US Supreme Court Justice Clarence Thomas Slams Civil Forfeiture Practices

In a denial of certeriori today in Lisa Oliva Leonard v. Texas, No. 16-122, US Supreme Court Justice Clarence Thomas wrote:
This system—where police can seize property with limited judicial oversight and retain it for their own use— has led to egregious and well-chronicled abuses. According to one nationally publicized report, for example, police in the town of Tenaha, Texas, regularly seized the property of out-of-town drivers passing through and collaborated with the district attorney to coerce them into signing waivers of their property rights. Stillman, Taken, The New Yorker, Aug. 12 & 19, 2013, pp. 54–56. In one case, local officials threatened to file unsubstantiated felony charges against a Latino driver and his girlfriend and to place their children in foster care unless they signed a waiver. Id., at 49. In another, they seized a black plant worker’s car and all his property (including cash he planned to use for dental work), jailed him for a night, forced him to sign away his property, and then released him on the side of the road without a phone or money. Id., at 51. He was forced to walk to a Wal-Mart, where he borrowed a stranger’s phone to call his mother, who had to rent a car to pick him up. Ibid. 
These forfeiture operations frequently target the poor and other groups least able to defend their interests in forfeiture proceedings. Id., at 53–54; Sallah, O’Harrow, & Rich, Stop and Seize, Washington Post, Sept. 7, 2014, pp. A1, A10. Perversely, these same groups are often the most burdened by forfeiture. They are more likely to use cash than alternative forms of payment, like credit cards, which may be less susceptible to forfeiture. And they are more likely to suffer in their daily lives while they litigate for the return of a critical item of property, such as a car or a home....
In the absence of this historical practice, the Constitution presumably would require the Court to align its distinct doctrine governing civil forfeiture with its doctrines governing other forms of punitive state action and property deprivation. See Bennis, supra, at 454 (THOMAS, J., concurring) (“One unaware of the history of forfeiture laws and 200 years of this Court’s precedent regarding such laws might well assume that such a scheme is lawless—a violation of due process”). 
I am skeptical that this historical practice is capable of sustaining, as a constitutional matter, the contours of modern practice, for two reasons. First, historical forfeiture laws were narrower in most respects than modern ones. Cf. James Daniel Good, 510 U. S., at 85 (THOMAS, J., concurring in part and dissenting in part) (noting that “ambitious modern statutes and prosecutorial practices have all but detached themselves from the ancient notion of civil forfeiture”). Most obviously, they were limited to a few specific subject matters, such as customs and piracy. Proceeding in rem in those cases was often justified by necessity, because the party responsible for the crime was frequently located overseas and thus beyond the personal jurisdiction of United States courts. See Herpel, Toward a Constitutional Kleptocracy: Civil Forfeiture in America, 96 Mich. L. Rev. 1910, 1918– 1920 (1998); see also id., at 1925–1926 (arguing that founding era precedents do not support the use of forfeiture against purely domestic offenses where the owner is plainly within the personal jurisdiction of both state and federal courts). These laws were also narrower with respect to the type of property they encompassed. For example, they typically covered only the instrumentalities of the crime (such as the vessel used to transport the goods), not the derivative proceeds of the crime (such as property purchased with money from the sale of the illegal goods). See Rumson, supra, at 121–122, 125 (plurality opinion) (Forfeiture of criminal proceeds is a modern innovation). Second, it is unclear whether courts historically permit-ted forfeiture actions to proceed civilly in all respects. 
Some of this Court’s early cases suggested that forfeiture actions were in the nature of criminal proceedings. See, e.g., Boyd v. United States, 116 U. S. 616, 633–634 (1886) (“We are . . . clearly of [the] opinion that proceedings instituted for the purpose of declaring the forfeiture of a man’s property by reason of offenses committed by him, though they may be civil in form, are in their nature criminal”); but see R. Waples, Treatise on Proceedings In Rem 29–30 (1882) (collecting contrary authorities). Whether forfeiture is characterized as civil or criminal carries important implications for a variety of procedural protections, including the right to a jury trial and the proper standard of proof. Indeed, as relevant in this case, there is some evidence that the government was historically required to prove its case beyond a reasonable doubt. See United States v. Brig Burdett, 9 Pet. 682, 690 (1835) (“The object of the prosecution against the Burdett is to enforce a forfeiture of the vessel, and all that pertains to it, for a violation of a revenue law. This prosecution then is a highly penal one, and the penalty should not be inflicted, unless the infractions of the law shall be established beyond reasonable doubt”). 

 Thanks to AFR research director Scott Meiner for the tip.

AFR files Supreme Court amicus brief arguing court lacked power to grant SEC disgorgement order

Americans for Forfeiture Reform is proud to announce that we have filed an amicus brief in Kokesh v. Securities and Exchange Commission, no. 16-529. The U.S. Supreme Court granted review on whether 28 U.S.C. § 2462's five-year statute of limitations applies to claims for “disgorgement.” Section 2462 applies to the enforcement of any "civil fine, penalty, or forfeiture, pecuniary or otherwise." AFR addresses an antecedent question, whether the district court enjoyed the power to enter the disgorgement order in the first place. We say no such authority exists under 15 U.S.C. § 78u(d)(5), the U.S. Code subsection cited below. 

As always, we thank Mahesha P. Subbaraman of Subbaraman PLLC, author of the brief and extraordinary lawyer.

AFR's amicus brief, Kokesh v. SEC, no. 16-529 (U.S. March 3, 2017).

Petitioner's merits brief, Kokesh v. SEC, no. 16-529 (U.S. Feb. 24, 2017).


AFR argues coordinated successive traffic stops must be construed as one stop under the 4th Amendment

Happy to announce the filing of another amicus curiae brief in the U.S. Court of Appeals for the Ninth Circuit. This brief argues that if police coordinate successive stops of motorists, such stops must be analyzed as one stop under the Fourth Amendment. 

Summary of our argument:

When police officers coordinate to stop the same person or vehicle multiple times, this raises major constitutional concerns about coercion by law enforcement and circumvention of Fourth Amendment limits on stops. To address these risks, courts must analyze coordinated successive stops together, account for the collective knowledge of the officers involved, and consider whether extra justification exists for the stops at issue. In this case, Straughn Gorman was subjected to two coordinated successive traffic stops—stops that led to a search of his vehicle and the seizure of $167,070 from him. Gorman was not charged with any crime nor were any illegal drugs found in his vehicle. The district court analyzed the traffic stops at issue together, and found that the second stop involved a redundant record check that unlawfully prolonged the stop. This Court should affirm the district court’s decision. The Fourth Amendment protects every American from prolonged detention without sufficient justification. The district court’s decision makes this clear. This decision thereby serves to ensure that police officers do not use their power to perform traffic stops and conduct record checks in ways that circumvent or gameplay an essential Fourth Amendment protection.

Read the rest of the brief here.

Finally, AFR wishes to extend our many thanks to our friend and frequent collaborator Mahesha Subbaraman of Subbaraman PLLC for his fine work on the brief.

Media Roundup of Yesterday's Win in Luis v. United States

Media coverage of the Supreme Court’s recognition that pretrial restraints of untainted assets are unconstitutional when such restraints prevent defendants from exercising their Sixth Amendment rights to assistance of counsel, Luis v. United States, No. 14-419 (March 30, 2016):

Damon Root explains Luis for Reason.

Amy Howe summarizes the four Luis opinions at Scotusblog.

Adam Liptak does the same for the New York Times.

Prof. Jonathan Adler notes the unusual voting coalitions at the Volokh Conspiracy.

At, Ian Millhiser interprets Justice Kagan’s dissent as soliciting an invitation to overrule United States v. Monsanto, 491 U.S. 600 (1989) (Government may freeze a defendant's tainted assets pretrial, on mere probable cause showing, without violating the Sixth Amendment).

Slate’s Mark Joseph Stern agrees with the concurrence from Justice Thomas.

Prof. Noah Feldman’s frames Luis as the Court standing up for the rights of rich criminal defendants.

The Atlantic’s Matt Ford reframes Luis into a discussion of the nation’s public defense system.


For AFR’s part, we are elated by Luis. Our next step will be defending its breadth in the courts. 

AFR files second U.S. Supreme Court brief

Americans for Forfeiture Reform is pleased to announce the filing of our second amicus curiae brief with the U.S. Supreme Court this term: Brief of Amicus Curiae Americans for Forfeiture Reform in Support of Petitioner, CRST Van Expedited, Inc. v. EEOC, No. 14-1375 (U.S. Jan. 25, 2016) (formatted copy below).

AFR owes an enormous amount of gratitude to Mahesha P. Subbaraman, of Subbaraman PLLC, our counselor for this brief, among others.

We also owe substantial thanks to those of you who have contributed time, money, effort, or any combination thereof to AFR. So, thanks!



No. 14-1375


In The

Supreme Court of the United States

---------------------------------  ---------------------------------







---------------------------------  ---------------------------------

On Writ of Certiorari to the 

United States Court of Appeals for the Eighth Circuit

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 Americans for Forfeiture Reform[1] (“AFR”) is a non-profit, non-partisan civic group concerned with the government’s fearsome power to forfeit private property, which “can be devastating when used unjustly.” Caplin & Drysdale, Chartered v. United States, 491 U.S. 617, 634 (1989). To this end, AFR is especially focused on the problem of civil forfeiture abuse. Civil forfeiture lets the government profit by seizing property allegedly linked to crime without ever having to prove the owner’s guilt. This power thus raises the “serious risk that an innocent person will be deprived of his property.” United States v. $191,910, 16 F.3d 1051, 1069 (9th Cir. 1994). 

 Given this reality, AFR works to increase public awareness of civil forfeiture abuse and the urgent need for legal reform. AFR advances this goal in a variety of ways, including the filing of amicus curiae briefs and helping property owners find effective legal counsel in civil forfeiture cases.[2] 


 AFR is accordingly interested in the present case. This case requires the Court to answer a legal question that could affect the willingness of property owners to resist wrongful government civil forfeiture actions despite Congress’s enactment of a fee-shifting law meant to enable such resistance.[3] That question, in short, is whether the court-ordered dismissal of a government suit for failure to comply with statutory preconditions to filing suit renders the defendant a “prevailing party” eligible to seek a fee award. 

 AFR believes the Court should answer this question with a resounding “yes.” By doing so, the Court will clarify its fee-award jurisprudence in a manner that “permits meaningful judicial review and produces reasonably predictable results.” Perdue v. Kenny A., 130 S. Ct. 1662, 1672 (2010). The Court will also vindicate the “interest of citizens in some minimum standard of decency, honor, and reliability in their dealings with their Government.” Heckler v. Cmty. Health Servs. of Crawford Cnty., Inc., 467 U.S.

51, 61 (1984); see id. at 61 n.13 (collecting cases). 

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 In his 2015 Year-End Report the Chief Justice reminded all lawyers of their duty to avoid “antagonistic tactics, wasteful procedural maneuvers, and teetering brinksmanship.”[4] Yet, when it comes to government civil suits against private defendants, the government too often engages in just such brinksmanship. Consider the present case. The district court found that the “EEOC’s failure to investigate the [Title VII] claims of . . . 67 allegedly aggrieved persons . . . foreclosed any possibility that the parties might settle all or some of this dispute without the expense of a federal lawsuit.” Pet. App. 211a.

 But so long as this kind of conduct enables the government to “pound an opponent into submission,” the government has every incentive to engage in it. Freeport-McMoRan Oil & Gas Co. v. FERC, 962 F.2d 45, 48 (D.C. Cir. 1992). Thus, to level the playing field, Congress has enacted a host of fee-shifting laws granting private defendants who prevail in court the ability to recover their attorney’s fees from the government. These laws include 42 U.S.C. § 2000e-5(k), which holds the government liable for fees in Title VII suits, and 28 U.S.C. § 2465(b)(1)(A), which does the same in federal civil forfeiture actions.


