13 Oct 2016
Stefan Cassella of Asset Forfeiture Law, LLC considers the recent judgment of United States v. Napoli which established that to show that the proceeds of a crime are unavailable due to an act or omission of the defendant, it is sufficient for the Government to show that the defendant no longer has substantial assets. Such a showing supports an inference that the proceeds have been spent and that the defendant is the one who spent them.
[United States v. Napoli, ___ Fed. Appx. ___, 2016 WL 4446065 (3rd Cir. Aug. 24, 2016).]
Third Circuit* Defendant, a high-ranking official in a motorcycle gang, was convicted of distributing methamphetamine and other offenses. As part of his sentence, he was ordered to pay a $6 million money judgment and to forfeit a sum of seized currency, as well as several vehicles, motorcycles and weapons.
After crediting the value of the seized property, $5.75 million of the money judgment remained unpaid, so the Government moved pursuant to Rule 32.2(e) to forfeit the balance in Defendant’s inmate trust account as a substitute asset. Defendant opposed the motion, but the court issued a forfeiture order and Defendant appealed. [United States v. Napoli, 2015 WL 4404789 (E.D. Pa. July 17, 2015)].
To forfeit property as a substitute asset, the Government must show that the directly-forfeitable property is unavailable due to an act or omission of the defendant. 21 U.S.C. § 853(p). Defendant argued that the Government offered no evidence that the proceeds of his offense were in fact unavailable, or that their unavailability was due to his act or omission.
The panel disagreed with Defendant on both points. The Government supported its Rule 32.2(e) motion with the Declaration of a Deputy US Marshal, who stated that he had done a financial investigation of Defendant and found that neither he nor his family members possessed substantial assets. The court held that if a person who has earned several million dollars from illegal activity has no substantial assets, it is reasonable to assume that the criminal proceeds are no longer available, and that the defendant has dissipated those proceeds through his acts or omissions.
So the panel agreed with the district court that the Government had satisfied the requirements of Section 853(p) and denied Defendant’s appeal from the order of forfeiture.
Comment: Section 853(p) says that the Government must show that the directly-forfeitable property is unavailable due to an act or omission of the defendant, but it is silent as to what the Government must do to satisfy that requirement. The defendant in this case wanted the court to hold that the Government has to make an attempt to trace the proceeds of his crime and show how they were dissipated, but the panel followed other courts in holding that there is no such requirement. Rather, it is sufficient for the Government to show that 1) the defendant obtained a lot of money illegally, and 2) he no longer has a lot of money. Such a showing supports an inference that the illegally-obtained money has been spent, and that the defendant is the one who spent it. See United States v. Gordon, 710 F.3d 1124, 1166 (10th Cir. 2013) (the Government generally has little difficulty in making the necessary showing under § 853(p); a financial analyst’s affidavit stating that he reviewed defendant’s records and could not find the proceeds is sufficient; it is reasonable to assume that defendant is the one responsible; collecting cases and citing Asset Forfeiture Law in the United States, § 22-3); United States v. Alamoudi, 452 F.3d 310, 315 (4th Cir. 2006) (courts interpret section 853(p) liberally to prevent defendants from frustrating the forfeiture laws; it is sufficient if a law enforcement agent submits that she has searched for the missing assets and that despite the exercise of due diligence she has been unable to find them).
Stefan Cassella, Asset Forfeiture Law, LLC
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