United States v. Carson - 52 F.3d 1173 (2d Cir. 1995)

Rule:

Categorical disgorgement of all ill-gotten gains may not be justified simply on the ground that whatever hurts a civil RICO violator necessarily serves to prevent and restrain future RICO violations. Ordinarily, the disgorgement of gains ill-gotten long in the past will not serve the goal of preventing and restraining future violations unless there is a finding that the gains are being used to fund or promote the illegal conduct, or constitute capital available for that purpose. The disgorgement of gains ill-gotten relatively recently is more easily justifiable on the basis of the same analysis. 

Facts:

The government asserted civil claims under the Racketeer Influenced and Corrupt Organizations statute, 18 U.S.C. § 1961 et seq. ("RICO"), alleging that appellant Donald J. Carson committed various racketeering acts on behalf of organized crime while Carson was Secretary-Treasurer of Local 1588 of the International Longshoremen's Association ("ILA"). Following a bench trial in which the district court heard ten weeks of evidence and argument distributed over an eleven month period, the United District Court for the Southern District of New York entered a final judgment in favor of the government, (1) granting injunctive relief, (2) ordering Carson to disgorge ill-gotten gains, and (3) imposing approximately $ 46,000 of costs. Carson appeals on numerous grounds. In addition, appeal is taken from the district court's dismissal of a complaint filed by Carson and his wife, Peggy Carson, against Local 1588 under the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq. ("ERISA"). This ERISA action had been consolidated with the civil RICO suit. On his appeal from the civil RICO judgment, Carson contends: (1) that the district court exceeded the scope of its jurisdiction under 18 U.S.C. § 1964 when it ordered him to disgorge his past ill-gotten gains; (2) that the disgorgement order violated the Double Jeopardy Clause of the Constitution; (3) that the injunctive relief was overbroad; (4) that a portion of a transcript from a prior criminal proceeding was improperly admitted into evidence in the civil proceeding; (5) that Carson was prejudiced by the scheduling of the ten weeks of trial over an eleven month period and other features in the conduct of the trial; and (6) that excessive costs were taxed by the clerk of the court. Finally, the Carsons argued that the district court erred when it dismissed their ERISA claim against Local 1588.

Issue:

May a categorical disgorgement of all ill-gotten gains be justified simply on the ground that whatever hurts a civil RICO violator necessarily serves to prevent and restrain future RICO violations?

Answer:

No

Conclusion:

The court held that categorical disgorgement of all ill-gotten gains may not be justified simply on the ground that whatever hurts a civil RICO violator necessarily serves to prevent and restrain future RICO violations. Ordinarily, the disgorgement of gains ill-gotten long in the past will not serve the goal of preventing and restraining future violations unless there is a finding that the gains are being used to fund or promote the illegal conduct, or constitute capital available for that purpose. The disgorgement of gains ill-gotten relatively recently is more easily justifiable on the basis of the same analysis. The court vacated the order of disgorgement and remanded for a determination of which disgorgement amounts were intended solely to prevent and restrain future RICO violations. The court also vacated and remanded the order to pay costs. In all other respects, the court affirmed.