Opinion ID: 760527
Heading Depth: 3
Heading Rank: 2

Heading: Other Penalties

Text: 24 Second, [i]n considering an offense's gravity, the other penalties that the Legislature has authorized are certainly relevant evidence, id. at 2038 n. 14, as are the maximum penalties that could have been imposed under the Sentencing Guidelines, id. at 2038. Bajakajian suggests that the maximum penalties under the Guidelines should be given greater weight than the maximum penalty authorized by statute, because the Guidelines take into consideration the specific level of culpability of the offender. Id. at 2038 n. 14. 25 Here, the maximum penalties authorized by each of the relevant statutes (§§ 1014, 1341, 1343) are 30 years' imprisonment and a $1 million fine. Under the Sentencing Guidelines, however, the maximum criminal punishment Ladum could have faced, absent an upward departure, was six months' imprisonment and a fine that could be as low as $500 to $5,000. 3 As in Bajakajian, Ladum's potential penalties under the Sentencing Guidelines confirm a minimum level of culpability. Id. at 2038.3. Harm Caused 26 In determining whether the forfeiture is grossly disproportionate given the gravity of the offense, the court should consider the extent of the harm caused. Id. at 2039. Here, neither creditors nor the government suffered any actual loss. In fact, the forfeiture judgment provides that, upon sale of the Property, Chemical Bank is to receive all principal and interest due on the loan first. The bank will be fully reimbursed before any amount is forfeited. In sum, applying the Bajakajian factors to this case leads to the conclusion that Ladum's violations were at the low end of the severity spectrum. 27 4. Gravity of the Offense v. Amount of the Forfeiture 28 In Bajakajian, the Court compared the gravity of the defendant's crime with the $357,144 forfeiture the government sought. The Court determined that the forfeiture was larger than the $5,000 fine imposed by the District Court by many orders of magnitude, and it bears no articulable correlation to any injury suffered by the Government. Id. at 2039. Therefore, the forfeiture was held to be grossly disproportionate to the gravity of the offense. Id. 29 The same is true in this case. Since Ladum was not criminally prosecuted, no fine could be imposed. It appears, however, that the maximum fine she could have faced was $5,000. The $200,686 the government seeks to forfeit is more than 40 times the maximum fine permitted under the Guidelines. Further, this amount bears no reasonable correlation to any injury suffered by the government or any other party, as the fraudulently-obtained loan will be fully repaid. We hold, therefore, that forfeiture of the entire $200,686.18 of increase in equity in the Property is excessive under the Bajakajian test and, thus, violates the Excessive Fines Clause. 30 In declining to hold an evidentiary hearing to determine whether the forfeiture is excessive under the Eighth Amendment, Thurman St. II, 946 F.Supp. at 846, the district court relied on the observation in United States v. Feldman, 853 F.2d 648, 663 (9th Cir.1988), that [w]hen the district court orders that the defendant forfeit the profits gained from illegal activity, it is hard to imagine how such a forfeiture could constitute cruel and unusual punishment. Aside from the fact that this statement was made in response to the challenge under the Eighth Amendment's Cruel and Unusual Punishment Clause, rather than its Excessive Fines Clause, Feldman pre-dates Bajakajian and does not control the decision in this case. 4 31 In light of the above analysis, we conclude that the district court erred in declining to consider the question of whether permitting forfeiture of the entire $200,686.18, in light of the facts in this case, would amount to an excessive fine under the Eighth Amendment.