2003 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

7-11-2003

USA v. Pantelidis

Precedential or Non-Precedential: Precedential

Docket No. 02-3436

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PRECEDENTIAL

Filed July 11, 2003

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Nos. 02-3436 and 02-4318

UNITED STATES OF AMERICA

v.

JERRY PANTELIDIS,

Appellant No. 02-3426

Appeal from an Order of the District Court

From the Eastern District of Pennsylvania

Denying Motion for Return of Property

in Criminal No. 01-694-01

United States District Judge Herbert J. Hutton

IN RE: JERRY PANTELIDIS

Petitioner No. 02-4318

On Petition for a Writ of Mandamus

From the Eastern District of Pennsylvania

(Related to Crim No. 01-cr-694)

Argued: April 1, 2003

Before: McKEE and SMITH, Circuit Judges,

and COWEN, Senior Circuit Judge

(Opinion filed: July 11, 2003)
JAMES M. BECKER, ESQ. (Argued)

JAMES A. KELLER, ESQ.

Saul Ewing LLP

3800 Centre Square West

1500 Market Street

Philadelphia, PA 19102

Attorneys for Appellant/Petitioner

PATRICK L. MEEHAN, ESQ.

United States Attorney

LAURIE MAGID, ESQ.

Deputy United States Attorney

for Policy and Appeals

ROBERT A. ZAUZMER, ESQ.

Assistant United States Attorney

Chief of Appeals

PAUL L. GRAY, ESQ. (Argued)

Assistant United States Attorney

615 Chestnut Street, Suite 1250

Philadelphia, PA 19106

Attorneys for Appellee/Respondent

OPINION OF THE COURT

McKEE, Circuit Judge. 

Jerry Pantelidis appeals from the district court’s order

denying his motion for return of property filed under

Fed.R.Crim.P. 41(e). He claims that he is entitled to the

return of certain funds escrowed pursuant to the terms of

a non-prosecution agreement. However, since we conclude

that the agreement is ambiguous, we will vacate the district

court’s order and remand for further proceedings so that

the district court can resolve the ambiguity. 

I. FACTS AND PROCEDURAL HISTORY

On November 5, 2001, a federal grand jury returned an

indictment charging Jerry Pantelidis with seven counts of

making false statements to federally insured financial

institutions, in violation of 18 U.S.C. § 1014, two counts of

bank fraud, in violation of 18 U.S.C. § 1344, one count of

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making a false oath in a bankruptcy proceeding, in

violation of 18 U.S.C. § 152(2), and one count of use of a

false social security number, in violation of 42 U.S.C.

§ 408(a)(7). The false statement and bank fraud counts

charged that Pantelidis advanced his real estate business

interests by making false and fraudulent statements,

including: fraudulently creating fictitious income tax

returns claiming inflated income amounts; creating false

financial statements; and making false declarations of

income and assets in order to secure bank loans and lines

of credit totaling in excess of $3.5 million, and to secure

credit cards and a car lease. The indictment further alleged

that Pantelidis earned hundreds of thousands of dollars

profit from the acquisition, development and resale of

properties which Pantelidis purchased using fraudulently

obtained financing. The indictment also contained a notice

of forfeiture concerning $637,411.40 in proceeds obtained

directly or indirectly from the violations of 18 U.S.C.

§§ 1014 and 1344, and a notification of the government’s

intention, if necessary, to seek forfeiture of substitute

assets, up to the value of the property subject to forfeiture.1

According to the government, the amount of the funds in

the notice of forfeiture in the indictment, viz., $637,441.40,

represents the total net proceeds Pantelidis realized from

the sale of two buildings he purchased or improved using

the fraudulently obtained funds. Those buildings were

located at 311 S. Juniper Street and 1315 Walnut Street in

Philadelphia. This appeal also involves proceeds derived

from the sale of the Barclay Hotel in Philadelphia. 

