Court filing
Attachment A — USA v. Crowther (Dkt. 149.1)
Filed June 10, 2021 in USA v. Crowther; one of 318 filings from this case.
Record facts
| Court | U.S. District Court for the Middle District of Florida |
|---|---|
| Filed | 2021-06-10 |
U.S. District Court for the Middle District of Florida · No. 2:20-cr-00114 · Doc. 149-1 · 2021-06-10 · Docket on CourtListener
Full text
ATTACHMENT
“A”
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No. _________
IN THE
SUPREME COURT OF THE UNITED STATES
NIDAL AHMED WAKED HATUM,
Petitioner,
v.
UNITED STATES OF AMERICA,
Respondent.
_____________♦_____________
On Petition for a Writ of Certiorari
to the United States Court of Appeals
for the Eleventh Circuit
_____________♦_____________
PETITION FOR A WRIT OF CERTIORARI
_____________♦_____________
Terrance G. Reed
Howard Srebnick*
Robert K. Moir
Jackie Perczek
LANKFORD & REED
BLACK, SREBNICK,
120 N. St Asaph Street
KORNSPAN & STUMPF
Alexandria, Virginia 22314
201 S. Biscayne Blvd., Suite 1300
Tel: (703) 299-5000
Miami, Florida 33131
Tel: (305) 371-6421
*Counsel of Record for Petitioner
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i
QUESTION PRESENTED
In a concealment money laundering case (18 U.S.C. § 1956(h)) based on a series
of “mirror-image” banking transactions in which the “same funds” (i.e., the tainted
property) borrowed on a line of credit were “almost simultaneously” returned to the
victim bank, with interest, thus causing no loss to the bank (a gain, actually), App.
41, the district court imposed zero forfeiture, finding that “[t]here [were] no laundered
funds that were retained by the Defendant or any other co-conspirator to be forfeited.”
App. 38. In a published opinion, the Court of Appeals reversed and remanded for
imposition of an order of forfeiture, approving imposition of a “forfeiture money
judgment” against petitioner’s untainted property even though none of the applicable
forfeiture statutes authorizes a money judgment. App. 2, 13. The question presented
is:
Whether a criminal defendant’s legitimate, untainted property is
subject to an extra-statutory forfeiture money judgment or substitute
property forfeiture (under 21 U.S.C. § 853(p)), particularly when the
defendant himself never “actually acquired” the tainted property (i.e.,
the laundered funds “involved in such offense,” 18 U.S.C. § 982(a)(1)),
see Honeycutt v. United States, 137 S. Ct. 1626, 1635 (2017), and all of
the tainted property was returned to its rightful owner (the victim of the
offense) before sentencing.
The question presented can be subdivided into three stand-alone questions, any one
of which, if answered in favor of petitioner, requires that the question presented be
answered in the negative and the judgment of the Court of Appeals reversed:
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(1) Whether a district court can impose a forfeiture money judgment
against a criminal defendant in the absence of any statutory authority;1
(2) Whether the Court’s holding in Honeycutt v. United States—that
criminal forfeiture under 21 U.S.C. § 853(a) of drug “proceeds the person
obtained” is “limited to [tainted] property the defendant himself actually
acquired as the result of the crime” (i.e., no joint and several liability),
137 S. Ct. 1626, 1635 (2017)—likewise limits criminal forfeiture under
18 U.S.C. § 982(a)(1) to the tainted property “involved in” the money
laundering offense that “the defendant himself actually acquired as the
result of the crime”; and
(3) Whether returning tainted property (i.e., the laundered funds
“involved in such offense,” 18 U.S.C. § 982(a)(1)) to the rightful owner of
the property (i.e., the victim of the offense) before sentencing is a
“transfer[] … to … a third party,” 21 U.S.C. § 853(p)(1)(B) (emphasis
added), that triggers forfeiture of a defendant’s untainted, substitute
property in an equivalent amount.
1 Pending before the Court is a certiorari petition likewise seeking review of the
legality of forfeiture money judgments. See Bradley v. United States, No. 20-7198
(Court-ordered response due May 10, 2021).
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PARTIES TO THE PROCEEDINGS
Petitioner Nidal Ahmed Waked Hatum was the defendant in the District
Court and the appellee in the Eleventh Circuit. He is an individual, so there are no
disclosures to be made pursuant to Supreme Court Rule 29.6.
The respondent is the United States.
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TABLE OF CONTENTS
PAGE(S)
QUESTION PRESENTED ............................................................................................. i
PARTIES TO THE PROCEEDINGS ........................................................................... iii
TABLE OF CONTENTS ............................................................................................... iv
TABLE OF AUTHORITIES ......................................................................................... vi
PETITION FOR A WRIT OF CERTIORARI ............................................................... 1
ORDERS AND OPINIONS OF THE COURTS BELOW ............................................ 1
JURISDICTION ............................................................................................................ 1
CONSTITUTIONAL AND STATUTORY PROVISIONS ........................................... 2
STATEMENT OF THE CASE ...................................................................................... 2
REASONS FOR GRANTING THE WRIT .................................................................... 8
I.
The Court should decide whether a district court can impose a
forfeiture money judgment against a criminal defendant in the
absence of any statutory authority ............................................................ 10
a. The plain text of the forfeiture statute does not authorize money
judgments .............................................................................................. 16
b. The statutory structure conflicts with money judgments ................... 19
c. The traditional history of forfeiture does not support money
judgments .............................................................................................. 20
II.
The Court should decide whether the holding in Honeycutt v. United
States—that criminal forfeiture under 21 U.S.C. § 853(a) of drug
“proceeds the person obtained” is “limited to [tainted] property the
defendant himself actually acquired as the result of the crime” (i.e.,
no joint and several liability), 137 S. Ct.1626, 1635 (2017)—likewise
limits criminal forfeiture under 18 U.S.C. § 982(a)(1) to the tainted
property “involved in” the money laundering offense that “the
defendant himself actually acquired as the result of the crime.” ............. 25
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PAGE(S)
III.
The Court should grant certiorari to confirm that returning tainted
property to the rightful owner of the property before sentencing is
not a “transfer[] … to … a third party,” 21 U.S.C. § 853(p)(1)(B)
(emphasis added), that triggers forfeiture of a defendant’s untainted,
substitute property in an equivalent amount ............................................ 33
CONCLUSION ............................................................................................................. 37
APPENDIX
Opinion of the United States Court of Appeals for the Eleventh
Circuit, United States v. Nidal Ahmed Waked Hatum,
No. 18-11951 (August 11, 2020) ........................................................... App. 1
Order of the United States Court of Appeals for the Eleventh Circuit
Denying Petition for Rehearing and Rehearing En Banc, United
States v. Nidal Ahmed Waked Hatum, No. 18-11951 (October 29,
2020) .....................................................................................................App. 35
Order of the United States District Court for the Southern District
of Florida on Government’s Request for Entry of Forfeiture Money
Judgment, United States v. Nidal Ahmed Waked Hatum, Case No.
15-20189-CR-SCOLA (S.D. Fla.) (April 10, 2018) ............................. App. 37
Factual Proffer Supporting Petitioner’s Guilty Plea, United States v.
Nidal Ahmed Waked Hatum, Case No. 15-20189-CR-SCOLA (S.D.
