Russello v. United States

RESPONDENT:United States
LOCATION:A&P supermarket

DOCKET NO.: 82-472
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: United States Court of Appeals for the Fifth Circuit

CITATION: 464 US 16 (1983)
ARGUED: Oct 05, 1983
DECIDED: Nov 01, 1983

Samuel A. Alito, Jr. – on behalf of the respondent
Ronald A. Dion – on behalf of the Petitioner

Facts of the case


Audio Transcription for Oral Argument – October 05, 1983 in Russello v. United States

Warren E. Burger:

Mr. Dion, you may proceed whenever you are ready.

Ronald A. Dion:

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

The sole issue that is being presented today is the scope of the RICO forfeiture statute that was passed by Congress in 1970, in particular, Section 1963(a)(1).

We will try, in the oral argument, to not get into a bingo contest.

Unfortunately, a lot of the sections in 1962 and 1963 are interrelated.

Most of the argument is going to deal with the interrelationship of those two statutes.

First of all, the simple question is whether or not the term 1963(a)(1) permits the forfeiture of income proceeds and profits of illegal racketeering activity or whether it does no so include it.

The first thing we need to do, of course, is go to the express wording of the statute.

As in many of these cases of statutory construction, both the government and the defense have argued that the express wording, as well as the intent of the legislature and the legislative history supports their respective positions.

If we take a look first at the express wording of 1963(a)(1), it is important to note, as several courts have held… In particular, I would like to bring to this Court’s attention the case of United States versus McManigall which was decided after the briefs were filed, which is out of the 7th Circuit.

Each of those courts have held that it is of interest that the actual words 1963(a)(1).

It is important for two reasons.

One of the reasons that is relied upon that I think is secondary is the inclusion of the words in the C.C.E. Statute 848 which was decided and passed within two weeks of the passage of the RICO statute.

And, in fact, in that statute in the forfeiture provisions, Congress did in fact specify the forfeiture of proceeds.

However, I believe that is secondary.

I think first we have to look at the actual RICO statute itself.

If we take a look at 1962(a)–

William H. Rehnquist:

Where do we find that, Mr. Dion, in the papers?

Where do we find 1962(a)?

Ronald A. Dion:

–A copy of it is in our Appendix at Appendix 1, Your Honor.

1962(a) is most illuminating in that in that section Congress did in fact use the term “interest”.

Did in fact use the term “income”, and did in fact independently use the word “proceeds”.

Now, the government’s argument, at least one of the positions, was that when Congress includes language in one section of the statute and doesn’t include it in another section, there must be a reason.

We obviously do not disagree with that at all in this context.

In 1962(a) Congress used the terms C.C.E. statute, when they wished to make it forfeitable, they said it was forfeitable.

The question then comes up to what is the interest included in 1963(a)(1)?

What are we talking about?

I would like to first take a shortcut.

One of the things that the government relies upon is a dictionary definition of the term “interest”.

And, one of the dictionary… not the legal definition, but the common Webster’s Dictionary of American Heritage Dictionary definition is that it includes the term “profit”.

Ronald A. Dion:

I would like the Court to understand what they mean by profit in that definition of the word “interest”.

When you go to a bank and you take out a loan and you pay money to the bank for that privilege, the interest is the profit the bank has made.

It is not the same context as the dictionary definition in a legal sense.

Black’s Law Dictionary defines it differently.

That is the definition that was used by the Martino dissent, by the Thevis court and by the McManigall court.

The most general term that can be employed to denote a right, claim, title, or legal share in something.

This is where a lot of lower courts went out and said, all right, if it is an interest in something, what is the something that we are talking about.

In a number of the courts, including a new case that was decided by the 10th Circuit since this case was submitted, United States versus Zang, has said, let’s us look at the RICO statute in its entirety.

What is it that makes the RICO statute different from other criminal statutes?

What is that we are attempting to punish since obviously this is a form of enhancement?

It is a form of we take the substantive crime and if they done it more than one time and other elements are there, we now have a new crime which we have construed in 1970 called RICO.

And, that something in addition is, in fact, the enterprise concept.

So, these courts have gone to say that when we talk about an interest in something, the something we are talking about is the enterprise.

They then go back and take a look at the actual wording of the statute.

In 1962, and other than in one place in 1963, which is the source of litigation here today, whenever Congress used the term “interest”, it said “interest in an enterprise”.

Now, one of the questions the government has raised is why then in 1963(a)(1) does Congress not say interest in an enterprise when in 1963(a)(2) and elsewhere throughout the statute, they say “interest in” and the government conveniently says three or four dots “an enterprise”.

I would submit that the reason that it is included in (a)(2) and not in (2)(1) is what is missing, what those dots represent.

We would submit that what Congress has already stated throughout the substantive events, that it is an 1963(a) at all, but that the reason they did it in (a)(2) was to make very clear, not that the interest which is forfeitable is the interest in the enterprise, but rather that the security of, claim against, or property or contractual right of any kind affording the source of influence over is modified by the term “any enterprise”, since those terms are not used elsewhere in the statute with the said modification.

A lot of the courts and some of the Law Review articles condemn the courts for this, then go into a question of legislative history.

And, as with many of these cases, both the government and the defense submit that the legislative history supports their respective positions.

There is a slight difference, however.

