Case o' The Week: Ninth Buys Forfeiture Overture - Valdez and Forfeiture of Substitute Property in Criminal Forfeiture Cases

 Federal funds are currently unavailable, from the President and from Congress.

The Feds can get money, however, from our indigent clients. United States v. Valdez, 2018 WL 6712061 (9th Cir. Dec. 21, 2018), decision available here.

Players: Decision by Judge Graber, joined by Judge Bennett and DJ Kobayashi. 

  Hard-fought appeal by D. Az. AFPD Eddie Cunningham.  

Facts: Valdez pleaded guilty to the attempted smuggling of 10,000 rounds of ammo to Mexico. Id. at *1. That ammo was subject to forfeiture, but wasn’t seized by the Feds. Id. The government therefore sought “forfeiture of substitute property” under 21 USC § 853(p) and 28 USC § 2461(c). Id. 

  Over defense objection, the district court agreed and ordered Valdez and her co-D to pay a personal money judgment for the value of the ammo. Id.

Issue(s): “Defendant complains that, had she been arrested before she caused the ammunition to be transferred, the government would have recovered the ammunition and would have had no ability to seek forfeiture of substitute property. She contends that Congress could not have intended this unfair result, which treats intermediary smugglers differently depending on when they are arrested.” Id. at *5.

Held: “We see no inequity in treating persons differently depending on whether they cause contraband to remain in the hands of criminals. For those who cause that additional harm, Congress permissibly has concluded that they must forfeit substitute property.” Id. at *5. “Reviewing de novo the interpretation of the federal forfeiture statutes . . . we conclude that the district court properly ordered forfeiture of substitute property. Accordingly, we affirm.” Id. at *1.

  “[W]e conclude that (A) the government properly sought criminal forfeiture; (B) 28 U.S.C. § 2461(c) authorizes the forfeiture of substitute property; and (C) the district court properly ordered forfeiture of substitute property.” Id. at *2.

Of Note: The origin of the dispute in Valdez was the government’s decision to seek criminal forfeiture of the ammo (or of “substitute property”), instead of civil forfeiture. Id. at *2. That raised the question of whether the criminal forfeiture statute, 28 USC § 2461(c), permitted the court to order payment of substitute property (here, money) when the ammo was not intercepted. Judge Graber recounts the procedures of 21 USC § 853, that apply to criminal forfeiture. She concludes that Congress meant for Section 853 to permit the forfeiture of substitute property (here, money) in criminal forfeiture cases. Id. at *4. 

  Notably, the DOJ – and US Attorney Offices – are increasingly obsessed with touting their forfeiture figures. See e.g, ND Cal USAO press release here. These billions of dollars in forfeited funds are used “for a variety of law enforcement purposes.” Id. Valdez is a worrisome development, with federal law enforcement agencies hungry for ways to make budgetary ends meet. 

How to Use: No question that in this case, Valdez was directly involved in buying the ammo to be smuggled. That close nexus isn’t always there, however. When wrestling with forfeiture, remember that your client is only on the hook for property that he or she “actually acquired as the result of the crime.” Honeycutt v. United States, 137 S.Ct 1626, 1635 (2017). Justice Sotomayor’s welcome Honeycutt decision is a rare limitation on the Feds’ ever-expanding forfeiture authority: worth a close read, if wrestling with forfeiture issues.

                                               

For Further Reading: Among the many innocent folks bearing the brunt of the latest government shutdown are the heroic attorneys who shoulder CJA appointments for our indigent clients. Last week, the Judiciary’s Administrative Office retroactively froze panel payments, beginning December 24, 2018. See generally article here.   

  (Criminal AUSAs? Not affected by the shutdown. See DOJ contingency plan here.)  

Image of “Government shutdown” from https://www.wkyt.com/content/news/Government-shutdown-will-continue-into-Monday-470431563.html

Steven Kalar, Federal Public Defender N.D. Cal. Website at www.ndcalfpd.org

.