United States v. Lizza Industries, Inc., Herbert Hochreiter

VAN GRAAFEILAND, Circuit Judge,

concurring in part and dissenting in part:

Although I agree in the main with the holding of the majority, I am troubled by the apparent failure of the district court to consider how RICO’s forfeiture provisions mesh with the Government’s tax laws. It seems to me that we lose sight of RICO’s basic purpose when we require a RICO defendant to forfeit to the Government that portion of the defendant’s unlawfully acquired profits which the Government already has taken by taxing the defendant’s income.

The question whether the proceeds of illegal activity must still be in existence in order to be subject to forfeit, while once a matter of some uncertainty, see, e.g., United States v. Alexander, 741 F.2d 962, 966-68 (7th Cir.1984), is now generally answered in the negative, United States v. Ginsburg, 773 F.2d 798 (7th Cir.1985); United States v. Conner, 752 F.2d 566, 576-77 (11th Cir.1985). However, if RICO’s goal is “to remove the profit from organized crime by separating the racketeer from his dishonest gains”, Russello v. United States, 464 U.S. 16, 28, 104 S.Ct. 296, 303, 78 L.Ed.2d 17 (1983), the Treasury Department already has accomplished this in substantial part, and, as to that part, there is no need for the Government to do it again.

It is generally recognized by now that RICO forfeiture is not a form of in rem seizure but is instead a criminal penalty against the convicted defendant. United States v. Huber, 603 F.2d 387, 397 (2d Cir.1979), cert. denied, 445 U.S. 927, 100 S.Ct. 1312, 63 L.Ed.2d 759 (1980); United States v. Conner, supra, 752 F.2d at 576. As such, it must meet the same constitutional standards as do other forms of punishment. For example, it should not lay “an unequal hand on those who have committed intrinsically the same quality of offense.” McLaughlin v. Florida, 379 U.S. 184, 194, 85 S.Ct. 283, 289, 13 L.Ed.2d 222 (1964) (quoting Skinner v. Oklahoma, 316 U.S. 535, 541, 62 S.Ct. 1110, 1113, 86 L.Ed. 1655 (1942)). An argument might be made that the hand which dips into a RICO defendant’s purse a second time is heavier than one which dips but once. If we adhere to RICO’s basic purpose, the separation of the racketeer from his dishonest gains, we can, as we should, avoid the constitutional issues of due process and equal protection that arise as a result of the Government’s double-dipping in the instant case.

In my opinion, the defendants should have been given an opportunity to prove how much of their unlawfully acquired profits already had been taken from them by the Government.