FI L ED U.S. COURT OF APPEAL S EL EVENTH CI RCUI T MAR 17, 2010 J OHN L EY CL ERK [PUBLIS H]

IN THE UN ITED STATES COURT OF APPEALS

FOR THE ELE VENTH CIRCUIT

__ __ __ __ __ __ __ __ __ __ __ __
No. 0 9- 10 44 6

__ __ __ __ __ __ __ __ __ __ __ __ D.C. Dock et No. 0 7- 00 06 1- CR-0 1- TW T-1

UNITED STAT ES OF AMERIC A,

Pl ai nt iff -Ap pe ll ee,

ve rs us

ANTHONY MICHAEL RAMUNNO, JR
.,
Defen da nt , THOMAS MARTIN,

Cl ai m an t-Ap pe ll an t.

__ __ __ __ __ __ __ __ __ __ __ __ App eal fro m

th e Uni te d S ta te s Di st ric t Co ur t fo r th e Nor th ern Dis tri ct of Ge or gi a

__ __ __ __ __ __ __ __ __ __ __ __ (Ma rch 17 , 20 10 )

Befo re BLACK, WILSON and COX, Circ ui t J ud ge s.

PER CURI AM:Ant ho ny Mi ch ael Ram un no , Jr

. pl ead ed gu il ty to on e co un t of m ai l frau d an d

on e co un t of wire frau d, in vi ol at io n of 18 U.S.C. §§ 13 41 an d 13 43 res pe ct iv el y

. As

pa rt of hi s pl ea ag reem en t, Ram un no ag reed to fo rfei t hi s il l-g ot te n ga in s to th e

Gov ern m en t. The di st ric t co ur t en te red a pr el im in ary or de r of fo rfei tu re by co ns en t.

Tho m as Mar ti n, on e of Ram un no ’s vi ct im s, pe ti ti on ed th e di st ric t co ur t to am en d it s

pr el im in ary or de r of fo rfei tu re, co nt en di ng th at he was en ti tl ed to a co ns tru ct iv e tru st

in th e fu nd s he in ve st ed wit h Ram un no

. The di st ric t co ur t gr an te d th e Gov ern m en t’s

m ot io n t o d is m is s M art in ’s pet it io n. Ma rti n a pp eal s. We affir m

.

I. BACKG ROUND & PROCEDURAL HIS TORY

In Feb ru ary 20 07 a fed eral gr an d jury in di ct ed Ram un no on m ai l an d wire frau d

ch a r g e s

. The in di ct m en t al le ge s th at Ram un no frau du le nt ly in du ced hi s vi ct im s to

in ve st in a fu nd ba se d on fo rg ed au di ts an d fic ti ti ou s earn in gs st at em en ts

. Ram un no

rep res en te d to po te nt ia l in ve st or s th at he was a su cces sf ul co m m od it y fu tu res tra de r,

th at fu nd s e n t r u s t ed to hi m wou ld be in ve st ed in co m m od it y fu tu res , an d th at

in ve st or s sh ou ld ex pe ct a si gn ifi can t rat e of ret ur n. In st ead
, Ram un no pe rp et rat ed a

“ Po nz i sc he m e”— he us ed pa rti ci pa nt fu nd s to gi ve fal se pro fit s t o earl ie r in ve st or s

an d m is ap pr op ria t e d f

u n ds to co ve r hi s pe rs on al ex pe ns es

. Tho ug h no ev id en ti ary

he ari ng was co nd uc te d, th e di st ric t co ur t ap pe ars to ha ve acce pt ed th e Gov ern m en t’s

arg um en t th at Ram

un n o d efra ud ed ap pr ox im at el y ni ne ty vi ct im s of $2 0 m il li on

2th ro ug h th is sc he m e. (R.3 -9 1 at 1.) He ul ti m at el y pl ead ed gu il ty to on e co un t of wire

frau d a nd on e co un t o f m ai l fr au d.

