Case o' The Week: Waver in Disfavor - Depue, Waiver and Forfeiture of Appellate Claims

  An en banc court of the Ninth has found that a defendant forfeited his challenge to a guideline sentence.

  Hooray!

United States v. Depue, 912 F.3d 1227(9th Cir. Jan. 14, 2019) (en banc),

decision available here.

Players: Decision by Judge Berzon, joined by CJ Thomas, and Judges Fletcher, Paez, Berzon, M. Smith, Ikuta, Christen, Nguyen, Watford, Hurwitz, and Friedland. 

  Federal Defender Amicus effort by AFD’s Vince Brunkow and Michael Marks, Federal Defenders of San Diego, Inc.  

Facts: Depue, who represented himself, was convicted of mortgage fraud after a jury trial. Id. at 1230. The government recommended a whopping OL 39, based on its loss theories. Id. at 1231. The PSR parroted this calculation: pro se defendant Depue didn’t object. Id. 

  Depue was sentenced to over twenty-one years. 

  He appealed, arguing that the loss calculations were erroneous. Id. A three-judge panel held Depue waived his objections to the alleged Guideline errors. Id. at 1231-32. 

  The case went en banc.

Issue(s): “We are asked to explain when a defendant is entitled to plain error review of challenges to his sentence that he failed to raise in the district court. Our cases have consistently held that a defendant waives his rights and precludes plain error review only when there is evidence that he knew of his rights at the time and nonetheless relinquished them. Twenty-one years ago, we explained this point in an en banc opinion. United States v. Perez, 116 F.3d 840 (9th Cir. 1997) (en banc).” Id. at 1229.

Held: “We reaffirm today this distinction between waiver and forfeiture.” Id. 

  “Confining our en banc consideration to Depue’s challenge to the Guidelines calculations, we hold that Depue’s failure to object to the Guidelines calculations at sentencing constitutes forfeiture subject to plain error review, but that there was no plain error.” Id. at 1230 (emphasis added).

Of Note: The Ninth reviewed Depue’s claims for plain error. The threshold issue for Olano “error” is whether the claim was “intentionally relinquished or abandoned.” Id. at 1232. As Judge Berzon explains, “forfeited claims are reviewed for plain error, while waiver precludes appellate review altogether.” Id. (emphasis added).  

  What makes for a “waiver?” Evidence that the defendant knew what they were giving up – a mere failure to object isn’t enough. 

  Judge Berzon writes that “The relevant question is whether Depue knew the substantive legal rules underlying the particular challenges to the Guidelines calculation he raises on appeal, and knew that the district court’s calculation violated those rules.” Id. at 1233-34. The en banc court holds that Depue didn’t know what he was giving up, so he didn’t waive. This distinction “between waiver and forfeiture is particularly important in the sentencing context.” Id. at 1234. A critically important holding, particularly for the extraordinarily complex Guideline (and Taylor analysis) sentencing process – it gives us a shot at plain error review, and getting a botched sentence fixed, on direct appeal. 

  This is a thoughtful opinion, buttressed by policy considerations, and is just flat-out fair: no surprise that all eleven e.b. votes signed onto the outcome.

How to Use: The defense in Depue won an (important) battle, but Depue himself lost the war. The Ninth held that, if there were legal or factual errors in the guideline calcs, they didn’t rise to level of plain error. 

  The take-away? Forfeiture and plain error review is better than waiver and getting kicked out of the Ninth -- but a nice record heavily peppered with clear objections is better than both.

                                               

For Further Reading: The national defense community generally, and NorCal specifically, has suffered a tremendous loss with the untimely death of San Francisco Public Defender Jeff Adachi.

   The only elected public defender in California, Jeff was a tireless and fearless advocate for his own clients, for resources for his office and for indigent defense, and for reform of the criminal justice system.

  

Our deepest condolences to his family, and to our PD brothers and sisters: we’ve all lost a good friend and great leader. See SF Chronicle Article here.

