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United States v. Berger

July 31, 2009

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
RICHARD I. BERGER, DEFENDANT,
v.
CORNELLA BERGER, THIRD-PARTY MOVANT-APPELLANT.



Appeal from the United States District Court for the Central District of California. Robert M. Takasugi, Senior District Judge, Presiding. D.C. No. 2:00-cr-00994-RMT-1.

The opinion of the court was delivered by: Milan D. Smith, Jr., Circuit Judge

FOR PUBLICATION

Argued and Submitted June 1, 2009 -- Pasadena, California.

Before: William A. Fletcher, Richard R. Clifton, and Milan D. Smith, Jr., Circuit Judges.

OPINION

In this appeal, Third-Party Movant-Appellant Cornella Berger (Cornella) contends that the district court erred in including her community property interest in the proceeds of a real estate sale among the funds payable to victims of her former husband's fraud pursuant to the Mandatory Victim Restitution Act (MVRA), 18 U.S.C. § 3663(a). We hold that community property is available to satisfy a restitution judgment obtained under the MVRA against a criminally liable spouse, including that portion of the property that otherwise would potentially be awarded upon dissolution of marriage to an innocent spouse who was not involved in the criminal activity. We thus affirm the order of the district court.

FACTUAL AND PROCEDURAL BACKGROUND

In 1986, while Richard I. Berger (Richard) and Cornella were married,*fn1 Richard joined a partnership (Partnership) known as 1748 North Verdugo Road, which he and others formed for the purpose of purchasing a 290-unit apartment complex (Property).

During the relevant period, Richard served as President, Chief Executive Officer, and Chairman of the Board of Craig Electronics (Craig), an electronics wholesaler. On March 19, 2003, a federal grand jury returned a first superceding indictment, charging Richard with thirty-six counts of conspiracy, loan fraud, falsifying corporate books, and other securities fraud violations committed at Craig from 1995 to as late as 1997. After a jury trial, Richard was found guilty on twelve of those counts. There is no evidence that Cornella was involved in any wrongdoing associated with the illegal scheme or that any proceeds therefrom were invested in the Property.

Richard was sentenced on September 13, 2004 to a short period of incarceration and was ordered, pursuant to the MVRA, to pay restitution of just over $3.14 million to the victims of his fraud. See United States v. Berger, 473 F.3d 1080, 1089, 1104 (9th Cir. 2007).

Before Richard's conviction, the government and the district court anticipated that a large restitution order would likely be imposed against Richard were he to be convicted. Accordingly, in May 2004, the district court ordered Richard to "undertake no payment or transfer of assets in excess of $10,000 without prior court approval." Thereafter, and before obtaining court approval, Richard consented to the Partner-ship's entering into a contract to sell the Property. In March 2006, the district court ordered that Richard's approximately $1.5 million share of the proceeds from the sale of the Property (the Proceeds) be deposited with the court. Id.

Richard appealed his conviction and sentence. We affirmed the conviction, but vacated the sentence and remanded for resentencing. See Berger, 473 F.3d at 1108-09. Upon resentencing, the district court imposed a significantly longer incarceration period but entered the same restitution order.

In June 2008, the government filed an application to disburse the Proceeds to the victims of Richard's fraud who were entitled to receive restitution. Cornella opposed the application, arguing that she was entitled to one-half of the Proceeds. Over Cornella's objection, the district court granted the government's ...


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