United States v. LazarenkoUnited States v. Lazarenko
Hartley West (argued) and Patricia J. Kenney, Assistant United States Attorneys, San Francisco, California, for the plaintiff-appellee.
Appeal from the United States District Court for the Northern District of California. Martin J. Jenkins, District Judge, Presiding. D.C. No. CR-00-00284-MJJ.
Before SANDRA DAY O‘CONNOR, Associate Justice,* and SUSAN P. GRABER and RICHARD C. TALLMAN, Circuit Judges.
ORDER AMENDING OPINION AND ON PETITIONS FOR REHEARING AND AMENDED OPINION
TALLMAN, Circuit Judge.
ORDER
1 The Court rules on the pending petitions for rehearing and Liquidators’ request to be heard as follows:
2 (1) The United States’ request to amend the opinion is granted in part and denied in part. The opinion filed November 21, 2006, slip opinion 18657, and reported at 469 F.3d 815 (9th Cir. 2006), is hereby amended as follows:
3 At slip opinion 18666, starting at line 2 (469 F.3d at 820), modify the first full sentence to state: “Section 982(b)(1) incorporates the standards and procedures, other than subsection (d), for forfeiting property under the Comprehensive Drug Abuse Prevention and Control Act of 1970,
4 At slip opinion 18666, beginning at the second paragraph (469 F.3d at 820), delete: “Property of a person convicted of violating
5 With these amendments, the panel has voted to deny the United States’ petition for rehearing. The panel has also voted to deny the Liquidators’ petition for rehearing, with suggestion for rehearing en banc. The full court has been advised of Liquidators’ petition for rehearing en banc and no judge of the court has requested a vote on it. The petitions are DENIED, and no further petitions for rehearing may be filed.
6 (2) The panel also denies Liquidators’ “Request to be Heard in Response to the United States’ Petition for Rehearing or For Clarification.”
7 This unusual appeal follows the government‘s seizure of approximately $2.5 million in assets from former Ukrainian Prime Minister Pavel Ivanovich Lazarenko (“Lazarenko“). A jury in the United States District Court for the Northern District of California convicted Lazarenko on several counts of money laundering in violation of
8 Liquidators seek interlocutory appeal from two orders arising from the United States’ efforts to seize the funds and bonds: (1) an order denying Liquidators’ motion to set an immediate hearing on their earlier filed “Motion for Return of Illegally Seized Funds” (“seizure motion“), and (2) a preliminary order of forfeiture the district court entered after Lazarenko‘s guilty verdict. Liquidators challenge both orders on numerous grounds. We must first determine, however, whether Liquidators have standing to invoke the jurisdiction of this Court before the district court concludes ancillary proceedings. We hold that they do not. We further conclude that the controversy is not yet ripe for judicial review. We therefore dismiss this appeal for lack of appellate jurisdiction.
I
9 In July 2001, a federal grand jury for the Northern District of California returned a second superseding indictment charging Lazarenko with conspiracy to commit money laundering (count 1),
10 A conviction under
11 On June 3, 2004, a petit jury convicted Lazarenko of conspiracy to commit money laundering (count 1), several counts of money laundering (counts 2-8), wire fraud (counts 20-29), and transportation of stolen property (counts 31 and 43-52). The jury found that Lazarenko conspired to launder and laundered the proceeds of specified unlawful activity—foreign extortion, wire fraud, and transportation of stolen property. He did so through various banks in the United States, Switzerland, Antigua, and elsewhere. Lazarenko waived a jury determination on special findings related to the forfeiture allegations and proceeded to trial on the substantive criminal counts of the indictment. Following Lazarenko‘s conviction, but before the district court sentenced Lazarenko, the government initiated separate civil forfeiture proceedings by filing a complaint against the res, No. C 05-946 MJJ. The Clerk of Court for the Northern District of California reassigned the civil action to the Honorable Martin J. Jenkins, as related to the underlying criminal action already pending before Judge Jenkins, No. CR 00-0284 MJJ.