 For these laws to serve their purpose, however, it must be recognized that private defendants do not need a merits judgment or a court-ordered consent decree in order to “prevail” against the government and qualify for a fee award. Cf. Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t of Health & Human Res., 532 U.S. 598, 600 (2001). Private defendants also serve to prevail when the court orders dismissal of the government’s claims. See Angel v. Bullington, 330 U.S. 183, 190 (1947) (“The ‘merits’ of a claim are disposed of when it is refused enforcement.”). 

 The Eighth Circuit failed to realize that here. It held that the district court’s dismissal of sixty-seven government claims did not make Petitioner a “prevailing party” eligible to receive fees under § 2000e5(k). See Pet. App. 23a–24a. The Eighth Circuit based this conclusion on the legal ground for the dismissal: the government’s failure to satisfy Title VII’s preconditions for filing suit. See id. The Eighth Circuit held that because this ground was “not . . . a ruling on the merits,” Petitioner lacked any basis to claim prevailing-party status. Id.; see Buckhannon, 532 U.S. at 603–04 (a “prevailing party” is usually a litigant who has received “some relief on the merits”). 

 What the Eighth Circuit’s analysis did not take into account, however, is the effect of Federal Rule of Civil Procedure 41 on the “dismissal of actions.” In particular, Rule 41(b) provides that for “involuntary dismissals”—like the dismissal here—“[u]nless the dismissal order states otherwise . . . any dismissal not under this rule—except one for lack of jurisdiction, improper venue, or failure to join a party under Rule 19—operates as an adjudication on the merits.” This means the Eighth Circuit had to treat the district court’s dismissal order in this case as a ruling “on the merits” given that this order: (1) did not “state otherwise”; and (2) did not concern “lack of jurisdiction, improper venue, or failure to join a party under Rule 19.” See Pet. App. 202a–217a.

 The Eighth Circuit should thus be reversed for failing to follow Rule 41. At the same time, the Court should observe that Rule 41 clarifies three further aspects of prevailing-party status for defendants. First, court-ordered dismissals will often confer prevailing-party status on defendants. Second, courtordered dismissals for failure to meet statutory preconditions to filing suit are as much “on the merits” as dismissals for failure to establish a claim element. Third, court-ordered dismissals “without prejudice” can still alter the parties’ legal relationship in ways that make defendants into prevailing parties. 

 Taken together, these observations reconcile the Court’s fee-shifting jurisprudence with the main goal of defendants in court: to avoid an adverse judgment and end the litigation. Defendants should be eligible for fee awards regardless of how they achieve this goal—be it through a merits judgment in their favor, a consent decree, or a court-ordered dismissal. The Court now has the chance to clarify this point of law  and, in the process, incentivize the government to litigate its suits in a far more level manner.

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Suspension of Federal Asset Forfeiture Equitable Sharing Program Poses Substantial Risks to Property Owners, Congressional Action Necessary

On December 21, 2015, M. Kendall Day, Chief of the Asset Forfeiture and Money Laundering Section of the United States Department of Justice, issued a letter of notice that payments from the Equitable Sharing program were deferred after Congress rescinded a combined $1.2 billion dollars from the program (in other words, Congress used its appropriation power to use public funds for its own purposes). 

It's worthwhile to note that the Audit of the Assets Forfeiture Fund and Seized Asset Deposit Fund Annual Financial Statements FY 2014 (published in January 2015) indicates on page 6 that the: 

Net position, an indicator of the AFF’s future capability to support ongoing operations, increased to $2,560.8 million in FY 2014 from $1,855.8 million in FY 2013, an increase of 38.0 percent.

With a recission of $1.2 billion from program funds, the net position of the fund would be roughly $1.3 billion. The FY 2014 audit also notes the annual costs facing the Asset Forfeiture Program were $1.775 billion dollars in 2013 and a little over $3 billion dollars in 2014. These costs include "the costs of seizing, evaluating, inventorying, maintaining, protecting, advertising, forfeiting, and disposing of property seized for forfeiture. These costs are necessary to support the AFP and fluctuate in direct relation to the forfeiture activity levels of the investigative, prosecutive, litigative, and administrative participants of the Fund." 

Facing similar levels of operating costs on an annual basis, along with a substantially diminished fund balance, the Department of Justice made the decision that it was in the best interests of federal law enforcement for the federal government to keep ALL of the proceeds from asset forfeiture, rather than continue making arrangements to share distributions with state and local law enforcement. 

However, reformers should not allow the perception that this temporary deferment of Equitable Sharing arrangements represents a victory to proliferate unchecked. Federal prosecutors now don't have to worry about working forfeiture actions that don't have 100% payoffs. Indeed, increased budgetary pressure from Congress makes it more likely...not less...that federal forfeiture prosecutions will continue to be aggressively pursued in more venues than ever before.

Counterintuitively, this policy directive *may* compound issues related to federalization of local law enforcement by increasing the option value of participating in a federal task force. Under the January 16, 2015 Holder order previously governing participation in Equitable Sharing, forfeiture actions stemming solely from state or local law enforcement activity were generally disfavored in lieu of forfeiture actions stemming from activities or organizations with a federal component. Under this latest directive, federal forfeiture dollars will exclusively remain with federal agencies, making the federal agents leading, directing, or facilitating participation with state or local law enforcement the sole brokers of federal agency resources accessible by non-federal agencies participating in task forces, etc. As state and local law enforcers look to maintain baseline access to expensive surveillance, targeting, and military equipment, these federal connections will increase in value, especially if they can be used to start investigations where state and local law enforcement pursue asset forfeiture under state law.

It should be noted that these federal policy directives don't result in substantial real or de facto protections for the rights of American property owners. They exist variously in response to Congressional budgetary pressures, and we have yet to solidify a commitment from an Attorney General or President to curtail practices and incentive structures that result in executive branch misconduct. Ultimately, no system that allows the executive branch to fund itself is desirable in our Constitutional republic; such a setup makes executive overreach inevitable and pervasive. 

Without significant further action by Congress to re-assert its Constitutional "power of the purse", we will continue to see escalating forfeiture payouts to federal agencies continue to set the tone for executive overreach and Constitutional violations. To this end, reformers must make significant inroads both within the insular world of law enforcement special interests as well as the broader world of voter awareness.

DOJ Inspector General Slams DEA Confidential Source Practices

Today the Department of Justice publicly released the Office of the Inspector General Semiannual Report to Congress (dated October 30, 2015), which contains a section (starting at page 38, copied below the fold) detailing the OIG's audit of the DEA's policy and practices related to confidential informants. 

These investigations were likely spurred by revelations in 2013 that the DEA had rehired controversial former informant Anthony Chambers, who had previously been named as a perjurer in 16 different federal cases from 1984 to 2000. During this period, Chambers received at least $4 million in compensation for his services as an informant in cases yielding tens of millions of dollars in asset forfeiture. Notably, when the Chambers scandal came to light, DEA spokeswoman Dawn Dearden claimed:

"However, I can say that DEA follows very strict and rigorous guidelines and protocols when handling all informants.”

Today, with public notice that the DEA agrees with all 7 reforms proposed by the DOJ Inspector General, we know Dearden's claim to be false. 


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Pennsylvania Prosecutors Shouldn't Be Taking Credit for Forfeiture Fund Appropriations -- The Pennsylvania Legislature Should

Yesterday, the Pennsylvania District Attorneys Association testified to the Pennsylvania Senate Judiciary Committee in opposition to civil forfeiture reform legislation (SB 869) sponsored by Senators Mike Folmer (R-48) and Anthony Williams (D-8). PDAA President Risa Ferman slammed SB 869, noting:

“This bill should be referred to as, ‘The Pennsylvania Drug Dealer Bill of Rights,’” said Ferman.  “When more people are dying from drug overdoses than ever before, now is not the time to give a break to drug dealers.  This bill will allow drug dealers to traffic more drugs, make more money and thrive.”

While PDAA recognizes and supports reasonable reforms to improve the civil forfeiture system, Ferman said the provisions written into S.B. 869 go too far.  She testified that the bill as currently written fails to recognize how drug dealers operate or how drug investigations take place.  Should the bill become law, Ferman said it would not only allow drug dealers to keep the tools of their trade, but will also help some defendants intimidate witnesses, avoid convictions and could severely limit law enforcement efforts to stop them.

“Requiring a criminal conviction as a mandatory condition for forfeiture would be an enormous win for drug dealers and would make it simple for drug dealers to protect their property, proceeds, and instrumentalities of crime,” Ferman noted as she outlined how the proposed procedures would play out in the justice system.  “This bill throws out a system communities fighting back against crime and violence count on.”

Along with their harsh criticisms of SB 869's reforms, the PDAA then proceeded to take credit for the ways law enforcement has used forfeiture proceeds:

Forfeiture not only makes communities safer by taking the money and tools of the drug trade out of the hands of criminals, but also by investing forfeiture proceeds into crime fighting and community building tools.  Drug task forces, the heroin antidote naloxone and investments in technology are just a few examples of how forfeiture turns drug money into a net win for taxpayers and the community.

There are a few problems with this stance. 

First, a literal reading of the PDAA's position is that the punishment of property forfeiture should not require a criminal conviction. This "guilty by default" position is contrary to the fundamental principles of liberty enshrined in both the Pennsylvania and US Constitutions and is in a nutshell, outrageous.

Second, the control of forfeiture proceeds by law enforcement undermines the ability of citizens to check abuses of power or unlawful conduct by government officials. In the immortal words of Federalist 58: "This power over the purse may, in fact, be regarded as the most complete and effectual weapon with which any constitution can arm the immediate representatives of the people, for obtaining a redress of every grievance, and for carrying into effect every just and salutary measure."

It's also worth noting that Risa Ferman, who also serves as the district attorney for Montgomery County, presides over an asset forfeiture program that egregiously violates the rights of Montgomery County citizens:

"...the ACLU- PA found no records showing that property owners were even charged with a crime in connection with 15% of forfeitures. An additional 8% of property owners were never convicted of a related crime. Even where the DA’s office secured a conviction, many of these were for drug possession (16%) or purchase (10%), rather than drug dealing...

...In comparison, while African-Americans make up only 9% of Montgomery County’s population and 37% of those arrested for forfeitable offenses, our random sample of cases showed that they constituted an estimated 53% of the property owners faced with forfeiture cases between 2012 and 2014..."

We hope that the Pennsylvania Legislature takes action to restore the property rights of citizens by enacting the reforms in SB 869.


Luis v. United States, No. 14-419, merits stage briefs:

Merits stage briefs filed in Luis v. United States, No. 14-419, as of August 29th, 2015:
Brief of amicus curiae Americans for Forfeiture Reform ("AFR")Luis v. United States, No. 14-419 (U.S. Aug. 25, 2015). (As we will never tire of saying, AFR owes an enormous amount of gratitude to Mahesha P. Subbaraman, of Subbaraman PLLC, our counselor for this brief.)
Brief of amicus curiae American Bar Association ("ABA")Luis v. United States, No. 14-419 (U.S. Aug. 25, 2015).
Brief of amici curiae Cato Institute and DKT Liberty ProjectLuis v. United States, No. 14-419 (U.S. Aug. 25, 2015).
Brief of amicus curiae New York Council of Defense Lawyers ("NYCDL")Luis v. United States, No. 14-419 (U.S. Aug. 25, 2015).
Brief of amicus curiae Rutherford InstituteLuis v. United States, No. 14-419 (U.S. Aug. 25, 2015).
Joint appendixLuis v. United States, No. 14-419 (U.S. Aug. 18, 2015).
Brief of petitioner Sila LuisLuis v. United States, No. 14-419 (U.S. Aug. 18, 2015).

More resources:
Scotusblog's page for Luis v. United States, No. 14-419 (w/ cert. stage briefing).
United States v. Luis, 564 Fed. Appx. 493 (11th Cir. 2014).
United States v. Luis966 F. Supp. 2d 1321 (S.D. Fla. 2013).

