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Schultz v. United States

February 9, 2010

RICHARD D. SCHULTZ, PLAINTIFF-APPELLEE,
v.
UNITED STATES OF AMERICA, CREDITOR-APPELLEE,
THOMAS K. BOURKE, PROPOSED INTERVENOR-APPELLANT, AND JUDGMENT RESOLUTION CORPORATION; LESLIE H. COMBS, II, DEFENDANTS-APPELLEES.



Appeal from the United States District Court for the Northern District of California Marilyn H. Patel, District Judge, Presiding, D.C. No. 3:87-cv-06038-MHP.

The opinion of the court was delivered by: Lynn, U.S. District Judge

FOR PUBLICATION

Argued and Submitted December 11, 2009 -- San Francisco, California

Before: Mary M. Schroeder and Consuelo M. Callahan, Circuit Judges, and Barbara M.G. Lynn,*fn1 District Judge.

OPINION

I. Introduction

Proposed Intervenor Thomas Bourke ("Bourke") seeks review of the denial of his motion to intervene as of right pursuant to Fed. R. Civ. P. 24(a)(2). We affirm the judgment of the district court because denial of Bourke's motion was proper under the Mandatory Victims Restitution Act ("MVRA"), 18 U.S.C. § 3663A, which gives rise to Bourke's interest in this action. Because the remedy provided in the MVRA is exclusive, Bourke may not use the provisions of Rule 24 to intervene in pursuit of his interest in restitution.

II. Facts and Procedural Background

The action in the Northern District of California in which Bourke seeks to intervene (the "California litigation") began more than twenty years ago. Richard Schultz was an investor in a private placement of stock in a thoroughbred horse breeding farm. When the market in thoroughbreds declined and Schultz's stock became almost worthless, Schultz sued several defendants in an effort to recoup his losses. One of those defendants, Frank Bryant, was represented by Bourke. Bourke and other defendants sought to recover their attorneys' fees from Schultz.

In 1994, the California district court entered judgment in favor of several defendants, including Bryant, who was awarded more than a million dollars in attorneys' fees. Bryant transferred part of his interest in the judgment to Bourke, pursuant to their retainer agreement.

Schultz appealed, and orchestrated a complex scheme to hide his assets from various creditors, making him appear judgment proof. During the appeal, Bourke sold his interest in the judgment at a discount to Judgment Resolution Corporation ("JRC"), which substituted as a party. JRC's president was Frank McPeak ("McPeak").

After remand in 1999, Schultz and JRC successfully petitioned the District Court for a reduction in the principal of the judgment. The District Court entered a consolidated final judgment (the "Final Judgment") awarding JRC principal of $4,118,559.21. Sometime thereafter, JRC assigned its interest in the Final Judgment to Gloria McPeak, McPeak's wife.

In 2001, the United States brought a criminal action in the U.S. District Court for the Southern District of Ohio against McPeak and eight other co-conspirators, alleging a conspiracy to defraud Schultz's creditors. McPeak pled guilty to conspiracy to commit wire fraud and conspiracy to impede the IRS.

On June 1, 2007, the Ohio court entered a Restitution Opinion and Order (the "Restitution Order") identifying Bourke as one of two victims of the conspiracy and awarding him $744,424.66 in restitution under the Mandatory Victims Restitution Act, 18 U.S.C. ยง 3663A, which mandates that orders of restitution be entered against defendants found guilty of certain charges. The Ohio court found McPeak jointly and severally liable for the restitution owed to Bourke because McPeak had conspired with Schultz to have JRC purchase the judgment in favor of Bourke at a reduced rate, using Schultz's own hidden assets, and then to obtain a ...


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