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UNITED STATES v. ELLIOTT

August 23, 1989

UNITED STATES OF AMERICA
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 been convicted of, among other things, a violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"). The government now seeks the forfeiture of the proceeds of Elliott's racketeering activity under 18 U.S.C. ยง 1963(a)(3). Elliott has waived his right to a jury trial on the forfeiture issue. Elliott and the government agree on the amounts involved, but they disagree on which amounts should be included as proceeds. It is that question which we consider in this opinion.

 BACKGROUND

 The seventy-count indictment charged that Elliott, a former partner in the law firm of Schiff, Hardin & Waite ("Schiff"), misused confidential client information for his personal benefit in nine sets of securities transactions. According to the government, when Elliott would learn confidential information about the planned acquisition of a large block of stock, he used this nonpublic information and purchased stock in the target company, in the expectation that the price would rise when the planned acquisition became public. The stock purchases were made through the Chicago office of Charles Schwab & Co. ("Schwab").

 In connection with these stock transactions, the government charged Elliott with thirty-four counts of wire fraud, thirty-four counts of securities fraud, one count of filing a false tax return and, most importantly for this opinion, one count (Count 69) under RICO. Paragraph 3 of Count 69 charged that each of the nine sets of transactions in which Elliott illegally purchased stock was a racketeering act, and that the nine racketeering acts together constituted a pattern of racketeering activity, in violation of section 1962(c). In turn, paragraph 4 of Count 69 sought the forfeiture of the proceeds of the nine corresponding racketeering acts in paragraph 3.

 At Elliott's request, we bifurcated the forfeiture proceedings for the guilt phase of the trial. After one mistrial, a jury convicted Elliott of all seventy counts charged in the indictment.

 Our Previous Decision

 DISCUSSION

 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 ...

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