PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 12-4442

UNITED STATES OF AMERICA,

Plaintiff − Appellee,

v.

NAWAF M. HASAN,

Defendant – Appellant.

Appeal from the United States District Court for the Eastern

District of Virginia, at Alexandria. T. S. Ellis, III, Senior 

District Judge. (1:11-cr-00503-TSE-1)

Argued: March 28, 2013 Decided: June 6, 2013

Before GREGORY, DUNCAN, and AGEE, Circuit Judges.

Affirmed by published opinion. Judge Agee wrote the opinion, in 

which Judge Gregory and Judge Duncan joined.

ARGUED: Marvin David Miller, Alexandria, Virginia, for 

Appellant. Richard Daniel Cooke, OFFICE OF THE UNITED STATES 

ATTORNEY, Richmond, Virginia, for Appellee. ON BRIEF: Neil H. 

MacBride, United States Attorney, Rebeca H. Bellows, Assistant 

United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY, 

Alexandria, Virginia, for Appellee.
2

AGEE, Circuit Judge:

Nawaf Hasan was convicted of various offenses related to 

the trafficking of contraband cigarettes. Hasan challenges his 

convictions on the basis that the conduct of the government 

agents investigating this case was so outrageous as to violate 

his due process rights. Separately, Hasan argues that the 

district court applied the wrong statutory rule to calculate the 

amount of the civil forfeiture adjudicated against him. For the 

reasons explained herein, we reject both challenges and affirm 

the judgment of the district court in its entirety. 

I.

Significant state-by-state disparities in the amount of 

taxes levied against the sale of a pack of cigarettes has 

created an interstate black market in the trafficking and 

distribution of cigarettes. Typically, cigarettes are purchased 

in a state with low taxes and then subsequently sold in another 

state where such taxes are much higher, but without the payment 

of the higher levy at point of sale. In this way, contraband

cigarette traffickers seek to evade applicable state and local 

taxes on cigarettes while profiting from the tax disparity. 

In response to this potential for state tax evasion, 

Congress enacted a statutory scheme to ensure that cigarettes

are taxed at the applicable rate in the locality in which sold 
3

to the consumer. One part of the statutory framework is the 

Contraband Cigarette Trafficking Act (“CCTA”), 18 U.S.C. § 2341, 

et seq., which prohibits the trafficking of tobacco products to 

avoid payment of state taxes. Pursuant to 18 U.S.C. § 2342(a), 

“[i]t shall be unlawful for any person knowingly to ship, 

transport, receive, possess, sell, distribute, or purchase 

contraband cigarettes or contraband smokeless tobacco.” 

“Contraband cigarettes” are defined as 

a quantity in excess of 10,000 cigarettes, which bear 

no evidence of the payment of applicable State or 

local cigarette taxes in the State or locality where 

such cigarettes are found, if the State or local 

government requires a stamp, impression, or other 

indication to be placed on packages or other 

containers of cigarettes to evidence payment of 

cigarette taxes[.]

18 U.S.C. § 2341(2).1 Exempted from this definition, however, 

are cigarettes in the possession of, inter alia, “an officer, 

employee, or other agent of the United States . . . having 

possession of such cigarettes in connection with the performance 

of official duties.” Id. § 2341(2)(D). 

In 2008, agents with the Federal Bureau of Alcohol, 

Tobacco, and Firearms (“ATF”) began an investigation, in 

conjunction with other state and federal authorities, into a 

ring of alleged traffickers of contraband cigarettes. For more 

 1 Each carton of cigarettes contains 200 cigarettes. 10,000 

cigarettes is fifty cartons of cigarettes. 
4

than two years, ATF agents and other law enforcement officers

participated in undercover transactions involving the sale of 

untaxed and unstamped cigarettes to members of the conspiracy, 

including Hasan.2 The government alleges that between June 2009 

and April 2011, undercover agents sold nearly 40,000 cartons of 

untaxed or unstamped cigarettes to Hasan and other members of 

the conspiracy. Most of these contraband cigarettes were 

purchased from ATF agents in Virginia before being transported 

to New York for sale.3

 

In 2011, Hasan was indicted in the United States District 

Court for the Eastern District of Virginia on six counts: one 

count of conspiracy to purchase, possess, transport, and 

distribute contraband cigarettes, in violation of 18 U.S.C. 

