Court Opinion

ID: 2799867
Source: CourtListenerOpinion
Date Created: 2015-05-11 19:01:32.703028+00
Date Added: 2024-06-11T12:05:04.165335
License: Public Domain

In the

      United States Court of Appeals
                   For the Seventh Circuit
No. 14-3027

UNITED STATES OF AMERICA,
                                                       Plaintiff-Appellee,

                                    v.

MICHAEL A. KNOLL and
DAX G. SHEPHARD,
                                                              Defendants.

APPEAL OF: BOB HENSON,                             Intervenor-Appellant.

            Appeal from the United States District Court for the
            Southern District of Indiana, Indianapolis Division.
    Nos. 1:12-cr-00102-TWP-DML-2 & 43 — Tanya Walton Pratt, Judge.

     SUBMITTED FEBRUARY 24, 2015* - DECIDED MAY 11, 2015

*
   The government included in its brief a statement indicating that oral
argument is not necessary, see Fed. R. App. P. 34(a)(1) and Circuit Rule
34(f), and the appellant subsequently moved to waive oral argument. Upon
review of the briefs and the record and consideration of the standards set
forth in Fed. R. App. P. 34(a)(2), the court determined that oral argument
is unnecessary to the resolution of this appeal, and granted the appellant’s
motion. The appeal has therefore been submitted on the briefs and the
                                                              (continued...)
2                                                  No. 14-3027

    Before EASTERBROOK, ROVNER, and SYKES, Circuit Judges.

    ROVNER, Circuit Judge. Michael Knoll and Dax Shephard
were members of the Outlaws Motorcycle Club (“Outlaws”).
Both men pled guilty to racketeering and Knoll also pled guilty
to running an illegal gambling business. Both men agreed in
their plea deals to forfeit certain real and personal property
that was used in the crimes. Bob Henson intervened to object
to the forfeiture of property in which he claimed an interest.
Henson now appeals the district court’s grant of summary
judgment in favor of the government, and we affirm.
                                 I.
   From approximately May 2009 through July 2012, the
Outlaws, true to their name, were a very busy criminal
organization. This case began with a forty-nine count indict-
ment that charged fifty-one individuals (all members of the
Outlaws) with racketeering, mail and wire fraud, money
laundering, drug trafficking, extortion, running an illegal
gambling business, witness tampering and firearms offenses,
among other things. The indictment sought the forfeiture of
real and personal property from Knoll, Shephard and some of
their fellow Outlaws on the basis of the racketeering count. See
18 U.S.C. §§ 1962 and 1963. Specifically, the indictment sought
the forfeiture of real property located at 305 North Jefferson
Avenue and 2204 East New York Street, both in Indianapolis,

*
  (...continued)
record.
No. 14-3027                                                    3

Indiana (“Indianapolis Properties”); as well as real property
located at 1202 West Main Street, Fort Wayne, Indiana (“Fort
Wayne Property”).
    In his plea agreement, Knoll agreed to forfeit any interest
he had in the Indianapolis Properties, any firearms found at
those properties and any items bearing the name or insignia of
the Outlaws found at those properties. Shephard agreed to
forfeit his interest in both the Indianapolis Properties and the
Fort Wayne property, as well as any firearms, currency and
items bearing the name or insignia of the Outlaws found at
those properties. For both Knoll and Shephard, the district
court granted the government’s motions for forfeiture, in each
case entering a “Preliminary Order of Forfeiture.” Those
Preliminary Orders directed the government to comply with
the due process requirements of United States v. James Daniel
Good Real Property, 510 U.S. 43 (1993), by affixing a copy of the
court’s order in a conspicuous place on the property, and by
leaving a copy of the order with the person having possession
or the person’s agent. The court further ordered the govern-
ment to publish notice of the Preliminary Orders, alerting
anyone other than the defendants having or claiming a legal
interest in the property to file a petition with the court within
thirty days. See 18 U.S.C. § 1963(l).
    Bob Henson subsequently filed intervenor petitions—one
in Knoll’s case and one in Shephard’s case—claiming an
interest in the Indianapolis Properties and the Fort Wayne
Property. When the government moved to dismiss the peti-
tions because they were not filed under penalty of perjury, the
district court granted Henson leave to file amended petitions.
Henson then filed an amended, consolidated petition, claiming
4                                                    No. 14-3027

a third-party interest in all of the properties. Specifically,
Henson claimed that he was a resident of the properties as well
as a member, trustee and officer of the Outlaws. He asserted
that the Outlaws’ interest in the properties was superior to that
of the defendants. The court allowed discovery on the petition,
and the government ultimately moved to compel Henson to
disclose all evidence in his possession relating to the nature
and extent of his right, title or interest in the Indianapolis
Properties and the Fort Wayne Property.
   In response, Henson filed a two-page statement titled “Bob
Henson’s interest in the Indianapolis (AOA) properties,” which
begins, inauspiciously:
     1) Giving brothers a place to live
     2) No one else wanted the responsibility because
     they were unwilling or scared.
     3) Without leadership the other motorcycle clubs in
     town would be fighting and causing problems.
R. 2853-1. Henson noted eleven other factors he believed to be
relevant to his interest in the properties, including the alarming
revelation that “[a] major school bus stop for neighborhood
children is in front of the clubhouse,” and his belief that “[t]he
club as a whole is not a criminal enterprise.” Henson then
moved on to more salient factors, under a section titled “Real
Interest.” That section reads in its entirety:
     1) I made sure that business within our home was
     conducted as any other household.
     2) I delegated chores (cooking, cleaning, etc.)
No. 14-3027                                                      5

