USA v. 8 Gilcrease Lane, Quincy, Flor, et al

Filing

OPINION filed [1299953] (Pages: 11) for the Court by Judge Griffith [10-5061]

Case: 10-5061

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United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Submitted November 10, 2010

Decided March 25, 2011

No. 10-5061
UNITED STATES OF AMERICA,
APPELLEE
v.
8 GILCREASE LANE, QUINCY, FLORIDA 32351, ET AL.,
APPELLEES
ADSURFDAILY, INC., ET AL.,
APPELLANTS

Appeal from the United States District Court
for the District of Columbia
(No. 1:08-cv-01345)

Charles A. Murray was on the briefs for appellants.
Ronald C. Machen Jr., U.S. Attorney, and R. Craig
Lawrence, Stephanie Lauren Brooker, and Barry Wiegand,
Assistant U.S. Attorneys, were on the brief for appellee.
Before: HENDERSON, TATEL, and GRIFFITH, Circuit
Judges.
Opinion for the Court filed by Circuit Judge GRIFFITH.

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GRIFFITH, Circuit Judge: After appellants withdrew their
claims in this civil forfeiture action, the district court entered
a default judgment and final order of forfeiture. Appellants
now ask us to reverse. For the reasons set forth below, we
reject their arguments and affirm the judgment of the district
court.
I
Appellant AdSurfDaily, Inc., is an internet marketing
company incorporated and controlled by appellant Thomas
Bowdoin, Jr. On August 1, 2008, federal agents seized
approximately $80 million of the company’s bank account
funds as part of an investigation of the company for wire
fraud and money laundering. Five days later, the government
filed a complaint for forfeiture in rem against the funds and
two pieces of real property that had been purchased with
AdSurfDaily money, invoking 18 U.S.C. § 981(a)(1)(C),
which authorizes civil forfeiture of proceeds traceable to wire
fraud, and 18 U.S.C. § 981(a)(1)(A), which permits forfeiture
of property involved in a money laundering scheme.
Bowdoin, AdSurfDaily, and appellant Bowdoin/Harris
Enterprises, Inc., filed verified claims to the properties.1 On

1

Rule C(6) of the Supplemental Rules for Admiralty or Maritime
Claims and Asset Forfeiture Actions requires a claimant in a
forfeiture proceeding to file a “verified statement of right or
interest” in the property at stake within fourteen days of execution
of process or within the time the court allows. This statement is
known as a “verified claim” and “is essential to confer[ring]
statutory standing upon a claimant in a forfeiture action.” United
States v. $125,938.62, 370 F.3d 1325, 1328 (11th Cir. 2004) (per
curiam) (alteration in original) (quoting United States v.
$175,918.00 in U.S. Currency, 755 F. Supp. 630, 632 (S.D.N.Y.
1991)) (internal quotation marks omitted). Appellants filed claims

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August 18, 2008, AdSurfDaily moved for dismissal of the
forfeiture action and return of the seized funds. The district
court held an evidentiary hearing and on November 19, 2008,
denied the motion on the grounds that the government had
properly filed its complaint and AdSurfDaily was not entitled
to pretrial release of its assets. United States v. 8 Gilcrease
Ln., Quincy, Fla. 32351 (8 Gilcrease Ln. I), 587 F. Supp. 2d
133, 139-40, 146 (D.D.C. 2008). AdSurfDaily did not appeal
this ruling.
On January 13, 2009, appellants through counsel moved
for leave to withdraw their claims, stating that they
“consent[ed] to the forfeiture of the properties.” Mot. for
Leave to Withdraw Claims, Release of Claims to Seized
Property, and Consent to Forfeiture 2 [hereinafter Withdrawal
Mot.]. The district court granted their motion. But appellants
soon reversed course and, beginning on February 27, 2009,
filed a series of pro se motions to rescind the withdrawal of
their claims. Appellants subsequently hired new counsel,
withdrew their pro se motions, and on September 14, 2009,
filed a Rule 60(b) motion to reinstate their claims. Bowdoin
submitted an affidavit in support alleging that the prosecutor
and his lawyer had “hoodwinked” him into believing that if
he withdrew his claims he would receive a decreased prison
sentence or no sentence at all.
The district court denied appellants’ motion on
November 10, 2009, concluding that they had released their
claims knowingly and voluntarily and that Bowdoin had done
so on no more than a hope that his sentence would be
decreased. United States v. 8 Gilcrease Ln., Quincy, Fla.
32351 (8 Gilcrease Ln. II), 668 F. Supp. 2d 128, 132 (D.D.C.

to the real property and to approximately $66 million of the $80
million the government had seized.