Fla.) (October 19, 2017) ...................................................................... App. 39
18 U.S.C. § 981 .................................................................................... App. 42
18 U.S.C. § 982 .................................................................................... App. 54
21 U.S.C. § 853 .................................................................................... App. 58
Federal Rules of Criminal Procedure, Rule 32.2 ............................... App. 67
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TABLE OF AUTHORITIES
CASES
PAGE(S)
Azar v. Allina Health Services,
139 S.Ct.1804 (2019) ........................................................................................ 24
Bradley v. United States,
No. 20-7198, ___ S.Ct. ___ (Mar. 22, 2021) .................................................. ii, 24
Caplin & Drysdale v. United States,
491 U.S. 617 (1989) .......................................................................................... 35
Honeycutt v. United States,
137 S. Ct. 1626 (2017) ................................................................................ passim
Kaley v. United States,
571 U.S. 320 (2014) .............................................................................. 12, 29, 30
Luis v. United States,
136 S. Ct. 1083 (2016) ........................................................................... 12, 30, 35
Peithman v. United States,
140 S. Ct. 340 (2019) ................................................................................. 28, 29
Pub. Citizen v. U.S. Dep’t of Just.,
491 U.S. 440 (1989) .......................................................................................... 36
Russello v. United States,
464 U.S. 16 (1983) ............................................................................................ 23
Sandoz Inc. v. Amgen, Inc.,
137 S. Ct. 1664 (2017) ...................................................................................... 23
The Palmyra,
12 Wheat 1 (1827) ............................................................................................ 28
United States v. Am. Trucking Ass’ns,
310 U.S. 534 (1940) .......................................................................................... 36
United States v. Awad,
598 F.3d 76 (2d Cir. 2010) ............................................................................... 21
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United States v. Bradley,
969 F.3d 585 (6th Cir. 2020) ............................................................................ 15
United States v. Browne,
505 F.3d 1229 (11th Cir. 2007) ......................................................................... 11
United States v. Caporale,
806 F.2d 1487 (11th Cir. 1986) ........................................................................ 11
United States v. Casey,
444 F.3d 1071 (9th Cir. 2006) .......................................................................... 18
United States v. Channon,
973 F.3d 1105 (10th Cir. 2020) ........................................................................ 11
United States v. Conner,
752 F.2d 566 (11th Cir. 1985) ..................................................................... 10, 11
United States v. Elbeblawy
899 F.3d 925 (11th Cir. 2018) .......................................................................... 15
United States v. Gjeli,
867 F.3d 418 (3d Cir. 2017) ............................................................................. 27
United States v. Gorksi,
880 F.3d 27 (1st Cir. 2018) .............................................................................. 21
United States v. Hawkey,
148 F.3d 920 (8th Cir. 1998) ........................................................................ 6, 35
United States v. Kalish,
626 F.3d 165 (2d Cir. 2010) .............................................................................. 35
United States v. Lo,
839 F.3d 777 (9th Cir. 2016), cert denied, 138 S. Ct. 354 (2017) ....................... 8
United States v. Nejad,
933 F.3d 1162 (9th Cir. 2019). .......................................................................... 21
United States v. Newman,
659 F.3d 1235 (9th Cir. 2011) .......................................................................... 11
United States v. Padron,
527 F.3d 1156 (11th Cir. 2008) .................................................................... 4, 23
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United States v. Peithman,
917 F.3d 635 (8th Cir. 2019), cert denied, 140 S. Ct. 340 (2019) ..................... 27
United States v. Ripinsky,
20 F.3d 359 (9th Cir. 1994) .............................................................................. 11
United States v. Sexton,
894 F.3d 787 (6th Cir. 2018), cert. denied, 139 S. Ct. 415 (2018) ................... 27
United States v. Stein,
964 F.3d 1313 (11th Cir. 2020) ........................................................................ 30
United States v. Surgent,
2009 WL 2525137 (E.D.N.Y. 2009) ................................................................... 21
United States v. Thompson,
___ F.3d___, 2021 WL 800686 (9th Cir. Mar. 3, 2021) ................. 27, 31, 32, 36
United States v. Waked Hatum,
969 F.3d 1156 (11th Cir. 2020) .......................................................................... 1
Whitman v. American Trucking Ass’n, Inc.,
531 U.S. 457 (2001) .......................................................................................... 30
STATUTES AND RULES
18 U.S.C. § 981(a)(1) .................................................................................................... 27
18 U.S.C. § 981(a)(1)(C) ....................................................................................... passim
18 U.S.C. § 982 ............................................................................................. 2, 11, 17, 20
18 U.S.C. § 982(a)(1) ............................................................................................. passim
18 U.S.C. § 982(b)(1) .................................................................................. 17, 20, 29, 31
18 U.S.C. § 1029(c)(2) ........................................................................................... 17, 30
18 U.S.C. § 1467(b) ..................................................................................................... 17
18 U.S.C. § 1834 ........................................................................................................... 17
18 U.S.C. § 1956 ........................................................................................................... 16
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18 U.S.C. § 1956(c)(7) ................................................................................................. 27
18 U.S.C. § 1956(h) ................................................................................................ i, 2, 4
18 U.S.C. § 1963(m) .................................................................................................... 17
21 U.S.C. § 853 ..................................................................................................... passim
21 U.S.C. § 853(a) ................................................................................................ passim
21 U.S.C. § 853(a)(2) ................................................................................................... 13
21 U.S.C. § 853(a)(3) ................................................................................................... 13
21 U.S.C. § 853(c) .................................................................................................. 12, 19
21 U.S.C. § 853(e) .................................................................................................. 12, 19
21 U.S.C. § 853(h) ....................................................................................................... 34
21 U.S.C. § 853(n) ................................................................................................. passim
21 U.S.C. § 853(n)(6)(A) ......................................................................................... 34, 35
21 U.S.C. § 853(o) ........................................................................................................ 18
21 U.S.C. § 853(p) ................................................................................................ passim
21 U.S.C. § 853(p)(1)(A)-(E) ......................................................................................... 16
21 U.S.C. § 853(p)(1)(B) ................................................................................. ii, 7, 33, 34
21 U.S.C. § 853(p)(2) ................................................................................................... 31
28 U.S.C. § 1254(1) ....................................................................................................... 2
28 U.S.C. § 2072(b) ..................................................................................................... 24
28 U.S.C. § 2461(c) ...................................................................................................... 17
28 U.S.C. § 2553(b) ..................................................................................................... 17
28 U.S.C. § 2671 ........................................................................................................... 14
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31 U.S.C. § 5317(c) ...................................................................................................... 17
31 U.S.C. § 5332(a)(2) ................................................................................................. 23
31 U.S.C. § 5332(b)(2) ................................................................................................. 22
31 U.S.C. § 5332(b)(3) ........................................................................................... 17, 22
31 U.S.C. § 5332(b)(4) ................................................................................................. 22
Fed. R. Crim. P. 32.2 ...................................................................................................... 2
Fed. R. Crim. P. 32.2(a) ............................................................................................... 23
Fed. R. Crim. P. 32.2(b)(1)(A) ..................................................................................... 23
OTHER AUTHORITIES
2000 Adv. Cmtee Notes Rule 32.2 ............................................................................... 24
Anti-Drug Abuse Act of 1986, Pub. L. No. 99-570, § 1351 (“Money Laundering
Control Act of 1986”), § 1366 (“Forfeiture”), § 1153(b) (“Substitute Assets”) ..... 16, 30
Anti-Drug Abuse Act of 1988, Pub. L. 100-690, Title VI, § 6463(c),
102 Stat. 4374, 4375 (1988) .................................................................................. 16, 30
Brief of the United States Opposing Certiorari,
Lo v. United States,
S. Ct. No. 16-8327 ............................................................................................. 20
The Civil Asset Reform Act, 28 U.S.C. § 2671 ............................................................ 14
The Comprehensive Drug Abuse and Prevention Act of 1970 .................................. 17
The Patriot Act of 2001 .......................................................................................... 22, 23
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PETITION FOR A WRIT OF CERTIORARI
Petitioner Nidal Waked petitions this Court pursuant to Sup. Ct. Rule 10 for
issuance of a writ of certiorari to review the decision of the Eleventh Circuit that: (1)
upheld the imposition of a “forfeiture money judgment” not authorized by statute; (2)
held that criminal forfeitures are not limited to tainted property, notwithstanding
this Court’s opinion in Honeycutt v. United States, 137 S. Ct. 1626 (2017); and (3) held
that the Government can forfeit a defendant’s legitimate, untainted assets even
after—indeed, because—the tainted funds were returned to the alleged crime victim.
ORDERS AND OPINIONS OF THE COURTS BELOW
The published opinion of the Eleventh Circuit reversing the district court is
reported as United States v. Waked Hatum, 969 F.3d 1156 (11th Cir. 2020), and
reproduced in the Appendix at App. 1-34.
The Eleventh Circuit’s order denying rehearing and rehearing en banc is
reproduced in the Appendix at App. 35-36.
The District Court’s order imposing zero forfeiture is reproduced in the
Appendix at App. 37-38.
The Factual Proffer supporting the guilty plea is reproduced in the Appendix
at App. 39-41.
JURISDICTION
The Eleventh Circuit issued its decision on August 11, 2020 and denied a
petition for rehearing and/or en banc review on October 29, 2020.
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The deadline for filing a petition for a writ of certiorari in this case is March
29, 2021, the Court having ordered that in light of the pandemic, “the deadline to file
any petition for a writ of certiorari due on or after the date of this order is extended
to 150 days from the date of the lower court judgment, order denying discretionary
review, or order denying a timely petition for rehearing.” Order Regarding Filing
Deadlines, 589 U.S. (Mar. 19, 2020). This petition, therefore, is timely.
The jurisdiction of this Court is invoked under 28 U.S.C. § 1254(1).
CONSTITUTIONAL AND STATUTORY PROVISIONS
The relevant provisions of law are reproduced in the Appendix as follows: 18
U.S.C. § 981, at App. 42-53; 18 U.S.C. § 982, at App. 54-57; 21 U.S.C. § 853, at App.
58-66; and Rule 32.2, Federal Rules of Criminal Procedure, at App. 67-86.
STATEMENT OF THE CASE
Petitioner pled guilty to one count of conspiracy to engage in concealment
money laundering (18 U.S.C. § 1956(h)) based on a series of “mirror-image” banking
transactions that caused zero loss to the bank. The “same funds” that were borrowed
on a line of credit were timely returned to the bank, with interest. App. 41. The
district court imposed zero forfeiture, finding that “[t]here are no laundered funds
that were retained by the Defendant or any other co-conspirator to be forfeited.” App.
38. The government appealed. Petitioner framed the issue as:
Whether the district court correctly imposed a forfeiture amount of zero,
where the same funds (the corpus) “involved in” the money laundering
offense were returned to, and thus recovered by, the victim before
sentencing (indeed, years before the defendant was indicted).
The Court of Appeals reframed the issue as follows:
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If a defendant is convicted of a money laundering scheme that caused no
financial harm to an innocently involved bank, is an order of forfeiture
still mandatory? We conclude that it is and reverse the District Court’s
denial of the government’s forfeiture motion in this case.
