11-610-cr (L)

United States v. Peters

UNITED STATES COURT OF APPEALS FOR THE SECON D C IRCUIT August Term, 2012 (Argued: D ecember 21, 2012 Decided: Octob er 9, 2013)

Docket Nos . 11-610-cr(Lead) 11- 612-cr(C on)

------------------------ ------------- UNITED STATES OF AMERICA,

Appellee,

- v - FRANK E. PETER S, Defendant-Appellant

.

------------------------ ------------- Before : SACK and LYNC H, Circuit Judges

. 1

Judge Guido Calabresi, original ly assigned to the panel, recuse d himself 1 from this case shor tly before or al argument. The two remaini ng members of the panel, who are in agre ement, have dete rmined the matter in accordance with Second C ircuit Internal Oper ating Procedure E(b). See28 U.S.C. § 46(d); cf

. United States v. Desimone, 140 F.3d 457, 458 (2d Cir. 1998).Appeal by the defe ndant, convicted of various counts related to a

scheme to defr aud a bank, from a judgment of the United States District Court for the We stern D istrict of New York (Will iam M . Skre tny, Judge ) order ing forfeiture pur suant to 18 U.S.C. § 982(a)(2) in the amount of $23,154,259. We conclude that (1) section 982 requires forfe iture of the gross rece ipts of the criminalviol ation, not only the pr ofits, and (2) in l ight of his al most totalcontrol over the c ompanies involved i n the violati on and their ass ets, the defe ndant "indirectly" obtained the proce eds of the fr aud through the companies and can theref ore b e held accountable for cr iminal forfeiture of those p rocee ds pursuant to section 982. We there fore affirm the for feiture award by the district court.

Affirmed. JAMES W. GRABLE, Jr., Connor s & Vilardo, LLP,

Buffalo, NY, for Defendant-Appellant

. JOSEPH J. KARASZEWSKI (Ri chard D . Kaufm an and Gretchen L. Wylegala, on the brief ), Assistant United States Attorneys forWil li am J. Hochul, Jr., United States Attorney for the Wester n District of New York, Buffalo, NY, for Appellee

.

2SACK, Circuit Judge : The defen dant, Frank E. Peters , was charge d in the United States District Court for the We stern D istrict of New York with various counts related to a scheme to defr aud Chase Manhattan Bank ("Chase ") by overvaluing assets used to secur e and maintai n a revolving line of cr edit. In addi tion to i mposing a term of imprisonment and ordering re stitution, the district court (Wi ll iam M

. Skre tny, Judge ) order ed forfe iture in the amount of $23,154,259 pursuant to 18 U.S.C. § 982(a)(2) . The district court concluded that section 982 requi res forfeiture of the "r eceipts" of the cr iminal viol ation, i .e., "the draws from the revolving li ne of cr edit between July 1998 and October 2000." United States v. Peters , 257 F.R.D. 377, 388 (W.D.N .Y. 2009). The district court also conclu ded that although the loan proceeds we re disbur sed to corpo rations owned and con trolled by Peters and his wife, because the y were in fact his corpor ate alter egos, it would "pi erce the corpor ate veil" and hold the defe ndant liabl e for the procee ds reape d by the cor porations.

The defen dant advances se veral arguments challenging his conviction and the loss amount cal culated for Senten cing Gui delines and restitution purposes, all of which we resolve in a summary order filed today. In this precede ntialopinion we address o nly the defendant's challenge to the orde r 3of forfeiture. The defendan t objects to it on two grounds: (1) section 982 requires

him t o forfeit only the "profits" of the fraudulent scheme, n ot allpayments that his companies rece ived under the C hase loan, and (2) the district court err ed when it "pierced the cor porate veil" to find thathe per sonally "obtai ned" the loan procee ds paid to his companies.

We conclude that (1) section 982 requires for feiture of the gros s

rece ipts attributable to the criminalviol ation, not only the pr ofits, and (2) in l ight of his near total control over the companies an d their assets, the defendan t "indirectly" obtained the Ch ase loan proce eds and canbe he ld accountable for criminalforfeiture of those procee ds pursuant to se ction 982. BACKGROUND Peters and h is wife, Marta Chaikovska, purchased Wo rld Auto Parts, Inc. ("WAPI ") in 1990. In 1995, WAPIacqui red a company Peter s and his wife renamed BighornCore , Ltd. ("Bighorn"). WAPI and Bi ghorn (togethe r, the "Companies") sold aftermarket auto parts. C haikovska was WAPI' s chief

exec utive offi cer and o wned 85 per cent of the C ompanies. Peters was the pres ident and owned 13 per cent. Peters 's sister-in-law owned one per cent, and a fourth indivi dual, Peter Van Domelen, owned on e per cent.