Mar ti n in ve st ed ap pr ox im at el y $2 m il li on wit h Ram un no in Ja nu ary 20 07

. On

Ja nu ary 23
, 20 07
, th e Uni te d Stat es se iz ed Ram un no ’s as se ts , whi ch were va lu ed at

be twee n $5 an d $6 m il li on

. (R.3 -9 1 at 1- 2.) The se iz ed as se ts in cl ud ed a W as hi ng to n

Mu tu al ba nk acco un t co nt ai ni ng $2 ,16 2,8 45 .24 . M art in all eg es he can tra ce t he $2

m il li on he in ve st ed wit h R am un no to th is acco un t.

Ram un no ag reed to fo rfei t th e se iz ed as se ts

. Th e di st ric t co ur t en te red a

pr el im in ary or de r o f f

o rfei tu re an d in it ia te d an ci ll ary pr oc eed in gs in whi ch th ird

p a rti es co ul d co nt es t th e fo rfei tu re pu rs ua nt to 21 U.S.C. § 85 3( n)

. Mar ti n fil e d a

pe ti ti on to am en d th e pr el im in ary or de r of fo rfei tu re. He as se rte d th at he was en ti tl ed

to a ret ur n of th e $2 m il li on he in ve st ed be cau se it was su bjec t to a co ns tru ct iv e tru st

in hi s fav or

. The Gov ern m en t m ov ed to di sm is s Mar ti n’s pe ti ti on

. The di st ric t co ur t

su m m ari ly gr an te d th e Gov ern m en t’s moti on an d, wit ho ut an ev id en ti ary he ari ng ,

en te red a fin al or de r an d jud gm en t of fo rfei tu re in fav or of th e Gov ern m en t. Mar ti n

ap pe al s.

II . ISSUE S ON APPEAL AND CONTENTI ONS OF TH E PARTIE S

Two qu es ti on s are pr es en te d. One is an is su e of st at e la w: th e na tu re of

Mar ti n’s in te res t in th e fo rfei te d fu nd s. W e m us t de te rm in e whe th er Mar ti n’s pe ti ti on

3can es ta bl is h hi s ri gh t t o a co ns tru ct iv e tru st un de r Geo rg ia la w. If no t, th e in qu iry

en ds

. Se e Uni te d St at es v. And re ws , 5 30 F.3 d 12 32 , 1 23 7 (1 0t h C ir. 2 00 8) . But if,

ta ki ng th e al le ga ti on s co nt ai ne d in th e pe ti ti on as tru e, we fin d th at Mar ti n can

es ta bl is h hi s en ti tl em en t to a co ns tru ct iv e tru st in th e fo rfei te d f u n ds , we m

us t th en

de ci de th e fed eral la w is su e. Uni te d St at es v. Sh ef to n , 54 8 F.3 d 13 60
, 13 64 (1 1t h Ci r.

20 08 ). The fed eral la w is su e is whe th er un de r § 85 3( n) (6 )(A) the co ns tru ct iv e tru st

co ns ti tu te s an int eres t su pe rio r to Ram un no ’s. The an swe r to th is qu es ti on tu rn s on

whe th er Mar ti n’s co ns tru ct iv e tru st r e l a t e s ba ck to th e ti m e th at th e frau d oc cu rred

an d t he refo re m

us t b e ex cl ud ed fro m

th e fo rfei tu re o rd er.

Mar ti n co nt en d s t ha t it was im pr op er fo r th e di st ric t co ur t to co ns id er

“ tra di ti on al pr in ci pl es of eq ui ty an d fai rn es s” in fin di ng th at he was no t en ti tl ed to a

co ns t r u c t i v e tru st (R.3 -9 1 at 3) be cau se un de r th is co ur t’s ho ld in g in Sh ef to n a

co ns tru ct iv e tru st ari se s aut om at ic al ly w he n a frau d o ccu rs

. Eve n if the co ur t do es 1

I n Shefton , the def

endant f raudule ntly

obtained $726,856.60 in loan proc eeds f rom L ong 1 Be ach Mor

tga g e Company

. Shefton , 548 F.3d a t 1361. Attorney ’s Title I nsuranc e F und, I nc. issued title insurance policie s to L ong Be ach tha t insured L ong Be ach’ s secur ity deeds se curing the loans. Id. The de fenda nt was indicted, plea ded g uilty to wire fr aud, and a g ree d to forfe it the proper ty he had pur chase d with the fra udulently obtained proc eeds of