§ 371 (Count 1), and five substantive counts of purchasing, 

 2 The CCTA defines “contraband cigarettes” as those which do 

not bear evidence of payment of state taxes (i.e., a stamp), 

where such evidence is required. Thus, while there is a 

technical difference between “untaxed” and “unstamped” 

cigarettes, the terms are largely used interchangeably. There 

is no allegation that any of the cigarettes purchased and resold 

by Hasan in this case were properly taxed, but merely unstamped. 

Consequently, we treat “untaxed” and “unstamped” cigarettes as 

interchangeable terms for purposes of this opinion. 

3 As the district court observed, New York imposed (as of 

August 2011) a relatively high, $4.35 per pack tax rate on 

cigarettes. Virginia, on the other hand, imposed a tax of only 

$.30 per pack during the same period. Charging prices 

comparable to properly taxed cigarettes, therefore, a criminal 

enterprise trafficking cigarettes from Virginia to New York 

could potentially make up to $4.05 per pack in profit. 
5

possessing, and transporting contraband cigarettes, in violation 

of 18 U.S.C. § 2342(a) (Counts 2-6). 

Prior to trial, Hasan filed a motion to dismiss the 

indictment, or in the alternative, to exclude the evidence 

collected against him on the basis that the undercover sales of 

untaxed cigarettes by ATF agents constituted government conduct 

so outrageous as to violate his due process rights. The 

district court denied the motions. Hasan and the government

then made certain factual stipulations and agreed to proceed to 

a bench trial while preserving his due process challenge. The 

court found that the stipulations were sufficient to prove 

beyond a reasonable doubt that Hasan was guilty of the offenses 

charged in the indictment, and issued a written opinion 

explaining its decision to deny the motions to dismiss or 

suppress. 

The court explained that the ATF had congressional 

authorization to possess and distribute untaxed cigarettes in 

furtherance of the ATF’s law enforcement mission. The court 

also saw no merit in Hasan’s argument that the undercover 

operation was “outrageous” because the ATF “let the cigarettes 

walk,” and allowed those items to be distributed on the black 

market rather than confiscating them. The court reasoned that 

the government’s failure to recover the contraband does not 

render an undercover operation unlawful because often, in order 
6

to gather more evidence, law enforcement is required to delay 

intervention in unlawful activity. The court observed an 

“important distinction” between cases involving undercover 

distribution of illegal narcotics and distribution of contraband 

cigarettes, “which, apart from being untaxed and/or unstamped, 

are otherwise legal commodities.” (J.A. 165.) 

The government then filed a motion for a preliminary order 

of forfeiture in the amount of $604,220, which represented the 

gross proceeds Hasan realized through the contraband trafficking 

offenses charged in the indictment. The government represented 

that its proposed forfeiture order was supported by the plain 

language of 18 U.S.C. § 981(a)(2)(A), which provides:

In cases involving illegal goods, illegal services, 

unlawful activities, and telemarketing and health care 

fraud schemes, the term “proceeds” means property of 

any kind obtained directly or indirectly, as the 

result of the commission of the offense giving rise to 

forfeiture, and any property traceable thereto, and is 

not limited to the net gain or profit realized from 

the offense. 

Hasan objected to the proposed forfeiture order and argued that 

the forfeiture amount should only be $130,000—the profits he 

realized from the cigarette smuggling scheme. He relied upon 18 

U.S.C. § 981(A)(2)(B), which provides that “[i]n cases involving 

lawful goods or lawful services that are sold or provided in an 

illegal manner, the term “proceeds” means the amount of money 

acquired through the illegal transactions resulting in the 
7

forfeiture, less the direct costs incurred in providing the 

goods or services.” Hasan claimed that the contraband 

cigarettes were merely lawful goods sold or provided in an 

illegal manner, thus entitling him to the benefit of the lower 

forfeiture amount. 

