Supreme Court Makes Criminal Forfeiture Harder for Feds

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By Jessica DaSilva and Kimberly Strawbridge Robinson

The government won’t be able to seize nearly $70,000 from a defendant whose brother profited from selling large quantities of water filters used to make methamphetamine, after a unanimous June 5 ruling from the U.S. Supreme Court ( Honeycutt v. United States , U.S., No. 16-142, 6/5/17 ).

The ruling prevents the federal government from getting the proceeds from a conspirator who never received any money.

Members of a conspiracy can be criminally liable for the acts of other members, the federal government told the justices in March during oral argument. So it would make sense that they could be financially liable, too, prosecutors said.

But the Supreme Court didn’t agree. It reversed a decision from U.S. Court of Appeals for Sixth Circuit that would allow the government, in this case from Georgia, to collect proceeds from the sale of iodine-based water purifiers that were used to make methamphetamine.

‘A Complete Fiction'

Under a plain reading, the federal forfeiture law is “limited to property the defendant himself actually acquired as the result of the crime,” Justice Sonia Sotomayor wrote for the court. It did not matter that the law allowed the government to seize property “directly or indirectly” obtained from a criminal enterprise.

“The adverbs ‘directly’ and ‘indirectly’ modify—but do not erase—the verb ‘obtain,’” the court stated. “In other words, these adverbs refer to how a defendant obtains the property; they do not negate the requirement that he obtain it at all.”

Barry J. Pollack, president of the National Association of Criminal Defense Lawyers and a member of Miller & Chevalier in Washington and chair of the firm's white collar defense practice, said this decision was in line with what he expected.

“This court, for whatever reason, is more attuned to unfairness with respect to financial penalties,” Pollack said. “When it comes to financial penalties, there’s been recognition from the court that the government overused and became overly reliant” on this form of civil forfeiture.

The decision returns the statute to its intended purpose, treating defendants who have different roles in a criminal enterprise differently, he said.

If one defendant winds up with the proceeds, you can and should get those proceeds back from that defendant, Pollack said. But “it would be a complete fiction to take proceeds” from a defendant who never had them, he said.

Water Filters, Dirty Sales

Terry Honeycutt worked as a clerk at his brother Tony’s hardware store and noticed that “edgy looking folks” were buying large quantities of an “iodine-based water-purification product known as Polar Pure.” He called the Chattanooga, Tenn., police department to ask whether the purifiers could be used to make meth. The police confirmed his suspicion.

Although Terry didn’t have any interest at stake in Tony’s store, he continued selling Polar Pure filters in large quantities to single buyers until an investigation involving federal and state law enforcement and the DEA shut down the operation.

Both brothers were indicted for “various federal crimes relating to their sale of iodine while knowing or having reason to believe it would be used to manufacture methamphetamine.” The federal government sought $269,751.98 in forfeiture judgments against the brothers.

Tony, the store owner, pled guilty and agreed to pay $200,000. The government sought the rest from Terry, who went to trial and was convicted.

To contact the reporters on this story: Jessica DaSilva in Washington at jdasilva@bna.com; 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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