the L ong Be ach loa

n. The district court ente red a

preliminary

order of for feiture , and the F und asser ted an inter est in the proper ty the def endant ha d purcha sed with the L ong Be ach loa n proce eds that we re tra cea ble to the prope rty . The F und asser ted that L ong Be ach should re ceive a construc tive trust in the proper ty and that the F und was subrog ated to the r ights a nd claims of L ong Be ach a g ainst Shefton. That is, “the F und [st ood] i n the shoes of L ong Be ach.” Id. at 1363. The G overnme nt moved to dismiss the Fund’ s petition, contending that the Fund w as mere ly one of ma

ny victims of the fr aud and tha t the Fund’ s status was that of a n unsecur ed cr editor. The district c ourt g rante d the Gover

nment’s motion to dis miss; after assuming arg uendo that the F und could

4co ns id er pri nc ip le s of eq ui ty, Mar ti n arg ue s th at pr in ci pl es of fai rn es s di rect th at he

sh ou ld rece iv e a co ns tru ct iv e tru st be cau se he ha s th e ab il it y to tra ce hi s in ve st m en t

to th e fu nd s at is su e. In co nt ras t, th e Gov ern m en t co n te nd s th at Sh ef to n do es no t

di ct at e “ th at th e tru st ari se s au to m at ic al ly in res po ns e to frau d reg ard le ss of whe th er

th e di st ric t co ur t, si tt in g as a co ur t of eq ui ty, vi ewed t h e im po si ti on of th e tru st as

eq ui ta bl e an d fai r.” (Ap pe ll ee’s Br. at 26 .) The refo re, acco rd in g to th e Gov ern m en t,

th e di st ric t co ur t co rrec tl y de cl in ed to gr an t Mar ti n a co ns tru ct iv e tru st be cau se do in g

so wou ld el ev at e hi s in te res t in th e li m it ed fu nd s ab ov e th at of si m il arl y s i t u a t ed

vi ct im s, whi ch wou ld be in e q u i t ab le

. In st ead
, th e Gov ern m en t as se rts , Mar ti n’s

ap pr op ria te rem e d y i s th e Att or ne y Gen eral ’s rem is si on pr oc es s, whi ch al lo ws th e

Att or ne y Gen eral to “ res to re fo rfei te d pr op ert y to vi ct im s

. . . [as ] is in th e in te res t of

jus ti ce.” § 85 3( i)( 1)

.

W it h res pe ct to th e fed eral is su e, Mar ti n co nt en ds th at th is ci rcu it ’s pr eced en t

in Sh ef to n ho ld s th at a co ns tru ct iv e tru st m ay se rv e as a su pe rio r le ga l in te res t un de r

th e st at ut e. The Gov ern m en t arg ue s th at Sh ef to n was wro ng ly de ci de d an d co nt en ds

th at a co ns tru ct iv e tru st is on ly “ an in ch oa te in te res t un ti l it is im po se d by a co ur t, an d

establish a construc tive trust, the district court found that suc h a construc tive trust could not defe at the Gove rnment’s for feiture claim, the fe dera l law issue. On appe al, this court re verse d, holding that the F und was e ntitled to a constructive trust and tha t the constructive tr ust constituted a super ior leg al intere st under § 853(n) (6)( A).

5th us do es no t qu al ify as a pr e-ex is ti ng in te res t in th e pr op ert y wit hi n th e m ean in g of

Sect io n 8 53 (n )(6 )(A).” (Ap pe ll ee’s Br. at 36 .)

II I. STANDARD OF REVIE W

“ In th e co nt ex t of th ird -p art y cl ai m s to cri m in al ly fo rfei te d pr op ert y , we rev ie w

th e di st ric t co ur t’s fact ua l fin di ng s fo r cl ear erro r an d it s le ga l co nc lu si on s de no vo .”