The district court overruled Hasan’s objection and 

concluded that “[t]his is a case involving illegal goods, 

illegal services, unlawful activities. Undercover sales of 

cigarettes were, as soon as they were . . . taken to New York, 

contraband.” (J.A. 223.) The court adjudicated Hasan as guilty 

of the charges against him, adopted the government’s proposed 

forfeiture order, and imposed a twenty-four month sentence of 

incarceration. Hasan has timely appealed and we have 

jurisdiction pursuant to 28 U.S.C. § 1291.

II.

Hasan raises two assignments of error on appeal. He first 

argues that the district court erred in denying his motion to 

dismiss the indictment or suppress the evidence against him 

based on the conduct of the government agents investigating this 

case. Hasan’s second claim of error is that the court 

miscalculated the amount of forfeiture imposed in the civil 

forfeiture order. We address each issue in turn.
8

A.

Hasan first contends that the district court erred in 

denying his motion to suppress the evidence against him on the 

basis that his due process rights were violated. The facts of 

this case are uncontested, and we review the legal issues 

underlying the denial of a motion to suppress de novo. See

United States v. Cain, 524 F.3d 477, 481 (4th Cir. 2008).4

Hasan is essentially raising a generalized due process 

claim that the law enforcement conduct at issue here was either 

unlawful or so outrageous as to violate fundamental notions of 

fairness. He seeks to invoke what the district court aptly

described as a “seldom-addressed category of constitutional 

violations,” J.A. 158, first articulated in United States v. 

Russell, 411 U.S. 423 (1973). In Russell, a criminal defendant 

argued outrageous government conduct where an undercover agent 

supplied narcotics manufacturers with a legal, but difficult to 

obtain, chemical that was essential to the methamphetamine 

manufacturing process. Id. at 431. After flatly rejecting the 

 4 In its response brief on appeal, the government suggests 

that this is an appeal of the denial of a motion to dismiss the 

indictment. The difference, for purposes of our standard of 

review, is not a material one. The parties do not dispute any 

material facts, and under either paradigm our review of the 

legal issues involved would be de novo. Compare, Cain, 524 F.3d 

at 481 (reviewing denial of motion to suppress de novo), with

United States v. Hatcher, 560 F.3d 222, 224 (4th Cir. 2009) 

(reviewing denial of motion to dismiss indictment de novo). 
9

defendant’s claim to an entrapment defense, the Supreme Court 

also denied a due process claim and observed that 

[w]hile we may some day be presented with a situation 

in which the conduct of law enforcement agents is so 

outrageous that due process principles would 

absolutely bar the government from invoking judicial 

processes to obtain a conviction, . . . the instant 

case is distinctly not of that breed.

Id. at 431-32 (internal citation omitted). 

A plurality of the Supreme Court expounded upon (and 

greatly limited) the application of an “outrageous conduct” due 

process violation in Hampton v. United States, 425 U.S. 484 

(1976). In Hampton, a government informant allegedly sold 

heroin to the defendant, who later sold it to government agents. 

Although the Court acknowledged that “the Government . . . 

played a more significant role in enabling petitioner to sell 

contraband in this case than it did in Russell,” id. at 489, the 

Court nevertheless rejected the defendant’s claim that his due

process rights were violated, id. at 490.

To sustain petitioner's contention here would run 

directly contrary to our statement in Russell that the 

defense of entrapment is not intended to give the 

federal judiciary a ‘chancellor's foot’ veto over law 

enforcement practices of which it did not approve.

. . .

The limitations of the Due Process Clause of the 

Fifth Amendment come into play only when the 

Government activity in question violates some 

protected right of the defendant. Here, as we have 

noted, the police, the Government informant, and the 

defendant acted in concert with one another. If the 

result of the governmental activity is to implant in 
10

the mind of an innocent person the disposition to 

commit the alleged offense and induce its commission, 

the defendant is protected by the defense of 

entrapment. If the police engage in illegal activity 

in concert with a defendant beyond the scope of their 

duties the remedy lies, not in freeing the equally 

culpable defendant, but in prosecuting the police 

under the applicable provisions of state or federal 

law.

