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United States v. Jackson

February 13, 2007

UNITED STATES OF AMERICA
v.
WILLIAM R. JACKSON DEFENDANT



The opinion of the court was delivered by: Elaine E. Bucklo United States District Judge

MEMORANDUM OPINION AND ORDER

William Jackson ("Jackson") has filed a motion to dismiss the three-count indictment against him, arguing that prosecution of this indictment would violate the Double Jeopardy Clause of the Fifth Amendment. The charges in the indictment relate to Jackson's purported conduct during the pendency of a bankruptcy proceeding in which he represented the debtor. Jackson contends that he was already punished for the offenses charged in the indictment when the bankruptcy court twice found him in contempt. For the following reasons, I deny Jackson's motion.

I.

The indictment in this case charges Jackson with violations of 18 U.S.C. § 157(3) (Count One); 18 U.S.C. § 152(5)*fn1 (Count Two); and 18 U.S.C. § 153 (Count Three). Count One alleges that Jackson devised and intended to devise a scheme or artifice to defraud the bankruptcy court and the bankruptcy trustee by falsely stating to the court that $28,000 he received from the debtor was in his firm's trust account when in fact he had already converted the funds. Count Two alleges that Jackson knowingly and fraudulently received a check for $6,098.16 payable to the debtor with the intent of defeating the provisions of title 11. Count Three alleges that Jackson knowingly and fraudulently appropriated for his own use approximately $6,098.16 belonging to the estate of the debtor.

These allegations are premised on Jackson's purported actions during a proceeding before the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division, in In Re Chicago Truck Center, Inc., Case No. 02 B 10050 (the "bankruptcy proceeding").*fn2 Jackson represented the debtor Chicago Truck Center, Inc. (the "debtor") and Robert Hatcher ("Hatcher") during the bankruptcy proceeding. Jackson filed a document entitled "Disclosure of Compensation of Attorney For Debtor" certifying he had received approximately $28,000 in legal fees from the debtor. A few months later, the bankruptcy trustee filed a motion for a rule to show cause and an order compelling Jackson to disgorge fees, arguing that the fees paid to Jackson were facially excessive. The bankruptcy court set a hearing for that motion for February 14, 2003. Jackson failed to appear at that hearing, and the bankruptcy court ordered him to disgorge his entire attorney's fee and to appear at a hearing on March 4, 2003. The bankruptcy court also issued a rule to show cause that, in part, ordered Jackson to show cause why he was not in contempt of court for a violation of certain of the court's earlier rulings.

Jackson subsequently filed a motion to vacate the bankruptcy court's order, explaining he had been unable to attend the February 14 hearing. The bankruptcy court heard his motion on March 4, 2003. At the hearing on his motion Jackson allegedly represented to the bankruptcy court that he had received $28,691 in legal fees from the debtor, that he deposited that entire amount in his firm's trust account, and that the entire amount remained in his trust account as of the date of the hearing. The same day of the hearing the bankruptcy court allowed Jackson to file a fee petition and set an evidentiary hearing on April 9, 2003 (later reset to April 29), on his fee petition and the February 14 rule to show cause.

On April 11, 2003, Jackson provided a deposition related to the bankruptcy proceeding. In that deposition Jackson allegedly admitted that certain of the funds he received from the debtor were never placed in his trust account and that he used all of the funds he received from the debtor for his own personal and business use.

On April 29, 2003, the bankruptcy court held an evidentiary hearing on Jackson's motion to vacate the court's February 14 order (the "April 29 evidentiary hearing"). At the conclusion of that hearing the bankruptcy court stated that it believed that Jackson had made "a very serious misrepresentation" concerning whether he had escrowed and drawn down the $28,000 in question, and that in part because of the bankruptcy court's "concern over the safety of the funds," the bankruptcy court would order Jackson to return the $28,000 to the estate. The bankruptcy court further stated that Jackson's receipt of the funds was an unauthorized transfer, and that setting aside whether this was the proper procedure for the trustee to seek a return of the funds, the bankruptcy court would order Jackson to return the $28,000 to the trustee by May 5, 2003. The bankruptcy court further stated that if Jackson did not comply with the order, the court would issue a rule to show cause why he should not be held in contempt of court, and would begin fining Jackson $500 for each day after May 6, 2003 that he did not return the $28,000.