4The Chase Loan In 1996, the Companies enter ed into an asset-bas ed cre dit agreement with Chase in which the bank agr eed to ex tend to the Companies a $9 mill ion revolving li ne of cr edit secured b y the Companies' assets. In June 1998, the parties re newed the agr eement for two year s, raising the available credit to $10.5 mil li on. The cash available to the Companies on any given day was de termined by the C ompanies' "borrowing base": the sum of the values of the Companies' inventory and accounts r eceivable. The C ompanies were p ermitted under their arrange ment with the bank to bo rrow up to an amount equal t o 85 perce nt of the value of current accounts r eceivable, plus 60 perce nt of the value of the curre nt inventory, less whateve r loan principal was outstandi ng (never to excee d the $10.5 mil li on maximum ).

The loan agreement pr ovided that the Companies would deposit al l payments from customers into "blocked" accounts at Chase , from which only the bank could make withdrawals. Chas e would then "sweep" the accounts periodicall y, using the money taken from them to pay down the Companies' loan balance. Cer tain accounts receivable were deemed "ineligible" for purp oses of determining the borr owing base be cause the b ank considere d it unl ikely that

5those amounts would be repaid. For e xample, the Companies wer e not

permitted to borrow against accounts re ceivable more than 90 days past due or purchase order s that had not yet bee n fulfil led. The Companies would periodicall y fil e a "bor rowing base r eport," which was suppos ed to reflect the combined value of accounts receivable and inventor y. To confirm the informati on in the borr owing base re port, and to verify gene rally the Companies' accounting standards, Ch ase "field examiners" wer e per mit ted to auditrandom samples of the Companies' reco rds. One such field examiner, Edward Grayes ki, testified at t rial that he had conducted field tests between 1996 and 1998, and that his review raised r ed flags with respect to some of the acc ounts rece ivable. Although the Companies were init ial ly able to deflect the bank's concerns about the accuracy of their r ecords , examiners e ventuallyuncovere d the fraudulent scheme, de scribed b elow, that underlies this case.

The Scheme Peters doe s not dispute that the Companies engage d in a fraudulent scheme to manipulat e the accounts r eceivable in order to infl ate their borr owing base. S tarting someti me in 1997, the Companies beganexpe riencing cash-flow shortages due to a low sales volum e. In resp onse, the Companies deve loped ways to increase cas h flow. Gregory Samer, a WAPI employee who pleaded

6guil ty under the same indictment that named Peters as a defe ndant, testified as a

cooperating witness at Peters's trial. Samer detailed three differ ent fraudulent accounting practices commi tted by Peters an d the Companies in orde r to increase the cash available through the Ch ase loan: (1) "holding the month open"; (2) "preb il li ng"; and (3) "reb il li ng."

The practice of "holding the month open" consisted of including i n a particular month an account receivable that did not actu all y ripen until the following month. For example, Samer might instruct Cher yl Marti nez, who worked in WAPI' s billing department, to include invoi ces fr om the first two weeks of Fe bruary in the Jan uary Accounts Receivable Repor t. Martinez woul d then backdate what sh ould have beena Febr uary invoice to make i t appear as though the goods sold had be en shipped in Januar y. If the product did eventually ship to the customer, Martinez would produce a han d-typed invoice that reflected the actual date of shipment.

"Prebilling" refe rre d to the practice of cre ating a sales invoi ce for an order befor e any goods wer e shipped, the reb y maki ng an unripe pur chase or der appear to b e an account re ceivable. For ex ample, i n January 2000, a company named ATCO placed a purch ase or der with Bighorn for $850,000 wor th of airconditioning cores . Bighorn lacked both the inventory to fulfillthe orde r and

7sufficient cash to purchase the inventory. Employees at Bighorn cre ated an

invoice falsely indicati ng that the ATCO orde r had sh ipped, which all owed them to incl ude an $850,000 orde r in the Accounts Receivable Repor t for that month. As a res ult, Chase was duped into lending the Companies more money -- money that Chase e xpected to b e re paid through a sale that, in fact, m ight never come to fruition. The practice of "re bill ing" was, in effect, an end-r un around C hase's policy of excluding accounts re ceivable that were more than90 days old from the borr owing base. Employees at the C ompanies would generate a new invoice for an old sale with a false date somewher e within the previous 90 days so that the

rece ivable could be included in the borr owing base re port.

