U.S. v. Khan
| Citation | 497 F.3d 204 |
| Decision Date | 10 August 2007 |
| Docket Number | Docket No. 05-6522-cv. |
| Parties | UNITED STATES, Plaintiff-Appellee, v. Mohammad KHAN, Akbar Khan, Muhammad Room, Montaz, Humayyum, John Patrick Donohue, as attorney for Khista Bacha, Amir Amaan, Dor Amaan, Bacha Khan, Ali Sher, Liaqat Ali, Sami Ur-Rahman, Said Ur Rahman, Gul Bacha, Bahroz Khan, Rahman Ali, Hanifa, Abdul Samad Khan, Aftab Ahmed, Sultan Zaib, Muhammad Ilyas Khan, Rashid Ahmed, Barakat Khwaja, Haroon Rasheed, Muzzafer Khan, Aftab Ud Din, Aziz Ur Rahman, also known as Azizullah, Imran Mateen, also known as Shakoor, Fazal Bacha, Rashid Iqbal, Muhammad Rahman, Nadar Shah, Muhammad Khan, Rahman Zaib, Ali Haider, Qadar Shab, Khalid Bacha, Amir Hamza, Abdul Kalam, also known as Humayyun, Arsala Khan, Muzaffar Khan, M. Khalid Farooqi, Muhammad Zahir, Ibn E. Amin, Muhammad Zaib, Shaffi Ullah, Ali Sher Khan, Bahadar Sher Khan, Ali Khan, Rafiq Ahmed, Alam Gir, Imran Matin, Samieur Rahman, M.A. Yeem, Mozafar Khan, Habib Ur Rehman, Sher Rahman, Badshah Amin, Rasheed Ahmed, Shams Ur Rahman, Muhammad Arifkhan, Noor Mohammad, Dil Aram Jan, Shafiullah, Mohammed Zeb, Ghulm Rahman, Fazal Rahman, Mohammad Room, Zahir Shah, Mohammad Amin, Sher Khan, Mohammad Shoeb, Qadar Shah, Iqbal Sayed, Claimants-Appellants, $293,316 in United States Currency, More or Less, and all Proceeds Traceable Thereto Seized From Ali Sher Khan, $187,155 in United States Currency, More or Less, and all Proceeds Traceable thereto Seized from Akbar Ali Khan, $35,112 in United States Currency, More or Less, and all Proceeds Traceable thereto Seized from Fazal Subhan, Defendants, Fazal Subhan, Haroon Khan, Mohammad Khan, Sami Ullah, Diaz Ali Shah, Amir Bahadur, Rohmai Khan, Khan Haroon, Sqbal Syed, Mian Rahim Shah, Fazal Rehman, Rehmat Ali, Ali Rehman Seth, Tajul Malook, Mohammad Ishaq, Malik Sardar, Iqbal Ahmed, Mohammad Khan, Claimants. |
| Court | United States Courts of Appeals. United States Court of Appeals (2nd Circuit) |
David B. Smith, English & Smith (John P. Donohue, Kittredge, Donley, Elson, Fullem & Emblick, LLP, Philadelphia, PA, on the brief), Alexandria, VA, for Claimants-Appellants.
Laura D. Mantell, Assistant United States Attorney for the Eastern District of New York (Roslynn R. Mauskopf, United States Attorney, Steven Kim and Kathleen A. Nandan, Assistant United States Attorneys, on the brief), Brooklyn, NY, for Plaintiff-Appellee.
Before: WALKER, STRAUB and B.D. PARKER, Circuit Judges.
The expression "you can take that to the bank" connotes the certainty and reliability of the banking system. This long-running dispute arises out of the disposition of several hundred thousand dollars that nearly eighty Pakistanis (the "contributor claimants")1 wished to transfer from New York to Pakistan. Their problems arose from their decision not to entrust their funds to the international banking system but rather to three couriers. The couriers, who were also carrying some of their own money, were apprehended by the U.S. Customs Outbound Currency Team ("Customs") as they were about to board a flight to Pakistan and were subsequently convicted under the bulk cash smuggling provision of the USA PATRIOT Act. See Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001, Pub.L. No. 107-56, 115 Stat. 272. The United States District Court for the Eastern District of New York (Jack B. Weinstein, Judge) concluded that the government could forfeit 50% of the funds owned by the couriers (the "convicted claimants") without violating the Excessive Fines Clause of the Eighth Amendment. United States v. $293,316 in U.S. Currency, 349 F.Supp.2d 638 (E.D.N.Y.2004). As for the contributor claimants, it took them roughly three years to recover the money they had dispatched on what they had believed would be an overnight flight.
Two attorneys, John P. Donohue and David B. Smith, who represent many of the contributor claimants — and, not incidentally, also two of the three convicted claimants — sought attorney's fees from the United States. The district court denied their request, and they now appeal from that decision.