App. 1-2.
The facts were not in dispute: As the general manager of Panamanian
electronics wholesaler Vida Panama, petitioner arranged to draw down on the
corporate credit facility that Vida Panama had at the International Commercial Bank
of China (“ICBC” or the “Bank”). App. 2. To justify drawing that corporate line of
credit, petitioner used phony invoices from other corporations he managed that
misrepresented to the Bank that Vida Panama was purchasing electronics from those
other corporations. Id. “In truth, Vida Panama was not buying merchandise” from
the other corporations. App. 3. “After the transfer from Vida Panama cleared, [the
manager of the other corporations] would send a check in the same amount from one
of those corporations back to Vida Panama. Ultimately, [petitioner] would deposit
that check in Vida Panama’s bank account.” Id. “Because of the mirror-image nature
of the scheme, the Bank incurred no financial loss from these transactions and all
draws were repaid with interest.” App. 3.
Petitioner, Vida Panama and the manager of the other corporations were
charged in a three-count indictment. The government alleged that petitioner used the
phony invoices “to launder money among his corporations … knowingly
misrepresenting to the Bank how the drawn money would be used.” App. 3. Before
trial, the counts against the manager were dismissed on speedy trial grounds. App.
4. Petitioner “pled guilty to conspiracy to commit money laundering in violation of 18
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U.S.C. § 1956(h), based on misrepresentations to [the Bank] in violation of 18 U.S.C.
§ 1957.” App. 4. In return for petitioner’s guilty plea to that one count, the remaining
counts against petitioner were dismissed, as were all charges against Vida Panama.
Binding precedent in the Eleventh Circuit mandated the entry of a forfeiture money
judgment. E.g., United States v. Padron, 527 F.3d 1156, 1161–62 (11th Cir. 2008).
But petitioner’s plea agreement expressly quantified the money judgment as “the
value of the property involved in the offense which is not otherwise recovered….” App.
4 (emphasis added). And the “Factual Proffer” supporting the plea stipulated that the
“scheme resulted in the same funds being moved from Panama to Miami and almost
simultaneously from Miami back to Panama.” App. 41 (emphasis added).
“The District Court sentenced petitioner to 27 months imprisonment,” App. 5,
and found that petitioner was “not able to pay a fine.” ECF#358 (Sentencing
Transcript), at 31. “The government requested forfeiture of $20,852,000. This was the
total amount of money [petitioner] illegally transferred from Vida Panama to [the
other corporations], plus the amount Vida Panama received back in mirror-image
repayments.” Id. “The government conceded there were no proceeds of [petitioner]’s
money laundering offense, but argued that, under the broad ‘involved in’ language of
18 U.S.C. § 982(a)(1), forfeiture of all the money [petitioner] laundered was proper.”
App. 6. Petitioner argued that because the Bank had already recovered the “same
funds” involved in the scheme (i.e., “the laundered money had already been returned
to the Bank”), there was no tainted property for petitioner to forfeit. App. 6. Petitioner
“also argued that forfeiture money judgments are not authorized by statute.” App. 6.
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The District Court “denied forfeiture based on ‘the unique circumstances of this
case, where Mr. Waked returned all of the money plus interest.’” App. 6. The District
Court explained that it was “declining to impose [forfeiture] because the statute’s
purposes—‘to ensure that criminals do not retain money for themselves and to punish
defendants by transferring ill-gotten gains to the United States’—would not be served
here.” App. 6 (quoting App. 37). In response to petitioner’s Eighth Amendment
challenge, the District Court found that “the government’s requested sum of
$20,852,000 would be unconstitutionally excessive.” App. 6. The District Court held
that “if it were required to impose a forfeiture money judgment,” the District Court
“would order $520,000 ($10,000 for each of the 52 transactions).” App. 6.
On the government’s motion to correct the sentence, the District Court “said it
was still having ‘a hard time getting [its] head wrapped around the idea that if the
money goes back to the original victim before there’s any prosecution, how is there
any money to recover?’” App. 7. Citing to language in the plea agreement that
quantified the money judgment as “equal to the value of the property involved in the
offense which is not otherwise recovered,” App. 4, the District Court reiterated its
ruling “that, since [petitioner] returned all the laundered money to the Bank, there
was no money to ‘recover.’” App. 7.
The Eleventh Circuit reversed, holding that:
(1) “[u]nless and until Congress, the Supreme Court, or this Court
sitting en banc changes the law of forfeiture, we will follow this Court’s
precedent permitting forfeiture money judgments.” App. 13;
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(2) “[e]ven if … laundered funds voluntarily returned to the victim
are not always subject to forfeiture, see United States v. Hawkey, 148
F.3d 920, 928 (8th Cir. 1998), that is not what happened in [petitioner]’s
case. [Petitioner] does not argue that he ‘returned’ the fraudulently
obtained funds to the Bank out of the goodness of his heart. His
laundering scheme depended on the Bank being repaid in full at the
conclusion of each mirror-image transaction.” App. 14-15;2
(3) “[a]llowing [petitioner] to escape forfeiture on the ground that
the interest in the laundered funds was actually Vida Panama’s, not his
own, would relieve him of culpability for the offense to which he already
pled guilty.” App. 16;
(4) this Court’s holding in Honeycutt “was based on the language
of § 853(a), which limits forfeiture to ‘proceeds the person obtained
directly or indirectly’ as the result of the crime. By contrast, the
government is seeking forfeiture against [petitioner] under 18 U.S.C. §
982(a)(1) [(“The court … shall order that the person forfeit to the United
States any property, real or personal, involved in such offense, or any
property traceable to such property.”) (emphasis added)]. And because §
982(a)(1) contains neither a ‘proceeds’ nor an ‘obtained’ limitation,
2 Construing the plea agreement, the Court of Appeals concluded that “[t]he plea
agreement’s use of the word ‘recovered’ in the forfeiture context clearly refers to
property not already recovered for forfeiture by the United States, rather than the
Bank.” App. 17 n.4 (emphasis added).
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Honeycutt’s ‘tainted property’ requirement does not apply to this case.”
App. 17 (emphasis added); and
(5) returning the tainted property to the victim bank—“the
original and still-current owner of the laundered money”—before
sentencing constituted a “third party” transfer within the meaning of 21
U.S.C. § 853(p)(1)(B), thus triggering forfeiture of petitioner’s untainted,
substitute property in an equivalent amount. App. 18-19.
Summing up its opinion, the Court of Appeals wrote:
The definition of property in 18 U.S.C. § 982(a)(1) is distinct from that
in the other subsections of § 982(a), as well as 21 U.S.C. § 853(a). Our
ruling allows forfeiture in the amount of property that Mr. Waked
transferred as a part of his laundering scheme. We understand this
outcome to be what Congress intended when it used the broad term “any
property, real or personal, involved in such offense” and instituted a
scheme of substitute forfeiture. We therefore conclude that the District
Court was under an obligation to order forfeiture against Mr. Waked
and we reverse its order to the contrary.
App. 19-20. The Court of Appeals also concluded that the District Court erred in
holding that “any forfeiture order above $520,000 would be unconstitutionally
excessive.” App. 21.
In her opinion concurring in part and dissenting in part, Judge Lagoa observed
that “three separate forms of forfeiture relief are reflected in the Rules of Criminal
Procedure.” App. 28. She did not identify any statutory source for forfeiture money
judgments (there is none). Moreover, she distinguished “substitute asset forfeiture
and forfeiture money judgments [as] separate forfeiture remedies. The latter is not
dependent on the existence of forfeitable substitute property or the government’s
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entitlement under § 853(p).” App. 29 (citing United States v. Lo, 839 F.3d 777, 792
(9th Cir. 2016) (“[W]here the government does not seek substitute property under
Rule 32.2(e), but seeks only ‘a money judgment as a form of criminal forfeiture under
Rule 32.2(b),’ those requirements [of § 853(p)] are inapplicable.”)). Observing that in
the district court “the government moved for only a money judgment,” App. 31, and
“did not request relief under § 853(p)—the substitute asset forfeiture provision,” App.
29, Judge Lagoa thought the court should “defer discussion on substitute asset
forfeiture and the Eighth Amendment until those issues properly reach” the Court of
Appeals. App. 34. Still, Judge Lagoa agreed with the majority that the District Court
was obliged to enter a forfeiture money judgment reflecting “the total money
laundered through [petitioner]’s conspiracy ... even if he paid those funds back to the
bank.” App. 27 (emphasis added).
Petitioner timely sought rehearing and en banc review, which the Court of
Appeals denied.
