Articles Posted in Criminal Forfeiture

This Friday in Atlanta there is the 26th annual seminar here in Atlanta for criminal defense lawyers.  I was asked to talk about civil asset forfeiture, and how that often accompanies or is parallel to a criminal case.  Here is the paper that is the subject of my presentation. Asset Forfeiture in Criminal Cases

As readers who waste some of their lives reading this blog know all too well, we have two court systems in this country where criminal cases arise: the federal system that is in all 50 states, and the separate systems used in each of those 50 states (plus the District of Columbia, Puerto Rico, Guam and a few other smaller locations).  Asset forfeitures arise in both federal criminal cases as well as the counterpart state criminal matters that I regularly handle in the Georgia court system. While there are many parallels, there also are some differences. Continue reading

Our friendly federal court of appeals here in Atlanta issued a recent opinion about evidence in a case arising out of a federal prosecution that reminded me of the funny quote from Blazing Saddles (and earlier movies and stories) about how the bad guys “don’t need no stinking badges.”  For the evidence geeks out there, the opinion concerns preliminary rules for assessing and potentially accepting a piece of evidence when there is a strong challenge as to whether the evidence is “authentic” under Rule 901 of the Federal Rules of Evidence.  After 36 years of trying cases in federal court, I call this “passing the smell test” for challenged documents.  The opinion is a lesson on how lawyers need to keep abreast of these rules, which can often win, or lose, a case.

Raul Gutierrez committed fraud when constructing the airport on the island nation of Trinidad and Tobago, and somehow the decidedly unfriendly federal prosecutors were able to bring federal criminal charges against him in south Florida.  Raul pled guilty in 2006, and as I have discussed on earlier occasions, the Judge imposed the usual financial penalties, such as restitution, along with a hefty prison sentence.  Raul had some real estate in Florida, the judge “forfeited ” the property, and later the nation of Trinidad and Tobago wanted to get the land as a “victim” of the offense.  Time passed, the island got the judge to let them weigh in on whether they could go after the property, and then, a magical thing happened.  A company that was once associated with our friend Raul claimed that they held a “security interest” in the property, even though no one had ever mentioned this million dollar “interest” nor recorded it in the preceding decade.  In other words, years later, friends of Raul claimed they held a piece of paper that said they had a superior interest in the particular piece of real estate. Continue reading

In Atlanta I have been asked to give a speech to some lawyers who handle federal criminal cases.  The organizers of the seminar asked that I talk about criminal forfeitures.  A lot of lawyers are not well acquainted with this ancient form of punishment that is becoming more and more common in modern federal criminal law.  Here is the paper that is the basis for my speech.   Criminal Forfeiture

Forfeiture is a very old concept we inherited (like so many legal principles) from ancient English law.  The basic idea is that if property is used in or obtained from criminal conduct, the King could take the property.  They created a legal fiction by which title to the property actually turned over to the King at the point when the crime happened.

Fast forward to our incredibly bad War on Drugs beginning back in the 1970’s. Congress began re-tooling the ancient forfeiture concepts to let federal prosecutors go after dope dealers’ assets.  That is all fine and good, in theory.  However, many readers know that law enforcement and government officials began taking these rules to the extreme, taking property barely associated with a crime or taking money far greater than what was involved in any crime.  The United States Supreme Court recently heard arguments in a case out of Indiana exemplifying this issue.  Justin Timbs carried some drugs in his Range Rover and got caught.  The maximum fine for the crime was $5,000, but the state prosecutors seized and forfeited the $42,000 vehicle.  Oh yeah, Mr. Timbs proved that he bought the Range Rover with the money he got from his Dad’s life insurance policy.  Here is the usual excellent analysis from describing the case and the issues involved.   Continue reading

The Supreme Court yesterday heard arguments in the case of Kaley v. United States, a case concerning pretrial restraint of assets that prevented the Defendants from hiring counsel of their choice. I previously discussed the issues in the case here and here.

