Opinion ID: 2798222
Heading Depth: 2
Heading Rank: 4

Heading: Right to Forfeiture of USW’s Assets

Text: Next, petitioners argue that the funds in USW’s bank accounts at JP Morgan Chase are not subject to forfeiture under 18 U.S.C. § 982(a)(2) because criminal forfeiture is an in personam proceeding that extends only to property owned by the criminal defendant. Because, according to petitioners, the contested funds were deposited directly into USW’s accounts and never passed through Dupree’s hands, they could not lawfully be included in the district court’s forfeiture order. Petitioners suggest that this principle both supports their reasonable lack of cause to believe that the contested funds were “subject to forfeiture” under § 853(n)(6)(B) and precludes the court from ordering USW’s funds forfeited in the first place. Petitioners’ argument runs contrary to this Circuit’s understanding of 18 U.S.C. § 982(a). The forfeiture provision that governs this case, § 982(a)(2), provides that a court sentencing a person convicted of violating or conspiring to 14 We of course express no view on whether petitioners will be able to sustain their allegations at a hearing, as the issue before us is only whether their petition can be dismissed as a matter of law. Similarly, since the parties do not contest before us whether D&B was a purchaser for value, we express no view on that issue. 53 violate 18 U.S.C. §§ 1341, 1343, or 1344 “shall order that the person forfeit to the United States any property constituting, or derived from, proceeds the person obtained directly or indirectly, as the result of such violation.” 18 U.S.C. § 982(a)(2) (emphases added). In De Almeida v. United States, 459 F.3d 377 (2d Cir. 2006), this Court confronted a similar challenge to a parallel provision of the statute, § 982(a)(1), which authorizes a court to “order that the [defendant] 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); see also De Almeida, 459 F.3d at 381. We held that this statutory language “makes sufficiently clear that criminal forfeiture is not a measure restricted to property owned by the criminal defendant; it reaches any property that is ‘involved’ in the offense.” De Almeida, 459 F.3d at 381 (emphasis in original). In light of the judicial presumption toward interpreting similar statutory language consistently across neighboring subsections of a statute, see, e.g., Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 489 (1985), De Almeida counsels us to read § 982(a)(2) as authorizing forfeiture of any property that is “derived” from proceeds obtained through a defendant’s offense, whether or not that property was ever owned by the criminal defendant. At the very least, De Almeida precludes petitioners from 54 relying on the ostensibly in personam nature of criminal forfeiture to establish the reasonableness of their belief that USW’s funds were not subject to forfeiture under § 853(n)(6)(B). As a precedential opinion interpreting a neighboring provision of § 982(a), De Almeida more than sufficed to alert petitioners that courts in this Circuit would likely interpret § 982(a)(2) to extend beyond the defendant’s own property interests. Petitioners insist that our more recent decision in United States v. Contorinis, 692 F.3d 136 (2d Cir. 2012), compels a different outcome in this case. In Contorinis, we held that an order of criminal forfeiture under 18 U.S.C. § 981(a)(1)(C), a provision reaching “[a]ny property, real or personal, which constitutes or is derived from proceeds traceable to [the] violation,”15 could not encompass proceeds that were never personally acquired or controlled by the defendant. Id. at 147‐48. Petitioners read this holding as reaffirming an in personam theory of criminal forfeiture, limiting the government’s reach to property that was once in the defendant’s own possession. 15 While 18 U.S.C. § 981(a)(1)(C) is technically a civil forfeiture provision, it has been integrated into criminal forfeiture law by 28 U.S.C. § 2461(c). Contorinis, 692 F.3d at 145 n.2. 55 Even assuming that Contorinis – which involved a different forfeiture statute and hinged on a statutory definition of “proceeds” not obviously applicable to this case, see id. at 145; 18 U.S.C. § 981(a)(2) – casts doubt on our holding in De Almeida, petitioners’ argument is not available to them as third‐ party claimants under § 853. Having established a third party’s right to an ancillary proceeding under § 853(n), that section explicitly provides that, “[e]xcept as provided in subsection (n) . . . , no party claiming an interest in property subject to forfeiture under this section may . . . commence an action at law or equity against the United States concerning the validity of his alleged interest in the property subsequent to the filing of an indictment.” 21 U.S.C. § 853(k) (emphasis added). We have consistently interpreted § 853(k) to mean that an ancillary proceeding under § 853(n) is “the only avenue for a post‐indictment third‐party claim to forfeited property” under the criminal forfeiture statute. De Almeida, 459 F.3d at 381 (emphasis in original); see also DSI Associates LLC v. United States, 496 F.3d 175, 183‐84 (2d Cir. 2007) (“It is . . . well settled that section 853(n) provides the exclusive means by which a third party may lay claim to forfeited assets . . . .”). 56 As outlined above, § 853(n) provides only two means by which a third‐ party claimant may establish his right to forfeitable property: either by demonstrating that he possessed a “superior interest” at the time of the offense under § 853(n)(6)(A), or by demonstrating that he was a “bona fide purchaser for value” reasonably without cause to believe that the property was subject to forfeiture under § 853(n)(6)(B). See 21 U.S.C. § 853(n)(6). Beyond those two limited claims, the provision authorizes no challenges to the forfeitability of a defendant’s property by interested third parties. Petitioners protest that § 853 manifests a clear concern with protecting innocent third‐party property from criminal forfeiture – not least, as we noted in De Almeida, by accommodating “[t]he likelihood that some property involved in an offense will be owned by persons other than the criminal defendant . . . in [its] provision for an ancillary proceeding.” 459 F.3d at 381. Yet just as there is no doubt that § 853 protects third parties by entitling them to ancillary hearings on their claims, there is also no doubt that it limits the scope of such ancillary hearings to the two grounds identified in § 853(n)(6). Any additional challenges to an order of forfeiture based on Contorinis must be raised – as was the challenge in Contorinis, see 692 F.3d at 139 – by the criminal defendant himself. 57 Because the criminal forfeiture statute does not authorize petitioners to challenge the scope of a forfeiture order beyond the two grounds identified in § 853(n)(6), the district court properly rejected their claim that USW’s funds are not subject to forfeiture under § 982(a)(2).16