REASONS FOR GRANTING THE WRIT
This petition challenges the judicial use of “extra-statutory” common law
money judgments to compel mandatory criminal forfeiture of untainted property, i.e.,
property lacking any nexus to crime. As this Court confirmed in Honeycutt, over the
last two centuries, Congress intentionally limited first civil, and then criminal,
forfeitures to property tainted by crime; forfeiture did not reach untainted property
unless expressly authorized by statute, for example, so-called “substitute property”
forfeiture under 21 U.S.C. § 853(p). By rejecting “joint and several liability” in a drug
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case, the Court in Honeycutt narrowed the application of the criminal forfeiture laws,
21 U.S.C. § 853(a), to comply with original Congressional intent. Despite this, many
courts, including the Eleventh Circuit here, have since relied upon Honeycutt’s
limiting language to expand—rather than constrain—forfeitures, under the theory
that any type of forfeiture Honeycutt failed to expressly prohibit (i.e., money
judgments, joint and several liability for non-drug offenses, forfeiture statutes using
different language) remains fair game for the imposition of mandatory forfeitures. In
this case, the Court of Appeals mandated that the District Court saddle an indigent
defendant with a money judgment—presumably to be collected against untainted
property that the indigent defendant may acquire in the future—even though
petitioner’s scheme, by design, had already (“almost simultaneously,” App. 41)
returned the tainted property back to its rightful owner (the victim bank).
Having preserved all challenges to this extra-statutory forfeiture, petitioner
asks this Court to grant review and direct the lower courts to adhere to the
congressionally-mandated procedures for imposing criminal forfeitures. At a
minimum, the Court should correct the decision of the Eleventh Circuit insofar as it
has interpreted the forfeiture statute to authorize forfeiture of a defendant’s
untainted, substitute property when the tainted property was previously returned, in
full, to its rightful owner.
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I.
The Court should decide whether a district court can impose a
forfeiture money judgment against a criminal defendant in the
absence of any statutory authority.
None of the statutes at issue authorize the imposition of a forfeiture money
judgment. Yet every court of appeals has approved their imposition, just as all, but
one, had approved joint and several forfeiture liability until this Court’s decision in
Honeycutt.
Extra-statutory forfeiture money judgments emerged in the mid-1980s, and
particularly in drug prosecutions, when some circuits deduced that because criminal
forfeitures are in personam judgments, federal prosecutors need not trace a criminal
offense to specific items of property to justify a forfeiture but rather can simply have
the court impose a “money judgment” against all of the defendant’s property. The
Eleventh Circuit coined the concept in United States v. Conner, 752 F.2d 566, 577
(11th Cir. 1985) (“This is a money judgment and the creditor need not trace the
proceeds to identifiable assets.”).
This judicial creation pre-dated the decision of Congress to enact substitute
property forfeiture in 1986, see 21 U.S.C. § 853(p), which, for the first time, allowed
the government to forfeit a defendant’s untainted property, but only after satisfying
the statutory preconditions of § 853(p)(1-5), i.e., dissipation by the defendant of the
tainted property. Despite this legislative development, the misguided judicial
assumption about Congressional abandonment of taint limitations for criminal
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forfeitures proceeded largely unchecked.3 Money judgments quickly ripened into
general judicial acceptance of common law (non-statutory) criminal forfeiture
liability, whereby courts imposed forfeitures upon a defendant’s untainted property
under attribution theories such as joint and several liability, United States v.
Caporale, 806 F.2d 1487, 1508 (11th Cir. 1986) (citing Conner), and co-conspirator
liability. United States v. Browne, 505 F.3d 1229, 1280 (11th Cir. 2007) (citing
Caporale).
In full bloom, courts deploy forfeiture money judgments to displace entirely the
substitute assets provisions of § 853(p), making the government’s compliance with its
statutory preconditions wholly unnecessary to forfeit a defendant’s legitimate
property. See, e.g., United States v. Newman, 659 F.3d 1235, 1243 (9th Cir. 2011)
(“Because the government sought a money judgment in the first instance, there was
no need to seek substitute property.”) (emphasis in the original) (quoted and followed
in United States v. Channon, 973 F.3d 1105, 1116 (10th Cir. 2020)).
These forfeiture money judgments, therefore, are judge-made devices born
from the unfounded judicial assumption that the scope of criminal, in personam,
forfeitures is materially different from the civil, in rem, forfeitures from which they
originated. Forfeiture money judgments assume that criminal forfeitures are not
3 The logical impact of the 1986 adoption of substitute asset forfeiture was not
initially lost on some lower courts. See, e.g., United States v. Ripinsky, 20 F.3d 359,
365 n.8 (9th Cir. 1994) (distinguishing rulings of “courts of appeals prior to 1986,”
including Conner, as being “written prior to the enactment of § 982, which defines
forfeitable assets to be only those associated with the underlying offense or traceable
to the offense and distinguishes between ’forfeitable” and ’substitute’ assets.”).
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confined by civil forfeiture’s historical limitation to specific “tainted” property. Under
this erroneous premise, courts hold that the in personam nature of criminal
forfeitures frees the prosecution from identifying, tracing, or securing specific tainted
property to obtain a forfeiture judgment (all of which is required in civil forfeitures).
The judicial device of forfeiture money judgments reduces the government’s burden
to estimating the potential monetary value of potentially forfeitable property
wherever historically located, by whomever obtained or currently held, to impose an
equivalent financial forfeiture liability upon all current and future property of all co-
defendants and co-conspirators. By abandoning any tracing requirement for specific
property, money judgments essentially eliminate both of the property nexus
requirements for forfeitures: (i) the nexus between the tainted property and the
offense; and (ii) the nexus between the tainted property and the defendant.
The essential premise of this precedent—that tracing a defendant’s criminal
conduct to specific property is unnecessary to impose a criminal forfeiture judgment—
would later be rejected by this Court in a series of cases leading up to this Court’s
unanimous opinion4 in Honeycutt, which reaffirmed that: “‘[F]orfeiture applies only
to specific assets.’” 137 S. Ct. at 1633 (quoting Kaley v. United States, 571 U.S. 320,
335 n.11 (2014) (criminal forfeiture under 18 U.S.C. § 982(a)(1)). See also Luis v.
United States, 136 S. Ct. 1083, 1090 (2016) (relation back doctrine, § 853(c), and
pretrial restraints, § 853(e), limited to tainted property).
4 Justice Gorsuch took no part in the case.
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Honeycutt involved a challenge to “joint and several liability for forfeiture
judgments.” 137 S. Ct. at 1631. The Sixth Circuit held (along with all but one circuit)
that joint and several forfeiture liability applied to conspirators, making the
defendant liable in criminal forfeiture for the value of drug proceeds acquired by his
co-defendant (co-conspirator) brother. In rejecting common law attribution theories
for criminal forfeiture liability, Honeycutt reaffirmed the government’s burden to
trace the proscribed criminal conduct directly to specific, tainted property acquired
by the individual defendant. Congress authorized the punishment of criminal
forfeiture “only from the defendant who initially acquired the [tainted] property and
who bears responsibility for its dissipation.” 137 S. Ct. at 1634. This Court concluded
that “§ 853 maintains traditional in rem forfeiture’s focus on tainted property unless
one of the preconditions [for forfeiting substituted property] exists.” Id. at 1635.
Honeycutt rejected the application of common-law principles to the criminal
forfeiture of a defendant’s untainted property as an impermissible “end run” around
the exclusive language of 21 U.S.C. § 853(p), which permits the forfeiture of a
defendant’s untainted assets. Id. at 1634. Honeycutt observed that all three
subsections of § 853(a) reflect Congressional intent to limit forfeitures to property
“acquired” by the defendant. 137 S. Ct. at 1632-33 (“obtain” under § 853(a); “personal
property” under § 853(a)(2); defendant’s “interest” under § 853(a)(3)). “[T]he Court
cannot construe a statute in a way that negates its plain text, and here, Congress
expressly limited forfeiture to tainted property that the defendant obtained.” Id. at
1635 n.2.
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Describing the advent of criminal forfeiture as “effectively merging the in rem
forfeiture proceeding with the in personam criminal proceeding,” Honeycutt found it
“clear
from
its
text
and
structure,
[that] §
853 maintains
traditional in
rem forfeiture’s focus on tainted property unless one of the preconditions of §
853(p) exists.” 137 S. Ct. at 1635.5 The statutory preconditions of § 853(p) require a
government showing that, by act or omission, a defendant dissipated tainted property
to make it unavailable for forfeiture at sentencing.
During oral argument in Honeycutt, the government told the Court that it need
not address the propriety of money judgments because Honeycutt had failed to raise
such a challenge. Responding to questions from the Court about when untainted,
“substitute property” is subject to forfeiture, government counsel emphasized that
Honeycutt conceded in the courts below that:
the government can seek a money judgment for an amount equal to the
value of the property that constitutes the proceeds of the drug violation.
… Petitioner could have argued that the prerequisites for seeking a
money judgment weren’t satisfied, either because we can’t get money
judgments and have to go through (p), or if we do have to go through (p),
that we hadn’t satisfied those prerequisites … but Petitioner didn’t make
those arguments…. The question, as this case has been litigated and as
it comes to the Court, there’s no question that the government can get a
money judgment.
Honeycutt, 2017 WL 1165184 (U.S.), 38-39, 48 (U.S. Oral. Arg., 2017) (emphasis
added). So, the Court did not address, in the first instance, the predicate for joint and
several liability, to wit, the entry of an “extra[-]statutory money judgment[].” Id. at
5 In 2000, Congress merged criminal and civil forfeitures with passage of the Civil
Asset Reform Act, 28 U.S.C. § 2671, which broadly renders property that is subject to
civil forfeiture also subject to criminal forfeiture.