A. 311 S. Juniper Street.

Count Two of the indictment charged that Pantelidis

made false statements to Regent National Bank to obtain a

$500,000 loan to purchase and improve upon a property at

311 S. Juniper Street, in violation of 18 U.S.C. § 1014. The

indictment alleged that in late 1994 Pantelidis supplied the

bank with copies of his federal income tax returns for the

1. If the government cannot reach illegal proceeds directly, it can, under

21 U.S.C. § 853(p), seek forfeiture of other property of the defendant,

called “substitute assets,” up to the value of the property. 

3
years 1991, 1992 and 1993, on which returns he claimed

adjusted gross income of $107,706, $133,675 and

$162,423, respectively. The indictment further alleged that

Pantelidis had not filed federal income tax returns during

those years, and that the returns he furnished to the bank

were fictitious and contained inflated income. According to

the government, Pantelidis’s actual federal income tax

returns for those years, filed with the IRS in April 1995,

showed true income during 1991, 1992 and 1993, of minus

$9,996, minus $34,878, and minus $59,908, respectively.

On February 3, 1998, Pantelidis’s company, 311 S.

Juniper Street, Inc., sold the property on Juniper Street.

The proceeds check from the sale of the property,

$263,901.40, was seized by the government pursuant to a

seizure warrant executed at the real estate closing. The

indictment seeks the forfeiture of these alleged proceeds of

the § 1014 violation. The proceeds are currently worth

$87,973, as will be explained later. 

B. 1315 Walnut Street.

Count Three charged that Pantelidis defrauded Regent

National Bank, while attempting to obtain a $1,300,000

secured line of credit to pay delinquent taxes and make

capital improvements to a property at 1315 Walnut Street,

in violation of 18 U.S.C. § 1344. The indictment alleged that

Pantelidis supplied the bank with a personal financial

statement dated May 10, 1995, in which he claimed to have

filed federal income tax returns for the years, 1991, 1992

and 1993. The indictment alleged that Pantelidis made the

claim knowing that Regent would rely on the fictitious

income tax returns he had previously given the bank in

connection with the Juniper Street property. The

indictment further alleged that Pantelidis did not give the

bank his true 1991, 1992 and 1993 federal income tax

returns, which he had filed with the IRS only sixteen days

earlier on April 24, 1995, but which showed negative

income during the three years, as described above. 

After the seizure of the 311 S. Juniper Street proceeds,

the government learned that Pantelidis intended to sell the

1315 Walnut Street property. Pantelidis’s former counsel

4
was aware by then that the government had the same

forfeiture claim to the proceeds of the sale of this property:

the building was improved using a $1,300,000 loan

allegedly obtained through deceiving Regent National Bank.

Rather than cause the government to apply for another

seizure warrant, Pantelidis’s former counsel attended the

April 6, 1999 closing, which was also attended by an FBI

agent, and agreed to have the proceeds of the sale of the

building placed in escrow accounts. As a result of the

agreement, Pantelidis escrowed approximately $447,540.

Approximately $267,180 of this amount remains escrowed.

C. The Barclay Hotel.

Count Eleven charged Pantelidis with making a false oath

before the bankruptcy court during hearings on two

competing plans of reorganization to purchase the Barclay

Hotel from bankruptcy. One of the plans was Pantelidis’s.

Pantelidis is accused of claiming to have “a little under a

million” in cash and readily marketable securities available

to him to secure financing for the project. The indictment

alleged that Pantelidis actually had approximately $101,000

in cash and unpledged securities at the time. The

indictment also alleged that Pantelidis’s financial status

was a material matter to the bankruptcy court. 

Neither of the two plans was accepted, which

necessitated the sale of the hotel at auction. At auction,

Pantelidis won the right to purchase the hotel for $5.5

million, which he did in January 1997. According to the

closing documents from the subsequent sale of the hotel in

June 1999, Pantelidis was paid in excess of $9 million for

the hotel less than two and one-half years after he

purchased it for $5.5 million. His profit allowed Pantelidis

to pay off more than $4 million in business and personal

debts. 