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2009). The court also determined that appellants had, in fact,
received sound advice from counsel to release their claims,
given that the government’s case “appear[ed] to be strong.”
Id. at 131.
The government then moved for a default judgment and
final order of forfeiture on the ground that no claimants
contesting forfeiture remained in the case. On November 20,
2009, the district court directed all potential claimants to
show cause why the court should not grant the government’s
motion. Neither appellants nor any other potential claimants
responded, and the court entered a default judgment and final
order of forfeiture on January 4, 2010.
Appellants then filed another Rule 60(b) motion, asking
the district court to vacate the order refusing to reinstate their
claims, the order to show cause, and the default judgment and
final order of forfeiture. The court denied the motion on
February 22, 2010, and appellants now seek relief from us.
We have jurisdiction to consider their appeal under 28 U.S.C.
§ 1291.
II
Appellants assert that the district court violated their due
process rights in two ways. First, the court failed to stay the
forfeiture action pending the outcome in the parallel criminal
proceeding. Appellants claim a stay was constitutionally
required because the allegations in the criminal proceeding
were filed under seal with portions redacted, making it
difficult or impossible to contest the government’s grounds
for forfeiture until the criminal proceeding was completed and
the materials unsealed.2 Second, appellants argue that by
2

According to appellants, “where the basis for a civil forfeiture
rests upon sealed allegations in a parallel criminal proceeding, the

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refusing to reinstate their withdrawn claims, the court denied
them the opportunity to challenge the forfeiture on the merits.
Neither argument has merit. Regarding the stay,
appellants never asked for one, and we are aware of no
authority for the proposition that a court has a duty to stay a
civil forfeiture proceeding on its own initiative pending the
outcome of a parallel criminal action. Appellants cite no
authority for this proposition, and to our knowledge the only
other circuit to consider the issue reached the opposite
conclusion. See United States v. Certain Real Prop. 566
Hendrickson Blvd., Clawson, Oakland Cnty., Mich., 986 F.2d
990, 996 (6th Cir. 1993). Additionally, we have previously
stated that “[t]he Constitution . . . does not ordinarily require
a stay of civil proceedings pending the outcome of criminal
proceedings.” SEC v. Dresser Indus., Inc., 628 F.2d 1368,
1375 (D.C. Cir. 1980) (en banc) (emphasis added).
Nor does due process require the government to provide
a person the opportunity to challenge the seizure of property
he has voluntarily forfeited. Ordinarily, “a citizen has a right
to a hearing to contest the forfeiture of his property, a right
secured by the Due Process Clause.” Degen v. United States,
517 U.S. 820, 822 (1996). The purpose of this right “is to
protect [the] use and possession of property from arbitrary
encroachment—to minimize substantively unfair or mistaken
deprivations of property.” Fuentes v. Shevin, 407 U.S. 67, 81
(1972). When a person has voluntarily relinquished his claim
to property, however, these concerns disappear. We have
due process rights of the defendant-claimant[] are properly
protected where the civil forfeiture action is stayed pending
outcome of the criminal trial, after which[] the sealed information
may be unsealed in the civil [action] to afford the [c]laimant[]
opportunity to meaningfully defend on the merits.” Appellants’ Br.
13 (emphasis omitted).

