Source: http://openjurist.org/156/f3d/784
Timestamp: 2014-08-28 11:39:17
Document Index: 205596621

Matched Legal Cases: ['§ 982', '§ 1957', '§ 1292', '§ 1292', '§ 982', '§ 982', '§ 1292', '§ 853', '§ 982', '§ 853', '§ 982', '§ 853', '§ 1292', '§ 853', '§ 853', '§ 1963', '§ 18', '§ 1963', '§ 1292', '§ 1292', '§ 853', '§ 982', '§ 982', '§ 1957', '§ 982', '§ 5316', '§ 982', '§ 982']

156 F3d 784 United States v. A Kirschenbaum Kirschenbaum | OpenJurist
156 F. 3d 784 - United States v. A Kirschenbaum Kirschenbaum	Home156 f3d 784 united states v. a kirschenbaum kirschenbaum
156 F3d 784 United States v. A Kirschenbaum Kirschenbaum 156 F.3d 784
UNITED STATES of America, Plaintiff-Appellee,v.Joseph A. KIRSCHENBAUM, a/k/a Ari Kirschenbaum, Defendant-Appellant.Appeal of: Julie KIRSCHENBAUM
Nos. 98-1591, 98-1592.
Argued May 28, 1998.Decided Sept. 30, 1998.Rehearing and Suggestion for Rehearing En Banc Denied Dec.23, 1998.*
Sheila Finnegan (argued), Office of the United States Attorney, Criminal Division, Chicago, IL, for Plaintiff-Appellee.
Gordon B. Nash, Jr. (argued), Deborah H. Bornstein, Gardner, Carton & Douglas, Chicago, IL, for Defendant-Appellant.
For those terminally ill, Medicare and Medicaid will pay for hospice care, which treats the patient with pain control and additional medical, social and spiritual assistance for the patient and the family. Defendant Joseph Ari Kirschenbaum owned or controlled a number of entities that delivered hospice services, and over several years he and his business operations received many millions of dollars. But the government has charged him with fraud and money laundering, and, pending trial, has seized about $20 million in assets. Mr. Kirschenbaum brings this interlocutory appeal challenging the district court's restraining order that seized the assets that the indictment against Mr. Kirschenbaum alleges are subject to forfeiture under 18 U.S.C. § 982(a)(1). Mr. Kirschenbaum first argues that none of the property is subject to pre-conviction seizure, then argues in the alternative that he was entitled to a hearing to challenge the government's proof and to show that he needed some of the seized assets to obtain counsel of his choice. As it relates to Mr. Kirschenbaum, we affirm the restraining order in all regards. Mr. Kirschenbaum's wife, Julie Kirschenbaum, also brings an interlocutory appeal challenging the district court's jurisdiction to enjoin her, a non-party. To the extent the order purports to enjoin her it is void, but to the extent Mrs. Kirschenbaum now attacks the part of the order directed to Mr. Kirschenbaum rather than to her, we affirm the denial of her motion.
We recite the facts as they have been alleged in the superseding indictment. As yet the allegations have not been tested by trial, so we express no opinion about their accuracy. In December 1991, Mr. Kirschenbaum incorporated Samaritan Care, Inc., an Illinois not-for-profit hospice, which he controlled. Samaritan Care provided hospice care to patients in nursing homes in Illinois and Indiana. Hospice care is provided to terminally ill patients. Rather than trying to cure the illness, which is diagnosed at that point as hopeless, hospice care focuses on controlling the pain and symptoms of the ailment, and delivers medical, social, psychological, emotional, and spiritual services to the patient and the patient's family. Medicare pays for hospice care for eligible patients, who generally are over age 65 and have been certified by a physician as being terminally ill with less than six months to live. The Medicaid program in Illinois also pays for hospice care. Between September 1992 and December 1994, Samaritan Care received at least $11.5 million from Medicare and Medicaid as reimbursement for hospice care. Of this amount, Mr. Kirschenbaum paid himself at least $8.6 million for management and billing services. These payments were usually made to two corporations that Mr. Kirschenbaum controlled and were then passed to two limited partnerships that Mr. Kirschenbaum also controlled.