At the time of closing in June 1999 (which was two

months after the sale of his 1315 Walnut Street property),

and while Pantelidis and the government were in plea

negotiations, the government learned that Pantelidis wished

to sell his interest in the Barclay. As noted in an agreement

reached between Pantelidis and the government concerning

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the sale, the government was aware of a difficult situation

involving the property and the benefits to be obtained

through the sale. The parties to the sale, and others,

requested that the government clear the way for the sale of

the building. 

The government agreed not to seek money laundering

charges against Pantelidis concerning the sale of the

Barclay, primarily on the condition that, from the gross

proceeds of the sale, Pantelidis escrow $850,000 allegedly

owed to Elizabeth McHenry, an elderly benefactor of

Pantelidis, and that he escrow all remaining proceeds from

the sale. 

On June 25, 1999, a week after the government agreed

not to seek money laundering charges against him,

Pantelidis sold his interest in the Barclay. The closing

documents for the sale show that, as agreed, Pantelidis

escrowed $855,496.50 for the benefit of Elizabeth McHenry,

and escrowed the net proceeds of the sale, $371,211.35.

Exhibit A to the closing documents shows that company

and personal debts of Pantelidis, well in excess of $4

million, were paid off from the gross proceeds. Among the

debts paid off were: $20,000 to Elizabeth McHenry’s

attorneys; $236,250 to Pantelidis’s civil attorneys; $50,000

to Pantelidis’s accountant; $212,000 to certain of

Pantelidis’s employees; $68,250 to Pantelidis’s criminal

attorney; and $2,255,863 to the Barclay Condo Association.

The Barclay proceeds were also used to pay off three loans

to Pantelidis which were, according to the indictment,

procured by false statements or fraud. These bank loans

are involved in Counts Four, Five and Six of the indictment.

Approximately $150,000 of the $371,211 net proceeds

from the Barclay sale remains in escrow. The government

does not contend that the remaining $150,000 constitutes

direct proceeds of criminal activity. Rather, because the

government says that it cannot recover the entire

$637,441.40 in proceeds from the remaining seized and

escrowed funds available for forfeiture from the Juniper

Street and Walnut Street properties (now approximately

$355, 153), the indictment seeks to forfeit the $150,000 as

substitute assets pursuant to 18 U.S.C. § 982(b) and 21

U.S.C. § 853(p). 

6
D. Disposition of the Seized and Escrowed Funds.

The seized and escrowed funds from the three properties

— Juniper Street, Walnut Street and the Barclay — totaled

approximately $1,938,000, including the $850,000 for

Elizabeth McHenry. After the closing of the Barclay sale in

June 1999, Elizabeth McHenry’s attorney began

negotiations to cause the government to pay over to

Elizabeth McHenry two-thirds of the total escrowed funds

from Pantelidis’s real estate sales for what the attorney

claimed was an “equitable interest” that Elizabeth McHenry

(then 90 years old) and her deceased sister, Mary McHenry,

had in Pantelidis’s real estate portfolio. According to the

attorney, this equitable interest arose from an oral

agreement between the McHenry sisters and Pantelidis

early on in Pantelidis’s real estate career whereby the

McHenrys allowed Pantelidis to use their funds to finance

his real estate operations in return for a two-thirds interest

in his real estate business. The government agreed to pay

over two-thirds of the escrowed funds on the condition that

Elizabeth McHenry terminate Pantelidis’s existing power of

attorney over her funds. Ms. McHenry terminated

Pantelidis’s existing power of attorney on May 5, 2000.

Thereafter, the government, with Pantelidis’s agreement,

paid over approximately $1,481,261 for the benefit of Ms.

McHenry. 

According to the government, after the disbursement to

Ms. McHenry, the following funds remain held to satisfy

Pantelidis’s possible forfeiture obligations: (a) a $87,973.80

check, plus interest earned, in the custody of the U.S.

