Opinion ID: 587567
Heading Depth: 2
Heading Rank: 4

Heading: Interest on Forfeiture Proceeds

Text: 27 Prior to its indictment, Bel-Art entered into a contract to sell the real property which was subject to forfeiture. The government obtained a pretrial order restraining the sale. Later, Bel-Art and the government agreed to permit these properties to be sold pending trial, and the sale proceeds ($3.1 million) were placed in interest-bearing escrow accounts. The jury returned a proportional verdict of forfeiture pursuant to section 1963(a)(2), and the bulk of the principal and accrued interest remaining in escrow was forfeited to the United States. 16 Bel-Art contends that the government is not entitled to the accrued interest because (1) section 1963(a) fixes the amount of the forfeiture as of the commission of the criminal offense, and (2) the government waived its right to the accrued interest.
28 Section 1963(a)(2)(D) declares forfeitable any property or contractual right of any kind affording a source of influence over any enterprise ... in violation of section 1962. Bel-Art argues that the interest on the escrowed funds is not forfeitable, as it accrued on the lawfully invested sale proceeds. Where a criminal statute is ambiguous, Bel-Art argues, the court should invoke the rule of lenity. See United States v. Enmons, 410 U.S. 396, 411, 93 S.Ct. 1007, 1015, 35 L.Ed.2d 379 (1973). 29 Bel-Art's contention is foreclosed by section 1963(c), which provides that title to forfeitable property vests in the United States upon the commission of the act giving rise to forfeiture. 17 Addressing the broader question whether the district court may impose prejudgment interest on the value of forfeitable property retained by the defendant during the period between its wrongful acquisition and the judgment of forfeiture, this court stated that 30 the RICO forfeiture statute does not expressly provide for the imposition of interest. RICO's provisions, however, were intended to be liberally construed to accomplish the statute's objectives. ... The forfeiture provision, in particular, constitutes one of the crucial weapons in the RICO arsenal and should be liberally construed to accomplish its purpose of attacking the economic power of illegal enterprises. ... 31 ... If interest had not been imposed, the defendants effectively would have been allowed to pocket three years worth of interest earned on a real estate investment that, in large part, was acquired with the proceeds of an extortionate loan. 32 Angiulo, 897 F.2d at 1216 (emphasis added) (citations omitted). Applying the Angiulo rationale in the instant context, it is obvious that interest could not have accrued but for the deposit of the proceeds from the sale of the forfeitable properties. No less clearly, title to the forfeitable properties vest[ed] in the United States upon the commission of the act giving rise to forfeiture, 18 U.S.C. § 1963(c), and, absent an express agreement to the contrary, interest earned on the sale proceeds belongs to the entity entitled to the escrowed principal. 18
33 Finally, Bel-Art argues that the government waived its relation back rights. 19 Our review of the written agreement authorizing the sale discloses no waiver. In return for the government's agreement to permit the pending sale, Bel-Art agreed that the proceeds of the sale ... shall be treated as the property from which they were derived for all purposes under [section 1963]. (Emphasis added). Bel-Art's waiver contention depends entirely on the premise that the agreement is silent on the issue of accrued interest. 20 Given the presumptive rights of the United States under section 1963(c), as well as the express terms of the agreement permitting the sale, Bel-Art's contention fails. 34 Affirmed.