If the Court would take a look at the references that the government has made to support their concept of legislative history, they are statements, speeches, and parts of the record, Congressional Record, that reflect the opinions of individual senators and members of the House.

It is not the position of the entire Congress that passed the statute and that is the intent we are going for if we are going to look at legislative history.

We, on the other hand, rely upon primarily the Preamble to Senate Bill 30, which was 1963, became 1963, which expressly limits the forfeiture of interest in an enterprise.

Also, the Senate reports and House reports which were the synopses and the explanations that were given to the senators and the congressmen when they, in fact, were required to vote on the statute.

When they said, what is this all about, that is what they were looking at.

William H. Rehnquist:

Mr. Dion, you say that the government relies on speeches by individual senators and House members and you rely on synopses and a preamble.

Neither of you rely on the words of the statute itself?

Ronald A. Dion:

Well, both of us rely initially on the wording of the statute and both submit that the express wording supports their respective positions.

Needless to say, unfortunately, it can’t, so obviously there is a conflict and the question of what the expression is.

William H. Rehnquist:

At that point you go to the secondary theory.

Ronald A. Dion:

That is when both sides go to the secondary.

Obviously, the express wording is of primary concern and the legislative history is really a secondary source of interpretation.

Sandra Day O’Connor:

Mr. Dion, with respect to Congress’ stated purpose which, as I understand it, was to eradicate organized crime, why in the world would Congress have wanted to exempt from forfeiture cash profits that are the primary product of an illegal enterprise?

I think your argument is a little strange in that regard.

Ronald A. Dion:

Well, there are primarily two reasons, Your Honor.

The first question is a policy determination that really needs to be addressed by Congress and I believe has been addressed.

And, that is a question of we have now punished the racketeer by throwing him in jail.

We have punished the racketeer by separating him from his office in the enterprise and separating him from his interest in the enterprise.

We have now fined the individual.

Now, we get to the question of the forfeiture aspect.

Who is it that we wish to protect?

Who should be the benefactor of the forfeiture?

Sandra Day O’Connor:

Wasn’t it Congress’ whole purpose to make a crime unprofitable?

Ronald A. Dion:

Of course, it was.

Sandra Day O’Connor:

And, if you don’t forfeit the profits, how do you do that?

Ronald A. Dion:

Well, again, there are two answers.

The first one is that it still is forfeitable.

Not only is it forfeitable under civil law, it is subject to treble damages.

I believe it was a question of policy of if we are going to take the criminal out of the enterprise, who should get the benefit of the forfeiture?

Should it be the government or the victim?

That is one answer.

The other one is a little bit more technical and, unfortunately, it is supposition since no one can really tell.

I would respectfully submit that one of the problems that Congress had was that when they passed the first United States in personam forfeiture action, they were most concerned with the constitutionality of the act.

And, I believe that when they sent… particularly Senator McClellan requested Attorney General Kleindienst to answer the question of the constitutionality.

Now we are getting into the Kleindeinst letter.

I believe this is one of the true reasons and importances of the Kleindienst letter.

Sandra Day O’Connor:

Well, that letter referred to a different version of the bill that was eventually enacted.

Ronald A. Dion:

It was a predecessor of the 1963, however, the importance of the statute… of the letter at this juncture is that when Congress said, is it constitutional, Kleindeinst responded, yes, it is constitutional as limited, as limited to interest in the enterprise, and as limited so that no other property is subject to forfeiture.

I think it really came down to a very simply question.

Ronald A. Dion:

Congress was afraid that if they extended the forfeiture beyond the limitations which were imposed by that letter that they would be getting into an area of constitutional dimension.

And, in order to avoid it, they went into the civil remedies and the civil treble damage forfeitures that were provided.

There is another aspect of the Kleindeinst letter that I believe is important.

The importance of the Kleindeinst letter is not the opinion of the Attorney General that it is limited, forfeitures are limited to an interest in an enterprise, because as Your Honor correctly pointed out, that applied to a prior forfeiture proceeding.

The importance of it is that it was included in Senate Bill 30 in the Preamble to show the intent of the Senate in passing the Bill, the intent of the limitation being there.

So, it is Congress’ intent by using the letter in their Preamble and referring to it that is important, not the Attorney General’s personal opinion.

William H. Rehnquist:

Mr. Dion, looking again at the language of 1963(a) as it appears in your brief at, I guess, the second page of the Appendix, what is the difference in operation between Subsection… What does Subsection (2) have that Subsection (1) doesn’t and and vice versa?

The Defendant would respectfully submit that what (a)(1) hits are… What are referred to in a couple of the cases as passive investments while (a)(2) hits active investments.

(a)(2) in particularly goes to those things which afford a source of control over an enterprise.

Does that modify all of the terms, interest and security of claim against?

Are all of those modified by the language, affording a source of control or influence over?

Ronald A. Dion:

Unfortunately, I am not a grammarian, however, several of the lower courts have so indicated that that limitation does apply across-the-board, if not expressly as an indication of the intent of the entire section.

William H. Rehnquist:

Well, is the reach of (1) somehow narrower than (2)?

Ronald A. Dion:

It is not a question of being narrower or not.

I believe that the government’s interpretation would make one narrower than the other.

I believe they actually go to different things.

For example, let’s assume that you have a situation where an individual is involved in a racketeering situation and he has interest in an enterprise that is less than of substantial source of influence over the enterprise.

