Intro
When I played little league baseball (and that is about as far as my talent took me), I was taught to always keep my eye on the ball. Whether it was fielding a routine grounder or a pop fly, I cannot tell you how many times my coaches repeated that message. In fact, this became more than just advice. It became an internal requirement on my playing checklist. Truth be told, between the repetition and its importance, this mantra became a part of me. So much so that it is the first lesson I have offered to my children when teaching them to play catch, basketball, and even soccer.
However, as important as this childhood lesson was, I would be lying to you if I said I never strayed. Do not get me wrong. I knew that it was important to keep my eye on the ball, and that a failure to do so could have disastrous results, but I must confess it became easy to tune out this advice after hearing it so many times. I dare say it is part of human nature to overlook the importance of fundamentals from time to time. Unfortunately, this carelessness can be found in institutions as well.
While this may seem a curious introduction to a discussion of federal criminal forfeiture practices, it is instructive to look at this body of law through the prism of overlooked fundamentals that have dramatic negative consequences to our clients and their families.
Asset forfeiture is the legal mechanism where a state or federal entity seeks to deprive persons (individuals or organizations) of private property on the basis that such property is improperly connected to illegal activity. Classic forfeiture examples are found within drug cases. Government entities often seek the seizure and forfeiture of cars, guns, jewelry, houses, cash, and other property that is either used to facilitate the drug distribution or the ill-gotten fruits of that activity.
Because it is designed to take away the largest motivator for most crimes (greed), forfeiture has become one of the most innovative and effective efforts of the Department of Justice. In fact, administrative, civil, and criminal forfeiture recoveries have resulted in the growth of the DOJ’s Asset Forfeiture Fund (AFF) to $1.8 billion in 2011 (GAO Analysis of DOJ Data). Obviously, such huge numbers would raise the eyebrows of any successful business let alone government entities strapped for funds. By the way, the Treasury Department has its own asset forfeiture fund, known as the Treasury Executive Office for Asset Forfeiture (TEOAF), and we have not even mentioned the many state and local law enforcement agencies, including many DA offices in on the action.1
While the desire to deprive criminals the fruit of their crimes is completely understandable, such obvious material incentive for the government brings with it the risk of tunnel vision and overzealousness. As with most other things, many unfortunate roads are paved with good intentions.
It should be pointed out that the purpose for such recovery efforts is not simply greed on the government’s part. These funds are often targeted for crime victims, recovery of lost taxpayer funds, DOJ operations and personnel, local law enforcement agencies, and, recently, non-law-enforcement congressional programs. These goals make forfeiture efforts attractive to politicians because of their moral worthiness and political popularity. This kind of political capital means that forfeiture is here to stay—and is likely to grow.
Further, this danger is not only expressed through the discretion of prosecutorial agencies in evaluating whether to pursue forfeiture of a particular asset. This danger has also allowed the procedural framework of federal criminal forfeiture proceedings to become so unbalanced in the government’s favor that there exists a serious question as to whether these proceedings even resemble any reasonable conception of justice at all. Put simply, it appears that Congress and the courts have taken their eyes off the ball of fairness.
While the federal government is more methodical in its forfeiture activities, it would be a mistake to view asset forfeiture as a tool used only by the feds. In fact, most states have extensive statutes and personnel dedicated to the seizure and forfeiture of private assets alleged to be connected to criminal activity.
This being said, it should be noted that the federal government provides more avenues to prosecutors to seek forfeiture than does the State of Texas. The most obvious difference between federal and Texas courts lies within the fact that federal courts provide a path to forfeiture within a criminal case itself. This is known as criminal forfeiture, authorized under 18 U.S.C. Section 982 and FRE 32.2. This article will examine the federal criminal forfeiture procedural system and illustrate its abandonment of certain basic and fundamental conceptions of fairness and justice.
Specifically, I would suggest that Congress overlooked some of the legal fundamentals that are designed to ensure fairness in federal criminal forfeiture proceedings—namely, the rights to fair notice and reasonable opportunity to present a defense. This discussion will address this topic in a comparative/analogical fashion. First, it will examine the differences between rights afforded to accused persons in general criminal proceedings and criminal forfeiture proceedings. Second, it will discuss how these differences can deprive defendants of any reasonable ability to fight the government’s seizure and forfeiture of their property. Third, systemic suggestions will be offered. Finally, it will offer some practice suggestions that can hopefully help defense lawyers help their clients.
