Opinion ID: 796946
Heading Depth: 3
Heading Rank: 1

Heading: Money Judgment

Text: 102 Misla's challenge to the forfeiture order involves a question that often comes up in cases where the government seeks criminal forfeiture of cash, rather than specific property. Pursuant to Rule 7(c)(2) of the Federal Rules of Criminal Procedure, the government gave notice in the indictment of an intent to seek forfeiture of all property involved in, or traceable to, the money laundering offense. It later filed a Bill of Particulars pointing to specific property it alleged was traceable to the money laundering proceeds, including an apartment in Luquillo, Puerto Rico. The government did not mention in the indictment any intent to seek substitute assets in lieu of the property it named as traceable to the proceeds of the offense. 103 After the verdict, the government moved for a judgment of forfeiture under Rule 32.2 of the Federal Rules of Criminal Procedure, and a hearing was held. At the hearing, the government stated an intention to go after only cash, rather than the real property that had been in the Bill of Particulars. The government also stated that it did not intend to seek forfeiture of any substitute assets. Misla argued that the government was not in a position to ask for forfeiture of cash because they had not identified any particular pool of cash that could be traceable to the money laundering. The court ordered forfeiture of $147,400, pointing to specific checks that the government had provided as exhibits. 104 On appeal, Misla makes a subtle, but ultimately unavailing, argument. He says that any attempt by the government to seize cash is equivalent to seizing substitute assets, because the original proceeds of the offense are no longer available, and that is something that the government expressly declined an interest in doing. It being therefore impossible to execute this forfeiture order, he argues, the order should not have been issued in the first place. He also argues that it would be too late now for the government to try to seek any substitute assets, since he was given no notice in the indictment of an intent to do so. As to his first point, we have said that 105 [a] money judgment permits the government to collect on the forfeiture order in the same way that a successful plaintiff collects a money judgment from a civil defendant. Thus, even if a defendant does not have sufficient funds to cover the forfeiture at the time of the conviction, the government may seize future assets to satisfy the order. 106 United States v. Hall, 434 F.3d 42, 59 (1st Cir.2006); see United States v. Candelaria-Silva, 166 F.3d 19, 42 (1st Cir.1999) ([C]riminal forfeiture may take several forms [including] an in personam judgment against the defendant for the amount of money the defendant obtained as proceeds of the offense.). Here, the government sought a forfeiture judgment under Rule 32.2, which provides that [i]f the government seeks a personal money judgment, the court must determine the amount of money that the defendant will be ordered to pay. Fed.R.Crim.P. 32.2(b)(1). This is in contrast to where the government seeks forfeiture of specific property, in which case the government has to show a nexus between the property and the offense. Id. 107 Misla is mistaken, therefore, in arguing that a forfeiture order can apply only to the specific proceeds of the offense. If the government seeks, and the court grants, a money judgment 16 as part of the forfeiture order, then the government need not prove that the defendant actually has the forfeited proceeds in his possession at the time of conviction. Hall, 434 F.3d at 59. If the government has proven that there was at one point an amount of cash that was directly traceable to the offense, and that thus would be forfeitable under 18 U.S.C. § 982(a), that is sufficient for a court to issue a money judgment, for which the defendant will be fully liable whether or not he still has the original corpus of tainted funds — indeed, whether or not he has any funds at all. 108 The question of how the government can enforce that judgment is a somewhat different question, however. There is a split of authority as to whether the government can seize assets with a money judgment just as any judgment creditor could, or whether the government must follow the substitute assets provisions of 21 U.S.C. § 853(p) 17 (we discuss the dispute briefly below). Here, however, we need not answer that question, because it does not appear from the record that the government has yet taken any action to enforce the judgment. We note, however, that, contrary to Misla's assertion, the government would not be constrained from seeking forfeiture of substitute assets under § 853(p) in the future. Misla argues that the government's disclaimer at the forfeiture hearing of an intent to seek substitute assets, coupled with the lack of any notice of an intent to do so in the indictment, would be fatal to any later attempts to go after substitute assets. If this were