Sh ef to n , 54 8 F.3 d at 13 63 (q uo ti ng Uni te d S t a t e s v

. W at ki ns , 32 0 F.3 d 12 79
, 12 81

(1 1t h Ci r. 20 03 )). Howev er, be cau se a co ns tru ct iv e tru st is an eq ui ta bl e rem ed y , we

rev ie w th e di st ric t co ur t’s de ci si on no t to im po se a co ns tru ct iv e tru st fo r an ab us e of

di sc ret io n. Se e Pref

er re d Si te s, LLC v. Tr ou

p Co un ty , 29 6 F.3 d 12 10
, 12 20 (1 1t h Ci r.

20 02 ).

IV. DIS CUSSI ON

Und er 21 U.S.C. § 85 3( n)
, a th ird -p a r t y a ss ert in g an in te res t in fo rfei te d

pr op ert y m ay pe ti ti on th e co ur t to ha ve hi s or he r in te res t ex cl ud ed fro m th e

fo rfei tu re. The s t a t u t e reco gn iz es two sc en ari os in whi ch a co ur t m us t am en d th e

fo rfei tu re ord er. Onl y

th e fi rs t i s at is su e in th is cas e: a co ur t m us t am en d th e or de r

whe n t he pe ti ti on er d em on st rat es , by a p rep on de ran ce o f th e ev id en ce, t ha t

th e pe ti ti on er ha s a le ga l rig ht
, ti tl e, or in te res t in th e pr op ert y , an d su ch rig ht
, ti tl e, or in te res t ren de rs th e or de r of fo rfei tu re in va li d in who le or in pa rt be cau se th e rig ht
, ti tl e, or in te res t was ve st ed i n t h e pe ti ti on er rat he r th an th e de fen da nt or was su pe rio r to an y rig ht
, ti tl e, or in te res t of

6th e de fen da nt at th e ti m e of th e co m m is si on of th e act s whi ch ga ve ris e to th e fo rfei tu re o f th e p ro pe rty un de r th is sec ti on [.]

§ 8 53 (n )(6 )(A).

A co ur t’s pr el im in ary fo rfei tu re or de r do es no t co ns id er th ird -p art y in te res ts

.

Bu t th e co ur t m

us t am en d th e fin al or de r of fo rfei tu re to e x e mp t t h e qu al if yi ng

in te res ts of th ird -p art ie s. And re ws , 53 0 F.3 d at 12 36

. Mar ti n’s pe ti ti on al le ge s he ha s

a qu al ifyin g in te res t pu rs ua nt to § 85 3( n) (6 )(A). To pr ov e he ha s a qu al ifyin g in te res t

un de r th is se ct io n, Mar ti n m us t sh ow th at : (1 ) he ha d a le ga l in te res t in th e fo rfei te d

pr op e r t y; ( 2 ) hi s le ga l in te res t in th e fo rfei te d pr op ert y was su pe rio r to Ram un no ’s

in te res t; an d (3 ) hi s le ga l in te res t was su pe rio r to Ram un no ’s in te res t at

th e ti me of

Ram un no ’s fra u d

. Sh ef

to n , 54 8 F.3 d at 13 64

. W hi le Geo rg ia la w de te rm in es th e

na tu re of Mar ti n’s in te res t i n t he pr op ert y —t ha t is
, whe th er he is en ti tl ed to a

co ns tru ct iv e tr us t, id

. (ci ti ng Uni te d St at es v. Flee t , 4 98 F.3 d 1 22 5, 1 23 1 (1 1t h C ir.

20 07 ))— we ap pl y fed eral la w to de te rm in e whe th er th at in te res t is a “ le ga l in te res t”

un de r § 85 3( n) (6 )(A) and whe th er it was sup eri or to Ram un no ’s in te res t at the ti m e

of th e fra ud

.

