FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
MASSACHUSETTS Hon. Denise J. Casper, U.S. District Judge
William J. Cintolo, with whom Thomas R. Kiley and Cosgrove
Eisenberg & Kiley, PC were on brief, for appellant.
Randall E. Kromm, Assistant United States Attorney, with whom
William D. Weinreb, Acting United States Attorney, was on
brief, for appellee.
Thompson, Circuit Judge, Souter, [*] Associate Justice, and Selya,
United States v. George (George I), 841
F.3d 55 (1st Cir. 2016), we affirmed the conviction and
sentence of a corrupt politician, defendant-appellant John
George, Jr. At the same time, we vacated the district
court's forfeiture order because the court lacked
jurisdiction when it purposed to enter that order. See
id. at 72. On remand, the district court - its
jurisdiction having reattached - revisited the matter of
forfeiture and ordered the defendant to forfeit proceeds of
his criminal activity in the amount of $1, 382, 214.
defendant again appeals. This time around, he mounts both
procedural and substantive challenges to the forfeiture
order. After careful consideration, we hold that the district
court did not abridge the defendant's procedural rights.
We further hold, as a matter of first impression in this
circuit, that the district court applied an appropriate
yardstick in measuring the "proceeds" to be
forfeited. Accordingly, we affirm the forfeiture order.
sketch the relevant facts and travel of the case. The reader
who hungers for more exegetic detail is free to consult our
case revolves around the Southeast Regional Transit Authority
(SRTA), a public authority funded jointly by the Commonwealth
of Massachusetts and the federal government. The defendant,
described in our earlier opinion as a local "political
satrap, " id. at 58, served on the SRTA
advisory board until 1988, when he arranged for his friend
and political ally, Joseph Cosentino, to replace him. Some
three years later, the defendant purchased Union Street Bus
Company (Union Street) through an alter ego, Trans-Ag
Management, Inc. (Trans-Ag). The defendant was the sole
shareholder of Trans-Ag and was its only employee.
the defendant took control of Union Street, the SRTA granted
the company an exclusive franchise for certain bus routes,
and the contract between the SRTA and Union Street was
periodically renewed (the last time in 2006). In order to
secure the 2006 renewal, the defendant colluded with
Cosentino to discredit Union Street's main competitor.
What is more, he brought in a stalking horse - an
artificially high bidder - to make Union Street's bid
appear more attractive. The defendant's machinations
succeeded, and Union Street's contract was renewed.
renewed contract was lucrative. Throughout its term, the SRTA
reimbursed Union Street for the amounts by which Union
Street's operating expenses exceeded its operating
income. Over and above this stipend, the SRTA paid Union
Street a hefty management fee to oversee the operation of the
designated routes.The operating expenses included the
salaries of two individuals, nominally employees of Union
Street, who spent most of their work-hours (during which they
were compensated directly by Union Street and, thus,
indirectly by the SRTA) toiling at the defendant's farm
and otherwise ministering to the defendant's personal
projects. This was the tip of a rather large iceberg; the
trial transcript is replete with other instances of the
defendant appropriating SRTA-funded resources for personal
use. See, e.g., id. at 60-61.
defendant's success at bilking the SRTA was not a mere
fortuity. During the renewal term, he was able to limit
oversight of Union Street's contract. Moreover, the
defendant was able to arrange for Cosentino (his political
ally) to be appointed, mid-way through the contract term, as
the SRTA Administrator.
the end of the renewal term, Cosentino turned over a new leaf
and began challenging the defendant's diversion of
SRTA-funded resources. He also took steps to ensure a fair
bidding process for the next renewal of the contract.
Displeased by this about-face, the defendant used his
influence to have Cosentino removed as Administrator.
Nevertheless, the 2010 renewal of the contract was awarded to
the chickens came home to roost. After conducting an
investigation of the SRTA's finances, the government
charged the defendant with conspiracy to commit an offense
against the United States and embezzlement. See 18
U.S.C. §§ 371, 666(a)(1)(A) & (a)(2).
a lengthy jury trial that resulted in the defendant's
conviction, the district court held a sentencing hearing on
July 29, 2015. In the course of that hearing, the court,
inter alia, entertained arguments on the government's
motion for an order of forfeiture. When the sentencing
hearing had concluded, the court (wanting additional time to
consider forfeiture) suggested that it delay the actual
imposition of sentence. Defense counsel resisted this
suggestion and instead sought the immediate imposition of
sentence. He told the court that "[t]o require [the
defendant], who is obviously taking this very badly, . . . to
have to wait more time to know what his fate is going to be,
I think would be devastating . . . let's get a sentence
today, your Honor." Defense counsel prefaced this
request with an acknowledgment that he had "absolutely
no problem" with the court resolving the issue of
forfeiture at a later date and entering an amended judgment.
The government did not object, and the court acquiesced. It
sentenced the defendant to a 70-month term of immurement on
the substantive offense count and a concurrent 60-month term
of immurement on the conspiracy count; ordered restitution in
the amount of $688, 772; and reserved judgment on the forfeiture
court embodied these sentencing determinations in a written
judgment, and the defendant appealed. While his appeal was
pending, the district court accepted additional briefing and
heard further argument with respect to forfeiture. On
September 21, 2015 - with the defendant's appeal still
pending - the district court entered an amended judgment,
which included a forfeiture award in the amount of $1, 382,
214 (the total amount of the management fees paid under the
2006 contract renewal).
course, we upheld the defendant's conviction and the
sentencing determinations made at the July 29, 2015
sentencing hearing. See George I, 841 F.3d at 72.
Withal, we did not reach the merits of the September 21
forfeiture order because the district court had entered that
order at a time when it lacked subject-matter jurisdiction.
See id. at 70-72. To tie up this loose end, we
authorized the district court, "once its jurisdiction
has reattached, [to] consider the issue of forfeiture
anew." Id. at 72. The case was remanded for
December 7, 2016, the district court - its jurisdiction
having been refreshed - notified the parties that it was
"inclined" to consider the matter of forfeiture on
the papers previously filed. In an abundance of caution, the
court nonetheless allowed additional briefing. After
receiving the parties' supplemental briefs, the court
ordered forfeiture in the amount of $1, 382, 214, holding
that this amount, which it derived by aggregating the
management fees paid under the 2006 renewal contract,
constituted proceeds of the charged crimes. This timely
forum, the defendant advances both procedural and substantive
claims. First, he contends that the district court denied him
the right to allocute and the right to be present when the
forfeiture order was entered. Second, he contends that the
management fees that formed the basis for the forfeiture
award did not constitute "proceeds" of the offenses
of conviction. We discuss these contentions sequentially.