AFR files first U.S. Supreme Court amicus curiae brief: Brief of amicus curiae Americans for Forfeiture Reform ("AFR"), Luis v. United States, No. 14-419 (U.S. Aug. 25, 2015).

Americans for Forfeiture Reform is pleased to report that we filed our first friend of the court brief in a U.S. Supreme Court case, Luis v. United States, No. 14-419, this week. 

We are also pleased to report that we are quite proud of this brief.

AFR owes an enormous amount of gratitude to Mahesha P. Subbaraman, of Subbaraman PLLC, our counselor for this brief, friend, and frequent collaborator. We also owe substantial thanks to those of you who have contributed time, money, effort, or any combination thereof to AFR.

Brief of amicus curiae Americans for Forfeiture Reform ("AFR")Luis v. United States, No. 14-419 (U.S. Aug. 25, 2015) (tables of contents and cited authorities are omitted below, among other edits; click the hyperlink for a pdf of the full brief):



No. 14-419


In The

Supreme Court of the United States














On Writ of Certiorari to the United States Court of Appeals for the Eleventh Circuit











Americans for Forfeiture Reform[1] (“AFR” or “Amicus”) is a non-profit, non-partisan civic group concerned with the government’s fearsome power to forfeit private property—a power that is “devastating when used unjustly.” Caplin & Drysdale, Chartered v. United States491 U.S. 617, 634 (1989). AFR thus seeks to increase public awareness of government abuses of this power and the urgent need for legal reform. AFR advances this mission through, among other things, filing amicus curiae briefs in forfeiture cases.[2] AFR is interested in the present case because forfeitures “should be enforced only when within both letter and spirit of the law.” United States v. One 1936 Model Ford V-8 De Luxe Coach, 307 U.S. 219, 226 (1939). Here, a district court imposed a blanket freeze on Petitioner’s property based on an erroneous interpretation of a highly limited forfeiture law. AFR therefore believes the Court should use this case to reaffirm the level of care that courts should take when interpreting and enforcing forfeiture laws.

[1] This brief is filed based on Petitioner’s written blanket consent filed with this Court and Respondent’s written consent to Amicus. No counsel for a party authored this brief in whole or in part; nor did any person or entity, other than Amicus and its counsel, make a monetary contribution intended to fund the preparation or submission of this brief.


[2] See, e.g., Brief of Amicus Curiae Americans for Forfeiture ReformUnited States v. Moser, No. 13-55266 (9th Cir. Nov. 1, 2013); see also United States v. Moser, No. 13-55266 (9th Cir. Feb. 5, 2015) (order granting AFR’s motion under Fed. R. App. P. 29(g) for permission to participate in oral argument).





The freezing or forfeiture of private property is an “exceedingly drastic” government act that has long been disfavored under common law. One 1936 Model Ford307 U.S. at 226. The government thus may not freeze or forfeit property absent clear legal authority to do so. But no such authority existed in this case—a reality made clear by the hypothetical that the district court offered here to explain why effectively freezing all of Petitioner’s property did not violate her Sixth Amendment right to counsel.

The hypothetical went as follows: imagine a suspect is arrested following a $100,000 bank robbery with $100,000 on him and no good account of where this cash came from. See P.App.31-32. It would be “reasonable” to deny the suspect use of the $100,000 to pay for a lawyer as it is “obvious” the cash does not belong to the suspect. Id. But what if the suspect had already spent the $100,000 before his arrest but also had another $100,000 in legitimate savings? Id. The court reasoned that it would be just as fair to deny the suspect the use of his savings to pay for a lawyer as his “decision to spend the $100,000 he stole” could not free him “to hire counsel with the other $100,000 when Congress has authorized restraint of . . . [his] substitute assets.” Id.

But this logic runs smack into what Congress has actually authorized. Under the Fraud Injunction Act, 18 U.S.C. § 1345—the statute that the district court found authorized a blanket $45 million freeze on Petitioner’s property in this case—federal courts may freeze assets only when a person is “alienating or disposing of property, or intends to alienate or dispose of property” that is traceable to certain federal offenses. Id. § 1345(a)(2). The Act thus could not authorize a freeze on the hypothetical suspect described above because this suspect no longer has any property traceable to a federal offense that he can alienate, much less intend to alienate.

There lies the fundamental problem with the $45 million freeze that was imposed on Petitioner here. Despite the exceedingly drastic nature of this freeze, neither the district court originally nor the Eleventh Circuit on appeal considered whether this freeze was authorized by the full text of the Fraud Injunction Act. See P.App.2, 9-11. Both courts instead largely assumed the Act did exactly what the government wanted it to do in this case: ensure that when some assets allegedly “obtained as a result of fraud cannot be located, a person’s substitute, untainted assets may be restrained instead.” P.App.10.

The Act’s text, historical purpose, schematic role, as well as governing legal canons, paint a different picture. Under the Act, a court may freeze actually tainted property—i.e., property traceable to a federal offense. Or a court may freeze constructively tainted property—i.e., property that is not connected to any crime but is equal in value to the actually tainted property that a person currently possesses. This untainted property is thus deemed “tainted” by the court either to preserve the status quo (e.g., freezing $100,000 in untainted cash instead of a $100,000 tainted car at risk of depreciation) or to protect third parties who would be harmed if a person’s tainted property were to be frozen. At all times, however, the Act requires a freeze to be tied to tainted property that a person presently holds (and thus can alienate).

Hence, the Act does not authorize the freezing of a person’s untainted property based on the sum value of property that a person may have improperly obtained or used in the past. Or, in concrete terms, the Act does not permit a $100,000 freeze on John Doe’s bank accounts because Doe allegedly defrauded the government of $100,000 five years ago. The Act instead requires the government to show the total amount of money in Doe’s accounts that is traceable to the alleged fraud today (whether $1 or $100,000) and further show that Doe intends to spend this tainted cash. The Act then enables the court to freeze either the tainted cash or untainted property belonging to Doe of equivalent value—but not both.

That is what should have happened here. But instead, the district court accepted the government’s charge that Petitioner improperly took $45 million from Medicare between 2006 and 2012, and then imposed a sweeping $45 million freeze on all of Petitioner’s property without determining whether any of this property was actually traceable to Petitioner’s alleged fraud (i.e., tainted) or not. See P.App.6, 13. The district court thus failed to acquit its fundamental responsibility when enforcing a forfeiture-related law like the Fraud Injunction Act—to ensure that its order fell “within both letter and spirit of the law.” One 1936 Model Ford, 307 U.S. at 226. The following plain interpretation of the Act, in turn, exposes the gravity of this error and a clear way to fix it that avoids the constitutional problems spawned by this error.








I.  The Fraud Injunction Act (“FIA”) allows a court to freeze only tainted property—the Act does not govern untainted property.

The Fraud Injunction Act, 18 U.S.C. § 1345, empowers the Attorney General to enjoin people from committing certain fraud-based federal offenses and from dissipating property traceable to these offenses (i.e., “tainted property”). The Act does not, however, enable the Attorney General to obtain “the functional equivalent of an order of attachment” against all of a defendant’s property. United States v. Jones, 652 F. Supp. 1559, 1560 (S.D.N.Y. 1986). Indeed, as detailed below, a plain reading of the Act reveals that in authorizing property freezes, the Act is not concerned with how much property the accused may have illegally taken—it is only concerned with how much illegal property the accused actually has.

A. The FIA lets a court freeze a person’s property only if the property is “traceable to” fraud (i.e., tainted).

To understand the property freezes authorized by section (a)(2) of the Fraud Injunction Act, the entire Act must be considered. The Act’s first major section states “the Attorney General may commence a civil action in any Federal court to enjoin”: (1) a person who is “violating or about to violate” any anti-fraud provision under Chapter 63 of Title 18 of the U.S. Code; (2) a person who is “committing or about to commit a banking law violation”; and (3) a person who is “committing or about to commit a Federal health care offense.” 18 U.S.C. § 1345(a)(1).

The point of § 1345(a)(1), then, is to enable the Attorney General to stop fraudulent conduct before or while it is happening—not to remediate such conduct after the fact. This is reflected by the consistent use of the present tense in § 1345(a)(1), which authorizes injunctions against people who are “committing” or who are “about to commit” certain violations, versus speaking of people who have committed a violation. Cf., e.g.42 U.S.C. § 1320a-7a(k) (allowing injunctive relief against any person who “has engaged” in health care fraud). Federal courts have thus limited any grant of injunctive relief under § 1345(a)(1) to situations where the alleged fraudulent scheme to be stopped is “ongoing and there exists a threat of continued perpetration,” thereby emphasizing that “the statutory equitable remedy [under § 1345] is not available for solely past violations.” United States v. William Savran & Assocs., Inc., 755 F. Supp. 1165, 1178 (E.D.N.Y. 1991) (collecting examples).

Section (a)(2) of the Fraud Injunction Act carries the same present-tense emphasis as (a)(1). It states that “the Attorney General may commence a civil action” to enjoin any person who is “alienating or disposing of property, or intends to alienate or dispose of property” that was “obtained as a result of ” or “is traceable to” a banking or health care violation. Section 1345(a)(2) thus covers only those people who presently have tainted property (i.e., property “traceable to” a violation). And this makes sense: a court cannot logically order a person to keep property they do not have; nor can a court rightfully order a person to stop using legitimate property.

This leads to § 1345(b), which also speaks in the present tense like § 1345(a). It states that where the Attorney General has filed suit under § 1345(a) to stop either fraudulent conduct or the dissipation of tainted property, the court may take any other action “warranted to prevent a continuing and substantial injury to the United States or to any person . . . for whose protection the action is brought.” Id. This does not grant any new form of power to the court—it merely confirms that a court may use its traditional, limited equitable powers in enforcing §§ 1345(a)(1) and (a)(2). See Jones, 652 F. Supp. at 1559-60.

With this context in mind, the plain meaning of §§ 1345(a)(2)(A) and (B) becomes accessible. These provisions delineate two distinct forms of relief that the Attorney General may choose between in seeking a court order under § 1345(a)(2) to prevent tainted property from being hidden or dissipated. As such, under § 1345(a)(2)(A), where a person “is alienating or disposing of ” tainted property—or where a person “intends” to do this—the Attorney General may seek a court order to “enjoin such alienation or disposition of property.” In some cases, this may be more than enough. For example, barring a jailed defendant from spending tainted cash in his personal bank account will preserve the status quo value of this cash.

But in cases where a simple injunction will not protect the value of tainted property, § 1345(a)(2)(B) comes into play. Unlike (a)(2)(A), this provision lets the Attorney General obtain a court order that “prohibit[s] any person”—not just the person who happens to possess the tainted property—from “withdrawing, transferring, removing, dissipating, or disposing of any such property or property of equivalent value.” This provision accordingly entails an important departure from Federal Rule of Civil Procedure 65(d)(2), which in general limits injunctive relief in civil actions to just the named parties and those acting in concert with them. Section (a)(2)(B) also empowers the court to “appoint a temporary receiver to administer such restraining order.”

This provision thus enables the government to preserve the status quo value of tainted property in the face of third-party claims to this property. On this score, consider a hypothetical fraud suspect who uses tainted cash to buy a car that he then allows his innocent son to drive. As long as the son keeps using the car (i.e., depreciating its value), the fact that the father is barred from selling the car will not preserve the car’s value. Section (a)(2)(B) avoids this problem by enabling the court to enter an order that prohibits “any person” from “dissipating” the car, thus barring the son from using the car even though the son is not a named defendant in the Attorney General’s civil action under § 1345 against the father.