That would not be subject to forfeiture under (a)(2), yet that certainly is not the intend of Congress.

The intent of Congress is to totally separate them from the legitimate enterprise entirely.

That would be subject to forfeiture under (a)(1).

There are other things that would be subject to forfeiture under (a)(1) that would not be subject under (a)(2).

For example, in the Godoy case out of the 9th Circuit, the profits and proceeds were then reinvested as part of the enterprise into investment property.

That was subject to forfeiture under (a)(1).

William H. Rehnquist:

What then does (a)(2) reach that (a)(1) doesn’t?

Ronald A. Dion:

(a)(2) primarily would reach not only interest in the enterprise which give a source of influence, which would also be arguably be covered under (a)(1), but it also allows the forfeiture of the securities, the claims, property contractual rights, all of which are a form of influence that arguably is not subject to forfeiture under (a)(1).

I think it is not really a question of is (a)(1) and (a)(2)… let’s categorize them separately.

It is a question of why are they there?

In the–

William H. Rehnquist:

But, surely, when Congress is writing in one single paragraph that someone shall forfeit to the United States, (1), and then a sentence, and then, (2), a sentence, we assume that Congress has two different… It was striking at two different things or it would have put it all in one sentence.

Ronald A. Dion:

–Of course, Your Honor.

Ronald A. Dion:

Initially they did have it all in one sentence as a matter of fact.

(a)(1) was the initial sentence.

Congress then ran into a problem, I would submit, in thereafter they passed the modification of 1962(a) where they included the one percent exception.

And, I agree with the government.

That does not make it not forfeitable.

However, Congress was afraid that someone might so interpret it and to avoid that possibility they more fully set forth the different categories that now make up (a)(1) and (a)(2) of 1963 which was not there before.

Actually though it attempted to make it a little bit more difficult to understand.

I think their intent really was to try to simplify it and they just didn’t succeed unfortunately.

John Paul Stevens:

I wonder if you misspoke or if I was incorrectly advised, but was it not (a)(2) that was originally in the statute and (a)(1) that was added later?

Ronald A. Dion:

I do not believe so.

I believe (a)(1) was the original, the original–

John Paul Stevens:

Because the original draft, I thought, was expressly limited to interest in an enterprise.

Ronald A. Dion:

–That is correct.

That is (a)(1).

John Paul Stevens:

No, it is (a)(2).

Ronald A. Dion:

Excuse me, let me rephrase that.

The original was actually… I apologize.

There was a modification of (a)(1) and (a)(2).

The original was interest in an enterprise.

John Paul Stevens:


Ronald A. Dion:

Which they did not then separate in any way, shape, or form.

Then they broke it down into (a)(1) and (a)(2).

John Paul Stevens:

Now, the words (a)(2), but not in (a)(1).

Ronald A. Dion:

And, I would submit that they are in (a)(2) for the express purpose of modifying the other sections of (a)(2) which were not in the predecessor proposed statute.

John Paul Stevens:

Is it correct that under your reading, and I am not suggesting it is not tenable, but you in effect read in the words (a)(1) and you also treat the violation of Section 1962 language as though it said violation of Section 1962(a) or (b).

You don’t really, as I understand your argument, deal with the possibility that (a)(1) may cover… may refer to 1962(c)?

Ronald A. Dion:

This is where I disagree with some of the lower courts that have ruled in my favor.

I absolutely believe that 1963(a)(1) will reach an enterprising fact under 1962(c).

Godoy, I think, is a perfect example of that or actually, to be most honest, this case, but for the judgment of acquittal, would have been a perfect example of that.

In this case, the individual was charged primarily with being involved in a racketeering situation where he, along with others, purchased property… in his case, he already had the property… donated the property to the enterprise, got it insured, burned it, took the proceeds.

Ronald A. Dion:

What would be forfeitable in this case, but for the judgment of acquittal that was granted below, would be the property, because the property was donated to the purpose, to serve the purpose of the enterprise.

This is an example of a 1962(c) violation or something that would be forfeitable under 1963(a)(1).

So, no, I do not agree with the lower courts, even the ones that decided in my favor, limitation, that 1962(c) does not apply to the forfeiture of (a)(1).

John Paul Stevens:

You are saying that if the government… If you lose that the entire property would have been forfeitable?

Ronald A. Dion:

That is correct.

John Paul Stevens:

Not just the profit from the illegal activity?

Ronald A. Dion:

The property would have been forfeitable because it was donated and used by the enterprise, yes, sir.

I think one of the important things to take into consideration here is the fact we are going into the area of policy determination.

Should it or should it not be forfeitable?

I would agree with the government wholeheartedly–

William H. Rehnquist:

You say, Mr. Dion, that here we are going into the area of policy formulation.

Does that mean in effect that we throw up our hands and say we have no idea what Congress wanted as between these two choices so we just have to pick what seems to us the better one?

Ronald A. Dion:

–Exactly the opposite.

My next sentence was going to be that policy determination should not be made here; that what we are doing here is interpreting the words of the statute and that is what we are limited to.

The only thing that I am trying to bring to the Court’s attention from a policy standpoint is the fact that even Congress across the street doesn’t know really what it wants to do.