Although there was evidence in the recor d that Chase was aware of at least some of these pr actices, the bank appe ars to have b een unawar e of the extent to which the Co mpanies' empl oyees we re ar tifi ciall y inflating the Companies' borr owing base. Ch ase ultim ately uncovered the full extent of the fraud in or around May 2000, whe n a Bighorn employee named Ron Hall disclosed it t o Chase examiners.

8The Creation of ITEC In early 2000, Peters cr eated a corp oration named Innovative Transmission and Engine Company ("ITEC") into which he spun off the Companies' heavy-duty equi pment department. Peters opened a b ank account for ITEC at another instituti on, M&T Bank. Sever al custom ers wh o had sent payments to WAPI were sent cor resp ondence informing them that WAPI had changed its name and asking that the payment be r eissued to ITEC. The re issued checks we re de posited in IT EC's account at M&T Bank, instead of in the Companies' Chase accounts, where the loan agreement r equired that such payments be de posited. Chase was thus depr ived of money that was supposed to have bee n used to pay down the loan.

Procedural History On October 22, 2003, a grand jury in the United States District Court for the We stern D istrict of New York return ed an eighteen- count indictment against Peters, Samer , and the chief financial officer of the Companies, Mark Hoffman. The indictm ent charge d Peters with a host of crimes, including one count of conspiracy to commi t bank fraud, in violat ion of 18 U.S.C. § 1014 and § 1344, in connection with the Companies' accounti ng practices and the c reation of ITEC; four counts of making a false statement to a bank, in vi olati on of 18

9U.S.C. § 1014, in conne ction wi th four separ ate instances of fr audulentl y inflating

the bor rowing base; four counts of bank fr aud, in vi olati on 18 U.S.C . § 1344, three of them all eging false statements in connection with al leged payments from the Companies to the defe ndant, and the fourth in conne ction wi th the ATCO pr ebill; one count of money laundering, in violation of 18 U.S.C. § 1957; and thr ee counts of mailor wire fr aud, in vi olati on of 18 U.S.C . §§ 1341 and 1343, in connection with the diversion of payments to IT EC.

Samer was ch arged with the conspiracy and b ank fraud counts, and Hoffman was charge d with the conspiracy and mailand wire fraud counts. The last fiv e counts sought criminal forfeiture of the proce eds of the allegedly fraudulent activi ty. In February 2005, Samer pleaded guilty to the conspiracy count and agree d to cooperate with the gover nment.

A jury trialbegan in May 2007. Although allparties agree d that a fraudulent scheme to inflate the borr owing base had occur red, Peter s disputed that he participated in i t and argued that he was in fact its victi m. On July 20, 2007, the district court granted Peters's motions for acquit tal on three bank-fr aud counts -- the counts alleging payments to Peters for pe rsonal use -- an d the money laundering count. On July 30, 2007, the jury convicted Peters of one count of conspiracy to commit bank fraud, one count of maki ng a false statement to a

10bank, one c ount of bank fraud, two counts of wire fr aud, and one count of mail

fraud. The jury acquitt ed him of three counts of making a false statement to a bank. Hoffman was acquitt ed of all counts.

On January 27, 2011, the district court sen tenced Peter s principallyto 108 months' i mprisonment, and order ed him to pay $11,988,501.36 i n res titution. The govern ment and Peters had agr eed that the district court would resolve the forfeiture counts, which it did i n March 2009 by e ntering a forfe iture money judgment of $23,154,259. Peters , 257 F.R.D. at 390. DISCUSSION On appeal, the defe ndant advances s ever al arguments chall enging the fairness of his trial and hi s sente nce. We addr ess most of these arguments in a summary order de cided simul taneously here with affi rming the defendant’s conviction and the amount of restitu tion awarded at sentencing. See United States v. Peters , --- F. App'x ---, --- WL ---, --- U.S. App . LEXIS --- (2d Cir. [date] 2013). The defen dant also argues that the district court erre d by enter ing a forfeiture order in the amount of $23,154,259 because (1) the cr iminal forfeiture statute, 18 U.S.C. § 982(a)(2) , requires forf eiture only of profits, not of gross r eceipts, and (2) the district court erre d in findi ng that the Companies wer e his alter egos such

11that the court could i mpose a forfe iture order against himpers onally. I t is thi s

challenge to the forfeiture award that we consider he re.

