otherthings.” Included in that indictment, was a count

charging nineteen members of the Outlaws with violations of

the Racketeer Influenced and Corrupt Organizations statute

(RICO), based on allegations that the Outlaws was an enterȬ

prise and its members participated in that enterprise through

the commission of various crimes. The indictment included a

notice ofthe government’s intentto forfeit any and all property

affording the RICO defendants with a source of influence over

the enterprise and all property obtained, directly or indirectly,

from racketeering activity.

On July 11, 2012, in connection with the arrests of the

Outlaws members, the FBI executed search warrants on the

Outlaws’ clubhouses in Indianapolis and FortWayne,Indiana,

the Outlaws’ bunkhouse in Indianapolis, and several individȬ

ual residences. Pursuant to those searches, the FBI seized

numerous items bearing the insignia of the Outlaws, and the

FBI sought forfeiture of those items. That property included,

but was not limited to: vests, patches, shirts, hats, belt buckles,

signs, mirrors, flags, calendars, books, and pictures. The

Outlaws used the symbols on the clothing to conspicuously

display their presence and to deter other groups from infringȬ

ing on their territory. The items included the symbol of the

Outlaws which was a skull and crossed pistons, and patches

with slogans such as “God Forgives, Outlaws Don’t” and

“Snitches Are a Dying Breed” which communicated a threat to

those who would seek to oppose the Outlaws.

Case: 15-2258 Document: 29 Filed: 08/23/2016 Pages: 12
No. 15Ȭ2258 3

One defendant, Christian Miller, was found guilty after

trial, but the remaining eighteen defendants pled guilty—

sixteen defendants to all charges and two defendants to all but

the RICO counts to which they pled nolo contendere. As part

of the plea agreements, each agreed to forfeit the Outlaws

paraphernalia seized by the FBI. After the government sought

and obtained final orders of forfeiture from all but one defenȬ

dant, and was in the process of finalizing forfeiture with the

remaining Outlaws defendant, the courtreceived a letterfrom

Bradley W. Carlson which it interpreted as a motion to

intervene in the criminal forfeiture actions. Pursuant to

18 U.S.C. § 1963(l)(2), “[a]ny person, other than the defendant,

asserting a legal interest in property which has been ordered

forfeited to the United States ... may ... petition the court for

a hearing to adjudicate the validity of his alleged interest in the

property.” In order to pursue such relief, a petitioner’s right to

the property must have vested in petitioner rather than the

defendant or be superior to any right, title or interest of the

defendant at the time of the commission of the criminal acts, or

the petitioner must be a bona fide purchaser of the property.

18 U.S.C. § 1963(l)(6). The government sought to dismiss the

motion as untimely in that final forfeiture orders had already

issued, but Carlson responded by filing a motion to reopen the

final orders and also challenging orders seeking forfeiture of

indicia and memorabilia of the Outlaws.

In seeking to reopen the forfeiture actions under Federal

Rule of Civil Procedure 60(b), Carlson contended that he had

a property interest in all of the Outlaws paraphernalia and that

the government had failed to provide him with direct notice of

the forfeiture actions. Therefore, the issue before the district

Case: 15-2258 Document: 29 Filed: 08/23/2016 Pages: 12
4 No. 15Ȭ2258

court was whether Carlson was due direct notice of the

forfeiture actions filed in this case. The notice requirements for

such forfeitures is set forth in 18 U.S.C. § 1963(l)(1), which

provides that

[f]ollowing the entry of an order of forfeiture

under this section, the United States shall

publish notice of the order and of its intent to

dispose of the property in such manner as the

Attorney General may direct. The GovernȬ

ment may also, to the extent practicable,

provide direct written notice to any person

known to have alleged an interest in the

property that is the subject of the order of

forfeiture as a substitute for published notice

as to those persons so notified.

In addition, Federal Rule of Criminal Procedure 32.2(b)(6)(A)

requires the government to “publish notice of the order and

send notice to any person who reasonably appears to be a

potential claimant with standing to contest the forfeiture in the

ancillary proceeding.” The government provided notice of all

of the forfeitures to each of the defendants, and also posted

notice of each forfeiture on the official government forfeiture

site at www.forfeiture.gov for 30 consecutive days.