12 In January 2005, the government obtained a civil seizure warrant for the assets at issue here—U.S. $2.5 million in funds and Ukrainian bonds on deposit with Bank of America. The funds and bonds comprise two accounts containing $1,379,879 and $327,544.09, respectively, and an account containing 923,000 Ukrainian bonds. The government filed its civil complaint against the funds and bonds under
13 In September 2005, Liquidators moved for summary judgment. The district court granted that motion and dismissed the civil forfeiture action on October 26, 2005, as barred by the applicable statute of limitation,
14 Liquidators contend the seized funds and bonds belong to Eurofed because, in December 1999, the High Court of Antigua appointed Liquidators to collect and distribute Eurofed‘s assets to its depositors and creditors (who include Lazarenko and his associates). As a result, in January 2006, Liquidators moved the district court to vacate the criminal seizure warrant and immediately return the funds and bonds to the Antiguan liquidation proceedings, so they may distribute the funds and bonds as directed by the Antiguan High Court. Liquidators challenge the United States’ probable cause to seize the assets, and they invoke the doctrines of res judicata, the statute of limitation, the act of state doctrine, and Eurofed‘s superior claim to ownership as grounds to vacate the seizure warrant. In March 2006, Liquidators applied ex parte to Judge Jenkins for an immediate hearing on their motion for return of the illegally seized funds. N.D. Cal. Crim. R. 47-1 & 47-3. Liquidators claimed that United States v. Crozier, 777 F.2d 1376 (9th Cir. 1985), afforded them the right to a constitutionally mandated and immediate hearing. They reasoned that waiting to commence the ancillary proceedings contemplated by
15 After holding a telephonic conference with all interested parties, the district court denied Liquidators’ ex parte application. The district court found that setting a hearing on Liquidators’ motion after sentencing Lazarenko comported with due process, as Congress has provided for ancillary proceedings on the heels of a sentence imposed upon conviction of a particular crime,
16 On May 24, 2006, Liquidators filed a provisional and precautionary petition with Judge Jenkins to adjudicate Liquidators’ interest in the funds and bonds. The parties inform us that Judge Jenkins has taken that application under advisement and awaits action from this court before deciding whether to proceed with the ancillary proceedings. During the pendency of this appeal, on August 25, 2006, the district court sentenced Lazarenko, and on September 29, 2006, Judge Jenkins entered a final order of forfeiture against Lazarenko. The district court has scheduled a status conference to address whether the district court should stay further ancillary proceedings until we resolve Liquidators’ appeal.
17 Liquidators essentially challenge the entire process Congress prescribed for third parties to adjudicate their interest in property subject to forfeiture. Without reaching the merits of this claim, we must first review criminal forfeiture as crafted by Congress because it impacts our standing analysis.
18 Courts impose criminal forfeiture as punishment following conviction of a substantive criminal offense. Libretti v. United States, 516 U.S. 29, 39 (1995). Criminal forfeiture operates in personam against a defendant to divest him of his title to proceeds from his unlawful activity as a consequence of his criminal conviction. United States v. Nava, 404 F.3d 1119, 1124 (9th Cir. 2005). Title
19 A court may not enter judgment of forfeiture in a criminal proceeding unless the indictment notifies the defendant that the government seeks criminal forfeiture in accordance with the applicable statute.
20 Upon a finding that the property involved is subject to forfeiture, a court must promptly enter a preliminary order of forfeiture without regard to a third party‘s interests in the property. See
21 Section 853(n) provides the process for vindicating a third party‘s interests in forfeited property. The law appears settled that an ancillary proceeding constitutes the only avenue for a third party claiming an interest in seized property. See Libretti, 516 U.S. at 44 (noting that Congress has determined that § 853(n) provides the means to vindicate third-party rights); Nava, 404 F.3d at 1125 (“We have held that third parties must await the defendant‘s conviction before filing proceedings to protect their interest in the property and must await the court‘s order of forfeiture before requesting an ancillary hearing.” (citing Crozier, 777 F.2d at 1382-83)).
22 A third party claiming an interest in property subject to forfeiture may not intervene in a trial or appeal of a criminal case involving the forfeiture.
23 After a court enters the forfeiture order, the United States must notify the public.
III
24 Liquidators insist the Court must order the United States immediately to return the funds and bonds to Liquidators and deem the seizure and attempted forfeiture improper, given the district court‘s delay in hearing Liquidators’ claims. Liquidators contend that the district court unlawfully entered the preliminary order of forfeiture because (1) the government sought criminal forfeiture beyond the limitation period, (2) res judicata bars the criminal forfeiture, (3) the criminal seizure violates the act of state doctrine, and (4) the forfeiture improperly extends to property Liquidators own. Liquidators further contend the district court‘s order denying them an immediate hearing violates their right to due process under the Fifth Amendment.
