United States v. Saccoccia

United States Court of Appeals
For the First Circuit

No. 04-2669

UNITED STATES OF AMERICA,

Appellee,

v.

STEPHEN A. SACCOCCIA,

Defendant,

JACK HILL, ESQ., and W. KENNETH O'DONNELL, ESQ.,

Appellants.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND

[Hon. Ernest C. Torres, Chief U.S. District Judge]

Before

Boudin, Chief Judge,
Stahl, Senior Circuit Judge,
and Lynch, Circuit Judge.

W. Kenneth O'Donnell for appellants.
Michael P. Iannotti, Assistant United States Attorney, with
whom Robert Clark Corrente, United States Attorney, and Michael E.
Davitt and Patrick Murphy, Asset Forfeiture and Money Laundering
Section, United States Department of Justice, were on brief, for
appellee.

December 23, 2005
 LYNCH, Circuit Judge. This case presents the question of

whether appellants, a pair of criminal defense attorneys, committed

civil contempt when they accepted legal fees from their client in

the face of an earlier protective order restraining the defendant

client from disbursing certain assets.

The appellants, attorneys Jack Hill and W. Kenneth

O'Donnell, began representing the client, Stephen Saccoccia, in

1991 and 1992, respectively. Saccoccia and his co-defendants were

convicted in 1992 and 1993 in separate trials; their appeals from

the criminal convictions were resolved against them in 1995.

The government first sought in 1998 to recover virtually

all of the fees paid to counsel. The government did not at that

time pursue a contempt theory; instead, it sought to reach the sums

paid to the lawyers both before and after trial as forfeited funds

under the Racketeer Influenced and Corrupt Organizations Act

(RICO), 18 U.S.C. § 1961 et seq. The district court rejected the

government's forfeiture claim as to fees paid before the jury's

verdict of conviction. It allowed the claims for fees paid after

the jury verdict but before entry of the judgment of conviction --

an approximately three-month span in 1993.

This court vacated the order as to the post-verdict fees.

The government then tried again, via a motion filed in 2004, to

obtain an award of the post-verdict fees, this time utilizing a

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civil contempt theory. The district court again agreed and ordered

the defense lawyers to turn over these fees to the government.

We reverse. We find that the Protective Order at issue

in this case did not clearly and unambiguously enjoin Hill and

O'Donnell from accepting the attorneys' fees in question, and so

the civil contempt finding cannot stand.

I.

A. The Indictment, Protective Order, and Trial

In 1991, Saccoccia, his wife, and a host of other

defendants were indicted for crimes arising out of a scheme to

launder $140 million in illegal drug distribution proceeds.1 See

United States v. Saccoccia (Saccoccia V), 342 F. Supp. 2d 25, 27

(D.R.I. 2004). Saccoccia, his wife, and several of the other

defendants were charged with, inter alia, one count of RICO

conspiracy. See United States v. Saccoccia (Saccoccia IV), 354

F.3d 9, 11 (1st Cir. 2003). The indictment contained a forfeiture

count for the defendants' interests in various assets; these

included named bank accounts, business property and proceeds

(including gold and jewelry), and "$140,000,000 in U.S. currency in

that such sum in the aggregate represents the proceeds the said

defendants obtained directly and indirectly from the racketeering

activity."

1
A superseding indictment was returned on July 22, 1992.

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 Four days after the initial indictment was returned, the

district court, pursuant to 18 U.S.C. § 1963(d)(1)(A),2 entered an

ex parte Protective Order ("the Order") enjoining Saccoccia and the

other defendants, and their agents and attorneys, from transferring

assets that the government alleged would be forfeitable upon

conviction. See Saccoccia V, 342 F. Supp. 2d at 27. The

interpretation of that Order is at issue in this case. The Order

banned the transfer of specific assets, such as certain bank

accounts. It also stated that Saccoccia and his agents, attorneys

and others, "shall not, without approval of this Court . . .

alienate, dissipate, [or] transfer . . . or . . . take, or cause to

be taken, any action which . . . would have the effect of . . . in

any way diminishing the value of any property named in Attachment

A to this Order." Attachment A includes among the named property

the following: "$140,000,000 in U.S. currency for which the

defendants . . . are jointly and severally liable."

