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Government Can't Claim Money Buried on Golf Course

By Robyn Hagan Cain | Last updated on

People might enjoy reading bankruptcy cases if more of those cases included money buried on a golf course.

In what the Sixth Circuit Court of Appeals characterizes as “a fact pattern befitting a John Grisham novel,” FBI agents found $250,000 of “fraudster” A. William Erpenbeck, Jr.’s cash stashed in a cooler on a golf course outside Cincinnati while Erpenbeck was serving a 300-month sentence in federal prison.

Thursday, the Sixth Circuit ruled that the feds couldn’t keep the cash because they didn’t give proper notice of their intent to seize the money for restitution.

Six years after Erpenbeck went to prison for fraud, the FBI learned that he had asked a friend to hold more than $250,000 cash until his release. That led FBI agents to unearth a cooler full of Erpenbeck's money near the third hole at the Summit Hills Country Club in Kentucky; the government sought forfeiture of the cash as proceeds of the fraud.

(Side Bar: For the golfers out there, Judge Jeffrey Sutton clarifies that it's a 366-yard par four hole.)

The government posted notice of the forfeiture online in November and December 2009. To obtain title to property through criminal forfeiture, the government must give third parties a chance to assert competing interests in the property. After a district court enters a preliminary order of forfeiture, federal law requires the government to provide notice of the proceedings, giving interested parties 30 days to file a petition asserting their claims.

If anyone files a petition, the court determine if the petitioner has a legitimate interest. If no one files a petition within the statutory time frame, "clear title" vests in the Government, extinguishing all other parties' interests in the property.

Because no one filed a petition asserting an interest in the cooler of cash in this case, the district court entered a final order of forfeiture.

Michael Baker, the trustee of Erpenbeck's bankruptcy estate, appealed the forfeiture, arguing that he didn't petition within 30 days of online publication of the notice because the government never gave him direct notice of the forfeiture action. (For its part, the government acknowledged that it did not provide direct notice of the forfeiture action to Baker.)

The Sixth Circuit Court of Appeals concluded that, while feds did post notice of the forfeiture online, Baker didn't see it, "having apparently not occupied his free time by browsing"

The feds claimed that the cash nonetheless did not belong to the estate because it vested in the government under the forfeiture statute's relation-back clause at the time of Erpenbeck's fraud.

The Sixth Circuit once again disagreed, holding, "Under the Bankruptcy Code, when Erpenbeck's creditors filed an involuntary bankruptcy petition against him in July 2002, all of his property, "wherever located and by whomever held," became part of the bankruptcy estate. That would include the $250,000 buried near the third hole of Summit Hills Country Club."

Do you agree? Did the right party get the dough?

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