But what if our fraud suspect instead puts his tainted cash into a bank account to pay his innocent mother’s hospital bills? Prohibiting “any person” from “dissipating” this account—including both the mother and the hospital—would preserve its value. It would also harm the mother’s health, presuming she has no other way to pay her hospital bills. And there lies the importance of the fact that § 1345(a)(2)(B) permits a court to prohibit the use of either tainted property “or property of equivalent value.” Hence, instead of freezing the tainted cash relied upon by the mother, the court may freeze other untainted property of equal value that the suspect holds (e.g., real estate), constructively transferring the “tainted” status of the former cash onto the latter property. And the court may do the same where the value of tainted property is better preserved by freezing untainted property of equal value than by freezing the tainted property itself, which may be subject to depreciation (e.g., freezing $100,000 in untainted cash rather than a tainted car valued at $100,000).

The phrase “or property of equivalent value” in § 1345(a)(2)(B) thus does not authorize the freezing of a person’s untainted property as a mere substitute for tainted property that cannot be located or that may have already been dissipated. Instead, this phase codifies the far more limited notion that “restraining orders entered before forfeiture should be concerned with preserving assets equivalent in value to the po- tentially forfeitable property, and not necessarily the precise property.” United States v. Regan858 F.2d 115, 121 (2d Cir. 1988) (interpreting the pre-trial asset freezes authorized under 18 U.S.C. § 1963(d)(1)(A)). And by codifying this notion, this phrase balances the extraordinary injunctive reach of § 1345(a)(2)(B) to “any person” with a quantum of respect for the legal reality that “orders directed at third parties are strong medicine and should not be used where measures that are adequate and less burdensome on the third parties are available.” Regan, 858 F.2d at 121.3

[3] This reading of § 1345(a)(2)(B) consequently explains why (a)(2)(B) explicitly provides for the appointment of a temporary receiver while (a)(2)(A) does not. A temporary receiver may well be needed to ensure that third-party access to actually tainted property is not abused, and that constructively tainted property is properly managed to preserve its value. Seee.g.Regan, 858 F.2d at 121 (affirming court appointment of a monitor to administer pretrial asset freeze affecting third parties).


So, to recap: § 1345(a)(2) lets a court preserve the value of tainted property in one of two ways. The court may freeze actually tainted property—i.e., property traceable to a banking or federal health care violation. Or the court may freeze constructively tainted property—i.e., untainted property that is equal in value to a person’s actually tainted property and then is treated as “tainted” by the court in order to preserve the status quo or to ensure that innocent third parties are still able to use actually tainted property. In practical terms, this means that where a person is accused of perpetrating a $10 million fraud and examination of their property reveals that they hold just a $5 million house traceable to the fraud and $5 million in cash acquired long before the fraud, the court may freeze either the tainted house or the untainted cash as “property of equivalent value” to the tainted house. But § 1345(a)(2) does not allow both the cash and the house to be frozen on the ground that the accused allegedly took $10 million and freezing these two properties would ensure the government a full recovery upon conviction.4

[4] See Caldwell v. United States49 U.S. 366, 379-80 (1850) (holding that where a forfeiture-related law gives the government a disjunctive choice between two ways to forfeit property, the government may choose either option).


Indeed, were the plain terms of § 1345(a)(2) meant to be interpreted in this latter way—as a law enabling the government to impose a pretrial blanket freeze on a person’s assets in an amount equal to the putative fraud committed by the person—then the law would read this way. It does not. The clearest proof of this can be seen by comparing § 1345(a)(2) to 12 U.S.C. § 1818(i)(4), a banking law that actually does authorize prejudgment attachment. Both sections were enacted under the Comprehensive Thrift and Bank Fraud Prosecution and Taxpayer Recovery Act of 1990, Title XXV of the Crime Control Act of 1990, Pub. L. No. 101-647, § 2521, 104 Stat. 4859, 4864-65 (1990). See United States v. DBB, Inc., 180 F.3d 1277, 1284 (11th Cir. 1999) (using § 1818(i)(4) to interpret § 1345(a)(2)).

Unlike § 1345(a)(2), § 1818(i)(4) is explicitly entitled “Prejudgment attachment.” Cf. Almendarez- Torres v. United States523 U.S. 224, 234 (1998) (the “heading of a section” is a tool of statutory construction). The operative language of § 1818(i)(4), in turn, contains none of the terms in § 1345(a)(2) that limit the asset-freezing power of § 1345(a)(2) to actually or constructively tainted property. Section 1818(i)(4) instead provides that incident to a civil or administrative legal proceeding against an insured depository institution, a court may “prohibit[ ] any person subject to the proceeding from withdrawing, transferring, removing, dissipating, or disposing of any funds, assets or other property.”

Accordingly, given the vast difference between a law like § 1818(i)(4) that reaches “any” property and a law like § 1345(a)(2) that only reaches property “traceable to” fraud, it is no surprise that most courts have enforced § 1345(a)(2) with a careful eye towards freezing only tainted property.5 In United States v. Brown, for example, the Sixth Circuit reversed a property freeze under § 1345(a)(2) on all funds held by defendants “at any financial institution except for an allowed withdrawal of $10,000 per month for business expenses.” 988 F.2d 658, 664 (6th Cir. 1993). The Sixth Circuit emphasized that only assets “related to the alleged fraud” were freezable and thus criticized the district court for failing to “distinguish between the proceeds from the alleged . . . fraud and [defendants’] untainted [business] funds.” Id.

[5] See, e.g., United States v. Cacho-Bonilla206 F. Supp. 2d 204, 209 (D.P.R. 2002) (holding that § 1345 receiver could only administer property traceable to a violation); United States v. Sriram, 147 F. Supp. 2d 914, 947 (N.D. Ill. 2001) (finding nothing in the language of § 1345 to show it “embrace[d] assets not only traceable to the violation but also assets sufficient to secure an ultimate money judgment”); United States v. Fang937 F. Supp. 1186, 1194, 1201 (D. Md. 1996) (“[A]ny assets to be frozen [under § 1345] must in some way be traceable to the allegedly illicit activity.”); United States v. Quadro Corp., 916 F. Supp. 613, 618-19 (E.D. Tex. 1996) (denying § 1345 freeze where the government failed to link “any specific assets” to an alleged fraud); see also United States v. Mercy Reg’l Health Sys., Ltd., No. 08-cv-0188, 2008 U.S. Dist. LEXIS 19362, at *10 (S.D. Ill. Mar. 13, 2008) (“[T]he Court will only restrain assets in bank accounts . . . traceable to the violations alleged.”).

 Here, however, the government, district court, and Eleventh Circuit read § 1345(a)(2) in a way that eliminated any need on their part to identify the amount of tainted property held by the Petitioner, much less distinguish this property from Petitioner’s untainted holdings. Such rewriting of § 1345(a)(2) should not be sustained by this Court. 


B. Construing the FIA to reach untainted property rewrites the FIA.

While the Fraud Injunction Act, § 1345(a)(2) has been read by most courts to authorize the freezing of only tainted property (either actual or constructive), the government, district court, and Eleventh Circuit in this case took a different view. The government read § 1345(a)(2) as allowing a court to freeze as much of a person’s property as is needed to “ensure that sufficient assets are available to satisfy any judgment requiring restitution or forfeiture.” Cert. Pet. 8 (quoting the government). The district court buttressed this view, finding the “equivalent value” language in § 1345(a)(2)(B) meant that “when some of the assets . . . obtained as a result of fraud cannot be located, a person’s substitute, untainted assets may be restrained instead.” P.App.10. The Eleventh Circuit then essentially rubber-stamped this view by affirming the district court without any substantive analysis of § 1345(a)(2) or how this provision has been construed by most courts. See P.App.1-3.

If the government and district court’s reading of § 1345(a)(2) is to be taken seriously, however, then it means effectively rewriting this provision using the past tense and rendering key parts of it surplusage. Here is what § 1345(a)(2) looks like as interpreted by the government, the district court, and the Eleventh Circuit in this case, with the grey bars reflecting the language in § 1345(a)(2) that is rendered surplusage by this interpretation:

(2) If a person [has] is alienat[ed] or dispos[ed] of property, or intends to alienate or dispose of property, obtained as a result of a banking law violation (as defined in section 3322 (d) of this title) or a Federal health care offense or property which is traceable to such violation, the Attorney General may commence a civil action in any Federal court— (A) to enjoin such alienation or disposition of property; or (B) for a restraining order to— (i) prohibit any person from withdrawing, transferring, removing, dissipating, or disposing of any such property or property of equivalent value; and (ii) appoint a temporary receiver to administer such restraining order.

Under this view of § 1345(a)(2), the government may freeze a person’s assets without ever needing to show that the person holds even a single dollar that is “traceable to” a banking or health care violation. The government need only show that sometime in the past, a person “alienat[ed]” tainted property, thus letting the court freeze the person’s untainted proper- ty in an amount “equivalent” to the alienated tainted property. This places § 1345(a)(2) in stark tension with every other part of § 1345 (which are all focused on present, not past, conduct), makes the simple injunction under § 1345(a)(2)(A) irrelevant (as this injunction only serves to restrict a person from alienating tainted property they now have), and detaches the “property of equivalent value” language in § 1345(a)(2)(B) from the words immediately before it (“any such property or”) that most naturally serve to answer the question “equivalent to what?”

Such an interpretation of § 1345(a)(2) thus flies in the face of this Court’s precedents, which express “a deep reluctance to interpret a statutory provision so as to render superfluous other provisions in the same enactment.” Pa. Dep’t of Pub. Welfare v. Davenport, 495 U.S. 552, 562 (1990). Indeed, the very goal of statutory interpretation is to “give effect, if possible, to every clause and word of a statute, avoiding, if it may be, any construction which implies the legislature was ignorant of the meaning of the language it employed.” Montclair v. Ramsdell107 U.S. 147, 152 (1883). Finally, “[w]hen a statute limits a thing to be done in a particular mode, it includes the negative of any other mode.”6 Botany Worsted Mills v. United States278 U.S. 282, 288 (1929).

[6] This principle is of particular relevance in dealing with forfeiture-related statutes, because “the legislature may provide that its forfeitures shall take effect differently from the course prescribed by the common law.” United States v. 1960 Bags of Coffee12 U.S. 398, 408 (1814) (Story, J., concurring).


Yet, the reading of § 1345(a)(2) advanced here by the government, the district court, and the Eleventh Circuit does not follow any of these principles. This reading instead elides those words in § 1345(a)(2) that limit when property may be frozen and what kinds of property may be frozen, thereby granting the government an unprecedented amount of “leverage” to “exert against a potential criminal fraud defendant.” Fang, 937 F. Supp. at 1202. Such an outcome, in turn, squarely conflicts with this Court’s decision last term in Yates v. United States.

In Yates, this Court rejected “the Government’s unrestrained reading” of 18 U.S.C. § 1519, which penalizes the destruction of records, documents, and tangible objects relevant to a federal investigation—a law the government argued could be read to reach the disposal of illegally-caught fish. 135 S. Ct. 1074, 1078-79, 1081 (2015) (plurality op.). The Court noted that while it might be “advisable” for Congress to enact “a coverall spoliation of evidence statute,” the Court could not morph § 1519 into such a broad statute absent “clear and definite” language in § 1519 supporting this view. Id. at 1088-89.

Yates thus stands for the simple proposition that a law should not be read to give extraordinary power to the government, however “advisable” this power might be, absent clear language in the law to support this reading. But here, the government, the district court, and the Eleventh Circuit all read § 1345(a)(2) to operate as a prejudgment attachment on all of a criminal defendant’s property (tainted or not)—an extraordinary remedy7—not by pointing to clear and definite language in § 1345(a)(2) supporting this conclusion (e.g., a putative section heading like “prejudgment attachment”), but rather by ignoring the clear and definite language in the law supporting the exact opposite conclusion (e.g., use of the present-tense and the “traceable to” requirement).

[7​] See infra Part IV; Sriram, 147 F. Supp. 2d at 947-48.