I. How Criminal Forfeiture Fits Into the Course of a Criminal Case
Unfortunately, the procedural framework regarding federal criminal forfeitures is so incompetent you will wonder if the analysis you are reading appeals to licensed practitioners or eighth-grade civic students. In other words, the federal criminal forfeiture system, which will be referenced as the “federal method,” raises due process concerns on the most basic levels.
Starting with such basics, every criminal accusation in this country requires some sort of pleading to initiate court proceedings. Obviously this allows an accused to know what he or she is being accused of and under which statute he or she faces punishment. Although one need not have attended law school to understand this concept, its importance cannot be overstated (sounds like my tee-ball coach constantly telling me to keep my eye on the ball). To put this principle into perspective, every five-year-old put into timeout demands to know the reason why.
Another basic concept rests in the ability of accused persons to meaningfully defend themselves. Not only does every case involve a charging instrument; but every accused has the opportunity to demand evidence to be put forth and to test such evidence. Once again staying at the most rudimentary levels, part and parcel of a person’s right to challenge an accusation is being afforded requisite time to prepare his or her own defense.
Shockingly, fair notice and fair opportunity to defend one’s self are not afforded the accused when it comes to facing the prospect of losing his or her interest in assets via forfeiture. To put it starkly, even though due process is supposed to be afforded persons facing deprivation of life, liberty, or property, an examination of the federal method leaves one to wonder where the constitution went, and possibly worse, where the basic vision of justice that every five-year-old shares has gone.
The Typical Federal Criminal Case
Obviously, federal cases begin with events that happen in the real world that are investigated by some law enforcement agency. Then, in the typical federal case, a decision is made by an agency along with the U.S. Attorney’s Office to bring charges into district court. Whether an arrest occurs before or after an indictment depends on the judgment of the prosecutor and the facts of an individual case. Regardless of the specific order, every case has a charging instrument. Then preliminary court proceedings such as arraignment occur, affording the opportunity to ensure the accused understands the specific charge he or she faces. Obviously, this knowledge gives the accused specific information about the range of punishment. Then typically, the defense attorney receives discovery from the prosecutor, which includes police reports, records, recordings, data, and other information relevant to the government’s case. When the defense attorney has an opportunity to review these items and interview the client and other witnesses, he or she can make a recommendation. At this point, the client decides whether to go to trial or plead guilty. Once a client is either found guilty at trial or pleads guilty, an interview then takes place and a presentence report is created for consideration by the district judge who will assess the sentence.
This process, while containing significant differences from Texas state procedure (like the unavailability of jury sentencing and the usage of a presentence investigation in nearly every case), generally fits the overall flow of state criminal cases. More importantly, this flow generally fits our most important precepts regarding basic justice: Every person ought to know what he or she is charged with, and every person ought to have a fair opportunity to defend him or her self against the charges. However, when a forfeiture notice is introduced in a criminal case, such precepts suffer significantly.
Application of Basic Hallmarks of Justice in the Adjudication of a Typical Federal Offense
For example, wire fraud under 18 U.S.C. Section 1343 carries a prison term up to 20 years and a fine up to twice the value of the property involved. Thus, a person charged by indictment with this offense conceivably understands what he or she is facing in terms of both liberty and pecuniary consequences.
The ability for an accused to know the scope of liberty and pecuniary exposure is a hallmark of our system of justice. Once again appealing to the obvious, if a person is accused of committing this crime, he or she must receive a charging instrument that gives 1) the name of a specific perpetrator or perpetrators; 2) a general jurisdictional location; 3) a written statement of the essential facts constituting the offense charged; and 4) customary citation of a statute or rule. Fed. R. Crim. P. 7.2 This framework, in most cases, satisfies the basic justice requirement of notice. Further, the framework also establishes static parameters. Namely, the persons punishable under the accusation, the term of imprisonment, and the amount of fine are limited to those identified within the charging instrument. For example, you could not list John Doe as the only accused defendant in an indictment for wire fraud and then imprison Jane Doe because she is not listed and, unless another charging instrument exists, has no notice that she is charged with a crime. Also, the statute listed in a charging instrument places a specific range of punishment for the accusation that cannot be exceeded. Forgive the obviousness of this discourse, but when you see the breadth of power afforded the government in criminal forfeiture, you will be astonished.
