Court Opinion

ID: 1022059
Source: CourtListenerOpinion
Date Created: 2013-07-04 23:16:17.16971+00
Date Added: 2024-06-11T15:27:52.281194
License: Public Domain

UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT

                             No. 06-4119

UNITED STATES OF AMERICA,

                                               Plaintiff - Appellee,

           versus

THOMAS L.    BROMWELL,    SR.;   MARY   PATRICIA
BROMWELL,

                                            Defendants - Appellants,

             and

W. DAVID STOFFREGEN,

                                                           Defendant.

Appeal from the United States District Court for the District of
Maryland, at Baltimore. J. Frederick Motz, District Judge. (1:05-
cr-00358-JFM)

Argued:   December 1, 2006                  Decided:   March 14, 2007

Before NIEMEYER, WILLIAMS, and KING, Circuit Judges.

Affirmed by unpublished per curiam opinion.

ARGUED: Joshua R. Treem, SCHULMAN, TREEM, KAMINKOW, GILDEN &
RAVENELL, P.A., Baltimore, Maryland, for Appellants.    Michael
Joseph Leotta, Assistant United States Attorney, OFFICE OF THE
UNITED STATES ATTORNEY, Baltimore, Maryland, for Appellee.   ON
BRIEF: Robert B. Schulman, SCHULMAN, TREEM, KAMINKOW, GILDEN &
RAVENELL, P.A., Baltimore, Maryland, for Appellant Thomas L.
Bromwell, Sr.; Gerard P. Martin, T. Christine Pham, ROSENBERG,
MARTIN, FUNK & GREENBERG, L.L.P., Baltimore, Maryland, for
Appellant Mary Patricia Bromwell.

Unpublished opinions are not binding precedent in this circuit.

                                2
PER CURIAM:

        Thomas L. Bromwell, Sr., and his wife Mary Patricia Bromwell

(“the Bromwells”) appeal the district court’s grant of a protective

order restraining certain property pending their trial for various

offenses, including a racketeering conspiracy and mail and wire

fraud.    The Bromwells contend that this property is not subject to

pretrial restraint under 18 U.S.C.A. § 1963 (West 2000 & Supp.

2006) because it is substitute property, rather than tainted

property deriving from or constituting proceeds of the racketeering

activity.      Following our circuit precedent that interprets § 1963

as   authorizing    pretrial    restraint       of    substitute   property,    we

affirm.

                                      I.

      Thomas Bromwell was a member of the Maryland Senate from 1983

until    his   resignation     in   May       2002.     From   1995   until    his

resignation, Thomas Bromwell served as the Chairperson of the

Senate Finance Committee, which had wide-ranging responsibility for

legislation concerning banking and financial institutions, economic

and community development, and health and welfare matters.                Thomas

Bromwell also owned Dallas, Inc., a Maryland construction company.

Mary Bromwell worked part-time as a sign-language interpreter for

the hearing impaired.

                                          3
      On October 19, 2005, a federal Grand Jury in the District of

Maryland returned a thirty-count superseding indictment charging

the   Bromwells   and   W.   David       Stoffregen   (collectively,   the

“Defendants”) with a racketeering conspiracy, mail and wire fraud,

extortion, and other offenses.       Stoffregen was the President and

Chief Executive Officer of Poole and Kent, a Maryland construction

company, and he was the President of Forti, Poole and Kent, LLC, a

company that provided steel erection services.

      The indictment charged a racketeering conspiracy in which

Thomas Bromwell used his position as Chairperson of the Senate

Finance Committee to obtain contracts for Stoffregen’s construction

companies in exchange for financial benefits.             These benefits

allegedly included $192,923 in salary payments made by unindicted

co-conspirators to Mary Bromwell, even though she performed no

useful business functions or tasks in return for the payments, and

construction services and materials valued at $9,150 provided to

Dallas, Inc., Thomas Bromwell’s construction company.            Finally,

Stoffregen and others allegedly provided construction services,

materials, and equipment valued at $85,000 for free, or for a

substantially reduced cost, for the construction of a new residence

for the Bromwells.

