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October 7, 1985


The opinion of the court was delivered by: GESELL

GERHARD A. GESELL, United States District Judge.


 The Court has before it the motion of defendant Ronald Perholtz *fn1" filed on September 13 to set aside a restraining order signed by Chief Judge Robinson on July 30, 1985. The order was obtained by the United States in an ex parte hearing coincident with the filing of the original, sealed indictment in this case pursuant to 18 U.S.C. § 1963(e) (1). A copy of the order is attached. The indictment was unsealed on July 31 and a superceding indictment filed on August 6.

 Defendant Perholtz maintains that the restraining order must be dissolved because it violates his right to due process and his Sixth Amendment right to retain the counsel of his choice. The Court found that the defendant bore the burden of proof on his contention that the restraining order prejudiced his Sixth Amendment rights. In an effort to meet this burden the defendant presented testimony, exhibits and argument which included an effort to demonstrate that the restraining order is overly broad. In responding to the defendant's Sixth Amendment claim, the United States, without withdrawing its contention that the defendant bore the burden of proof in challenging the scope of the order, presented exhibits, testimony, a detailed exposition of the case against the defendant and argument to show that the properties named in the indictment were likely to be subject to forfeiture. Many of the materials which formed the basis of the United State's presentation were made available to the defendants for inspection several weeks ago. The defendant responded to the United States' legal arguments but did not directly contest any of its representations on what the United States' evidence may show.

 Based upon this factual hearing the Court finds by the preponderance of the evidence that the United States has established that the properties listed in the restraining order are likely to be subject to forfeiture but that the order is overly broad to the extent it prevents defendant Perholtz from using funds covered by the order for payment of any federal taxes he now owes or may owe while the order is in effect. The Court further finds that when the order is so construed and limited, defendant Perholtz has failed to establish that the order has or is likely to prejudice his Sixth Amendment rights by depriving him of funds necessary for his defense.

 The restraining order must nonetheless be vacated. The United States cannot obtain a permanent restraining order that prevents a defendant from disposing of his property by means of an ex parte proceeding. Due process requires that such an order be temporary and the United States must give affected defendants notice of a hearing within a brief amount of time or the ex parte order expires. A ten day limitation on the duration of such ex parte orders seems appropriate. The statute itself provides that ex parte orders obtained before indictment should expire within ten days. 18 U.S.C. § 1963(e) (2). Ten days is also the time period provided to secure the due process rights of civil litigants under Fed. R. Civ. P. 65(b) and numerous courts have held that the same limitation is appropriately imposed on restraining orders under this and parallel criminal forfeiture provisions. See United States v. Rogers, 602 F. Supp. 1332, 1342-45 (D.Co. 1985) (interpreting 18 U.S.C. § 1963(e)); United States v. Spilotro, 680 F.2d 612, 617 (9th Cir. 1982) (interpreting pre-1984 provision of 18 U.S.C. § 1963(b)); United States v. Lewis, 759 F.2d 1316 (8th Cir. 1985) (interpreting 18 U.S.C. § 848); United States v. Crozier, 674 F.2d 1293 (9th Cir. 1982) (same); United States v. Veon, 538 F. Supp. 237, 243-49 (E.D.Ca. 1982) (same); see also Criminal Forfeiture and the Necessity for a Post Seizure Hearing: Are CCE and RICO Rackets for the Government ?, 57 St. Johns L. Rev. 776 (1983).

 The United States has taken the position that Congress intended for this statute to permit the imposition of a permanent restraining order in an ex parte hearing and the order may only be modified through the defendant's motion for a hearing at which the defendant must bear the burden of proof. The Court cannot accept this view. The legislative history indicates that Congress realized that a subsequent hearing might be necessary after the entry of an ex parte restraining order. S. Rep. No. 98-225, 98th Cong., 2d Sess. 203, reprinted in 1984 U. S. Code Cong. & Ad. News 3183, 3386. The constitutional guarantee of a right to be heard on any deprivation of property requires that notice be given and a hearing be held within a brief time after the entry of the ex parte order.

 Moreover, if the order is challenged it cannot become permanent until the United States has meet the burden of establishing that it is likely that it will be able to convince a jury that the property involved is subject to forfeiture in a hearing in which the defendant has an opportunity to respond, as has been done in this instance. The mere fact of indictment is not enough. The United States must make a prima facie showing that it will be able to prove the elements necessary for forfeiture. The statute prevents such a hearing from becoming a premature trial of the United States' case by permitting the consideration of information which would be inadmissible under the Federal Rules of Evidence. 18 U.S.C. § 1963(e) (3).

 It now appears to be well settled that rulings dissolving or granting restraining orders such as this are appealable. See United States v. Ferrantino, 738 F.2d 109, 110 (6th Cir. 1983); United States v. Spilotro, 680 F.2d 612, 615 (9th Cir. 1982). Because this ruling involves questions of first impressions the Court will stay its order vacating the restraining order for ten days to enable the United States, if it so desires, to seek review in the Court of Appeals. The stay will also permit defendant Perholtz to cross-appeal the aspects of the Court's ruling and findings which are adverse to him, if he so desires. Clarification of the timing, burden and procedures for dealing with restraining orders under this new statute is necessary to avoid prejudice to defendants and uncertainty among prosecutors. The modification pertaining to federal taxes shall take effect immediately, however, as the United States does not oppose it.

 Accordingly, it is ordered that the restraining order of July 30 is vacated. The order vacating the restraining order is stayed for ten days, during which period the restraining order is modified to permit defendant Perholtz to pay any federal taxes which are now due or become due by having any of the banks holding accounts which are subject to the restraining order issue a certified check payable directly to the United States Treasury.


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