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46:13 (Justice Kagan: “And let’s put aside the extra[-]statutory money judgments,
since I don’t understand really how that works, so let’s just focus on (p). All right?”).
The lower courts have construed Honeycutt’s silence on the propriety of money
judgments as an endorsement of their use in criminal cases. E.g., United States v.
Bradley, 969 F.3d 585, 588 (6th Cir. 2020) (“Honeycutt itself addressed the
permissible scope of a money judgment under § 853. It’s hard to maintain that the
Court always prohibited what it refined, absentmindedly cutting off the branch it sat
on.”) (citing United States v. Elbeblawy, 899 F.3d 925, 941 (11th Cir. 2018)), petition
for certiorari filed, S. Ct. No. 20-7198 (February 22, 2021).
This Court’s review is therefore justified to clarify that this Court did not
approve money judgments by failing expressly to reject them in Honeycutt. Further,
review is justified to clarify that Honeycutt’s attention to the legislative intent
reflected in § 853(a) does not bar application of this Court’s reasoning to other
criminal forfeiture statutes, especially those statutes that contain the same features
that Honeycutt held were “incompatible” with attributed forfeiture liability. 137 S.
Ct. at 1635 n.2. See post Section II. Quite the contrary, Honeycutt construed the
Congressional intent expressed in the criminal forfeiture statutes by considering: (a)
the statutory text; (b) the statutory structure; and (c) the historical traditions of
forfeiture. 137 S. Ct. at 1634-35. Each of these considerations also render the
judicially-created forfeiture sanction of money judgments incompatible with the
manifest intent of Congress. Only this Court can prevent the further fragmentation
of mandatory criminal forfeiture jurisprudence in the wake of Honeycutt.
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a. The plain text of the forfeiture statute does not authorize money
judgments.
Money judgments cannot be found in any of the statutory provisions
applicable to this case. More broadly, each of the three subsections of § 853(a), as
originally enacted in 1970 to describe property nexus requirements for criminal
forfeiture—such as property “obtained” ((a)(1)), a defendant “person’s property”
((a)(2)), and defendant’s “interest in” an enterprise ((a)(3))—demonstrate legislative
intent to forfeit only specific, tainted property directly connected to crime. Honeycutt,
137 S. Ct. at 1633. Money judgments are also not a textually enumerated condition
for the forfeiture of a defendant’s untainted property under § 853(p)(1)(A)-(E), the
incorporated counterpart to “subsection (a).”
Nor did Congress depart from traditional taint doctrine when it later
simultaneously enacted the three forfeiture provisions at issue here: the money
laundering offense (18 U.S.C. § 1956), the sanction of criminal forfeiture for its
violation (18 U.S.C § 982(a)(1)), and substitute-property forfeiture (21 U.S.C. §
853(p)). Each were component parts of the same legislation—the Anti-Drug Abuse
Act of 1986, Pub. L. No. 99-570, § 1351 (“Money Laundering Control Act of 1986”), §
1366 (“Forfeiture”), § 1153(b) (“Substitute Assets”). The applicable “involved in”
language of § 982(a)(1) would be enacted with the Anti-Drug Abuse Act of 1988, Pub.
L. 100-690, Title VI, § 6463(c), 102 Stat. 4374, 4375 (1988).
Honeycutt construed the nexus criminal forfeiture language of the 1970 drug
forfeiture statute (§ 853(a)) to codify the traditional taint forfeiture limitations
applicable to civil forfeitures. 137 S. Ct. at 1634. This was then reinforced by the
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introduction in 1986 of the limited statutory pathway to forfeit untainted substitute
assets under § 853(p). The legislative express incorporation of § 853(p) for criminal
forfeitures under the statute invoked here, § 982, must signify the same legislative
intent—i.e., that § 982 criminal forfeitures are similarly limited to tainted property,
subject only to the preconditions for substitute-property forfeiture listed in § 853(p).
Although § 982 has been amended eighteen times since 1986, Congress has
never amended it to authorize money judgments. This Court’s holding in Honeycutt
that Congress intended that § 853(p) implement the pre-existing taint limitation on
forfeitures is reinforced by each such amendment to § 982, and indeed in multiple
other consistent legislative extensions of § 413 of the Comprehensive Drug Abuse and
Prevention Act of 1970 (i.e., § 853) to additional criminal offenses.6 That Congress
repeatedly adopted these provisions without even a mention of forfeiture money
judgments reinforces this Court’s futility doctrine reasoning in Honeycutt. Honeycutt
deployed the futility principle to reject the notion that the nexus language of § 853(a)
could somehow be construed to authorize the forfeiture of untainted property, thereby
superseding and rendering futile § 853(p)’s specific provisions governing untainted
property. Honeycutt, 137 S. Ct. at 1633 (“It would also render futile one other
provision of the statute. Section 853(p)—the sole provision of § 853 that permits the
Government to confiscate property untainted by the crime . . . .”).
6 In 1986, for 18 U.S.C. §§ 982(b)(1), 1029(c)(2), 1834, 1963(m); in 1996, for 18 U.S.C.
§ 1834; in 2001, for 28 U.S.C. §§ 2461(c) & 2553(b), 31 U.S.C.§§ 5317(c) & 5332(b)(3);
and in 2006, for 18 U.S.C. § 1467(b).
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“Congress provided just one way for the government to recoup substitute
property when the tainted property itself is unavailable—the procedures outlined in §
853(p).” Honeycutt, 137 S. Ct. at 1634. The circumscribed substitute-property
forfeiture authority would be completely unnecessary if, as the Eleventh Circuit held
here, the same result could be obtained with a money judgment, without a
government showing that the defendant acquired anything at all, and without any
act of dissipation by the defendant to render property unavailable for forfeiture at
sentencing. Indeed, the textual language of § 853(p) informs the construction of its
express textual counterpart—“any property described in subsection (a).” § 853(p)(1).
The language of § 853(p) “begins from the premise that the defendant once possessed
tainted property as ‘described in subsection (a),’ and provides a means for the
Government to recoup the value of the property if it has been dissipated or otherwise
disposed of by ‘any act or omission of the defendant.’ § 853(p)(1).” Honeycutt, 137 S.
Ct. at 1634.
Some courts have found a textual grant of Congressional authority to impose
forfeiture money judgments implicit in the liberal construction clause of 21 U.S.C. §
853(o). See, e.g., United States v. Casey, 444 F.3d 1071, 1073 (9th Cir. 2006). But this
Court, in Honeycutt, rejected this very argument when offered to justify the
imposition of joint and several liability not authorized by the plain text used by
Congress. Honeycutt, 137 S. Ct. at 1635 n.2 (“But the Court cannot construe a statute
in a way that negates its plain text, and here, Congress expressly limited forfeiture to
tainted property that the defendant obtained.”).
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b. The statutory structure conflicts with money judgments.
As Honeycutt held, Congress created interlocking statutory structures to extend
taint doctrine from civil forfeiture proceedings (which begin with the seizure of
tainted property) to the different processes of criminal forfeitures: beginning with the
relation back doctrine’s historical timing of the vesting of government title rights to
specific tainted property (§ 853(c)), to affording pretrial judicial authority to restrain
such tainted property (§ 853(e)), to the post-trial system for recouping the value of
missing tainted, forfeited, property if dissipated by the defendant prior to sentencing.
§ 853(p).7
These statutory structures collectively “expressly incorporate the § 853(a)
limitations,” that is, the taint limitations applicable to property nexus language of §
853(a). Honeycutt, 137 S. Ct. at 1633 (emphasis added). Honeycutt emphasized that
substitute-property forfeiture procedures and provisions (§ 853(p)) demonstrated
“that Congress contemplated situations where the tainted property itself would fall
outside the Government’s reach.” 137 S. Ct. at 1634. There simply is no statutory
structure for money judgments, and they pose an existential threat to the actual
statutory structures enacted by Congress to distinguish between tainted and
untainted property.
7 Another consistent statutory structure created by Congress (but unidentified in
Honeycutt) to implement the taint limitation is the third-party post-forfeiture
ancillary procedures enacted in 1984 to permit third parties to exclude their specific
property forfeited under § 853(a) from the final forfeiture judgment against the
defendant. See 21 U.S.C. § 853(n).
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c. The traditional history of forfeiture does not support money
judgments.
Honeycutt fully accounted for the “background” forfeiture principle that
Congress intended to restrict forfeitures to tainted property. 137 S. Ct. at 1635.
Congress intended to extend this age-old limitation from civil forfeitures to its newer
iteration, criminal forfeitures. Id. at 1635 (holding that Ҥ 853 maintains
traditional in rem forfeiture's focus on tainted property unless one of the
preconditions of § 853(p) exists.”). Honeycutt interpreted the “background” principles
of forfeiture law to leave no room for judge-made theories to expand the scope of
criminal forfeiture under common law attribution doctrines such as conspiracy or
joint and several liability. Such forfeiture theories are “incompatible” with the
language and history of criminal forfeitures. 137 S. Ct. at 1635 n.2.