Saccoccia's attorneys were concerned from the outset

about whether any attorneys' fees paid by Saccoccia would be

subject to forfeiture. In early 1992, shortly after Saccoccia was

2
This provision authorizes the court to enter a restraining order
or injunction "to preserve the availability of property described
in [the criminal forfeiture provision, § 1963(a)] . . . upon the
filing of an indictment or information" charging a RICO violation
and "alleging that the property with respect to which the order is
sought would, in the event of conviction, be subject to
forfeiture." 18 U.S.C. § 1963(d)(1)(A).

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indicted, appellant Hill and another attorney met with Assistant

United States Attorneys (AUSAs) James Leavey and Michael Davitt and

asked them about their office's policy regarding forfeiture of the

fees paid to defense attorneys. See United States v. Saccoccia

(Saccoccia III), 165 F. Supp. 2d 103, 106 (D.R.I. 2001), aff'd in

part, vacated in part, 354 F.3d 9 (1st Cir. 2003). Leavey told

them that the U.S. Attorney's Office in Rhode Island had never

sought to forfeit reasonable fees paid to attorneys. Id.

Specifically, Hill testified that Leavey said "that he and the

Government in Rhode Island had never done that. It was not their

policy to do that, and . . . they did not intend to do that,

subject to the caveat of reasonableness, in terms that monies

received were reasonable, in light of the services rendered and

expenses and so forth." However, Leavey testified at a 1999

forfeiture hearing that he also told the two defense attorneys that

day that "this case may be the first one" where a forfeiture of

reasonable attorneys' fees would be sought.

A couple of weeks later, Hill and the other attorney

again met with Leavey, this time to discuss the possibility of a

plea agreement for Saccoccia. Id. Leavey stated during that

discussion that if the parties reached agreement on a plea, Leavey

would include in the written plea agreement a provision that the

government would not seek forfeiture of reasonable attorneys' fees.

Id.

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 Later, in the fall of 1992, appellant O'Donnell told

Leavey that he, too, might represent Saccoccia and asked about the

government's forfeiture policy. Id. Leavey essentially repeated

what he had told Hill, stating to O'Donnell that the U.S.

Attorney's Office in Rhode Island had never sought to forfeit

reasonable attorneys' fees. Id. O'Donnell later testified that

Leavey told him during that conversation "that [Leavey] was aware

that there were other assets out there that hadn't been

specifically frozen, and [Leavey] essentially said that . . . if

you find . . . an asset which isn't frozen, you can have it for

attorney's fees, as long as it's reasonable and as long as none of

it goes to Saccoccia or his wife." O'Donnell also testified that

Leavey's assurances -- that his office had never sought forfeiture

of fees and had no intention of doing so in this case -- were

reiterated to him by the then-U.S. Attorney for the District of

Rhode Island during a telephone call shortly after O'Donnell's

conversation with Leavey.3

On September 28, 1992, during a hearing before the

district court,4 attorneys for Saccoccia and other defendants

3
In a later conversation, on April 5, 1996, Leavey told O'Donnell
that his office "did not intend to move to forfeit his legal fee"
but would do so if "[then-Attorney General] Janet Reno said to do
it."
4
The district judge who presided over this hearing, Saccoccia's
subsequent trial, and the forfeiture and contempt litigation is not
the same judge who had entered the Protective Order.

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argued in support of their motions to compel the government to

reveal precisely which of Saccoccia's assets it had frozen, and

upon what authority, so that defense counsel could look to any

unfrozen accounts for legal fees and defense costs. During that

hearing, an attorney representing Mrs. Saccoccia suggested that

there was a "race for the proceeds" developing between the

government and defense counsel; he told the court that he had at

one point called AUSA Leavey to tell him about an unfrozen account

in Switzerland and Leavey replied, "don't tell me because if you

tell me I am going to have to go get it." AUSA Leavey argued in

response that the government should not be forced to specify the

frozen accounts for the defense because that would give Saccoccia

"free rein to go to all the other accounts that he has," if he had

any at all. He suggested that the defense should instead give the

government a list of all of Saccoccia's assets, and the government

would then tell the defense which (if any) were unfrozen. Later in

the hearing, he characterized the government's position as: "[G]ive

us assets of a hundred and forty million dollars and everything

over that is yours for legal counsel."

