Court Opinion

ID: 4152067
Source: CourtListenerOpinion
Date Created: 2017-03-13 17:01:04.195175+00
Date Added: 2024-06-11T07:46:33.357858
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

CINDY OMIDI; ASSET                   No. 15-55667
MANAGEMENT
IRREVOCABLE TRUSTS via                D.C. No.
Trustee ASIATRUST NEVIS,      2:15-cv-00389-ODW-VBK
LTD., aka Asiatrust, Ltd.;
and PROPERTY CARE
INSURANCE, INC.,                       OPINION
    Petitioners-Appellants,

            v.

UNITED STATES OF
AMERICA,
     Respondent-Appellee.

      Appeal from the United States District Court
          for the Central District of California
       Otis D. Wright II, District Judge, Presiding

        Argued and Submitted January 11, 2017
                 Pasadena, California

                 Filed March 13, 2017
2                    OMIDI V. UNITED STATES

Before: Alex Kozinski and Paul J. Watford, Circuit Judges,
          and Mark W. Bennett,* District Judge.

                    Opinion by Judge Watford

                            SUMMARY**

                           Civil Forfeiture

    The panel affirmed the district court’s order denying
appellants’ motion for return of seized funds under the Civil
Asset Forfeiture Reform Act of 2000 (CAFRA), 18 U.S.C.
§ 983(a)(1)(F).

    In connection with an ongoing criminal investigation, the
government seized around $100 million from bank accounts
controlled by appellants as proceeds of criminal activity and
subject to forfeiture under 18 U.S.C. § 981. Appellants
alleged that the government did not provide the notice
required by § 983(a)(1)(A) of CAFRA within 60 days of the
seizure.

    The panel held that § 983(a)(1)(A) did not apply to this
case because the provision limits the applicability of the 60-
day notice deadline to “nonjudicial” civil forfeiture
proceedings, and this case involved judicial forfeiture

    *
     The Honorable Mark W. Bennett, District Judge for the U.S. District
Court for the Northern District of Iowa, sitting by designation.
    **
       This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                  OMIDI V. UNITED STATES                      3

proceedings. The panel held that the government could not
have pursued nonjudicial forfeiture proceedings even if it had
wanted to because the value of the personal property
exceeded $500,000. 19 U.S.C. § 1607(a).

                         COUNSEL

Ryan D. Kashfian, Esq. (argued) and Robert A. Kashfian,
Esq., Kashfian & Kashfian LLP, Century City, California, for
Petitioners-Appellants.

Steven R. Welk (argued), Assistant United States Attorney,
Chief, Asset Forfeiture Section; Eileen M. Decker, United
States Attorney; Lawrence S. Middleton, Assistant United
States Attorney, Chief, Criminal Division; Office of the
United States Attorney, Los Angeles, California; for
Respondent-Appellee.

                          OPINION

WATFORD, Circuit Judge:

    As part of the Civil Asset Forfeiture Reform Act of 2000
(CAFRA), Pub. L. No. 106–185, 114 Stat. 202, Congress
imposed new deadlines for the processing of civil forfeiture
claims. Under CAFRA, when the federal government seizes
certain types of property, it must generally provide notice of
the seizure to interested parties as soon as practicable, but in
no event later than 60 days after the seizure occurs. 18
U.S.C. § 983(a)(1)(A). After receiving notice, a person with
an interest in the property may file a claim with the relevant
4                 OMIDI V. UNITED STATES

agency. § 983(a)(2)(A). Upon receiving a claim, the
government must file a civil or criminal forfeiture action
within 90 days, unless a court extends the deadline.
§ 983(a)(3)(A).

    In this case, in connection with an ongoing criminal
investigation, the government obtained warrants authorizing
it to seize roughly $100 million from bank accounts
controlled by the appellants. The government asserts that the
funds are proceeds of criminal activity and thus subject to
forfeiture under 18 U.S.C. § 981, the primary statute
authorizing forfeiture of property tied to criminal
wrongdoing. The appellants allege that although they learned
of the seizure shortly after it occurred, the government did not
provide the notice required by § 983(a)(1)(A) within 60 days
of the seizure. As a consequence of that failure, they contend,
the government must return the seized funds under
§ 983(a)(1)(F). That provision provides, as a sanction for
violating subsection (A), that “the Government shall return
the property to [the person from whom it was seized] without
prejudice to the right of the Government to commence a
forfeiture proceeding at a later time.” The district court
denied the appellants’ motion on the ground that
§ 983(a)(1)(A) does not apply in this case. We agree with
that conclusion.

