Opinion ID: 614400
Heading Depth: 2
Heading Rank: 2

Heading: Challenge to Forfeiture Calculation

Text: Roberts challenges the $3,160,000 forfeiture order in his case, asserting that the record evidence does not support a finding that the conspiracy obtained this amount in proceeds from its drug trafficking activities. The district court arrived at the challenged amount by finding that the conspiracy smuggled at least seventy-nine kilograms ( i.e., 79,000 grams) of cocaine into the United States and then multiplying that weight by its estimated street value of $40 per gram. We review the district court's factual findings regarding forfeiture for clear error and its legal conclusions de novo. See United States v. Sabhnani, 599 F.3d 215, 261 (2d Cir.2010), cert. denied, ___ U.S. ___, ___, 131 S.Ct. 1000, 178 L.Ed.2d 854, 855 (2011). Title 21 U.S.C. § 853(a)(1) states that a defendant convicted of a drug crime shall forfeit ... any property constituting, or derived from, any proceeds the person obtained, directly or indirectly, as the result of the crime of conviction. In the case of a narcotics conspiracy, this mandatory liability is joint and several among all conspirators. See United States v. Benevento, 836 F.2d 129, 130 (2d Cir. 1988); cf. United States v. Fruchter, 411 F.3d 377, 384 (2d Cir.2005) (applying joint and several liability for criminal proceeds from racketeering enterprise). The procedures applicable to a forfeiture determination are detailed in Fed.R.Crim.P. 32.2. The government's burden of proof with respect to forfeiture is a preponderance of the evidence. See United States v. Kalish, 626 F.3d 165, 168 (2d Cir.2010). In this case, the government sought to carry its burden by proving the quantity of cocaine dealt by the conspiracy and then urging that the amount be multiplied by the price it could have commanded. We identify no error in the district court's use of this approach. See United States v. Treacy, 639 F.3d 32, 47-48 (2d Cir.2011) (stating that district court's forfeiture calculations may be based on reasonable estimate in light of available information). Specifically, we reject Roberts's argument that the evidence in this case was insufficient to permit a preponderance finding as to the quantity of cocaine smuggled into the United States by the charged conspiracy. Clive Beckford testified that in the period from 2003 to 2009, the conspiracy imported between four and fifteen kilograms of cocaine on at least seventeen occasions, not including one test trip, one trip importing marijuana, and the November 5, 2005 trip from Barbados resulting in a seizure of drugs. Roberts's proffer statementsthe use of which Roberts did not dispute at sentencingcorroborated Beckford's accounts and suggested that his estimates may have been low. Roberts admitted personally unloading fifteen bricks of cocaine on one occasion and estimated that the conspiracy imported thirty to forty kilograms of cocaine several times a week. This evidence supports the district court's conservative estimate that the conspiracy imported fifteen kilograms of cocaine on at least one occasion and four kilograms of cocaine on each of sixteen occasions, for a total of seventy-nine kilograms, or 79,000 grams, of cocaine. See United States v. Treacy, 639 F.3d at 47-48; cf. United States v. Kalish, 626 F.3d at 168 (affirming forfeiture calculation based on defendant's routine fraudulent activity). Similarly, the evidence was sufficient to permit the district court to find by a preponderance that the conspiracy distributed this quantity of cocaine. Agent McAlpin offered expert testimony that this quantity of cocaine, possessing a purity level comparable to that seized on November 5, 2005, was consistent with distribution rather than personal use. This was supported by Beckford's testimony that, on at least one occasion, he and Roberts sent money representing drug profits to Jamaica to purchase more drugs. Trial Tr. at 404-05. The conspirators' successful distribution of the smuggled drugs could also be inferred from Beckford's testimony that Bourne and Roberts paid him between $2,000 and $10,000 each time he participated in an importation. Roberts's objection to the district court's valuation for the cocaine merits more discussion. Contrary to Roberts's assertion, the government was not obliged to adduce drug records or evidence of specific monetary transactions to support a preponderance finding as to the dollar amount realized from the conspirators' distribution of the smuggled cocaine. Def.'s Br. at 81-82. Conspiracies are, by their nature, shrouded in secrecy and, thus, such evidence may not always be available. Consequently, the law does not demand mathematical exactitude in calculating the proceeds subject to forfeiture. Indeed, because the purpose of forfeiture is punitive rather than restitutive, see Libretti v. United States, 516 U.S. 29, 41, 116 S.Ct. 356, 133 L.Ed.2d 271 (1995), district courts are not required to conduct an investigative audit to ensure that a defendant is not deprived of a single farthing more than his criminal acts produced, United States v. Lizza Indus., Inc., 775 F.2d 492, 498 (2d Cir.1985) (making observation in context of forfeiture of racketeering proceeds). Rather, district courts may use general points