Opinion ID: 566819
Heading Depth: 2
Heading Rank: 1

Heading: WMOT's Contentions

Text: 30 The thrust of WMOT's appeal is that the district court, in holding that a victim of embezzlement lacks standing under section 853(n)(6)(B), adopted an unduly narrow construction of the term bona fide purchaser for value. WMOT urges us instead to construe the term more liberally so as to protect the legitimate interests of all innocent third parties. To bolster its interpretation of section 853(n)(6)(B), WMOT directs us to subsection (o), which states that [t]he provisions of this section shall be liberally construed to effectuate its remedial purposes. Among the remedial purposes of section 853, WMOT contends, is the protection of the property rights of innocent third parties, see S.Rep. No. 225, 98th Cong. 1st Sess. 208, reprinted in 1984 U.S.Code Cong. & Admin.News 3182, 3391 [hereinafter S.Rep. No. 225]. WMOT also relies on the hoary maxim that the law abhors a forfeiture. See United States v. One 1936 Model Ford V-8 De Luxe Coach, 307 U.S. 219, 226, 59 S.Ct. 861, 864-65, 83 L.Ed. 1249 (1939) (Forfeitures are not favored; they should be enforced only when within both letter and spirit of the law.). By foreclosing its sole avenue of judicial relief, WMOT asserts, the district court contravened the salutary purpose of section 853(n). 31 WMOT further maintains that its more expansive reading of the term bona fide purchaser for value has been endorsed by two courts. See United States v. Reckmeyer, 836 F.2d 200 (4th Cir.1987); United States v. Mageean, 649 F.Supp. 820 (D.Nev.1986), aff'd, 822 F.2d 62 (9th Cir.1987); but see United States v. Campos, 859 F.2d 1233 (6th Cir.1988) (holding that general, unsecured creditors are not bona fide purchasers for value). In Reckmeyer, the criminal defendant's father, who had loaned the defendant money to purchase a parcel of real estate, and a gem merchant, who had sold two precious stones to the defendant on credit, petitioned the court under section 853(n) to amend the forfeiture order. 836 F.2d at 202. Both petitioners sought to recover out of the defendant's assets, virtually all of which had been ordered forfeited, the amount of their unsecured claims. The Fourth Circuit, after rejecting the government's claim that unsecured creditors lack a legal interest under the statute, construed the term bona fide purchaser for value liberally to include all persons who give value to the defendant in an arms'-length transaction with the expectation that they would receive equivalent value in return. Id. at 208. The Reckmeyer court then held that both petitioners were bona fide purchasers in that they gave value to the defendant in anticipation of receiving value in return. Id. at 208-09. 32 Likewise, the Mageean court declined to adopt the government's interpretation of section 853(n)(6)(B). The court instead held that unsecured trade creditors, who had provided goods and services to the defendant and who sought to satisfy their claims out of the defendant's forfeited assets, qualified as bona fide purchasers for value under the statute: 33 Although a bona fide purchaser is traditionally thought of as a buyer of tangible property, given the purposes of the statute, there is no reason that a good faith provider of goods and services cannot be a bona fide purchaser under the statute. The trade creditors before the Court are innocent parties and their transactions with [the forfeitor] were made at arm's-length. 34 649 F.Supp. at 829. 35 WMOT argues that its claim against Lavin's forfeited assets falls squarely within the Reckmeyer and Mageean courts' construction of the term bona fide purchaser for value: 36 WMOT is a creditor of Lavin which has a legal interest in the forfeited estate and which gave (albeit unwittingly) value to the forfeited estate. The value given was the approximately $440,000 that Stewart embezzled from WMOT for Lavin's benefit. In other words, due to Lavin's receipt of benefits from the embezzlement from WMOT, a bona fide obligation arose between WMOT and Lavin, and WMOT thereby purchased 'property' i.e., [its] claims against [Lavin's estate]. 37 Appellant's Br. at 12-13 (citation omitted). Indeed, WMOT contends that its petition presents an even more compelling case for relief than that of the third parties in Reckmeyer and Mageean. WMOT points out that, unlike the petitioners in the above two cases, it has obtained a judgment (admittedly, a default judgment) against the forfeitor. WMOT also submits that, because it was an innocent victim of unlawful conduct perpetrated by the forfeitor, its plight is significantly more sympathetic than that of either a maker of an unsecured intrafamily loan or a provider of goods and services. 8 38 This latter point, WMOT insists, underscores the tension between the district court's advertent/inadvertent distinction and the putatively broad remedial purpose of section 853(n). According to WMOT, a third party whose interest in the forfeited estate arises from an inadvertent, tort-like obligation suffers the same harm--and thus merits the same relief--as a third party whose interest arises from an advertent, contract-like obligation. Given that the purpose of section 853(n) is, in WMOT's view, to protect the property rights of all innocent third parties while preserving the deterrent and punitive effects of forfeiture, WMOT asserts that contract and tort obligations should be treated alike under subsection (B). 39 WMOT also emphasizes that, due to the nature of embezzlement, we need not hold that all tort-like obligations amount to bona fide purchases under the statute. As WMOT explains, obligations that arise from embezzlement are different from those that arise from the typical tort situation such as an automobile accident, because the embezzler, by injuring his or her victim, is enriched. In other words, WMOT (the tort victim) actually conveyed value to Lavin (the putative tortfeasor) in an amount that is easily quantifiable in dollar terms. By conveying value to Lavin, WMOT contends that it purchased a claim against his forfeited estate that is cognizable under section 853(n)(6)(B), especially in light of our duty to construe that subsection liberally.