The Honorable James M. Rosenbaum, United States District

1

Judge for the District of Minnesota.

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 90-5417

___________

United States of America, *

*

 Plaintiff-Appellee, *

* Appeal from the United States

v. * District Court for the

* District of Minnesota.

Ferris Alexander, *

*

 Defendant-Appellant. *

___________

 Submitted: September 11, 1996

 Filed: March 10, 1997

___________

Before WOLLMAN, FLOYD R. GIBSON, and JOHN R. GIBSON, Circuit

Judges.

___________

JOHN R. GIBSON, Circuit Judge.

Ferris Alexander is before us again. The United States

Supreme Court remanded this case for a determination of whether the

forfeiture of Alexander's property under the Racketeer Influenced

and Corrupt Organizations Act, 18 U.S.C. §§ 1961-1968 (1994),

violated the Eighth Amendment prohibition against excessive fines.

Alexander v. United States, 509 U.S. 544, 559 (1993). Following

our remand to the district court, United States v. Alexander, 32

F.3d 1231 (8th Cir. 1994) (Alexander II), the district court held 1
 In his brief, Alexander identifies and values the items

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forfeited: ten parcels of real property valued at $1,040,334.06;

fifteen bank accounts totalling $5,017.47; fourteen bookstores

valued at least at $2,000,000; personal property and equipment

liquidated at auction and private sale for $47,297.47; 113.8 tons

of "presumptively protected" magazines, videos, and novelties;

1,033 boxes of magazines, videos, and novelty items from a

California warehouse; three motor vehicles valued at $12,000; and

monies acquired from the RICO enterprise from the years 1985

through 1988, totalling $8,910,548.10. 

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that Alexander failed to make a prima facie case of

disproportionality, and Alexander appeals this order. Alexander

argues that the forfeiture of his property was prima facie

disproportionate, and thus, constituted an excessive fine. He

argues that the district court ignored uncontroverted valuation

evidence, erroneously excluded property forfeited from the

proportionality analysis, and misconstrued the legal and factual

tests applicable to a proportionality analysis. We affirm.

The details of Alexander's convictions and forfeiture of

property are set forth in Alexander v. Thornburgh, 943 F.2d 825,

826-29 (8th Cir. 1991) (Alexander I), Alexander II, 32 F.3d at

1233-34 (8th Cir. 1994), and Alexander, 509 U.S. at 547-49. We

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affirmed the district court's forfeiture order, 943 F.2d at 832-36.

The Supreme Court reversed and remanded for consideration of

whether the forfeiture of Alexander's property violated the Eighth

Amendment's prohibition against excessive fines. 509 U.S. at 559.

We, in turn, remanded the case to the district court to consider

this issue and to take additional evidence as it deemed

appropriate. Alexander II, 32 F.3d at 1235. In our remand order,

we outlined a number of principles the district court might

consider in its proportionality analysis, giving the district court

full discretion to develop the record and make appropriate

findings. Id. at 1235-37. 
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In considering Alexander's argument that the forfeiture of his

property constituted an excessive fine, the district court

recognized this court's instruction that it must distinguish

proceeds of the racketeering activity and property which

facilitates or affords a source of influence over the illegal

enterprise. See 32 F.3d at 1236. The forfeiture of proceeds from

the illegal enterprise is not considered punishment subject to the

excessive fines analysis because the forfeiture of proceeds simply

deprives the owner of the fruits of his criminal activity. See id.

The district court found that the real property, the $8,910,548.10

in proceeds, and the personal property, equipment, and inventory

located on the premises of the forfeited real property constituted

proceeds of Alexander's racketeering enterprise, and were not

subject to the excessive fines analysis. The court determined that

it would only include Alexander's personally held real property and

business interests in the amount forfeited for the purpose of the

proportionality analysis. 

The district court recognized that Alexander must make a prima

facie showing of gross disproportionality before the court will

consider the government's counter-evidence of just proportionality.

Following this court's suggestion, the district court stated that,

to determine if Alexander made a prima facie showing of gross

disproportionality, it must compare the extent and duration of

Alexander's criminal activities with the amount of property

forfeited. The court decided that Alexander had the burden to make

at least a preliminary showing of the sums forfeited, and to

demonstrate a disproportionality between the forfeiture and his

crime. The court concluded that Alexander "entirely failed to come

forward with any cognizable evidence establishing the dollar value

of his holdings." The court specifically referred to the several

amounts Alexander claimed to have held, varying from "$25 million,"

to "many millions" to "$2 million." The court pointed out that
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Alexander failed to submit any evidence of the value of his

business, such as a certified appraisal, audited financial

statements, or any value based on a capitalization of income

stream, an offer of a comparable sale, or a specific asset listing

and valuation. Because the court could not calculate "base

holdings," the court concluded it was impossible to determine the

proportion of fines and, ultimately, determine if the forfeiture

was disproportionate. 