We re view a district

court's legal concl usions -- including those regar ding the application of the forfeiture statute -- de novo , and all underlyi ng factual findings for clear e rror . United States v. Gaskin , 364 F.3d 438, 461-62 (2d Cir. 2004). I. Criminal Forfeitu re Unde r 18 U.S.C . § 982(a)(2)

The forfe iture statute at i ssue he re is 18 U.S.C . § 982(a)(2), which provides in relevant par t:

The Cour t, in i mposing sentence ona pers on convicted of a violation of, or a conspiracy to violate –- (A) section . . . 1014, 1341, 1343, or 1344 of this titl e, affecting a financialinstitution . . . shall order that the per son forfe it t o the United States any prope rty constituting, or der ived from, procee ds the pers on obtained directly or indirectly, as the result of such violati on. Id. Feder al Rul e of Cr iminal Procedure 32.2(b )(1)(A) requires a trial court, "[a]s soon as practical after a verdict . . . of guil ty" against a defendant, to "determine what prope rty is subject to forfeiture under the applicable statut e."

12Id. "If the government see ks a per sonal money judgment, the court must

determine the amount of money that the defendan t wil l be order ed to pay." Id. The govern ment must establi sh the ne xus be tween the offe nse and the forfeiture request by a pr eponder ance of the e vidence. See United States v. Capoccia , 503 F.3d 103, 110 (2d Cir. 2007).

Criminal forfeiture under se ction 982 i s a form of punishment, separ ate and apart fro m any restituti ve measure s imposed during sentencing. Forfeiture of money unde r sec tion 982, unl ike restituti on, "constitutes punishment," because the statute directs the court to order it "as an additional sanction when 'imposi ng senten ce on a pe rson con victed' of the re levant offense" and because "[crimi nal] forfeiture ser ves no r emedial purpose, is designed to punish the offende r, and canno t be imposed upon innocent owner s." United States v. Bajakajian , 524 U.S. 321, 328, 332 (1998); see also Libretti v. United States , 516 U.S. 29, 39 (1995) ("Our pr ecede nts have likewise character ized crimi nal forfeiture as anaspect of punishment imposed following conviction of a substantive criminaloffense ."). A court's discretion in ordering criminal forfeiture is cabined b y the Eighth Amendment’s Excess ive Fines Clause. The amount of forfeiture "must bear some r elationship to the gravity of the offens e that it is designed to punish." Bajakajian , 524 U.S. at 334. 13II. The District Court’s D ecision The defen dant elected to have the district court, rather than the jury,

reso lve the criminalforfeiture char ges against him. The government requested an order of forfeiture in the amount of $28,204,200, which repr esen ted the sum of (1) all di sburs ements under the 1998 Chas e loan, (2) payments the defe ndant diverted from WAPI to I TEC, and (3) payments made fr om the Companies directly to the defendant -- e.g., as s alary, car payments, and r ent -- betwee n 1996 and 1998. The district court ordere d criminalforfeiture b y Peters in an amount equal t o the sum of (1) all di sburs ements under the 1998 Chas e loan, and (2) all payments diverted from WAPI to I TEC. Peters , 257 F.R.D. at 388-89. In doing so, the court rejected Peters' argument that he should be liable only for the "prof its" gener ated by the fr aud. Id. at 388. The district court al so concluded that WAPI and Bighorn wer e the defe ndant's corporate alter e gos for the p urpose o f piercing the corpor ate veil and finding the defe ndant pers onally l iable under sec tion 982(a)(2). Id. at 385. The court rejected the government’s r equest for forfe iture of payments made to the defendan t from the Companies be tween 1996 and 1998, concluding that

there was insuffici ent evidence to conn ect any pre -1998 payments to any offense s for which the de fendant was convicted. Id. at 388.

14After doing the arithmetic, the court im posed a money judgment

against Peters in the amount of $23,154,259. Id. at 390.

III

. Analysis A. Proceeds Versus Profits On appeal, Peters urges us to r ead "proce eds" in section 982 to include only the pr ofits of his fraud. Section 982 does not supply a definition of the term "proce eds." Ne ither have we de termined whether , as used in section 982(a)(2), "proce eds" means pr ofits or gross r eceipts. We ultim ately agree with the district court that the term "pro ceeds" is not limi ted to profits.

