Understanding Federal Criminal Forfeiture: How Assets Can Be Seized

Understanding Federal Criminal Forfeiture: How Assets Can Be Seized

Federal criminal forfeiture is a powerful tool that allows the government to seize assets that are connected to certain types of criminal activity. This article provides an overview of federal criminal forfeiture, how it works, what types of crimes it applies to, constitutional issues, and potential defenses.

What is Criminal Forfeiture?

Criminal forfeiture is the process by which assets derived from or used to facilitate federal crimes can be seized by the government.[1] The purpose is to deprive criminals of the proceeds and instrumentalities of their illegal activity.

Criminal forfeiture cases proceed in personam, meaning they are filed against the defendant as part of a criminal prosecution.[2] In order to seize assets through criminal forfeiture, prosecutors must first obtain a conviction or guilty plea. The forfeiture is then imposed as part of the defendant’s sentence.

This is different from civil forfeiture, which proceeds in rem against the property itself without requiring a criminal conviction.

Federal Crimes Subject to Forfeiture

While many federal crimes can trigger forfeiture, the main statutes outlining forfeitable offenses are:[3]

• Drug crimes – The primary forfeiture statute is 21 U.S.C. 853, which applies to federal drug trafficking crimes. This covers proceeds obtained as a result of the crime as well as property used to facilitate drug trafficking.
• Fraud and money laundering – 18 U.S.C. 982 allows for forfeiture relating to a wide range of financial crimes, including money laundering, bank fraud, healthcare fraud, securities fraud, and more.
• Child exploitation – 18 U.S.C. 2253 mandates criminal forfeiture for crimes related to sexual exploitation of children.
• RICO – 18 U.S.C. 1963 provides for extensive criminal forfeiture relating to racketeering offenses under RICO.

There are also other forfeiture provisions tied to particular federal crimes, such as terrorism, customs violations, alien smuggling, and intellectual property offenses.

What Types of Assets Can Be Forfeited?

The two main categories of forfeitable assets are:[4]

Proceeds – This refers to assets obtained directly or indirectly as a result of the crime. For example, money derived from drug sales or fraud schemes.

Facilitating Property – This covers assets used to facilitate the crime or made the crime easier to commit. Examples include vehicles, real estate, equipment, or tools used in the commission of the offense.

In addition to facilitating property and criminal proceeds, the government may also seek forfeiture of “substitute assets” if the directly forfeitable property is unavailable. This allows them to seize other assets belonging to the defendant up to the value of the missing forfeitable property.

How Does Criminal Forfeiture Work?

Here is a basic overview of the criminal forfeiture process:[5]

1. Charging Document – The indictment or information alleging criminal charges must also include notice of assets subject to forfeiture. This puts the defendant on notice regarding what property the government intends to forfeit.
2. Jury Finding – In some cases, the government may ask the grand jury to issue a finding that there is probable cause linking the charged offenses to the assets targeted for forfeiture.
3. Conviction – The defendant must be convicted of the charges either by guilty plea or following trial. The government must then establish the “requisite nexus” between the offenses and the forfeitable assets.
4. Preliminary Order – If the nexus is established, the court will issue a preliminary order of forfeiture. This order forfeits the defendant’s interests in the identified assets.
5. Third Party Claims – Anyone other than the defendant who claims interest in the forfeited property can then petition the court in an “ancillary proceeding.” They must show they have a valid legal interest in the property that predates or is superior to the defendant’s.
6. Final Order – After resolving any third party claims, the court enters a final order of forfeiture. The government then takes title to the forfeited property.

Constitutional Limits on Criminal Forfeiture

While criminal forfeiture can be a potent weapon against crime, there are constitutional limitations. Two key U.S. Supreme Court cases outline the boundaries.

In United States v. Monsanto, the Court held pre-conviction restraint of forfeitable assets does not violate due process if there is probable cause the assets have the “requisite nexus” to the alleged crime. However, restraint of “untainted” assets needed to pay legal fees was found to violate the 6th Amendment right to counsel.

Subsequently, Caplin & Drysdale v. United States held that forfeiture of assets needed to pay attorney fees following conviction does not violate the 6th Amendment. But the Court noted that discretionary exemptions of assets for attorneys fees may be allowed in limited cases where needed to secure competent counsel.

Defending Against Criminal Forfeiture

Here are some potential defenses in criminal forfeiture proceedings:

• No nexus – Argue the assets subject to forfeiture were not derived from or used to facilitate the federal offense. The burden is on the government to establish the “requisite nexus.”
• Innocent owner – Assert you had no knowledge of the criminal activity or did not consent to the use of the property to facilitate such activity. The burden shifts to you to establish innocent ownership.
• Disproportionality – The 8th Amendment prohibits “excessive fines.” Argue the harshness of forfeiting certain property is disproportionate to the gravity of the offense.
• Hardship – Seek a discretionary exemption of forfeitable property needed to pay basic living expenses or legal fees. Argue forfeiture would cause serious hardship.

Conclusion

Federal criminal forfeiture can result in substantial losses of property and assets connected to a wide range of federal crimes. It is a powerful tool for prosecutors. Understanding how criminal forfeiture works and the potential defenses is critical for any attorney advising clients facing related charges or sentencing consequences. Careful litigation strategy guided by constitutional boundaries is key to protecting client interests.