    Section 983(a)(1)(A)(i) provides in relevant part as
follows:

       Except as provided in clauses (ii) through (v),
       in any nonjudicial civil forfeiture proceeding
       under a civil forfeiture statute, with respect to
       which the Government is required to send
       written notice to interested parties, such notice
                   OMIDI V. UNITED STATES                          5

        shall be sent in a manner to achieve proper
        notice as soon as practicable, and in no case
        more than 60 days after the date of the
        seizure.

(Emphasis added.)

    In our view, the italicized phrase resolves this appeal. It
limits the applicability of the 60-day notice deadline to
“nonjudicial” civil forfeiture proceedings. This case involves
judicial forfeiture proceedings, so the notice provision at
issue does not apply. Explaining why requires a brief
description of the difference between judicial and nonjudicial
forfeiture proceedings.1

    As the term implies, in nonjudicial (administrative)
forfeiture proceedings, the government may obtain title to
forfeited property without any involvement by the courts.
The procedure is authorized by provisions of the Tariff Act of
1930, found at 19 U.S.C. §§ 1607 and 1609. Those
provisions pertain to customs cases, but the forfeiture statute
the government invokes here—18 U.S.C. § 981—
incorporates them by reference (as modified by CAFRA).
§ 981(d); see Stefan D. Cassella, Asset Forfeiture Law in the
United States § 4-3, at 153 (2d ed. 2013).

    To start the administrative forfeiture process, the
government must provide notice to interested parties after
seizing the targeted property. 19 U.S.C. § 1607(a). If no one
comes forward to claim an interest in the property within the
deadline specified in the notice, the government may declare

     1
       We limit our discussion to forfeitures governed by CAFRA; some
forfeitures are exempted from the Act’s requirements. § 983(i).
6                 OMIDI V. UNITED STATES

the property forfeited, at which point title passes to the United
States. 18 U.S.C. § 983(a)(2)(B); 19 U.S.C. § 1609. If a
claimant does come forward to claim an interest in the
property, the administrative forfeiture process ceases and
within 90 days the government must initiate a judicial
forfeiture proceeding—a formal court action which, if
successful, results in a court order declaring the property
forfeited. 18 U.S.C. § 983(a)(3). The government may
initiate judicial forfeiture proceedings in one of two ways: by
filing a civil forfeiture complaint in the district court, or by
obtaining a criminal indictment alleging that the property is
subject to forfeiture. Id.

    Certain types of property are not eligible for nonjudicial
forfeiture proceedings; they may be forfeited only through
proceedings in court. The government may obtain forfeiture
of real property, for example, only through judicial forfeiture
proceedings. 18 U.S.C. § 985(a). The same is true with
respect to personal property worth more than $500,000,
subject to a few exceptions not relevant here. 19 U.S.C.
§ 1607(a); see Cassella § 4-3, at 154–55.

   To obtain forfeiture of the seized funds in this case, the
government must pursue judicial forfeiture proceedings
because the value of the property far exceeds $500,000. The
government could not have pursued nonjudicial forfeiture
proceedings even if it had wanted to. That is why the notice
deadline imposed by § 983(a)(1)(A)—limited on its face to
nonjudicial forfeiture proceedings—does not apply here.

