Opinion ID: 537726
Heading Depth: 2
Heading Rank: 2

Heading: Proportional Forfeiture

Text: 223 Defendants next argue that the trial court erred in failing to instruct the jury that it had the option of only forfeiting a portion of certain amounts of cash that the government sought under Sec. 1963(a)(2), rather than forfeiting the cash on an all or nothing basis. The facts underlying this claim are rather complex, so we state them with some care. 224 As discussed earlier, the forfeiture form given to the jury presented only two legal theories under which the jury could find assets subject to forfeiture: (1) assets could be forfeited because they were acquired and maintained in violation of Sec. 1963(a)(1)--e.g., because they constituted proceeds or profits of an illegal racketeering enterprise; or (2) assets could be forfeited because they afforded a source of influence over an illegal enterprise in violation of Sec. 1963(a)(2). With respect to assets or property that the government sought to forfeit under Sec. 1963(a)(1), the jury received a proportionality instruction. The court instructed it to determine what percentage of the assets or property actually constituted proceeds or profits, and to forfeit only this percentage. With respect to assets or property that the government sought to forfeit as a source of influence under Sec. 1963(a)(2), the court gave a proportionality instruction regarding certain items, but not others. The court declined to give a proportionality instruction with respect to $331,576 in cash that was seized at 98 Prince Street and $41,025 in cash that was seized at 95 Prince Street. As to these items, the jury was to forfeit under Sec. 1963(a)(2) on an all or nothing basis. 225 In its forfeiture verdict, the jury found that 50% of the cash described above constituted proceeds or profits under Sec. 1963(a)(1). It also found that the cash afforded a source of influence over the enterprise under Sec. 1963(a)(2). Due to the latter determination, 100% of the cash was ordered forfeited. 226 Defendants contend that the court erred in forfeiting the cash on an all or nothing basis under Sec. 1963(a)(2). They argue that the jury should have been instructed to apply a proportional forfeiture theory to these assets and to forfeit only that percentage of the cash that actually was used to further the affairs of the enterprise. We agree. 227 The types of property interests subject to forfeiture under Sec. 1963 can be divided into two broad categories: (1) interests in a RICO enterprise, and (2) interests outside the enterprise. Any interests in an enterprise, including the enterprise itself, are subject to forfeiture in their entirety, regardless of whether some portion of the enterprise is not tainted by the racketeering activity. As the Ninth Circuit stated in United States v. Busher, 817 F.2d 1409 (9th Cir.1987): [F]orfeiture is not limited to those assets of a RICO enterprise that are tainted by use in connection with racketeering activity, but rather extends to the convicted person's entire interest in the enterprise. Id. at 1413. 228 The forfeiture of interests outside the enterprise, however, is subject to limitations. It has been held that the forfeiture of outside interests is subject to a rule of proportionality. See United States v. Porcelli, 865 F.2d 1352, 1362-65 (2d Cir.), cert. denied, --- U.S. ----, 110 S.Ct. 53, 107 L.Ed.2d 22 (1989); United States v. Horak, 833 F.2d 1235, 1242-43 (7th Cir.1987). Such outside interests include proceeds or profits forfeitable under Sec. 1963(a)(1), see, e.g., Horak, 833 F.2d at 1242-43, and also property that affords a source of influence over an enterprise, which is forfeitable under Sec. 1963(a)(2). See Porcelli, 865 F.2d at 1364-65; see also United States v. McKeithen, 822 F.2d 310, 314-15 (2d Cir.1987) (requiring, under the continuing criminal enterprise statute, 21 U.S.C. Sec. 848(a)(2)(B), proportional forfeiture with respect to property affording a source of influence over an enterprise). Under this proportionality rule, proceeds or profits and property affording a source of influence are only subject to forfeiture to the extent they are tainted by the racketeering activity. This is in contrast to the treatment of interests in an enterprise, which are forfeitable regardless of percentage of taint. 229 The court below properly instructed the jury on the proportionality rule regarding proceeds or profits under Sec. 1963(a)(1). With respect to the $331,576 and $41,025 in cash, however, the court erroneously failed to instruct the jury to apply the proportionality rule regarding source of influence forfeiture under Sec. 1963(a)(2). 230 The government strenuously contends that no such proportionality instruction was required. Our review of the cases cited by the government in support of its contention reveals that these cases refer to the forfeitability of interests in an enterprise, which is not the situation presented here. See, e.g., Busher, 817 F.2d at 1413; Cauble, 706 F.2d at 1349-50. The jury was explicitly instructed to apply the source of influence forfeiture theory. It was not instructed to consider whether the cash constituted an interest in the enterprise. As we have stated, the source of influence theory pertains to the forfeiture of interests outside the enterprise, and a proportionality instruction was required. See Porcelli, 865 F.2d at 1364-65. 231 The government also argues that the statutory language of Sec. 1963(a)(2) negates the need for a proportionality instruction. It quotes the provision as requiring the forfeiture of any interest in ... property ... of any kind affording a source of influence over a RICO enterprise. Brief for Government at 120. (Emphasis added by the government). This is a highly selective statutory excerpt, and omits crucial language and punctuation that serve to delineate the types of interests subject to forfeiture. Quoted correctly, Sec. 1963(a)(2) provides for the forfeiture of any interest in, security of, claim against, or property or contractual right of any kind affording a source of influence over, any [RICO] enterprise. Interpreted in a manner consistent with its punctuation, this provision first provides for the forfeiture of any interest in an enterprise; these are inside interests subject to forfeiture regardless of percentage of taint. The provision also separately provides for the forfeiture of property affording a source of influence over an enterprise. We interpret this as referring only to that property that affords a source of influence--in other words, only that property that is actually tainted. 25 Viewed this way, the statutory language supports the requirement that a proportionality instruction be given with respect to source of influence forfeitures. Cf. McKeithen, 822 F.2d at 314-15 (interpreting virtually identical language in the continuing criminal enterprise statute, 21 U.S.C. Sec. 848(a)(2), as requiring a proportionality instruction). Because the trial court failed to give a proportionality instruction with respect to the cash seized, we reverse that part of the judgment forfeiting the cash under a source of influence of theory. Only the 50% of the cash that was forfeited as proceeds or profits was properly forfeited. 26