The district court denied the defense motions. In so

doing, it noted its understanding that "the Government cannot

deprive a criminal Defendant of his only assets available for

attorneys' fees without any showing that the assets are connected

to illegal activity." However, it said that that was not the

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situation before the court. The main legal precedent the defense

team cited for its position was distinguishable, the court said,

because in that case,

the Government had left the Defendant with
nothing but the shirt on his back. So that,
in effect, what the Government had done was
taken all of the assets of the Defendant and
left the Defendant unable to pay counsel.

There's been no such showing in this
case. . . . It would seem to the Court that
the minimum . . . that the Defendants would
have to present . . . to the Court [is
something] to indicate that the tying up of
their assets is depriving them of funds needed
to conduct their defense and that is lacking.

Saccoccia eventually went to trial; on March 12, 1993,

the jury found him guilty of one count of RICO conspiracy, as well

as numerous substantive (i.e. non-conspiracy-based) counts of money

laundering and related offenses under 18 U.S.C. §§ 1952, 1956, and

1957. The jury determined, as part of its finding as to the

substantive counts, that Saccoccia had laundered $9,382,757.

However, it did not make any finding as to RICO forfeiture;

Saccoccia waived jury trial on that issue, and no finding was made

as to RICO forfeiture prior to sentencing. See United States v.

Saccoccia (Saccoccia I), 823 F. Supp. 994, 997 & n.1 (D.R.I. 1993),

aff'd, 58 F.3d 754 (1st Cir. 1995).

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 The district court sentenced Saccoccia on May 12, 1993,5

to a 660-year term of imprisonment and a fine in excess of $15

million; the court also, pursuant to RICO, ordered Saccoccia to

forfeit in excess of $136 million. On June 4, 1993, the court

issued a written opinion explaining its forfeiture conclusion and

reiterating that Saccoccia had to forfeit more than $136 million.

Id. at 1006. Judgment of conviction entered on June 10, 1993; the

conviction, sentence, fine, and forfeiture were affirmed on appeal

in 1995. United States v. Saccoccia (Saccoccia II), 58 F.3d 754

(1st Cir. 1995).

B. The Fees

The issues on appeal, more than twelve years after

Saccoccia's conviction, concern the fees received by his attorneys

in the period between the jury verdict on March 12, 1993, and the

imposition of sentence, opinion on forfeiture, and judgment of

conviction, on May 12, June 4, and June 10, 1993, respectively. In

an earlier proceeding (discussed further below), the district court

found that appellant Hill received a total of $504,985 in fees.

Saccoccia III, 165 F. Supp. 2d at 107. Of that total, Hill

received $250,000 before the jury verdict against Saccoccia, while

"[t]he remaining $254,985 was received on March 25, 1993." Id. It

is this $254,985 which is still at issue as to Hill. All but

5
The government stated in its brief that sentence was imposed on
May 18, not May 12. We use the date set forth in the records of
the district court.

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$25,000 of Hill's total fee was paid in the form of checks or wire

transfers from a Swiss attorney, Valentin Landman; the payments

ranged in size from $20,000 to $229,985. Id. The remaining

$25,000 was delivered, in cash, to appellant O'Donnell's office.

Id. The date of this cash transfer is not clear; O'Donnell stated

in a deposition that it was "between February 17 and March" of

1993, but could not provide a more exact date.

O'Donnell, meanwhile, was also receiving payment of his

own fees. The district court found that "[b]etween January 1993

and April 1993, O'Donnell received approximately $410,000. One

hundred twenty-five thousand dollars of that amount was delivered

anonymously to his office in cash installments ranging from $25,000

to $50,000." Id. The court found that O'Donnell kept $107,500 of

the total as payment for his fees, while the rest was given to him

for distribution to co-defense attorneys and others. Id.

O'Donnell received $65,000 of his total fee before Saccoccia was

found guilty and the remaining $42,500 in the weeks after the jury

verdict. Id. As to O'Donnell, it is the $42,500 which the

government now seeks to recover.

