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United States v. Segal

United States Court of Appeals, Seventh Circuit

September 16, 2019

United States of America, Plaintiff-Appellee,
Michael Segal, Defendant-Appellant, Appeal of: Joy Segal, Proposed Intervenor.

          Argued April 4, 2019

          Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:02-CR-00112-1 - Ruben Castillo, Judge.

          Before Ripple, Hamilton, and St. Eve, Circuit Judges.


         These two appeals present straightforward issues of contract law, but with some procedural complications. Appellant Michael Segal was convicted in 2004 of racketeering, mail and wire fraud, making false statements, embezzlement, and conspiring to interfere with operations of the Internal Revenue Service. The company he owned, Near North Insurance Brokerage (NNIB), was convicted of mail fraud, making false statements, and embezzlement. The history of Mr. Segal's prosecution is detailed in United States v. Segal, 495 F.3d 826 (7th Cir. 2007) (affirming convictions and all aspects of sentence except forfeiture order); United States v. Segal, 644 F.3d 364 (7th Cir. 2011) (affirming in part and remanding for discretionary re-sentencing); and United States v. Segal, 811 F.3d 257 (7th Cir. 2016) (addressing several issues under settlement of forfeiture obligations).

         After Mr. Segal served time in prison, see 811 F.3d at 259, and after further sentencing proceedings, see 644 F.3d at 366-68, he was ordered to forfeit to the government $15 million and his entire interest in NNIB. The company itself was ordered to pay restitution and a fine. 495 F.3d at 830. The government initially restrained approximately $47 million worth of assets of both Segal and NNIB. Liquidation proceedings have continued well into the case's second decade.

         Mr. Segal's forfeiture obligations have been disputed for years. See, e.g., 811 F.3d 257. In early 2013, on the eve of what promised to be a complex and contentious hearing over which assets should be forfeited and how much they were worth, Mr. Segal and the government agreed on a court-approved settlement that fulfilled Mr. Segal's $15 million personal forfeiture obligation. Mr. Segal now seeks to rescind or modify that agreement. The district court denied his attempt, and he now appeals. The 2013 settlement, which Mr. Segal has succeeded in enforcing strictly against the government, see id. at 261-62, is the first of the two contracts we address here.

         The second contract is a related settlement between Mr. Segal's ex-wife, Joy Segal, and the United States government. The Segals divorced in June 2005, after Mr. Segal's conviction. In February 2006, Ms. Segal filed a third-party claim under 18 U.S.C. § 1963(l) to intervene in Mr. Segal's forfeiture proceedings. In November 2010, Ms. Segal, too, settled her claims with the government. Under that deal, the government released to her about $7.7 million in restrained assets. In exchange, she relinquished all further claims -save one contingent future interest, at issue here. She now seeks to intervene in the ongoing liquidation proceedings that the district court is administering pursuant to Mr. Segal's forfeiture settlement. The district court denied her attempt at intervention because her contingent future interest is not yet ripe. She also appeals.

         We have jurisdiction over both appeals, and we affirm in all respects the district court's challenged orders. Because Ms. Segal's claims depend on Mr. Segal's-jurisdictionaily, procedurally, and substantively-we address his first.

         I. Michael Segal's Challenge to his Settlement Agreement

         A. Appellate Jurisdiction

         We begin with appellate jurisdiction, which the government challenges on the ground that Mr. Segal filed his notice of appeal too late. See, e.g., United States v. Lilly, 206 F.3d 756, 760 (7th Cir. 2000) (timely notice of appeal is prerequisite for appellate jurisdiction). Mr. Segal appeals from two orders: the district court's denial of his motion to modify his forfeiture order, entered on July 12, 2017, and its denial of his motion to amend that order, entered on August 16, 2017. R. 2100, 2107. He filed his notice of appeal in the district court on September 6, 2017.