According to the superseding indictment, Mr. Kirschenbaum perpetrated a massive fraud scheme against Medicare and Medicaid by fraudulently obtaining state operating licenses, receiving payments for care to ineligible patients (many of whom were not even terminally ill), grossly overstating the number of patients cared for, and billing for patients who had already exhausted all hospice benefits. In December 1994, Mr. Kirschenbaum sold Samaritan Care to Integrated Health Services, a Maryland company in the business of managing nursing homes. He supposedly made numerous misrepresentations and so defrauded Integrated Health Services out of about $17 million. (The parties informed us that Integrated Health Services has brought a civil fraud action against Mr. Kirschenbaum.) Mr. Kirschenbaum is also charged with defrauding Illinois out of unemployment benefits that he collected and taxes he avoided paying.
On July 22, 1997, prior to Mr. Kirschenbaum being indicted, the government sought an ex parte restraining order covering some of Mr. Kirschenbaum's property, which the government contended was forfeitable as being involved in money laundering. The district court, Chief Judge Aspen, entered an order restraining about $17.8 million in 15 brokerage accounts, as well as other property. Mr. Kirschenbaum moved to dissolve the order, and the government moved to extend the restraining order for 90 days. On August 13, 1994, the parties conducted an evidentiary hearing before Magistrate Judge Lefkow, who subsequently recommended that Mr. Kirschenbaum's motion to dissolve the order be denied and the government's motion to extend the order be granted. On September 25, 1997, Chief Judge Aspen overruled Mr. Kirschenbaum's objections to the recommendation.
On October 14, 1997, a federal grand jury returned a 73-count indictment against Mr. Kirschenbaum, charging him with mail fraud, wire fraud, health care fraud, and money laundering. It also sought forfeiture of $28,250,000 in various accounts and other property. The government requested and received an ex parte restraining order covering all the property identified in the indictment. Mr. Kirschenbaum again filed a motion to vacate this restraining order, arguing that he was entitled to an evidentiary hearing and that the government had the burden of proving that there was probable cause to believe the property covered by the restraining order was forfeitable. Mr. Kirschenbaum also argued that he needed to free some of the frozen assets to obtain counsel of his choice. The district court, Judge Gettleman, directed Mr. Kirschenbaum to make a showing that he had no other funds to obtain legal counsel and directed the government to make its evidence supporting the indictment available to Mr. Kirschenbaum. This precipitated numerous filings by both parties and several conferences that we need not recount. We do note, however, that the government produced large numbers of records and provided over 100 summary charts that it had created from those records.
On February 10, 1998, a grand jury handed down a 97-count superseding indictment against Mr. Kirschenbaum, which again charged Mr. Kirschenbaum with various fraud offenses and with eighty-six counts of money laundering in violation of 18 U.S.C. § 1957. The superseding indictment sought forfeiture of about $31 million in various accounts as well as other property. On February 27, 1998, the district court issued an order continuing the restraint of the previously frozen assets as well as some additional ones. The frozen accounts contained just under $20 million. On March 5, 1998, Mr. Kirschenbaum's counsel filed a motion on behalf of his wife Julie Kirschenbaum arguing for a modification of the restraining order as it applied to the income stream from an Illinois nursing home that Mr. Kirschenbaum had put into her name. The district court denied that motion. Both Kirschenbaums filed notices of appeal, and the district court stayed all proceedings pending our decisions.
