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United States v. Bowser

United States Court of Appeals, Seventh Circuit.

August 23, 2016

United States of America, Plaintiff-Appellee,
Joshua N. Bowser, et al., Defendants. Appeal of: Bradley W. Carlson

          Argued January 19, 2016

         Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. l:12-cr-00102-TWP-DML - Tanya Walton Pratt, Judge.

          Before Easterbrook, Rovner, and Sykes, Circuit Judges.

          ROVNER, Circuit Judge.

         This appeal involves the government's efforts to seize personal property bearing the insignia of the Outlaws Motorcycle Club (the "Outlaws"), and the effort of a representative of the Outlaws to intervene to prevent those forfeitures. The forfeiture actions stemmed from criminal cases brought against a number of Outlaws members, including all members of the Indianapolis chapter of the Outlaws. As we summarized in United States v. Knoll, 785 F.3d 1151, 1152-53 (7th Cir. 2015), "[t]his case began with a forty-nine count indictment that charged fifty-one individuals (all members of the Outlaws) with racketeering, mail and wire fraud, money laundering, drug trafficking, extortion, running an illegal gambling business, witness tampering and firearms offenses, among other things." Included in that indictment, was a count charging nineteen members of the Outlaws with violations of the Racketeer Influenced and Corrupt Organizations statute (RICO), based on allegations that the Outlaws was an enterprise and its members participated in that enterprise through the commission of various crimes. The indictment included a notice of the government's intent to forfeit any and all property affording the RICO defendants with a source of influence over the enterprise and all property obtained, directly or indirectly, from racketeering activity.

         On July 11, 2012, in connection with the arrests of the Outlaws members, the FBI executed search warrants on the Outlaws' clubhouses in Indianapolis and Fort Wayne, Indiana, the Outlaws' bunkhouse in Indianapolis, and several individual residences. Pursuant to those searches, the FBI seized numerous items bearing the insignia of the Outlaws, and the FBI sought forfeiture of those items. That property included, but was not limited to: vests, patches, shirts, hats, belt buckles, signs, mirrors, flags, calendars, books, and pictures. The Outlaws used the symbols on the clothing to conspicuously display their presence and to deter other groups from infringing on their territory. The items included the symbol of the Outlaws which was a skull and crossed pistons, and patches with slogans such as "God Forgives, Outlaws Don't" and "Snitches Are a Dying Breed" which communicated a threat to those who would seek to oppose the Outlaws.

         One defendant, Christian Miller, was found guilty after trial, but the remaining eighteen defendants pled guilty- sixteen defendants to all charges and two defendants to all but the RICO counts to which they pled nolo contendere. As part of the plea agreements, each agreed to forfeit the Outlaws paraphernalia seized by the FBI. After the government sought and obtained final orders of forfeiture from all but one defendant, and was in the process of finalizing forfeiture with the remaining Outlaws defendant, the court received a letter from Bradley W. Carlson which it interpreted as a motion to intervene in the criminal forfeiture actions. Pursuant to 18 U.S.C. § 1963(1)(2), "[a]ny person, other than the defendant, asserting a legal interest in property which has been ordered forfeited to the United States ... may ... petition the court for a hearing to adjudicate the validity of his alleged interest in the property." In order to pursue such relief, a petitioner's right to the property must have vested in petitioner rather than the defendant or be superior to any right, title or interest of the defendant at the time of the commission of the criminal acts, or the petitioner must be a bona fide purchaser of the property. 18 U.S.C. § 1963(1)(6). The government sought to dismiss the motion as untimely in that final forfeiture orders had already issued, but Carlson responded by filing a motion to reopen the final orders and also challenging orders seeking forfeiture of indicia and memorabilia of the Outlaws.

         In seeking to reopen the forfeiture actions under Federal Rule of Civil Procedure 60(b), Carlson contended that he had a property interest in all of the Outlaws paraphernalia and that the government had failed to provide him with direct notice of the forfeiture actions. Therefore, the issue before the district court was whether Carlson was due direct notice of the forfeiture actions filed in this case. The notice requirements for such forfeitures is set forth in 18 U.S.C. § 1963(1)(1), which provides that

[f] olio wing the entry of an order of forfeiture under this section, the United States shall publish notice of the order and of its intent to dispose of the property in such manner as the Attorney General may direct. The Government may also, to the extent practicable, provide direct written notice to any person known to have alleged an interest in the property that is the subject of the order of forfeiture as a substitute for published notice as to those persons so notified.

