Court Opinion

ID: 3064965
Source: CourtListenerOpinion
Date Created: 2015-10-14 22:27:58.364051+00
Date Added: 2024-06-11T11:19:47.175320
License: Public Domain

FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,              
                 Plaintiff-Appellee,
                                           No. 08-50415
                v.
                                              D.C. No.
RICHARD I. BERGER,
                         Defendant,       2:00-cr-00994-
                                              RMT-1
                v.
                                             OPINION
CORNELLA BERGER,
    Third-Party Movant-Appellant.
                                       
      Appeal from the United States District Court
          for the Central District of California
   Robert M. Takasugi, Senior District Judge, Presiding

                  Argued and Submitted
            June 1, 2009—Pasadena, California

                     Filed July 31, 2009

    Before: William A. Fletcher, Richard R. Clifton, and
            Milan D. Smith, Jr., Circuit Judges.

           Opinion by Judge Milan D. Smith, Jr.

                            10023
                  UNITED STATES v. BERGER              10025

                        COUNSEL

Jenny O. Blake, Chicago, Illinois, for third-party movant-
appellant Cornella Berger.

Leon W. Seidman and Brent A. Whittlesey, Assistant United
States Attorneys, United States Attorneys Office for the Cen-
tral District of California, Los Angeles, California, for
plaintiff-appellee United States of America.
10026               UNITED STATES v. BERGER
                           OPINION

MILAN D. SMITH, JR., Circuit Judge:

   In this appeal, Third-Party Movant-Appellant Cornella Ber-
ger (Cornella) contends that the district court erred in includ-
ing her community property interest in the proceeds of a real
estate sale among the funds payable to victims of her former
husband’s fraud pursuant to the Mandatory Victim Restitution
Act (MVRA), 18 U.S.C. § 3663(a). We hold that community
property is available to satisfy a restitution judgment obtained
under the MVRA against a criminally liable spouse, including
that portion of the property that otherwise would potentially
be awarded upon dissolution of marriage to an innocent
spouse who was not involved in the criminal activity. We thus
affirm the order of the district court.

      FACTUAL AND PROCEDURAL BACKGROUND

   In 1986, while Richard I. Berger (Richard) and Cornella
were married,1 Richard joined a partnership (Partnership)
known as 1748 North Verdugo Road, which he and others
formed for the purpose of purchasing a 290-unit apartment
complex (Property).

   During the relevant period, Richard served as President,
Chief Executive Officer, and Chairman of the Board of Craig
Electronics (Craig), an electronics wholesaler. On March 19,
2003, a federal grand jury returned a first superceding indict-
ment, charging Richard with thirty-six counts of conspiracy,
loan fraud, falsifying corporate books, and other securities
fraud violations committed at Craig from 1995 to as late as
1997. After a jury trial, Richard was found guilty on twelve
of those counts. There is no evidence that Cornella was
involved in any wrongdoing associated with the illegal
  1
   Though they are now divorced, Cornella and Richard were married
during the entire period relevant to this case.
                     UNITED STATES v. BERGER                    10027
scheme or that any proceeds therefrom were invested in the
Property.

   Richard was sentenced on September 13, 2004 to a short
period of incarceration and was ordered, pursuant to the
MVRA, to pay restitution of just over $3.14 million to the
victims of his fraud. See United States v. Berger, 473 F.3d
1080, 1089, 1104 (9th Cir. 2007).

   Before Richard’s conviction, the government and the dis-
trict court anticipated that a large restitution order would
likely be imposed against Richard were he to be convicted.
Accordingly, in May 2004, the district court ordered Richard
to “undertake no payment or transfer of assets in excess of
$10,000 without prior court approval.” Thereafter, and before
obtaining court approval, Richard consented to the Partner-
ship’s entering into a contract to sell the Property. In March
2006, the district court ordered that Richard’s approximately
$1.5 million share of the proceeds from the sale of the Prop-
erty (the Proceeds) be deposited with the court. Id.