Steps in a Federal Criminal Case Including a Forfeiture Notice
Where Rule 7 sets requirements for a substantive criminal pleading, Rule 32.2 sets a very different standard for forfeiture notices. The rule starts out with a semblance of fairness by requiring all indictments to contain a forfeiture notice to authorize a criminal forfeiture; however, this is simply a notice and not a count. The burden of proof is preponderance of evidence. More striking is the fact that forfeiture notices do not need to list the object of prosecution (the property items sought). Instead, the notices simply need to state a general warning that the government will seek property if the client is convicted.
Specifically, Rule 32.2(a) brazenly states, “The indictment or information need not identify the property subject to forfeiture or specify the amount of any forfeiture money judgment the government seeks.” Even more amazing is the fact that the government need not inform the court which items are subject to deprivation until after a finding of guilt. Once again, the Rule states, “As soon as practical after a verdict or finding of guilty, or after a plea of guilty or nolo contendere is accepted… the court must determine what property is subject to forfeiture.”
Where “seizure” is the act of the government taking possession of private property, “forfeiture” is the legal mechanism where the government tries to own/keep the property. At this point it would be helpful to explain that the government can seek a seizure warrant for property once probable cause exists for the application of a forfeiture theory. This means that seizures often take place long before indictment. However, it is not at all uncommon for seizure efforts to begin at the time of conviction. That being the case, the government is under no obligation to notify the client which items it seeks before conviction. The problem is that the client is often expected to defend him or her self on the fly.
Application of Rule 32.2 in a Typical Federal Forfeiture Proceeding
Taking the wire fraud example listed above, a forfeiture notice contained in an indictment under 1343 gives the government the right to forfeit all property used to facilitate the offense or that is traceable to the gross proceeds the defendant obtained from the offense. (Other federal offenses allow the forfeiture of commingled assets, which is more expansive than facilitation or proceeds theories. Such ramifications go beyond the scope of this article.3) However, where the object of the prosecution in a criminal count is the corpus of the defendant, the object of prosecution in a forfeiture notice could be anything from a car to a necklace to a fossil to a bank account. Worse, since the government does not need to specify the object of its prosecution, the defendant is often left in the dark as to what he or she stands to lose.
Further applying the wire fraud example, imagine a fraudster sells 15 nonexistent Porsches on eBay to 15 separate victims for $50,000 each. For ease of example, say the sales all took place on the same day and the money transferred to the client on the same day. Obviously, the government will seek a money judgment in the amount of $750,000. But please realize that forfeiture is not confined to money judgments consisting simply of debt obligations. It often encompasses specific assets.
Imagine further that the day after the illegal money arrived, the fraudster bought 10 necklaces for $10,000, a BMW for $75,000, and put $100,000 into a bank account.4 In that case, the government would likely seek to forfeit those items.
Also imagine that since the fraud, the client put $250,000 to pay off the beach house he bought 10 years before committing the offense. The government will likely seek this home but there becomes a question whether the entire home is subject to forfeiture. The client will need to establish what portion of the home came via legitimate means and what portion did not.5
II. The Unfairness of Criminal Forfeiture Proceedings
In cases where a client pleads guilty, you can expect that forfeiture discussions will be a part of the overall plea negotiation process. Thus, the danger of unfair surprise is not as great (but actually still happens) in plea scenarios. However, forfeiture proceedings where the client demands and receives a trial are far more treacherous. This is because the government, as already stated, is under no obligation to identify which assets it will seek to forfeit until “as soon as practical” after a finding of guilty.
Also realize that third-party claims are often dealt with long after the criminal case is concluded. On the other hand, the client’s interest is usually dealt with very quickly after conviction, and it is the client who is in danger of losing property without a meaningful opportunity to fight.6
Imagine that the client is found guilty after a trial. This may very well be the first time he or she learns that the necklaces, account, beach house, and BMW are at risk. While few people will lose sleep over the fact that the client loses ill-gotten property, forfeiture of these items may have a devastating effect on a spouse or children. Further, remember that hybrid assets such as the beach house are not sheer proceeds. Does the government deserve the entire property? Is the client prepared to establish which portion he or she should keep?