The purpose of including in the brief a number of House bills and Senate bills that have come up for consideration after the passage of 1963 is to not to show what Congress’ intent was back in 1970.

Obviously, that is impossible.

What it is to show is the importance of the policy decision which Congress should be making and even they at this point don’t know which way they want to go.

The reason they don’t know is, number one, the question of the constitutionality; and, number two, the question of who should benefit from the forfeiture.

Are society’s need sufficiently met by throwing the racketeer in jail, giving him a fine, and separating him from the enterprise, and giving treble damages to the victims, or do we also need additional forfeiture?

William H. Rehnquist:

Well, what is the constitutional problem?

Ronald A. Dion:

Personally I don’t see one.

William H. Rehnquist:

I don’t either.

Ronald A. Dion:

Personally I think they have every right to do it, Your Honor.

Warren E. Burger:

Well, were you raising that as the policy question?

Is that what you meant by policy?

Ronald A. Dion:


What I basically meant is… Going back to 1970 I think it was a policy determination, because they didn’t know being the first type statute that went in personam.

They didn’t know whether it was going to be declared constitutional or not and they were trying to limit their actions by the limitations that the Attorney General had given them.

I think the policy determination now, which Congress ultimately is going to have to make, is strictly a question of which way are we going to go or both ways?

Ronald A. Dion:

Is it going to be a forfeiture to the government?

Is there going to be treble damages to the victim so that his business, his enterprise, can get back on its feet once the racketeer has been removed or it is best served by doing both?

Warren E. Burger:

Why does that concern the judicial process?

Ronald A. Dion:

It absolutely should not concern this Court, Your Honor, absolutely should not.

It is a decision that should be made across the street.

Warren E. Burger:

Mr. Alito?

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

As Justice O’Connor observed, Congress’ stated objective in enacting the RICO statute was nothing less than “eradication of organized crime” by, among other things, providing enhanced sanctions and new remedies.

It is worth noting that in the preface to the RICO statute Congress, the entire Congress stated that its objective was to do this and found

“that organized crime in the United States is a highly sophisticated, diversified, and widespread activity that annually drains billions of dollars of America’s economy by unlawful conduct and the illegal use of force, fraud, and corruption. “

Organized crime derives a major portion of its power through money obtained through such illegal endeavors as syndicated gambling, loansharking, the theft and fencing of property, the importation and distribution of narcotics and other dangerous drugs, and other forms of social exploitation.

Given Congress’ objective and its finding, it would have been surprising is Congress had enacted a racketeering forfeiture statute, but had held back from authorizing the forfeiture of the illegal profits that constitute organized crime’s life blood and the source of its wealth and power.

Neither petitioner nor the dissent in the court below nor any court or commentator has been able to identify any convincing reason why Congress might not have wanted to authorize the forfeiture of racketeering profits.

Certainly there is nothing harsh or unfair about doing so, about requiring a convicted criminal to give up his illegal gain.

In this case, for example, petitioner obtained some $340,000 in insurance proceeds by taking out fire insurance on his property and arranging for an arsonist to burn it down.

There is no reason why he should be permitted to keep that money.

What reasons as petitioner suggested this morning–

John Paul Stevens:

May I ask a question right there?

What exactly is it that you contend should be forfeited to the United States as opposed to what the insurance company might get back?

I take it that the insurance company might have a claim to this money too.

–That is right, Justice, Stevens, but there is no contradiction there.

Under 1963(c) the Attorney General is directed to dispose of forfeited property, making due provision for the rights of innocent persons.

And, under the procedures that are incorporated into RICO, a victim of racketeering can apply to the Attorney General to receive the forfeited property and can receive that property.

So there is no contradiction.

John Paul Stevens:

So the end result would be the same?

The government would, in effect, collect the forfeited property and turn it back to the insurance company.

That is correct and that is of considerable benefit to the victims.

It spares them the trouble and expense of bringing suit and it also spares them the unpleasant prospect of having to square off in court against the defendant who may be a notorious racketeer.

John Paul Stevens:

Actually the money ends up… I understand what you are saying about undesirability about bringing litigation, but assuming that the rights were enforced by civil litigation, the net result would really be pretty much the same anyway, wouldn’t it?

Well, Congress intended–

John Paul Stevens:

At least in this case.

–That is correct, Justice Stevens.

Congress intended for both of those remedies to be available and they both serve–

Sandra Day O’Connor:

If the government brings the suit, Mr. Alito, are treble damages available though?

–No, the government simply gets the forfeiture.

Sandra Day O’Connor:

And, if the victim did, the victim would get treble damages?

That is correct.

I think they are independent procedures.

Sandra Day O’Connor:

Could the victim bring a suit for treble damages even after the government had imposed a civil forfeiture?

Well, that is not settled, Justice O’Connor.

I would think perhaps the money received from the government would be taken into account in computing the victim’s damages.

Sandra Day O’Connor:

But that is not resolved?

That is not resolved and certainly isn’t the question.

Sandra Day O’Connor:

While I have you interrupted, would you be good enough to give me examples of what you think would be covered under (a)(2) in your interpretation that wouldn’t already be covered in (a)(1)?

It is just hard to make perfectly clear what those two subsections were intended to cover under your view.

Well, one critical difference between the two provisions is that under (a)(1), as we read that statute, the interest must be illegally obtained.

It is an interest acquired or maintained in violation of Section 1962.