1. Textual Arguments . When a ter m in a statute is undefined, we are to give it its ordinary meaning. FDIC v. Meyer , 510 U.S. 471, 476 (1994). "Proceeds ," however , "can mean either 'rece ipts' or ' profits.' Both meanings are accepted, and have long been acce pted, in ordinary usage." United States v. Santos , 553 U.S. 507, 511 (2008). The ter m "' [p]roce eds,' moreover , has not acqui red a common meaning in the provisions of the Feder al Crimi nal Code. . . . Congr ess has defined 'procee ds' in various crim inal provisi ons, but sometimes has defined it to mean 'receipts' and sometim es 'profits.'" Id. at 511-12.

The defen dant argues that this case is controlled by Santos , a case involving an ill egal lott ery. In Santos , the Supre me Court constr ued the word 15"procee ds" in the feder al anti -money laundering statute, 18 U.S.C. § 1956, to mean

profits, rather than gross r eceipts. A plurality of the Santos Court found that because "[f]rom the face of the statute, there is no more r eason to think that 'proceeds' means 'rece ipts' than there is to thi nk that 'proceeds' means 'profits,'" the rule of lenity required that "the ti e must go to the defendant." Id. at 514.

The defen dant would have us conclude that the term "proceeds " under s ection 982(a)(2) must therefore also be lim ited to "profits." The problem with the defendant’s ar gument is that, u nder the rule announced b y the Supre me Court in Marks v. United States , 430 U.S. 188 (1977), the holding in Santos is li mit ed to the "position taken by those Member s who concurr ed in the judgments on the nar rowest gr ounds," id. at 193 (internal qu otation m arks omitted). And as we explained in United States v. Quinones , 635 F.3d 590 (2d Cir.), cert. denied, 132 S. Ct. 830 (2011), Justice Steven s' concurre nce contro ls the scope of the Court's holding i n Santos

. Id. at 599 (citing Santos , 553 U.S. at 523). Unlike the plurali ty, Justice Stevens would have he ld that "proceeds" meant "profits" when the antimoney laundering statute was appli ed to specified unlawful activi ties, but that i t meant "receipts" when ap plied to others

. Santos, 553 U.S. at 525 (Steven s, J., concurring).

16We nee d not and do not decide her e the pr ecise contours of Santos 's

holding. I t is enough to obser ve, as we did in Quinones , that a key point of agreemen t among the plurali ty and Justice Stevens was the desire to avoid a "merger pr oblem." Quinones , 635 F.3d at 599. In the context of the ill egal lott ery at issue in Santos , the plurality explained that "[i]f ' procee ds' meant ' rece ipts,' nearly ever y viol ation of the il legal-l ottery statute would al so be a violation of the money-laundering statute, because paying a winning bettor is a transaction involving rece ipts that the defendant intends to promote the car rying on of the lottery." Santos , 553 U.S. at 515. Justice Stevens agr eed that such payments would necessar il y be funded by the "re ceipts" of il legal acti vity. Id. at 526-27 (Stevens , J., concurr ing). And he agree d with the plural ity that Congre ss could not have intended violati ons of the money-launder ing statut e to "merge" in this way with vi olati ons of other statutes. Id. at 528 & n.7.

By contrast, the cr iminal forfeiture statute pres ents no merge r issue. Unlike the anti-m oney laundering statute, section 982(a)(2) is a form of punishment rather thana substantive criminaloffense . There is ther efore no risk of what Justice Stevens called a "practical effect tantamount t o double jeopardy," id. at 527, when section 982(a)(2) capture s funds es sential to the comm ission of one of its predicate offe nses. B ecause the concer ns uniting Justi ce Steve ns's 17concurre nce and the p lurali ty in Santos do not apply in the context of criminal

forfeiture, Santos does not contr ol the questi on of how to interpre t "proceeds " for the purpos es of se ction 982(a)(2).

Turning then to the text, the def endant points to subse ctions (a)(3) and (4) of section 982, which apply to viol ations of other statutes and which require forfe iture of allproper ty traceable to "gross r eceipts obtained" as a re sult of the violati on. The govern ment counters by p ointi ng to the see mingl y broad 2 language of section 982, which reaches "any prope rty . . . obtained directly or indirectly" from the crime. The gover nment notes that, in interpreting near ly identicallanguage in 21 U.S.C. § 853, which addres ses cr iminal forfeiture in the context of nar cotics viol ations, the Supreme C ourt was of the view that "Congre ss could not have chosen . . . b roader words to define the scope of what was to be forfeited." United States v. Monsanto , 491 U.S. 600, 607 (1989).