During an August 11, 1999 hearing, O'Donnell testified

that various gold and jewelry merchants in Rhode Island and

Massachusetts had told him, before Saccoccia's trial, that they had

done legitimate business with Saccoccia over the years and that

they had records to prove it. O'Donnell also testified that he was

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told by Saccoccia that some of the monies the defense attorneys

received as fees were the proceeds of loans Saccoccia had made

earlier that were being repaid by the debtors, while other funds

used for attorneys' fees stemmed from loans made to Saccoccia by

others. Specifically, O'Donnell testified that Saccoccia said one

of the payments consisted of the proceeds of a loan Saccoccia had

made that had nothing to do with illegality but instead stemmed

from "his other businesses." O'Donnell also stated that Saccoccia

told him "on several occasions" that a large sum of money that had

been wired to defense counsel from Switzerland for fees stemmed

from funds loaned to Saccoccia by "an individual and a bank." He

further testified that he had seen documents that "appeared . . .

to be loan documents, promissory notes" bearing Saccoccia's

signature, which confirmed for him that the latter payments were

indeed loan proceeds. He stated: "Loan proceeds that never touched

the Saccoccia's [sic] hands are not covered by that [protective]

order, I would think. Accounts receivable owed to him that . . .

never touched his hands and were never in his possession aren't

encompassed by that order either."

C. The First Proceeding for Forfeiture of Attorneys' Fees

After the defense attorneys had received the disputed

funds but before the filing of any motion seeking a return of fees

on grounds of forfeiture, the government sought leave in August

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1993, pursuant to 18 U.S.C. § 1963(k),6 to depose various defense

attorneys, including appellants, on the subject of their legal fees

and Saccoccia's assets generally. At a February 18, 1994, hearing

on the application, the district court asked AUSA Leavey whether

the purpose of deposing the attorneys to learn about their fees was

to forfeit them. Leavey replied:

The purpose at this point, Your Honor, would
be to locate the money that [Saccoccia] now
has and to seize them [sic] to satisfy the
judgment. If there is a next step after that,
in going after attorneys' fees that he has
already paid the attorneys, we are not at that
stage at this point.

The district court granted the government's § 1963(k) application

on August 28, 1995; pursuant to that order, Hill and O'Donnell were

deposed on March 28 and 29, 1996.

The government filed a motion on January 23, 1998, based

on the deposition testimony and evidence from the criminal trials,

seeking to compel Hill, O'Donnell, and several other defense

attorneys involved in the Saccoccia case to turn over their fees.

Specifically, the government sought the return of $504,985 from

Hill and $107,500 from O'Donnell. It argued that the fees were

forfeitable under 18 U.S.C. § 1963(c), which applies to "proceeds"

of a RICO conspiracy that have been transferred by a defendant to

another person, or § 1963(m), which makes other property of a

6
Section 1963(k) permits the court, upon application of the
United States, to "order that the testimony of any witness relating
to the property forfeited be taken by deposition."

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defendant forfeitable as "substitute assets" when the "proceeds"

cannot be located. See Saccoccia III, 165 F. Supp. 2d at 105.

Alternatively, the government argued that if the fees were not

forfeitable under § 1963(c) or (m), they were forfeitable

nonetheless because they had been transferred in violation of the

Order. Id. This was purely a statutory RICO forfeiture argument

and not a contempt argument. Id. at 114.

On July 31, 2001, the district court issued its decision,

finding for the government in part and ordering Hill and O'Donnell

to disgorge $254,985 and $42,500, respectively. Id. Those were

the amounts, the district court found, that Hill and O'Donnell had

received after the March 1993 jury verdict against Saccoccia. It

reasoned that prior to the verdict, Hill and O'Donnell were

"reasonably without cause to believe" the money used to pay them

was subject to forfeiture, 18 U.S.C. § 1963(c), and therefore even

though the funds were in fact proceeds of money laundering

violations, they were not forfeitable under § 1963(c). Saccoccia

III, 165 F. Supp. 2d at 111-12. The same result did not obtain for

post-verdict fees, the court held, because "[a]t that point, there

no longer was any reasonable doubt about the Saccoccias' guilt, and

it had become clear that virtually all of their assets were

proceeds of their RICO violations." Id. (emphasis added).

The district court rejected the government's alternative

argument that all the fees, including pre-jury verdict payments,

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had to be disgorged because their acceptance violated the Order.

