Opinion ID: 418131
Heading Depth: 1
Heading Rank: 2

Heading: The RICO Forfeiture

Text: 85 American antipathy for the English common law's forfeiture of estate, which disinherited those unfortunate enough to be kin to felons, dates from the founding of the nation. 84 Criminal forfeiture has, therefore, been largely unknown in the United States. 85 86 Congress added the forfeiture provisions 86 to RICO in order to attack the sources of economic power of organized crime 87 in addition to removing from power and imprisoning those individuals who violate the statute. It viewed the sanctions and remedies against organized crime then available to the government as unnecessarily limited in scope and impact. 88 As enacted the forfeiture provisions are meant to reach the illgotten gains of criminals where they enter or operate an organization through a pattern of racketeering activity. 89
87 After finding Cauble guilty on the RICO counts, the jury responded to special interrogatories regarding the forfeiture of his interest in Cauble Enterprises. 90 Cauble now launches a barrage of attacks against the validity of the forfeiture.
88 Cauble first contends that the forfeiture violates the due process clause because it affects property rights of the limited partners of Cauble Enterprises, neither of whom were given notice of the forfeiture and an opportunity to be heard. He claims that the government may not partition the undivided partnership interest and remove the general partner without a finding against all owners that partnership property was used or acquired in violation of law. 91 89 Neither of the limited partners has sought to be heard in this case. Their remedy, as we made explicit in United States v. L'Hoste, 609 F.2d 796 (5th Cir.), cert. denied, 449 U.S. 833, 101 S.Ct. 104, 66 L.Ed.2d 39 (1980), is to petition the Attorney General for remission or mitigation of the forfeiture. As we stated in that case, Congress plainly addressed the possible hardship that forfeiture could cause to those innocent parties holding an interest in forfeited property and gave responsibility to the United States, not the district court, to alleviate the hardship. 609 F.2d at 812. 92 This directive applies with equal force to the court of appeals. 90 Cauble asks that we distinguish L'Hoste on the grounds that it involved freely transferable corporate shares rather than undivided partnership interests and that it involved inchoate rather than vested property rights. These distinctions lack substance. The former would permit a defendant to avoid RICO forfeiture by forming a partnership, but not a corporation, with an innocent party; the latter would make the validity of federal RICO forfeitures subject to the nuances of state property law. Therefore, L'Hoste squarely controls this claim of error.
91 Cauble next contends that, because Cauble Enterprises' property interests were affected by the trial and consequent forfeiture, it was entitled to separate representation. He claims that trial counsel made an insufficient effort to demonstrate that there was no connection between the drug-smuggling conspiracy and Cauble Enterprises because he was more concerned with proving Cauble's lack-of-knowledge defense. 92 If Cauble Enterprises had been charged as a RICO defendant instead of or in addition to being charged as the enterprise, it would have been entitled to separate counsel. 93 But Cauble Enterprises was charged with no crime and suffers no punishment as a result of Cauble's conviction. 93 The forfeiture in this case is of Rex C. Cauble's property interest in Cauble Enterprises. It is in personam, imposed directly on a guilty person, rather than in rem, imposed on guilty property. Therefore, Cauble Enterprises had no stake in the proceeding and was not entitled to separate counsel.
94 Cauble next claims that the notice of forfeiture failed to advise him of the nature, cause, and extent of the forfeiture sought. These claims focus on the allegedly confusing character of the notice, were not presented to the district court, and do not assert that the indictment failed to charge an offense. Therefore, they are waived. 94 Even if not waived, however, these claims would not support a reversal. The purpose of the notice of forfeiture in the indictment is to inform the defendant that the government seeks forfeiture as a remedy. 95 Barebones pleading suffices so long as it puts the defendant on notice that the government seeks forfeiture and identifies the assets subject to forfeiture with sufficient specificity to permit the defendant to marshal evidence in their defense. 96 This the indictment did by noticing that the government sought to forfeit the interests [sic] of Rex C. Cauble in Cauble Enterprises and by listing thirteen assets included in Cauble Enterprises' holdings.
