17 Jan 2017
Stefan Cassella of Asset Forfeiture Law, LLC comments on U.S. v Ary, in which a lunar sample bag from the Apollo 11 mission, which had been stolen by a museum official, was sold on by the government at auction. The case found that the sale was final and could not be rescinded, even though the Government had failed to give notice of the forfeiture to the true owner. The true owner’s remedy was to sue the Government for compensatory damages, while the purchaser got to keep the forfeited property.
[United States v. Ary, 2016 WL 7229277 (D. Kan. Dec. 14, 2016)]
Defendant, the president of a space museum in Kansas, was convicted of stealing some of the museum’s artifacts, selling them at auction, and keeping the proceeds. To satisfy the ensuing forfeiture order, the Government seized other items from Defendant’s garage and, believing them to be Defendant’s personal property, obtained an order forfeiting them as substitute assets.
One of the substitute assets was Lunar Sample Bag that had been used on one of NASA’s Apollo missions. When no one filed a claim to the bag in the ancillary proceeding, the USMS sold the bag to Claimant at auction for $995.
Sometime thereafter, NASA learned of the sale and discovered that the bag in question was not just any lunar sample bag but the one used on Apollo 11 to return the first lunar samples to Earth. Moreover, it was determined that the bag still contained a residue of lunar dust. Finally, NASA asserted that it had never transferred title of the bag to Defendant or to anyone else, that it was still the rightful owner of the bag, and that the bag had great historical value.
Asserting that it was a mistake to have forfeited the bag without giving notice to NASA in the ancillary proceeding, the Government moved under Rule 60(b) to vacate the forfeiture order and rescind the sale to Claimant. Claimant opposed the motion, arguing that NASA was part of the Government and therefore had actual notice of the forfeiture order, and that the sale was final.
The court held that NASA was indeed the rightful owner of the bag prior to the entry of the forfeiture order, that it was forfeited in error, and that the Government should not have forfeited the bag without giving notice to NASA.
“Where there is an ascertainable owner of property whose whereabouts are known,” the court said, due process and Rule 32.2(b)(6) requires that notice be sent to that owner. That the owner is another Government agency does not alter that requirement. Moreover, the actual knowledge of one Government agency is not automatically imputed to another agency.
The court held, however, that even if property is forfeited in error and in violation of the rights of the true owner, the courts lack the statutory authority to rescind an otherwise valid and final sale to a bona fide purchaser for value. In this case, Claimant qualified as such a bona fide purchaser. As her rights prevailed over those of the true owner of the property, the Government’s motion to vacate the forfeiture order and rescind the sale was denied. NASA’s remedy, the court said, is to seek compensation from the Government for the wrongful taking of its property.
Comment: This case has extraordinary facts, but the principle is this: if the government wrongfully seizes someone’s property and forfeits it without giving the property owner proper notice, and then sells the property to a bona fide purchaser for value, the purchaser’s rights prevail over those of the true owner, whose only remedy is to sue the Government for damages.
I find that to be an unfortunate result. Suppose the Government finds property in a drug dealer’s garage, forfeits it as substitute assets to satisfy a money judgment, sends no notice to anyone who might have an interest in the property, and sells it at auction to a BFP. And suppose it later turns out the property was stolen, or belonged to the defendant’s family members, and the Government had reason to know of those persons’ interest in the property but failed to send notice. Does it seem right that in those circumstances the purchaser’s rights 14 should prevail over those of the rightful owner?
If the Government (which is the guilty party) must compensate someone, wouldn’t it make more sense to require the Government to rescind the sale and refund the purchase money to the BFP rather than pay compensatory damages to the true owner? The BFP in that scenario would be returned to the position she was in before the sale occurred. But paying compensatory damages can never fully compensate the rightful owner who may have some intangible interest in the property – e.g. maybe it was his mother’s wedding ring – than cannot be measured in terms of monetary damages.
Perhaps Congress needs to enact a legislative fix to address this problem.
Stefan Cassella, Asset Forfeiture Law, LLC
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