      The indictment notified the Defendants that the Government

would seek forfeiture of the property that constituted proceeds of

the illegal activity.    See Fed. R. Crim P. 32.2 (requiring notice

                                     4
to a defendant that the Government will seek criminal forfeiture).

This property included the $192,923 in salary payments to Mary

Bromwell,    the     $9,150    of    construction       services       and    materials

provided to Thomas Bromwell’s construction company, and the $85,000

of construction services, equipment, and materials provided by

Stoffregen to build the Bromwells’ residence.                   The indictment also

sought   the    forfeiture      of    $1,707,879        in    salary      payments     to

Stoffregen     and   $93,267    in    kickbacks     to       him.   In       total,    the

indictment     sought     forfeiture       of    $2,088,219,        for      which    the

Defendants were jointly and severally liable.

     The indictment also notified the Defendants that if any of the

forfeitable property “a. cannot be located upon the exercise of due

diligence; b. has been transferred or sold to, or deposited with,

a third party; c. has been placed beyond the jurisdiction of the

court; d. has been substantially diminished in value; or e. has

been commingled with other property which cannot be divided without

difficulty,”     the    Government     would     seek    forfeiture          of   certain

substitute     property    listed     in   the   indictment,        including         real

property and numerous financial accounts owned by the Defendants.

(J.A. at 67.)

     On October 19, 2005, the same day that the grand jury returned

the superseding indictment, the Government filed an Ex Parte

Application for a Protective Order and Seizure.                     The application

requested a protective order over the substitute property listed in

                                           5
the indictment.         A United States Magistrate Judge granted the

Government two protective orders over this property.                     Thereafter,

the Defendants moved to vacate the protective orders on several

grounds, including that the magistrate judge was without authority

to enter the order.

      In response, on November 15, 2005, the Government filed with

the district court an Ex Parte Application for Renewed Protective

Order and Seizure Warrants For Assets Subject to Forfeiture,

seeking    a    renewed    protective       order    covering      the   Defendants’

substitute property.           Attached to the Application for Renewed

Protective Order was an affidavit by FBI Special Agent Jeffrey

Williams. Special Agent Williams averred that the tainted property

to be forfeited could not be located, had been transferred or

deposited with a third party, and had been commingled with other

property       that    could    not    be        divided    without      difficulty.

Specifically, Special Agent Williams’s affidavit stated that the

Bromwells had expended most of the $192,923 in salary payments made

to Mary Bromwell, and had only $384 remaining in the account in

which the salary had been deposited. The affidavit stated that the

$9,150 in construction materials and services provided to Thomas

Bromwell’s construction company was unavailable because it had been

used in the construction of a building for a third party.                   Finally,

the   affidavit       stated   that   the       $85,000    worth   of    construction

services, equipment, and materials provided by Stoffregen to build

                                            6
the Bromwells’ residence had been commingled with other property

that could not be divided without difficulty, i.e., it was used in

the construction of the home.

      On January 17, 2006, the district court vacated the protective

orders entered by the magistrate judge and entered a Renewed

Protective Order restraining real and personal property of the

Defendants as substitute property subject to forfeiture.                   The

Bromwells await trial, currently scheduled to begin in March 2007.

      The Bromwells timely noted an interlocutory appeal of the

Renewed Protective Order.1          We have jurisdiction to hear this

appeal pursuant to 28 U.S.C.A. § 1292(a)(1) (West 2006), which

authorizes interlocutory appeals from the district court’s grant of

injunctions.

                                     II.

      The   district   court    entered    a   protective   order   over   the

Bromwells’ property pursuant to 18 U.S.C.A. § 1963(d).              We review

the   district   court’s       decisions   regarding    protective     orders

restraining property for an abuse of discretion.            United States v.

Bollin, 264 F.3d 391, 421 (4th Cir. 2001).           “A district court per

se abuses its discretion when it makes an error of law . . . .”

      1
      Stoffregen also appealed. Prior to oral argument, however,
Stoffregen reached an agreement with the Government on the
underlying criminal matter, and we granted his motion to dismiss
his appeal.

                                      7
Thorn v. Jefferson-Pilot Life Ins. Co., 445 F.3d 311, 317 (4th Cir.

2006).