W e fir st co ns id er th e st at e la w qu es ti on of whe th er Mar ti n ha s m et th e

req ui rem en ts of a co ns tru ct iv e tru st

. “ The co ns tru ct iv e tru st , a crea tu re of eq ui ty, is

th e ‘form ul a th ro ug h whi ch th e co ns ci en ce of eq ui ty fin ds ex pr es si on .’ ” Mit su bi sh i

7In t’l Co rp

. v. Ca rd in al Text il e S a l e s, In c., 14 F.3 d 15 07
, 15 18 (1 1t h Ci r. 19 94 )

(q uo ti ng 5 Aus ti n W

. Sco tt , Th e La w of Tr us ts , § 46 2, at 34 13 (3 d ed

. 19 67 )). In

Geo rg ia
, “ [a] co ns tru ct iv e tru st is a tru st im pl ie d whe ne ve r th e ci rcu m st an ces are su ch

th at th e pe rs on ho ld in g le ga l ti t l e t o t he pr op ert y , ei th er fro m frau d or ot he rwis e,

can no t en joy th e be ne fic ia l in te res t in th e pr op ert y wit ho ut vi ol at in g so m e es ta bl is he d

pr in ci pl e of eq ui ty.” O.C.G.A. § 53 -1 2- 93 (a); Lee v. Lee , 39 2 S.E.2d 87 0, 87 2 (Ga.

19 90 ) (n ot in g th at un de r Geo rg i a l aw “ a co ns tru ct iv e tru st m ay be im po se d whe re

pr op ert y ha s be en acq ui red by frau d, or whe re, th ou gh no t acq ui red by frau d it is

ag ai ns t eq ui ty th at it sh ou ld be ret ai ne d by th e pe rs on who ho ld s it .”); Mur ra y Co un ty

v. Pick er in g , 26 S.E.2d 28 7, 2 92 (Ga. 19 43 ) (“ A con st ru ct iv e tru st is no t creat ed by

an y wor ds
, ei th er ex pr es sl y or im pl ie dl y ev in ci ng a di rect in te nt io n to crea te a tru st ,
bu t by th e co ns tru ct io n of eq ui ty in or de r to sa ti sf y th e de m an ds of jus ti ce.”) (in te rn al

qu ot at io ns an d ci ta ti on s om it te d) ; Tr ou tma n v. Tr ou tma n , 67 6 S.E.2d 78 7, 79 0 (Ga.

Ct

. App

. 20 09 ) (“ [A] co ns tru ct iv e tru st is a rem ed y crea te d by a co ur t in eq ui ty to

pr ev en t un

jus t en ric hm en t.”) (q uo ta ti on s an d ci ta ti on s om it te d)

. Und er Geo rg ia la w,

co ns tru c t i v e t ru st s are av ai la bl e as a rem ed y to reco ve r m on ey lo st th ro ug h frau d.

Sh ef to n , 54 8 F.3 d at 13 64 (ci ti ng Bat ema n v. Pat te rs on , 92 S.E.2d 8, 10 (Ga. 19 56 ));

Eas on v. Far mer , 40 9 S .E.2d 50 9 (Ga . 19 91 ).

8Mar ti n’s arg ume n t th at a co ur t’s ro le is li m it ed to si m pl y reco gn iz in g a

co ns tru ct iv e tru st th at is al read y in ex is te n c e i s m is gu id ed

. He co nt en ds th at a

co ns tru ct iv e tru st ari se s au to m at ic al ly whe ne ve r a fra u d oc cu rs

. Thi s arg um en t is

m is ta ke n an d is no t th e la w in Geo rg ia

. As th e Geo rg ia Su pr em e Co ur t ha s ex pl ai ne d,

a co ns tru ct iv e tru st is crea te d “ by th e co ns tru ct io n of eq ui ty in or de r to sa ti sf y t h e

de m an ds of jus ti ce.” Mur ra y Co un ty , 26 S.E.2d at 29 2 (cit at io n om it te d)

. “ [T]here

is no th in g in th e Geo rg ia st at ut or y or de ci si on al la w to in di cat e th at or di na ry m ax im s

of eq ui ty juri sp ru de nc e do no t ap pl y .” Mit su bi sh i , 14 F.3 d at 15 18

. Sh ef to n do es no t 2

m an da te th at we th ro w co ns i d e r a t i o n s of fai rn es s an d eq ui ty ou t th e win do w whe n

de te rm in in g whe th er to reco gn iz e a co ns tru ct iv e tru st

. To th e co nt rary, Geo rg ia la w

re qu ir es co ur ts to co ns id er pr in ci pl es of fai rn es s i n m ak in g th is de te rm in at io n.