A forfeiture money judgment is one such common law forfeiture liability
doctrine untethered to any statutory language, which conflicts with (and renders
futile) the substitute-property forfeiture provisions of § 853(p) and the corresponding
taint language of the other forfeiture statutes. For example, neither 18 U.S.C. § 982
nor 21 U.S.C. § 853 mention forfeiture money judgments, although both expressly
incorporate the substitute-property language of § 853(p) and its narrow statutory
path to the forfeiture of untainted property. See 18 U.S.C. § 982(b)(1).
Even after admitting that “the criminal forfeiture statutes at issue here do not
use the term ‘money judgment,’” the government continues to insist that “they impose
a mandatory in personam forfeiture obligation.” Brief of the United States (opposing
certiorari) in Henry Lo v. United States, S. Ct. No. 16-8327, at 19. Like the Eleventh
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Circuit opinion below, for decades the majority of circuits have accepted the use of
forfeiture money judgments—as they previously did the use of conspiracy and joint
and several liability principles (now prohibited by Honeycutt)—to expand forfeiture
liability. The dissenting judicial voices on the judicial device of money judgments
were few, and they went largely unheeded. See, e.g., United States v. Surgent, 2009
WL 2525137 (E.D.N.Y. 2009) (Gleeson, J.), abrogated in United States v. Awad, 598
F.3d 76, 79 n.5 (2d Cir. 2010) (“criminal forfeiture need not be traced to identifiable
assets in a defendant’s possession”).
As in this case, the circuits have found nothing in this Court’s Honeycutt
opinion to justify abandonment of this judicial device authorizing the forfeiture of
defendant’s untainted assets.8 The Ninth Circuit has held that money judgments are
still permitted, but that they can only be enforced by means of a substitute property
proceeding under § 853(p). United States v. Nejad, 933 F.3d 1162, 1166 (9th Cir.
2019). But, as this Court held in Honeycutt, the plain text for substitute-property
forfeiture in § 853(p) is limited to the replacement of identified, traced, specific
tainted property previously found to be forfeitable under § 853(a). There is no
statutory basis under § 853(p) to substitute a defendant’s legitimate assets to satisfy
a money judgment not textually found in § 853(a). Honeycutt instructs that, where §
853(p) goes, the taint doctrine follows. Fidelity to the expressed intent of Congress
8 See, e.g., United States v. Nejad, 933 F.3d 1162, 1165 (9th Cir. 2019); United States
v. Gorksi, 880 F.3d 27, 40 (1st Cir. 2018).
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counsels reluctance to create a new judicial doctrine to salvage a statutorily
unauthorized forfeiture sanction.
That Congress enacted a different statute that expressly authorizes money
judgments as a forfeiture punishment for another, unrelated offense confirms that
“[t]here is no basis to read such an end run into the statute.” Honeycutt, 137 S. Ct. at
1634. The Patriot Act of 2001 authorizes forfeiture “money judgments” for bulk cash
smuggling at the border, 31 U.S.C. § 5332(b)(4), and also deployed this term in a way
that further undermines the legitimacy of its judicially-created cousin.
Initially, the cash smuggling offense uses the same “involved in” property
nexus forfeiture language found in the money laundering forfeiture statute in this
case, § 982(a)(1). See 31 U.S.C. § 5332(b)(2). Unlike the forfeiture statute invoked
here, however, the bulk cash smuggling statute expressly provides for a “personal
money judgment,” but only after establishing that the original tainted cash has been
rendered unavailable by the defendant. 31 U.S.C. § 5332(b)(4). Congress
differentiated among: (i) the “involved in” cash actually smuggled; (ii) the forfeiture
of substitute property of the defendant under § 853(p);9 and (iii) when the defendant
lacks sufficient substitute property to offset the missing cash, authorizing a “money
judgment” to be imposed upon the defendant for any resulting shortfall.10
9 31 U.S.C. § 5332(b)(3).
10 31 U.S.C. § 5332(b)(4) provides: “Personal money judgment. If the property subject
to forfeiture under paragraph (2) is unavailable, and the defendant has insufficient
substitute property that may be forfeited pursuant to section [853(p)], the court shall
enter a personal money judgment against the defendant for the amount that would
be subject to forfeiture.”
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By approving the imposition of a money judgment (exclusively for the crime of
bulk cash smuggling), but only after a court exhausts its direct (“involved in”) and
substitute property forfeiture authority (§ 853(p)), Congress made clear it did not
intend for money judgments to supersede the statutory forfeiture mechanisms for
tainted and untainted property, or to render them surplusage by permitting money
judgments for all offenses. The sequential language in the Patriot Act would have
been utter surplusage if Congress had previously authorized forfeiture money
judgments to be available ab initio for all criminal forfeitures because of their in
personam nature, and without regard to the statutory requirement of identifying and
exhausting tainted and substitute assets.
The presence of the express statutory term “money judgments” for “involved
in” forfeitures under 31 U.S.C. § 5332(a)(2), when contrasted with its total absence
from § 982(a)(1), must be given effect. Russello v. United States, 464 U.S. 16, 23
(1983). See also Sandoz Inc. v. Amgen, Inc., 137 S. Ct. 1664, 1676 (2017) (presence of
express federal statutory enforcement remedies is strong evidence that Congress did
not intend others; courts should be reluctant to provide other remedies).
Admittedly, forfeiture money judgments are described in Fed. R. Crim. P.
32.2(a) as an alternative to forfeiting “specific property,”11 and courts have looked to
such language as authorizing imposition of money judgments. Padron, 527 F.3d at
11 Rule 32.2(b)(1)(A) distinguishes between cases in which the government seeks the
forfeiture of “specific property” versus those “where the government seeks a personal
money judgment.”
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1162. But the Drafting Committee of this Rule noted that it was not thereby
authorizing use of forfeiture money judgments, but instead added this language in
recognition that, as of 2000, some lower courts had employed them. 2000 Adv. Cmtee
Notes Rule 32.2 (comment on subdivision (b)(1)) (“The Committee takes no position
on the correctness of those rulings.”). Only Congress can authorize criminal
punishments, and “courts aren’t free to rewrite clear statutes under the banner of our
own policy concerns.” Azar v. Allina Health Services, 139 S. Ct. 1804, 1815 (2019).
Ultimately, of course, the Rules Committee lacks authority to authorize forfeitures
not enacted by Congress, 28 U.S.C. § 2072(b), and the Committee disclaimed having
done so here.
In the courts below, petitioner explicitly “argued that forfeiture money
judgments are not authorized by statute.” App. 6. But the three-judge panel of the
Court of Appeals felt constrained to mandate imposition of a money judgment
“[u]nless and until Congress, the Supreme Court, or this Court sitting en banc
changes the law of forfeiture.” App. 13. This case, in which the parties have stipulated
that the tainted property was returned to its rightful owner, and petitioner preserved
his challenge to the imposition of an extra-statutory money judgment, is an excellent
vehicle for the Court to address this issue.12
12 Given that another certiorari petition similarly seeking review of the legality of
forfeiture money judgments is currently pending, see Bradley v. United States, No.
20-7198 (Court-ordered response due May 10, 2021), the Court may prefer that the
two cases be considered at the same conference and carried together.
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II.
The Court should decide whether the holding in Honeycutt v.
United States—that criminal forfeiture under 21 U.S.C. § 853(a)
of drug “proceeds the person obtained” is “limited to [tainted]
property the defendant himself actually acquired as the result
of the crime” (i.e., no joint and several liability), 137 S. Ct. 1626,
1635 (2017)—likewise limits criminal forfeiture under 18 U.S.C.
§ 982(a)(1) to the tainted property “involved in” the money
laundering offense that “the defendant himself actually
acquired as the result of the crime.”
Regardless of whether the Court addresses—or even if it approves—the
imposition of extra-statutory forfeiture money judgments, the Court should grant
certiorari to resolve the disagreement among the circuits over whether the taint
limitation confirmed in Honeycutt—a case specifically addressing forfeiture of drug
proceeds under 21 U.S.C. § 853(a)—extends to other criminal and civil forfeiture
statutes, like the money laundering forfeiture statute at issue in petitioner’s case, 18
U.S.C. § 982(a)(1).
The “Factual Proffer” supporting petitioner’s guilty plea stipulated that the
money laundering “scheme resulted in the same funds being moved from [the Bank
in] Panama to Miami and almost simultaneously from Miami back to [the Bank in]
Panama.” App. 41 (emphasis added). By design, petitioner’s “laundering scheme
depended on the Bank being repaid in full at the conclusion of each mirror-image
transaction.” App. 15. Petitioner never personally acquired—much less retained—
any of the corporate credit draws; no sooner than the funds hit the Miami corporate
account, those same “laundered funds were returned to the Bank with interest.” App.
16; accord App. 6, 7, 11, 13, 17 n.4, 24, 29 (“Mr. Waked returned all laundered funds
to the bank.”). Consistent with the holding in Honeycutt that forfeiture is “limited to
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[tainted] property the defendant himself actually acquired as the result of the crime,”
137 S. Ct. at 1635 (emphasis added), the District Court found as a factual matter that
“[t]here [were] no laundered funds that were retained by the Defendant or any other
co-conspirator to be forfeited.” App. 38.