Id. at 490 (internal citation and quotation marks omitted).5

 

After Hampton, the “outrageous conduct” doctrine survives

in theory, but is highly circumscribed. As we explained in 

United States v. Goodwin, 854 F.2d 33 (4th Cir. 1988), a due 

process violation may only be found when the conduct at issue 

“is outrageous, not merely offensive.” Id. at 37. And as the 

district court observed, this Court has never held in a specific 

case that the government has violated the defendant’s due 

process rights through outrageous conduct. In United States v. 

Osborne, 935 F.2d 32 (4th Cir. 1991), this Court opined on the 

“high shock threshold” of the appellate courts in the context of 

 5 Justice Powell wrote a concurring opinion in Hampton, 

expressing doubts as to the plurality’s conclusion that the 

entrapment defense is the only remedy available to an accused 

defendant who claims he was the victim of fundamentally unfair 

government conduct: “[t]here is certainly a [constitutional]

limit to allowing governmental involvement in crime. It would 

be unthinkable, for example, to permit government agents to 

instigate robberies and beatings merely to gather evidence to 

convict other members of a gang of hoodlums.” Hampton, 425 U.S. 

at 493 n.4 (Powell, J., concurring) (quoting United States v. 

Archer, 486 F.2d 670, 676-77 (2d Cir. 1973)) (alterations in 

Hampton).
11

the “outrageous conduct” due process violation, and the Court’s

reluctance to vacate a conviction based on outrageous government 

conduct that does not otherwise violate a defendant’s rights. 

Id. at 36. The Osborne court cited with approval several cases, 

including United States v. Simpson, 813 F.2d 1462 (9th Cir. 

1987), wherein the Ninth Circuit upheld the conviction of a 

defendant who had provided heroin in exchange for sexual favors 

from a woman who had been manipulated into doing so by the FBI. 

935 F.2d at 36. Thus, the Osborne court articulated what has 

become the test in this circuit for whether government conduct 

is so outrageous as to offend due process: the conduct must be 

“shocking,” or “offensive to traditional notions of fundamental 

fairness.” 935 F.2d at 37. In refining the standard for an 

“outrageous conduct” due process claim, however, the court again 

concluded that the government conduct at issue failed to satisfy 

that threshold. With these general standards in mind, we turn 

now to Hasan’s specific arguments. 

Hasan first contends that the district court erred in 

concluding that Congress authorized the ATF to undertake the 

investigation that lead to his apprehension. He implies that 

the multiple sales of cigarettes to him by the ATF, anticipating 

the cigarettes would later be resold without payment of state 

taxes are outrageous acts, per se, because the ATF effectively 

distributed “contraband cigarettes.” We disagree.
12

As noted earlier, the CCTA specifically exempts from the 

definition of “contraband cigarettes” unstamped cigarettes that 

are in the possession of an “officer, employee, or other agent 

of the United States . . . having possession of such cigarettes 

in connection with the performance of official duties.” See 18 

U.S.C. § 2341(2)(D). Hasan acknowledges that ATF agents may 

possess untaxed cigarettes, but argues that by failing to grant 

explicit authorization for government agents to also distribute 

untaxed cigarettes, Congress has impliedly prohibited the 

practice. 

Hasan’s argument, however, is based on a misreading of the 

exemption language of the CCTA. The CCTA does not, as such, 

“authorize” federal agents to possess contraband cigarettes. 

Rather, under the plain language of the statute, when unstamped

cigarettes are in the possession of federal agents (in the 

course of their official duties) the cigarettes are not 

“contraband” as a matter of law. This distinction is a 

significant one. Since the untaxed cigarettes are not 

contraband in the possession of federal agents, the subsequent 

distribution through undercover sales to cigarette traffickers

is not a distribution of contraband cigarettes by the agents. 