         In addition, Federal Rule of Criminal Procedure 32.2(b)(6)(A) requires the government to "publish notice of the order and send notice to any person who reasonably appears to be a potential claimant with standing to contest the forfeiture in the ancillary proceeding." The government provided notice of all of the forfeitures to each of the defendants, and also posted notice of each forfeiture on the official government forfeiture site at for 30 consecutive days.

         Carlson asserts that he was entitled to direct written notice of the order because he claims that he has been elected by the collective membership of the Outlaws to protect, manage, direct, oversee, and control all indicia and memorabilia of the Outlaws in the United States. Carlson maintains that all patches and registered collective marks of the Outlaws are owned solely by the collective membership of the Outlaws, not by any individual members. As support for his position, Carlson points out that Outlaws members believe that the property bearing the markings of the Outlaws are the property of the Outlaws as a whole, and that Outlaws members must return their "colors" (paraphernalia with Outlaws markings) if they cease to become active members. The government concedes that Outlaws members share that belief. Carlson claims that by virtue of his elected position he has been vested by the membership of the Outlaws with a "superior possessory interest in all items of [Outlaws] indicia."

         The district court denied that motion, as well as Carlson's subsequent motion to alter or amend the judgment pursuant to Rule 59(e). The district court determined that Carlson had failed to demonstrate that the government was aware of Carlson or his alleged interest in the property, and that in any event Carlson had failed to demonstrate a property interest in the Outlaws paraphernalia. We review the district court's Rule 60(b) determination for abuse of discretion. Anderson v. Catholic Bishop of Chicago, 759 F.3d 645, 652 (7th Cir. 2014); United States v. 8136 S. Dobson St., Chicago, III, 125 F.3d 1076, 1082 (7th Cir. 1997).

         On appeal, Carlson presents two issues for our resolution: whether Carlson possessed an interest in the property sufficient to entitle him to notice of the forfeiture proceedings, and whether the notice provided by the government was adequate as both a statutory and constitutional matter. Because Carlson fails to adequately allege that he had a lawful property interest at stake of which the government reasonably would have been aware, we need not consider his second contention that the notice supplied to all members of the Indianapolis Outlaws chapter, including its president, was inadequate to inform the Outlaws' collective membership.[1]

         As Carlson concedes, a lawful property interest for purposes of the forfeiture notice provision is created and defined by state law. Knoll, 785 F.3d at 1156; United States v. 5 S 351 Tuthill Rd., Naperville, III, 233 F.3d 1017, 1021 (7th Cir. 2000), amended on denial of reh'g (Mar. 21, 2001). Therefore, we must look to Indiana law to determine whether Carlson has alleged a property interest recognized in that state. Only a person possessing a legal interest, rather than an equitable interest, in property will have standing to challenge its forfeiture. Knoll, 785 F.3d at 1156; United States v. Timley, 507 F.3d 1125, 1129 (8th Cir. 2007). Carlson alleges only that the property subject to forfeiture was not owned by individuals, but was owned by the "collective membership" of the Outlaws and he was an agent of that collective membership for the purposes of maintaining and controlling the property and therefore had a lawful, possessory interest over the forfeited items by virtue of that agency relationship.

         Under Indiana law, ownership of personal property is determined by reference to the indicia such as title, possession, and control. Harden v. Monroe Guaranty Ins. Co., 626 N.E.2d 814, 820 (Ind. App. Ct. 1993); Womack v. State,738 N.E.2d 320, 324 (Ind.Ct.App. 2000); National Serv-All Inc. v. Indiana Dept. of State Revenue,644 N.E.2d 954, 957 (Ind. Tax Ct. 1994); Meridian Mortgage Co. v. State,182 Ind.App. 328, 339, 395 N.E.2d 433, 439 (1979); Rhoades v. State,70 N.E.2d 27, 29 (Ind. S.Ct. 1946). Carlson has not alleged any of these indicia, and in fact does not cite to any Indiana cases in asserting the property interest. Although he has alleged an understanding that property cannot be transferred to non-members, he does not identify what type of interest, if any, in that property was retained by the Outlaws-whether an option to purchase back, a right of first refusal, a termination of a bailment or lease, etc.- and whether that interest is a legal interest that grants standing or an equitable or other interest that does not. He fails in fact to cite to Indiana law at all to establish the legal interest in the property despite recognizing that property interests are defined by state law. Moreover, among ...

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