In September 2002, the convicted claimants — Ali Sher Khan, Akbar Ali Khan, and Fazan Subhan — were arrested while on the jetway trying to board a flight from New York to Pakistan carrying $515,583.00 in U.S. currency, concealed, among other places, in soap and toothpaste boxes. In December 2002, they were convicted of bulk cash smuggling, see 31 U.S.C. § 5332(a), as well as various offenses relating to their failure to report to government agents the amount of money they were transporting, see 31 U.S.C. § 5316(a)(1)(A), (b).
On or about February 10, 2003, the government filed a civil forfeiture action in rem against the funds seized from the convicted claimants. Because this case turns, in part, on whether the government was dilatory in eventually returning money to the contributor claimants, we must recite the course of proceedings in some detail.
On or about March 11, 2003, Ali Sher Khan filed his answer to the complaint in rem as well as responses to the government's interrogatories. Cf. Fed.R.Civ.P. C(6)(b) (Supplemental Rules for Certain Admiralty and Maritime Claims) ( ) [hereinafter Supplemental Rules]. He did not submit a verified claim to the seized funds. In his papers, Ali Sher Khan mentioned the names of approximately forty-five of the eighty contributor claimants, which corroborated a list the government had seized from his person. Customs then sent copies of the verified complaint, as well as the government's interrogatories, to these forty-five putative claimants. Customs also sent the same documents to various other contributor claimants, identified in a letter dated July 9, 2003 from Attorney David Udell, who was representing Akbar Ali Khan and Fazal Subhan.2 Thus, by mid-summer 2003, the government had notified nearly all of the contributor claimants that their money had been seized.
The contributor claimants, who had violated no law, understandably wanted their money back. Pursuant to Supplemental Rule C(6)(a)(i)(A), those asserting a right to seized funds must file verified claims promptly. See also Supplemental Rule C(6)(a)(iv); see generally United States v. Cambio Exacto, S.A., 166 F.3d 522, 529 (2d Cir.1999) (citing United States v. Amiel, 995 F.2d 367, 371 (2d Cir.1993)). This, unfortunately, they did not do, in part because some had gone to Pakistan and others did not quickly retain counsel.
The district court, however, has the authority to extend the time period for filing verified claims. See Supplemental Rule C(6)(a)(i)(B). And, both Judge Weinstein and Magistrate Judge Cheryl L. Pollack proved accommodating. Still, by January 30, 2004, no claimant had filed a verified claim — neither the convicted claimants nor a single one of the contributor claimants.3
Eventually, the three convicted claimants and those who had contributed money to one of them, Ali Sher Khan, filed verified claims. On August 2, 2004, the government agreed to return money to forty-one of the forty-five contributors to Ali Sher Khan. However, the aggregate amount claimed by the contributors to Ali Sher Khan exceeded by $28,000 the amount the government had seized from him and his belongings.4 Three of the four contributors whose claims remained in dispute at that point eventually prevailed after a hearing before Magistrate Judge Pollack, although not until July 1, 2005.
With respect to those who had given their money to Akbar Ali Khan (the "Akbar Ali Khan contributors"), the process was slower. By August 2, 2004, a number of the Akbar Ali Khan contributors still had failed to respond to the government's interrogatories, and many had not filed verified claims.5 Some contributors to Akbar Ali Khan were still filing claims as late as May 2005.
As verified claims trickled in, the government pressed for the forfeiture of the full amount owned by the convicted claimants. The convicted claimants argued that forfeiture in that amount was unconstitutional under the Excessive Fines Clause of the Eighth Amendment and in light of United States v. Bajakajian, 524 U.S. 321, 118 S.Ct. 2028, 141 L.Ed.2d 314 (1998). The district court agreed, concluding that "forfeiture of the entire amount of [convicted] claimants' currency would be grossly disproportionate to the gravity of claimants' offenses." $293,316, 349 F.Supp.2d at 640. The district court ultimately ordered the forfeiture of half of the convicted claimants' own funds, amounting to "$33,500 for Ali Sher Khan, $9,650 for Akbar Ali Khan, and $5,000 for Fazal Subhan." Id. at 651.
In August 2005, the government began the process of issuing checks to both the contributor claimants and the convicted claimants. Thereupon, attorneys Donohue and Smith sought fees and expenses in the amount of $157,884.81, a little under a third of the total amount seized from the convicted claimants on the jetway. The district court denied their application, noting that although
The district court concluded that attorneys Donohue and Smith could not, pursuant to the Civil Asset Forfeiture Reform Act of 2000, Pub.L. No. 106-185, 117 Stat. 202 ("CAFRA"), obtain fees for their work on behalf of the contributor claimants because there "were `competing claims' [to the same property] within the meaning of section 2465(b)(2)(C)(ii)." Cf. 28 U.S.C. § 2465(b)(2). The district court also held that they could not obtain fees for their work on behalf of the convicted claimants because the government had been "substantially justified"...
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