As such, the Court should reject this reading of § 1345(a)(2) with the same vigor it rejected the government’s overreaching in Yates. The better reading of § 1345(a)(2) belongs to Amicus, because only Amicus reads this provision in a way that gives meaning to every word in this provision while harmonizing this provision with every other part of the Fraud Injunction Act. See FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 133 (2000) (“A court must . . . interpret [a] statute as a symmetrical and coherent regulatory scheme and fit, if possible, all parts into a[ ] harmonious whole.” (internal citations and quotation marks omitted)).


C. Under a plain reading of the FIA, the district court’s freeze of Luis’s assets lacked statutory authorization.

 Once the Fraud Injunction Act, § 1345(a)(2) is read in plain terms—as set forth in Part I.A above—it becomes clear that the $45 million property freeze that the district court entered against Petitioner here lacked proper statutory authorization. See P.App.4-34. This is true in two main respects:

First, in order to freeze Petitioner’s property under § 1345(a)(2), the district court had to find that Petitioner “is alienating or disposing” or “intends to alienate or dispose” of property obtained from or traceable to a banking law violation or health care offense. The district court did not find this. What the district court held was that Petitioner “has alienated or disposed of property, and unless enjoined could continue to alienate or dispose of property” from a health care violation. P.App.5 (emphasis added). The district court thus froze almost all of Petitioner’s property based on a combination of past conduct and speculative reasoning about Petitioner’s future conduct—not on what Petitioner was actually doing or intended to do. By contrast, in United States v. Gupta, a district court froze a defendant’s assets under § 1345(a)(2) after finding that the defendant “is now dissipating assets traceable to his fraud.” No. 11-3329, 2011 U.S. Dist. LEXIS 97264, at *11 (C.D. Ill. Aug. 30, 2011) (emphasis added).

Second, to freeze Petitioner’s property under § 1345(a)(2), the district court had to identify the property held by Petitioner that was “obtained from” or “traceable to” Petitioner’s alleged health care offense. This is because under § 1345(a)(2)(A) and (B), the only property that the Petitioner can be enjoined from dissipating is either tainted property now in her possession8 or untainted property equal in value to the tainted property now in her possession. But the district court made no effort to analyze Petitioner’s current holdings.9 Instead, the district court looked to the fact that Petitioner’s alleged health care offenses “resulted in $45 million of improper Medicare bene- fits being paid” to Petitioner, and then imposed a blanket $45 million freeze on all property belonging to Petitioner—even though it was undisputed that Petitioner “has much less than $45 million in person- al assets.” P.App.6,12.

[8] By “possession,” Amicus means all forms of possession, actual and constructive. See Henderson v. United States, 135 S. Ct. 1780, 1784 (2015).


​[9] Had the district court performed this analysis, it could have readily identified property in Petitioner’s possession that was tainted and thus freezable under § 1345(a)(2)—a reality made clear by the court’s acknowledgement of the government’s “evidence that [Petitioner] used . . . [tainted] funds to purchase luxury items, real estate, [and] automobiles.” P.App.13-14.​


 But even if Petitioner did obtain $45 million through the offenses she is accused of, § 1345(a)(2) still requires the court to determine how much of this $45 million is presently in the Petitioner’s possession. As such, the only way the district court could freeze all of Petitioner’s property (as it effectively did here) is by finding that all of Petitioner’s property could be traced to the tainted $45 million. Cf. United States v. Barnes, 912 F. Supp. 1187, 1198 (N.D. Iowa 1996) (freezing under § 1345(a)(2) all bank accounts held by defendants because all the cash in these accounts was traceable to defendants’ alleged fraud).

The district court did not make such a finding here—nor could it given Petitioner’s showing that at least $15 million of her property came from untainted sources. Cert. Pet. 12. The district court’s broad $45 million freeze could, of course, be read as treating this untainted $15 million as “property of equivalent value” to Petitioner’s tainted holdings. But the dis- trict court never found that Petitioner held $15 million in tainted property. Plus, even if the district court had made this finding, the court then could freeze either Petitioner’s actually tainted $15 million or her untainted $15 million (which, once frozen, would be constructively tainted). Not both.

The district court’s imposition of a pretrial blan- ket $45 million freeze on Petitioner’s property there- fore cannot be reconciled with the plain requirements of § 1345(a)(2). And while the district court may well have viewed this freeze as consistent with the idea that the government should be able to recover in full even when “some of the assets that were obtained as a result of fraud cannot be located,” that is not what

§ 1345(a)(2) is meant to do. P.App.10. Indeed, this provision has a much narrower purpose: to prevent fraud suspects from concealing or dissipating the tainted property they actually possess.



II. Construing the FIA to reach only tainted property accords with the FIA’s historical purpose: to prevent the concealment and dissipation of tainted property.

 Congress enacted the Fraud Injunction Act, 18 U.S.C. § 1345, as part of the Comprehensive Crime Control Act of 1984, Pub. L. No. 98-473, § 1205(a), 98 Stat. 1837, 2152 (1984). At that time, the Act did not explicitly authorize property freezes—it just allowed courts to enjoin imminent and ongoing fraudulent conduct. See Jones, 652 F. Supp. at 1559. It was only through the Comprehensive Thrift and Bank Fraud Prosecution and Taxpayer Recovery Act of 1990 that § 1345 was finally amended to empower courts to freeze property. See DBB, Inc., 180 F.3d at 1282. The Sixth Circuit effectively traces the course of this evolution in United States v. Brown, 988 F.2d at 660-61. See also Fang, 937 F. Supp. at 1192-94.

 Ultimately, the main point to be taken from the historical genesis of the Fraud Injunction Act, both before and after Congress amended it to authorize property freezes, is that the Act’s core purpose has always been to prevent imminent or ongoing harm— not penalize or remediate such harm after the fact. As Congress took care to observe in explaining why it was necessary to adopt the Act in the first place: “Experience has shown that even after indictment or the obtaining of a conviction, the perpetrators of fraudulent schemes continue to victimize the public. . . . [T]he Attorney General should be empowered to bring suit to enjoin the fraudulent acts or practices.” S. Rep. No. 98-225, at 402 (1983). And the original text of § 1345—now present at § 1345(b)— bears out this understanding, empowering courts to enjoin fraud violations only so far “as is warranted to prevent a continuing and substantial injury to the United States.”

 That purpose did not change in 1990, when Congress amended the Fraud Injunction Act to give courts the power to freeze property traceable to fraudulent conduct. Indeed, as the Sixth Circuit notes: “By amending section 1345, Congress wanted to respond to the savings and loan scandal because ‘executives of thrift institutions and other[s] associated with them enriched themselves by fraudulently diverting immense amounts of funds from those institutions.’ ” Brown, 988 F.2d at 662 (quoting H.R. Rep. No. 101-681(I)). Accordingly, to ensure these tainted funds were not concealed or dissipated before the government could recover them, Congress gave courts the power under § 1345(a)(2) to freeze these funds, “enhanc[ing] the United States’ ability to prevent . . . the wrongful disposition of assets after . . . violations have occurred.” Id. (emphasis added).

 Even the government has acknowledged this to be the purpose of § 1345(a)(2), as may be seen in 1997 bulletin published by the Executive Office for U.S. Attorneys which clarifies that the government “may feasibly seek an injunction [under § 1345(a)(2)] long after the underlying bank fraud or health care fraud has stopped if one can prove imminent alienation or disposal of the proceeds of the fraud.”10

Indeed, § 1345(a)(2) enables a court to freeze a person’s property to prevent them from hiding or spending tainted money. But once a person has spent this money (or if the money cannot be located), then any freeze on a person’s property serves a totally different purpose: to remediate harm after the fact by guaranteeing a person’s capacity for restitution. That punitive—as opposed to preventative—purpose11 cannot be found in the historical genesis of § 1345, and thus furnishes additional grounds for the Court to favor Amicus’s prevention-driven interpretation of § 1345(a)(2) over one that treats this law as a broad authorization of prejudgment attachment.

[10] See Michael Runyon (Asst. U.S. Att’y, M.D. Fla.) & David Jennings (Asst. U.S. Att’y, W.D. Wash.), Practicing in the Field of Injunctions, 45 USABULLETIN, no. 2, April 1997, available online usab4502.pdf (at PDF p.41) (emphasis added).


[11] See United States v. Logal106 F.3d 1547, 1551-52 (11th Cir. 1997) (“ ‘[T]hough restitution resembles a judgment for the benefit of a victim, it is penal . . . .’ ”); see also Johnson v. United States, 135 S. Ct. 2551, 2566 n.1 (2015) (Thomas, J., concurring) (“[A] law imposing a monetary exaction as a punishment for noncompliance with a regulatory mandate is penal.”).



III. Construing the FIA to reach only tainted property accords with the exclusive power of the Health and Human Services Secretary to exact monetary penalties and re- strain assets in Medicare fraud cases.

The district court froze Petitioner’s property in this case based on government evidence that Petitioner had committed several federal health care offenses, including billing fraud and paying kickbacks. See P.App.12-14. It should not be assumed, however, that the Fraud Injunction Act, 18 U.S.C. § 1345(a)(2), was the only law that the government could rely on to offset Petitioner’s alleged $45 million fraud. See id. In fact, the government could have relied on 42 U.S.C.

§ 1320a-7a(k), which, unlike § 1345(a)(2), is a prejudgment attachment statute meant to be used in health care fraud cases. The existence of this law, in turn, only further affirms why § 1345(a)(2) cannot be read as a prejudgment attachment statute.

Under 42 U.S.C. § 1320a-7a(k), whenever the Secretary of the U.S. Department of Health and Human Services (“HHS”) “has reason to believe that any person has engaged, is engaging, or is about to engage in any activity which makes the person subject to a civil monetary penalty” under § 1320a-7a— which includes both billing fraud and illegal kickbacks12—“the Secretary may bring an action in an appropriate district court . . . to enjoin the person from concealing, removing, encumbering, or disposing of assets which may be required in order to pay a civil monetary penalty.” And the monetary penalties established under § 1320a-7a for various federal health care offenses are substantial (e.g., a $50,000 penalty for every illegal kickback plus up to three times the value of all such kickbacks).13

​[​12]​ See 42 U.S.C. §§ 1320a-7a(a)(1) (civil monetary penalty for Medicare fraud); 1320a-7a(a)(7) (civil monetary penalty for kickbacks, as prohibited by 42 U.S.C. § 1320a-7b(b)).

​[13] See 42 U.S.C. § 1320a-7a(a).​

The plain language of § 1320a-7a(k) thus enables the government to do what the plain language of § 1345(a)(2) does not: rely upon solely past conduct to freeze a person’s untainted property in anticipation of restitution. But why, then, did the government not use § 1320a-7a(k) in this case? Perhaps because only the HHS Secretary can invoke § 1320a-7a(k)—not the Attorney General. And that is the whole point. In- deed, § 1320a-7a(k) serves to reflect the important reality that “Congress has actively developed a comprehensive bifurcated civil and criminal scheme for addressing fraudulent and abusive payment practices in federal health care programs.” Reliable Ambulance Serv. v. Mercy Hosp. of Laredo, No. 4-02-0188-CV, 2003 WL 21972724, at *6 (Tex. App. Aug. 20, 2003) (detailing how this scheme works).

This bifurcated scheme means that while the Attorney General may prosecute kickback and billing violations as crimes,14 only HHS may exact monetary penalties and freeze health care provider assets for these same offenses.

[14] Federal law limits the nature of such prosecution. Under 42 U.S.C. § 1320a-7b(a) & (b), both fraudulent Medicare billing and illegal kickbacks are criminally punishable by only a fine of up to $25,000 and a prison term of up to five years.

