FILED

U.S. COURT OF APPEALS

ELEVENTH CIRCUIT

MAR 17, 2010

JOHN LEY

 CLERK

[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

________________________

No. 09-10446

________________________

D.C. Docket No. 07-00061-CR-01-TWT-1

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

versus

ANTHONY MICHAEL RAMUNNO, JR.,

Defendant,

THOMAS MARTIN,

Claimant-Appellant.

________________________

Appeal from the United States District Court

for the Northern District of Georgia

________________________

(March 17, 2010)

Before BLACK, WILSON and COX, Circuit Judges.

PER CURIAM:
Anthony Michael Ramunno, Jr. pleaded guilty to one count of mail fraud and

one count of wire fraud, in violation of 18 U.S.C. §§ 1341 and 1343 respectively. As

part of his plea agreement, Ramunno agreed to forfeit his ill-gotten gains to the

Government. The district court entered a preliminary order of forfeiture by consent. 

Thomas Martin, one of Ramunno’s victims, petitioned the district court to amend its

preliminary order of forfeiture, contending that he was entitled to a constructive trust

in the funds he invested with Ramunno. The district court granted the Government’s

motion to dismiss Martin’s petition. Martin appeals. We affirm.

I. BACKGROUND & PROCEDURAL HISTORY

In February 2007 a federal grand jury indictedRamunno on mail and wire fraud

charges. The indictment alleges that Ramunno fraudulently induced his victims to

invest in a fund based on forged audits and fictitious earnings statements. Ramunno

represented to potential investors that he was a successful commodity futures trader,

that funds entrusted to him would be invested in commodity futures, and that

investors should expect a significant rate of return. Instead, Ramunno perpetrated a

“Ponzi scheme”—he used participant funds to give false profits to earlier investors

and misappropriated funds to cover his personal expenses. Though no evidentiary

hearing was conducted, the district court appears to have accepted the Government’s

argument that Ramunno defrauded approximately ninety victims of $20 million

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through thisscheme. (R.3-91 at 1.) He ultimately pleaded guilty to one count of wire

fraud and one count of mail fraud.

Martin invested approximately $2 million with Ramunno in January 2007. On

January 23, 2007, the United States seized Ramunno’s assets, which were valued at

between $5 and $6 million. (R.3-91 at 1-2.) The seized assetsincluded a Washington

Mutual bank account containing $2,162,845.24. Martin alleges he can trace the $2

million he invested with Ramunno to this account. 

Ramunno agreed to forfeit the seized assets. The district court entered a

preliminary order of forfeiture and initiated ancillary proceedings in which thirdparties could contest the forfeiture pursuant to 21 U.S.C. § 853(n). Martin filed a

petition to amend the preliminary order of forfeiture. He asserted that he was entitled

to a return of the $2 million he invested because it was subject to a constructive trust

in his favor. The Government moved to dismiss Martin’s petition. The district court

summarily granted the Government’s motion and, without an evidentiary hearing,

entered a final order and judgment of forfeiture in favor of the Government. Martin

appeals.

II. ISSUES ON APPEAL AND CONTENTIONS OF THE PARTIES

Two questions are presented. One is an issue of state law: the nature of

Martin’s interest in the forfeited funds. We must determine whether Martin’s petition

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can establish his right to a constructive trust under Georgia law. If not, the inquiry

ends. See United States v. Andrews, 530 F.3d 1232, 1237 (10th Cir. 2008). But if,

taking the allegations contained in the petition as true, we find that Martin can

establish his entitlement to a constructive trust in the forfeited funds, we must then

decide the federal law issue. United States v. Shefton, 548 F.3d 1360, 1364 (11th Cir.

2008). The federal law issue is whether under § 853(n)(6)(A) the constructive trust

constitutes an interest superior to Ramunno’s. The answer to this question turns on

whether Martin’s constructive trust relates back to the time that the fraud occurred

and therefore must be excluded from the forfeiture order.