The Eleventh Circuit rejected this acquisition limitation, narrowly focusing on
the “obtained” nexus language of § 853(a)(1)—the specific subsection addressed by
the Court in Honeycutt—and contrasting it with the “involved in” money laundering
nexus language of 18 U.S.C. § 982(a)(1), the statute under which petitioner was
convicted.13 Because § 982(a)(1) does not contain the “obtained” nexus language of §
853(a)(1), the Eleventh Circuit held that Honeycutt is inapplicable and is not thereby
“limited to [tainted] property the defendant himself actually acquired as the result of
the crime.” Honeycutt, 137 S. Ct. at 1635; App. 17 (“because § 982(a)(1) contains
neither a ‘proceeds’ nor an ‘obtained’ limitation, Honeycutt’s ‘tainted property’
requirement does not apply to this case.”); App. 19 (“The definition of property in 18
U.S.C. § 982(a)(1) is distinct from that in the other subsections of § 982(a), as well as
21 U.S.C. § 853(a).”).
More recently, the Ninth Circuit held that the “obtained” property nexus
language addressed in Honeycutt was not the sine qua non of Honeycutt’s taint
limitation. Noting that its “sister circuits are split” on whether the taint limitation
13 The statutory language of § 982(a)(1) provides that “the person shall forfeit to
United States” the “property involved in such offense.” 18 U.S.C. § 982(a) (emphasis
added).
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applied to another forfeiture statute, 18 U.S.C. § 981(a)(1)(C),14 the Ninth Circuit
held that:
Honeycutt does apply to 18 U.S.C. § 981(a)(1)(C). The textual differences
between it and 21 U.S.C. § 853 appear to us to be immaterial, in light of
the reasoning and language in Honeycutt. Honeycutt treats forfeiture, in
accord with its development at common law over many centuries, as
applicable only to “tainted” property … Also, the absence of the phrase,
“the person obtained” in Section 981 strikes us as immaterial in light of
the reasoning in Honeycutt, that “the most important background
principles underlying § 853” are “those of forfeiture.” The same
principles animate Section 981. The text of this statute and its roots in
common law forfeiture, like the statute in Honeycutt, necessitate a
connection to tainted property.
United States v. Thompson, ___ F.3d___, 2021 WL 800686, at *8 (9th Cir. Mar. 3,
2021); accord United States v. Gjeli, 867 F.3d 418 (3d Cir. 2017) (Honeycutt applies to
criminal forfeitures under 18 U.S.C. § 981(a)(1)); contra United States v. Sexton, 894
F.3d 787, 799 (6th Cir. 2018) (“Unlike § 853(a)(1), 18 U.S.C. § 981(a)(1)(C) does not
contain the phrase ‘the person obtained’ which was the linchpin of the Supreme
Court’s decision in Honeycutt. … While property must be connected, or ‘traceable,’ to
the crime, it does not need to be property that the particular defendant received. As
long as the property is connected to the crime, a defendant can be liable for property
that his codefendant acquired. Consequently, we hold that the reasoning of Honeycutt
is not applicable to § 981(a)(1)(C).”); United States v. Peithman, 917 F.3d 635, 652
14 18 U.S.C. § 981(a)(1)(C) provides that “[t]he following property is subject to
forfeiture to the United States: … (C) Any property, real or personal, which
constitutes or is derived from proceeds traceable to a violation of [certain sections] of
this title or any offense constituting ‘specified unlawful activity’ (as defined in section
1956(c)(7) of this title), or a conspiracy to commit such offense.”
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(8th Cir. 2019) (“The plain language under § 981 is broader than § 853 and less
focused on personal possession. … The statute does not contain any language that
requires possession of the property by the defendant, either explicitly or implicitly.
We think these differences are significant. We join the Sixth Circuit and conclude
that the reasoning of Honeycutt is not applicable to forfeitures under 18 U.S.C. §
981(a)(1)(C) and hold the district court did not err when imposing joint and several
liability as to this portion of the money judgment.”), cert. denied, 140 S. Ct. 340 (2019).
In dissenting from the denial of certiorari in Peithman, Justice Sotomayor
observed:
The Government now concedes error. According to the Government,
there is no “distinguishing 18 U.S.C. 981 from 21 U.S.C. 853 for
purposes of joint and several liability.” Brief in Opposition 6. … [T]he
Government now concedes that the rationale of Honeycutt applies
equally to § 981(a)(1)(C) as it does to § 853(a)(1)….
Peithman v. United States, 140 S. Ct. 340, 340 (2019) (Sotomayor, J., dissenting from
the denial of certiorari). The government has made no such concession on the related
question presented in this case: whether “Honeycutt applies equally to” criminal
forfeitures sought under § 982(a)(1), which authorizes forfeiture “under the broad[er]
‘involved in’ language of 18 U.S.C. § 982(a)(1).” App. 6.
The textual distinction does not justify abandoning Honeycutt’s guidance on
Congressional intent and the criminal forfeiture structures Congress enacted,
especially “the most important background principles underlying § 853: those
of forfeiture.” 137 S. Ct. at 1634 (emphasis added) (citing The Palmyra, 12 Wheat 1,
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14-15 (1827)). These same forfeiture background principles have been extended by
Congress from civil forfeitures to criminal forfeitures:
By adopting an in personam aspect to criminal forfeiture, and providing
for substitute-asset forfeiture, Congress made it easier for the
Government to hold the defendant who acquired the tainted property
responsible. Congress did not, however, enact any “significant expansion
of the scope of property subject to forfeiture.”
Honeycutt, 137 S. Ct. at 1635 (emphasis added) (quoting S. Rep. No. 98–225, p. 192
(1983)).
There is no statutory evidence that Congress abandoned centuries of forfeiture
doctrine by using the term “involved in” in § 982(a)(1) to describe the property nexus
required for money laundering forfeitures. To the contrary, § 982(b)(1)’s express
adoption for money laundering forfeitures of the same statutory structures used for
drug forfeitures under § 853 (including substitute-asset procedures) demonstrates
that Congress intended that “the rationale of Honeycutt applies equally to §
981(a)(1)(C) [and § 982(a)(2)] as it does to § 853(a)(1)….” Peithman, 140 S. Ct. at 340
(Sotomayor, J., dissenting) (interlineation and emphasis added).
Indeed, Honeycutt quoted, and relied upon, this Court’s earlier opinion in Kaley
v. United States, 571 U.S. 320 (2014), which recognized and extended this same taint
limitation to the “involved in” forfeiture nexus language of § 982(a)(1). Honeycutt, 137
S. Ct. at 1633 (quoting Kaley, 571 U.S. at 335 n.11). And this Court separately re-
affirmed the taint limitation on criminal forfeitures by holding that the Fifth and
Sixth Amendments preclude pretrial restraints on a defendant’s use of his untainted
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assets to pay for criminal defense counsel of choice. Luis, 136 S. Ct. at 1095 (“[courts]
have experience separating tainted from untainted assets”).
The Eleventh Circuit’s opinion is not only in derogation of this Court’s Kaley,
Luis, and Honeycutt opinions, it also dramatically expands criminal forfeiture by
abandoning taint doctrine underlying centuries of forfeiture statutes, a result which
should not be lightly inferred from the mere use of the nexus phrase “involved in” in
§ 982(a)(1). Such a result is precluded by the statutory textual principle that Congress
“does not, one might say, hide elephants in mouseholes.” Whitman v. American
Trucking Ass’n, Inc., 531 U.S. 457, 468 (2001) (Scalia, J.).
The upshot of the Eleventh Circuit’s opinion—that Congress intended to favor
drug defendants, but not other defendants, by limiting their forfeiture exposure to
their tainted property under § 853(a)(1))15—cannot be divined solely from the use of
the term “involved in” in § 982(a)(1). It is doubtful that such a Congressional intent
to favor drug defendants over money launderers (and most other offenders) would be
contained in the Anti-Drug Abuse Acts of 1986 or 1988, and it is not. To the contrary,
the consistent practice of Congress has been to extend the drug forfeiture provisions
to non-drug offenses by reference to and incorporation of Ҥ 413 of the Controlled
Substances Act” (i.e., § 853). See, e.g., 18 U.S.C. § 1029(c)(2) (credit card offenses).
Congress did not intend by using the term “involved in” to authorize such an “end
run” around the careful substantive and procedural language of § 853(p). The
15 United States v. Stein, 964 F.3d 1313, 1325 (11th Cir. 2020) (distinguishing
Honeycutt as addressing drug crimes).
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“involved in” language of § 982(a)(1) is illustrative of, rather than a repeal of, the
historical taint limitation on forfeitures. See Thompson, 2021 WL 800686, at *6
(forfeiture’s “common law origin and development explains why forfeiture is closely
tied to the property involved in the criminal conduct, as opposed to a criminal fine or
restitution, which depends on guilt but not on any taint on the criminal’s property.”)
(emphasis added).
In stating that the defendant “shall forfeit” the property involved in the
offense, § 982(a)(1), Congress carried forward the traditional limitation of criminal
forfeitures that a defendant can be ordered to forfeit only that property which he
acquired in violation of the law, subject to his acts or omissions of later dissipation
under § 853(p), for which he can be held responsible by forfeiting his “other property.”