Remember, as stated above, the government may have taken possession of the items via warrant before the trial/plea—or it can wait to mention its intention to seize and forfeit the property at this point. If the government already seized the property, then the client obviously knows of the government’s intention to forfeit. However, if the government has not taken possession before the verdict or plea, then the client might be shocked to see that he or she is losing more than liberty. Remember, the judge is not called upon to identify the items subject to forfeiture until “as soon as practical after a verdict or finding of guilty.” The problem for the client is that since he or she may be unaware that these items were targeted by the government, he or she has probably not taken any steps to establish the legitimacy of these items.
Not only is there a possibility that the client may learn for the first time what items are targeted after the conviction; there is also the possibility that he or she may be expected to defend the legitimacy of those items (or the absence of a nexus between the offense and the property) immediately after a verdict. I know of several instances where forfeiture hearings take place immediately after a jury’s finding of guilt. In fact, if the client has the gall to demand that a jury decide whether a piece of property is connected to a crime, such a jury hearing will almost assuredly take place immediately after the verdict of guilt. That hardly seems fair, given that the client may have just learned for the first time which items are subject to forfeiture.
Further complicating matters is the fact that the government may seek items that are owned by the client but unconnected to the offense under a theory known as substitute property. This means that if our wire fraud client does not have $750,000 worth of property traceable to the offense to satisfy the entire obligation, then the government can go after any other items the client owns. So unless the client kept the fruit of the crime, good-bye beach house or anything else the client owns. Once again, nobody is weeping for the client’s loss, but that home or other items may have sentimental value for the client’s spouse or kids. What if for example, the client owned one car upon which the family depends while he or she is in prison? Or, if an elderly client’s spouse stands to lose the pension your client earned?
Now imagine the client learns of this for the first time right after the verdict comes down.
Rule 32.2 provides: “If the forfeiture is contested, on either party’s request the court must conduct a hearing after the verdict or finding of guilty.” The problem is that these hearings often take place immediately after the verdict. How can a client prepare to establish a lack of nexus between an item of property and the underlying offense if he or she does not know which items the government wants?7
Compounding the client’s problem is the fact that the government enjoys a massive informational advantage over the defense attorney and the trial judge. While forfeiture jurisprudence has existed for centuries, very few judges and lawyers are familiar with it except for one group—government forfeiture specialists. Being a part of this select group harkened back to my speech and debate days in college and high school. Nobody thought we were cool, or even understood what we did, but we huddled together as a testament to ourselves.
Not being familiar with forfeiture law, judges often rely heavily on prosecutors to shepherd them through forfeiture proceedings. Further, these proceedings can utilize “evidence already in the record… or any additional evidence or information submitted by the parties and accepted by the court as relevant and reliable.” This includes the introduction of summary and hearsay evidence. With little exaggeration, the client’s chances regarding forfeiture stand as between slim and none, regardless of the level of connectedness targeted property has to the criminal activity.
The diagram on the facing page charts the flow of a criminal case, along with intervening forfeiture steps if the case involves criminal forfeiture.
III. Possible Systemic Solutions to Provide Fairness in Criminal Forfeiture Proceedings
Clearly, our clients need a fair opportunity to know what items they stand to lose sufficiently in advance of any determination that the property is subject to criminal forfeiture. Obviously, the government would object that any advance notice would allow for dissipation of assets. The clear trend of the legislation and court rulings in this area makes it clear that the government will receive every opportunity to capture assets to avoid dissipation. Thus, solutions must balance the government’s interest with reasonable justice tenets such as notice and time for preparation. Surely fairness should not be sacrificed to ensure the government’s rightful interest in avoiding dissipation of assets.