Carlson asserts that he was entitled to direct written notice

of the order because he claims that he has been elected by the

collective membership of the Outlaws to protect, manage,

direct, oversee, and control all indicia and memorabilia of the

Outlaws in the United States. Carlson maintains that all

patches and registered collective marks of the Outlaws are

Case: 15-2258 Document: 29 Filed: 08/23/2016 Pages: 12
No. 15Ȭ2258 5

owned solely by the collective membership ofthe Outlaws, not

by any individual members. As support for his position,

Carlson points out that Outlaws members believe that the

property bearing the markings of the Outlaws are the property

of the Outlaws as a whole, and that Outlaws members must

return their “colors” (paraphernalia with Outlaws markings)

if they cease to become active members. The government

concedes that Outlaws members share that belief. Carlson

claims that by virtue of his elected position he has been vested

by the membership oftheOutlaws witha “superiorpossessory

interest in all items of [Outlaws] indicia.”

The district court denied that motion, as well as Carlson’s

subsequent motion to alter or amend the judgment pursuant

to Rule 59(e). The district court determined that Carlson had

failed to demonstrate that the government was aware of

Carlson or his alleged interest in the property, and that in any

event Carlson had failed to demonstrate a property interest in

the Outlaws paraphernalia. We review the district court’s

Rule 60(b) determination for abuse of discretion. Anderson v.

Catholic Bishop of Chicago, 759 F.3d 645, 652 (7th Cir. 2014);

United States v. 8136 S. Dobson St., Chicago, Ill., 125 F.3d 1076,

1082 (7th Cir. 1997).

On appeal, Carlson presents two issues for our resolution:

whether Carlson possessed an interest in the property suffiȬ

cient to entitle him to notice of the forfeiture proceedings, and

whetherthe notice provided by the government was adequate

as both a statutory and constitutional matter. Because Carlson

fails to adequately allege that he had a lawful property interest

at stake of which the governmentreasonably would have been

aware, we need not consider his second contention that the

Case: 15-2258 Document: 29 Filed: 08/23/2016 Pages: 12
6 No. 15Ȭ2258

notice supplied to all members of the Indianapolis Outlaws

chapter, including its president, was inadequate to inform the

Outlaws’ collective membership. 1

As Carlson concedes, a lawful property interest for purȬ

poses of the forfeiture notice provision is created and defined

by state law. Knoll, 785 F.3d at 1156; United States v. 5 S 351

Tuthill Rd., Naperville, Ill., 233 F.3d 1017, 1021 (7th Cir. 2000),

amended on denial ofrehȇg (Mar. 21, 2001). Therefore, we must

look to Indiana law to determine whether Carlson has alleged

a property interest recognized in that state. Only a person

possessing a legal interest, rather than an equitable interest, in

property will have standing to challenge its forfeiture. Knoll,

785 F.3d at 1156; United States v. Timley, 507 F.3d 1125, 1129 (8th

Cir. 2007). Carlson alleges only that the property subject to

forfeiture was not owned by individuals, but was owned by

the “collective membership” of the Outlaws and he was an

agent of that collective membership for the purposes of

maintaining and controlling the property and therefore had a

1

ȱȱAlthough both parties rely on trial testimony in arguing as to ownership,

Carlson asserts that the government should not be able to point to

testimony in the criminal case that Carlson never had an opportunity to

contest. Setting aside the contradiction in relying on such testimony when

useful and disavowing its relevance when not, the argument is problematic

on a more fundamental basis. The issue here is whether the government

should have know that Carlson had an ownership interest in the property

such as to entitle him to direct notice. The government’s knowledge of the

Outlaws gleaned in the trial testimony is relevant to that determination

regardless of whether that information could have been contested by

Carlson.

Case: 15-2258 Document: 29 Filed: 08/23/2016 Pages: 12
No. 15Ȭ2258 7

lawful, possessory interest overthe forfeited items by virtue of

that agency relationship.

Under Indiana law, ownership of personal property is

determined by reference to the indicia such as title, possession,

and control. Harden v. Monroe Guaranty Ins.Co., 626 N.E.2d 814,

820 (Ind. App. Ct. 1993); Womack v. State, 738 N.E.2d 320, 324

(Ind. Ct. App. 2000); National ServȬAll Inc. v. Indiana Dept. of

State Revenue, 644 N.E.2d 954, 957 (Ind. Tax Ct. 1994); Meridian

Mortgage Co. v. State, 182 Ind. App. 328, 339, 395 N.E.2d 433,

439 (1979); Rhoades v. State, 70 N.E.2d 27, 29 (Ind. S. Ct. 1946).