Under 1963(a)(2), the interest may not… It need not be illegally obtained.

It may be a lawfully acquired interest in an enterprise that the defendant has established, conducted, controlled, or participated in in violation of the RICO statute.

1963(a)(1) is really the less controversial provision of the forfeiture statute, because it talks about illegally obtained interest.

1963(a)(2) goes further and takes interest that may be lawfully obtained but have been associated with an enterprise that has been found to be unlawful.

And, that goes to–

John Paul Stevens:

Mr. Alito, that really isn’t quite right, is it, because in (a)(2), if you maintain an interest of that kind, it is in violation of Section 1962.

And, (a)(1) covers not only acquisition but also maintaining an interest.

I think you just forgot about the word (a)(1).

Any interest maintained in violation of 1962 is forfeitable under (a)(1).


John Paul Stevens:

And, it seems to me all of your examples under (a)(2) are interests that would be maintained unlawfully.

–Justice Stevens, if maintained is read in that broad way, I am not aware of judicial authority for that proposition.

Then they may overlap to a substantial extent, but it is not at all obvious to me that maintained means exactly that.

Maintained means any interest in enterprise that has found to be unlawful.

It could be read much more narrowly to talk about an interest that has been sustained by racketeering activity in the sense that only through that racketeering activity was the interest permitted to survive.

Your reading is certainly a possible one, but I don’t know… It certainly isn’t settled if that is what Congress intended.

Sandra Day O’Connor:

Could you give a concrete example then of what you think would be covered by (a)(2) that is not covered by (a)(1)?

I think that if someone had a lawful business and fell upon financial hard times and turned to racketeering to keep the business going or, as a sideline, to make extra profit, that would clearly be an interest that is forfeitable under (a)(2).

It is much less clear that that would be reached by (a)(1).

Sandra Day O’Connor:

You think it wouldn’t be maintained in the language of (a)(1), the business maintained–

I don’t know that that is a necessary reading of (a)(1).

I think it is important to point out that in (a)(1) and (a)(2) Congress was not crafting pieces of a puzzle that fit together neatly.

I think Congress was attempting to cover the field as it was in many of the provisions of the RICO statute.

So, there is a considerable overlap in these provisions.

I don’t think anyone, although they have tried mightily has succeeded in construing the two provisions in such a way that they interlock with no overlap.

I think there is a considerable amount of overlap.

William H. Rehnquist:

–But, are you satisfied that in your view (a)(1) covers some things that (a)(2) doesn’t and (a)(2) covers some things that (a)(1) doesn’t?

Certainly (a)(2) covers… Yes, Justice Rehnquist, that is certainly true.

(a)(1) covers–

Sandra Day O’Connor:

What else?

I mean you suggested one example.

I still am not clear on what else you have in mind.

–Well, under our interpretation, (a)(1) covers any interest whether or not in an enterprise and (a)(2) is limited to interest in an enterprise and I think that is what Congress clearly intended.

Sandra Day O’Connor:

Well… But, (a)(1) would pick up that, wouldn’t it?

(a)(1), as I have said, covers any interest as that term has been defined in common use.

Sandra Day O’Connor:

So you don’t need (a)(2)?

No, (a)–

Sandra Day O’Connor:

You can pick up everything under (a)(1) if I am understanding you correctly.

–I don’t think that is true unless you mean… unless you read into the word (a)(2) and I don’t think it is clear that Congress intended that.

William H. Rehnquist:

I supposed maintained in (a)(1) could mean the situation where the thing was begun lawfully so that you couldn’t say it was acquired in violation of 1962.

But, then it gets unlawful in the course of operating it.

I think that is right, Justice Rehnquist.

One may have an interest in a lawful enterprise and they use that enterprise to facilitate racketeering activity.

And, it may be that the racketeering activity does not further the enterprise, but the enterprise furthers the racketeering activity.

That results in a forfeiture under (a)(2) and would not fall within the meaning of the word (a)(1).

Petitioner suggested this morning that one of the reasons that Congress held back from authorizing the forfeiture of racketeering profits was because they entertained some constitutional doubts about their ability to do so.

He quickly concedes that he doesn’t see any constitutional problem and it is noteworthy that this provision of a continuing criminal enterprise statute, upon which he relied and which was enacted during the same term of Congress, authorized the forfeiture of illegal income derived from a continuing criminal enterprise engaged in drug activities.

In passing that statute, Congress had no constitutional doubts, so it is farfetched, I would suggest, to argue that Congress had unexpressed constitutional doubts of very dubious validity about authorizing the forfeiture of the RICO statute.

He argued that Congress may have held back in authorizing the forfeiture of racketeering profits because they thought that the civil remedies were enough, but this is unconvincing for a number of reasons.

First, in many case, narcotics, gambling, prostitution, there may be no identifiable victims to come forward and bring civil suit and the result is that the racketeer gets to keep his illegal gain even though he has been convicted of participating in a criminal offense.

The only argument he raised in his brief and the only argument that was raised by the dissent below for why Congress might not have wanted to authorize the forfeiture of racketeering profits is that our society, he says, is traditionally abhored in personam forfeitures.

But, this argument is not good for at least two reasons.

First of all, as I said, whatever attitudes were in the past, there is little doubt that the Congress that passed the RICO statute did not abhor in personam forfeiture because it enacted an in personam statute, both in RICO and in the continuing criminal enterprise statute.

