Opinion ID: 198294
Heading Depth: 2
Heading Rank: 11

Heading: Forfeiture of the Montanez Property

Text: 124 Reyes-Padilla makes six separate objections to the inclusion of the Montanez Property in the Final Order of Forfeiture: (1) that there was no evidence that the property was traceable to drug proceeds; (2) that she was denied the opportunity to have the forfeiture determined by a jury; (3) that there was no principal asset for which the Montanez property could properly be substituted; (4) that forfeiture of the property constitutes double jeopardy; (5) that the government waived its right to forfeit the property as a substitute asset when it withdrew it from Count 49; and (6) that her joint and several liability for the full amount realized by the conspiracy violates the Excessive Fines Clause of the Eighth Amendment. None of Reyes-Padilla's arguments is compelling.
125 A criminal forfeiture order may take several forms. First, the government is entitled to an in personam judgment against the defendant for the amount of money the defendant obtained as proceeds of the offense. Second, to the extent the government can trace any of the proceeds to specific assets, it may seek the forfeiture of those assets directly pursuant to 21 U.S.C. § 853(a)(1). Third, if as a result of some act or omission of the defendant, the government cannot trace the proceeds to specific assets, it may seek the forfeiture of any property, cash or merchandise, in satisfaction of the amount of criminal forfeiture to which it is entitled. United States v. Voigt, 89 F.3d 1050, 1088 (3d Cir.1996); see 21 U.S.C. § 853(p) (authorizing forfeiture of substitute assets). 126 In Voigt, the Third Circuit held that a defendant convicted of laundering $1.6 million was required to forfeit that amount as a money judgment. See 89 F.3d at 1084. When the government could not directly trace any forfeitable proceeds to the defendant's current assets, the court held that the government could satisfy the $1.6 million judgment by seeking forfeiture of the defendant's assets as substitute assets. See id. at 1088. 127 Similarly, in this case, the district court ordered forfeiture of the Montanez property as a substitute asset to satisfy, at least in part, the $6,000,000 money judgment set forth in the preliminary order of forfeiture because the government established that it could not trace any of the criminal proceeds into any of the defendant's current assets. 128 In this context, failure to establish any nexus between the MONTANEZ property and the conspiracy is irrelevant. In fact, such a nexus would render forfeiture of the property as a substitute asset unnecessary. See Voigt, 89 F.3d at 1086 ([t]he substitute asset provision comes into play only when forfeitable property cannot be identified as directly 'involved in' or 'traceable to' [the criminal activity]). 129 To obtain an order forfeiting property as a substitute asset, the government need only comply with the requirements of § 853(p). In particular, substitute assets may be forfeited if the government shows that, as a result of any act or omission of the defendant, the forfeitable property (1) cannot be located upon the exercise of due diligence; [or] (2) has been transferred or sold to, or deposited with, a third party. § 853(p)(1) & (2). 130 Here, the government complied with § 853(p) by submitting a motion and affidavit that recited the efforts the government had made to locate the proceeds of the drug conspiracy that would have been directly forfeitable under § 853(a). See Defendant's App. at 121-24 (Affidavit of Special Agent Felicia Ramos-Andino). The affidavit concluded that Reyes-Padilla had dissipated or otherwise disposed of the proceeds of her drug trafficking, id. at 123, so that the proceeds could not, despite the exercise of due diligence, be located. See id. at 123-24. Based on this record, it was not error for the district court to order the forfeiture of other property of the defendant, § 853(p), up to the amount described in the money judgment. See § 853(p); United States v. Hurley, 63 F.3d 1, 23-24 (1st Cir.1995) (affirming forfeiture of substitute assets under identical provision in 18 U.S.C. § 1963(m)).
131 Reyes-Padilla contends that she was denied the right to have the jury determine whether the Montanez Property could be forfeited. She also asserts that there was no principal asset for which the Montanez Property could properly be substituted. 132 The forfeiture of substitute assets is a matter left solely to the court. See Hurley, 63 F.3d at 23 (the statute says that an order substituting assets is to be made by 'the court' ). As this Court explained in Hurley, the defendant has a right to have the amount subject to forfeiture determined, in the first instance, by the jury. See 63 F.3d at 23; see also Fed.R.Crim.P. 31(e) (stating that the initial forfeiture is sought in the indictment and is specified in a special verdict). But the jury has no role in determining, subsequently, whether the property has been dissipated and whether the government is thereby entitled to seek the forfeiture of substitute assets. Indeed, the government might not even know that substitution is necessary until it seeks to take possession of the property specified in the initial forfeiture order. Hurley, 63 F.3d at 23. 133 In this case, the jury determined--by rendering the special verdict--that the conspiracy realized $6,000,000 in proceeds from the commission of the specified offenses, and that the defendant and others were jointly and severally liable for that amount. Thus, the jury determined that the $6,000,000 was the principal asset subject to forfeiture. In having the jury determine that amount, the defendant was afforded all of the procedural protections regarding the determination of the forfeiture by the jury to which she was entitled.