The untaxed cigarettes only become contraband when they are then

possessed by someone, like Hasan, not exempted from the 
13

statutory definition. See § 2341(2).6 The ATF-distributed 

cigarettes were not “contraband cigarettes” under the clear 

terms of the statute.

Moreover, Congress has explicitly authorized federal law 

enforcement to conduct commercial endeavors in the context of 

undercover investigations, and to use the proceeds from these 

transactions to offset the costs of the undercover operation. 

See Departments of State, Justice, and Commerce, the Judiciary 

and Related Agencies Appropriations Act of 1992, Pub. L. No. 

102-395, § 102(b)(1)(B), (D) (authorizing the Federal Bureau of 

Investigation and Drug Enforcement Administration to use 

appropriated funds to establish, inter alia, “business entities 

as part of an undercover investigative operation,” and 

authorizing “proceeds from such undercover operation [to] be 

used to offset necessary and reasonable expenses incurred in 

such operation”). This statutory authorization has also been 

specifically extended to the ATF. See Consolidated and Further 

Continuing Appropriations Act of 2012, Pub. L. No. 112-55 § 207

 6 Hasan further undermines his own argument by explicitly 

conceding that the ATF is authorized to purchase contraband 

cigarettes from cigarette traffickers. See Appellant’s Opening 

Br. at 8 (“[ATF] may only possess, such as when an undercover 

agent buys from dealers.”). Thus, under Hasan’s theory, if 

“possession” can be read to include “purchase” or “receipt,” 

there is no logical reason that term would not also be read to 

include “distribution.”
14

(“Public Law 102-395 section 102(b) shall extend to the [ATF] in 

the conduct of undercover investigative operations[.]”). 

With this statutory foundation, it simply cannot be said 

that the actions undertaken by the ATF in this case were 

unlawful. 

There is also no merit to Hasan’s claim that ATF agents in 

this case otherwise engaged in behavior that is “offensive to 

traditional notions of fundamental fairness.” Osborne, 935 F.2d 

at 37. As we observed in Goodwin, “[o]utrageous is not a label 

properly applied to conduct because it is a sting or reverse 

sting operation involving contraband.” 854 F.2d at 37. We 

further reasoned in United States v. Milam, 817 F.2d 1113, 1116 

(4th Cir. 1987), that “Justice Powell's concurrence in Hampton

recognized that the practicalities of law enforcement sometimes 

compel officers to provide supplies to drug manufacturing 

operations, or even to supply ‘contraband itself,’ and suggested 

that due process does not necessarily prohibit use of these and 

similar investigative techniques.” Thus, the mere fact that ATF 

sold untaxed cigarettes does not render their investigation 

outrageous. 

In sum, we see no merit to Hasan’s argument that the 

conduct of ATF agents in this case was unlawful, or otherwise
15

“shocking,” or “offensive to traditional notions of fundamental 

fairness.” We therefore affirm his conviction.7

B.

Hasan also contends on appeal that the district court 

miscalculated the forfeiture amount by calculating the sum based 

on the gross proceeds, rather than profits, realized by the 

contraband cigarette distribution scheme. We find that his 

claim lacks merit and the district court did not err. 

This Court reviews the district court’s interpretation of 

statutory provisions de novo, Scott v. United States, 328 F.3d 

132, 137 (4th Cir. 2003), but will reverse its findings of fact 

only if we find them clearly erroneous. See, e.g., HSBC Bank 

USA v. F & M Bank N. Va., 246 F.3d 335, 338 (4th Cir. 2001); see

also United States v. Funds Held in the Name or for the Benefit 

of Wetterer, 210 F.3d 96, 106 (2d Cir. 2000) (reviewing legal 

determination de novo and factual findings for clear error in 

applying civil forfeiture statute). 