We do not find either of thes e arguments par ticul arly helpful or pers uasive. For much the same re asons the Santos Court thought that the term

Although Peters does not cite it, another ex ample i s section 982's civil 2 cousin, 18 U.S.C. § 981. In imposing ci vilforfeiture for unlawfulactivi ty -- indeed, for the same types of fr aud for which the defe ndant was convicted -- that provision explicit ly states that "the court shall al low the clai mant a deducti on from the forfe iture to the extent that the loan was re paid, or the debt was satisfied, without any financialloss to the victi m." 18 U.S.C. § 981(a)(2)(C ). 18"procee ds" in section 1956 was ambiguous i n the contex t of money laundering,

we think that the term is ambi guous as used in section 982.

2. Primary Purpose of Section 982. "Where the language of a statute is ambiguous, we focus upon the 'broader context' and 'primary purpose' of the statute." Castellano v. City of New York , 142 F.3d 58, 67 (2d Cir. 1998) (citing Robinson v. Shell Oil Co. , 519 U.S. 337, 345-46 (1997)). Her e, the punitive intent of section 982 favors the government's interpr etation of the word "proce eds." Criminal forfeiture is a form of punishment. As such, it i s distinct from restitution or other re medialactions, which are intended to re turn the victimand the per petrator to the s tatus qu o that existed befor e the violati on took place.

We agree with the government that doing no more than return ing a "wrongdoer to the economic positi on he occupied be fore he commi tted his criminaloffense does not pr ovide much of a deterre nt to those who might be tempted to foll ow in his footsteps." Gov’t Br. at 64. That i s not "punishment." Moreover , as the Eighth Circuit noted in a case involvi ng forfeiture unde r the Racketeer Influenced an d Corr upt Organizations Act ("RI CO"), 18 U.S.C

. § 1963(a)(3), a broad r eading of "procee ds" in the context of cr iminal forfeiture punishes "all convicted crim inals who receive income from ill egal activi ty, and

19not merely those whose criminalactivi ty turns a profit." United States v. Simmons ,

154 F.3d 765, 771 (8th Cir. 1998).

We also find relevant the fact that it m ay often, although not alway s, be difficult

to isolat e and identify the "profits" of crimi nal acti vity. Here, for example, the fraudulent accounting practices at the hear t of the scheme also make it chal lenging to determine what exactly became of the loan disbursements. As the Eighth Circuit noted, quot ing the RICO forfeiture pr ovision' s legislat ive history, "[i]t should not be necess ary for the prose cutor to prove what the defendan t's overhead e xpens es wer e." Id. ; see also United States v. McHan , 101 F.3d 1027, 1042 (4th Cir. 1996) ("Wer e we to re ad procee ds in § 853 [the narcotics forfeiture statute] to mean only profits, . . . we would create per verse incentives for criminals to empl oy compli cated accounting measures to she lter the profits of their ill egal enterpr ises.").

We conclude that reading "proce eds" to mean "rec eipts" rather than "profits" in the context of section 982(a)(2) be tter vindicates the primary purpose of the statute. In so doing, we agree with the Ninth Circuit that in enacti ng the section, "Congr ess s ought to punish equal ly the thief who carefully saves his stolen loot and the thief who spends the loot on ' wine, women, and song.'" United States v. Newman , 659 F.3d 1235, 1243 (9th Cir. 2011). "[T]he 'proce eds' of a

20fraudulently obtai ned loan equal the amou nt of the loan," id. at 1244, irrespe ctive

of whether the defen dant pers onally profit ed from the loan or whe ther the b ank

recove red par t of the loan principal.

We came to a simi lar conclusion i n United States v. Awad, 598 F.3d 76 (2d Cir. 2010) (per curiam). There, we he ld that crim inal forfeiture under 21 U.S.C. § 853 "pe rmits i mpositi on of a money judgment on a defendant who posses ses no assets at the time of senten cing." Id. at 78. Because "[m]andatory forfeiture is conce rned n ot with how much an indivi dual has but with how much he re ceived in connection with the comm ission of the crime," id. at 78 (internal quotation marks omi tted, brackets in or igi nal), we conclude that the term "procee ds" as used in se ction 982(a)(2) means "rece ipts."