A. Jurisdiction over Mr. Kirschenbaum's interlocutory appeal.
Before turning to the merits of Mr. Kirschenbaum's interlocutory appeal, we must first address whether we have jurisdiction; although the parties assume we do, we have the obligation to satisfy ourselves that we can hear this appeal. GNB Battery Technologies, Inc. v. Gould, Inc., 65 F.3d 615, 619 (7th Cir.1995). Mr. Kirschenbaum asserts we have jurisdiction over this appeal under 28 U.S.C. § 1292(a)(1) because the district court's order is an injunction and so the district court's denial of Mr. Kirschenbaum's motion to vacate that order is immediately appealable. See 28 U.S.C. § 1292(a)(1) (includes orders "refusing to dissolve or modify injunctions"); In re James Wilson Assocs., 965 F.2d 160, 166 (7th Cir.1992). This court has yet to address the appealability of protective orders under § 982(b), but the Fifth and Ninth Circuits have and concluded they are appealable. United States v. Floyd, 992 F.2d 498, 500 (5th Cir.1993) (post-indictment pretrial ex parte protective order under 18 U.S.C. § 982(b)(1) (seizure of property) is "injunction" covered by 28 U.S.C. § 1292(a)(1)); United States v. Ripinsky, 20 F.3d 359, 361 (9th Cir.1994) (same) (citing United States v. Roth, 912 F.2d 1131, 1132 (9th Cir.1990)) (restraining order under 21 U.S.C. § 853(e)(1)); see also United States v. Field, 62 F.3d 246, 248 (8th Cir.1995) (reviewing postindictment ex parte restraining order under 18 U.S.C. § 982(b)(1) without discussing basis for appellate jurisdiction). And courts have reached the same conclusion regarding restraining orders under 21 U.S.C. § 853(e)(1), which 18 U.S.C. § 982(b)(1) incorporates. Roth, 912 F.2d at 1132 (post-indictment ex parte restraining order under 21 U.S.C. § 853(e)(1) appealable under § 1292(a)(1)); United States v. Monsanto, 836 F.2d 74, 77 (2d Cir.1987) (same), vacated on rehearing en banc on other grounds, 852 F.2d 1400 (2d Cir.1988) (per curiam), and rev'd on other grounds, 491 U.S. 600, 109 S.Ct. 2657, 105 L.Ed.2d 512 (1989) (reviewing merits without addressing jurisdictional basis); cf. United States v. Estevez, 852 F.2d 239, 240 n. 3 (7th Cir.1988) (dismissing interlocutory appeal of restraining order under § 853(e)(1) as moot where defendant had already been convicted and had filed appeal from final judgment). On the other hand, the Tenth Circuit concluded that restraining orders under 21 U.S.C. § 853(e)(1) and a comparable provision under RICO, 18 U.S.C. § 1963(e)(1), were appealable under the collateral order doctrine. United States v. Musson, 802 F.2d 384, 385 (10th Cir.1986); but see In re Assets of Martin, 1 F.3d 1351, 1355 (3d Cir.1993) (concluding restraining order under § 18 U.S.C. § 1963(e)(1) was appealable under 28 U.S.C. § 1292(a)(1) as an "injunction") (citing Floyd, 992 F.2d at 500). We agree with the Martin court that the "considerable weight" of decisions on point establishes that the restraining order in this case and the district court's order refusing to vacate it are immediately appealable under 28 U.S.C. § 1292(a)(1).
B. Whether the property identified in the indictment is subject to pre-conviction seizure.
Mr. Kirschenbaum argues that his property identified in the indictment as subject to postconviction forfeiture is not subject to preconviction seizure because, although the indictment alleges the property was involved in money laundering, it does not also allege that the property was involved in federal drug crimes. The parties have not identified any case addressing the issue of whether the pre-trial restraint provision of § 853(e)(1)(A) incorporated by 18 U.S.C. § 982(b)(1) applies to charges not involving drugs, and our own research has revealed none. Because this issue involves a question of statutory interpretation, our review is de novo. United States v. Wicks, 132 F.3d 383, 386 (7th Cir.1997).
The indictment alleges that the identified property was "involved" in money laundering or "traceable" to such property. If these allegations are proven at trial, this property must be forfeited under 18 U.S.C. § 982(a)(1), which provides that as part of the sentence for any person convicted of certain federal offenses, including money laundering under 18 U.S.C. § 1957, the district court must "order that the person forfeit to the United States any property, real or personal, involved in such offense, or any property traceable to such property." See also United States v. Bajakajian, --- U.S. ----, 118 S.Ct. 2028, 141 L.Ed.2d 314 (1998) (addressing post-conviction forfeiture under § 982(a)(1) for violation of 31 U.S.C. § 5316, one of the enumerated offenses). The government asserts that under 18 U.S.C. § 982(b)(1)(A) it may obtain a pre-conviction restraining order over property alleged in an indictment to be forfeitable under § 982(a)(1) without regard to whether it was involved in federal drug offenses.
Section 982(b)(1) provides that "[p]roperty subject to forfeiture under this section [and] any seizure ... thereof ... shall be governed--(A) in the ca