Image of “Ralph Wiggum” waver from https://tenor.com/search/waving-gifs

Image of Jeff Adachi from https://abc7news.com/society/san-francisco-public-defender-jeff-adachi-dies-at-59/5152699/

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

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Case o' The Week: No Ammo Dough? A Ninth No-Go - Soto and Forfeiture of Substitute Property

 Forfeiture forfeited.

United States v. Soto, 2019 WL 489065 (9th Cir. Feb. 8, 2019), decision available here.

  

 Players: Decision by (visiting Sixth Circuit) Judge Gilman, joined by Judges Paez and Owens.

Facts: Soto, along with twenty other defendants, was indicted for crimes relating to exporting guns and ammo to Mexico. Id. at *1. She pleaded guilty to a count of attempting to export ammo, and a count of conspiracy to export guns and ammo. Id. 

  At sentencing, she was hit with a forfeiture order for substitute property worth around $7,000, for ammo that had been transferred. Id. at *2.

   Soto didn’t object to the forfeiture order at sentencing. Id. After she filed her appeal, Soto filed a Rule 35(a) motion to correct “clear error” at sentencing. The district court denied her motion. Id.

Issue(s): “Soto argues that the district court’s forfeiture order was improper because the crimes for which she was convicted do not authorize forfeiture. She also contends that the notice of forfeiture in the indictment was inadequate because it cited an inapplicable statutory provision.” Id. at *1.

  “Soto argues that criminal forfeiture is available only if a federal forfeiture statute expressly references the criminal statute under which a defendant is convicted. Because Soto was convicted of violating 18 U.S.C. §§ 371 and 554(a), and these statutes are not expressly mentioned in any federal forfeiture statute, she argues that forfeiture is unavailable in this case.” Id. at *2.

Held: “Soto’s argument fails because she overlooks 18 U.S.C. § 924(d)(1), which provides that “[a]ny firearm or ammunition involved in or used in any ... violation of any other criminal law of the United States ... shall be subject to seizure and forfeiture ....” Id. 

  “The requirements of § 853(p) were met in this case because Soto had ammunition that was subject to forfeiture and she transferred that ammunition to a coconspirator. Accordingly, the district court committed no error, much less plain error, in ordering the forfeiture of  substitute property up to the value of the ammunition that was transferred.” Id. at *2.

Of Note: In a third issue on appeal, Soto also argued that she was given inadequate notice of the forfeiture because the government cited the wrong statute in the indictment. Id. at *4. Putting aside some waiver problems, the Ninth warns that it would have not found this to rise to plain error. Id. As Judge Gillman explains, “[E]ven though the indictment cited the wrong statute, Soto was nevertheless provided with adequate notice of forfeiture. The district court therefore did not commit plain error regarding the adequacy of notice.” Id. 

  Practically speaking, if the wrong forfeiture statute is alleged, that’s a challenge that has to be made in the district court (where, of course, the government can supersede after you’ve educated them on their error!)

How to Use: Looking for a cite to brush back on a government argument not raised in its opening brief? Look to Soto, where the “wrong forfeiture statute” was raised for the first time in the reply. Id. at *4 (“[T]his challenge first appears in her reply brief. Because Soto did not challenge the adequacy of the notice of forfeiture in the indictment before the district court or in her opening brief, the challenge is not reviewable.”)

                                   

For Further Reading: In 2018, the Ninth delivered the troubling Briones decision, on Miller and LWOP for juveniles. See blog entry here. 

  The case upheld a life sentence, after Miller re-sentencing, for a Native American defendant who had suffered childhood addiction and who was 17 when he committed the federal offenses of conviction. 

The Hon. Judge Diarmuid O'Scannlain

   In Briones, Judge O’Scannlain penned a compelling dissent, refusing to “divine incorrigibility” by “reading a transcript through squinted eyes.” Id.

  Happily, others on the Ninth shared Judge O’Scannlain’s concerns: on February 13, Briones went en banc. See order here. 

   Here’s hoping for an e.b. flip.