B. "Obtained Indirectly" Section 982(a)(2) directs that a per son must forfeit to the United States any pr oceeds "the per son obtained directly or indirectly, as the res ult of such violati on." As he did be fore the district court, the defendant argues on appeal that it

was the Companies, n ot he, that "obtained" the proce eds of the Chase loan. The government r esponds that the defendant sh ould not be permitted to shield hi mself from li abili ty behind the Companies' corpor ate form.

21It asserts that the district court proper ly "pi erce d the corpor ate veil" to find that

the defen dant "obtained" the loan procee ds through his cor porate alter ego.

The proce eds subject to forfeiture are thos e obtained both direc tly and indirectlyas a res ult of the criminal vi olati on. 18 U.S.C . § 982(a)(2). It seems to us beyond doubt that any loan proce eds trans ferr ed from the C ompanies to the defen dant pers onally are obtained by him "di rectly" and are pr operly subject to forfeiture. This, however , accounts for only a re lati vely smallfraction of the forfeiture award -- just over $2.3 mil li on.

The secon d, more difficul t issue -- and one as to which the par ties have not identified any prior decision binding on us -- is under what circumstances an individu al can be said to have "obtained . . . indirectly" the procee ds of his criminalconduct through a corpor ate entity. The district court analyzed the question wi th refe rence to New York's "complete dominat ion" theory of cor porate alter ego liabili ty and found that the defendant "ob tained" the loan proceeds because the Companies wer e his alter egos for purpose s of "piercing the corpor ate veil." Peters , 257 F.R.D. at 385. Applying this theory of li abili ty, the district court conclu ded that the defen dant obtained the loan procee ds indirectly through the Companies as his cor porate alter egos

.

22The court base d its conclusi on on the fact that: (1) the defe ndant and

his wife together owned 98 pe rcent of the Companies and the de fendant's sisterin-law owned 1 percent, leaving only 1 percen t of the Companies outside of famil y control; and (2) the defe ndant "controlled [the Companies] on a day-today basis." Id. Among other things, the court found that Peters "hired new employees"; "directed pr oduct managers at [the Companies] onallaspects of business"; "moved money in and out of [the C ompanies], and had the ability t o direct wire transfe rs fr om the corporate ac counts"; "owned or h ad interests in the companies that owned the buildings where [the C ompanies] were h oused, as well as other corpor ate entities that had business re lati onships with [the Companies]"; "directed the c orpor ate accounting and bill ing methods"; "knew about, approved, an d directed the pr actices of 'holding months open,' 'prebilling,' 'rebill ing,' and the use of f alse invoices, which essentially consti tuted the fraud against Chase"; and "was instrumental in secur ing and rene wing" the line of credit with Chase in June 1998. Id. at 385-86. The court concluded that the evidence de monstrated that the defen dant "completely dominat ed [the Companies] such that they wer e his alter egos." Id. at 386.

Although the district

court relied on the doctrine of "pier cing the corpor ate veil," we find i t unnecess ary to do so and ther eby avoid enter ing into

23the somewhat compli cated jurisprudence involved. See Morris v. N.Y. State Dep't

of Taxation & Fin. , 82 N.Y.2d 135, 140-41, 623 N.E.2d 1157, 1160, 603 N.Y.S .2d 807, 810 (1993) ("The doctrine of pierc ing the corporate ve ilis typical ly empl oyed by a third party seeking to go beh ind the corporate existence in order to circumvent the lim ited li abili ty of the owners and to hold them l iable for some under lyi ng corpor ate obligati on . . . . Thus, an attempt of a third party to pierce the cor porate veil does not constitut e a cause of action independ ent of that against the corpor ation . . . ."). We conclude instead that, under the terms of the statute, the defendan t "indi rectly" obtained the loan procee ds, ren dering him li able for forfeiture in conne ction wi th them. 3

Because the question of whether an individualobtains procee ds "indirectly" through a corpor ation i nvolves the interpr etation of a federal statute, we examine it under fede ral law. See Miss. Band of Choctaw Indians v. Holyfield, 490 U.S. 30, 43 (1989) ("[I]n the abse nce of a plain indication to the contrary, . . . Congr ess whe n it enacts a statute is not m aking the appli cation of the federal act