Martin contends that it was improper for the district court to consider

“traditional principles of equity and fairness” in finding that he was not entitled to a

constructive trust (R.3-91 at 3) because under this court’s holding in Shefton a

constructive trust arises automatically when a fraud occurs. Even if the court does 1

In Shefton, the defendant fraudulently obtained $726,856.60 in loan proceeds from Long 1

Beach Mortgage Company. Shefton, 548 F.3d at 1361. Attorney’s Title Insurance Fund, Inc.

issued title insurance policies to Long Beach that insured Long Beach’s security deeds securing

the loans. Id. The defendant was indicted, pleaded guilty to wire fraud, and agreed to forfeit the

property he had purchased with the fraudulently obtained proceeds of the Long Beach loan. The

district court entered a preliminary order of forfeiture, and the Fund asserted an interest in the

property the defendant had purchased with the Long Beach loan proceeds that were traceable to

the property. The Fund asserted that Long Beach should receive a constructive trust in the

property and that the Fund was subrogated to the rights and claims of Long Beach against

Shefton. That is, “the Fund [stood] in the shoes of Long Beach.” Id. at 1363. The Government

moved to dismiss the Fund’s petition, contending that the Fund was merely one of many victims

of the fraud and that the Fund’s status was that of an unsecured creditor. The district court

granted the Government’s motion to dismiss; after assuming arguendo that the Fund could

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consider principles of equity, Martin argues that principles of fairness direct that he

should receive a constructive trust because he has the ability to trace his investment

to the funds at issue. In contrast, the Government contends that Shefton does not

dictate “that the trust arises automatically in response to fraud regardless of whether

the district court, sitting as a court of equity, viewed the imposition of the trust as

equitable and fair.” (Appellee’s Br. at 26.) Therefore, according to the Government,

the district court correctly declined to grant Martin a constructive trust because doing

so would elevate his interest in the limited funds above that of similarly situated

victims, which would be inequitable. Instead, the Government asserts, Martin’s

appropriate remedy is the Attorney General’s remission process, which allows the

Attorney General to “restore forfeited property to victims . . . [as] is in the interest of

justice.” § 853(i)(1). 

With respect to the federal issue, Martin contends that this circuit’s precedent

in Shefton holds that a constructive trust may serve as a superior legal interest under

the statute. The Government argues that Shefton was wrongly decided and contends

that a constructive trust is only “an inchoate interest until it isimposed by a court, and

establish a constructive trust, the district court found that such a constructive trust could not

defeat the Government’s forfeiture claim, the federal law issue. On appeal, this court reversed,

holding that the Fund was entitled to a constructive trust and that the constructive trust

constituted a superior legal interest under § 853(n)(6)(A).

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thus does not qualify as a pre-existing interest in the property within the meaning of

Section 853(n)(6)(A).” (Appellee’s Br. at 36.) 

III. STANDARD OF REVIEW

“In the context ofthird-party claims to criminally forfeited property, we review

the district court’s factual findings for clear error and its legal conclusions de novo.”

Shefton, 548 F.3d at 1363 (quoting United States v. Watkins, 320 F.3d 1279, 1281

(11th Cir. 2003)). However, because a constructive trust is an equitable remedy, we

review the district court’s decision not to impose a constructive trust for an abuse of

discretion. See Preferred Sites, LLC v. Troup County, 296 F.3d 1210, 1220 (11th Cir.

2002). 

IV. DISCUSSION

Under 21 U.S.C. § 853(n), a third-party asserting an interest in forfeited

property may petition the court to have his or her interest excluded from the

forfeiture. The statute recognizes two scenarios in which a court must amend the

forfeiture order. Only the first is at issue in this case: a court must amend the order

when the petitioner demonstrates, by a preponderance of the evidence, that 

the petitioner has a legal right, title, or interest in the property, and such

right, title, or interest renders the order of forfeiture invalid in whole or

in part because the right, title, or interest was vested in the petitioner

rather than the defendant or was superior to any right, title, or interest of

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the defendant at the time of the commission of the acts which gave rise

to the forfeiture of the property under this section[.]

