Opinion ID: 2998711
Heading Depth: 2
Heading Rank: 4

Heading: Court Orders on IFG’s Status

Text: Having emerged from the jurisdictional thickets, we now consider Segal’s various challenges to the district court’s approval of the settlement. Segal first argues that neither the district court nor the Trustee had any authority to dispose of IFG at the time of the January settlement because the district court had excluded North Sun and IFG as non-forfeited enterprises in October. We review the district court’s findings of fact for clear error, and the 5 Because a different analysis is involved, our conclusion that the order is sufficiently final to be appealable does not contradict our earlier comments about mootness and its equitable corollary. No. 05-1511 15 question of whether those facts compel forfeiture under RICO de novo. See United States v. Marmolejo, 89 F.3d 1185, 1197 (5th Cir. 1996). The forfeiture provisions under RICO state that a person shall forfeit to the government: (1) any interest the person has acquired or maintained in violation of section 1962; (2) any— (A) interest in; (B) security of; (C) claim against; or (D) property or contractual right of any kind affording a source of influence over; any enterprise which the person has established, operated, controlled, conducted, or participated in the conduct of, in violation of section 1962. 18 U.S.C. § 1963(a). The property subject to forfeiture includes all tangible and intangible personal property, including rights, privileges, interests, claims, and securities. 18 U.S.C. § 1963(b)(2). In the forfeiture proceedings, there was some understandable confusion as the district court waded through the various entities that Segal had used in his RICO enterprise. At first, the district court entered a preliminary forfeiture order that designated all of Segal’s insurance companies, including North Sun and IFG, as forfeited because of the RICO violations. In October of 2004, however, the district court excised North Sun, IFG, and a handful of other companies from the preliminary forfeiture order because they did not appear to be involved in the RICO scheme. 16 No. 05-1511 However, at the time of the October order, the district court did not know that NNNG owned NNIB,6 which owned North Sun, which had the fifty-percent stake in IFG.7 NNNG and NNIB were clearly forfeited as part of the RICO scheme, a fact that Segal does not challenge. It therefore follows that all assets of these companies, including all of their interests in other companies, were forfeited to the government. Consequently, both the wholly-owned North Sun, and North Sun’s interest in IFG never were independent interests of Segal and should have followed NNNG and NNIB into the hands of the Trustee as forfeited assets of those companies. After hearing testimony about this corporate structure at the forfeiture hearing, the district court acknowledged in its January 14 order that North Sun and IFG were forfeited as assets of NNNG and NNIB and modified the October order to reflect that. The question then becomes whether the district court could properly readdress in the January order the subject of IFG’s status as a forfeited entity, given its earlier exclusion. Looking at the two orders and the background surrounding them, it is clear that they are dealing with different issues, so the district court did not act improperly by ruling on this issue in January. The original order was a response to Segal’s objection that IFG and North Sun, among others, were not tainted by RICO activity and so were not forfeited as part of the RICO scheme. This was true, and the district 6 For ease of reference, we remind the reader that NNNG stands for Near North National Group (which was directly owned by Segal), and NNIB refers to Near North Insurance Brokerage. 7 The record does not suggest that any party acted in bad faith or attempted to mislead the district court at the time of the October modification order. No. 05-1511 17 court properly agreed. What the district court did not address until January was whether IFG and North Sun were forfeited as assets, a completely separate issue that had not been raised earlier. Again, the district court reached the correct conclusion that they were forfeited. Greater precision by the district court in its October ruling would have avoided this issue, but nonetheless, the district court acted properly in January when it recognized that North Sun and IFG were forfeited as assets of forfeited entities.