And for good reason:

 First, HHS’s exclusive monetary-exaction power goes hand-in-hand with HHS’s exclusive ability (albeit after consulting with the Attorney General) to eliminate kickback offenses entirely by creating “safe harbors” that exempt persons from prosecution. See Reliable, 2003 WL 21972724, at *4; see also 42 C.F.R. § 1001.952 (setting out 25 safe harbors). HHS can even forgive conduct that facially violates the anti- kickback law and does not fall within a safe harbor so long as the HHS Office of the Inspector General deems the conduct to “pose[ ] little risk of fraud and abuse.” Reliable, 2003 WL 21972724, at *5 (citing HHS OIG Advisory Op. 01-18 (Nov. 7, 2001)).

 Second, HHS’s  exclusive monetary-exaction power goes hand-in-hand with HHS’s statutory duties both to afford due process to those it targets with this power (see 42 U.S.C. § 1320a-7a(c)(2)) and to use all money collected from violators to reimburse defraud- ed health care programs (see id. § 1320a-7a(f )(3)). By contrast, all money collected by the Attorney General through criminal forfeiture—even if based on a federal health care offense that caused a financial loss to Medicare—goes into the Attorney General’s coffers. See 28 U.S.C. § 524(c)(4)(A) (“all amounts from the forfeiture of property under any law enforced” by the Attorney General “shall be deposited” in the U.S. Department of Justice’s Assets Forfeiture Fund, with certain exceptions that are not relevant here).

Third, and finally, HHS’s exclusive monetary- exaction power goes hand-in-hand with HHS’s unique expertise and institutional responsibility. Simply put, freezing a health care provider’s funds carries the grave risk of shuttering vital medical services, even where a provider may have engaged in some amount of fraud. See, e.g.Mercy Reg’l Health, 2008 U.S. Dist. LEXIS 19362, at *6 (rejecting the Attorney General’s “extraordinary request” under § 1345 “to shut down” what was “the largest ambulance service in the area” around Benton, Ill.). Being responsible for the entire federal health care system, HHS retains the experi- ence and objectivity needed to appreciate this risk, while the Attorney General, driven by the “often competitive enterprise of ferreting out crime,” does not. Johnson v. United States333 U.S. 10, 14 (1948).

Only HHS may thus impose broad asset freezes on health care providers. And where Congress has made “a basic decision . . . on how to allocate responsibility among different federal agencies,” this decision must be respected. Am. Bankers Ass’n v. SEC804 F.2d 739, 755 (D.C. Cir. 1986). Hence, to stretch the Fraud Injunction Act, § 1345(a)(2) to grant power to the Attorney General that Congress wanted only HHS to have—as the government, the district court, and the Eleventh Circuit effectively did here—is tantamount to a “unilateral[ ] changing [of ] the rules of the game.” Id. Such interpretive gymnastics should not be sustained by this Court regardless of whatever “beneficial purpose or . . . regulatory need” could be offered to justify them. Id.



IV. Construing the FIA to reach only tainted property accords with the traditional reach of federal equity practice, which does not include prejudgment asset freezes.

The Fraud Injunction Act explicitly provides that all proceedings under the Act, including ones to freeze property, are “governed by the Federal Rules of Civil Procedure.” 18 U.S.C. § 1345(b). This places the Act within the ambit of federal equity practice—a tradi- tion in which prejudgment attachment is “a type of relief that has never been available before.” Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308, 322 (1999). This tradition, in turn, furnishes another key reason why the Act’s property- freezing power must be read in a far more restrained manner than was employed by the government, the district court, and the Eleventh Circuit here.

Congress may, of course, enable federal courts to grant forms of equitable relief beyond what has been traditionally available at common law. As this Court has explained, “[w]hen there are indeed new conditions that might call for a wrenching departure from past practice, Congress is in a much better position. . . to perceive them and to design the appropriate remedy.” Grupo, 527 U.S. at 322. At the same time, any such remedy must be read with care. This follows from the longstanding judicial canon that statutes in derogation of common law are to be strictly construed—or, put more precisely, “statutes will not be interpreted as changing the common law unless they effect the change with clarity.”15



 Hence, in United States v. Sriram, a federal district court rejected the government’s argument that § 1345(a)(2) should be interpreted as allowing the court to freeze not only tainted property but also “a sum that accounts for trebled damages and civil penalties.” 147 F. Supp. 2d 914, 947 (N.D. Ill. 2001). The court first highlighted the plain language of § 1345(a)(2), finding the statute meant “just what it says: that an injunction is authorized to put a hold on the fruits of the criminally fraudulent activity.” Id. The court then noted there was “nothing in the language” of § 1345(a)(2) to support the government’s view that § 1345(a)(2) further authorized a freeze on “assets sufficient to secure an ultimate money judgment.” Id. And this led the court to emphasize the need for “caution in expanding the sweep of that authority to freeze assets beyond the specific grant of authority made by Congress,” as this power was “not generally available” at common law. Id. at 948.

The district court and Eleventh Circuit should have performed the same analysis here. Had they done so, caution would have militated against accepting the government’s view that § 1345(a)(2) authorized all of Petitioner’s property to be frozen to secure “any judgment requiring restitution or forfeiture.” Cert. Pet. 8. That such caution was absent in these courts’ respective decisions, in turn, confirms their hasty “creat[ion] [of ] a precedent of sweeping effect” without proper regard for the plain language of § 1345(a)(2) or the narrower manner in which this language could have been read (see Part I.A). De Beers Consol. Mines, Ltd. v. United States325 U.S. 212, 222 (1945). The Court should not allow that error to stand.



V.  Construing the FIA to reach only tainted property accords with the rule that for- feitures are not favored in law.

The Fraud Injunction Act, 18 U.S.C. § 1345(a)(2) is not only a statute in derogation of common law but also one that forfeits property.16 This demands even more caution in how courts enforce the Act, because “[f ]orfeitures are not favored” in the law and should be enforced “only when within both letter and spirit of the law.” One 1936 Model Ford, 307 U.S. at 226. 

Yet, here, the government, the district court, and the Eleventh Circuit took the exact opposite approach, reading § 1345(a)(2) in a way that enabled this law to freeze all of Petitioner’s property, tainted or not.

It remains the case, however, that when “two constructions can be given to a statute, and one of them involves a forfeiture, [then] the other is to be preferred.” Farmers’ & Mechanics’ Nat’l Bank v. Dearing91 U.S. 29, 35 (1875). On this score, the view of § 1345(a)(2) advanced by the government, the district court, and the Eleventh Circuit in this case involves the blanket forfeiture of untainted property. The view of § 1345(a)(2) advanced by Amicus—and supported by most courts—does not. And that fact alone should be reason enough for this Court to favor Amicus’s interpretation of § 1345(a)(2).

[16]​ While the Act merely freezes property pendente lite— rather than seizing it permanently—the Act still works a forfeiture. Cf. Krimstock v. Kelly306 F.3d 40, 43-44 (2d Cir. 2002).






This Court has already concluded that a pretrial freeze of a criminal defendant’s tainted property does not raise any constitutional concerns. See Caplin & Drysdale, Chartered v. United States491 U.S. 617 (1989). And that is all the Fraud Injunction Act, 18 U.S.C. § 1345, authorizes. See Part I.A. The lower courts in this case failed to realize this, however, and imposed a blanket freeze on Petitioner’s untainted assets based on a reading of the Act unsupported by its plain text, historical purpose, schematic role, and common law nature. Accordingly, consistent with the “cardinal principle that this Court will first ascertain whether a construction of [a] statute is fairly possible by which [a] [constitutional] question may be avoided,” the Court should adopt the reading of the Act advanced by Amicus in this brief so as to avoid the constitutional questions presented by this case. Crowell v. Benson285 U.S. 22, 62 (1932).

Respectfully submitted,


August 25th, 2015.



Counsel of Record


Read more

SCOTUS grants cert in Luis, an important asset forfeiture case

The U.S. Supreme Court has agreed to review Luis v. United States. In Luis, the court will be asked to decide whether the pre-conviction, post-indictment restraint of forfeitable substitute assets, needed to retain counsel of choice in a criminal case, violates the Fifth or Sixth Amendments. 

Americans for Forfeiture Reform will seek permission to file an amicus curiae brief in Luis.

I'll also be blogging about the case, as merits stage briefs begin appearing.

For today, I thought I'd tee up how the case got to the Supreme Court:

Ms. Sila Luis operated a health care business, providing nursing and therapy services. The government obtained a grand jury indictment of Luis, alleging that a portion of her business involved defrauding Medicare by illegally paying kickbacks for patient referrals and billing Medicare for unnecessary services. (Perhaps unsurprisingly, Ms. Luis disputes that her conduct was illegal.)

Concurrent to the indictment, the government filed a civil complaint and an emergency ex parte motion for a temporary restraining order (TRO) and preliminary injunction, seeking to freeze up to $45 million of Luis' assets “to preserve the status quo and ensure that sufficient assets are available to satisfy any judgment requiring restitution or forfeiture.” The $45 million dollar calculation--a sum vastly exceeding Luis' assets--appears to be derived from the gross revenue of her Medicare business (not simply the proceeds of her Medicare business or the proceeds of her alleged frauds or even the revenues tied to the alleged frauds).

Without prior notice to Luis, the district court judge granted an ex parte TRO that prohibited Luis from disposing of any assets 

“that are proceeds from [petitioner’s] Federal health care offenses or property of an equivalent value of such proceeds or profits,” including but not limited to forty bank accounts and sixteen parcels of property. App. 8, 12. On the same date, a federal grand jury returned an Indictment against petitioner that tracked the allegations of the civil complaint. The Indictment invoked 18 U.S.C. § 982 and 21 U.S.C. § 853 to seek forfeiture of assets traceable to the crimes charged, as well as substitute assets. However, the government did not seek a restraining order under section 853(e), having already obtained the ex parte TRO in the parallel civil proceeding under section 1345. The government arrested petitioner and served her with a copy of the civil action." Petition for Writ of Certiorari at 9, United States v. Luis (Oct. 7th 2014), No. 13-13719, 564 F. App’x. 493 (11th Cir. 2014).

Ms. Luis responded by filing a motion to modify the restraining order for the purpose of releasing her untainted assets in her criminal defense, arguing that to do otherwise would contravene the Fifth and Sixth Amendments:

"As the government and Judge Huck acknowledged, petitioner’s net worth was far less than $45 million, so the ex parte TRO effectively prohibited her from spending any funds for her defense. App. 12. Petitioner proffered that she owned untainted assets, not traceable to Medicare revenue, and argued that a court order prohibiting her from using her untainted assets for her criminal defense categorically violated the Fifth and Sixth Amendments: Defendant Luis submits that the Fifth and Sixth Amendments, individually and in combination, require that the court exempt from restraint and forfeiture those assets needed for (and ultimately expended on) her legal defense to the charges pending before Judge Cooke. By freezing even a defendant’s untainted assets before trial, the government not only “cripple[s] a defendant’s ability to retain [private] counsel,” but also takes from her the funds she would otherwise invest in her defense for the best and most industrious investigators, experts, paralegals, and law clerks, to at least attempt to match the litigation support available to the United States Attorney’s Office. DE46:13-14 (citations and quotations omitted); see App. 29." Petition for Writ of Certiorari at 9, United States v. Luis (Oct. 7th 2014), No. 13-13719, 564 F. App’x. 493 (11th Cir. 2014).

After hearing the government's objections, the district court judge rejected Luis' motion, concluding (perhaps carelessly--more on that later) that there is "no Sixth Amendment right to use untainted, substitute assets to hire counsel":

"The more difficult question is the one presented here. That is, whether a criminal defendant has a Sixth Amendment right to use untainted, substitute assets to retain counsel of choice. Although the answer to this question is far from  [**28] clear, the Fourth Circuit's opinion in In re Billman, 915 F.2d 916, 921 (4th Cir. 1990) supports the Government's position. In Billman, a defendant was charged with racketeering and a forfeiture count, and the defendant then transferred some of the assets to another person. Id. at 918. The district court found that the assets that were transferred could not be directly linked to the racketeering, and the circuit court determined that it was bound to accept this finding. Id. As such, they were "substitute" assets. Id. at 920. The transferee argued that she had a Sixth Amendment right to use the funds to retain counsel of her choice. Id. at 921-22. The court rejected this argument because the substitute assets were subject to restraint under § 1963. Id. Therefore, the Billman court's view is that there is no Sixth Amendment impediment to the seizure of substitute assets pursuant to the statute because those assets are "contraband," even if they were not the proceeds of criminal activity. Id. at 922; see also United States v. Am. Therapeutic Corp., 797 F. Supp. 2d 1289, 1293-94 (S.D. Fla. 2011) (finding no Sixth Amendment right to use untainted, substitute assets that are restrained under  [**29] § 1345).

