Opinion ID: 537726
Heading Depth: 2
Heading Rank: 3

Heading: Bonds and Yacht

Text: 232 Defendants Donato and Francesco Angiulo next challenge the forfeiture of their ownership interests in the six Chrysler bonds and yacht that were seized by the government. The jury found that 50% of Donato's and Francesco's interests in those items constituted proceeds or profits of the RICO enterprise and thus were subject to forfeiture under Sec. 1963(a)(1). Defendants contest this finding, and argue that according to the indictment and the evidence introduced at trial, they cannot be deemed to have joined the enterprise through the commission of two predicate acts until after the acquisition of the bonds and the yacht. As a result, they say, their interests in these items cannot constitute proceeds or profits resulting from their involvement in the enterprise, and were not properly forfeitable by the jury under Sec. 1963(a)(1). We agree. 233 To determine what is properly forfeitable under Sec. 1963(a)(1), courts have applied a but for test. Under this test, (a)(1) forfeitures are limited to property interests that would not have been acquired or maintained but for the defendant's racketeering activities. See United States v. Ofchinick, 883 F.2d 1172, 1183-84 (3d Cir.1989), cert. denied, --- U.S. ----, 110 S.Ct. 753, 107 L.Ed.2d 769 (1990); Porcelli, 865 F.2d at 1364-65. To put it another way, defendants' racketeering activities must be shown to be a cause in fact of the acquisition or maintenance of these interests or some portion of them. United States v. Horak, 833 F.2d 1235, 1243 (7th Cir.1987). This but for test is a proportionality rule of forfeiture. Such a rule is applied because, as already discussed, proceeds or profits constitute property interests outside the enterprise and thus are only forfeitable to the extent they are actually tainted by unlawful activities. 234 For any property to be forfeitable under this but for test, the property would have to have been acquired by defendants after the defendants joined the RICO enterprise. If property were acquired before the defendants joined the enterprise, it could not be said that the property would not have been acquired but for the defendants' racketeering activities. 235 Applying this analysis to the evidence adduced at trial requires that we overturn the forfeiture of Donato's and Francesco's interests in the bonds and yacht. The government's proof at trial established that the Chrysler bonds and the yacht were acquired in 1979 and February, 1980 respectively. The earliest predicate act of racketeering on which Donato was convicted commenced in January, 1981, well after the time of acquisition of the bonds and the yacht. The commission of two such predicate acts is required for conviction as a member of a RICO enterprise. See, e.g., United States v. Friedman, 854 F.2d 535, 562 (2d Cir.1988), cert. denied, --- U.S. ----, 109 S.Ct. 1637, 104 L.Ed.2d 153 (1989); United States v. Winter, 663 F.2d 1120, 1136 (1st Cir.1981), cert. denied, 460 U.S. 1011, 103 S.Ct. 1250, 75 L.Ed.2d 479 (1983). Because Donato had not even committed one act prior to the acquisition of the bonds and the yacht, he cannot be said to have joined the enterprise until after these assets were acquired. For the reasons stated, the but for test therefore was not satisfied as to Donato's interests in the bonds and yacht. 236 Similarly, the but for test was not satisfied as to Francesco's interests in the bonds and yacht either. We recognize that Francesco was convicted on one predicate act--operating the Las Vegas nights--that commenced in June, 1979 and thus occurred prior to the acquisition of the bonds and yacht. The second earliest predicate act, however, was not alleged to have commenced until October, 1980 (the North Margin Street poker games). Because two predicate acts of racketeering are needed to support a defendant's conviction as a member of a RICO enterprise, and because Francesco's second act did not occur until October, 1980, Francesco cannot be deemed to have joined the enterprise until after the bonds and yacht were acquired. Therefore, the bonds and yacht cannot be considered proceeds or profits of Francesco's participation in the enterprise, because he was not a member of the enterprise until after they were acquired. 237 The government argues in response that the enterprise began its unlawful activities as early as 1967, well before the bonds and yacht were acquired, and thus it is immaterial that Donato's and Francesco's commission of two racketeering acts occurred after the time of the property's acquisition. The government's theory of forfeiture, however, was that this property constituted the proceeds or profits of defendants' participation in the RICO enterprise. The crucial date, therefore, is when the defendants joined the enterprise, not when the enterprise began its operations. The proof at trial established that Francesco and Donato joined the enterprise after the acquisition of the bonds and yacht. These assets cannot, therefore, have been acquired as a result of Francesco's and Donato's participation in the enterprise. 238 The government mentions in passing a final theory that the property was forfeitable because it was maintained as a result of defendants' participation in the enterprise, even though it may not have been acquired as a result of this participation. It is true that Sec. 1963(a)(1) provides for the forfeiture of any property acquired or maintained as a result of racketeering activities. We recognize that some assets might be maintained as a result of participation in a RICO enterprise even though the timing of their acquisition prevents finding them to have been acquired as a result of such participation. Our review of the record, however, reveals that the government did not argue a maintenance theory to the jury. It argued only an acquisition theory. We must therefore reject the maintenance justification advanced by the government on appeal. We reverse that part of the judgment forfeiting Donato's and Francesco's interests in the Chrysler bonds and the yacht.