A reasonable framework to resolve this tension begins by recognizing that possession and forfeiture are distinct. The system can easily accommodate this concern by allowing seizure of targeted assets during any time period necessary to allow our clients to prepare for a forfeiture proceeding. Oh wait, they can already do that: It’s called a seizure warrant. Be that as it may, the government does not always elect to seize assets before trial. Oh,wait again, the rules of criminal procedure already allow trial courts to order seizure of any asset of the defendant’s after conviction. This allows the government to retain possession while the ultimate issue regarding the client’s interest in such items is resolved.
Solution Number One: Require the government to name known assets 60 days before trial. If the government identifies an asset after that time, see Solution Number Two.
Solution Number Two: Require 60 days for preparation between the government’s naming of an asset targeted for forfeiture and the hearing deciding the issue. This means that criminal forfeiture proceedings regarding assets that are not identified sufficiently in advance of trial will need to be addressed at a separate hearing. In other words, gone should be the days that the client needs to immediately face a forfeiture hearing right after the verdict—unless of course, the government names such assets 60 days before trial.
Keep in mind that that federal law allows the government to name assets for forfeiture long after the criminal case is concluded. There is no artificial deadline attached to either the date of conviction, sentencing, or even appellate decision. Thus, the rules already contemplate that proceedings can be held years after the criminal case is concluded. Thus, requiring a 60-day window between naming/seizure of an asset and the hearing is perfectly reasonable.
Solution Number Three: In the alternative, require that all assets not named in the criminal indictment be dealt with via civil forfeiture. For all practical purposes, once the client is sentenced, the trial court is putting the case behind it. It is rare that assets identified after sentencing are pursued under a criminal forfeiture theory. This means that most criminal forfeiture case only deal with the client’s interest in the property until the ancillary process begins. This makes sense because the ancillary process handles third-party claims in much the same way as do civil forfeiture proceedings. Since post-verdict forfeiture hearings only deal with the client’s interest in the property, why not keep the proceedings clean? If a sentence only applies to the objects of prosecution contained within the indictment—namely, the person and the penalty range—why not confine the criminal forfeiture proceedings to objects that are listed within the indictment, namely, the listed items for forfeiture?
Instead, Fed R. Crim. P 32.2 does the opposite and allows a generic forfeiture notice. Hopefully, this article has demonstrated that there are massive problems in the federal criminal forfeiture system, and hopefully it has done so in a clear way. In the end, even the most ardent prosecutor would agree that persons should have meaningful notice of what they stand to lose as well as a reasonable opportunity to prepare a defense. Hopefully, these systemic suggestions at least point to potentially positive first steps to address these concerns.
IV. Practice Tips
Living in the real world, we can’t simply lament the problems that exist within the system. As defense practitioners, we should take steps to protect our clients even in the face of difficult odds. Actually, it is one of the sick satisfactions that we can take as defense attorneys—that is, the fact that we are expected to drain the ocean with a teaspoon. With this spirit in mind, and with the hopes of trying to look out for our clients and their families, here a few things that can be done to deal with the current system.
Tip #1: Stop the Unacceptable Excuses
We all have enough to do as defense lawyers. Between making court appearances, advising clients, preparing for contested settings, and, of course, engaging in the never-ending battle of actually collecting the fees we have earned, there are not enough hours in the day. However, it is important to recognize that forfeiture, even civil forfeiture, is part and parcel of many criminal cases and we cannot just ignore it. Certain excuses such as, “I do not do forfeiture,” “Financial Investigations are hard,” or “Your wife did not hire me” do not serve your client. To be sure, your client’s spouse is not your client and you need to avoid conflicts of interest. Please do not read anything within this article to sugarcoat this issue. Thus, referring separate counsel to the spouse if she has a distinct property interest makes sense. Having said that, property owned by the client outright, which typically would allow only the client the right to claim it, may still be critically important to people the client loves.
Tip #2: Start Thinking About the Financial/Forfeiture Case Early
Financial records do not magically appear. The facts that trigger a criminal defense ought to also trigger a forfeiture defense at the same time. Once you receive a charging instrument that contains a forfeiture notice (or the government has seized an asset belonging to your client), you should begin interviewing your client regarding these assets and issuing subpoenas for bank records. Also request copies of your client’s tax returns and pay stubs. Demonstrating legitimate income is crucial, and you have to begin early.