95 Cauble challenges the judge's charge to the jury and the adequacy of the special verdict form the jury completed in ordering the forfeiture. He claims that the instructions failed to inform the jury of its role in determining the scope of the defendant's interest in the enterprise, in effect directing a verdict on the extent of the forfeiture. 96 The judge explained the forfeiture allegation in the indictment to the jury, stated that the government sought to forfeit only Cauble's one-third interest in Cauble Enterprises, and re-summarized the allegations of all three RICO counts. He then read the forfeiture provision, Sec. 1963(a), to the jury and added: [I]f you find beyond a reasonable doubt that the Defendant is guilty of any of the offenses charged in Counts 1, 2 or 3 of the Indictment, it will be your duty to determine whether the government has proven beyond a reasonable doubt that Rex C. Cauble's interest in Cauble Enterprises is subject to forfeiture to the United States. The judge also gave the jury the special forfeiture verdict. 97 97 Before considering Cauble's claims of error, we pause to explain briefly how some of the complaints he raises can be avoided in future RICO trials. The substantive jury charge in these trials is ordinarily extremely long 98 and requires the jurors to pay close attention to a number of definitions and elements. Therefore, it is not surprising that the instructions on forfeiture, which ordinarily come at the end of the substantive charge, are often brief--perhaps excessively so. 98 To ease the jurors' task in determining guilt or innocence, the forfeiture issue should be withheld from them until after they have returned a general verdict. At that time the trial judge can instruct the jurors fully about forfeiture and submit the special verdict to them. Such a bifurcated trial--using, of course, only one jury--is not only convenient for the judge and fairer to the defendant. It also prevents the potential penalty of forfeiture from influencing the jurors' deliberations about guilt or innocence. 99 That practice was not followed here, but Cauble made no objection to the judge's method, instructions, or special verdict form. We, therefore, review only for plain error. 100 Cauble argues that the instructions failed to inform the jury that only interests acquired or maintained in violation of Sec. 1962 or affording a source of influence over the enterprise are subject to forfeiture. He claims that the instructions and verdict form made it appear that a RICO conviction carried a penalty of automatic forfeiture of his entire interest in Cauble Enterprises. This claim is belied, however, by the fact that the judge read Sec. 1963(a) to the jury and, therefore, used the precise words Cauble emphasizes in defining the interest subject to forfeiture. Furthermore, the special verdict specifically asked the jury whether Cauble's interest in Cauble Enterprises afforded him a source of influence over the enterprise. Although the judge might have expanded the entire forfeiture charge and emphasized this point in his instructions, the charge he gave, read together with the special verdict form, accurately presented the relevant legal issue to the jury. 101 Cauble next argues that the jury was not informed that it had to find a nexus between the racketeering activity and the property claimed. We agree that proper jury instructions should include language that suggests that a jury may find an interest or contractual right forfeitable if there is evidence linking the defendant's conduct to the property interest and the government has proved such a nexus beyond a reasonable doubt. 99 Nevertheless, the omission of this charge did not amount to plain error. The substantive RICO instructions required the government to prove that Cauble conducted the enterprise's affairs through a pattern of racketeering activity. Therefore, the jury had already found beyond a reasonable doubt a link between Cauble's conduct, the enterprise, and the racketeering activity. 102 Furthermore, the second question in the special verdict form required the jury again to find beyond a reasonable doubt that Cauble conducted the enterprise through a pattern of racketeering activity. The jury answered the question affirmatively and, therefore, found the nexus required. The omission of the nexus instruction from the forfeiture charge was not plain error. 103 Cauble next claims that the charge made it impossible for the jurors to render anything but a blanket verdict of forfeiture because they were not furnished a list of Cauble Enterprises' assets so that they might forfeit only those that were the basis for Cauble's control and were not asked to determine what manner of forfeiture would deprive him of his influence over the enterprise. 