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Ninth Circuit:
Conviction May Not Be Expunged Over Equitable Concerns
Panel Says Ancillary Jurisdiction Is Limited to Cases Alleging Unlawful Conviction or Clerical Error
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals held Friday that a district court lacks jurisdiction to grant a motion to expunge the conviction of a defendant who pled guilty to aiding and abetting in the transmission of wagering information where the defendant did not allege an unlawful arrest or conviction or the existence of a clerical error.
The defendant sought the expungement over fairness concerns, arguing that a subsequent IRS assessment, based on the activities underlying his conviction, of potential excise tax liability of over $100,000 was highly disproportionate to the $3,000 fine imposed by the court.
Judge Gary S. Katzmann of the United States Court of International Trade, sitting by designation, authored the opinion affirming the denial of the motion to expunge by District Judge Janis L. Sammartino of the Southern District of California. Circuit Judges Morgan Christen and Mark J. Bennett joined in the opinion.
Motion to Expunge
Appealing the denial was Salvatore Groppo, who pled guilty in March 2014 to violating 18 U.S.C. §1084 for activities relating to his role as a “sub-bookie” with Macho Sports International Corporation, which operated websites conducting illegal online and telephone-based sports gambling.
The 2013 indictment charging Groppo and 18 other defendants for their involvement with Macho Sports said that the operation, based in Peru but operating in Southern California, ensured prompt payment of gambling debts through the use of intimidation, threats and violence.
Groppo was sentenced pursuant to the plea agreement to five years probation, 200 hours of community service, and a $377 forfeiture, which represented a small share of the millions in assets disgorged from defendants in the case.
The plea agreement specifically provided that it “cannot bind any other federal, state, or local prosecuting administrative, or regulatory authorities.”
In August 2022, he moved to expunge his felony conviction, arguing that the court had ancillary jurisdiction to expunge because “the existence of his felony conviction continues to punish him beyond what the parties or the court intended.” He claims difficulties in starting a business or finding work due to the conviction, in addition to facing the IRS assessment.
In denying the motion, Sammartino said that “[w]hile the Court is sympathetic to the difficulties Defendant continues to fact as a result of his conviction, it cannot grant the relief Defendant seeks.”
Ancillary Jurisdiction
Katzmann noted that a “federal court’s power to expunge is sourced in one of two authorities: statute or the court’s inherent authority” and that Groppo cited no statute as granting authority in this matter. However, the jurist explained, district courts possess ancillary jurisdiction to expunge criminal records arising out of their jurisdictional grant in 18 U.S.C. §3231, governing federal offenses.
He pointed out that a district court’s ancillary jurisdiction in this area is limited to expunging the record of an unlawful arrest or conviction, or to correcting a clerical error and “a district court is powerless to expunge” a valid arrest solely for equitable considerations.
Groppo alleged neither an invalid nor unlawful arrest or conviction, but instead relied upon language in the 1991 Ninth Circuit case of United States v. Smith.
The panel in Smith vacated an order granting expungement and said, in a memorandum opinion, that expungement “is appropriately used only in extreme circumstances” where an arrest or conviction was unlawful or invalid, or the “government engaged in any sort of misconduct.”
Based on this language, Groppo argued that the IRS engaged in misconduct and Smith permits such alleged misconduct to form the basis for expungement.
Rejecting Groppo’s “singular reading” of the case, Katzmann explained:
“The kinds of government misconduct or any other factors that warrant expungement must have resulted in (1) a judgment that an arrest or conviction is unlawful or (2) a clerical error….
“Groppo concedes that he does not have a judgment that his guilty plea and conviction are unlawful. His case therefore fails at the outset.”
Alleged Misconduct
Katzmann considered the nature of the alleged misconduct, and opined:
“More to the point, the IRS’s allegedly unlawful action would not be the kind of government misconduct that would warrant expungement. Beyond pointing to the disparity between his plea deal with the DOJ and the IRS’s enforcement action—a $3,000 fine versus more than $100,000 in tax liability—he does not explain how a post-hoc agency action distorts the validity of his conviction.”
He continued, quoting from Smith:
“Groppo’s arrest and conviction were not obtained through the IRS’s allegedly unlawful conduct…. [T]he IRS relied on Groppo’s conviction to assess a tax liability that is a ‘natural and intended collateral consequence[] of having been convicted.’ ”
Katzmann acknowledged that “the IRS’s enforcement action may well be a burdensome consequence” but Groppo’s motion “is an expungement request for solely equitable relief that the district court cannot grant.”
He noted that “Groppo passingly alleges that the IRS violated the Fifth Amendment due process clause and Eighth Amendment guarantee against cruel and unusual punishment,” but said “Groppo’s remedy…does not lie in expungement.”
The case is United States v. Groppo, 22-50288.
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