Marshall and derived from the sale of 311 S. Juniper

Street; (b) approximately $267,180 held in escrow from the

proceeds of the sale of 1315 Walnut Street; and (c)

approximately $150,000 in escrowed proceeds from the sale

of the Barclay Hotel. 

E. Pantelidis’s Rule 41(e) motion.

On January 4, 2002, Pantelidis filed a motion for return

of property under Fed.R.Crim.P. 41(e).2 The motion sought

2. When Pantelidis filed his Rule 41(e) motion it provided: 

7
the return of approximately $500,000 in potentially

forfeitable funds constituting the proceeds of Pantelidis’s

real estate transactions. All but approximately $87,000 had

been, as noted, voluntarily placed into escrow accounts

before indictment during 1998 and 1999, by Pantelidis

pending plea discussions between the parties. On February

21, 2002, Pantelidis moved for a hearing on his Rule 41(e)

motion. On April 10, 2002, the government responded to

Pantelidis’s motion. And, on May 8, 2002, the government

filed an ex parte motion for a restraining order under 18

U.S.C. § 981 and 21 U.S.C. § 853(e)(1), seeking the pre-trial

restraint of portions of the seized and escrowed funds

obtained directly or indirectly from the violations of 18

U.S.C. §§ 1014 and 1344. The government claimed that it

did not attempt to restrain the $150,000 of Barclay funds

which it considers substitute assets for forfeiture purposes.

On August 12, 2002, Pantelidis moved for an order

directing the government to serve him with a copy of its ex

A person aggrieved by an unlawful search and seizure or by the

deprivation of property may move the district court for the district

in which the property was seized for the return of the property on

the ground that such person is entitled to lawful possession of the

property. The court shall receive evidence of any issue of fact

necessary to the decision of the motion. If the motion is granted, the

property shall be returned to the movant, although reasonable

conditions may be imposed to protect access and use of the property

in subsequent proceedings. If a motion for return of property is

made or comes on for hearing in the district of trial after an

indictment or information is filed, it shall be treated also as a

motion to suppress under Rule 12. 

On April 20, 2002, the Supreme Court entered an order amending the

Federal Rules of Criminal Procedure 1 through 60, effective December 1,

2002. As a result, Rule 41(e) became Rule 41(g) and provides: 

A person aggrieved by an unlawful search and seizure of property or

by the deprivation of property may move for the property’s return.

The motion must be filed in the district where the property was

seized. The court must receive evidence on any factual issue

necessary to decide the motion. If it grants the motion, the court

must return the property to the movant, but may impose reasonable

conditions to protect access to the property and its use in later

proceedings. 

8
parte application. However, on August 26, 2002, the district

court issued an order denying Pantelidis’s Rule 41(e)

motion for return of property. The district court did not

hold a hearing nor did it make any findings concerning the

motion. 

On September 3, 2002, Pantelidis filed a notice of appeal

from the district court’s denial of his motion for return of

property. Thereafter, on September 9, 2002, the district

court, at Pantelidis’s request, granted a stay of the criminal

proceedings pending his appeal.3

II. DISCUSSION

Pantelidis argues that (1) the $150,000 Barclay funds be

returned to him because they are substitute assets not

subject to pre-conviction restraint and (2) the district court

erred by not conducting an evidentiary hearing and making

factual and legal findings on his Rule 41(e) motion. The

government agrees with Pantelidis that the district court

erred by not conducting a hearing on Pantelidis’s Rule 41(e)

motion as to the non-Barclay funds. Therefore, we will

remand to the district court so that it can conduct a

hearing on Pantelidis’s motion as to the non-Barclay funds.

However, the government contends that Pantelidis is not

entitled to the return of the Barclay funds because they

have been escrowed pursuant to the terms of the nonprosecution agreement. 

A. Appellate Jurisdiction.

Before beginning the inquiry into whether the Barclay

funds should be returned to Pantelidis, we must first

determine whether we have jurisdiction over his appeal.

