Legal battle over Mongols motorcycle club's logo creates headache for feds

McClatchy NewspapersOctober 8, 2012 

A screen shot from the Mongols website.

— An unprecedented federal government effort to seize the Mongols Motorcycle Club’s trademark has quietly become a quarter-of-a-million-dollar headache for the Justice Department.

Four years after prosecutors grabbed attention by lassoing the Mongols’ logo – a ponytailed man riding a motorcycle – along with myriad club members in Southern California, an appellate court must sort out what the federal government might owe the club’s attorneys.

It could be a lot, in a free-speech case that’s also a cautionary tale about aggressive federal use of forfeiture to seize private property.

“What they did was an outrageous violation of the First Amendment, and an absolute abuse of forfeiture and trademark laws,” American Civil Liberties Union attorney David Loy said Monday in a telephone interview.

Rebuking prosecutorial overreach, a federal judge in Los Angeles ordered the Justice Department to pay $253,206 to Loy, who’s with the ACLU of San Diego & Imperial Counties, and Alan Mansfield, an attorney with Consumer Law Group of California, in San Diego.

Loy and Mansfield successfully challenged the prosecutors’ 2008 attempt to seize the Mongols’ trademark. The Justice Department is appealing the judge’s order to pay, however, with the 9th U.S. Circuit Court of Appeals likely to hear the case next year.

“There is no evidence here that the government or the defendants set out at any time to violate the rights of any individual or group, or to mislead the court,” Assistant U.S. Attorney Steven R. Welk wrote in one legal filing, adding that the admittedly “novel” trademark-forfeiture case targeted “members of a brutally violent criminal gang.”

Forfeitures are big business for the federal government. Last year, the Justice Department seized some $1.8 billion worth of forfeited assets. Typically, these are ill-gotten gains from drug trafficking, financial fraud and other criminal activity.

The most recent Justice Department forfeited-assets inventory includes a $1.6 million Cessna Citation aircraft seized in Palm Beach, Fla., 10 million Vaquero cigars seized in Louisville, Ky., and 152 boxes of gold and silver taken in Charlotte, N.C. Officials also reported seizing lots of cash and real estate and, in Laredo, Texas, a big stash of “assorted fragrances.”

Los Angeles-based prosecutors claimed a huge haul in October 2008 when they announced mass indictments of those they called “violent Mongols outlaw motorcycle gang” members. The indictments followed a lengthy undercover investigation by four agents of the federal Bureau of Alcohol, Tobacco, Firearms and Explosives, who managed to become patch-wearing members of the club.

Prosecutors subsequently secured more than 80 convictions, mostly on racketeering and conspiracy charges. Investigators also seized hundreds of firearms, thousands of rounds of ammunition, stacks of dollar bills and other items, opening one legal front that’s still active.

On Tuesday, in Los Angeles, a federal judge will hear an ongoing challenge to some of the property seizures. The judge already has returned some motorcycles to other Mongols.

In addition to physical assets, prosecutors sought in 2008 to claim the Mongols’ trademarked name and logo.

“If any law enforcement officer sees a Mongol wearing his patch, he will be authorized to stop that gang member and literally take the jacket right off his back,” then-U.S. Attorney Thomas P. O’Brien declared at the time.

A U.S. Attorney’s Office spokesman couldn’t be reached Monday, a federal holiday.

A Republican appointee, O’Brien left office in 2009. Justice Department lawyers eventually said they wouldn’t seek to seize the Mongols’ trademark after all. But a judge in Los Angeles ruled last year that prosecutors had gone too far.

The judge reasoned that the trademark belonged to the organization, not to individuals, and therefore unindicted club members should still enjoy the right to use it. Last February, another federal judge added that the Justice Department had to pay for the trademark fight because the government “violated settled First Amendment and trademark law.”

“The novelty of the government’s position did not make it substantially justified,” U.S. District Judge David O. Carter ruled. “Rather, it took unlawful action based on an ungrounded and unsubstantiated legal theory, and without sufficient factual support.”

Because the complex case “arose at the intersection of forfeiture, trademark and First Amendment law, “ Carter added, attorneys deserved the fair-market rates of between $525 and $650 an hour for the 461 hours spent challenging the government.

“They fought us tooth and nail, every step of the way,” Loy said, “and they forced us to work all those hours and incur all those costs.”

Email: mdoyle@mcclatchydc.com; Twitter: @MichaelDoyle10

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