See Thyroff v. Nationwide Mut. Ins. Co. , 460 F.3d 400, 405 (2d Cir. 2006) 3 ("[W]e are free to affirm a decisi on on any grounds supported in the r ecord, e ven if it is not one on which the trial court relied."). 24depende nt on state law." (int ernal quotati on marks omitt ed; ellipsi s in original)). 4

We there fore do n ot suggest that the government must satisfy state law requirements for pier cing the corporate veil i n order to establish that proceeds of criminalactivi ty were "indirectly" obtained under the for feiture statute. But although we reject the gover nment's assertion that New York law controls this issue, seeGov' t Br. at 70 n.8, we agre e with the district court' s analysis insofar as it borr owed from principles of alter ego liabil ity that may be relevant to the question of whether an individualindirectly obtained the pr oceeds of his or her criminalconduct through a corpor ation.

Also drawing in part on principles of alter ego liabi li ty, we conclude that, in the context of a criminalforfeiture pr oceeding under section 982, an indivi dual "obtai ns" proce eds "indirectly" through a corporation when the indivi dual "so extensively control[s]," First Nat. City Bank v. Banco Para El Comercio Exterior de Cuba , 462 U.S. 611, 629 (1983), or "dominate[s],"

Even inthe absenc e of this presumpti on, becaus e thiscase ari ses u nder federal 4 questi on jur i sdi cti on and involv es a federal statute that "demands nati onal uni formity," federal common law, n ot New Yo rk St ate law, presumabl y contr ols the questi on of whether the cor porat e veil s hould be pi erced. See Brotherhood o f Locomotive Engine ers v. Sprin gfield Term inal Ry. C o. , 210 F.3d 18, 25-26 (1st Ci r. 2000); see gene rallyNote, Piercin g the Corpora te Veil: The Alter Ego Doctrine u nder F ederal Common Law , 95 Harv. L. R ev. 853 (1982) ( describing ci rcums tances un der whi ch federal law should gover n the corpo rat e veil- pi erci ng i nqui ry ). 25Bridgestone/Firestone, Inc. v. Recovery Credit Servs., Inc. , 98 F.3d 13, 17 (2d Cir.

1996), the corpor ation and it s asse ts that money paid to the corp oration was effectively under the con trol of the indivi dual. Factors that we think are li kely to be r elevant to this q

uestion inclu de the individual 's ownership intere st; the level of control he ex ercised ove r the company; his authority to direct the dispositi on of corpor ate assets an d the degre e to which he ex ercised that authority; and the use of cor porate ass ets for his pe rsonal ex pense s.

The district court made several sound factual findi ngs to support its conclusion that the corporate veil should be pierce d to hold the defendant liable for forf eiture of the loan proce eds. While we find it unnecessar y to employ that doctrine her e, most of the court's findings are equall y relevant to the question of whether the defen dant obtained the loan procee ds indirectly.

Of particular signifi cance ar e the court's findings that the defendant and his famil y together owne d 99 perce nt of the company; that the Companies "operated unde r [the de fendant's] direction and control, and all si gnificant t asks

were c ompleted according to his i nstructions"; that the defendan t "moved money in and out of [the Companies], and had the ab il ity t o direct wire transfe rs fr om the corpor ate accounts"; that he "directed the cor porate accounting and billing methods" and "directed the pr actices of 'holding months open,' 'prebilling,'

26'rebill ing,' and the use of f alse invoices; and that he was "instrumental i n secur ing

and ren ewing the line of credit from Chase," which he "could access at wil l." Peters , 257 F.R.D. at 385-86. The district court also noted that the defendant paid himself an escalati ng salary from $100,000 to $120,000 in 1990 to between $285,000 and $287,000 in 2000, and that WAPIpaid for two vehicles for the defendan t, neither of which were used for co rporate business. Id. at 385.

We see no err or, let alone clear er ror, in the district court’s factual determinations. Based on them, we conclude that Peters did indeed obtain "indirectly" the proce eds of his cr iminal conduct, i.e., the relevant loan procee ds. He effe ctively owned 99 per cent of the C ompanies and exe rcised almost total control over their management and finance s. He also had complete acces s to and control over the C ompanies' assets. We ther efore agree with the district court that the defendant sh ould be held accountable for for feiture of the loan proce eds, although we reach this conclusion on the ground that the de fendant himself obtained these p rocee ds "indirectly." CONCLUSION For the for egoing reason s, the judgment of the district court imposi ng criminalforfeiture is affirmed in its entirety.

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