22 Dec 2017
Stefan Cassella of Asset Forfeiture Law, LLC discusses a case in which the Defendant, a convicted sex trafficker or pimp, tried to limit the proceeds the state could confiscate.
However, money judgments are not limited to the value of the defendant’s proceeds but may include the value of the property that the defendant used to facilitate the offense but no longer possesses.
In a sex trafficking case, that may include the amounts the defendant spent recruiting young women and paying for hotel rooms.
United States v. Ford, ___ F. Supp.3d ___, 2017 WL 5045644 (D. Or. Nov. 3, 2017).
D. Or. * Defendant was convicted of pimping women as part of a sex trafficking conspiracy.
At sentencing, the Government sought the forfeiture of the proceeds of the offense and the property that Defendant used to facilitate it, pursuant to 18 U.S.C. § 1594.
Because Defendant had retained very little of the actual proceeds of his offense and none of the facilitating property, the Government asked the court to enter the forfeiture order in the form of a personal money judgment.
Defendant objected that the Supreme Court’s decision in Honeycutt overruled all precedents allowing a forfeiture order to take the form of a money judgment.
In holding that criminal forfeiture orders must be limited to the property that a defendant personally obtained, he
argued, the Supreme Court signaled that criminal forfeiture orders must be limited to specific assets.
Thus, in his view, the court’s authority to enter a forfeiture order is limited to the directly forfeitable property and substitute assets that are in the defendant’s possession at the time he is sentenced.
But the court held that Defendant read Honeycutt too broadly. Honeycutt had nothing to do with limiting forfeitures to specific assets.
Rather, the issue in Honeycutt was whether a defendant could be held liable for criminal proceeds that he never obtained.
Here, in contrast, the Government was seeking to hold Defendant liable for proceeds that he did obtain but no longer possessed.
There is a difference, the court said, between holding a defendant liable for proceeds that he never obtained and holding him liable for proceeds he obtained but no longer has.
A holding that a defendant cannot be held liable for the former does not mean than he cannot be held liable for the latter.
Honeycutt, the court concluded, “merely limits forfeiture to proceeds that he obtained at some point from his crimes.”
Thus, a court may not impose a money judgment on a co-conspirator who never received or possessed any of the proceeds of his crimes.
But there is no reason why a court cannot hold a defendant liable for proceeds that he did obtain but no longer has in his possession.
The court then turned to the calculation of the amount of the money judgment.
Noting that such a calculation “does not demand mathematical exactitude” and that courts are permitted to “make reasonable extrapolations from the evidence,” the court reviewed the testimony of the prostitutes that Defendant employed and calculated that Defendant had obtained, directly or indirectly, $222,700 in proceeds from sex trafficking victims.
The court also found that Defendant spent $600,000 to promote the offense, including money spent on rent for an “employee condo,” hotel and motel rooms, and money used to recruit and retain sex trafficking victims.
Accordingly, the court held that Defendant was liable to forfeit the $600,000 plus the $222,700, but reduced the forfeiture to $600,000 to avoid doublecounting.
The court also indicated that Defendant would receive credit for the value of any substitute assets that the Government was able to identify.
SDC Contact: AUSAs Steven Mygrant and Leah Bolstad
It was inevitable that someone would argue that Honeycutt, read broadly, limits criminal forfeitures to specific assets, and thus overrules the unanimous view that a forfeiture order may take the form of a personal money judgment.
This is merely the first such case to be decided by a court in a published opinion.
(Note: In October, the Supreme Court denied cert. in a case in which the defendant sought to have the Court extend Honeycutt to bar money judgments. Accordingly, the lower courts will be left to address that issue in the first instance. See Henry Lo v. United States, No. 16-8327 (U.S. Oct. 16, 2017) (November 2017 Digest).)
There were several threads to the defendant’s argument. Principally, he argued that the Supreme Court reached its conclusion that forfeitures are limited to what the defendant personally obtained as the consequence of a broader ruling that forfeitures are limited to specific assets.
He also argued that the holding followed from the Court’s view that the forfeiture statutes must be read narrowly and thus do not authorize anything that is not expressly set forth in the statutory text – i.e., if joint and several liability is not allowed because it is not mentioned in the statute, then money judgments are not allowed because they are not mentioned in the statute either.
Finally, he noted that Honeycutt refers to criminal forfeiture as an in rem action modified to take the form of an in personam punishment only to the extent that it authorizes the forfeiture of substitute assets.
The court in this case rejected all of these arguments. It was not necessary for the Supreme Court to find that forfeitures are limited to specific assets to find that the statute does not support holding a defendant liable for property that he never obtained.
Those are separate questions and the Supreme Court only addressed the latter. And holding that there can be no joint and several liability without explicit statutory authorization does not mean that nothing can ever be found to be implicit in the statutory language.
Again, the Court ruled only that joint and several liability is not implicit in the statute.
Finally, the court held that reading Honeycutt to limit the forfeiture of substitute assets to those assets in the defendant’s possession at the time of sentencing would improperly preclude the Government from depriving the defendant of the fruits of his crime by forfeiting assets that he acquired in the future, and would reward defendants who dissipated their criminal proceeds quickly.
The Supreme Court’s observation that criminal forfeitures are a modified form of in rem forfeitures does not require that result. Indeed, Rule 32.2(e), which authorizes a court to modify a forfeiture order at any time to include substitute assets, would make no sense if the forfeiture order was limited in the first instance to the specific assets in the defendant’s possession at the time he was sentenced. SDC
Stefan Cassella, Asset Forfeiture Law, LLC
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