Pantelidis’s appeal is from the district court’s denial of his

Rule 41(e) motion to return the escrowed and seized funds.

Rule 41(e) provides, in relevant part: 

3. On November 7, 2002, Pantelidis filed a petition for a Writ of

Mandamus. By an order dated February 5, 2003, we consolidated that

petition with this appeal. However, in his brief, Pantelidis does not

address his petition for a writ of mandamus. Therefore, we must assume

that he has abandoned that petition. 

9
A person aggrieved by an unlawful search and seizure

or by the deprivation of property may move . . . for the

return of the property on the ground that such person

is entitled to lawful possession of the property. 

Fed.R.Crim.P. 41(e).4 As a general principle, “[a]n order

denying return of property would not be final and

appealable if the government were holding the property as

evidence in a potential criminal prosecution.” Government of

the Virgin Islands v. Edwards, 903 F.2d 267, 272 (3d Cir.

1990) (citing DiBella v. United States, 369 U.S. 121 (1962)).

Nonetheless, the government argues that we have

jurisdiction under 28 U.S.C. § 1292(a)(1). It is undisputed

that asset restraint orders are to be treated like injunctions

which are immediately appealable under § 1292(a)(1). In re

Assets of Martin, 1 F.3d 1351, 1356 (3d Cir. 1993). In the

government’s view, because the practical effect of the

district court’s denial of Pantelidis’s Rule 41(e) motion is to

continue the pretrial restraint of the escrowed Barclay

funds, the district court’s order is appealable as if it were

an injunction under § 1292(a)(1). 

In spite of the logical appeal of the government’s

argument, our decision in United States v. Furina, 707 F.2d

82 (3d Cir. 1983), prevents us from analogizing the denial

of Pantelidis’s Rule 41(e) motion to an injunction for

jurisdictional purposes under 1292(a)(1). In Furina,

business records and other documents belonging to the

defendants, who had not been arrested or indicted, were

seized by federal agents pursuant to search warrants for

presentation to a grand jury. The defendants moved under

Rule 41(e) for the return of the seized materials, claiming

that the search warrants were defective. The district court

denied the motion and the defendants appealed. On their

appeal, the appellants argued, inter alia, that we had

jurisdiction under § 1292(a)(1) “for in effect the district

court has denied appellants an interlocutory injunction.” Id.

at 84-85. We refused to accept the analogy and “reject[ed]

this attempt to sidestep the policy against piecemeal

appeals by dressing the motion in ‘equitable garb’.” Id. at

85 (quoting Smith v. United States, 377 F.2d 739, 742 (3d

4. See n.2, supra. 

10
Cir. 1967)). Furina has not been overruled or limited, and

it is indistinguishable from this case. Therefore, § 1292(a)(1)

does not provide us with jurisdiction over this appeal. 

However, we do believe that we have jurisdiction under

28 U.S.C. § 1291. In DiBella v. United States, 369 U.S. 121

(1962), the Supreme Court held that, generally, the denial

of a pre-indictment Rule 41(e) motion to suppress evidence5

allegedly procured through an unreasonable search and

seizure is not final for purposes of appeal under § 1291.

However, the Court in DiBella “recognized an exception for

appeals from independent proceedings.” Furina, 707 F.2d at

84. Under the DiBella exception, there is sufficient

independence to allow an immediate appeal “[o]nly if the

motion is solely for the return of property and is in no way

tied to a criminal prosecution in esse against the movant.”