100 Cauble emphasizes the minor role of some of Cauble Enterprises' assets and the absence of evidence that some assets were involved at all. This argument, however, is based on an incorrect view of the operation of RICO's forfeiture provisions. 104 The RICO forfeiture is in personam: a punishment imposed on a guilty defendant. It deprives that defendant of all of the assets that allow him to maintain an interest in a RICO enterprise, regardless whether those assets are themselves tainted by use in connection with the racketeering activity. Thus, in United States v. Hess, 691 F.2d 188, 190-91 (4th Cir.1982), the court held that the jury may not find that less than the full amount of the defendant's interest in an enterprise is subject to forfeiture because Sec. 1963 is mandatory. The court concluded that the only issues for the jury are whether the defendant violated RICO and what interest the defendant held in the enterprise. 101 105 In United States v. Huber, 603 F.2d 387, 396 (2d Cir.1979), cert. denied, 445 U.S. 927, 100 S.Ct. 1312, 63 L.Ed.2d 758 (1980), the jury was required to specify which corporations were part of the enterprise and the percentage of [the defendant's] interest in each. The indictment in that case, however, charged an enterprise-in-fact composed of a number of corporations. Therefore, it was necessary for the jury to decide which corporations were, in fact, part of the enterprise. 102 106 In this case, however, the enterprise charged was a single pre-existing legal entity. Once Cauble was convicted his interest in that entity was subject to forfeiture in accordance with Sec. 1963(a). The jury was not required to select only certain of that entity's assets for forfeiture, just as the jury in Huber was not required to determine which assets or divisions of the several corporations were subject to forfeiture. 103
107 Cauble's challenge to the sufficiency of the evidence supporting forfeiture reargues his claim that there is no culpable connection between Cauble's conduct and the forfeited property. For the reasons stated in our discussion of the sufficiency of the evidence to support the substantive RICO convictions, we conclude that a reasonable juror might have been persuaded of such a nexus beyond a reasonable doubt. 108 Cauble further argues that, even if the evidence supports a connection between bank accounts, assets, and entities, this proof does not justify forfeiture of Cauble's entire undivided interest in Cauble Enterprises. We reiterate that property forfeited under RICO need not be guilty. RICO forfeiture is aimed at divorcing guilty persons from the enterprises they have corrupted. A reasonable juror might have been persuaded that this task would be accomplished by forfeiting Cauble's share of Cauble Enterprises.
109 Cauble finally argues that, because his general partnership interest in Cauble Enterprises is not exercisable or transferable for value by the United States, 104 it is subject only to expiration and not to forfeiture. He argues that a forfeiture order installing the United States as general partner of Cauble Enterprises is impermissible under both the partnership articles and Texas law. 110 The language in Sec. 1962(c) on which Cauble relies has been construed only once. 105 In that case we noted that the defendant's offices in various unions and employee benefit plans could not meaningfully be transferred to the United States and were, therefore, subject only to termination. 106 111 Every court that has considered the broader question what interests are subject to forfeiture has concluded that Sec. 1963(a) requires forfeiture of interests in the nature of ownership of or control over an enterprise. 107 Cauble's general partnership interest in Cauble Enterprises is a source both of ownership and control. This interest is a property interest, valuable and heritable. It is not merely a position. 108 112 The forfeiture provision of RICO is designed to prevent a convicted defendant from being replaced by the enterprise or from exercising control over the enterprise's affairs in absentia. 109 In McNary, the court upheld forfeiture of the defendant's partnership interest in a family-owned travel service. 620 F.2d at 622, 628-29. In L'Hoste, we upheld forfeiture of a stockholder's interest in a corporation. 609 F.2d at 809, 812. 110 There is no reason to make the effect of a forfeiture depend on the form of the enterprise's organization. Accordingly, we hold that Cauble's general partnership interest in Cauble Enterprises is forfeitable to the United States.