It wrote that the argument "does not withstand scrutiny." Id. at

113. The court explained:

The mere fact that an order is entered
enjoining the transfer of property does not
make the property forfeitable. Nor does the
property become forfeitable solely because it
is transferred in violation of such an order.
If that were so, property described in or
transferred in violation of such an order
would become forfeitable even if it, later,
was determined not to be "property described
in subsection (a) [of 18 U.S.C. § 1963]." Such
legal alchemy would violate the plain language
of subsection (d)(1).

Id. at 113-14 (quoting 18 U.S.C. § 1963(d)(1)).

Hill and O'Donnell appealed, arguing that the district

court's order was improper because they had already spent the

post-verdict fees in question. Saccoccia IV, 354 F.3d at 12. This

court agreed, holding that the "substitute assets" provision, 18

U.S.C. § 1963(m), "plainly does not afford an avenue through which

the government may reach a third party's untainted assets as a

substitute for tainted assets which the third party had already

transferred prior to the date of forfeiture." Saccoccia IV, 354

F.3d at 13. We vacated the portion of the district court's

decision requiring Hill and O'Donnell to forfeit their post-verdict

fees and remanded for further proceedings. Id. at 15-16.

D. The Attempt to Recover Fees on a Civil Contempt Theory

On February 5, 2004, in the wake of this court's decision

in Saccoccia IV, the government filed a motion seeking to compel

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Hill and O'Donnell to turn over the money still at issue -- the

$254,985 received by Hill and the $42,500 received by O'Donnell

after March 12, 1993 -- on the ground that, in accepting those

fees, the attorneys had committed civil contempt by violating the

1991 Protective Order. The district court accepted this argument:

on October 25, 2004, it found Hill and O'Donnell in contempt and

ordered that they disgorge the post-verdict fees. Saccoccia V, 342

F. Supp. 2d at 32-33.

In its decision, the district court examined whether the

government had established, by clear and convincing evidence, that

the attorneys had engaged in civil contempt. It utilized the usual

civil contempt inquiry: (1) whether the alleged contemnor had

notice of the order; (2) whether the order was clear, definite, and

unambiguous; (3) whether the alleged contemnor had the ability to

comply with the order; and (4) whether the alleged contemnor

violated the order. Id. at 30-32. There was no doubt that the

attorneys had notice of the Order. Id. at 31. As to prong (2),

Hill and O'Donnell had argued that the Order was unclear, inter

alia, "because it was impossible for them to determine whether a

particular one hundred dollar bill paid to them as part of their

fees" came from the specific $140 million in U.S. currency that had

been enjoined. Id. at 32. The district court rejected this

argument, writing:

[Hill and O'Donnell] appear to rely on what
some courts have referred to as the "four

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 corners" rule which states that prohibited
conduct must be ascertainable from the "four
corners" of the order. However, that reliance
is misplaced. The "four corners" rule simply
requires that the prohibited conduct be
clearly described in the order itself. In
this case, the Protective Order does clearly
describe the prohibited conduct. It
specifically enjoins the transfer of the
"$140,000,000 in U.S. currency for which the
defendants are jointly and severally liable."

Id. (citation omitted). The court found that the attorneys could

have complied with the Order by simply refusing to accept post-

verdict fees. Id. Finally, the court found that the Order had

been violated because "there is no question that the fees at issue

were part of the $140,000,000 referred to in the Protective Order."

Id.

Hill and O'Donnell timely appealed.7

II.

In civil contempt cases, we first look to the text of the

order to determine whether it is clear. As to findings of fact, we

7
On appeal, Hill and O'Donnell renew their argument, rejected
by the district court, that the government's motion was barred by
laches and take issue with many of the district court's findings of
fact and conclusions as to civil contempt. Because of our
disposition of this case, we need only address appellants'
contention that the district court erred in finding that the Order
was "clear and unambiguous" in barring their acceptance of fees.
Hill and O'Donnell also challenge the jurisdiction of the
district court, and this court, on the grounds that (1) the
district court lost the authority to enforce the Order at the time
of judgment in Saccoccia's criminal case, and (2) alternatively, a
four-year statute of limitations should apply to civil contempt
motions. We find these arguments meritless and do not discuss them
further.