The court also commented on Alexander's lack of credibility

based on discrepancies in Alexander's trial testimony and his

declarations. Alexander had stated to the Supreme Court that his

business was worth $25 million, but on his Chapter 7 bankruptcy

schedule, he stated, under penalty of perjury, that his business

was worth approximately $2 million. The court found "unworthy of

belief," Alexander's valuation of his assets. The court referred

to evidence that Alexander failed to keep records of receipts and

that there were "vast unreported sums of money." As one example,

the court recounted evidence that Alexander maintained only a

personal monthly declaration of quarters he collected and counted

from unmetered "peep show" vending machines, and that these records

did not square with testimony from a bank employee who stated that

Alexander deposited substantial amounts of quarters into different

bank accounts, often retaining large amounts of cash in $50 and

$100 denominations. The court stated that between the time of

Alexander's conviction and the seizure of his assets, Alexander

requested and received control of his business and assets and,

during that time, he "secreted assets, attempted bulk sales, and

engaged in . . . a series of shenanigans designed to obstruct th[e]

Court's orderly processes and enrich himself before the marshal

seized his inventory and equipment." Under these circumstances,

the court concluded that the United States had no duty to inventory

Alexander's holdings and rejected Alexander's argument that he 
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should be relieved of his burden to show gross disproportionality.

The district court then considered the extent and duration of

Alexander's criminal activities. The court compared Alexander's

maximum consecutive sentences (171 years and statutory fines of

$6,400,000) with his imposed sentence (72 months and $100,000 fine,

special assessments, and costs), specifically noting that the court

did not order a higher fine because of the forfeiture. The court

concluded that the imposed sentence was appropriate and Alexander

failed to make any showing that the forfeiture was grossly

disproportionate to his criminal activity. 

Alexander now argues that the district court incorrectly

conducted the proportionality analysis. Alexander perceives five

problems with the court's conclusion that he failed to make a prima

facie case of disproportionality. He argues that the court: (1)

ignored uncontroverted evidence in the record regarding the value

of property forfeited; (2) misconstrued the legal and factual test

applicable to the proportionality analysis; (3) erroneously

excluded at least $8.9 million from the proportionality analysis;

(4) erroneously focused on facts relating to the tax counts; and

(5) erroneously failed to hold as a matter of due process that

Alexander had met his burden of establishing a prima facie case of

disproportionality. 

I.

Alexander first claims that the district court ignored

uncontroverted valuation evidence. He argues that the court failed

to acknowledge the evidence of value of the United States Marshall

appointed by the court to "apprise" the forfeited property, who he

says valued the forfeited property at around $10,017,197.10. 
 The government explains that the term "apprise" means to

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"advise, counsel, inform, notify, and warn," it does not mean to

appraise or value.

 The affidavit sets forth the net proceeds the government

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received from disposing the property seized as a result of the

forfeiture: real estate - $659,344.58; cash - $2,185.13; bank

accounts - $5,017.47; and contents of businesses - $49,297.47.

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Alexander stresses that this amount did not even include the entire

amount of the forfeiture, as the ten million dollar figure did not

include the value of the fourteen ongoing businesses and 114 tons

of seized inventory. 

Alexander's characterization of the affidavit is not accurate.

Pursuant to a district court order, the United States Marshall

Service was authorized and directed to dispose of forfeited

property, not value the property. The affidavit sets forth the

3

net proceeds of the property seized, and does not “value” the

seized property at anywhere near ten million dollars. The

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affidavit contains nothing to cause us to conclude that the

district court ignored valuation evidence or erred in conducting

its proportionality analysis.

II.

Alexander next contends that the district court incorrectly

analyzed the proportionality question. He directs us to our remand

order in which we suggest that the district court compare "the

extent of the criminal activity and the quantum of property

forfeited." Alexander II, 32 F.3d at 1236. He alleges that the

district court added the further requirement, unsupported by the

case law, of requiring him to establish the sums he originally

possessed. He characterizes the district court's analysis as a

comparison of the forfeiture to his net worth, not as a comparison
 Alexander identifies the following factors from Busher and

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Sarbello as critical to the disproportionality analysis: (1) the

circumstances surrounding the defendant's criminal conduct; (2) the

harm suffered by the victim and the defendant's culpability; (3)

the dollar volume of the loss caused, whether physical harm to

persons was inflicted, threatened or risked, or whether the crime

had severe collateral consequences; (4) the benefit reaped by the

defendant; (5) the defendant's state of mind and motive; and (6)

the degree to which the enterprise operated by the defendant was

infected by criminal conduct. The Supreme Court declined to

establish a multifactor test for determining when a fine is

unconstitutionally excessive, leaving the lower courts free to

develop their own tests. See Austin v. United States, 509 U.S.

602, 622-23 (1993). We have considered many of the factors urged

by Alexander. See United States v. Bieri, 68 F.3d 232, 236 (8th

Cir. 1995), cert. denied, 116 S. Ct. 1876 (1996). 

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of the forfeiture to his criminal activities. 

The district court, following our suggestion, considered

whether the forfeiture constituted an excessive fine by comparing

the extent and duration of Alexander's criminal activities with the

amount of property forfeited. See id. Contrary to Alexander's

argument, the district court did not compare the amount of the

forfeiture to Alexander's net worth. The court was simply trying

to ascertain the amount forfeited by determining the amount of

Alexander's property that was not the fruit of his RICO violations.