     3) I delegated people to pay the bills monthly.
       a. Gas & Electric
       b. Property taxes
       c. Water/Sewage
       d. Cable
     4) I have been the leader since the initial raid in 2012.
       a. I am a natural leader who has a way to make the
       inner-workings of our organization move without
       crime and/or violence.
       b. I am loyal
       c. Trustworthy
       d. I believe that we can have a motorcycle club
       and be productive citizens within the community.
     Pursuant to 28 USC § 1746, I declare under the
     penalties of perjury that my stated interests in
     properties at 2202 – 2204 East New York Street and
     305 North Jefferson Street, Indianapolis, Indiana are
     true and accurate as I am informed and believe.
R. 2853-1. Henson presented no other evidence in support of
his interest in the properties.
   Around the same time that he filed this statement, Henson
moved for the court to allow Bradley Carlson to intervene as
both an expert witness and an interested party. According to
the motion, Carlson possessed “first-hand and considerable
knowledge on the constitutional issues relative to forfeiture of
memorabilia and personal effects seized by the Government
6                                                   No. 14-3027

from the locations in this case and would seek participation as
both an Interested Party and expert witness for Intervenors
and as to the value of items seized by the government.”
R. 2842, at 2. The motion further explained that Carlson would
assess the value of “rings, necklaces, belt buckles, pictures and
photographs” seized by the government.
    The government then moved for summary judgment on the
ground that Henson had failed to present any evidence to
establish a legal right, title or interest in the Indianapolis
Properties or the Fort Wayne Property. The government also
asserted that Henson’s claimed interest did not arise until after
the properties became subject to forfeiture, contrary to the
timing requirements of the statute. The district court noted that
the RICO statute allows challenges to forfeitures only by
persons having an interest in the property at the time the crime
was committed (or by bona fide purchasers for value, an
exception not relevant here). Henson’s personal statement
asserted an interest that arose after the crimes were committed.
The court also concluded that nothing in Henson’s statement
established a legal interest in the properties as opposed to an
equitable interest. Finally, the court noted that Henson’s
statement did not mention the Fort Wayne Property at all. For
all of those reasons, the district court granted the government’s
motion for summary judgment and denied as moot Henson’s
request to have Carlson testify as an expert witness. Henson
appeals.
                                 II.
   On appeal, Henson argues that the district court abused its
discretion in refusing to allow Carlson to testify as an expert.
No. 14-3027                                                        7

He also contends that the court erred in concluding that
Henson lacked a sufficient interest in the properties, asserting
that Henson’s personal statement demonstrated a “possessory
interest” sufficient to challenge the forfeiture. Finally, Henson
asserts that the government failed to establish a connection
between the properties seized and the crimes to which Knoll
and Shephard pled guilty.
    We review the district court's grant of summary judgment
de novo, examining the record in the light most favorable to
Henson and construing all reasonable inferences from the
evidence in his favor. Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 255 (1986); Bluestein v. Central Wisconsin Anesthesiology,
S.C., 769 F.3d 944, 950-51 (7th Cir. 2014); Naficy v. Illinois Dep't
of Human Servs., 697 F.3d 504, 509 (7th Cir. 2012). Summary
judgment is appropriate when there are no genuine disputes
of material fact and the movant is entitled to judgment as a
matter of law. Fed. R. Civ. P. 56(a); Bluestein, 769 F.3d at 951;
Naficy, 697 F.3d at 509.
   A third party challenging an order of forfeiture in a RICO
case must establish by a preponderance of the evidence that:
     (A) the petitioner has a legal right, title, or interest in
     the property, and such right, title, or interest renders
     the order of forfeiture invalid in whole or in part
     because the right, title, or interest was vested in the
     petitioner rather than the defendant or was superior
     to any right, title, or interest of the defendant at the
     time of the commission of the acts which gave rise to
     the forfeiture of the property under this section; or
8                                                     No. 14-3027