Mur ra y Co un ty , 26 S.E.2d at 29 2. Thu s, we reject M a r t i n ’s as se rti on th at a

co ns tru c t i v e t r us t ari se s au to m at ic al ly, an d th at a co ur t’s ro le is li m it ed to si m pl y

reco gn iz in g a n a lre ad y

ex is ti ng in te res t.

Martin cites Shefton for the pr oposition t hat once a fr aud has be en committed, a 2 constructive tr

ust “arise s when the unde rly ing e quities ex ist, not when it is announced,” Shefton
, 548 F.3d a t 1366 (citing United States v. 1419 Mount Alto Rd. , 830 F. Supp. 1475, 1481-82 (N.D. G a. 1993), a

nd “[i] t is an elementa

ry mistake to suppose that a c ourt cre ates the trust [because t]he oblig ation on the fra udster is imposed by

law and a

rises immediately

with his acquisition of the proc eeds of the fra ud.” Shefton , 548 F.3d a t 1366 (quoting United States v. $4,224,958.27 ( “Boylan”), 392 F.3d 1002, 1004 ( 9th Cir. 2004)). I mportantly , though, w hen citing to these quoted passag es, Shefton was c onsidering the fe dera l law tempora l question, not the threshold state la

w question of whe ther a

constructive tr

ust ex ists.

9Sh ef

to n is no t bi nd in g on th is st at e la w is su e be cau s e t h a t cas e pr im ari ly

ad dr es se d th e fed eral la w is su e. In Sh ef to n , bo th pa r t i e s a n d t he di st ric t co ur t ha d

as su m ed arg ue nd o th e ex is te nc e of a co ns tru ct iv e tru st

. Afte r no ti ng th e ex is te nc e of

bo th a fed eral an d s ta te law q ue st io n, t he di st ric t co ur t wro te th at th e de te rm in at iv e

is su e is whe th er th e co ns tru ct iv e tru st , if es ta bl is he d, co ul d de feat th e Gov ern m en t’s

pr op ert y rig ht cl ai m

. Thu s, un li ke th is cas e, whe th er a co ns tru ct iv e tru st ex is te d was

no t at is su e. Mo reo ve r, th e fact s in t h i s c as e are di st in gu is ha bl e fro m th os e in

Sh ef to n

. Here, th ere were m ul t i p l e v i c ti m s of th e sa m e frau du le nt sc he m e. In

co nt ras t, whi le Sh ef

to n m ay ha ve in vo lv ed m

ul ti pl e vi ct im s, th ey were no t vi ct im s of

th e sa m e co nt in ui ng sch em e.

Afte r co ns id eri ng tra di ti on al pr in ci pl es of fai rn es s an d eq ui ty, th e di st ric t co ur t

de cl in ed to award Mar ti n a co ns tru ct iv e tru st

. The di st ric t co ur t fo un d th at be cau se

Mar ti n was on ly one of R am un no ’s m an y vi ct im s, to al lo w h im to fu ll y reco ve r hi s

lo ss

fro m th e li m it ed po ol of reco ve red as se ts at th e ex pe ns e of th e rem ai ni ng vi ct im s wou ld ren de r an in eq ui ta bl e an d fun da m en ta ll y un fai r res ul t .

.