25 Liquidators also assert appellate jurisdiction over the preliminary order of forfeiture under
26 We must always examine our own jurisdiction before deciding the merits of a dispute. Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., Inc., 528 U.S. 167, 180 (2000); Friery v. L.A. Unified Sch. Dist., 448 F.3d 1146, 1148 (9th Cir. 2006). The Constitution‘s case-or-controversy limitation on federal judicial authority is the lynch pin for standing and ripeness jurisprudence. Friends of the Earth, Inc., 528 U.S. at 180. The standing doctrine determines “whether the litigant is entitled to have the court decide the merits of the dispute or of particular issues.” Warth v. Seldin, 422 U.S. 490, 498 (1975). “[C]oncern[s] about the proper—and properly limited—role of the courts in a democratic society” underlie the standing doctrine. Id. The ripeness doctrine prevents courts from deciding cases prematurely. Nat‘l Park Hospitality Ass‘n v. Dep‘t of the Interior, 538 U.S. 803, 807 (2003).
27 Both standing and ripeness jurisprudence include a constitutional component, rooted in the Constitution‘s case-or-controversy requirement, and a prudential component, which embraces judicially self-imposed restraints on federal jurisdiction. Elk Grove Unified Sch. Dist. v. Newdow, 542 U.S. 1, 11 (2004); Nat‘l Park Hospitality Ass‘n, 538 U.S. at 808. A litigant must satisfy both to seek redress in federal court. Nuclear Info. & Res. Serv. v. Nuclear Regulatory Comm‘n, 457 F.3d 941, 949-50 (9th Cir. 2006).
28 Persons seeking appellate review, like those who appear in courts of first instance, must satisfy Article III standing. Arizonans for Official English v. Arizona, 520 U.S. 43, 64 (1997). To establish Article III standing, a litigant must show that the allegedly unlawful conduct caused him to suffer an actual or imminent injury—not a hypothetical, conjectural, or abstract injury—that a favorable decision would likely redress. Elk Grove Unified Sch. Dist., 542 U.S. at 12; Allen v. Wright, 468 U.S. 737, 751 (1984). Courts often treat the constitutional component of ripeness under the rubric of standing; indeed, “in many cases, ripeness coincides squarely with standing‘s injury in fact prong.” Thomas v. Anchorage Equal Rights Comm‘n, 220 F.3d 1134, 1138 (9th Cir. 2000) (en banc). This statement rings true here.
29 A litigant must also meet non-constitutional or prudential requirements to invoke federal jurisdiction. Prudential standing encompasses “the general prohibition on a litigant‘s raising another person‘s legal rights, the rule barring adjudication of generalized grievances more appropriately addressed in representative branches, and the requirement that a plaintiff‘s complaint fall within the zone of interests protected by the law invoked.” Allen, 468 U.S. at 751. The prudential component of the ripeness requirement focuses on the adequacy of the record to ensure effective review. Portman v. County of Santa Clara, 995 F.2d 898, 903 (9th Cir. 1993).
B
30 We first address the injury requirement for Article III standing and ripeness, which ultimately sounds the death knell for Liquidators’ interlocutory appeal. Liquidators claim two injuries: (1) unlawful restraint on the assets seized from their bank accounts, and (2) denial of an immediate hearing after the government seized their property. Both, according to Liquidators, constitute an “injury” sufficient to satisfy Article III standing. We disagree.
31 Neither constitutes a legally cognizable injury in light of the statutory scheme specifying the process accorded to Liquidators in connection with a criminal forfeiture. Section 853(n) provides Liquidators an adequate opportunity to protect their claimed interest in the funds and bonds in an ancillary proceeding where they may present evidence, offer witnesses, and cross-examine witnesses who appear at the hearing.
32 Liquidators present no reason why the ancillary proceeding would inadequately protect their interest in adjudicating their competing claim to the property. In the proceedings that we understand the district court will promptly commence below, Liquidators may present all arguments and defenses to defeat the government‘s forfeiture, including those raised in their seizure motion and on appeal.2 We express no opinion on the merits of those arguments, and the district court may freely apply the law to the facts as it finds them during the ancillary proceedings. The district court deferred hearing Liquidators’ motion for return of the seized funds until the ancillary proceeding and at no time held that it would not consider the arguments raised in their seizure motion.