This view is common sense. An example by the Fourth Circuit that was related by the Bissel decision is instructive:
Suppose a bank is robbed and $100,000 taken. A defendant is arrested in possession of $100,000 and nothing more. The defendant protests his innocence and claims, without the slightest proof, that the $100,000 was in fact a gift from a friend. Surely no one will contend that the $100,000 must be made available to pay the defendant's lawyer, and not be kept available for return to the bank in the event the defendant is found guilty.
Bissell, 866 F.2d at 1351 (quoting In re Forfeiture Hearing As to Caplin & Drysdale, Chartered, 837 F.2d 637, 645 (4th Cir. 1988),aff'd sub nom., Caplin, 491 U.S. 617, 109 S. Ct. 2646, 109 S. Ct. 2667, 105 L. Ed. 2d 528.

The reason the bank robber is not permitted to use the $100,000 to hire a lawyer is obvious. The money does not belong to him. But suppose the bank robber in the example above spent the $100,000 that he stole. It just so happens, however, that he has another $100,000 that he obtained legitimately. Should his decision to spend the $100,000 he stole mean that he is free to hire counsel with the other $100,000 when Congress has authorized restraint of those substitute assets?  [**30] The reasonable answer is no. The bank has the right to have those substitute, untainted assets kept available for return as well. Therefore, in accord with the Fourth Circuit's view, the most reasonable conclusion is that  there is no Sixth Amendment right to use untainted, substitute assets to hire counsel." [emphasis added] United States v. Luis, 966 F. Supp. 2d 1321 (S.D. Fla. June 21, 2013).

On appeal, a three-judge panel from the U.S. Court of Appeals for the 11th Circuit, in an unpublished opinion, summarily--and without further explanation or analysis--rejected Luis' arguments as "foreclosed by the United States Supreme Court decisions in Kaley v. United States, 134 S. Ct. 1090, 1105 (2014); Caplin & Drysdale Chartered v. United States, 491 U.S. 617, 631 (1989); United States v. Monsanto, 491 U.S. 600, 616, (1989); and United States v. DBB, Inc., 180 F.3d 1277, 1283-84 (11th Cir. 1999). " United States v. Luis, 564 F. App’x. 493 (11th Cir. 2014). (Notably, none of the panel's cited cases squarely addresses whether untainted substitute assets (Luis' argument!) can be restrained when needed to hire counsel of choice.)

As we get closer to oral arguments, I'll discuss why the case matters and I'll brief some conceptual problems that the case presents. 


Rodriguez v. United States, an equilibrium adjustment

Yesterday, in a 6-3 opinion authored by Justice Ruth Bader Ginsburg, the U.S. Supreme Court determined that the Fourth Amendment is offended when police, without reasonable suspicion, extend a traffic stop to conduct a drug-dog sniff. Rodriguez v. United States, USSC No. 13-9972, 2015 WL 1780927 (April 21, 2015), reversing United States v. Rodriguez, 741 F.3d 905 (8th Cir. 2014).

Rodriguez could be an attempt at what Professor Orin Kerr has dubbed, elsewhere, in other contexts, a Fourth Amendment equilibrium adjustment.

To flesh out the conjecture, Rodriguez was decided after Reuters UK revealed the existence of the DEA's Special Operations Division/parallel construction program, a domestic intelligence-sharing program that secretly provides state and local police with possibly inadmissible (and possibly illegally obtained) intelligence of cash or drugs. While many suspected parallel constructions were occurring, the proof was lacking.

Until Rodriguez, police were free to find a traffic violation (or allege a violation that could not be easily disproven), extend the stop to run a drug-dog search that wasn't treated as a search for purposes of the Fourth Amendment (United States v. Place, 462 U.S. 696 (1983)), register a positive drug-dog sniff alert of dubious probative value, and then use that alert to 'discover' (and seize) cash or drugs that police already knew existed (via DEA intelligence), without having to reveal (or expose to judicial scrutiny) the true provenance of the possibly inadmissible evidence. Courts, however, were not privy to the fact that they were being used to sanction seizures prefaced on general and extrajudicial dragnets, thinking, instead, that the seizures were the products of articulable and reasonable suspicions developed within the stop.

Following Rodriguez, creating a parallel discovery of the cash or drugs that police already know of, via drug-dogs, requires executing the drug-dog search within the time it takes to conduct the mission of the traffic stop or finding articulable reasons to extend and expand the traffic stop for a drug-dog non-search search. This will often prove difficult. Where articulable reasons are absent, police will be confronted with foregoing seizure, commissively defrauding the court, or exposing the true provenance of the evidence to judicial supervision. Rodriguez, thus, is an incremental step towards restoring the background from which the court decided cases like Place; Illinois v. Caballes, 543 U.S. 405 (2005); and possibly even Florida v. Harris, 568 U.S. ___ (2013).

Cert. request: Whether the pretrial restraint of a criminal defendant's untainted assets needed to retain the defendant's counsel of choice violates the Fifth and Sixth Amendments.

The U.S. Supreme Court will consider whether it should review United States v. Luis, No. 13-13719, 564 F. App’x. 493 (11th Cir. 2014) on May 1st, 2015. In Luis, a three judge panel from the U.S. Court of Appeals for the 11th Circuit determined that the Fifth and Sixth Amendments permit the pretrial restraint of a criminal defendant's untainted assets, needed to retain counsel of the defendant's choice, where probable cause exists to believe that the untainted assets will be forfeitable as substitute assets. The Supreme Court has previously permitted pretrial restraint of tainted forfeitable assets to hire counsel of one's choosing. See United States v. Monsanto, 491 U.S. 600, 616 (1989); Caplin & Drysdale, Chtd. v. United States, 491 U.S. 617, 631 (1989). 

Whether such pretrial restraint requires that assets be tainted and forfeitable or merely forfeitable is arguably unsettled.

Should the Supreme Court grant cert., AFR will consider filing--or partnering with another organization to file--an amicus curiae brief. 



Important new law review article regarding criminal forfeiture & the right to have juries decide forfeitability

Brynn Applebaum, Criminal Asset Forfeiture and the Sixth Amendment After Southern Union and Alleyne: State-Level Ramifications, 68 Vand. L. Rev. 549 (2015).

An important article from Brynn Appelbaum, a J.D. Candidate at the Vanderbilt University Law School. The article convincingly argues that the Sixth Amendment should be construed as guaranteeing the right to have a jury decide the forfeitability of assets in criminal asset forfeiture cases, and provides persuasive historical evidence for thinking that eighteenth century jurisprudence is consonant with that view, among other things. Well worth a read.

Ninth Circuit to hear oral arguments today in Moser, two other forfeiture fee-shifting cases. AFR to appear as amicus curiae in Moser.

A three-judge panel from the U.S. Court of Appeals for the Ninth Circuit will hear oral arguments today, March 2nd, 2015, in three disputes over attorney fee awards in civil asset forfeiture cases. Each of the appeals could affect the future availability of and pricing for private forfeiture defense.

Arguments will be broadcast live, here, at 9:30 a.m. PST (10:30 a.m. MST, 11:30 a.m. CST, 12:30 p.m. EST). Update: A rebroadcast of today's oral arguments is currently available hereMoser starts about 15 minutes in.

The panel will consist of Circuit Judges Stephen R. Reinhardt, N. Randy Smith, and Andrew D. Hurwitz.

The first appeal, U.S. v. Moser, asks whether a federal district court abused its discretion in the low attorney fee award it set for the prevailing forfeiture claimant, slashing the hours claimed by the claimant's counsel, and further reducing the attorney's fee pursuant to the so-called Kerr/Johnson factors

Americans for Forfeiture Reform filed an amicus curiae brief in Moseravailable here, and will participate in today's oral arguments. Ben Steinberg of Robins Kaplan LLP will be arguing on behalf of AFR.

Moser filed an opening brief, available here. The United States responded with its own brief, available here. Moser filed a final reply, available here.

I blogged about the case in February of 2013:

Claimants who substantially prevail in [adjudicated] federal civil asset forfeiture cases and seek costs are generally eligible to receive awards of reasonable attorney fees and other litigation costs reasonably incurred by the claimant pursuant to the fee-shifting provision of the Civil Asset Forfeiture Reform Act of 2000 (CAFRA)[1][2]

The dispute over what constitutes a proper award of attorney fees stems from the government’s unsuccessful attempt to forfeit $28,000.00 from claimant Robert J. Moser. In March of 2012, U.S. District Judge Larry Alan Burns issued a ruling granting claimant Moser’s motion to suppress evidence and granting Moser’s motion for Summary Judgment after finding purposeful and flagrant constitutional violations:

“…Moser’s consent in this case followed closely on the heels of serial constitutional violations including ignoring the requirement to advise him of Miranda rights before questioning him about the marijuana and illegally entering and reentering Moser’s home without a search warrant.

The Court also finds the constitutional violations that preceded Moser’s consent were purposeful and flagrant. There is no suggestion here that either Deputy Bloomberg or Officer Reed believed that they were acting under the authority of a search warrant when they entered Moser’s home. And even if they were uninformed or confused about the existence of a search warrant, the federal agents were present during both of their searches (even accompanying Deputy Bloomberg on the first occasion) and did not inform their state counterparts that no search warrant had been obtained. Moser’s earlier limited consent to enter the home for the purpose of escorting him to retrieve his medication did not authorize the subsequent entries to search for marijuana and evidence of other crimes.

There is really nothing, then, to purge or attenuate the taint of the initial illegal searches of Moser’s home. Moser’s consent to search was tainted by those initial constitutional violations. The Court concludes that the $28,000 must therefore be suppressed.” United States of America v. $28,000.00 in United States Currency, Order Granting Defendant-Claimant’s Motions to Suppress and for Summary Judgment and Denying Plaintiff’s Motion for Summary Judgment, and Denying Plaintiff’s Motion to Strike the Claim as Moot, 2012 U.S. Dist. (S.D. Cal. March 29, 2012).

On February 11th, 2013, United States District Judge Larry Alan Burns issued another order granting an award of $14,000.00 of the $50,775.00 in attorney fees sought by Claimant Moser and his attorney Richard M. Barnett.[3] The latter order is as problematic as the former was commendable. Judge Burns’ opinion first reduced Barnett’s requested-for-fee from $500.00/hour to $300.00/hour and then accepted only 60 hours of Barnett’s reported 100+ work hours, reasoning that “Barnett gave the government’s litigation work more respect than it deserved.” After arriving at a lodestar[4] figure of $18,000.00,[5] Judge Burns proceeded to downgrade the $18,000.00, in part, because Barnett was willing to take the case on a contingency basis set at 1/3 of the $28,000.00 and because, in Judge Burns’ apparent reasoning, Barnett would have been aware that CAFRA fee-shifting awards are rare and not intended to produce a bounty for attorneys. Judge Burns then made a small allowance for risk and arrived at the $14,000.00 sum:

“The remaining relevant factors are the customary fee, whether the fee is fixed or contingent, the amount involved, and the “undesirability” of the case. These all boil down to a limited set of facts, namely that Barnett knew Moser could not recover more than $28,000, and he agreed in a contingent fee agreement to accept 1/3 of the total recovery as his fee.