   Richard appealed his conviction and sentence. We affirmed
the conviction, but vacated the sentence and remanded for
resentencing. See Berger, 473 F.3d at 1108-09. Upon resen-
tencing, the district court imposed a significantly longer incar-
ceration period but entered the same restitution order.

   In June 2008, the government filed an application to dis-
burse the Proceeds to the victims of Richard’s fraud who were
entitled to receive restitution. Cornella opposed the applica-
tion, arguing that she was entitled to one-half of the Proceeds.
Over Cornella’s objection, the district court granted the gov-
ernment’s application to disburse the entire sum of the Pro-
ceeds to the victims.2 Cornella appeals.
  2
   The government and Cornella entered into an agreement providing that
the court would reserve the funds to which Cornella claimed an interest
until this appeal is resolved.
10028                 UNITED STATES v. BERGER
      JURISDICTION AND STANDARD OF REVIEW

   We have jurisdiction over this appeal pursuant to 28 U.S.C.
§ 1291. We review de novo questions of law regarding the
application of restitution statutes. See United States v. Peter-
son, 538 F.3d 1064, 1074 (9th Cir. 2008).

                           DISCUSSION

   Cornella claims that the district court erred by failing to
award her a one-half interest in the Proceeds. She first argues
that the asset distribution should have been analyzed under
case law governing criminal forfeiture. In support of that posi-
tion, she cites United States v. Lester, 85 F.3d 1409 (9th Cir.
1996) (holding that wife’s one-half interest in portion of com-
munity property was not liable to criminal forfeiture imposed
on her husband).

   [1] Restitution and forfeiture are distinct asset collection
regimes, and they are governed by different rules. Criminal
forfeiture is “ ‘an in personam judgment against a person con-
victed of a crime.’ ” Id. at 1413 (emphases omitted) (quoting
United States v. $814,254.76 in U.S. Currency, 51 F.3d 207,
210-11 (9th Cir. 1995)). On the other hand, a restitution order
under the MVRA is “a lien in favor of the United States on
all property and rights to property of the person fined.” 18
U.S.C. § 3613(c).

   [2] The district court did not order a criminal forfeiture
against Richard; it ordered a restitution under the MVRA. See
generally Berger, 473 F.3d 1080 (listing penalties imposed in
this case and analyzing court’s MVRA award, but not men-
tioning forfeiture); id. at 1104 (“The court . . . ordered Berger
to pay $3,144,832 in restitution to the lending banks.”); id.
(noting that “restitution in this case is governed by the Man-
datory Victims Restitution Act of 1996”).3 Cornella cites no
  3
  Cornella admitted during a hearing before the district court that “there
was no forfeiture count . . . I will concede that.”
                     UNITED STATES v. BERGER                  10029
authority suggesting that a MVRA restitution case may be
analyzed under a forfeiture regime, and we are aware of only
contrary authority. See United States v. Mays, 430 F.3d 963,
965 (9th Cir. 2005) (explaining that MVRA restitution judg-
ments may be enforced using the procedures for the enforce-
ment of civil judgments, but not mentioning forfeiture law).
Accordingly, we analyze the allocation of restitution funds in
this case using the law governing MVRA restitution.

   [3] Under the MVRA, the government may collect on a res-
titution judgment using the procedures available for the col-
lection of criminal fines outlined in 18 U.S.C. § 3613(a), see
18 U.S.C. §§ 3613(f), 3664(m), and “may enforce a judgment
imposing a fine in accordance with the practices and proce-
dures for the enforcement of a civil judgment under Federal
law     or    State      law,”   id.    § 3613(a).    Moreover,
“[n]otwithstanding any other Federal law . . . , a judgment
imposing a fine may be enforced against all property or rights
to property of the person fined,” except in certain circum-
stances not relevant here. Id. Accordingly, under the MVRA,
a restitution judgment may be enforced against all of Rich-
ard’s assets, i.e., his “property or rights to property.” See id.