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review for clear error, while "[t]he trial court's ultimate finding

on contempt is reviewed for abuse of discretion." Project

B.A.S.I.C. v. Kemp, 947 F.2d 11, 15-16 (1st Cir. 1991).

Importantly, though, "our review will proceed more searchingly

when, as here, we are confronted with a finding of contempt than

when we are called upon to consider a finding exonerating a

putative contemnor from a charged contempt." Id. at 16.

A. Substantive Principles of Civil Contempt

Civil contempt may be imposed to compel compliance with

a court order or to compensate a party harmed by non-compliance.

McComb v. Jacksonville Paper Co., 336 U.S. 187, 191 (1949).

However, "[r]ecognizing the contempt power's virility and damage

potential, courts have created a number of prudential principles

designed to oversee its deployment." Project B.A.S.I.C., 947 F.2d

at 16. As the district court properly noted, the proof must

establish (1) that the alleged contemnor had notice that he was

"within the order's ambit," id. at 17; (2) that the order was

"clear and unambiguous," e.g., Accusoft Corp. v. Palo, 237 F.3d 31,

47 (1st Cir. 2001) (quoting Project B.A.S.I.C., 947 F.2d at 16);

(3) that the alleged contemnor had the ability to comply, see

United States v. Rylander, 460 U.S. 752, 757 (1983) (stating that

"where compliance is impossible, neither the moving party nor the

court has any reason to proceed with the civil contempt action");

and (4) that the order was indeed violated, Project B.A.S.I.C., 947

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F.2d at 16. This court has sometimes combined the related "clear

and unambiguous" and violation prongs, asking whether "the putative

contemnor has violated an order that is clear and unambiguous."

Id. When the question turns on findings of fact, "a complainant

must prove civil contempt by clear and convincing evidence." Id.

(internal quotation marks omitted) (quoting Langton v. Johnston,

928 F.2d 1206, 1220 (1st Cir. 1991)).

We focus on the "clear and unambiguous" prong together

with the violation prong. This court has, over the years, provided

guidance as to how the "clear and unambiguous" requirement should

be analyzed. First, "[t]he test is whether the putative contemnor

is 'able to ascertain from the four corners of the order precisely

what acts are forbidden.'" Goya Foods, Inc. v. Wallack Mgmt. Co.,

290 F.3d 63, 76 (1st Cir. 2002) (quoting Gilday v. Dubois, 124 F.3d

277, 282 (1st Cir. 1997)). The purpose of this "four corners" rule

is to assist the potential contemnor by narrowly cabining the

circumstances in which contempt may be found. It is because "[t]he

consequences that attend the violation of a court order are

potentially dire," Project B.A.S.I.C., 947 F.2d at 17, that "courts

must 'read court decrees to mean rather precisely what they say,'"

id. (quoting NBA Properties, Inc. v. Gold, 895 F.2d 30, 32 (1st

Cir. 1990)). As the Supreme Court has written:

The judicial contempt power is a potent
weapon. When it is founded upon a decree too
vague to be understood, it can be a deadly
one. Congress responded to that danger by

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 requiring that a federal court frame its
orders so that those who must obey them will
know what the court intends to require and
what it means to forbid.

Int'l Longshoremen's Ass'n v. Philadelphia Marine Trade Ass'n, 389

U.S. 64, 76 (1967) (identifying the specificity requirements of

Fed. R. Civ. P. 65(d) as relevant to certain contempt inquiries);

see also Sanders v. Air Line Pilots Ass'n, Int'l, 473 F.2d 244, 247

(2d Cir. 1972). Along the same lines, "we must read any

ambiguities or omissions in . . . a court order as redound[ing] to

the benefit of the person charged with contempt." NBA Properties,

895 F.2d at 32 (second alteration in original) (internal quotation

marks and citation omitted).