134 There is no merit whatsoever in Reyes-Padilla's contention that she was subject to double jeopardy because the government commenced its case with a civil seizure, but concluded it by proceeding under the substitute assets provision of the criminal forfeiture statute. Nor did the government's initial inclusion, and subsequent dismissal, of the Montanez property from Counts 48 and 49 of the Superseding Indictment constitute a waiver of the right to seek forfeiture of the property as a substitute asset. 135 A completed civil forfeiture of property does not constitute jeopardy under the Double Jeopardy Clause, and does not bar the subsequent criminal prosecution and punishment of the defendant whose property was forfeited. See United States v. Ursery, 518 U.S. 267, 274, 116 S.Ct. 2135, 135 L.Ed.2d 549 (1996) (stating that the Supreme Court has consistently concluded that the Clause does not apply to [civil forfeitures] because they do not impose punishment). A fortiori, a civil forfeiture action that goes no further than a seizure, and never results in the entry of any civil forfeiture judgment cannot constitute jeopardy. Moreover, this Court has recognized that it is perfectly proper to begin a forfeiture action with a civil seizure, and then to convert the action to a criminal forfeiture once an indictment is returned. See United States v. Kingsley, 851 F.2d 16, 18 & n. 1 (1st Cir.1988). Indeed, that procedure is commonplace. 136 Nor is it uncommon for the government to shift theories of criminal forfeiture--from direct forfeiture to substitute assets--upon return of an indictment. We held in Voigt that when the government's attempt to forfeit the defendant's property directly was unsuccessful, the remedy was for the government to seek forfeiture of the same property as a substitute asset under § 853(p). See Voigt, 89 F.3d at 1088. If, as Voigt illustrates, it is proper to seek the forfeiture of property as a substitute asset even after a jury has rejected the government's attempt to forfeit the property directly, then there is no error in allowing the government to dismiss the property from the forfeiture allegation before it goes to the jury and to seek the forfeiture as a substitute asset after trial. In dismissing the Montanez property from the forfeiture allegation in Count 49, the government simply shifted its theory of forfeiture from § 853(a) to § 853(p). Doing so before submission of the case to the jury was entirely proper in light of the prosecutor's conclusion that there was insufficient evidence to support direct forfeiture under § 853(a).
137 It is well-established that criminal defendants are jointly and severally liable for forfeiture of the full amount of the proceeds of their criminal offense, and that the imposition of such a forfeiture judgment does not constitute an unconstitutionally excessive fine. See Hurley, 63 F.3d at 23 (the government can collect [the amount subject to forfeiture] only once but, subject to that cap, it can collect from any appellant so much of that amount as was foreseeable to that appellant); see also United States v. Simmons, 154 F.3d 765, 769-70 (8th Cir.1998) (holding that each defendant is jointly and severally liable for all foreseeable proceeds of the scheme and that the government is not required to prove the specific portion of proceeds for which each defendant is responsible). 138 In Hurley, we affirmed precisely the action taken here: the imposition of an order substituting other property of each defendant up to the value of the criminal proceeds for which the defendant was jointly and severally liable. In that case, each of the defendants, including the relatively minor participants, was ordered to forfeit substitute assets up to approximately $140 million in value. If holding each defendant jointly and severally liable to forfeit that amount in substitute assets did not violate the Excessive Fines Clause, then the forfeiture imposed on Reyes-Padilla does not. 139 It is true, as Reyes-Padilla notes, that the Eighth Circuit has held that holding a secondary figure jointly and severally liable for the forfeiture of the full amount of the criminal proceeds may constitute an excessive fine if the defendant reaped little benefit from the scheme. See United States v. Van Brocklin, 115 F.3d 587, 602 (8th Cir.1997). Van Brocklin does not aid the defendant. 140 First, in Hurley, we upheld the imposition of a substitute assets order for the full amount of the criminal proceeds against relatively low-level participants who reaped little personal benefit from the criminal offense. 141 Second, in its most recent opinion on the matter, the Eighth Circuit relied on Hurley to uphold a forfeiture order holding the defendants jointly and severally liable for the full amount of the proceeds of a bribery offense, whether or not a given defendant received those funds personally. See Simmons, 154 F.3d at 769. 142 Third, it is appropriate to hold Reyes-Padilla accountable. Although the district court determined that she was a minor participant in the offense, she served as an important link between Israel Santiago-Lugo and his distributors at the various housing projects. Because she personally received and stored controlled substances at her apartment and at the apartment of Morales-Santiago, personally provided wholesale quantities of controlled substances to Santiago-Lugo's distributors, and also assisted with maintaining records of these transactions, she is appropriately characterized as being in charge of Santiago Lugo's drug trafficking business at the Virgilio Davila Housing Project in Bayamn. Defendant's App. at 121 (Affidavit of Special Agent Felicia Ramos-Andino). Reyes-Padilla was at Morales-Santiago's apartment when POPR officers seized approximately $96,000 in currency and the drug ledgers reflecting over $3,000,000 worth of transactions during a one-year period. Given Reyes-Padilla's role, holding her liable for the full amount of the proceeds of the conspiracy falls well within the bounds we prescribed in Hurley. 143 Finally, Reyes-Padilla does not challenge the $6,000,000 money judgment. Rather, her appeal challenges only the forfeiture of the Montanez property as a substitute asset. The Montanez property has a value of only $169,000. Reyes-Padilla cannot seriously argue that the forfeiture of property valued at that amount is grossly disproportional to the gravity of a drug conspiracy that realized millions of dollars in proceeds. See United States v. Bajakajian, 524 U.S. 321, ----, 118 S.Ct. 2028, 2036, 141 L.Ed.2d 314 (1998) (holding that a punitive forfeiture violates the Excessive Fines Clause if it is grossly disproportional to the gravity of a defendant's offense). Accordingly, the forfeiture of Reyes-Padilla's Montanez property does not violate the Excessive Fines Clause of the United States Constitution.