   [4] We next consider whether the Proceeds constitute Rich-
ard’s “property or rights to property” for the purposes of “en-
forc[ing] . . . a civil judgment under . . . State law,” id., in this
case, California law. Under California law, property acquired
by either husband or wife during a marriage generally consti-
tutes “community property.” State Bd. of Equalization v. Woo,
82 Cal. App. 4th 481, 483 (Ct. App. 2000) (citing, e.g., Cal.
Fam. Code § 760 (“Except as otherwise provided by statute,
all property, real or personal, wherever situated, acquired by
a married person during the marriage while domiciled in this
state is community property.”); Martin v. S. Pac. Co., 130
Cal. 285, 286 (1900)). Here, Cornella and the government
agree that the Proceeds are community property.

  [5] In the ordinary case, “the community estate is liable for
a debt incurred by either spouse before or during marriage,
10030              UNITED STATES v. BERGER
regardless of which spouse has the management and control
of the property and regardless of whether one or both spouses
are parties to the debt or to a judgment for the debt.” Cal.
Fam. Code § 910(a). Thus, even though Richard is the only
spouse who is a party to the judgment for the debt at issue
here, under the MVRA and California law the Proceeds’ com-
munity property status makes Cornella liable for that debt. See
18 U.S.C. §§ 3613, 3664(m); Cal. Fam. Code § 910(a).

   Our holding in In re Soderling supports this conclusion. See
998 F.2d 730, 734 (9th Cir. 1993) (holding that criminal resti-
tution judgment against two appellants was nondischargeable
in bankruptcy as to community property the appellants shared
with their respective spouses). In that case, we noted that a
state restitution order is a “debt” within the meaning of the
Bankruptcy Code. Id. (citing Penn. Dep’t of Pub. Welfare v.
Daveport, 495 U.S. 552, 557-63 (1990) (superseded on other
grounds)). We reasoned that similarities between the defini-
tion of “debt” under the Bankruptcy Code and California law
would compel the California Supreme Court to determine that
a restitution judgment constitutes a “debt” under California
law. Id. Therefore, we concluded that the federal criminal res-
titution judgment created a claim against the community
under California state law. Id. at 733-34. Such is the case here
as well.

   Cornella argues that, even under a restitution scheme, she
is entitled to one-half of the Proceeds. In support of her argu-
ment, she cites Edukere v. United States, No. 05CV4227(RT),
2008 WL 2824954 (C.D. Cal. July 21, 2008) (unpublished
disposition). In Edukere, the court held that, where a wife’s
community property earnings were used to pay the mortgage
on her separate property residence, her husband acquired an
undivided one-half interest in the pro tanto community prop-
erty interest. Id. at *5.

   Even if we were persuaded by the reasoning of an unpub-
lished district court opinion, Edukere is unavailing. Contrary
                    UNITED STATES v. BERGER                10031
to Cornella’s characterization, Edukere held that the commu-
nity property at issue was subject to the government’s foreclo-
sure action, despite the fact that property interest arose almost
exclusively from the innocent spouse’s personal earnings. Id.
Although the court intimated that the spouse may be able to
raise some defense to foreclosure based on the community
property’s not having benefitted from the husband’s criminal-
ity, the court declined to decide the issue, noting that such an
argument was properly made during the separate foreclosure
proceeding. See id.

   [6] Cornella also argues that it would be unjust to punish
an innocent spouse for her husband’s misdeeds. We sympa-
thize with Cornella’s situation, but for better or worse, it has
long been true in community property jurisdictions that both
spouses assume the risks—and benefits—of that legal system.
The case books are replete with examples of seeming injus-
tices to innocent spouses where community property laws are
applied. Nevertheless, we are bound by California’s commu-
nity property laws, and they control the outcome in this case.

                       CONCLUSION

   Even though Cornella was not a party to, nor guilty of any
criminal wrongdoing in connection with, Richard’s fraud, her
community property interest in the Proceeds is subject to
Richard’s obligations under the restitution order entered by
the district court.

  AFFIRMED.