    The appellants counter this straightforward textual
reading of § 983(a)(1)(A) by relying on the last clause of the
provision, which states that the required notice “shall be sent
in a manner to achieve proper notice as soon as practicable,
                  OMIDI V. UNITED STATES                       7

and in no case more than 60 days after the date of the
seizure.” (Emphasis added.) The appellants contend that
when Congress said “in no case” it meant in no case of any
kind, whether involving judicial or nonjudicial forfeiture
proceedings. Read in context, though, it is evident that the
phrase “in no case” was used to mean “in no event” or “in no
instance.” It qualifies the requirement that notice must be
given “as soon as practicable” by setting an outer limit on the
time period within which notice must be sent. It does not
establish a freestanding notice deadline of its own, much less
one that overrides the statute’s clear statement that the notice
deadline applies only in “nonjudicial civil forfeiture
proceeding[s].”

    The appellants contend that our reading of the statute
leads to an apparent anomaly, which they describe as follows:
Owners of personal property worth less than $500,000 are
generally entitled to notice within 60 days of the seizure of
their property, and by promptly filing a claim, they can force
the government to initiate court proceedings within 90 days,
absent a court-approved extension. Owners of personal
property worth more than $500,000, however, are not entitled
to the same procedural protections. The government may
seize their property and delay initiating judicial forfeiture
proceedings for a lengthy period of time, subject only to the
limits imposed by the Due Process Clause. See United States
v. $8,850 in U.S. Currency, 461 U.S. 555, 564, 569–70 (1983)
(upholding an 18-month delay). That result is at odds, the
appellants say, with CAFRA’s objective of ensuring timely
access to the courts for those who seek to contest the seizure
of their property.

   We do not think this apparent anomaly gives us license to
rewrite the statutory text, given the clarity of § 983(a)(1)(A)’s
8                  OMIDI V. UNITED STATES

limitation to “nonjudicial” civil forfeiture proceedings. See
Consumer Product Safety Commission v. GTE Sylvania, Inc.,
447 U.S. 102, 108 (1980). In any event, though, the
difference in treatment highlighted by the appellants is not as
stark as they suggest. Owners of personal property worth
more than $500,000 are not left without recourse to the courts
when the government seizes their property and delays
initiating judicial forfeiture proceedings for months or years
on end. They can file a motion in the district court seeking
return of their property under Federal Rule of Criminal
Procedure 41(g), which provides that “[a] person aggrieved
by an unlawful search and seizure of property or by the
deprivation of property may move for the property’s return.”
When criminal proceedings are already underway against the
aggrieved property owner, such motions can be heard as part
of the criminal case itself. Even when criminal proceedings
are not yet underway, as was true here, an aggrieved property
owner may invoke Rule 41(g) as a means of obtaining
judicial review. In that situation, the motion is treated as a
petition for civil equitable relief subject to the district court’s
balancing of four discretionary factors. United States v.
Comprehensive Drug Testing, Inc., 621 F.3d 1162, 1172–74
(9th Cir. 2010) (en banc) (per curiam).

    Virtually all challenges to the government’s basis for
seeking forfeiture that could be raised in judicial forfeiture
proceedings may be raised in proceedings under Rule 41(g).
That is not to say the proceedings are equivalent, as the
claimant bears the burden of proof in a Rule 41(g)
proceeding, United States v. Gladding, 775 F.3d 1149, 1152
(9th Cir. 2014), whereas the government bears that burden in
judicial forfeiture proceedings, 18 U.S.C. § 983(c)(1); United
States v. Hernandez-Escarsega, 886 F.2d 1560, 1576–77 (9th
Cir. 1989). Nonetheless, the key point is that owners of
                  OMIDI V. UNITED STATES                      9

personal property worth more than $500,000 are not deprived
of timely access to the courts altogether if they seek to
challenge the government’s seizure of their property.

    This case bears out that very point. The district court
construed the appellants’ motion for return of the seized
funds as a motion under Rule 41(g). The appellants could
have challenged in that proceeding the lawfulness of the
government’s seizure (and retention) of the $100 million.
They could have argued, for example, that the seized funds
lack any connection to criminal wrongdoing and thus are not
subject to forfeiture, or that the government’s lengthy delay
in initiating judicial forfeiture proceedings violates their due
process rights. But they raised no such arguments. They
instead asserted as the sole basis for relief a violation of the
notice deadline imposed by § 983(a)(1)(A), a provision
which, as we have explained, simply does not apply in this
case.

   AFFIRMED.