Tip #3: Consider Dedicating Another Attorney to Handle the Forfeiture Part of the Criminal Case
As stated before, the primary defense attorney has enough to worry about trying to keep the client out of prison. Further, not all practitioners have expertise in this unique area of law. Consider either commandeering an attorney within your practice group or reaching out to another attorney who can begin to address these issues. Clearly structure your fee to ensure you are not working for free. If the client does not want to pay for work on the forfeiture case, then that is his or her decision. Offering a service that the client rejects is different than ignoring the issue.
Tip #4: File a Bill of Particulars
Just as you can file a bill of particulars demanding additional information regarding substantive criminal counts, you can file such a pleading to demand specific information regarding the forfeiture. While there is some controversy as to whether the government needs to list known assets targeted for forfeiture, many AUSAs will go ahead and either file a response or amend the charging instrument. By the way, this information may be helpful in understanding the government’s theory of fraud or the money flow of what they feel are transactions related to the underlying offense. In other words, this information can be helpful to the criminal defense.
Tip #5: Start Talking to the AUSA about Assets
The importance of communicating with the case prosecutor cannot be overstated. If you ask the government what assets they are seeking, you might be surprised that they answer you. If the prosecutor does not answer, you have not lost anything by asking. Also inquire whether the government will seek a jury determination regarding forfeiture and whether the government is seeking substitute assets. Also, request any equity valuations of targeted assets and other forfeiture related discovery they might have.
Tip #6: File or Submit a FRCP 16 Request for Discovery of Items Related to Forfeiture
FRCP 16 allows for discovery of multiple items upon a defendant’s request. You can have access to items such as the defendant’s statements, prior record, and inspection of documents but only if you request it. While it is unclear whether Rule 16 applies to forfeiture cases, surely you should try to invoke it in a criminal forfeiture proceeding. Even if you do not do so formally under Rule 16, request these items informally to the prosecutor. Any gained information would be more than you had before you requested it.
Asset forfeiture is a practice area expanding at an incredible rate. This is because the incredible material incentive it offers government agencies is undeniable. Also, these successes enjoyed by the government make it safe to assume that forfeiture efforts will only increase over time. Therefore it is incumbent on defense practitioners to take reasonable steps to protect their clients. While the law is slanted significantly in the government’s favor in this area, there are some reasonable steps that be taken to help your clients, and hopefully this article can help the practitioner in that endeavor. Best of luck!
Notes
1. Equitable sharing of forfeited assets is an interesting area but outside the scope of this article.
2. Many cases have addressed the level of specificity required under the Constitution. In a nutshell, due process requires sufficient facts so that an accused can present a meaningful defense—and which facts are going to be used to support the government’s theory.
3. Another issue beyond the scope of this article rests in the fact that property interests are often not confined to the accused. It is important to understand that criminal forfeiture not only contemplates depriving a defendant of property, but also ensuring that such property is taken from all others and given to the government. Once again, as alluded to earlier, I do not mean to suggest that the government seeks to take property from innocent persons, and to be sure, 18 U.S.C. Section 982 and FRE 32.2 include assurances that third parties can make “ancillary claims.”
4. And that the bank account had no withdrawals between the day of the offense and the verdict/plea. Not that account activity per se negates the government’s right to seize and forfeit the asset, but in such cases, accounting efforts to properly trace the assets must be used. For ease of discussion, this article will not address tracing concerns.
5. The government has the burden of proof to establish a nexus (connection) between the item of property and the offense, but this is usually done because hearsay is admissible and the general case agent will be allowed to present summary evidence to establish the nexus. However, proper tracing and accounting for assets is not always done, meaning that such a nexus may be based upon innuendo rather than accounting principles. Thus, for practical purposes, the client has the real burden of establishing legitimacy.
6. It is true there are two forfeiture orders regarding the client. One is the preliminary order of forfeiture and then comes a final order of forfeiture. However, it would be a mistake to take this to mean that the preliminary order is the lesser mandate. The final order is only used to allow “the parties to suggest revisions or modifications.” The preliminary order is the mandate dealing with the substantive issues regarding how much property the government will take in a forfeiture proceeding.
7. Third-party interests are not dealt with in the criminal forfeiture hearing or the criminal sentencing hearing but rather through a separate ancillary process that closely resembles civil forfeiture procedural rules.