369 U.S. at 131-32. See also In re Search Warrant (Sealed),

810 F.2d 67, 70 (3d Cir. 1987) (“A significant exception,

however, allows for immediate appeal of orders that are

sufficiently independent from the anticipated criminal

proceeding.”); United States v. Premises Known as 608

Taylor Ave., 584 F.2d 1297, 1300 (3d Cir. 1978) (“The

5. At the time DiBella was decided, Rule 41(e) provided: 

A person aggrieved by an unlawful search and seizure may move the

district court for the district in which the property was seized for the

return of the property and to suppress for use as evidence anything

so obtained on the ground that (1) the property was illegally seized

without warrant, or (2) the warrant is insufficient on its face, or (3)

the property seized is not that described in the warrant, or (4) there

was not probable cause for believing the existence of the grounds on

which the warrant was issued, or (5) the warrant was illegally

executed. The judge shall receive evidence on any issue of fact

necessary to the decision of the motion. If the motion is granted the

property shall be restored unless otherwise subject to lawful

detention and it shall not be admissible in evidence at any hearing

or trial. The motion to suppress evidence may also be made in the

district where the trial is to be had. The motion shall be made before

trial or hearing unless opportunity therefor did not exist or the

defendant was not aware of the grounds for the motion, but the

court in its discretion may entertain the motion at the trial or

hearing. 

369 U.S. at 122 n.1. 

11
Supreme Court has indicated that the finality of an order

relating to a potential criminal prosecution is governed by

the independence of the order from the criminal

proceeding.”); Government of the Virgin Islands v. Edwards,

903 F.2d at 272 (“[A]n order is final if the essential

character of the motion is for the return of property which

is not intimately involved in the criminal process.”) (citation

omitted). 

In this case, both requirements of the DiBella exception

are satisfied. First, Pantelidis’s Rule 41(e) motion sought

only the return of the Barclay Funds and did not seek to

suppress the evidentiary value of those assets. See

Premises Known as 608 Taylor Avenue, 584 F.2d at 1300.

Second, the Barclay Funds are “in no way tied to a criminal

prosecution in esse against” Pantelidis. The Barclay Funds

are substitute assets. See 18 U.S.C. § 982 (b) and 21 U.S.C.

§ 853(p). The substitute asset provisions will become

operative only if Pantelidis is convicted of the crimes

charged in the indictment and only if the profits he received

directly or indirectly from those crimes cannot be otherwise

recovered. 21 U.S.C. §§ 853(p)(1)(A) - (E) and 853(p)(2).

Therefore, in a very real sense, substitute assets are “assets

not associated with the crime.” United States v. Field, 62

F.3d 246, 247 (8th Cir. 1995). Accordingly, the order

denying Pantelidis’s Rule 41(e) motion is independent from

the criminal proceeding and we have jurisdiction under

§ 1291. 

B. The Barclay Funds.

Approximately $150,000 of the proceeds from the Barclay

sale remain in escrow. The Barclay funds are substitute

assets and the government seeks their forfeiture as such

under 18 U.S.C. § 982(b) and 21 U.S.C. § 853(p). Pantelidis

argues that the district court erred by not releasing the

Barclay funds to him because, as substitute assets, they

are not subject to pre-conviction restraint.6 The government

concedes, as it must, that substitute assets are not subject

6. Pantelidis claims that he needs the Barclay funds to pay his legal fees

and living expenses. The government claims that Pantelidis sought the

return of the Barclay funds only after pre-indictment negotiations failed.

12
to pretrial restraint.7 United States v. Field, 62 F.3d 246

(8th Cir. 1995); United States v. Floyd, 992 F.2d 498 (5th

Cir. 1993); see also In re Assets of Martin, 1 F.3d 1351 (3d

Cir. 1993) (pre-conviction restraint of substitute assets

impermissible under RICO forfeiture provisions). However,

the government argues that the Barclay funds are subject

to pretrial restraint because the non-prosecution agreement

that Pantelidis entered into allows the funds to remain

escrowed for purposes of forfeiture. Not unexpectedly,

Pantelidis claims that he never agreed to the pretrial

restraint of the Barclay funds. 