     The sole issue on appeal is the legal question of whether

property that is not profits of illegal racketeering activity, and

instead is substitute property, is subject to pretrial restraint

under § 1963 to preserve it for forfeiture after trial.              Section

1963(a) provides that

     Whoever violates any provision of section 1962 of this
     chapter . . . shall forfeit to the United States,
     irrespective of any provision of State law --
          (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; and
          (3) any property constituting, or derived
          from, any proceeds which the person obtained,
          directly or indirectly, from racketeering
          activity or unlawful debt collection in
          violation of section 1962.

18 U.S.C.A. § 1963(a).     Thus, the property described in subsection

(a) is tainted property that is forfeitable because it is connected

with or derived from the illegal racketeering activity. See, e.g.,

United States v. West, 877 F.2d 281, 292 (4th Cir. 1989) (affirming

the RICO forfeiture of an automobile and two houses because the

defendant   stored   and   sold   drugs   in   the   houses   and   used   the

                                     8
automobile to secure debts incurred in purchasing drugs, rendering

those assets forfeitable under § 1963(a)(1) and (2)).

     Concerned that “‘a defendant may succeed in avoiding the

forfeiture sanction simply by transferring his assets to another,

placing them beyond the jurisdiction of the court, or taking other

actions to render his forfeitable property unavailable at the time

of conviction,’” Congress enacted a substitute property forfeiture

provision, 18 U.S.C.A. § 1963(m). United States v. McHan, 345 F.3d

262, 271 (4th Cir. 2003) (quoting S. Rep. 98-225 at 201, reprinted

in 1984 U.S.C.C.A.N. at 3384)).   Subsection (m) provides that

     If any of the property described in subsection (a), as a
     result of any act or omission of the defendant --
          (1) cannot be located upon the exercise of due
          diligence;
          (2) has been transferred or sold to, or
          deposited with, a third party;
          (3) has been placed beyond the jurisdiction of
          the court;
          (4) has been substantially diminished in
          value; or
          (5) has been commingled with other property
          which cannot be divided without difficulty;
     the court shall order the forfeiture of any other
     property of the defendant up to the value of any property
     described in paragraphs (1) through (5).

18 U.S.C.A. § 1963(m). In other words, subsection (m) provides for

forfeiture of substitute property after conviction if one or more

of the five statutory conditions has occurred that makes the

tainted property unavailable for forfeiture.

     Section 1963 has another provision to prevent defendants from

thwarting forfeiture.   Subsection (d) provides that

                                  9
       [T]he court may enter a restraining order or injunction,
       require the execution of a satisfactory performance bond,
       or take any other action to preserve the availability of
       property described in subsection (a) for forfeiture under
       this section.

18 U.S.C.A. § 1963(d)(1) (emphasis added).

       The district court entered a protective order under § 1963(d)

to restrain the Bromwells’ substitute property, i.e., property

described in subsection (m).       The Bromwells contend that the

district court erred because the text of § 1963(d) provides only

for pretrial restraint of property described in subsection (a), not

pretrial restraint of substitute property described in subsection

(m).

       In In re Billman, 915 F.2d 916 (4th Cir. 1990), cert. denied

sub. nom. McKinney v. United States, 500 U.S. 952 (1991), we held

that “the pretrial restraining provisions of § 1963 do not permit

a defendant to thwart the operation of the forfeiture laws by

absconding with RICO proceeds and then transferring his substitute

assets to a third party . . . .”        Id. at 921.    We noted that

although § 1963(d)(1)(A) authorizes a district court to enter an

injunction “to preserve the availability of property described in

subsection (a) for forfeiture” -- that is, the property that is the

proceeds of the racketeering activity –- “when . . . the defendant

has placed the assets specified in subsection (a) beyond the

jurisdiction of the court, subsection (d)(1)(A) must be read in

conjunction with subsection (m) to preserve the availability of

                                  10
substitute assets pending trial.         In this way the purpose of

§ 1963(d)(1)(A) can be attained.”        Id. at 920-21.      We therefore

concluded “that § 1963(d)(1)(A) should be construed to authorize

pretrial restraint of property specified by subsections (a) and (m)

that can be forfeited after conviction.”         Id. at 921.

