Source: https://law.justia.com/cases/federal/appellate-courts/F2/948/851/286376/
Timestamp: 2020-02-19 04:54:12
Document Index: 389689933

Matched Legal Cases: ['§ 1962', '§ 1962', '§ 1963', '§ 1341', '§ 1963', '§ 1963', '§ 1963', '§ 1962', '§ 1963', '§ 5236', '§ 1963']

United States of America, Appellee, v. Angelo Paccione; August Recycling, Inc.; a & a Landdevelopment; National Carting, Inc.; Stagecarting, Inc.; Anthony Vulpis; Androsedale Carting, Inc.,defendants-appellants, 948 F.2d 851 (2d Cir. 1991) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Second Circuit › 1991 › United States of America, Appellee, v. Angelo Paccione; August Recycling, Inc.; a & a Landdevelopmen...
United States of America, Appellee, v. Angelo Paccione; August Recycling, Inc.; a & a Landdevelopment; National Carting, Inc.; Stagecarting, Inc.; Anthony Vulpis; Androsedale Carting, Inc.,defendants-appellants, 948 F.2d 851 (2d Cir. 1991)
US Court of Appeals for the Second Circuit - 948 F.2d 851 (2d Cir. 1991) Argued Aug. 12, 1991. Decided Nov. 4, 1991
On March 8, 1990, an eighteen count superseding indictment was handed down against Angelo Paccione, Anthony Vulpis, Fred E. Weiss, John B. McDonald, A & A Land Development ("A & A Land"), August Recycling, Inc. ("August Recycling"), National Carting, Inc. ("National"), Stage Carting, Inc. ("Stage"), Rosedale Carting, Inc. ("Rosedale"), Vulpis Brothers, Ltd. ("Vulpis Bros.") and New York Environmental Contractors. Count One of the indictment charged all defendants with conducting and participating in the affairs of an enterprise, which was comprised of all defendants, through a pattern of racketeering, in violation of section 1962(c) of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(c). The indictment charged eighteen racketeering acts, including mail fraud on New York city and state government agencies, mail and wire fraud on CSX Transportation, Inc. ("CSX"), illegal disposal of medical wastes, fraudulent statements to city officials to secure disposal permits, and mail fraud on various medical care facilities. Count Two of the indictment charged all defendants with conspiracy to conduct and participate in the affairs of an enterprise through a pattern of racketeering, in violation of section 1962(d) of RICO, 18 U.S.C. § 1962(d). Paragraphs 61-62 of the indictment sought forfeiture pursuant to 18 U.S.C. § 1963(a) (1), (2) & (3) of the defendants' stock and other ownership interests in August Recycling, National, Stage, A & A Land, Rosedale and Vulpis Bros. Counts Three through Twelve of the indictment related to other instances of mail fraud, in violation of 18 U.S.C. § 1341.
At trial, the government presented evidence demonstrating that the defendants defrauded various persons and governmental agencies through the operation of an illegal landfill on 70 acres of land on Staten Island, New York, and through the operation of a company that falsely held itself out as a specialist in the strictly regulated field of collection, transportation and disposal of infectious medical wastes. For a more detailed description of the offenses, which one court has called "one of the largest and most serious frauds involving environmental crimes ever prosecuted in the United States," see United States v. Paccione, 751 F. Supp. 368, 371 (S.D.N.Y. 1990).
In order to conclude a sale of the corporations, the government moved on May 9, 1991 before Judge Constance Baker Motley for an order substituting the Subject Property for the $22 million cash payments due and vesting title to the Subject Property in the government. The government claimed that, despite its efforts, it could not locate $22 million in cash and that, as a result of the defendants' failure to sell their interests in the corporations, defendants had in effect commingled the monies due with other interests and property belonging to them. See 18 U.S.C. § 1963(m) (5).
The government contends that it did not waive its rights and remedies under the forfeiture statute by entering into the agreement. It argues that "rather than constituting a waiver of the Government's forfeiture rights under [section] 1963, the [agreement] expressly provides for the very forfeitures envisioned by the statute." The government points to the fact that it has exercised virtually all of its rights under the forfeiture statute from the time of the execution of the agreement. First, the agreement maintained in effect a post-indictment restraining order enjoining the dissipation of assets, pursuant to section 1963(d) (1) (A). Next, the agreement provided for the appointment of a RICO trustee to oversee the operation of the companies until payment was made in full, see 18 U.S.C. § 1963(e). In an order dated June 19, 1990, the district judge appointed Barrington D. Parker to serve as trustee. On November 10, 1990, the district court entered another order authorizing the trustee to oversee "the disposition of the assets and/or stock of the defendants and defendant corporations." Then, upon the default of appellants, the government applied pursuant to section 1963(k), for authority to conduct discovery in order to locate $22 million in cash. Thus, by requiring the defendants to deliver to the government affidavits of confessions of judgment, the government maintains that it did not relinquish its other rights under the statute but rather acquired additional rights so as to secure the defendants' obligations. With this latter contention we disagree.