Alexander further contends that applying the inquiries

articulated by United States v. Busher, 817 F.2d 1409, 1415 (9th

Cir. 1987), and United States v. Sarbello, 985 F.2d 716, 721-25 (3d

Cir. 1993), he has made a prima facie case of gross

disproportionality. As Alexander stressed in his earlier appeals, 5

he complains that he was convicted of three RICO counts predicated

on seven items of obscene materials, and the dollar value of these

obscene materials was "infinitesimal" when compared to the volume

of the sale of other protected expressive material. Alexander's

argument essentially asks us to limit the proportionality analysis
 The district court ordered the forfeiture of $8,910,548.10 as 6

proceeds obtained from the racketeering activity. The government

contends that in light of Alexander's financial situation,

including his tax liability and Chapter 7 bankruptcy, this amount

is unlikely to be collected. 

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to a comparison of the number of magazines and videos specifically

found by the jury to be obscene to the dollar amount of the

forfeiture. The Supreme Court, however, implicitly rejected this

same argument: 

[Alexander] contends that forfeiture of his entire

business was an "excessive" penalty for the Government to

exact "[o]n the basis of a few materials the jury

ultimately decided were obscene." It is somewhat

misleading, we think, to characterize the racketeering

crimes for which [Alexander] was convicted as involving

just a few materials ultimately found to be obscene.

Alexander was convicted of creating and managing what the

District Court described as "an enormous racketeering

enterprise." It is in the light of the extensive

criminal activities which [Alexander] apparently

conducted through this racketeering enterprise over a

substantial period of time that the question whether the

forfeiture was "excessive" must be considered.

Alexander, 509 U.S. at 559 (citations to record omitted). The

district court did not err in conducting its proportionality

analysis.

III.

Alexander further contends that the district court abused its

discretion and clearly erred in finding that the entire $8.9

million included in the forfeiture order constituted "proceeds" of 6

the racketeering enterprise. Alexander restates his argument

presented in this and earlier appeals, attacking the forfeiture of

the fourteen bookstores and theaters based on findings that three
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videotapes and four magazines were obscene. He does not dispute

that the business may have generated $8.9 million during the years

1985 through 1988; rather, his objection is to the district court's

conclusion that the entire $8.9 million is proceeds and is not

included in the Eighth Amendment analysis. He suggests that the

proceeds from the seven items found to be unlawful, and perhaps the

multiple copies, are all that can be excluded from the

proportionality analysis.

In remanding the case to the district court, we instructed

that "[f]orfeiture of proceeds cannot be considered punishment, and

thus, subject to the excessive fines clause, as it simply parts the

owner from the fruits of the criminal activity." Alexander II, 32

F.3d at 1236. The district court made explicit its earlier finding

that the forfeiture of $8,910,548.10 constituted proceeds of

Alexander's racketeering enterprise. This amount represented

proceeds which Alexander obtained directly or indirectly from his

racketeering activities for the years 1985 through 1988. 

We have already decided that proceeds cannot be included in

the proportionality analysis. See id. The only question remaining

is whether the forfeiture ordered constitutes an excessive fine.

We have no hesitation in concluding that the district court did not

err in excluding the $8.9 million from its proportionality

analysis. The jury found this amount forfeitable as proceeds of

the racketeering activity for the years 1985 through 1988. The

district court concluded that "the proceeds were inextricably tied

to an enormous racketeering enterprise." Alexander has not

presented any cogent argument explaining why the jury and district

court determination as to the amount of proceeds from the

racketeering enterprise should not stand.

IV.
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Alexander also argues that the district court erred by

focusing on facts relating to the tax counts in concluding that the

forfeiture was not excessive. He claims the non-RICO tax counts

are irrelevant in evaluating gross disproportionality.

Alexander's indictment set forth the racketeering enterprise

and the purpose of the enterprise, as well as the extensive means

and methods that Alexander used to conduct the enterprise. The

indictment incorporated allegations of the tax counts as "means and

methods" by which Alexander "conducted and participated in the

conduct of affairs of the enterprise." Accordingly, the court did

not err in considering the entire record, including the tax counts,

in deciding whether the forfeiture constituted an excessive fine.

V.

Finally, Alexander argues that due process requires that he be

relieved of his burden to show gross disproportionality because the

United States Marshall made no detailed inventory or appraisal of

the business's videos, magazines, and other items at the time they

were seized. He contends that it is impossible for him to

determine the total value of the property forfeited because the

government destroyed approximately "114 tons of presumptively

protected magazines and videotapes." 

The district court rejected Alexander's due process argument,

observing that Alexander was attempting to turn his obligation to

present valuation evidence at the forfeiture hearing into a duty

imposed on the Marshall to make an inventory at the time of

seizure. 

We see no circumstance here excusing Alexander from showing 
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disproportionality. The record is replete with examples of

Alexander's attempts to frustrate the valuation of his property as

well as dissipate assets between the time of his conviction and the

seizure of assets. We reject Alexander's due process argument.

We affirm the judgment of the district court.

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.