Pursuant to 18 U.S.C. § 981(a), a defendant’s property is 

subject to forfeiture if, inter alia, it is “derived from 

proceeds traceable to . . . any offense constituting ‘specified 

unlawful activity[.]’” See id. § 981(a)(1)(C). Section

 7 Hasan does not raise a separate challenge to the term of 

imprisonment imposed against him. 
16

981(a)(1)(C) defines “specified unlawful activity” in part by

cross-reference to 18 U.S.C. § 1956(c)(7)(A), which in turn 

cross-references 18 U.S.C. § 1961(1). That subsection 

encompasses offenses related to trafficking in contraband 

cigarettes. Thus, the “proceeds” of the cigarette trafficking 

are clearly subject to forfeiture. However, the definition of 

what constitutes “proceeds” differs depending on the nature of 

the offense. See id. § 981(a)(2) (“For purposes of paragraph 

(1), the term ‘proceeds’ is defined as follows” and then 

providing different categories). 

The district court applied § 981(a)(2)(A), which provides:

In cases involving illegal goods, illegal services, 

unlawful activities, and telemarketing and health care 

fraud schemes, the term “proceeds” means property of 

any kind obtained directly or indirectly, as the 

result of the commission of the offense giving rise to 

forfeiture, and any property traceable thereto, and is 

not limited to the net gain or profit realized from 

the offense.

Hasan contends using subsection A was error and the district 

court should have instead applied subsection B, which states

In cases involving lawful goods or lawful services 

that are sold or provided in an illegal manner, the 

term “proceeds” means the amount of money acquired 

through the illegal transactions resulting in the 

forfeiture, less the direct costs incurred in

providing the goods or services. The claimant shall 

have the burden of proof with respect to the issue of 

direct costs. The direct costs shall not include any 

part of the overhead expenses of the entity providing 

the goods or services, or any part of the income taxes 

paid by the entity.
17

Id. § 981(a)(2)(B). In support, Hasan argues that contraband 

cigarettes are merely lawful goods that are sold or provided in 

an illegal manner and cites the district court’s order denying 

his motion to dismiss or suppr0ess, in which the court concluded 

that “contraband cigarettes, which, apart from being untaxed 

and/or unstamped, are otherwise legal commodities.” (J.A. 165.) 

We must determine, therefore, whether “contraband 

cigarettes” are “illegal goods” (§ 981(a)(2)(A)) or “lawful 

goods . . . that are sold or provided in an illegal manner”

(§ 981(a)(2)(B)). We have identified no published opinion from 

a court of appeals that has addressed this specific question. 

The sole unpublished court of appeals decision, as well as the 

district court decisions to have confronted the issue, are in 

agreement, however, that distribution of contraband cigarettes

is a “case involving illegal goods” thus triggering 

§ 981(a)(2)(A). United States v. Noorani, 188 F. App’x 833, 838 

(11th Cir. 2006) (per curiam) (“[W]e conclude that the district 

court did not err in calculating the order of forfeiture based 

upon the wholesale value of the cigarettes because the statute 

authorized that amount.”); United States v. Funds from First 

Reg’l Bank Acct. No. XXXXX1859, 639 F. Supp. 2d 1203, 1216 (W.D. 

Wash. 2009) (“Global's conduct in selling and transporting 

contraband cigarettes in violation of the CCTA therefore falls 

into the category of ‘cases involving . . . unlawful activities’
18

in which gross receipts are subject to forfeiture as ‘proceeds.’ 

. . . This case also involves the sale and transport of 

‘illegal goods’ because the cigarettes or ‘goods’ that Global 

sold and transported to Washington were unlawful under state 

law.”); United States v. Patel, No. 05:11cr031, 2013 WL 149672, 

at *7 (W.D. Va. Jan. 11, 2013) (unpublished) (“[B]ecause the 

possession and trafficking of contraband cigarettes is 

inherently illegal, they are illegal goods for the purposes of 

§ 981(a)(2), requiring forfeiture of gross proceeds[.]”); United 

States v. Diallo, No. 09 CR 858 (MEA), 2011 WL 135005, at *2 

(S.D.N.Y. Jan. 13, 2011) (unpublished) (citing § 981(a)(2)(A)). 

