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UNITED STATES v. ELLIOTT

June 6, 1989

UNITED STATES OF AMERICA, Plaintiff,
v.
ALFRED ELLIOTT, Defendant



The opinion of the court was delivered by: ASPEN

 MARVIN E. ASPEN, UNITED STATES DISTRICT JUDGE

 The defendant Alfred Elliott has moved to strike certain sections of paragraph 4 of Count 69, which allege that certain monies are forfeitable under section 1963(a)(3) of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1963(a)(3). For the reasons set forth below, Elliott's motion is granted in part.

 In relevant part, section 1963(a)(3) provides:

 
Whoever violates any provision of section 1962 of this chapter . . . shall forfeit to the United States, irrespective of any provision of State law --
 
* * * *
 
(3) any property constituting, or derived from, any proceeds which the person obtained, directly or indirectly, from racketeering activity . . . in violation of section 1962.

 Paragraph 3 of Count 69 identifies nine sets of illegal securities transactions on the part of Elliott; each set, according to the government, constitutes a racketeering act, and the nine racketeering acts together constitute a pattern of racketeering activity, in violation of section 1962(c). In the nine sections of paragraph 4, the government seeks the forfeiture of the proceeds of the nine corresponding racketeering acts in paragraph 3.

 Elliott argues, however, that certain sections of paragraph 4 (specifically, 4(a), (d), (e), (f), (h) and (i)) must be stricken because he has already paid the proceeds sought to the United States. Elliott notes that in a civil suit brought by the Securities and Exchange Commission, he agreed to pay, without admitting or denying liability, and without any judicial finding of fact, a sum of $ 271,312, "representing disgorgement of profits allegedly derived from the securities transactions alleged in the complaint." SEC v. Elliott, No. 86 C 10184 Consent Decree at 5 (N.D. Ill. Dec. 31, 1986). The "securities transaction alleged in the complaint" are essentially the same acts included in Count 69 as racketeering acts 1, 4, 5, 6, 8 and 9. See SEC v. Elliott, Complaint at 5-12 (N.D. Ill. Dec. 30, 1986). According to Elliott, the forfeiture claims connected with these racketeering acts must be stricken "because they seek to disgorge what has already been disgorged."

 We agree. This appears to be a matter of first impression, but this result is mandated by the statutory scheme. Section 1963(a)(3) states that a person who violates 1962 "shall forfeit to the United States . . . any proceeds . . . obtained . . . from racketeering activity." The securities transactions alleged in the civil complaint are the same as the racketeering acts in the indictment, and the moneys derived from these racketeering acts have already been paid over to the SEC, an arm of the United States. The requirements of section 1963(a)(3) therefore have already been met for six of the racketeering acts in Count 69, with one exception that we note below.

 This result is also required by the case law including section 1963. As the Supreme Court has said, the purpose of section 1963 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). But the SEC has already separated Elliott from his dishonest gains, if that is what they are, and section 1963(a)(3) consequently does not apply.

 The government argues, however, that section 1963(m) nevertheless requires forfeiture. 18 U.S.C.A. § 1963(m) (West Supp. 1989). Section 1963(m) provides in part:

 
If any of the property described in subsection (a) as a result of any act or ...

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