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Media Alerts - Roy Langbord v. United States Department of the Treasury - Third Circuit en banc
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August 5, 2016
  Roy Langbord v. United States Department of the Treasury - Third Circuit en banc
Headline: Third Circuit affirms Government's ownership of stolen 1933 Double Eagle Coins

Area of Law: Property, civil forfeiture

Issue(s) Presented: Was the Mint required to file a forfeiture action under CAFRA to keep coins which were submitted to it solely for authentication by putative owners?

Brief Summary:

The dispute regarded the rightful ownership of ten pieces of gold, rare 1933 Double Eagles, which were supposed to be melted shortly after they were minted, when the US went off the gold standard. A few of the 1933 Double Eagles escaped this fate when they were stolen by the Philadelphia Mint's cashier and distributed by a Philadelphia merchant. Since 1944, the United States has attempted to locate and recover all extant 1933 Double Eagles. One was sold to King Farouk of Egypt in 1944 and acquired in 1995 by Stephen Fenton, an English coin dealer. When Fenton attempted to resell that coin to a collector in New York, the government seized it. The government agreed to resolve its dispute with Fenton by auctioning the coin and splitting the $7,590,020 proceeds. A year after the auction, Joan Langbord, daughter of the merchant, discovered ten 1933 Double Eagles in a family safe-deposit box. Her attorney, who had also represented Fenton in his dispute, contacted the Mint in an effort to resolve the Langbords' claim in the same manner. The Langbords agreed to turn the coins over for authentication only. The Mint took possession of the ten 1933 Doubles Eagles in 2004, authenticated them in 2005, but refused to return them to the Langbords.

The en banc decision reversed the panel and affirmed the District Court's declaratory judgment that, because the coins were not authorized to be removed from the Mint, they remained property of the United States. It also found that the Mint's refusal to return the coins was a seizure but not a forfeiture and thus the judicial forfeiture action by the United States, ordered by the District Court, was not time-barred under CAFRA.

Extended Summary:

This appeal dealt with a dispute over ten pieces of gold. The Langbords claimed to be the rightful owners of the gold pieces while the Government claimed that they were the property of the United States. The ten gold pieces, 1933 Double Eagles, had a face value of $20. The renowned sculptor August Saint-Gaudens designed these Double Eagles in 1907 at the request of President Theodore Roosevelt and millions were manufactured between 1907 and 1933 as legal tender. However, in 1933 President Franklin Delano Roosevelt signed a series of orders which prohibited the nation's banks from paying out gold.

That same year, the United States Mint in Philadelphia struck 445,500 Double Eagles, but they were never issued. Instead all but 500 of the Double Eagles were placed into the Mint's vault and the remaining coins were held by the Mint's cashier. By 1937, all of the 1933 Double Eagles held at the Philadelphia Mint were supposed to have been melted. This was not the case as some coins were transferred among collectors, which prompted an investigation by the Secret Service in 1944. The Secret Service recovered a small number of the 1933 Double Eagles and determined that they had been stolen from the Mint by George McCann, who was the Mint's cashier from 1934 to 1940. The Secret Service also concluded that the coins had been distributed by Israel Switt, a Philadelphia merchant, who was also Joan Langbord's father.

Since 1944, the United States has attempted to locate and recover all extant 1933 Double Eagles. The only exception has been a 1933 Double Eagle sold to King Farouk of Egypt on 1944 and later acquired in 1995 by Stephen Fenton, an English coin dealer. When Fenton attempted to resell that coin to a collector in New York, the government seized it and a protracted legal dispute ensued. The government agreed to resolve its dispute with Fenton because the Treasury Department had improvidently issued an export license for the coin when it was sold to King Farouk in 1944. The Fenton-Farouk coin was sold at auction in 2002 for $7,590,020 and the net proceeds were divided equally between Fenton and the Government pursuant to their settlement agreement. A year after the auction, Joan Langbord allegedly discovered ten 1933 Double Eagles in a family safe-deposit box. Her attorney, Barry Berke, who had also represented Fenton in his dispute, contacted the Mint in an effort to resolve the Langbords' claim in the same way. After a meeting with Mint officials, the Langbords agreed to turn the coins over for authentication but reserved "all rights and remedies." The Mint took possession of the ten 1933 Doubles Eagles in 2004 and authenticated them in 2005, but then refused to return them to the Langbords.

