Caplin & Drysdale, Chartered v. United States

PETITIONER: Caplin & Drysdale, Chartered
RESPONDENT: United States
LOCATION: Sable Communications of California

DOCKET NO.: 87-1729
DECIDED BY: Rehnquist Court (1988-1990)
LOWER COURT: United States Court of Appeals for the Fourth Circuit

CITATION: 491 US 617 (1989)
ARGUED: Mar 21, 1989
DECIDED: Jun 22, 1989

ADVOCATES:
Peter Van N. Lockwood - on behalf of the Petitioner
William C. Bryson - on behalf of the Respondent

Facts of the case

Question

Media for Caplin & Drysdale, Chartered v. United States

Audio Transcription for Oral Argument - March 21, 1989 in Caplin & Drysdale, Chartered v. United States

William H. Rehnquist:

We'll hear argument first this morning in No. 87-1729, Caplin & Drysdale v. United States.

Mr. Lockwood, you may proceed whenever you're ready.

Peter Van N. Lockwood:

Mr. Chief Justice, and may it please the Court:

The issue that the Court is faced with here today is whether the Comprehensive Forfeiture Act of 1984 and the Fifth and Sixth Amendments to the United States Constitution permit the federal government to deprive a... an unconvicted defendant of access to his assets to employ counsel to defend him against the very charges on which the proposed forfeiture in the indictment is based and to obtain necessary living expenses.

The facts, briefly stated, in Caplin & Drysdale are... is that the Petitioner, the law firm of Caplin & Drysdale, was retained in the summer of 1983 by the Defendant Christopher Reckmeyer to represent him in a matter then understood to be a grand jury investigation involving possible federal tax evasion.

In January of 1985, Reckmeyer was indicted for not only a multiplicity of tax crimes, but a multiplicity of drug crimes and a... charged with a violation of the Continuing Criminal Enterprise statute or CCE.

The indictment also contained what I will refer to in shorthand as blanket forfeiture allegations which essentially sought forfeiture of every asset Reckmeyer owned that was worth more than $1,000.

Approximately simultaneously with the entry of the indictment, the government, ex parte, obtained a temporary restraining order against Reckmeyer and all persons acting in concert with him from transferring any of the assets listed as forfeitable in the indictment.

Immediately prior to the indictment, Reckmeyer had paid Caplin & Drysdale $10,000 by check for previously incurred legal fees.

That check... those checks were returned unpaid by the banks as a result of the restraining order.

Shortly after the indictment, Reckmeyer paid Caplin & Drysdale approximately $25,000 in cash, again for previous... pre-indictment legal services.

Because of the restraining order, Caplin & Drysdale deposited that money in an escrow account and immediately notified both the court and the government of its receipt of those funds.

Thereafter, Caplin & Drysdale continued to represent Reckmeyer in the criminal proceedings.

Some weeks after the indictment, Caplin & Drysdale filed on Reckmeyer's behalf a motion with the district court for... to amend the temporary restraining order to allow Reckmayer access to his restrained assets to pay counsel and, in addition, requested that the assets so relieved from restraint would be exempted from subsequent forfeiture in the event Reckmeyer should be convicted.

That motion came on for a hearing, but the day prior to the hearing, Reckmeyer pleaded guilty.

As a result, the district court deferred ruling on the motion to some post-conviction procedures under Subsection N(2) of the CCE forfeiture statute.

At that subsequent... subsequent hearing, Caplin & Drysdale at this point, petitioning on its own behalf for the fees, pursuant to the court's instruction... and the court granted Caplin & Drysdale's motion.

In the interim, while those proceedings were transpiring, Reckmeyer also consented to the entry of a forfeiture decree against him, which once again covered all the assets listed in the indictment and included the bank accounts on which the $10,000 in unpaid checks were drawn and the 25,000 odd dollars that was in the possession of Caplin & Drysdale in the escrow account.

William H. Rehnquist:

Mr. Lockwood, what are the requirements for a forfeiture?

That the... the monies or property have been acquired as a result of the drug activities?

Peter Van N. Lockwood:

Chief Justice Rehnquist, there are a variety of properties which are subject to forfeiture in Section 853(a).

They include proceeds of drug transactions, but--

William H. Rehnquist:

I didn't mean so much the various kinds of properties, but what does the government have to show in order to forfeit any property?

That it be acquired from drug proceeds?

Peter Van N. Lockwood:

--The government has to show... well, the government first has to convict the defendant.

William H. Rehnquist:

Yes.

Peter Van N. Lockwood:

Secondly, having convicted it, it has to show that the property was either obtained or used in the manner proscribed by the statute itself which, as I say, involves a variety of different considerations including, for example, that the property in a RICO case, which has an identical statute to the one at issue here, was a portion of the enterprise that the defendant conducted by a pattern of racketeering activity.

For example, if an enterprise is a legitimate business, but the defendant participated in two or more predicate crimes which were deemed to be a pattern of racketeering activity, the defendant's entire interest in the enterprise could be forfeited, not merely that portion of the enterprise's assets that resulted from the criminal activity.

William H. Rehnquist:

What was the basis for the forfeiture against Reckmeyer here?

Peter Van N. Lockwood:

Well, the ultimate basis was Reckmeyer's consent.