As a quick recap, the Kaleys were under federal investigation. They denied they had done anything wrong, so they went looking for a great federal criminal defense lawyer. As we know, specialists are expensive, and lengthy white collar federal criminal cases chew up lots of time, energy, and money. The Kaleys therefore borrowed $500,000, and stuck it into the bank to fund the fight for their lives. The feds got an indictment, but also wanted to “forfeit” all of the Kaleys’ assets, including the half-million sitting in the bank. Prosecutors got an order from the judge freezing the money in the bank, and this happened right after the indictment was issued, meaning the Kaleys do not have access to these funds to defend themselves at trial. The issue before the Supreme Court is whether they at least have a right to a hearing before the trial in order to challenge the freezing of the assets, or whether the mere fact that a grand jury issued an indictment based on probable cause is sufficient to justify holding their money.
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Defending federal crimes is always difficult, whether the client is a “white collar” defendant charged with fraud or whether prosecutors charge other crimes, like drug violations. However, the defense is made more difficult in federal court by virtue of the prosecutor’s ability to sometimes freeze and then forfeit all of the Defendant’s assets. Making it more difficult still, the laws sometimes permit prosecutors to freeze the Defendant’s assets even without a hearing in front of a judge! After many years of uncertainty, the Supreme Court the other day agreed to hear a case as to whether the pretrial restraint (or freezing) of a Defendant’s assets is permissible if done without a hearing. The case is Kaley v. United States, and the certiorari petition is here.

Ms. Kaley was in the business of selling medical equipment. She and her husband apparently made a good living selling equipment that certain manufacturers no longer wanted. The federal authorities claimed these practices were fraudulent, and indicted the couple. Prosecutors also filed an ex parte request to restrain and freeze much of the couple’s assets, claiming that the money they had in the bank and which they’d used to buy their house was obtained as proceeds of the fraudulent conduct charged in the indictment. A Federal Magistrate Judge agreed, and issued an order freezing their assets so they could not be used by the couple to defend themselves. The case has had a complex history, with two trips already to the Court of Appeals here in Atlanta before the defense team finally got the Supreme Court to agree to hear the case.
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When we handle federal criminal cases here in Atlanta, Georgia and in other parts of the country, our clients often face criminal penalties along with possible forfeiture of their property. Lawyers often forget how important these financial penalties can be. A recent case from the United States Court of Appeals for the Eleventh Circuit (located several blocks from our office in Atlanta) shows the importance of understanding the immense financial penalties that can be imposed in a federal criminal matter. The case is United States v. Chaplin’s.

Two brothers (we will call them #1 and #2) owned separate jewelry stores here in Atlanta. Brother #1 was caught in an undercover sting operation selling $22,000 in jewelry to a person he thought was a drug dealer. He agreed to accept more than $10,000 in cash from the person he thought was a drug dealer, and also agreed to not file the IRS forms that are required in this situation. Brother #1 was charged with and convicted of money laundering.

The government also charged the corporation that owned Brother #2’s store with similar crimes. This was one of those relatively rare situations where the prosecutors went after a corporate entity. The prosecutors got convictions against the corporation that owned #2’s store based on the fact that some of Brother#1’s dealings were done in the store owned by #2.

Our local Federal Court of Appeals, sitting just down the street from our offices here in Atlanta, yesterday reversed a federal criminal conviction for obstruction of justice. The prosecutors contended that the defendant tried to obstruct a forfeiture matter. The Eleventh Circuit joined other courts and relied on some earlier Supreme Court cases by holding that there cannot be a conviction in this context unless there is evidence that the defendant was aware of the forfeiture proceeding he obstructed. The case is United States v. Friske.

Mr. Friske lives in Wisconsin, but his friend (Erickson) got busted in Florida for drug crimes. Law enforcement listened to calls Erickson made from jail to Friske where he asked the latter to do a “repair job” and remove “three things” buried near Erickson’s pool. Agents got there before Friske, and found $375,000 buried in that location. Later, they observed Friske coming away from the pool area, covered in dirt. Friske made some baloney statements to the police, and later conceded he was just “trying to help a friend.”

The government indicted Friske for attempting to obstruct an official proceeding by attempting to hide and dispose of assets involved in a forfeiture case, in violation of 18 U.S.C. §1512(c)(2). The Eleventh Circuit joined other appellate courts by holding there is a “nexus” requirement in this statute which requires a connection between the obstructive conduct and the proceeding in question. Stated another way, “if the defendant lacks the knowledge that his actions are likely to affect the judicial proceeding, he lacks the requisite intent to obstruct.”

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