Carlson has not alleged any of these indicia, and in fact does

not cite to any Indiana cases in asserting the property interest.

Although he has alleged an understanding that property

cannot be transferred to nonȬmembers, he does not identify

what type of interest, if any, in that property was retained by

the Outlaws—whether an option to purchase back, a right of

first refusal, a termination of a bailment or lease, etc.—and

whether that interest is a legal interest that grants standing or

an equitable or other interest that does not. He fails in fact to

cite to Indiana law at all to establish the legal interest in the

property despite recognizing that property interests are

defined by state law. Moreover, among the forfeitures chalȬ

lenged by Carlson are those of three persons who were former

members of the Outlaws, yet still in possession of such

paraphernalia, and at least one person who was never an

Outlaws member, thus contradicting the claim that the

collective membershipexercisedthat control overdistribution.

In his initial brief to this court, Carlson appeared to assert

a bailment relationship, wherein the property would be

possessed by the Outlaws members only as bailees with the

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8 No. 15Ȭ2258

Outlaws organization presumably the bailor, but he affirmaȬ

tively denied any such argument in his reply brief and on

appeal. Bailment, at least, is a recognized property interest,

although appropriately abandoned given the absence of

evidence that this was in fact a bailmentrelationship. He relies

instead only on an argument that his legal interest is as an

agent of the Outlaws and that his agency interests are a legally

recognized interest. But an agent can possess only the interest

of his principal, and Carlson has not alleged what legally

protected interest the principal—the Outlaws—has in the

property. Carlson did not assert, forinstance, that the Outlaws

have a property interest because the Outlaws purchased or

manufactured the paraphernalia and retained a recognized

legal interest in it, nor does he allege that the Outlaws posȬ

sessed it and distributed it in such a manner that the Outlaws

retained a legal as opposed to equitable interest in the propȬ

erty. In fact, at oral argument counsel for Carlson did not know

whether the Outlaws organization had purchased the items,

and did not know where the items were purchased or where

manufactured. He asserted that “ownership is ownership”

regardless of whether one has a receipt for the items or

whether the items are found on the street. But of course, the

origin ofthe items—such as whetherthey are borrowed, stolen,

purchased, leased, or not possessed at all—is in factrelevant to

whether the Outlaws have a legal interest recognized under

state law. Carlson maintained that all parties agreed as to

ownership, but the existence of a legally enforceable property

interest is a matter of state law not a matter to be decided by

the parties. Persons joining the Outlaws may well understand

that the Outlaws colors must only be worn by Outlaws

Case: 15-2258 Document: 29 Filed: 08/23/2016 Pages: 12
No. 15Ȭ2258 9

members in good standing, and that the members will take

away a person’s colors if they leave the Outlaws either volunȬ

tarily or otherwise. That type of expectation may be found in

other contexts such as in street gangs, in which gang members

may enforce their gang rules and prohibit nonȬmembers from

displaying the symbols of the gang; that does not vest those

gang members with a legally protected interest in those

symbols or vestments.2 In fact, Outlaws also purport to require

members to color over tattoos containing Outlaws symbols if

they leave the Outlaws, but that does not suggest ownership of

the tattoos. The attempt to control member behavior and the

use of symbols is prevalent in many organizations—criminal

or otherwise—but does not in itself establish a lawful property

interest.

In short, it is not enough to merely assert that the Outlaws

members understand that Outlaws insignia can only be

possessed and exhibited by Outlaws members, or even to

assert their “agreement” that the items are owned by the

collective membership not the individuals. “Courts generally

do not determine legal interests in property for forfeiture

purposes by evaluating the history and traditions of the

Outlaws” and the equitable interests created by that history

and tradition “are insufficient to establish property rights.”

Knoll, 785 F.3d at 1156. State law defines property interests, not

2

ȱȱAlthough Carlson states that the collective marks of the Outlaws are

registered with the United States Patent and Trademark Office, Carlson

makes no argument relating to trademark protection in his brief and

therefore we do not address that in this opinion.

Case: 15-2258 Document: 29 Filed: 08/23/2016 Pages: 12
10 No. 15Ȭ2258

the agreements by individuals as to who will be deemed an

owner.