Civil forfeiture cases involve a variety of types of property and a wide range of property values. Within this range, a claim for $28,000 is not as lucrative as some, but a contingency fee agreement would be enough to attract competent counsel. See Blanchard, 489 U.S. at 92 n.6 . It is not such an undesirable case that a higher fee award is merited in order to encourage attorneys to undertake the representation. The Court finds very significant the fact that Barnett was willing to undertake the representation for no more than $9,333.33 plus costs. He might have expected it to settle quickly, based on the strength of Moser’s suppression argument. But there was no assurance of that. He might also have hoped for an award of fees under CAFRA. But he would have been aware that fee awards are not common, and also that they are not intended to produce a bounty for attorneys. See Blanchard, 489 U.S. at 92 n.6. The logical and reasonable inference here is that Barnett and Moser agreed to a fee of no more than about $9300.

It is also significant that this was a contingent fee agreement. The fraction of the recovery that goes to the attorney under such agreements typically compensates the attorney not only for work done in cases where his client prevails, but also covers the attorney’s losses in cases where the client recovers little or nothing. In other words, it is adjusted upwards to account for risk. The $9,333 figure can be presumed to be higher than what Barnett would charge if there were no risk, i.e., if Moser had guaranteed payment regardless of the outcome.

While the Court recognizes that this figure is not a cap on the award, it is nevertheless relevant. See $186,416.00 in U.S. Currency, 642 F.3d at 755 (court may consider fee agreement when determining reasonable fee award). Bearing in mind the relevant Johnson factors, the Court determines that a fee award of $18,000 is excessive, but an award of $14,000 is reasonable.” United States of America v. $28,000.00 in United States Currency, Order Granting In Part Motion For Attorney’s Fees, 2013 U.S. Dist. (S.D. Cal. February 11th, 2013).

What Judge Burns’ formulations seem to ignore is that CAFRA’s fee-shifting provisions were meant by Congress to induce private attorneys to take civil forfeiture cases. The awards were never meant to be mere happenstance or afterthought. Rather, the cost-shifting provisions were intended as a solution. They were supposed to create and drive a market. They were supposed to address that asset forfeiture law is highly specialized, unlikely to be handled well by those lacking significant experience in asset forfeiture law, frequently expensive to litigate, and that innocent property owners were understood to be conceding cases or going bankrupt defending against federal forfeiture actions. Moreover, an assessment that “fee awards are not common” would demand an upward determination from lodestar to sufficiently induce the availability of attorneys willing to take cases looking for such awards.

Furthermore, treating CAFRA’s fee-shifting provision as mere afterthought ignores the power of the provision to persuade public interest groups to assume the costs of litigating gross injustices in civil asset forfeiture. The availability of compelling fee-shifting awards makes it feasible for public interest groups to take more cases and argue them with added vigor. It should be reiterated that the government only pays when claimants substantially prevail–that is, only in cases of genuine merit and precisely when we would most want attorneys or public interest groups to step in and offer to take cases for the lure of CAFRA’s fee-shifting awards.

In the second appeal, Optional Capital, Inc. asks for review of a federal district court order denying its motion for attorneys' fees arising out of a civil forfeiture action. The district Court did not construe Optional Capital, Inc. as a prevailing party entitled to an award of attorney fees under 28 U.S.C. § 2465. The appellate panel could thus clarify or reshape what it means to be a prevailing party under 28 U.S.C. § 2465.

In the third appeal, the U.S. Government appeals an assignment of awarded attorney fees to noted forfeiture attorney Eric Honig, arguing that attorney fee assignments are not “final” under 28 U.S.C. §2414, until the government approves them, pursuant to the Anti-Assignment Act, codified at 31 U.S.C. §3727. Were the Government to prevail, attorneys would be on notice that they may never receive fee-shift awards, despite winning their cases. The NACDL filed an amicus curiae brief, available here; the Government's first appellant brief is available here; and Honig's response is available here

General Holder makes permanent ATF authority to administratively forfeit property prefaced on bare drug accusations

Cato's Adam Bates has the details:

"...Attorney General Eric Holder, who earned cautious praise last month for a small reform to the federal equitable sharing program, has now delegated authority to the Director of the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) to seize and “administratively forfeit” property involved in suspected drug offenses.  Holder temporarily delegated this authority to the ATF on a trial basis in 2013, and today made the delegation permanent while lauding the ATF for seizing more than $19.3 million from Americans during the trial period.

Historically, when the ATF uncovered contraband subject to forfeiture under drug statutes, it was required to either refer the property to the DEA for administrative forfeiture proceedings or to a U.S. Attorney in order to initiate a judicial forfeiture action.  Under today’s change, the ATF will now be authorized to seize property related to alleged drug offenses and initiate administrative forfeiture proceedings all on its own.

The DOJ claims this rule change doesn’t affect individual rights (and was thus exempt from the notice and comment requirements of the Administrative Procedure Act) and that the change is simply an effort to streamline the federal government’s forfeiture process.  Those who now stand more likely to have their property taken without even a criminal charge may beg to differ...." Excerpted from Bates, Adam. "Quiet Change Expands ATF Power to Seize Property." Cato Institute. February 25, 2015. Accessed February 25, 2015.

I first reported on the then-impending "trial basis" delegation here, in 2012.

General Holder's delegation is bad news not simply because it gives yet another federal agency the power to administratively forfeit property on bare rumor and accusation (although that is reason enough, obviously), removing the ATF's need for the blessing of an external agency or judicial authorization removes structural protections. Structure, here, protects individual rights.  Any change thus should have triggered the APA's public notice-and-comment requirements.

The Federal Register explanation of the change is available here.


Acting Chief of DOJ Asset Forfeiture Division Issues Guidance on Holder Equitable Sharing Order

On Tuesday, February 10, 2015, DOJ Asset Forfeiture and Money Laundering Section Acting Chief M. Kenndall Day issued a memo guiding agency participants in the DOJ's Asset Forfeiture Fund on the implementation of US Attorney General Eric Holder's January 16, 2015 order (effective March 1, 2015) governing use of the adoptive forfeiture process through the DOJ's Equitable Sharing program. 

When it was released, Holder's order was widely misunderstood; some commentators went to far as to claim the order ended civil forfeiture. However, the Holder order is extremely limited, and the Kenndall Day memo provides some clarity as to the scope of behavior implicated: 

Central to the application of the Attorney General's order is whether there was federal law enforcement oversight or participation at the time of seizure by state and local law enforcement. To ensure sufficient federal participation in all seizures that lead to federal forfeiture, an attorney from a federal agency must provide justification in writing for the federal forfeiture of an asset that is seized by a state or local law enforcement officer as a task force or joint investigation seizure, applying the factors outlined below. A prosecutor at the U.S. Attorney's Office for the district where the seizure took place (or if the seizure is part of an ongoing investigation, a prosecutor at the relevant U.S. Attorney's Office or Department litigating section) then must agree, in writing, that the forfeiture is permissible under the Attorney General's order.' This requirement extends to all types of forfeiture, including administrative. Federal prosecutors asked to provide such agreement must also consider the factors below when determining whether the seizure constitutes either a task force or joint investigation seizure.

Factors to Consider When Deciding Whether a Seizure Qualifies as a Task Force or Joint Investigation Seizure

  • Was the Seizure Effected by a Federal Task Force Officer? -- Is the state and local law enforcement officer who effected the seizure a task force officer on a joint federal and state task force? Is the officer deputized to enforce federal criminal law under either Title 18 or Title 21? Does the officer possess credentials issued by a federal law enforcement agency? Is the officer assigned to work on a task force full-time? Is the officer bound by the rules, regulations, and policies that otherwise govern the conduct of federal agents employed by the agency that issued the credentials to the officer? If the officer is assigned to the task force only part time or for a specific investigation, do the facts clearly demonstrate that the seizure was part of the officer's task force duties rather than a state or local law enforcement action, as described below?

  • Were Federal Authorities Involved Prior To and At the Moment of Seizure? -- Was the seizure made with direct, pre-seizure involvement by federal law enforcement? For example, at the time of the seizure, was the seizing officer acting under the direction of, or in real-time, hand-in-hand cooperation with, federal law enforcement? Was the seizure made as part of a preexisting federal or joint federal-state investigation in which federal agents are involved in the pursuit of federal criminal charges?

  • Does the Seizure Relate Primarily to State or Local Law Enforcement Action? -- Was the seizure made pursuant to a state seizure warrant without federal involvement? Is the state pursuing a criminal case under state law against the owner of the property? Did the officer seize the asset pursuant to his or her authority as a state or local law enforcement officer? 

I've noted in previous commentary that the Holder order will incentivize a proliferation of federal partnerships with state and local law enforcement, as agencies seek to retain their federal asset forfeiture revenues. The Day memo only clarifies the process and best practices for the operation of those partnerships.

While M. Kenndall Day's guidance on the implementation of the Holder memo resolves some fundamental questions about the implementation of the Holder order, it is to be noted that it does not represent statutory law, nor does it offer additional protections to property owners facing asset forfeiture. Any US Attorney who does not strictly adhere to the policy would only face the discretionary sanction of the President (practically speaking, this never happens). 


House Judiciary Subcommittee to hold forfeiture oversight hearings today

The Crime, Terrorism, Homeland Security, and Investigations Subcommittee will hold an oversight hearing on civil asset forfeiture this morning, at 10:30 a.m. EST, in the Rayburn House Office Building. Live coverage available here. We will re-post today's broadcast when it becomes available.

Among the experts scheduled to testify today are friends of Americans for Forfeiture Reform, Darpana Sheth and David B. Smith. Prepared testimony below:

 UPDATE: A rebroadcast of today's hearing is available here (about an hour in).

Scheduled Witnesses:






AFR granted argument time in USA v. Robert Moser, an important fee-shifting case

The U.S. Court of Appeals for the Ninth Circuit has granted Americans for Forfeiture Reform's request to participate in oral arguments in United States v. Moseran appeal of a District Court order slashing an attorney fee-shifting award arising from a civil forfeiture. 

Potentially at stake in Moser is whether the Civil Asset Forfeiture Reform Act of 2000's fee shifting provision continues to provide a compelling market incentive for private attorneys to take cases defending forfeiture victims on hopes of winning fee-shift awards.

Whatever the U.S. Court of Appeals for the Ninth Circuit decides in Moser could thus shape whether forfeiture victims will be able to retain counsel when they lack the means to finance a forfeiture defense out-of-pocket or when legal costs threaten to surpass the value of the seized property---which is often. 

I previously discussed the case here and hereAmericans for Forfeiture Reform filed an amicus curiae brief in Moseravailable here.

AFR's successful request for inclusion in oral arguments is available here.

Many thanks to Mahesha Subbaraman, our former counsel, and to Ben Steinberg, our current counsel, in Moser.

Forfeiture news: Virginia House of Delegates votes for landmark forfeiture reform; Rand Paul to vote against Lynch over forfeiture; Colorado legislature delays forfeiture debate; more.

The ACLU celebrates Virginia House of Delegates 92 to 6 vote to require a conviction or plea agreement before property can be forfeited under Virginia law -- available here. Text of HB 1287 available here. HB 1287 will move to Virginia's Senate next.

Senator Rand Paul (R-KY) says that he'll oppose confirmation of Loretta Lynch over her support of asset forfeiture, troubling responses to Senator Mike Lee's (R-UT) questions concerning forfeiture -- available here. Cato's Adam Bates further explored Ms. Lynch's responses here.

Colorado Senators have delayed debate of legislation aimed at restricting the availability of civil forfeiture in Colorado -- available here. Text of CO Senate Bill 6 available here.

The Mercury News and the San Francisco Chronicle detail an appellate panel's skeptical reaction to Oakland's arguments that it has standing to fight the Harborside Health Center forfeiture via the Administrative Procedure Act (APA) -- available here and here. I briefly previewed the oral arguments here. Video of the oral arguments is available here.