The government’s position is straightforward. It argues

that Pantelidis and the government agreed to allow the

Barclay sale to proceed and each party gave consideration

for their respective promises. The government agreed to

“refrain from initiating criminal charges against Pantelidis

or his corporate entity charging a money laundering

violation from the monetary and/or financial transaction

which is the sale.” App. 30a. In return, Pantelidis agreed to

have the proceeds of the sale to be used to satisfy certain

claims, and agreed to “[e]scrow all remaining proceeds from

the sale.” App. 31a. Moreover, the government expressly

reserved its right to seek forfeiture with respect to any

criminal offenses which pre-dated or post-dated the sale.

App. 30a. At the same time, Pantelidis and the government

entered into an escrow agreement, which provided in part:

Escrow Agent will release funds upon the following

conditions:

1) An Agreement between Jerry Pantelidis and the

United States Government; or

2) Final unappealable Judicial Order by a court of

competent jurisdiction. 

App. 32a.

In the government’s view, by entering into the nonprosecution agreement, Pantelidis consented to the

restraint of the Barclay funds beyond that permitted by the

law with respect to substitute assets. According to the

7. Pantelidis calls it “pre-conviction restraint” and the government calls

it “pretrial restraint.” 

13
government, Pantelidis received valuable consideration for

that concession in the form of the government’s agreement

not to initiate money laundering charges against him. The

government also notes that it lived up to its part of the

agreement. However, argues the government, if the Barclay

funds are returned to Pantelidis, the government will not

receive the benefit of the bargain struck between it and

Pantelidis. 

Pantelidis’s argument that he did not agree to the pretrial

restraint of the Barclay funds is equally straightforward. He

first argues that the agreement contains a reservation of

rights which provides: “Pantelidis reserves all rights with

respect to the disposition of the proceeds of the Barclay

sale.” App. 31 (Pantelidis’s emphasis). According to

Pantelidis, one such reserved right is the right to use the

Barclay funds prior to trial. He next argues that neither the

non-prosecution agreement nor the escrow agreement

provides that the Barclay funds must remain in escrow

until the criminal prosecution is completed. He claims that

the above-quoted language of the escrow agreement means

that, in the absence of an agreement between the parties,

either party is free to seek a court order determining the

disposition of the funds. And, says Pantelidis, that’s

precisely what he has done. He contends that if the

government had intended for the funds to remain in escrow

until the criminal prosecution was completed, then the

government, as the drafter of the agreements, would have

included an explicit provision to that effect. He notes that

neither the agreement nor the escrow agreement contains

any such provision. Therefore, he argues that he is entitled

to seek recovery of the Barclay Funds. 

Although the agreements rise against the backdrop of a

criminal prosecution, they are nevertheless, contracts. In

resolving a contract dispute, “the initial determination is

whether the contract is ambiguous concerning the dispute

between the parties.” Sumitomo Machinery Corp. of America,

Inc. v. AlliedSignal, Inc., 81 F.3d 328, 332 (3d Cir. 1996).

The determination of whether a contract is ambiguous is a

question of law. Taylor v. Continental Group Change In

Control Severance Pay Plan, 933 F.2d 1227, 1232 (3d Cir.

1991). A contract is ambiguous “where the contract is

14
susceptible of more than one meaning,” Sumitomo

Machinery, 81 F.3d at 332, or “if it is subject to reasonable

alternative interpretations.” Taylor, 933 F.2d at 1232. 

After reading the disputed language, and considering the

conflicting arguments of the parties, we frankly come to the

conclusion that the government’s reading and Pantelidis’s

reading of the non-prosecution agreement are both

reasonable alternative interpretations. Therefore, the nonprosecution agreement is, by definition, ambiguous as to

Pantelidis’s entitlement to the Barclay Funds.

Consequently, a remand is warranted to enable the district

court to resolve that ambiguity in the first instance. On

remand, the district court can resolve the ambiguity by

applying the framework we outlined in In re New Valley

Corp., 89 F.3d 143, 149-150 (3d Cir. 1996). 

III. CONCLUSION

For the above reasons, we will remand to the district

court for proceedings consistent with this opinion.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

15