§ 853(n)(6)(A).

A court’s preliminary forfeiture order does not consider third-party interests. 

But the court must amend the final order of forfeiture to exempt the qualifying

interests of third-parties. Andrews, 530 F.3d at 1236. Martin’s petition alleges he has

a qualifying interest pursuant to § 853(n)(6)(A). To prove he has a qualifying interest

under this section, Martin must show that: (1) he had a legal interest in the forfeited

property; (2) his legal interest in the forfeited property was superior to Ramunno’s

interest; and (3) his legal interest was superior to Ramunno’s interest at the time of

Ramunno’s fraud. Shefton, 548 F.3d at 1364. While Georgia law determines the

nature of Martin’s interest in the property—that is, whether he is entitled to a

constructive trust, id. (citing United States v. Fleet, 498 F.3d 1225, 1231 (11th Cir.

2007))—we apply federal law to determine whether that interest is a “legal interest”

under § 853(n)(6)(A) and whether it was superior to Ramunno’s interest at the time

of the fraud.

We first consider the state law question of whether Martin has met the

requirements of a constructive trust. “The constructive trust, a creature of equity, is

the ‘formula through which the conscience of equity finds expression.’” Mitsubishi

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Int’l Corp. v. Cardinal Textile Sales, Inc., 14 F.3d 1507, 1518 (11th Cir. 1994)

(quoting 5 Austin W. Scott, The Law of Trusts, § 462, at 3413 (3d ed. 1967)). In

Georgia, “[a] constructive trust is a trust implied whenever the circumstances are such

that the person holding legal title to the property, either from fraud or otherwise,

cannot enjoy the beneficial interest in the propertywithout violating some established

principle of equity.” O.C.G.A. § 53-12-93(a); Lee v. Lee, 392 S.E.2d 870, 872 (Ga.

1990) (noting that under Georgia law “a constructive trust may be imposed where

property has been acquired by fraud, or where, though not acquired by fraud it is

against equity that itshould be retained by the person who holds it.”); Murray County

v. Pickering, 26 S.E.2d 287, 292 (Ga. 1943) (“A constructive trust is not created by

any words, either expressly or impliedly evincing a direct intention to create a trust,

but by the construction of equity in order to satisfy the demands of justice.”) (internal

quotations and citations omitted); Troutman v. Troutman, 676 S.E.2d 787, 790 (Ga.

Ct. App. 2009) (“[A] constructive trust is a remedy created by a court in equity to

prevent unjust enrichment.”) (quotations and citations omitted). Under Georgia law,

constructive trusts are available as a remedy to recover money lost through fraud.

Shefton, 548 F.3d at 1364 (citing Bateman v. Patterson, 92 S.E.2d 8, 10 (Ga. 1956));

Eason v. Farmer, 409 S.E.2d 509 (Ga. 1991). 

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Martin’s argument that a court’s role is limited to simply recognizing a

constructive trust that is already in existence is misguided. He contends that a

constructive trust arises automatically whenever a fraud occurs. This argument is

mistaken and is not the law in Georgia. As the Georgia Supreme Court has explained,

a constructive trust is created “by the construction of equity in order to satisfy the

demands of justice.” Murray County, 26 S.E.2d at 292 (citation omitted). “[T]here

is nothing in the Georgia statutory or decisional law to indicate that ordinary maxims

of equity jurisprudence do not apply.” Mitsubishi, 14 F.3d at 1518. Shefton does not

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mandate that we throw considerations of fairness and equity out the window when

determining whether to recognize a constructive trust. To the contrary, Georgia law

requires courts to consider principles of fairness in making this determination.

Murray County, 26 S.E.2d at 292. Thus, we reject Martin’s assertion that a

constructive trust arises automatically, and that a court’s role is limited to simply

recognizing an already existing interest. 

