(CN) - Reviving a civil forfeiture action, the 9th Circuit found no proof that a broker intended to defraud a Swiss client when he spent part of a $1 million gold contract to post bail on mortgage-fraud charges in Arizona.
A federal agent seized about $477,000 from three accounts in September 2010, $311,000 of which had been paid to Better Bail Bonds in Phoenix to post an appearance bond for Henry Oliver Ford, a.k.a. Cleothus Lefty Jackson.
The government alleged that Ford had paid Better Bail Bonds out of the $1 million he received from a Swiss company called Interfinanz Und Immobilien, AG (IFG), which had contracted his company, World Food Association Organization, S.A., Inc., to purchase and deliver 35 kilograms of alluvial gold on a monthly basis.
The civil forfeiture complaint filed in Phoenix in 2011 called Ford a "serial fraud perpetrator who has been involved in a number of scams which failed to produce any legitimate income," and claimed that he had fraudulently used money on himself that had been earmarked solely for the purchase of gold.
Ford argued that he had received the money as a fee and that he could use it as he desired. For its part, IFG told the court that it still trusted Ford and asked that the money be returned so he could fulfill the contract.
Federal attorneys noted that, aside from sending an employee - but no money - to Ghana to attempt to purchase the gold, "Ford made no effort to perform any aspect of the contract and could not because he was in custody."
Around the same time he received the $1 million from IFG, Ford was arrested, jailed and indicted in Arizona on mortgage-fraud charges.
Prosecutors said that Ford, using the name Cleothus Jackson, was part of a $50 million straw buyer scheme that had led to the foreclosure of more than 100 high-end homes in Phoenix.
Ford was convicted and sentenced to 30 months in prison in 2011. Court records show that he was paroled in July and is living Florida, where he will remain on probation until 2019.
U.S. District Judge Susan Bolton, the same judge who sentenced Ford for the mortgage fraud, eventually granted summary judgment for the government in the civil forfeiture action.
Ford then took his case to the 9th Circuit, where he argued in a brief that "there was evidence in the record that the $1 million payment was, in fact, a fee earned upon receipt by World Food, which World Food could use however it pleased."
In a reply brief, the government claimed that Ford had "used unsupported claims he was paid exorbitant fees as a consultant, when he has no professional or business skill to justify such fees." The brief also suggested that IFG may not be a legitimate company.
IFG's alleged owners are Arthur Hirner and Gerhard Huber, but both claimed that the "seized funds were not their property but the property of Robert Demund Strauss, the 'investor' for whom they claimed to act," according to the government's appellate brief.
In 2011 Huber allegedly told Swiss police that "IFG had never made any money and was a vehicle used to conduct business transactions with Hirner, his friend," the brief states.
In an unsigned ruling Wednesday, a three-judge appellate panel reversed Bolton's summary judgment and sent the forfeiture action back to Phoenix for a possible jury trial. The unanimous panel found that unanswered questions remain as to the details of the parties' contract, and that the government had failed to show clear evidence of fraud.
"The government has not charged World Food or Mr. Ford with fraud related to this particular transaction, and as the government acknowledges, IFG has not made an official request for the seized monies, nor has it sued World Food for breach of contract," the court wrote. "Indeed, representatives of IFG insist that they 'still trust' World Food and Mr. Ford, and have requested that the funds be released from seizure so that World Food can either perform under the contract or return the money to IFG. Whether World Food was required to use the money from IFG to purchase gold under the contract, or whether it could use the funds at its discretion, is a triable issue of fact for the jury that the plain language of the contract does not resolve."
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