The Langbords then brought suit in the United States District Court for the Eastern District of Pennsylvania, alleging violations of the United States Constitution, the Civil Asset Forfeiture Reform Act of 2000 (CAFRA), the Administrative Procedure Act, as well as common law torts. The District Court issued a split decision. It found that the Mint violated the Fourth and Fifth Amendments in refusing to return the coins. But it ruled in favor of the Government's declaratory judgment claim that the coins "were not authorized to be taken from the United States Mint and that therefore, as a matter or law, all of the 1933 Double Eagles remain property belonging to the United States." It ordered the Government to initiate judicial forfeiture proceedings to compensate for its Constitutional violations. A jury found in favor of the Government. The Langbords prevailed on appeal to the Third Circuit, but the Court vacated the panel opinion and agreed to hear the case en banc.

The en banc Court found that the Government's forfeiture action was not time-barred. Under CAFRA, any person claiming property seized in a nonjudicial forfeiture proceeding may file a claim with the appropriate official after the seizure. The government must then file a complaint for forfeiture no later than 90 days after a claim has been filed. If the government does not file a complaint for forfeiture, it must release the property and take no further action to effect the civil forfeiture of the property. The Court rejected the Langbords' argument that their seized asset claim started the ninety-day period for the government to file a complaint. It determined that property must be seized in a nonjudicial forfeiture proceeding before a seized asset claim triggers the ninety-day statutory period. The Mint's retention of the coins did not initiate a nonjudicial forfeiture proceeding because it was a seizure but not a forfeiture. A seizure is the act of taking possession of property by legal right or process and forfeiture involves a transfer of title from one party to another. Through a seizure the government obtains possession while through forfeiture it obtains ownership of property. As government actors regularly seize property with the intention of returning it, it follows that a seizure alone does not initiate a forfeiture proceeding because it does not implicate the transfer of legal title. In addition, the Court stated that the government had determined that it was not obligated to initiate forfeiture proceedings because it had merely repossessed its own property. As a result, neither the Mint nor any other federal agency took any steps to initiate a nonjudicial forfeiture. In fact, the government had explicitly disclaimed any intent to forfeit the coins, instead choosing to assert its ownership rights.

The Court also affirmed the District Court's declaratory judgment that the Government was the owner of the coins. The Court held that CAFRA only precludes declaratory judgments that affect forfeiture, and in this case the Government was attempting to regain possession of what it believed to be its own property. The Court also determined that the declaratory judgment action fit within the pattern of cases typically decided by a court sitting in equity, as it fits the equitable pattern of an action to quiet title.

The Court rejected the Langbords' arguments that evidentiary errors entitled them to a new trial. The Court found no error in admitting the evidence related to Switt's prior forfeiture, but that portions of both the Secret Service reports about the 1944 investigations and the expert's testimony should have been excluded. However, the Court concluded that those evidentiary errors were harmless. Finally, it rejected the Langbords' last argument that the District Court erroneously instructed the jury on the intent necessary to establish liability under 18 U.S.C. ยง641. The Court stated that the Supreme Court has held that a conviction under the statute requires a jury to find the criminal intent to wrongfully deprive another of possession of property. The Court determined that the District Court's instructions conveyed exactly this point of law as it instructed the jury that it was required to find that whoever stole or embezzled did so knowingly, defined as exercising a deliberate choice. The Court concluded that the District Court's definition of "knowingly" accorded with its model jury instructions, and was therefore proper.

Judge Rendell, joined by Judges McKee and Krause, dissented. The dissent argued that the Mint's refusal to return the coins was a forfeiture sufficient to start the clock under CAFRA, and that the Government's failure to file a forfeiture action within the 90-day time period barred the later action.

The full opinion can be found at http://www2.ca3.uscourts.gov/opinarch/124574p2.pdf

En Banc: McKee, Chief Judge; Ambro, Fuentes, Smith, Fisher, Chagares, Jordan, Hardiman, Vanaskie, Schwartz, Krause, and Rendell, Circuit Judges

Argument Date: October 14, 2015

Date of Issued Opinion: August 1, 2016

Docket Number: No. 12-4574

Decided: Affirmed

Case Alert Author: Cynthia C. Pereira

Counsel: Barry H. Berke, Eric A. Tirschwell, Counsel for Appellants; Zane David Memeger, Robert A. Zauzmer, Jacqueline C. Romero, Nancy Rue, Counsel for Appellees

Author of Opinion: Circuit Judge Hardiman

Circuit: Third Circuit

Case Alert Circuit Supervisor: Prof. Susan L. DeJarnatt

    Posted By: Susan DeJarnatt @ 08/05/2016 01:50 PM     3rd Circuit  

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