true, Misla's objection to the forfeiture order would have some teeth. But it is not true. 109 Criminal forfeiture orders are something of a mongrel, United States v. Hurley, 63 F.3d 1, 23 (1st Cir.1995), and this fact seems to have confused Misla. Although the government must include in the indictment notice of which property it plans to seek forfeiture of, Fed.R.Civ.P. 7(c)(2), that notice is only as to particular property, not as to particular statutory elements. Even though it must be mentioned in the indictment, forfeiture is not a substantive element of an offense, but is rather an element of the sentence imposed following conviction. Libretti v. United States, 516 U.S. 29, 38-39, 116 S.Ct. 356, 133 L.Ed.2d 271 (1995) (emphasis in original); see United States v. Moffitt, Zwerling & Kemler, P.C., 83 F.3d 660, 664-65 (4th Cir.1996). Section 982 says simply that [t]he court, in imposing sentence . . . shall order the forfeiture of property involved in or traceable to the offense. 18 U.S.C. § 982(a)(1). And in cases where, inter alia, the original property cannot be located upon the exercise of due diligence or has been transferred or sold to, or deposited with, a third party then the court shall order the forfeiture of any other property of the defendant. 21 U.S.C. § 853(p)(1)(A) & (B), (2). All that is necessary, therefore, for a court order to issue is that these conditions be met. No additional notice is necessary. 18 110 In Hurley, we allowed an order for substitute assets to be entered after the case had already been appealed, which would imply that the government could ask for such an order at any time. 63 F.3d at 23-24. We noted there that 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. Id.; see United States v. Voigt, 89 F.3d 1050, 1088 (3d Cir.1996) (on remand to apply the substitute assets provision, no de novo hearing necessary). 111 In Candelaria-Silva we said that [t]he forfeiture of substitute assets is a matter left solely to the court. 166 F.3d at 43. In that case the parties chose, unlike here, to have the forfeiture amount tried to a jury, which determined that $6,000,000 in proceeds was the asset subject to forfeiture. But, we said, the jury has no role in determining, subsequently, whether the property has been dissipated and whether the government is thereby entitled to the forfeiture of substitute assets. Id. All we said that was necessary for the government to show was that the principal forfeitable property was not available. Id. at 42. This is where the burden of the government lies: in showing that the principal forfeitable assets — that is, those named in the indictment — are unavailable at the end of the trial, not in giving notice at the beginning of the trial of an intent to invoke the substitute assets provisions. Indeed, to allow the failure to specifically name the substitute assets provision of the forfeiture statute in the indictment — or the substitute assets themselves — to defeat any later attempt to go after substitute assets would allow defendants to avoid forfeiture simply by transferring away the assets after the indictment has come down. See United States v. Hatcher, 323 F.3d 666, 673 (8th Cir.2003) (The defendant does not need to know the identity of the substitute assets to marshal a defense to the forfeiture. Accordingly, [it is] not require[d] that the indictment specify what property will be sought as substitute assets.) 112 If the government instead acts to enforce the money judgment without using the substitute assets provisions of § 853(p), it raises the question of whether that is permitted, which is a question we need not reach here. The question is important, since § 853(p) places a greater burden on the government before assets can be seized. There is some split of authority among the circuits on whether the government must follow the procedures of § 853(p) or not. See, e.g., United States v. Vampire Nation, 451 F.3d 189, 202 (3d Cir.2006) ([T]he in personam forfeiture judgment may also be distinguished from a general judgment in personam. The judgment in personam here is one in forfeiture and is limited by the provisions of [§ 853].); Hall, 434 F.3d at 59 (noting that a forfeiture money judgment is equivalent to a civil judgment, though that issue was not directly before the court). 113 In summary, a court may properly issue a money judgment as part of a forfeiture order, whether or not the defendant still retains the actual property involved in the offense, or any property at all. Furthermore, the money judgment can be used in the future to seek forfeiture of substitute assets by court order under § 853(p) and Rule 32.2, even where the government has not expressed an intent to do so at any time before it seeks such an order. We leave for another day the question of whether, in seeking to seize assets to satisfy that judgment, the government is required to do so under the substitute assets provisions of § 853(p), or whether it may use the judgment to attach assets just like any other judgment creditor could.