Finally, if the "clear and unambiguous" test is to have

any content, it cannot be applied in the abstract. The question is

not whether the order is clearly worded as a general matter;

instead, the "clear and unambiguous" prong requires that the words

of the court's order have clearly and unambiguously forbidden the

precise conduct on which the contempt allegation is based. See

Perez v. Danbury Hosp., 347 F.3d 419, 424 (2d Cir. 2003) (rejecting

district court's finding that an order was clear and unambiguous

where the district court "appeared to rule in a vacuum and failed

to evaluate whether the order was 'clear and unambiguous' with

reference to the conduct in question"). The Order in this case,

therefore, must have "left no reasonable doubt" that an attorney

would be violating its terms were that attorney to accept the post-

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guilty verdict attorneys' fees in question. Project B.A.S.I.C.,

947 F.2d at 17.

B. Application of the Civil Contempt Requirements

We discuss two questions -- first, the meaning of the

Order, and second, the adequacy of the evidence to show that the

payments came out of assets restricted by the Order. The two

issues are interconnected. The clarity of the Order is judged in

connection with the facts presented. Here, as we discuss, the

Order does not say that all of Saccoccia's assets are restricted,

nor does it say that all assets received from Saccoccia become

restricted on a finding of guilt. As to the evidence, the

government did not prove that these particular payments to the

attorneys came out of restricted assets.

1. The Order's Text and Context

The relevant portion of the Order8 states that it barred

Saccoccia and his attorneys from alienating, dissipating, or

transferring "$140,000,000 in U.S. currency for which the

defendants . . . are jointly and severally liable."

It is true that the purpose of the Order was to preserve

assets so that they would be available for later forfeiture should

the government prevail on its forfeiture claim. Beyond that,

8
The Order also contained a number of specific injunctions as to
bank accounts, gold, and other assets. We focus on the $140
million provision because the government and the district court
relied on it. See Saccoccia V, 342 F. Supp. 2d at 32.

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however, the exact relationship between the forfeiture laws and the

Order was not specified. More fundamentally, we think that the

Order did not clearly establish that there were no assets from

which fees could be paid.

The phrase "$140,000,000 in U.S. currency" does not

itself identify assets or state whether it is inclusive of all

assets belonging to Saccoccia. Further, the Order did not itself

distinguish between tainted and substitute assets; it instead

referred only to assets "for which [Saccoccia is] jointly and

severally liable." A reasonable person, reading the Order in 1993,

could have had legitimate doubts as to whether it restrained any

"substitute assets," as defined by 18 U.S.C. § 1963(m). Indeed,

that year, several courts held that such substitute assets may not

be restrained prior to conviction. See, e.g., In re Assets of

Martin, 1 F.3d 1351, 1362 (3d Cir. 1993) (holding that 18 U.S.C. §

1963(d)(1)(A) does not authorize pre-conviction restraints on

substitute assets).9

9
The fact that appellants accepted fees in the face of an unclear
Order does not run afoul of the different rule that where an order
is by its terms clear and unambiguous, a party's subjective doubt
about the order's scope or effectiveness does not render the order
ambiguous. See Goya, 290 F.3d at 75-76 ("[T]he appellants could
have asked the district court for clarification as to the enduring
vitality of the November 1995 orders, but . . . [t]hey chose
instead to rely on their own judgment as to whether the orders
remained in effect. In so doing, the appellants acted at their
peril."). Here the Order itself was unclear.

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 Thus the Order, when issued, could have been interpreted

in various ways. It could have meant that the court believed that

all of Saccoccia's assets were tainted and that none could be used

to pay attorneys' fees; but it did not say that expressly or even

impliedly. It could have meant that at least $140 million in

assets had to be preserved for the government, and that any party,

including a lawyer, seeking payment of any kind from the Saccoccia

coffers had to satisfy the court that he was being paid from the

unprotected excess or would risk losing the assets. But it did not

expressly say that either. It also could have been read to mean

that the government had the right to identify up to $140 million in

tainted assets that would be frozen, but also bore the burden of

making specific identifications, leaving any of Saccoccia's assets

not yet so identified presumed untainted and therefore freely

transferable.

Context further reinforces that there was ambiguity about

what the Order required and what it did not. It is entirely

consistent with the four corners rule (which is meant to protect

alleged contemnors) to look at context offered by the alleged

contemnors to demonstrate that there was ambiguity in the terms of

the Order. See Danbury Hosp., 347 F.3d at 424-25 (applying four

corners rule and noting that the district court had previously

expressed an understanding of a consent decree that would not have

prohibited appellants' conduct and considering that fact in its

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"clear and unambiguous" analysis). Early on, Hill and O'Donnell

requested clarification from the government, via the district

court, as to which of Saccoccia's assets could be used to pay

attorneys' fees. At the 1992 hearing, the district court found

there had been no showing that the government had "taken all of the

assets of the Defendant and left the Defendant unable to pay

counsel."10 If the district court had understood the Order to block

all payment of attorneys' fees from whatever source, one would not

have expected it to make such a statement.