of reference as a starting point for a forfeiture calculation and make reasonable extrapolations supported by a preponderance of the evidence. United States v. Treacy, 639 F.3d at 48. Here, Agent McAlpin, testifying as an expert witness with respect to drug values, provided the district court with two possible starting points for calculating the value of the distributed drugs when he stated, without contradiction, that at the time of the charged distribution conspiracy, a kilogram of high quality cocaine would have sold for a wholesale price of $24,000. Meanwhile, if such cocaine were cut or diluted to a strength consistent with street sales, it could command a retail price of $40 per gram. See generally United States v. Quiroz, 13 F.3d 505, 514 (2d Cir.1993) (noting that matters such as the price of a kilogram of cocaine in New York City ... are appropriate areas for expert testimony). Roberts now faults the district court for using the retail rather than wholesale price for cocaine as the multiplier in calculating proceeds realized from the crimes of conviction in his case. No such objection was raised in the district court. There, Roberts argued more generally that any reliance on an estimated value of the seized cocaine to extrapolate total proceeds was overly speculative and that no evidence showed the wholesale or retail price negotiation regarding these alleged shipments. Def.'s Mem. of Law in Opp. to Gov't's Forfeiture Request at 6. Accordingly, we review the district court's use of a retail-value multiplier to estimate drug proceeds under the rigorous plain error standard. See United States v. Paul, 634 F.3d at 674. The government argues that no error can be identified here because it is always permissible and in fact the most reliable method to use a retail-value multiplier in calculating drug proceeds. Gov't's Br. at 65. In support, it cites United States v. Awad, 598 F.3d 76 (2d Cir.), cert denied, ___ U.S. ___, 131 S.Ct. 613, 178 L.Ed.2d 453 (2010). In that case, involving the importation of khat plants, whose constituent cathinone is a controlled substance, the forfeiture amount was calculated by multiplying drug quantities by street value. See id. at 78. That use of retail value, however, was not at issue on appeal and, thus, we had no occasion to consider whether a retail-value multiplier was properly supported by the evidence in that case. See id. at 78 n. 4. In Awad, we ruled only that a defendant was subject to a forfeiture order under 21 U.S.C. § 853(a)(1) even if he possesses no assets at the time of sentencing. Id. at 78. Thus, Awad cannot decide this case. More relevant to the identification of possible error is law that affords a district court considerable discretion in estimating the proceeds realized from drug trafficking provided those estimates find support in a preponderance of the evidence. See United States v. Treacy, 639 F.3d at 47-48. Thus, if the evidence indicates that it is more likely than not that a conspiracy that imported drugs then distributed the contraband through to the street level, the use of a retail multiplier would certainly be warranted. But where there is no evidence of such a conspiracy engaging in more than wholesale distribution, then application of a retail-value multiplier would be error. Further, such a possible error would affect substantial rights. If the seventy-nine kilograms of cocaine here at issue were sold wholesale for $24,000 per kilogram, the realized proceeds would be $1,896,000, more than $1 million less than the proceeds calculated by using the $40 per gram retail multiplier. Cf. United States v. Thomas, 274 F.3d 655, 669 (2d Cir.2001) ( en banc ) (concluding that imposition of imprisonment term higher than maximum term established by Congress affected defendant's substantial rights). Here, the district court did not state its reasons for employing a retail rather than wholesale multiplier to calculate the conspiracy's drug proceeds. This is not surprising given that the government proposed this calculation, [7] and the defense did not urge that use of the wholesale value would be more appropriate. In short, there was no dispute to resolve. That is not the case on appeal where we consider a plain error challenge to the sufficiency of the evidence to support use of a retail multiplier. The record before us, however, does not permit us to decide conclusively whether evidence before the district courtwhether at trial, in pre-trial proceedings, at sentencing, or in forfeiture discussionscould support a preponderance finding that this particular conspiracy distributed at the retail as well as the wholesale level. Thus, we do not here decide the question of plain error. Rather, we vacate the forfeiture order and remand the case to the district court for clarification of this matter. See United States v. Crosby, 397 F.3d 103, 118-19 (2d Cir.2005); United States v. Jacobson, 15 F.3d 19, 21-22 (2d Cir.1994); see also United States v. Varrone, 554 F.3d 327, 333 (2d Cir.2009) (vacating and remanding forfeiture order for further factual development regarding Eighth Amendment claim). On remand, the district court may expand the record as necessary to make factual findings on this question, and may modify the forfeiture order as warranted by the evidence.