Government Likely Loser in High Court Forfeiture Case

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By Kimberly Strawbridge Robinson

You know your U.S. Supreme Court argument isn’t going well when the justices say that your theory is “odd” and “troubling,” can’t be understood and can’t be found in the text of the particular statute at issue.

Those were statements from Justices Anthony M. Kennedy, Sonia Sotomayor, Elena Kagan and Stephen G. Breyer, respectively, directed at the federal government March 29 in a forfeiture case ( Honeycutt v. United States, U.S., No. 16-142 , argued 3/29/17 ).

A loss for the government would make forfeiture more difficult to obtain in criminal cases.

Here, the government is trying to get the proceeds of a drug conspiracy from a conspirator that never actually received those proceeds.

Terry Honeycutt was just a salaried employee at his brother’s hardware shop, Adam G. Unikowsky, Jenner & Block LLP, Washington, who represents Honeycutt, said. Honeycutt’s brother was the one who received the proceeds, Unikowsky said.

Both got jail time for their “don’t-ask-don’t-tell” policy on the sale of an iodine-based water purifier because the purifier was used by the purchasers to make methamphetamine.

But the government said that it makes sense to go after Honeycutt for the financial gains of the conspiracy too.

In a conspiracy, the acts of any member of the conspiracy are attributable to all members, Brian H. Fletcher, of the Justice Department, Washington, said.

Confusingly Indirect

The statute, at 21 U.S.C. §853, requires forfeiture of tainted assets—namely, assets derived from the crime—that “the person obtained, directly or indirectly.”

The term “indirectly” envisions that the defendant might not have actual possession of the money, Fletcher said.

But Unikowsky said that’s not what “indirectly” is intended to do.

This case is the perfect example of what that term actually was meant to do, Unikowsky said.

Here, Honeycutt’s brother didn’t receive the profits directly—his corporation did, Unikowsky said. But the brother is still liable for the ill-gotten gains, he said.

That’s all the work that the term “indirectly” was intended to do, Unikowsky said.

‘Substitute Property.’

But Fletcher said the government could go after Honeycutt under another provision in the forfeiture statute, too.

The “substitute-property” provision allows the government to seize “any other property of the defendant, up to the value” of the tainted assets, if the tainted assets themselves cannot be located.

Kagan asked Fletcher to “walk her through the mechanics” of that because she didn’t get it.

The government must prove that the actual tainted assets are unavailable for forfeiture in that particular proceeding, Fletcher explained. Only then can the government move to get substitute property, he said.

But before you can do that, the statute requires that you find that the money can’t be located “as a result of any act or omission of the defendant,” Kagan said.

Here, Honeycutt didn’t do anything to make the money unavailable, she said.

In fact, Kennedy noted that it was the government that made the assets unavailable by entering into a plea deal with the brother that sought only a portion of the proceeds. It’s “odd” that the government would now go after Honeycutt, Kennedy said.

Don’t Look at Text

Moreover, Chief Justice John G. Roberts Jr. pointed out that requiring the government to only show that the tainted assets are unavailable in that particular proceeding means that the government can pretty much pick who it wants to get the money from.

Under the government’s theory, a chauffeur could be on the hook for the millions of dollars that a kingpin made, while the kingpin got to hold on to his ill-gotten gains, Roberts said.

That’s troubling, Sotomayor said.

But that’s the nature of conspiracy liability, which is working in the background here, Fletcher said.

We hold conspirators liable for the criminal acts of other members of the conspiracy, Fletcher said. If they can be jointly liable for illegally getting the money in the first place, then they can be jointly liable when they make the money unavailable for forfeiture, he said.

It’s not an anomalous result given that the defendants agreed to engage in an illegal conspiracy, Fletcher said.

The government wants you to look at background principles of conspiracy and ignore the text, Unikowsky said. But the text of the forfeiture statute clearly doesn’t allow for forfeiture here, he said.

To contact the reporter on this story: Kimberly Strawbridge Robinson in Washington at krobinson@bna.com

To contact the editor responsible for this story: Jessie Kokrda Kamens at jkamens@bna.com

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