. The on ly di ffer en ce be twee n [ ] Mar ti n an d th e ot he r vi ct im s is th at he

was de frau de d la st

. Thi s di st in ct io n sh ou ld no t di ct at e th at he rece iv e

m or e o f th e fo rfei te d a ss et s t ha n t he ot he r vi ct im s o f th e fra ud

. (R.3 -9 1 at 3- 4.) In de ed
, we ag ree th at eq ui ty de m an ds th at no vi ct im be gi ve n pr io rit y

ov er an y ot he r si m il arl y si tu at ed vi ct im

. And re ws , 53 0 F.3d at 12 38

. Fai rn es s do es

10no t cal l fo r a co ns tru ct iv e tru st in th is cas e ev en if Mar ti n can pr ov e th at he can tra ce,

be cau se it wou ld el ev at e hi s po si ti on ov er th at of si m il arl y si tu at ed vi ct im s. If Mar ti n

were gr an te d a co ns tru ct iv e tru s t t o r e c o up hi s en ti re $2 m il li on lo ss , th e po ol of

fu nd s av ai la bl e to be di st r i b u t e d to Ram un no ’s ot he r vi ct im s th ro ug h th e Att or ne y

Gen eral ’s rem is si on pr oc es s wou ld be red uc ed

. If th e fu nd s are di st rib ut ed eq ui ta bl y

to al l vi ct im s, th en each vi ct im
, in cl ud in g Mar ti n, m ay reco ve r so m e frac ti on of th ei r

lo st in ve st m en ts

. Howev er, if Mar ti n is gr an te d a co ns tru ct iv e tru st an d reco ve rs hi s

en ti re lo ss , th e ot he r vi ct im s wou ld reco ve r le ss th an th ei r pr o- rat a sh are of th e se iz ed

as se ts

.

Acco rd in gl y , th e di st ric t co ur t di d no t ab us e it s di sc ret io n in de cl in in g to gr an t

Mar ti n a co ns tru ct iv e tru st

. Id

. (fi nd in g th at “ a co ur t sh ou ld no t em pl oy an eq ui ta bl e

fic ti on to el ev at e on e c l a i m ov er th e cl ai m s of ot he r cred it or s if th os e cred it or s are

si m il arl y s i t u a te d.” ) (q uo ta ti on s an d ci ta ti on s om it te d) ; S.E.C. v. Ell io tt , 95 3 F.2 d

15 60
, 15 69 (1 1t h Ci r. 19 92 ) (h ol di ng th at th e di st ric t co ur t di d no t ab us e it s di sc ret io n
by di sa ll ow i n g t r a ci ng , whe n al lo win g a de frau de d in ve st or to reco up hi s en ti re

in ve st m en t wou ld el ev at e hi s po si ti on ov er th at of si m il arl y si tu at ed vi ct im s, th ereb y

11c r eat in g an in eq ui ta bl e res ul t); Uni te d St at es v. Dur ha m , 86 F.3 d 70
, 72 (5 th Ci r

.

19 96 ). 3

Bec au se we ho ld th at th e di st ric t cou rt di d n ot ab us e it s d is cret io n by fin di ng

th at Mar ti n is no t en ti tl ed to a co ns tru ct iv e tru st , we ne ed no t co ns id er th e fed eral la w

is su e. And

re ws , 53 0 F.3 d at 12 37

. If Mar ti n is no t en ti tl ed to a co ns tru ct iv e tru st , an y

erro r rel at in g t o t he fed eral is su e is ha rm le ss

.

V. CONCLUSIO N

Fo r th e fo reg oi ng reas on s, we ho ld th a t th e di st ric t co ur t di d no t ab us e it s

di sc ret io n b y

de cl in in g t o g ran t M art in a co ns tru ct iv e tr us t.

AFFIRMED.

I f Mar tin rece ived a c onstructive trust limited to his pro-r ata sha re of the forf eited asse ts, 3 the potential unfa irness to the other f raud vic tims would appear to be eliminated. B ut neither party arg ued for

a pro- rata

constructive tr

ust either in the district cour t or on this appeal. We cannot sa y that the district court a

bused its discretion in this case by failing to consider the pr orata approa ch g iven the fa ct that neither party asked the district court to consider it. And, we express no opinion as to whether G eorg ia law would support the imposition of a construc tive trust limi ted to Martin’s pro- rata share of for feited a ssets.

12