Court Opinion

ID: 9469188
Source: CourtListenerOpinion
Date Created: 2023-08-05 02:34:45.764736+00
Date Added: 2024-06-11T17:41:16.611862
License: Public Domain

POOLE, Circuit Judge, concurring and dissenting:
I concur in parts IA and II of the majority opinion, but not in part IB, because I conclude that the majority’s holding affirming the forfeiture of Godoy’s commercial property at Van Nuys and Mission Hills is inconsistent with this court’s opinion in United States v. Marubeni America Corp., 611 F.2d 763 (9th Cir. 1980).
In Marubeni, we held that Congress did not intend to provide for forfeiture of all income from racketeering activities when it enacted RICO. Rather, Congress’ forfeiture scheme is as follows:
[T]he § 1963(a)(1) forfeiture provision applies to interests “in an enterprise” illegally acquired or maintained. Section 1963(a)(2) completes the attack on racketeering infiltration by insuring that persons who conduct an enterprise illegally will similarly be separated from it, even if the enterprise was legally acquired and maintained.
Id. at 769. Thus, the fact that Godoy acquired property with income from racketeering activity did not by itself warrant forfeiture of that property. Godoy’s property interests were not properly forfeited unless they could fairly be characterized as interests in an “enterprise.”
At least some of these properties housed active businesses. However, the majority does not suggest that those tenants are involved with Godoy in a RICO “enterprise” since Godoy was not associated with them in any way. Neither does the opinion imply that Godoy’s property interests afforded him a “source of influence over” the tenant *89businesses. See 18 U.S.C. § 1963(a)(2). It is quite clear that Godoy had no relationship with any of the businesses conducted on his properties other than that of landlord, and that that relationship afforded him no influence over them.
Instead, the majority concludes that the enterprise here is simply the aggregate of Godoy’s investment activities. In particular, it finds that since Godoy took income derived from racketeering activity and invested it in the purchase of real property, the users (lessees) of which paid him income (rent), he is engaged in the “enterprise” of real estate investment, in violation of § 1962(a), and that the property he acquired is therefore subject to forfeiture under § 1962(a)(1) as an “interest ... acquired or maintained in violation of section 1962.”
Yet the majority’s position that mere purchase of real estate using racketeering income constitutes an enterprise effectively nullifies the holding of Marubeni. It creates the anomaly that while income from racketeering activity would not itself be subject to forfeiture, any assets or income traceable to that income would be so subject. In effect, all income except that which is kept in a mattress would be forfei-table.
The majority opinion is also inconsistent with other explicit provisions of RICO itself. For example, § 1962(a) specifically states:
A purchase of securities on the open market for purposes of investment, and without the intention of controlling or participating in the control of the issuer, or of assisting another to do so, shall not be unlawful under this subsection if the securities of the issuer held by the purchaser, the members of his immediate family, and his or their accomplices in any pattern or racketeering activity or the collection of an unlawful debt after such purchase do not amount in the aggregate to one percent of the outstanding securities of any one class, and do not confer, either in law or fact, the power to elect one or more directors of the issuer.
In Marubeni, we stated:
Congress would not have established rules for the investment of racketeering income, enforced by the penalty of criminal forfeiture, if it intended the government to seize that income regardless of how it was used.
611 F.2d at 767. Likewise, Congress would not have established rules for the investment of racketeering income if it intended by use of the term “enterprise” to comprehend that very activity and thereby to subject to forfeiture the investments made. This was not mere solicitude for the stock market; it was recognition that invested income may generate profit without creating an “enterprise,” especially where the investor has no input into the conduct or management of the business.1
This is not to suggest that the activity of investment in real estate may never constitute an enterprise within the meaning of RICO. An owner or lessor may have such a relationship to the business carried on as to assume the character of an ongoing business concern. However, the evidence presented in this case shows nothing more than an ordinary at arm’s length lessor-lessee relationship and as such was insufficient to support a finding that Godoy was such an investor. Nor did Godoy’s ownership constitute part of an ongoing real estate development scheme. Thus the dangers identified by Congress — use of coercive tactics and corruption of local officials to gain an unfair competitive advantage2 —are *90largely inapplicable to this type of passive investment.
Indeed, Godoy’s involvement with the commercial property is not unlike his position vis-a-vis the residential property which he also owned and rented and which the government conceded was not an enterprise under Marubeni. The residential property constituted “income-producing real estate” under the majority’s definition of an “enterprise.” And although it was not “commercial real estate” Godoy had no interest in the businesses operating on his property other than the collection of rent. Thus, since the focus here is on whether Godoy’s ownership of the property constituted an enterprise, he occupied the same position for both the commercial and residential real estate.
Accordingly, I would reverse the order insofar as it forfeits Godoy’s commercial properties in Van Nuys and Mission Hills.

. It seems apparent that the stock investment exception was intended to provide clear guidelines for investments in what are concededly enterprises, rather than, as the majority suggests representing the exclusive means of investing racketeering income. Nothing in the legislative history indicates a Congressional motivation thus to funnel racketeering acquired funds into the stock market.

. See Organized Crime Control: Hearings Before Subcommittee No. 5 of the House Committee of the Judiciary, 91st Cong., 2d Sess. 89 (1970) (statement of Senator McClellan); Id. at 433 (statement of Aaron M. Kohn, United *90States Chamber of Commerce); S.Rep.No.91-617, 91st Cong., 1st Sess. 77 (1969).