The RICO provision that is not challenged here, 1963(a)(2), authorizes the forfeiture of interests that may have been lawfully obtained and, therefore, that is a far more extreme position than the forfeiture of illegally obtained gains.

It is not disputed that Congress wanted to do that.

The second reason why this argument is not convincing is that it simply is not true in personam have been historically disfavored.

What was outlawed by the Constitution and by the first Congress was a particular harsh type of in personam forfeiture, what was known in common law as forfeiture by attainder under which the convicted felon was pronounced legally dead and he lost all of his property and he lost the right to transmit property to his heirs.

Now, just because that was felt to be too harsh, it certainly doesn’t follow that the same is true of all in personam forfeiture.

On the contrary, in personam forfeiture is really less harsh than in rem forfeiture because it is a criminal proceeding.

The government must satisfy the reasonable doubt standard.

In rem forfeiture–

William H. Rehnquist:

Well, do you have some dicta in, for instance, the contract law of remedies that equity abhors a forfeiture.

They will read something as… They will try to avoid reading it as a condition that will result in a forfeiture, say, by failure to complete a building?

–Well, I think that is right, Justice Rehnquist.

But, I understand petitioner to be drawing a much mor subtle distinction between in personam and in rem forfeitures.

And, I think the argument that our society has traditionally view in personam forfeitures as harsher and, therefore, has disfavored them as simply not valid.

William H. Rehnquist:

Is there a bright distinction between what you refer to as in rem forfeitures and in personam forfeitures?

There may not be a bright line, but taking the extreme cases, there certainly is a distinction.

In rem is a proceeding against the forfeited object itself and it doesn’t require proof of the owner’s fault.

It may result in the forfeiture in some cases of lawfully obtained property that was used on a particular occasion for an illegal purpose, even without the owner’s knowledge or consent, a boat that was used to import drugs or smuggle goods.

William H. Rehnquist:

But, if I own a boat and it is forfeited in an in rem proceeding and admiralty, I am still without the boat at the end of the proceeding, you know, even if you call it in rem.

That is exactly my point.

I think it is at least as harsh, in many ways much harsher, than the in personam forfeiture that is involved here and simply results in a personal judgment against the defendant.

My point is that is not to venture into the area of policy whether it is socially desirable to forfeit racketeering profits.

My point is that no one has been able to suggest why Congress might not have wanted to do this and with that in mind I would like to turn to the language in the legislative history of RICO, both of which demonstrate that Congress did quite clearly intend to authorize forfeiture of interest such as those involved in this case.

Now, of course, the starting point, as petitioner observed, is the language of 1963(a)(1) itself which calls for the forfeiture of any interest in an enterprise.

Excuse me, of any interest acquired or maintained in violation of 1962, not an interest in enterprise, any interest.

And, profits obtained from racketeering fall squarely within the plain meaning of this statute.

Petitioner contests this on the grounds that an interest means an interest in something.

But, that usage is only employed to draw distinction between the interest which is a bundle of rights, and the thing to which the interest applies, so that racketeering profits are clearly an interest in something.

They are in interest in cash, in a bank account, in CD’s or the like.

If the language of 1963(a)(1) is not clear enough, then the contrast with 1963(a)(2) is really dispositive.

1963(a)(1) talks about any interest.

1963(a)(2) talks about an interest in an enterprise.

When Congress places a limitation like that in one subsection and omits it from another, the inference is virtually inescapable that they did so for a purpose.

And, I don’t think it is a convincing explanation to suggest, as petitioner did here, that Congress simply wanted to say “inc”.

and did not want to have to include the modifying terms, in an enterprise, in 1963(a)(1).

Our interpretation is also supported by the RICO statute’s definition of the term “enterprise”, which is not limited to legal entities, but also extends to wholly illegitimate ones as this Court held in Turkette.

Since Congress wanted to attack these enterprises, it would not make sense for it to limit its forfeiture provision in such as way as to make it ineffectual in doing so.

Yet, in a case of an illegitimate enterprise, there were usually no interest in the enterprise that can be forfeited.

They usually don’t issue stock.

So, it would not have made sense for Congress to provide solely for the forfeiture of interest in an enterprise and not income which is the source of organized crime’s power.

Petitioner relies on the use of the term 1962(a), one of the prohibitory provisions, and states that if Congress intended to require the forfeiture of income in 1963(a)(1), it would have used the term “income” there.

Well, I hardly think there is a dispute about whether the term “income” was in Congress’ vocabulary.

It knew the term, but it had a good reason for using a different term in 1963(a)(1), because while that provisions reaches income, it is not limited to income.

It includes many other types of real and personal property and other things that afford sources of wealth and control.

The alternative to using the broad less specific term 1963(a)(1) would have been an enumeration of all the things subject to forfeiture.

William H. Rehnquist:

Your contention then really is that interest in the term (a)(1) means any real or personal property, tangible or intangible?

That is correct, Justice Rehnquist.

The issue here, of course, is just the proceeds, but we would contend that it reaches any type of real or personal property.

And, as petitioner himself suggested, the lower courts have held that it reaches other things such as offices and companies and labor unions and positions that permit a racketeer to control a business or another organization.

William H. Rehnquist:

Now, what specifically is the property that is being forfeited by the District Court order here?