Image of ammo from: https://www.fnherstal.com/products/ammunition 

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

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Case o' The Week: Hidden Dough a Ninth No-Go - Hernandez-Escobar and Due Process Rights in Forfeiture Proceedings

  Hiding money from a spouse? 

Avoid stashing it with a drug-dealing son.

  United States v. Hernandez-Escobar, 2018 WL 6693487 (9th Cir. Dec. 20, 2019), decision available here.

Players: Decision by Judge Fisher, joined by Judges Berzon and Watford.

Facts: Roberto Hernandez (“Roberto”) pleaded guilty to drug charges. In his plea agreement, he agreed to forfeit $73,000 in cash that was found in his bedroom, alongside thirteen pounds of meth, guns, and pay-owe sheets. Id.

  After the plea, Roberto’s father (“Mr. Hernandez”) filed a claim on that money. Id. Mr. Hernandez claimed it was his cash. Mr. Hernandez explained that he had stored the dough in shoeboxes, and stashed it with his son to protect it from his wife during marital difficulties. Id. at *2.

  Before the forfeiture hearing, the AUSA met with Roberto. When Roberto (generally) confirmed his father’s story, the AUSA reminded Roberto of his plea agreement, said he thought Roberto was lying, and warned of potential false statement charges. Id. Not surprisingly, Roberto then asserted the Fifth at his father's forfeiture hearing. Id.

  The district court found that the cash was drug proceeds, denied Mr. Hernandez’s “bailor” argument, and forfeited the funds. Id.

Issue(s): “[Mr. Hernandez] argues that he is a bailor whose title to the cash is superior to the Government’s, and also that his due process rights were violated because his son did not testify at the hearing.” Id. at *1.

Held: “We affirm.” Id. “In Alcaraz-Garcia, we ruled that for the purpose of calculating the time to appeal, a criminal forfeiture proceeding is civil in nature . . . We need not determine whether this reasoning in Alcaraz-Garcia extends to due process questions, because even if Mr. Hernandez was entitled to due process protections coextensive with those afforded to criminal defendants, he has not shown a violation.” Id. at *6 (internal quotations and citation omitted).

Of Note: The main holding of Hernandez-Escobar is a predictable affirmance of the factual findings of the district court. A far more interesting question is the due process rights of a third party seeking funds slated for forfeiture.

  As noted above, Judge Fisher skirts that question by holding that Mr. Hernandez (the father) suffered no due process violation in any event – the son was not (we are told) coerced into not testifying. This due process question remains an intriguing issue for another day.

How to Use: What happens when a prosecutor bullies a central defense witness into silence, by threatening perjury charges? Judge Fisher delves into that problem, in the context of the – "admonitions" – this prosecutor gave to the defendant (the father’s key witness). Id. at *7.

  Judge Fisher warns that, “In other circumstances, a prosecutor’s stated belief that a potential witness is lying might be an unnecessarily strong admonition, but not on these facts.” Id. at *6 (internal quotations and citation omitted).

  This discussion in Herandez-Escobar is worth a close read when dealing with a “dissuading” AUSA: on slightly different facts, the prosecutor here might have well crossed the line.

                                           

The Hon. United States Attorney David Anderson

For Further Reading: Trump-nominee David Anderson is officially the new United States Attorney for the Northern District of California. On January 2, 2019, Mr. Anderson was confirmed by voice vote in the Senate. See Congressional site here. 

  The Honorable Anderson takes the corner office in the midst of a long government shutdown, as federal investigators work without pay, AUSAs ask for delays of civil cases, and the Judiciary contemplates contingencies just to pay juror fees. See NYT article here. 

  Welcome back to the Federal Building, Dave.

Image of money in shoebox from https://news.dailytoast.com/blogs/after-60-years-of-marriage-a-man-finds-95-000-in-a-shoe-box-in-his-wi.

Image of the Hon. U.S Attorney David Anderson from https://www.sidley.com/en/people/a/anderson-dave.

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

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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

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Case o' the Week: A Remarkable Feet (Ninth Rejects Podiatrist Qui Tam) - Van Dyck / Smith, Qui Tam, and Criminal Forfeiture

 No foot in the door for Relators.