The government contends that one of its primary objectives has been to require the defendants to forfeit all of their property interests in, or those acquired through, their unlawful activities. They assert that 18 U.S.C. § 1963(a) mandates the forfeiture of these interests upon conviction under 18 U.S.C. § 1962. See 18 U.S.C. § 1963(a) ("Whoever violates any provision of section 1962 of this chapter ... shall forfeit to the United States" any interest in the enterprise); see also United States v. Porcelli, 865 F.2d 1352, 1364-65 (2d Cir. 1989); United States v. Hess, 691 F.2d 188, 190 (4th Cir. 1982). The government, however, must have believed that $22 million represented the full amount of the defendants' interests in and acquired through the racketeering enterprise or else it would not have agreed to that sum and withdrawn the issue from the jury's consideration. Cf. Hess, 691 F.2d at 190 (jury not permitted to find that less than all the defendant's interest in an enterprise is subject to forfeiture whenever section 1962 violated). An execution on the judgment therefore is all that is necessary to enforce payment of the amount that both sides agreed should be paid.
Fed. R. Civ. P. 69(a) directs that the laws of New York be applied in enforcing a judgment obtained in a federal court located in New York. New York law authorizes the sale of real property to satisfy a money judgment. See N.Y.Civ.Prac.L. & R. § 5236 (McKinney 1978). That provision requires that property, which is subject to the lien of the judgment at the time of delivery of execution to the sheriff, be sold "at public auction at such time and place within the county where the real property is situated and as a unit or in such parcels, or combination thereof, as in [the sheriff's] judgment will bring the highest price." Thus, New York law requires that the sale of real property to satisfy a money judgment must be conducted in a commercially reasonable manner. Clearly, there is a significant difference between the sale of property to the highest bidder and the sale of property at whatever price and under whatever terms the government deems appropriate. Only under the former method of sale are the defendants provided with some assurance that if the properties are worth more than $22 million, they will receive the surplus after payment is made to the government. That is the benefit of the bargain they made when they signed the agreement.
The government maintains that the bidding procedures established by the RICO trustee duplicated the procedures mandated by New York law. The trustee, it contends, is pursuing the highest, commercially reasonable price for the properties. Moreover, after sale, the government will distribute to appellants any proceeds in excess of the $22 million, plus interest, costs, fees, and other expenses incurred to date. However that may be, the Second Order of Forfeiture does not require the government to secure the highest price for the properties but instead gives the government discretion as to price and purchaser. At the hearing before Judge Motley, appellants requested that the government be required to sell the property in a commercially reasonable manner. The government objected, claiming that it was not required to conduct its sale in such a manner, and only consented to replacing the terms " [sale] at whatever price and under whatever terms" with the language " [sale] by any commercially feasible means." The terms, "commercially feasible," are found in 18 U.S.C. § 1963(f), the forfeiture statute. In its brief, the government maintains that its offer to amend the Second Order of Forfeiture in that manner still stands. After vigorously maintaining that it was not required under RICO to sell the property in a commercially reasonable manner, the government now appears in its brief to suggest that by (i) adopting the "commercially feasible" language of RICO itself and (ii) following on its own initiative some of the requirements of the New York CPLR, it is imposing upon itself the requirement that its actions be guided by commercial reasonableness. What is required by the agreement, however, is an execution sale in accordance with the laws governing such sales.
The government has advanced no plausible arguments and consequently has not persuaded us that the agreement should be treated differently from any other agreement entered into by the government. Indeed, we fail to see any analytical difference between this agreement and a plea agreement. In a plea agreement, the defendant waives his right to put the government to its proof before a jury and the government typically waives its right to convict of a more serious offense. Here, the parties in similar fashion bargained for certain benefits and corresponding burdens. We already have held that both parties to a plea agreement made in lieu of statutory forfeiture proceedings are bound by their bargain, see United States v. Alexander, 869 F.2d 91, 94-95, 96 (2d Cir. 1989), as has at least one other circuit court, see In re Arnett, 804 F.2d 1200, 1204 (11th Cir. 1986), and we see no reason to conclude otherwise with respect to an agreement in lieu of a formal forfeiture hearing. Like any other party to a contract, the government may not perform in a manner inconsistent with the terms of the agreement. All of the actions taken by the government up to this point were either expressly permitted by the agreement or not inconsistent with any express or implied terms. For instance, the agreement explicitly recognized that the post-indictment restraining order would remain in effect. Also, the express terms of the agreement authorize the appointment of a trustee to oversee the operation of the defendant companies. Finally, although the agreement is silent with respect to the authority of the government to conduct discovery to locate the $22 million, neither is such discovery expressly or impliedly prohibited. Unlike the above actions, a substitution of assets is wholly inconsistent with the terms of the agreement. Contrary to the government's contention, this is not a case where an agreement simply fails to incorporate expressly a substitution of assets provision; rather, the terms of the agreement here plainly are inconsistent with any substitution. We therefore conclude that it was error to issue the Second Order of Forfeiture authorizing the government to invoke the substitution provisions of section 1963(m). Indeed, it was error to issue a Second Order of Forfeiture because there was no First Order of Forfeiture.