The proceeds that petitioner received from insurance companies when he submitted a fraudulent claim on the property that he himself arranged to have burned down.

Sandra Day O’Connor:


It is cash, $140,000.

In a somewhat related argument, petitioner relies on the contemporaneously enacted provision of continuing criminal enterprise statue which, as I said, authorizes the forfeiture of illegal income derived from the kinds of enterprises with which that statute is concerned.

But, although it is true that these two provisions were contemporaneously enacted, they are really the handiwork of different congressional committees, and, thus, it is not clear their language was placed under a microscope and compared.

Moreover, the language is fully consistent.

In the C.C.E. statute, Congress was concerned with a single, narrow type of enterprise, an enterprise that is engaged in drug activities.

These enterprises usually generate large cash profits and there usually is not an interest in the enterprise that can be forfeited.

So, Congress used the narrow term “income”.

In RICO, Congress was concerned with a different problem with a vast variety of enterprises and with more than 30 specific kinds of enumerated criminal conduct.

So, it used the broader term “interest”.

Moreover, if it is true, as petitioner suggests, that Congress carefully compared these two provisions, that supports our argument and not his.

As I said, no one has suggested any reason why Congress might not have wanted to authorize the forfeiture of racketeering profits.

The only possible explanation is mere oversight.

And, alerted by the C.C.E. provision to the availability of this potent weapon, it doesn’t make sense to suggest that Congress would have omitted it from the RICO statute without at least some discussion or debate if that is what petitioner’s position must be.

John Paul Stevens:

But, the other side of the coin, if I might interrupt, is I gather they included or they added Subsection (1) without any particular explanation or debate focusing on that subjection, isn’t that true?

That is one of our problems, in fact.

That is certainly true, Justice Stevens, but where Congress does something that is fully consistent with its intent, I think that is less in need of an explanation than when Congress is charged with doing something that runs directly counter to its broad intent and that is what petitioner–

John Paul Stevens:

Well, except for the fact… This is a very tricky case.

I must confess to be very puzzled by it.

But, except for the fact, as Justice Rehnquist has suggested, if you are talking about any property of any kind in the way of profits, it would seem to me that Congress would have been more apt to use the kind of language it used in Section 848.

Whereas this does have at least… There is a tenable explanation for this, namely, the difference between passive and active investments.

This would pick up, which (a)(2) wouldn’t, using proceeds to buy two percent of some publicly… to buy an interest in a publicly held legitimate business.

That would be forfeitable, as I understand it, under (a)(1), but would not be forfeitable under (a)(2).

–That is correct, Justice Stevens.

John Paul Stevens:

So there is some sensible explanation for his reading that does not make the two just redundant really.

Well, we don’t argue that his reading renders them completely redundant.

I think it is clear that our reading doesn’t render them completely redundant.

As I said, these things were intended to occupy the field and not really to interlock.

John Paul Stevens:

The problem with his reading is you have got to stick some extra words in the statute.

That is one of the problems with his reading and another major problem with his reading, beyond the plain language of RICO, is the legislative history.

There are three points I would make about the legislative history very quickly.

First, there are numerous places in the legislative history where sponsors and principal advocates of RICO, not just any congressman, but the congressmen who were responsible for drafting this bill and getting it enacted, stated that one of the purposes of the forfeiture provision was to take away racketeers’ illegal gain.

In the Senate, Senator McClellan, who was probably the chief sponsor of the bill, stated that RICO

“would forfeit the ill-gotten gain of criminals where the enter or operate an organization through a pattern of racketeering activity. “

William H. Rehnquist:

Well, Mr. Alito, do you think you could take a senator’s statement on the floor that we want ill-gotten gains forfeited and say he must have meant profits as opposed to other kinds of interests?

I think that is what ill-gotten gains means.

It means illegal profit.

It certainly doesn’t mean… That certainly is a much more reasonable reading than to say that it means a lawfully acquired interest in an enterprise that has been used to further a criminal purpose.

William H. Rehnquist:

But, my query was whether Senator McClellan was really focusing on the fine distinctions that perhaps the statute might have drawn when he said ill-gotten gain.

Well, it is less specific than we might have hoped, but I think it is a reasonable approximation of our argument.

And, this is not a single, isolated statement.

There are many statements in the debate to that effect and they illicited no opposition or inquiries from other members of Congress suggesting that maybe they shouldn’t go that far.

Representative Poth, to give just one more example, who was perhaps the statute’s chief advocate in the House, said after conviction the ill-gotten gains must be forfeited to the government.

And, the House Report stated that the forfeiture provision extends

“to all property and interests as broadly defined which are related to the violation. “

And, as I said, there are other statements to this effect.

The second point is, as I have pointed out, that forfeiting racketeering profits is entirely consistent with Congress’ broad intent.

And, there are many specific problems that Congress was concerned with during the congressional debates that virtually cry out for the forfeiture of racketeering profits.

One example are illegal businesses that organized crime has dominated like narcotics and gambling where there are no interests in the enterprise that can be taken in forfeiture, but striking at the illegal profits really gets at the heart of the matter.

And, another was the practice of taking over a legitimate business, skimming off profits and leaving it bankrupt.

Forfeiting and interest in the bankrupt shell would not do any good, but taking the illegal profits that are drained off the business would be an effective remedy.