United States v. Van Dyck, Nancy Smith, Intervenor 2017 WL 3428096 (9th Cir. Aug. 10, 2017), decision available here.

Players: Decision by Ninth Circuit Chief Judge Sidney Thomas, joined by Judge Murguia and D.J. McCalla.  

Facts: Van Dyck, a podiatriast, was convicted of health care fraud. Id. at *2. The district court entered a $1.23 forfeiture judgement against him: the estimated amount of fraudulent claims paid by the victim insurers. Id.

  “Relator Nancy Smith” was a medical assistant in Van Dyck’s office who (she claimed) helped investigators before the prosecution began. Id. at *1.

  During the investigation, Relators filed a qui tam action under the False Claims Act. Id. at *3. When the qui tam action was (partially) unsealed, the government declined to intervene. Id. at *3.

  The Relators then moved to intervene in the government’s criminal forfeiture action: the district court declined the request. Id.

Issue(s): “[W]e consider whether a criminal forfeiture action constitutes an ‘alternate remedy’ to a civil qui tam action under the False Claims Act, entitling a relator to intervene in the criminal action and recover a share of the proceeds . . . .” Id. at *1.

  “[I]t is an open question as to whether a criminal proceeding constitutes an ‘alternate remedy,’ and that [the Relators] are therefore entitled to protect their interests in the proceeds.” Id. at *4.

Held: “We hold that it does not, and we affirm the district court’s order denying intervention.” Id. at *1.

  “The district court was entirely correct. Intervention would have violated the general rule against non-parties intervening in criminal proceedings; intervention was not permitted under the governing statute; and Realtors did not establish a sufficient interest in the forfeited funds. Relators lack standing to intervene.” Id. at *4.

  “The ‘alternate remedy’ provisions of the False Claims Act do not permit a relator to intervene in a criminal action for the purpose of asserting a right to the proceeds of that action.” Id. at *4. “[W]e need not reach the question in this case as to whether a criminal case constitutes an ‘alternate remedy,’ because the sole issue before us is whether Relators are entitled to intervene in the criminal proceeding. There is nothing in the False Claims Act that affords Relators the right to intervene in a criminal prosecution. The sole remedy afforded relators under the False Claims Act is to commence a ‘civil action.’” Id. at *4.

Of Note: These Relators are (technically) not out of the fight. The Chief explains, “Just because the criminal forfeiture action is over doesn’t mean that the Relators can’t go forward on their qui tam action.” Id. at *5.

  Of course (as Relators here complained), their late-to-the game qui tam action will be against a defendant who is effectively judgement proof: assets stripped to the bone by the voracious maw of criminal forfeiture.

  “Meh,” shrugs the Ninth: “That may well be a practical concern, but it does not provide Relators with the right to intervene in a criminal action.” Id. at *5.

How to Use: Qui tam seems an exotic civil beast irrelevant to our indigent clients. Van Dyck will hopefully keep it that way. The defense here were fighting a three-front battle: a criminal prosecution, criminal forfeiture proceedings, and a third-party qui tam action also hunting dough. A three-ring circus makes for complicated settlement discussions (note that ultimately the AUSA and the defense in Van Dyck shrugged and kicked the Relators out of negotiations. Id. at *3).

  Van Dyck radically undermines the financial incentive for qui tam actions against our clients. Qui tam actions makes the defense and government strange bedfellows: give Van Dyck to your AUSA, and collaborate to keep Relators from mucking-up already-complicated fraud cases.

                                               

For Further Reading: On the subject of strange bedfellows . . . law enforcement’s and prosecutors’ ravenous forfeiture appetite disrespects fundamental property rights. So says the ACLU – and the Koch Brothers. See article here. 

  Time for the defense bar to question whether aggressive local forfeiture initiatives are consistent with President Trump’s and Attorney General Sessions' national prosecution priorities.

Image of foot from http://nhpodiatricmedassoc.com/wp-content/uploads/2013/03/podiatrist-1.jpg

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

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Case o' The Week: Forfeiture hits a new Lo -- United States v. Henry Lo, Forfeiture, and Restitution

 Q: What do you call a forfeiture order that seizes proceeds from dismissed or acquitted counts?