The record shows that Jackson did not return the $28,000, and on May 16, 2003, the trustee filed a motion for a rule to show cause. On May 20, 2003, the bankruptcy court issued a rule to show cause against Jackson requiring him to show why he should not be held in contempt, and fined him $500 per day beginning May 6, 2003 for every day that he had not returned the $28,000. The court set a June 17, 2003 hearing on the rule to show cause. The court also took Jackson's petition for fees under advisement.

At the June 17, 2003 hearing the bankruptcy court issued a judgment (the "June 17 judgment") against Jackson on the rule to show cause. The bankruptcy court's judgment stated, in relevant part:

A judgment is hereby entered against Jackson as follows: (a) Jackson is in contempt of the Rule for failing to abide by it; (b) a money judgment is entered against Jackson and in favor of [the trustee] in the sum of $28,000.00; and (c) a money judgment is hereby entered against Jackson and in favor of [the trustee] in the sum of $500.00 per calendar day from an [sic] including May 6, 2003, until including the day all sums due under this judgment are paid in full as a sanction under the Court's inherent powers and 11 U.S.C. § 105 for Jackson's violation of the Rule.

On July 17, 2003, the bankruptcy court issued a memorandum opinion denying Jackson's fee petition in its entirety. The bankruptcy court found that Jackson would have been allowed $4,000 in fees, but for the bankruptcy court's conclusion that Jackson had made false statements to the court. The bankruptcy court entered sanctions against Jackson under 28 U.S.C. § 1927. On October 7, 2003, the bankruptcy court ordered Jackson to appear for a deposition to discover his assets and to produce documents related to the discovery of his assets. The trustee filed a rule to show cause against Jackson for failing to produce documents or appear for his deposition. Jackson was subsequently deposed on November 5, 2003. The rule to show cause hearing was then continued several times, but according to the government's pleadings, at some point Jackson agreed to pay the judgment at the rate of $600 per month. Also according to the government's pleadings, Jackson made one such payment and then ceased further payments. Jackson asserts that because he has not paid the amount due, and because the $500 per day has continued to accrue against him, as of October of 2005 he would have had to pay approximately $400,000 in order to satisfy the June 17 judgment, and this amount has continued to grow since then.*fn3 The government does not contest that this figure is accurate.

On May 18, 2006, the bankruptcy court entered a memorandum opinion holding Jackson in contempt for converting estate property post-petition and causing harm to the debtor's estate (the "May 18 memorandum opinion"). According to the findings of fact set forth in the memorandum opinion,*fn4 on July 29, 2004, GM issued a check in the amount of $6,098.16 made out to the debtor. Hatcher, who had possession of the check, met with Jackson to discuss returning the check to the trustee. Hatcher endorsed the check and gave it to Jackson for him to "take care of it." After receiving the check, Jackson incorporated a business under the name Chicago Truck Center, Inc., the same name as the debtor in the bankruptcy proceeding. He then went to a bank, opened an account in the name of Chicago Truck Center, Inc., and endorsed the check from GM and deposited it into the newly-opened account. A few days later, Jackson wrote a temporary check to himself from the account in the amount of $6,060. He withdrew the final $35.00 from the account seven days later.

The May 18, 2006 memorandum opinion further noted that Jackson was prevented from introducing any evidence at the evidentiary hearing on the motion for contempt because he had failed to file an exhibit or witness list within the time the bankruptcy court specified for such filings. Jackson did argue at the evidentiary hearing that Hatcher's testimony was false. The bankruptcy court nevertheless concluded, in the memorandum opinion, that Jackson took funds belonging to the bankruptcy estate, and that he had defrauded his client, the trustee, and the court by cashing the check. The court therefore held Jackson in contempt for converting estate property post-petition and causing the estate harm in the amount of $6,098.16. The May 18 memorandum opinion ordered Jackson to repay that amount to the estate within 30 days. The bankruptcy court held a status hearing on ...


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