The third point that emerges from the legislative history is it is certainly true, as petitioner points out, that there are statements in the legislative history that the forfeiture provision results in the forfeiture of interests in an enterprise.

But, none of the statements, addressed to the finally enacted version of RICO, states that the forfeiture provision is limited to these interests.

These are merely illustrative and not exhaustive.

And, as to the letter from Deputy Attorney General Kleindeinst upon which petitioner relies, this addressed an earlier version of the RICO statute that was limited to interest in an enterprise, so it really sheds no light on what the finally enacted and amended version means.

This letter was quoted and cited in the Senate Report because of its bearing on the question of the constitutionality of the forfeiture of interest in an enterprise.

And, the point that Mr. Kleindeinst was making was there isn’t a constitutional problem when the forfeited interest is one in an enterprise that was involved in the violation and not simply an enterprise that the convicted person happened to have.

In conclusion, the forfeiture of racketeering profits is an extremely important weapon in the on-going battle against organized crime.

The plain language of RICO and the legislative history show with some certainty that Congress intended to acquire the forfeiture of such proceeds and we, therefore, urge that the judgment of the court below be affirmed.

Warren E. Burger:

Do you have anything further, Mr. Dion.

Ronald A. Dion:

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

I would like to respond to two things in particular that possibly were not discussed in the affirmative argument.

One question is what exactly is the difference and the purpose of in personam jurisdiction versus in rem forfeiture jurisdiction?

The reason that they went over to in personam jurisdiction is twofold.

Number one, unlike in rem jurisdiction, it allows for the immediate and mandatory forfeiture, totally non-discretionary.

In rem, you have independent lawsuits, independent parties involved.

More importantly, the reason that it was in personam is so that the 1963 forfeiture could serve its purpose and go to things that were normally not forfeitable, that are not in rem.

I think the case of United States versus Rubin is the perfect example of this.

The government wanted the racketeer out the union, out of the enterprise.

To do this, the 5th Circuit said, all right, it is subject… the office is subject to forfeiture.

That is not in rem.

It has to be in personam.

That is the reason for the in personam jurisdiction.

It is all well and good for the government to say that we think profits should be forfeitable.

We believe that it is an effective weapon.

That is not what we are here to discuss.

What we are here to discuss is whether it does or does not fall under the statute as written.

For example, the government has gone down and listed a number of things that they believe are subject to forfeiture under RICO which only has as its fruits, if you will–

Byron R. White:

Of course, if the language was all that clear, probably this case wouldn’t be here.

I thought you said earlier in your argument, your argument in chief, the statute is a little confusing–

Ronald A. Dion:

–It is.

Byron R. White:

–and hard to parse.

So you must turn to secondary sources like the government does, is that right?

Ronald A. Dion:

The secondary sources certainly are illustrative.

There is no question about it.

Byron R. White:

So the government is entitled to turn to its secondary sources like you are.

Ronald A. Dion:

Well, there is a question of what level.

I believe that the statements of congressmen and senators on the floor really isn’t secondary, it is almost in the third position.

What we are relying upon is the exact wording of the bills… of the Preamble of the Bill and the reports which is what the congressmen had in front of them as their understanding of the statute when they were voting on the issue.

William H. Rehnquist:

Of course, you are not in the position of a civil litigant either where it is kind of evenly divided.

William H. Rehnquist:

It goes perhaps to the person without the burden of proof.

You have the presumption of lenity in a criminal action in your favor.

Ronald A. Dion:

We would submit that we do.

One of the things that is interesting is the government talks about the history of the last 15 years, how now, because forfeitures are so run-of-the-mill, we can interpret them as broadly as we possibly want.

However, none of those were on the books in 1970 when the issue of the intent of Congress actually came into being, the kind of after-the-fact.

I think one of the important things though is what really was the purpose of the racketeering statute?

The purpose of the statute… and I don’t think there is really any argument on this… is to get the racketeer out of the enterprise, to allow the enterprise to live independent of the racketeering and to survive.

Very simply stated, unless the profits and proceeds are put back into an enterprise, it falls outside the scope of the statute.

That is one of the reasons we have 1962(a).

That is what provides for the substantive crime and ultimately the forfeiture when there is a plowing back into an enterprise of illegally obtained interest and proceeds.

If the interest and proceeds are not put back into the enterprise… though it may very well be that Congress would love to get those profits and proceeds… it goes outside the purpose and scope of the racketeering statute.

Sandra Day O’Connor:

Well, Mr. Dion, you do concede that Congress, in its stated purpose, intended to eradicate organized crime, do you not?

Ronald A. Dion:

There is no question that was their stated purpose.

However, at the same time, we take a look at what are the underlying crimes.

The government basically says we have got to go after profits and proceeds as a forfeiture of all the underlying crimes.

If we look at the list of underlying crimes, Congress has not provided for forfeiture of the underlying substantive crimes in many cases.

Gambling, prostitution and murder, for example, have no forfeiture provisions attached to them.

That is one of the reasons I would suggest that the scope and purpose of RICO is getting the criminal out of the enterprise and that under that interpretation the statute can be read as expressly worded without a provision for the forfeiture of income, profits, and proceeds.

Warren E. Burger:

Thank you, gentlemen.

The case is submitted.

We will resume at 1:00.