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previously said that “[a]bsent an underlying property or
liberty interest, . . . one has no entitlement to procedural due
process and hence no ‘right to be heard.’” Sargeant v. Dixon,
130 F.3d 1067, 1070 (D.C. Cir. 1997); see also MercadoAlicea v. P.R. Tourism Co., 396 F.3d 46, 53 (1st Cir. 2005)
(“[Appellant] voluntarily gave up his property interest . . . and
does not have a due process right to a hearing.”). By
voluntarily releasing their claims to the properties, appellants
relinquished their right to an adversarial hearing to contest the
grounds for forfeiture. It goes without saying, of course, that
had the district court granted appellants’ Rule 60(b) motion to
reinstate their withdrawn claims, they would have been
entitled to an adversarial hearing before being deprived of the
properties.
Neither of the cases appellants cite for the proposition
that they were entitled to an adversarial hearing is on point.
United States v. James Daniel Good Real Property, 510 U.S.
43 (1993), held that absent “exigent circumstances,” due
process requires the government to provide “notice and a
meaningful opportunity to be heard before seizing real
property subject to civil forfeiture.” Id. at 62. Here, although
the government seized the bank account funds prior to
appellants’ withdrawal of claims, there is no indication that it
seized the real property at issue prior to appellants’
withdrawal. United States v. Property Identified as Lot
Numbered 718, 20 F. Supp. 2d 27 (D.D.C. 1998), is similarly
distinguishable. See id. at 35-38 (finding due process
violation where government seized claimant’s home without
an adversarial hearing). In any event, in neither James Daniel
Good nor Lot Numbered 718 did the claimant relinquish
claim to the property, voluntarily or otherwise.
We turn next to the district court’s denial of appellants’
first Rule 60(b) motion, which sought to reinstate their

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previously withdrawn claims to the properties. We review the
district court’s decision for abuse of discretion. See Smalls v.
United States, 471 F.3d 186, 191 (D.C. Cir. 2006). Federal
Rule of Civil Procedure 60(b) provides that “[o]n motion and
just terms, the court may relieve a party or its legal
representative from a final judgment, order, or proceeding
for,” inter alia, “mistake, inadvertence, surprise, or excusable
neglect,” Fed. R. Civ. P. 60(b)(1); “fraud . . . ,
misrepresentation, or misconduct by an opposing party,” id.
60(b)(3); or “any other reason that justifies relief,” id.
60(b)(6). Appellants contend that the district court should
have reinstated their withdrawn claims to the properties
because Bowdoin acted on his attorney’s negligent advice that
he could “wholly” avoid jail time by relinquishing his claims.
Appellants’ Br. 16.
Neither side cites, and we are unable to find, any circuit
court precedent setting forth principles for assessing whether
a district court abused its discretion in denying a Rule 60(b)
motion to rescind a withdrawal of claims in a civil forfeiture
action. Casting our net a bit wider, we take counsel from the
Supreme Court’s instruction that Rule 60(b) is not an avenue
for relieving litigants from “free, calculated, deliberate
choices.” Ackermann v. United States, 340 U.S. 193, 198
(1950). This teaching has guided much of our Rule 60(b) case
law, see, e.g., In re Sealed Case (Bowles), 624 F.3d 482, 489
n.4 (D.C. Cir. 2010) (stating that appellant could not “use
Rule 60(b) to avoid its strategic choice” to file a rushed,
poorly drafted request for judicial notice before the court
ruled on other pending motions); Kramer v. Gates, 481 F.3d
788, 792 (D.C. Cir. 2007) (vacating grant of Rule 60(b)
motion deeming plaintiffs “employees” under the Back Pay
Act, because plaintiffs’ failure to request retroactive
employee status “was clearly a litigation choice”), and we
have emphasized several times that “Rule 60(b) cannot . . . be

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employed simply to rescue a litigant from strategic choices
that later turn out to be improvident.” Good Luck Nursing
Home, Inc. v. Harris, 636 F.2d 572, 577 (D.C. Cir. 1980);
accord Kramer, 481 F.3d at 792; Smalls, 471 F.3d at 191; S.
Pac. Commc’ns Co. v. AT&T, 740 F.2d 1011, 1019 (D.C. Cir.
1984). Applying the Supreme Court’s instruction to the case
before us, we hold that a district court does not abuse its
discretion in denying a Rule 60(b) motion to reinstate
withdrawn claims when the withdrawal was the product of a
free, deliberate choice. We further find that appellants’ choice
to withdraw their claims in this case was free and deliberate.
To begin with, there can be no doubt that appellants
meant to withdraw their claims. Their withdrawal motion
expressly stated that they wished to “withdraw and release
with prejudice” their verified claims and that they
“consent[ed] to the forfeiture of the properties.” Withdrawal
Mot. 2. Nor is there any basis to conclude that appellants
were somehow tricked into releasing their claims. Despite
Bowdoin’s protests to the contrary, his own affidavit shows
that he understood well that he was receiving no promise in
return for relinquishing his claims. See Bowdoin Aff. ¶ 8
(“I . . . signed a document stating that I would release my
claims . . . on the understanding that by cooperating I could
possibly avoid a prison sentence.”); id. ¶ 11 (“[My attorney]
le[d] me to believe that if I cooperated there was a possibility
that I would not be incarcerated or imprisoned.”); id. ¶ 12 (“I
believed that my cooperation would still result in a criminal
sentence that could possibly not include imprisonment or
incarceration.”). That he feared a stiffer prison sentence if he
did not withdraw his claims does not mean his withdrawal
was not a free, deliberate choice. Cf. Brady v. United States,
397 U.S. 742, 749-55 (1970) (holding that a guilty plea is not
involuntary even though made to avoid possibility of death
penalty). Of course, had Bowdoin been induced to withdraw