         The notice of appeal was too late if we apply the 14-day deadline for a defendant's criminal appeal in Federal Rule of Appellate Procedure 4(b)(1)(A), but it was timely if we apply the 60-day deadline in 28 U.S.C. § 2107(b) and Rule 4(a)(1)(B) for civil appeals where the United States is a party. Counting on the civil appeal deadline for an appeal of such ancillary orders in a criminal case is risky, but we find that this appeal is civil in substance and that Mr. Segal's notice was therefore timely.

         Strictly speaking, the time limit in a criminal case is not jurisdictional, in the sense that a failure to comply may not be overlooked or waived, because the time limit appears in a Federal Rule rather than in a statute. United States v. Neff, 598 F.3d 320, 323 (7th Cir. 2010); see generally Hamer v. Neighborhood Housing Svcs. of Chicago, 138 S.Ct. 13, 20 (2017) (distinguishing between jurisdictional and mandatory claims-processing rules); United States v. Rollins, 607 F.3d 500, 501 (7th Cir. 2010) (same). The 60-day civil deadline where the United States is a party is statutory, however, established by 28 U.S.C. § 2107(b), so it is jurisdictional. The government has raised the timeliness issue properly, so we must decide the issue, whether as a matter of appellate jurisdiction or the claims-processing rule.

         Under the 2013 settlement agreement, the district court retained jurisdiction "in order to implement and enforce" the settlement of the forfeiture issues. 2013 Settlement Agreement 1 22. Though Mr. Segal himself titled the motion at issue as one to modify the underlying forfeiture order, the district court focused on the real substance of the relief sought, which was rescission or modification of the settlement agreement. That was the correct focus. The court's order resolved what was in essence a civil dispute embedded within a criminal case.

         Defendants' appeals from decisions modifying or refusing to modify forfeiture orders in criminal cases are ordinarily governed by Federal Rule of Appellate Procedure 4(b) because criminal forfeitures are "punishment" and therefore part of a criminal sentence. Libretti v. United States, 516 U.S. 29, 39 (1995) ("Congress conceived of forfeiture as punishment for the commission of various drug and racketeering crimes."); United States v. Infelise, 159 F.3d 300, 302 (7th Cir. 1998) ("There is no question that, in general, forfeiture is part of the sentence and is appealable."); United States v. Apampa, 179 F.3d 555, 556-57 (7th Cir. 1999) ("[T]he core of a 'criminal case' to which Rule 4(b) applies is the sentence.... A forfeiture that constitutes part of the punishment in a criminal prosecution is governed by Rule 4(b).").

         Appellants in criminal cases do not often attempt to rely on the longer appeal deadlines for civil cases, but in several such appeals filed under the umbrella of criminal cases, we have applied a pragmatic approach that looks to the "substance and context, and not the label, of the proceeding appealed from [to] determine its civil or criminal character." Betts v. United States, 10 F.3d 1278, 1283 (7th Cir. 1993) (applying civil deadline to appeal from denial of certificate of innocence). We have taken this approach because "many appealable orders technically 'in' criminal cases look more civil than criminal," especially when they pertain to "postjudgment remedies ... collateral to criminal punishment." United States v. Taylor, 975 F.2d 402, 403 (7th Cir. 1992) (applying civil deadline to appeal of denial of order for return of seized property); United States v. Lee, 659F.3d 619, 620-21 (7th Cir. 2011)

          (applying civil deadline to appeal of order to defendant to turn over funds in retirement accounts), citing United States v. Kollintzas,501 F.3d 796, 800-01 (7th Cir. 2007) (allowing government to pursue garnishment and other civil debt collection techniques under umbrella of criminal case); United States v. Santiago,826 F.2d 499, 502 (7th Cir. 1987) (applying civil deadline to surety's appeal of forfeiture of bail bond: "a bail bond is a civil contractual agreement between the government and the surety on behalf of the criminal defendant"); cf. Lilly, 206 F.3d at 760 (applying criminal deadline where defendant sought declaration that he had satisfied his forfeiture obligation, which was a ...

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