34 In Crozier, we considered due process concerns in a case filed more than five years earlier, with a pre-trial restraining order issued years earlier, and where the defendants’ trial and appeals could delay ancillary proceedings for several more years. Crozier, 777 F.2d at 1384. Here, in contrast, the district court has already sentenced Lazarenko and stands by, awaiting the results of Liquidators’ appeal to initiate ancillary proceedings. We see no reason to delay those proceedings from going forward. Should Liquidators be dissatisfied with the results, they may raise all issues that they now press on subsequent appeal from an adverse final judgment at the close of those proceedings.
35 In sum, Liquidators fail to identify a concrete and imminent injury where, as soon as our mandate issues, they may adequately seek to perfect their claimed superior interests in the funds and bonds in the ancillary proceeding. Given the relatively short delay compared to Crozier, and Liquidators’ failure to adduce sufficient evidence in the record establishing a particularized injury that the district court cannot adequately redress below, we hold that Liquidators currently fail to satisfy the constitutional requirements of standing and ripeness.
C
36 Even were we to conclude that Liquidators satisfy the constitutional component of standing and ripeness, we would still dismiss because this case raises prudential concerns under standing and ripeness jurisprudence.
1
37 Although Liquidators raise their own legal rights, not those of a third party, this appeal offends one prudential standing principle. Namely, courts refrain from adjudicating “‘abstract questions of wide public significance’ which amount to ‘generalized grievances,’ pervasively shared and most appropriately addressed in the representative branches.” Valley Forge Christian Coll. v. Am. United for Separation of Church & State, Inc., 454 U.S. 464, 475 (1982) (quoting Warth, 422 U.S. at 499-500). A generalized harm shared in substantially equal measure by all or a large class of citizens does not by itself warrant exercise of jurisdiction. Warth, 422 U.S. at 499.
38 Liquidators raise a generalized grievance about the statutory scheme governing criminal forfeiture. Liquidators claim not that the district court violated
39 Nor do Liquidators meet the prudential component of the ripeness doctrine. We determine if a case is ripe for review by evaluating whether (1) the issues are fit for judicial decision, and (2) the parties will suffer hardship if we withhold decision. Nat‘l Park Hospitality Ass‘n, 538 U.S. at 808.
40 For the first prong, we evaluate “whether the controversy generated is essentially legal in nature or whether further factual amplification is necessary.” W. Oil & Gas Ass‘n v. Sonoma County, 905 F.2d 1287, 1291 (9th Cir. 1990). Liquidators’ appeal involves issues not entirely developed in the record before us. The district court deferred the ancillary proceeding until after Lazarenko‘s sentencing. At the ancillary proceeding, Liquidators and the government may introduce evidence and witnesses, and the district court must consider relevant portions of the criminal record.
41 Turning to the second consideration, Liquidators fail to persuade us that postponing review imposes a “direct and immediate hardship” on them. Chavez v. Director, 961 F.2d 1409, 1415 (9th Cir. 1992). Without evidence in the record and without supporting facts, Liquidators conclude that the “rulings are ‘ripe’ and have a demonstrable ‘adverse effect’ on the Liquidators’ interests.” Liquidators’ ability to adjudicate their claims following our mandate undermines their claims of hardship. These conclusory claims of hardship simply fail to satisfy Liquidators’ burden of proving ripeness. Pettis ex rel. United States v. Morrison-Knudsen Co., 577 F.2d 668, 674 (9th Cir. 1978). Resolving this appeal and issuing our mandate returning jurisdiction to the district court to commence ancillary proceedings constitutes the only impediment to promptly adjudicating unresolved legal and factual issues surrounding Liquidators’ entitlement to the res. If the district court ultimately determines the funds were wrongfully seized, an award of pre-judgment accrued interest, along with the return of the res, will redress the damage.
IV
42 We hold that Liquidators may adequately protect their interest in the funds and bonds in the ancillary proceeding under § 853(n). Congress designated no other means for third parties to vindicate their interest in forfeited property. Because Liquidators may present all legal arguments that might bar the government‘s forfeiture in the proceedings below, and because the district court is prepared to undertake the ancillary proceedings promptly, we further hold that Liquidators fail to satisfy the constitutional and prudential components of standing and ripeness. Accordingly, we dismiss this appeal for lack of jurisdiction.
43 DISMISSED.