Martin cites Shefton for the proposition that once a fraud has been committed, a 2

constructive trust “arises when the underlying equities exist, not when it is announced,” Shefton,

548 F.3d at 1366 (citing United States v. 1419 Mount Alto Rd., 830 F. Supp. 1475, 1481-82

(N.D. Ga. 1993), and “[i]t is an elementary mistake to suppose that a court creates the trust

[because t]he obligation on the fraudster is imposed by law and arises immediately with his

acquisition of the proceeds of the fraud.” Shefton, 548 F.3d at 1366 (quoting United States v.

$4,224,958.27 (“Boylan”), 392 F.3d 1002, 1004 (9th Cir. 2004)). Importantly, though, when

citing to these quoted passages, Shefton was considering the federal law temporal question, not

the threshold state law question of whether a constructive trust exists.

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Shefton is not binding on this state law issue because that case primarily

addressed the federal law issue. In Shefton, both parties and the district court had

assumed arguendo the existence of a constructive trust. After noting the existence of

both a federal and state law question, the district court wrote that the determinative

issue is whether the constructive trust, if established, could defeat the Government’s

property right claim. Thus, unlike this case, whether a constructive trust existed was

not at issue. Moreover, the facts in this case are distinguishable from those in

Shefton. Here, there were multiple victims of the same fraudulent scheme. In

contrast, while Shefton may have involved multiple victims, they were not victims of

the same continuing scheme. 

After considering traditional principles offairness and equity, the district court

declined to award Martin a constructive trust. The district court found that because

Martin was only one of Ramunno’s many victims, to allow him to fully recover his

loss

fromthe limited pool of recovered assets at the expense of the remaining

victims would render an inequitable and fundamentally unfair result . .

. The only difference between [ ] Martin and the other victims is that he

was defrauded last. This distinction should not dictate that he receive

more of the forfeited assets than the other victims of the fraud.

(R.3-91 at 3-4.) Indeed, we agree that equity demandsthat no victimbe given priority

over any other similarly situated victim. Andrews, 530 F.3d at 1238. Fairness does

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not call for a constructive trust in this case even if Martin can prove that he can trace,

because it would elevate his position over that ofsimilarly situated victims. If Martin

were granted a constructive trust to recoup his entire $2 million loss, the pool of

funds available to be distributed to Ramunno’s other victims through the Attorney

General’s remission process would be reduced. If the funds are distributed equitably

to all victims, then each victim, including Martin, may recover some fraction of their

lost investments. However, if Martin is granted a constructive trust and recovers his

entire loss, the other victims would recover lessthan their pro-rata share of the seized

assets. 

Accordingly, the district court did not abuse its discretion in declining to grant

Martin a constructive trust. Id. (finding that “a court should not employ an equitable

fiction to elevate one claim over the claims of other creditors if those creditors are

similarly situated.”) (quotations and citations omitted); S.E.C. v. Elliott, 953 F.2d

1560, 1569 (11th Cir. 1992) (holding that the district court did not abuse its discretion

by disallowing tracing, when allowing a defrauded investor to recoup his entire

investment would elevate his position over that of similarly situated victims, thereby

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creating an inequitable result); United States v. Durham, 86 F.3d 70, 72 (5th Cir.

1996).3

Because we hold that the district court did not abuse its discretion by finding

that Martin is not entitled to a constructive trust, we need not consider the federal law

issue. Andrews, 530 F.3d at 1237. If Martin is not entitled to a constructive trust, any

error relating to the federal issue is harmless.

V. CONCLUSION

For the foregoing reasons, we hold that the district court did not abuse its

discretion by declining to grant Martin a constructive trust.

AFFIRMED. 

 If Martin received a constructive trust limited to his pro-rata share of the forfeited assets, 3

the potential unfairness to the other fraud victims would appear to be eliminated. But neither

party argued for a pro-rata constructive trust either in the district court or on this appeal. We

cannot say that the district court abused its discretion in this case by failing to consider the prorata approach given the fact that neither party asked the district court to consider it. And, we

express no opinion as to whether Georgia law would support the imposition of a constructive

trust limited to Martin’s pro-rata share of forfeited assets. 

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