     (B) the petitioner is a bona fide purchaser for value
     of the right, title, or interest in the property and was
     at the time of purchase reasonably without cause to
     believe that the property was subject to forfeiture
     under this section;
18 U.S.C. § 1963(l)(6). Because Henson presented no evidence
to the district court regarding the Fort Wayne Property, and
because the burden rests on the petitioner to establish an
interest in forfeited property, we may summarily affirm the
district court’s grant of summary judgment to the government
on the Fort Wayne Property. Therefore, only the Indianapolis
Properties are in dispute on appeal.
    Henson claims an “equitable” interest in the Indianapolis
Properties created by his caretaking role for the Outlaws.
Henson contends that his personal statement, together with
Carlson’s proposed expert testimony “would have established
Henson’s interest as a caretaker all within the history and
tradition of the Outlaws relative to equitable property rights.”
Brief and Required Short Appendix of Robert “Bob” Henson
(“Henson Brief”), at 6. There are several problems with this
argument. First, Henson ignores the requirement of the statute
that the third party petitioner possess a right to the property
“at the time of the commission of the acts.” 18 U.S.C.
§ 1963(l)(6). According to Henson’s personal statement, he took
on his caretaking role for the properties after the “initial raid in
2012.” That is, he had no interest in the property at the time of
the commission of the acts giving rise to the RICO charges, a
timing problem that is fatal to his claim under the statute. See
18 U.S.C. § 1963(l)(6); United States v. Ginsburg, 773 F.2d 798,
801 (7th Cir. 1985) (while the government's interest in the
No. 14-3027                                                        9

profits or proceeds of racketeering activity does not attach until
conviction, its interest vests at the time of the act that consti-
tutes the section 1962 violation). See also United States v. Timley,
507 F.3d 1125, 1130 (8th Cir. 2007) (noting that in a criminal
forfeiture under 18 U.S.C. § 853, a “claimant must either
demonstrate priority of ownership at the time of the offense …
or that he subsequently acquired the property as a bona fide
purchaser for value”); United States v. Totaro, 345 F.3d 989, 994
(8th Cir. 2003) (noting that section 1963(l) “permits petitioners
to challenge an order of forfeiture by showing they had a
vested or superior legal right, title or interest in the property at
the time the criminal acts took place, or they were bona fide
purchasers for value”).
    Second, Henson has presented no evidence demonstrating
“a legal right, title, or interest in the property.”
18 U.S.C. § 1963(l)(6). “Property interests are created and
defined by state law.” Butner v. United States, 440 U.S. 48, 55
(1979). See also Board of Regents of State Colleges v. Roth, 408 U.S.
564, 577 (1972) (property interests “are created and their
dimensions are defined by existing rules or understandings
that stem from an independent source such as state law”);
O’Gorman v. City of Chicago, 777 F.3d 885, 890 (7th Cir. 2015)
(same). In his personal statement, Henson apparently took the
word “interest” to mean the personal significance that the
property held for him rather than his legal rights in the
property. Henson cites no Indiana law giving rise to property
rights—legal, equitable or otherwise—for a caretaker who
“giv[es] brothers a place to live,” delegates chores, or oversees
the paying of bills. Courts generally do not determine legal
interests in property for forfeiture purposes by evaluating the
10                                                   No. 14-3027

“history and tradition of the Outlaws.” See Henson Brief, at 6.
Instead, we are guided by state law in determining who holds
an interest in property. Butner, 440 U.S. at 55; Roth, 408 U.S. at
577.
    Moreover, the statute calls for a “legal” rather than an
equitable interest in the property. See Timley, 507 F.3d at 1129
(“‘legal interest’ encompasses only legally protected rights, not
equitable rights”); United States v. Reckmeyer, 836 F.2d 200, 205
(4th Cir. 1987) (the term “legal interest” encompasses all legally
protected rights, claims, titles, or shares in real or personal
property, in contrast to equitable interests). Thus, any equitable
interest created by Henson’s caretaking or use of the property
is insufficient to establish rights under the statute.
    We turn to the question of the expert witness. The district
court denied as moot Henson’s motion for Carlson to appear
as an expert. Henson contends on appeal that Carlson would
have testified that Henson, as caretaker, paid the bills and
directed accounts for the properties, and that it was the
tradition of the Outlaws to consider caretakers as having an
equitable interest in the properties. As we noted above,
however, equitable interests created by the history and
tradition of the Outlaws are insufficient to establish property
rights and so Carlson’s testimony would not have been helpful
to the district court. See Fed. R. Evid. 702. Moreover, Henson
argued below only that Carlson would testify to the value of
personal property and to his knowledge of the constitutional
issues relevant to forfeiture of personal property. But the value
of the personal property was not a fact in issue, see Fed. R.
Evid. 702(a), and experts generally may not offer legal opin-
No. 14-3027                                                      11

ions. Jimenez v. City of Chicago, 732 F.3d 710, 721 (7th Cir. 2013),
cert. denied, 134 S. Ct. 1797 (2014) (because it is the role of the
judge, not an expert witness, to instruct the jury on the
applicable principles of law, and it is the role of the jury to
apply the law to the facts in evidence, as a general rule, an
expert may not offer legal opinions). The district court there-
fore did not abuse its discretion in denying Henson’s motion to
allow Carlson to testify as an expert witness.
   Finally, Henson asserts that the court erred in granting
summary judgment to the government without evidence of a
nexus between the crimes committed by Knoll and Shephard
and the properties. But Henson never made this argument in
the district court and it is therefore waived. United States v.
Clark, 657 F.3d 578, 582-83 (7th Cir. 2011).
                                                      AFFIRMED.