In United States v. Funds in the Amount of $239,400, 795 F.3d

639, 642Ȭ43 (7th Cir. 2015), we recognized that “an assertion of

ownership combined with some evidence of ownership is

sufficientto establish standing atthe summary judgment stage

of a civil forfeiture action.” Here, Carlson asks us to hold that

in a criminal forfeiture, an assertion of ownership, without

more, is sufficient to alert the government that he has a

property interest in the items as against those who were in

possession of the items and conceded their forfeiture. It is not.

Such an approach is inconsistent with the law, and underȬ

standably so, as it would be rife for abuse. Persons engaged in

a criminal enterprise could simply agree among themselves

that all personal and real property in their possession is

actually owned by their lawȬabiding grandmother down the

block, andthe grandmother couldcontestthe forfeiture of such

property without any other allegation of a legal interest in the

property.

The district court in United States v. Rosga, 864 F. Supp. 2d

439 (E.D. Va. 2012),recognized such a dangerin a case presentȬ

ing the same issues here—an effort to intervene in forfeiture

actions based on ownership by the collective membership of

the Outlaws. As in this case, the Rosga court was presented

with forfeiture of Outlaws paraphernalia following RICO

convictions of sixteen Outlaws members, and the government

providednotice to those defendants as well as the public notice

on its website. Four Outlaws members not named as defenȬ

dants in the criminal case then contested the forfeiture, seeking

the return of all indicia and other property associated with the

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No. 15Ȭ2258 11

Outlaws based on the argument that none of the individual

defendants owned the Outlaws items. The court held that, in

order to adequately allege standing to contest a forfeiture, the

claimants must establish “at least ‘a facially colorable ownerȬ

ship interest’ in the property in question.” Id. at 448. The Rosga

court noted that dismissal of the petition on such standing

grounds would be proper only if the facts taken as true in the

light most favorable to petitioners, “do not plausibly demonȬ

strate a cognizable legal interest in the forfeited assets.” Id at

449. Faced with the same “collective membership” argument

raised here, the court held that the petitioners—who never

claimed to have been in possession of the property and

asserted only unsupported legal conclusions of collective

ownership—failed to demonstrate a cognizable interest in the

items. The court noted that criminal forfeiture statutes should

be construed to deny relief to parties engaged in manipulating

ownership. The court deemed “wellȬfounded” the governȬ

ment’s argument that the collective ownership mechanism

asserted by the Outlaws was “designed solely ‘to insulate from

forfeiturepropertyusedby convictedmembers ofthe organizaȬ

tion.’” Id. at 450.

The allegations relied upon by Carlson are similar. Carlson

relies solely on the understanding of the members set forth in

the membership affidavit that each member signs, and atȬ

tachedhisAmericanOutlawsAssociation (AOA)Membership

Affidavit to the Rule 60(b) motion. That affidavit contains only

a few sentences, all of which reflect a focus on evading law

enforcement. First,the affidavitdefines ownershipof property,

declaring that “every member of the AOA is informed and

agrees, that a member can only surrender, transfer or forfeit

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12 No. 15Ȭ2258

indicia of the AOA to another member in good standing,

therefore all property bearing the markings of the AOA is the

property of the AOA as a whole, not the individual.” In the

sentence following that declaration, the affidavit discusses

possible forfeiture, and the member agrees that if the property

is seized by law enforcement he will pursue it by all legal

resources that are available. Finally, the final sentence in that

same affidavit provides “I also know and agree that by

becoming a member of the AOA it is not, nor has ever been a

criminal enterprise.” That statement mirrors the statement

concerning the property interest in that it reflects a legal

conclusion, with no factual basis whatsoever, which appears to

be designed to subvert law enforcement efforts. The statement

that it was not a criminal enterprise is belied by the RICO

charges and convictions as to all members of the Indianapolis

chapter in the underlying criminal action here, and the

statement concerning the ownership interest fares no better.

The affidavit statements do not provide any basis forthe court

to identify what legal interest the Outlaws have in the propȬ

erty, and certainly would not put the government on notice

that the “collective membership” possessed a legal ownership

interest in the property. As the Indiana Court of Appeals

recognized, “[o]wnership can not be conferred by a wave of a

magic semantic wand. We will look past the terms of the

agreement to the actual transaction involved.” Meridian

Mortgage, 395 N.E.2d at 440. Carlson has failed to identify the

origin of the items or allege the Outlaws relationship at its

inception, and the district court properly held that Carlson was

not entitled to individualized notice.

The decision of the district court is AFFIRMED.

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