21 U.S.C. § 853(p)(2). As Honeycutt explains, Congress structurally layered the three
nexus subsections of § 853(a) to capture the pre-existing limitation of forfeiture to
property with a specific nexus to criminality—tainted property. Substitute property
forfeiture under subsection (p) applies exclusively to tainted property, i.e., “property
described in subsection (a).” § 853(p)(1).
The Eleventh Circuit made no attempt to reconcile the language of § 853(p), its
incorporation into § 982(a) by § 982(b)(1), the statutory structures erected by
Congress, or the background forfeiture principles restricting forfeitures to tainted
property. Instead, the panel opinion concluded that merely by using the term
“involved in” in subsection 982(a)(1), Congress sub silentio rendered inapplicable the
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statutory language and structures and background forfeiture principles that this
Court honored in Honeycutt.
If the Court agrees that the acquisition limitation confirmed in Honeycutt
applies equally to “involved in” property, then the government would not be entitled
to any forfeiture. As the Ninth Circuit explained when it rejected the government’s
effort to pin forfeiture liability on a defendant under § 981(a)(1)(C) based solely on
the defendant’s “physical control” of the tainted funds:
Honeycutt does not allow for an interpretation that any conspirator who
at some point had physical control is subject to forfeiture of all the
proceeds. … [H]ere, the trust accounts and escrows were stops on the
way to splitting up the money, not jointly controlled deposits where the
money came to rest after the swindlers split it up. … The forfeiture
judgments must be separate, for the approximate separate amounts that
came to rest with each of them after the loot was divided among the
swindlers.
Thompson, 2021 WL 800686, at *9. Honeycutt’s acquisition limitation on forfeiture is
not satisfied where the tainted property “came to rest” with its rightful owner. See id.
Petitioner’s role as manager of a corporate account into which the tainted corporate
funds were initially deposited, only to be returned “almost simultaneously” under a
corporate credit facility to the (victim) Bank in Panama (plus interest), App. 41, would
not suffice to authorize an in personam forfeiture against petitioner. Accordingly, this
case presents an ideal vehicle to address the issue.
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III.
The Court should grant certiorari to confirm that returning
tainted property to the rightful owner of the property before
sentencing is not a “transfer[] … to … a third party,” 21 U.S.C. §
853(p)(1)(B) (emphasis added), that triggers forfeiture of a
defendant’s untainted, substitute property in an equivalent
amount.
The District Court imposed no substantive forfeiture, and therefore had no
reason, or legal basis, to consider whether a substitute-asset forfeiture should be
imposed under § 853(p). Nonetheless, the Eleventh Circuit held that § 853(p) applies
equally to authorize imposition of substitute-asset forfeiture even when the
laundered funds have been returned to their rightful owner. The Eleventh Circuit
approved substitute property forfeiture under the theory that returning the “same
funds” (credit draws), App. 41, to “the original and still-current owner of the
laundered [tainted] money” (the Bank), App. 18, was a “transfer[] … to … a third
party,” thus triggering the forfeiture of petitioner’s untainted, substitute property
under § 853(p)(1)(B).
The Eleventh Circuit’s construction of “third party” under § 853(p)(1)(B) to
include the victim/rightful owner of the misappropriated funds cannot withstand
scrutiny. This specific statutory substitute forfeiture precondition is intended to
prevent a defendant from defeating in personam forfeiture by transferring tainted
property to others, i.e., a “third party.” Return of tainted property to the victim is a
recognized goal of forfeiture, not a method to frustrate it. Indeed, the statutory
scheme provides that the government’s interest in imposing forfeiture as punishment
must yield to a victim’s “right, title, or interest in the [tainted] property.” See § 853(n);
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see also 21 U.S.C. § 853(h) (“[T]he Attorney General shall direct the disposition of the
property … making due provision for the rights of any innocent persons”).
To be sure, § 853(n) is titled: “Third Party Interests.” It protects the property
rights of third parties who have a “superior” interest in the tainted property, §
853(n)(6)(A), or are bona fide purchaser[s] for value … without cause to believe that
the property was subject to forfeiture,” § 853(n)(6)(B). After the government secures
a forfeiture of the tainted property, those third parties—the rightful owners of the
forfeited property—can petition the court to “amend the order of forfeiture” to
restore/recover their property rights. § 853(n)(6). Thus, a “third party” transfer
(dissipation) of tainted property under § 853(p)(1)(B)—one of five preconditions to
imposition of substitute property forfeiture—cannot logically include a transfer to the
rightful owner, who would be entitled, under the same statutory scheme, to recover
that property. Returning to the alleged victim of a fraud offense the “same funds”
obtained from the victim is not a transfer to a “third party.”
After all, had petitioner retained possession of the funds “involved in the
offense” (rather than returned them to the Bank), those “same [tainted] funds”—
seized by the government upon petitioner’s arrest—would have been forfeited under
§ 853(a), precluding forfeiture under § 853(p) of petitioner’s untainted, substitute
property. And once forfeited, the court, if not the government, would have been
obliged under § 853(n)(6) to return those “same funds” to their rightful owner (the
Bank) following the ancillary procedures provided by Congress to insure this result.
The government could not (lawfully) have kept the Bank’s funds—i.e., the property
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involved in the offense. See Luis, 136 S. Ct. at 1091 (“And we see this in § 853(n)(6)(A),
which exempts certain property from forfeiture when a third party can show a vested
interest in the property that is ‘superior’ to that of the Government.”) (emphasis
added). Under 21 U.S.C. § 853(n), the victim Bank would have then recovered those
“same funds” after sentencing, in the ancillary proceedings. Returning the “same
funds” to the Bank before sentencing—even if not “out of the goodness of [petitioner’s]
heart,” App. 14-15—accomplished (more expediently) the statutory objective of
“‘returning property, in full, to those wrongfully deprived or defrauded of it.’”
Honeycutt, 137 S. Ct. at 1631 (quoting Caplin & Drysdale, Chtd. v. United States, 491
U.S. 617, 629 (1989)).
Not surprisingly, the Eleventh Circuit’s counterintuitive interpretation
“find[s] no support in the statute” and conflicts with a decision of the Eighth Circuit.
See Hawkey, 148 F.3d at 928 (“We find no support in the statute … for the proposition
that a defendant should not be credited with returning misappropriated funds…. We
conclude that while Hawkey must forfeit the entire corpus of his ill-gotten gains, the
total funds subject to forfeiture must reflect any funds returned prior to the forfeiture
order….”) (emphasis added). See also United States v. Kalish, 626 F.3d 165, 169-70
(2d Cir. 2010) (“We recognize, however, that once some payment has been made by
way of restitution, a defendant would be in a position to argue that such a payment
should be a credit against any then remaining forfeiture amount. The forfeiture
amount represents ‘ill-gotten’ gains, and it is at least arguable that any money
returned to a victim has reduced the amount of ‘ill-gotten’ gains remaining in the
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defendant’s possession. In the absence of any claim that Kalish has made any
restitution payment, however, we need not decide whether such an argument would
prevail.”) (citations omitted) (emphasis added).
The Eleventh Circuit’s decision mandates a higher forfeiture penalty upon a
defendant for returning laundered funds to their rightful owner even before arrest
than could be imposed if the government had seized those funds from a defendant
upon or after arrest. Perhaps more puzzling, a defendant who “had physical control
of all the money,” none of which “came to rest with him” after “the loot was divided
among conspirators,” faces no forfeiture liability in the Ninth Circuit, see Thompson,
2021 WL 800686, at *9; yet, under the Eleventh Circuit’s holding, where the loot
comes to rest with its rightful owner (rather than with conspirators), the defendant
faces forfeiture of his untainted property in an equivalent amount. In the Eleventh
Circuit, therefore, a defendant faces a higher and more severe forfeiture punishment
for transferring the tainted property to its rightful owner (thus making the victim
whole) than he faces in other circuits where the tainted property comes to rest with
a co-conspirator. See id. The Court should not let stand a circuit decision that
produces
such
“patently
absurd
consequences,” that
“Congress
could
not possibly have intended.” Pub. Citizen v. U.S. Dep’t of Just., 491 U.S. 440, 470
(1989) (Kennedy, J., concurring) (citations and quotations omitted) (emphasis in
original).16
16 See also United States v. Am. Trucking Ass’ns, 310 U.S. 534, 543 (1940) (“When that
meaning has led to absurd or futile results, however, this Court has looked beyond
the words to the purpose of the act. Frequently, however, even when the plain
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Conclusion
The petition should be granted.
Respectfully submitted,
Terrance G. Reed
Howard Srebnick*
Robert K. Moir
Jackie Perczek
LANKFORD & REED
BLACK, SREBNICK,
120 N. St Asaph Street
KORNSPAN & STUMPF
Alexandria, Virginia 22314
201 S. Biscayne Blvd., Suite 1300
Tel: (703) 299-5000
Miami, Florida 33131
Tel: (305) 371-6421
March 2021
*Counsel of Record for Petitioner
meaning did not produce absurd results but merely an unreasonable one ‘plainly at
variance with the policy of the legislation as a whole’ this Court has followed that
purpose, rather than the literal words.”) (footnotes omitted).
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