      We perceive no basis on which to distinguish this case from

Billman, which we have described broadly as holding “that the pre-

trial restraint provision of . . . 18 U.S.C.A. § 1963(d)[] permits

the   restraint   of   substitute   assets    under   §   1963(m)   pending

resolution of the defendant’s case.”         Bollin, 264 F.3d at 422.    In

view of Billman, the district court correctly determined that

§ 1963(d)(1) authorizes the pretrial restraint of the Bromwells’

substitute assets.2

      2
      Billman was the first case in the courts of appeals to
address pretrial restraint of substitute property, and we are aware
that our position has not been followed by other circuits. See
United States v. Gotti, 155 F.3d 144, 149-50 (2d Cir. 1998)
(holding that the “unambiguous language” of § 1963(d)(1)(A) does
not authorize pretrial restraint of substitute assets); United
States v. Riley, 78 F.3d 367, 371 (8th Cir. 1996) (same); In re
Assets of Martin, 1 F.3d 1351, 1359 (3d Cir. 1993) (same); see also
United States v. Ripinsky, 20 F.3d 359, 362 (9th Cir. 1994)
(holding that substitute assets are not subject to pretrial
restraint under the criminal forfeiture provision of the Controlled
Substances Act, 21 U.S.C.A. § 853); United States v. Floyd, 992
F.2d 498, 501-02 (5th Cir. 1993) (same).      We, of course, must
follow Billman, which was decided by a distinguished panel that
included retired Justice Powell. See McMellon v. United States,
387 F.3d 329, 332 (4th Cir. 2004) (en banc) (“[O]ne panel [of this
court] cannot overrule a decision issued by another panel.”).

                                    11
                                    III.

     One final matter must be addressed.             On March 9, 2006 -- after

the district court entered its order in this case -- Congress

amended the statute governing the mode of recovering forfeiture

penalties, 28 U.S.C.A. § 2461(c) (West 2006), to state that the

forfeiture procedures of the Controlled Substances Act, 21 U.S.C.A.

§ 853 (West 1999 & Supp. 2006), “apply to all stages of a criminal

forfeiture   proceeding.”       See       USA       PATRIOT   Improvement   and

Reauthorization Act of 2005, Pub. L. 109-177, §                410, 120 Stat.

192, 246 (“Uniform Procedures for Criminal Forfeiture”) (March 9,

2006).    Congress did not alter or repeal § 1963.                Although the

district court’s protective order was entered pursuant to § 1963,

the Government contends that our appellate review of that order

should be conducted under § 853.

     We need not address whether 21 U.S.C.A. § 853 now applies

rather than 18 U.S.C.A. § 1963 because the result is the same.              For

the most part, the distinction between 18 U.S.C.A. § 1963 and 21

U.S.C.A. § 853 is without a difference.                   Compare 18 U.S.C.A.

§ 1963(d)(1) with 21 U.S.C.A. § 853(e)(1) (authorizing pretrial

restraint of tainted property) and 18 U.S.C.A. § 1963(m) with 21

U.S.C.A. § 853(p) (requiring the forfeiture of substitute property

if any of five conditions has occurred making tainted property

unavailable for forfeiture).    In light of this similarity, we have

applied   Billman   to   conclude   that        §   853   authorizes   pretrial

                                     12
restraint of substitute property, observing that “[t]he restraint

and substitute assets provisions of § 853 are identical to those in

the   RICO   statute,   and   we   see    no   reason   to   construe   them

differently.”    Bollin, 264 F.3d at 421-22.            Therefore, whether

further forfeiture proceedings in this case are now governed by 18

U.S.C.A. § 1963 or 21 U.S.C.A. § 853, the district court was

authorized to enter an order restraining the Bromwells’ substitute

property because our precedent dictates that substitute property is

subject to pretrial restraint under both statutes.            See Billman,

915 F.2d at 921; Bollin, 264 F.3d at 421-22.

                                    IV.

      Because the Bromwells’ substitute property is subject to

pretrial restraint to preserve its availability for forfeiture, we

affirm the district court’s order.

                                                                   AFFIRMED

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