Opinion ID: 78296
Heading Depth: 3
Heading Rank: 1

Heading: Forfeiture of Bank Accounts and Inventories

Text: Chaplin's and Midtown contend that the district court erred in ordering forfeiture of their bank accounts and inventories because they did not constitute properties involved in, or used to facilitate, the offenses charged in Counts Two through Seven. Specifically, they maintain that there is no connection between these properties and the money laundering offenses. They also emphasize that, apart from the undercover sales, there was no proof of any other illegal activities taking place at the Chaplin's and Midtown stores We review de novo the district court's legal conclusions regarding forfeiture and the court's findings of fact for clear error. Puche, 350 F.3d at 1153. A person convicted of violating 18 U.S.C. § 1956 and 31 U.S.C. § 5324 must forfeit to the government all property that is either involved in that violation or traceable thereto. 18 U.S.C. § 982(a)(1); 31 U.S.C. § 5317(c)(1)(A). Property eligible for forfeiture under 18 U.S.C. § 982(a)(1) includes that money or property which was actually laundered (the corpus), along with any commissions or fees paid to the launderer[] and any property used to facilitate the laundering offense. Puche, 350 F.3d at 1153 (quotation marks and citation omitted). Property would facilitate an offense if it makes the prohibited conduct less difficult or more or less free from obstruction or hindrance. Id. (quotation marks and citation omitted). Though the pooling or commingling of tainted and untainted funds would not by itself render the entirety of an account subject to forfeiture, if the government establishes that the defendant did so to facilitate or `disguise' his illegal scheme, then forfeiture is acceptable. Id. Chaplin's and Midtown first contend that we should not interpret § 5317(c)(1)(A) to allow for forfeiture of property used to facilitate the transaction reporting violation. See 31 U.S.C. § 5317(c)(1)(A). In support of their argument, they cite United States v. Dean, 87 F.3d 1212, 1213-14 (11th Cir.1996), in which we noted that the amount forfeitable in a case would be limited to that money which was directly involved in the reporting offense. However, we conclude that discussion in Dean to be inapposite and not controlling here. In Dean we were dealing with a separate and distinct issue, the legality of a civil forfeiture agreementa question that involved determining whether § 5317 was a remedial or punitive statute. In answering this question, we never addressed whether facilitation of the offense was a valid interpretation of § 5317, instead focusing on the nature of the statute itself. See Dean at 1213-14. Furthermore, Dean was addressing an old version of § 5317, which included no mention of the current version's phrase involved in. See id. at 1213. The term `involved in' has consistently been interpreted broadly by courts to include any property involved in, used to commit, or used to facilitate the offense. United States v. Varrone, 554 F.3d 327, 331 (2d Cir.2009) (quotation marks and citation omitted). Because Dean does not affect our analysis, we instead focus on the similarity between the relevant language of § 5317(c)(1)(A) and § 982(a)(1). Section § 5317(c)(1)(A) requires the defendant to forfeit all property, real or personal, involved in the offense and any property traceable thereto, whereas § 982(a)(1) states that the person forfeit to the United States any property, real or personal, involved in such offense, or any property traceable to such property. 18 U.S.C. § 982(a)(1); 31 U.S.C. § 5317(c)(1)(A). Given that the two statutes essentially mirror each other, it seems incongruous to interpret those provisions as covering different arrays of property. Cf. Varrone, 554 F.3d at 330-31 (noting that the two provisions have nearly identical language and that the broad interpretation of involved in applies equally to § 5317(c)(1)(A) and § 982). Furthermore, we can discern no policy basis for distinguishing between the two. Accordingly, we conclude that § 5317(c)(1)(A) allows for forfeiture of property that facilitates the reporting violation. Chaplin's and Midtown next assert that forfeiture of their accounts and inventories was improper because there was no evidence that they were used in the commission of those violations. This contention ignores the fact that the availability of the two stores' inventories made it easier for Seher to launder money by giving potential buyers a large variety of jewelry options. Furthermore, Seher used telephones, business cards, and other company property to create a facade of legitimacy, which aided in the concealment of his actions. See United States v. Rivera, 884 F.2d 544, 546 (11th Cir.1989) (deeming defendant's horse breeding business a front for his drug trafficking and thus permitting forfeiture of horses under facilitation theory). Both stores' inventories thus facilitated the offenses, and the district court properly included them in the forfeiture order. For much the same reason, we also find that the district court did not err in including Midtown's bank account. The evidence established that the cash from Perkins' last two purchases was deposited in Midtown's bank account, thereby further facilitating the laundering by disguising the source of those tainted funds. See Puche, 350 F.3d at 1154 (deeming it reasonable to infer that the intermingling of tainted and legitimate proceeds act[ed] as a `cover' and hence reduced suspicion of the source of the tainted funds). We can identify no evidence in the record, however, linking a Chaplin's bank account to the reporting and laundering offenses. There were no deposit slips or account statements showing that Perkins' cash was deposited in a Chaplin's account, nor were there any references to payments being deposited into a Chaplin's bank account. In fact, the record does not disclose the name of Chaplin's bank account or even mention that a Chaplin's account exists, other than in general references to accounts apparently held by Chaplin's. The government provides no record cites to a specific Chaplin's bank account. Instead the government focuses on the interconnectedness between Chaplin's and Midtown and asserts that all of the assets of both companies, including their bank accounts, were thereby involved in the offenses. It also notes that some Midtown employees occasionally worked at Chaplin's and often were paid in cash. Though this latter fact could support the inference that Perkins' cash was used to pay employees, it would not tie the cash to a Chaplin's bank account. Additionally, the district court made no specific findings regarding whether Chaplin's and Midtown should be treated as one entity. Unless such a finding is made, we cannot view the two companies as sharing assets for forfeiture purposes. See United States v. Gilbert, 244 F.3d 888, 919 (11th Cir.2001) (noting that criminal forfeiture reaches only those assets owned by a particular defendant). Instead, the court found that the proceeds from the offenses went back into both Chaplin's and Midtown via bank deposits and cash payments. Though property need not be used exclusively for illegal activities to be forfeitable, it must have more than an incidental or fortuitous connection to criminal activity. United States v. Schifferli, 895 F.2d 987, 990 (4th Cir.1990). As a result, there must be evidence that some part of the property was used for illegal activities. Since we can identify no evidence to support the district court's finding as it pertains to Chaplin's bank accounts, we find that the district court clearly erred on that point. [27] See United States v. Bornfield, 145 F.3d 1123, 1138 (10th Cir.1998) (concluding that jury verdict ordering forfeiture of defendant's business account in money laundering case constituted clear error when the record showed that all of the laundered funds went to his personal account and that there was no connection between his business account and the laundering offense). Accordingly, we find that the district court did not err in ordering forfeiture of the inventory of both companies and of Midtown's bank account; however, we vacate that part of its order forfeiting any bank accounts of Chaplin's and remand for further hearing to address whether the evidence supports such a forfeiture.