 A: Valid.

 United States v. Henry Lo, 2016 WL 5799706 (9th Cir. Oct. 5, 2016), decision available here.

Players: Decision by Judge Ikuta, joined by Judge Clifton and DJ Lamberth. 

  Hard fought appeal by NorCal CJA stalwart Martha Boersch, of Boersch Shapiro LLP.

Facts: Lo was charged with wire and mail fraud. Id. at *1. He pleaded guilty to some of the counts in the indictment, in a standard NorCal plea agreement: a detailed fact pattern in paragraph 2, a concession of fraud proceeds of over $2 million, and an appellate waiver. Id. at *2-*3. The plea agreement specified a restitution amount of no less than $1.7 million. Id. at *3. 

  Before sentencing, the government moved for a forfeiture order of over $2.3 million. Id. After sentencing, the Court ordered a forfeiture money judgment of over $2.3 million, and also ordered Lo pay $2.3 million in restitution. Id. Lo appealed. Id.

Issue(s): “Before addressing Lo’s claims, we must first address the government’s argument that Lo waived his right to appeal any aspect of the sentence by agreeing to an appeal waiver in his plea agreement.” Id. at *4.

Held: “Because Lo validly waived his right to appeal, and none of the exceptions to such waivers are applicable, we dismiss this appeal.” Id. at *1.

Of Note: Lo is now a seminal case in the Ninth on restitution and forfeiture. The decision first lays out the contractual interpretations of plea agreements, discusses exceptions to those interpretations, and describes the interplay between restitution and forfeiture. In so doing Lo sets forth several new rules. 

  It has long been a requirement that a defendant receive notice before being hit with restitution. That notice requirement doesn’t apply, Judge Ikuta explains, to forfeiture orders – a beast authorized by an entirely different statute. Id. *8. “Therefore, an appeal waiver can validly waive the right to appeal a forfeiture order issued as part of the sentence regardless of whether the plea agreement provides the defendant with a reasonably accurate estimate of the amount of forfeiture or whether the defendant was given adequate notice before a district court determined that amount.” Id. at *9. 

  The take-away? Your client’s dough is being grabbed: either through a restitution order, or a forfeiture order. If the money is seized through restitution, there are specific notice requirements that – if not followed – can undermine the validity of an appellate waiver. 

  If the funds are seized through forfeiture? Not so much.

How to Use: Under the forfeiture statute the government can get a forfeiture order to seize proceeds of the crimes for which the defendant was convicted. If the defendant is convicted of counts 1, 2, and 3, can the court order forfeiture of proceeds from crimes alleged in dismissed (or acquitted) counts 4, 5, and 6? 

  In another new rule, Judge Ikuta holds, “yes.” 

  Joining the Seventh Circuit, the Ninth concludes that the “proceeds of the crime of conviction” for forfeiture “consist of the funds involved in that fraudulent scheme, including additional executions of the scheme that were not specifically charged or on which the defendant was acquitted.” Id. at *12 (emphasis added). 

  This is analogous to that cursed guideline “relevant conduct:” a concept that can scoop up and punish charges for which your client was actually acquitted. Same idea, now expanded to forfeiture. 

  Before assuring your client a deal or trial could provide some finality, have a hard talk about the forfeiture ramifications of those dismissed (or even acquitted) counts.

                                               

For Further Reading: What’s with the surging interest in forfeiture and restitution? Turns out that grabbing the funds is an active prosecution priority of DOJ. For an accessible summary of DOJ’s blurb on restitution and forfeiture, see DOJ post here. 

  For a gleeful DOJ Powerpoint that gloats that a lack of a criminal conviction needn’t stand in the way of forfeiture, see pdf available here. (“No criminal restitution order? No problem!”)

Image of DEA patch from http://d7.freedomworks.org.s3.amazonaws.com/field/image/DEA-asset-forfeiture-patch.jpg

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

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