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his claims by a false promise of a more lenient sentence, his
choice to withdraw would not have been free and deliberate,
but that is not this case.
Moreover, far from being negligent, appellants’ attorney
had sound reasons for recommending that they cooperate with
prosecutors by relinquishing their claims. “Such an approach
from counsel could be seen as the norm when the
Government’s evidence is strong,” 8 Gilcrease Ln. II, 668 F.
Supp. 2d at 131, and indeed, the district court itself remarked
below that based on the affidavits received and the testimony
at the evidentiary hearing, the government’s evidence
“appear[ed] to be strong,” id. Further, the witnesses
AdSurfDaily offered at the evidentiary hearing to prove that it
operated a legitimate business contradicted each other, see 8
Gilcrease Ln. I, 587 F. Supp. 2d at 144, and at least one
actually undermined the company’s position, see id. at 143.
We thus need not consider whether a party that withdraws its
claims based on negligent advice from counsel has made a
free, deliberate choice to withdraw. Under the circumstances
of this case, the district court did not abuse its discretion in
denying appellants’ Rule 60(b) motion to reinstate their
withdrawn claims.
After the district court entered a default judgment and
final order of forfeiture, appellants filed another Rule 60(b)
motion, this time asking the court to vacate the denial of their
reinstatement motion, the order to show cause why a default
judgment should not be entered, and the default judgment and
final order of forfeiture. Appellants claim they never received
notice of the show cause order, making their failure to
respond “excusable neglect,” see Fed. R. Civ. P. 60(b)(1), and
rendering the subsequent default judgment invalid because
their default was not “willful,” see Jackson v. Beech, 636 F.2d
831, 832 (D.C. Cir. 1980) (“A motion for relief from a default

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judgment should be granted when . . . the defendants have not
willfully defaulted . . . .”).
But as appellants concede, see Reply Br. 2, they were no
longer parties to the forfeiture proceeding when the show
cause order issued. Although notice generally must be “given
to parties known to the government as potential claimants”
before the court may enter default judgment in a forfeiture
action, United States v. $4,224,958.57, 392 F.3d 1002, 1005
(9th Cir. 2004), a party who has lost a Rule 60(b) motion to
reinstate voluntarily withdrawn claims is not a “potential
claimant” entitled to notice of a proposed default judgment.
Obvious fairness concerns motivate the notice requirement
for known potential claimants. See, e.g., Auster Oil & Gas,
Inc. v. Stream, 891 F.2d 570, 581 (5th Cir. 1990) (Garwood,
J., specially concurring) (“For one to be bound by a judgment
in a suit to which it was not a party and of which it had no
notice is, to say the least, unusual, if not unconstitutional.”).
But these concerns do not apply where a party has previously
received notice, filed claims, voluntarily withdrawn those
claims, and tried but failed to convince a court to reinstate the
withdrawn claims. Thus, whether appellants in this case
received notice of the district court’s show cause order is
irrelevant given that they were no longer parties to the
proceeding and no longer had any claim to the properties. The
district court did not abuse its discretion in denying
appellants’ second Rule 60(b) motion.
Finally, appellants challenge the district court’s entry of
default judgment and final order of forfeiture as untimely.
Federal Rule of Appellate Procedure 4 gives a party sixty
days to appeal a judgment or order when the United States is
a party to the suit. Fed. R. App. P. 4(a)(1)(B). The district
court, however, entered default judgment and final order of
forfeiture only fifty-five days after denying appellants’

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motion to reinstate their withdrawn claims. Appellants claim
that the district court’s entry of default judgment prevented
them from filing an interlocutory appeal of the order denying
their reinstatement motion. This argument is moot. We are
now hearing the very appeal that appellants claim the district
court’s entry of default judgment foreclosed.
III
For the foregoing reasons, the judgment of the district
court is
Affirmed.