In conducting our independent analysis into the 

categorization of “contraband cigarettes,” for forfeiture 

purposes, we look primarily to the statutory definition of that 

term. As explained supra, the CCTA defines “contraband 

cigarettes” as “a quantity in excess of 10,000 cigarettes, which 

bear no evidence of payment of the applicable State or local 

cigarette taxes in the State or locality where such cigarettes 

are found[.]” 18 U.S.C. § 2341(2). By its plain terms, the 

statute does not define contraband cigarettes by reference to 

the manner in which the cigarettes are sold. Rather, when the 

cigarettes are possessed without evidence of payment of taxes, 
19

they are contraband per se.8 In other words, contraband 

cigarettes are inherently unlawful, i.e., “unlawful goods.” 

Contraband cigarettes could never be sold lawfully because it is 

possession of the defined item itself that violates the CCTA. 

By contrast, courts have found § 981(a)(2)(B) applies when 

a good or service that is not inherently illegal is sold or 

provided in an illegal manner. See, e.g., United States v. 

Mahaffy, 693 F.3d 113, 138 (2d Cir. 2012) (holding that 

securities fraud constituted lawful goods sold in an illegal 

manner because, while “trading . . . securities, as a general 

manner, is not unlawful. . . . [A]ny illegality occurred when 

the defendants bought and sold securities as part of a scheme 

involving illegal bribery and frontrunning.”); United States v. 

St. Pierre, 809 F. Supp. 2d 538, 543 (E.D. La. 2011) (applying 

§ 981(a)(2)(B) to calculate forfeiture of a contractor convicted 

of bribery and fraud because “[i]nformation technology work is a 

lawful service and crime cameras are lawful goods, but the 

contracts for that work or those cameras were obtained through 

illegal bribes and kickbacks. Thus the amounts of money 

 8 As explained earlier, the ATF’s possession and

distribution of cigarettes in the course of its duties is 

expressly exempt from the statutory definition of contraband 

cigarettes. 
20

acquired through those contracts were for otherwise legal goods 

and services provided ‘in an illegal manner.’”).9 

Hasan also invokes the law of the case doctrine by arguing 

that the district court should have been bound by the statement 

it made in denying his motion to dismiss, that “apart from being 

untaxed and/or unstamped, [contraband cigarettes] are otherwise 

legal commodities.” (J.A. 165). He argues that this 

constitutes, in effect, a concession by the court that 

contraband cigarettes are lawful goods sold in an illegal way. 

Once again, however, Hasan fails to recognize that 

contraband cigarettes, as defined by statute, are inherently

unlawful goods. The district court’s statement, that cigarettes 

are otherwise lawful (i.e., when they are properly taxed) is 

correct, but the cigarettes to which the court referred were not 

contraband cigarettes.

 9 Because we conclude that contraband cigarettes are illegal 

goods, we do not decide whether the distribution of contraband 

cigarettes is an “unlawful activity” within the meaning of 

§ 981(a)(2)(A). To be sure, distribution of contraband 

cigarettes is against the law, but at least one court has 

recognized that “unlawful activity,” as the term is used in 

§ 981(a)(2)(A), is a term of art that is not meant to encompass 

every activity that is unlawful. See United States v. Nacchio, 

573 F.3d 1062, 1089 (10th Cir. 2009) (“The term ‘unlawful 

activities’ in section 981(a)(2)(A) was meant to cover 

inherently unlawful activities such as robbery that are not 

captured by the words ‘illegal goods’ and ‘illegal services.”)

(quoting 1 David Smith, Prosecution and Defense of Forfeiture 

Cases, ¶ 5.03[2], at 5-62 (2008)).
21

We therefore conclude that the district court properly 

calculated the order of forfeiture in this case.10 

III.

For the foregoing reasons, the judgment of the district 

court is affirmed.

AFFIRMED

 10 Hasan’s sole challenge to the forfeiture order is the 

legal one discussed above. He does not otherwise claim an error 

in the amount of proceeds attributed to him for forfeiture 

purposes.