In summary, the Order's text did not clearly state that

it covered all of Saccoccia's assets. Only six months before the

payments at issue, there was no clear understanding that all of

Saccoccia's assets were in fact covered or that there were no

assets from which reasonable attorneys' fees could be paid.

Defense counsel's efforts to obtain clarity had been rebuffed;

moreover, the district court had commented that the government

could not deprive Saccoccia of his only assets for paying

attorneys' fees without a showing that the assets were connected to

illegal activity.

10
The government added to the bevy of contradictory signals. For
example, the AUSA would, understandably, not commit on whether the
government would ever seek forfeiture of attorneys' fees, even from
the Protective Order funds, and on whether, in any event, there
were funds available outside the Protective Order.

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 As discussed next, the government failed to produce

evidence demonstrating that the payments were within the activities

expressly forbidden by the Order.

2. The Government's Approach

The district court reasoned that any ambiguities that

existed at the time the Order was entered were resolved by the

evidence adduced at trial and by the jury verdict. Essentially,

the court accepted the government's position that after the

verdict, and even before entry of judgment of conviction, it was

perfectly clear that (1) all of Saccoccia's assets were subject to

the Order, (2) the payments received in this period came from

Saccoccia's assets, and so necessarily came from assets subject to

the Order, and (3) acceptance of these particular assets violated

the Order.

The district court's ruling may reflect a sort of common-

sense judgment that by the time the verdict of guilt was delivered,

it was clear that there was little chance Saccoccia would have any

funds to pay his lawyers after paying off the inevitable forfeiture

of funds, and that the lawyers should have had less confidence in

accepting the payments once the guilty verdict was rendered. These

are not unreasonable assumptions. The government chose to proceed

under a contempt theory, however, and the law of civil contempt

requires much more precision. And that rationale is ill-suited to

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the language of the Order. The government's evidence does not show

that the terms of the Order were violated.

The jury made no determination as to the amount Saccoccia

was required to forfeit pursuant to RICO, or as to the provenance

of particular funds, or as to the total amount of Saccoccia's

assets. It simply returned a general verdict of guilt as to the

RICO charge, leaving it to the judge to make findings of fact as to

forfeiture at sentencing. The payments at issue here came before

the court made those findings of fact.

Further, even the district court's June 4, 1993 opinion

regarding forfeiture did not find that all of Saccoccia's assets

stemmed from money laundering. See generally Saccoccia I, 823 F.

Supp. 994. In fact, no fact-finder has ever reached such a

conclusion; even in its much later decision as to fee forfeiture

under the RICO statute, the district court found only that

"virtually all of [Saccoccia's] assets were proceeds of [his] RICO

violations." Saccoccia III, 165 F. Supp. 2d at 112 (emphasis

added); see also id. at 111 (finding that Saccoccia's businesses

were "not particularly profitable" and that they were "primarily"

fronts for money laundering).

Given its choice of a contempt theory, the government had

the burden of proof to show, by clear and convincing evidence, that

the attorneys' acceptance of post-jury verdict fees fell within the

list of activities expressly forbidden by the Order. Based on this

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record, the government, which presented no new evidence in support

of its contempt motion but instead relied on the record and the

district court's prior findings, failed to carry that burden.

III.

The fact that this case involves attorneys' fees rather

than payments for other purposes gives the lawyers no advantage.

Fees paid to attorneys from the criminal proceeds of their clients

are not held sacred. They may be reached by the government, and

Congress, under RICO, has set clear parameters for the forfeiture

of attorneys' fees. See generally Caplin & Drysdale, Chartered v.

United States, 491 U.S. 617 (1989). This case does not involve the

use of those RICO procedures. Rather, the principles involved here

are of civil contempt, a serious sanction requiring unmistakably

clear notice to the person involved of what is required. Those

standards were not met here.

We reverse the district court's order of contempt and

remand for entry of judgment for appellants. No costs are awarded.

Reversed.

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