U.S.A v. Mcginty, 09-6246.

Citation610 F.3d 1242
Decision Date29 June 2010
Docket NumberNo. 09-6246.,09-6246.
PartiesUNITED STATES of America, Plaintiff-Appellant,v.Criss L. McGINTY, Defendant-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (10th Circuit)

Scott E. Williams, Assistant United States Attorney (Sanford C. Coats, United States Attorney, with him on the briefs), Oklahoma City, OK, for Plaintiff-Appellant.

Thomas S. Bala, Oklahoma City, OK, for Defendant-Appellee.

Before BRISCOE, Chief Judge, HAWKINS *, and MURPHY, Circuit Judges.

BRISCOE, Chief Judge.

In this case we address the mandatory nature of the criminal forfeiture statute, 18 U.S.C. § 982(a)(2); the distinction between forfeiture and restitution; and the government's ability to obtain at sentencing a money judgment representing the full amount of a defendant's unlawful proceeds from an offense.

Pursuant to a plea agreement, Criss L. McGinty was convicted of one count of misapplication of bank funds in violation of 18 U.S.C. § 656. At sentencing, the district court ordered forfeiture of McGinty's house and the proceeds from the sale of his boat and boat motor. The house, boat, and motor were subject to criminal forfeiture under 18 U.S.C. § 982(a)(2) as proceeds of his unlawful activity. The government appeals the district court's order of forfeiture imposed at sentencing, arguing that it is entitled to a money judgment representing the full amount of McGinty's unlawful proceeds. Exercising jurisdiction pursuant to 28 U.S.C. § 1291 and 18 U.S.C. § 3742(b)(1), we reverse and remand.

I

From 2006 until 2009, McGinty was employed as the executive vice president of Glencoe State Bank in Glencoe, Oklahoma. During that time, McGinty transferred over $500,000 from a customer's account, Dove Construction, LLC, to his own personal account. He then used the money in his personal account to pay for construction on his house and other personal expenses. While transferring funds from the Dove Construction account, that account was often overdrawn, and as vice president, McGinty approved the overdrafts. When the FDIC began an examination of the bank, he provided falsified documents and bank statements to the FDIC examiners.

McGinty was subsequently indicted on one count of misapplication of bank funds in violation of 18 U.S.C. § 656, two counts of knowingly making false statements to the FDIC in violation of 18 U.S.C. § 1007, and one count of obstructing a bank examination in violation of 18 U.S.C. § 1517. The indictment also sought the criminal forfeiture of McGinty's property pursuant to 18 U.S.C. § 982(a)(2).

On July 2, 2009, McGinty and the government entered into a plea agreement. The agreement provided that McGinty would plead guilty to count one of the indictment, misapplication of bank funds in violation of 18 U.S.C. § 656, and the government would dismiss the remaining counts of the indictment. The plea agreement further provided as follows:

The defendant agrees to forfeit to the United States voluntarily and immediately all of his right, title, and interest to any and all proceeds of the offense pursuant to 18 U.S.C. § 982(a)(2)(A) that are in the possession and control of the defendant or nominees. The defendant agrees that those proceeds include $536,995.00, which represents a portion of the money obtained as a result of the offense charged in Count One. The defendant further agrees to the entry of a money judgment in this amount at sentencing.

Appellant's App. at 15-16. McGinty also agreed that his house, boat, and boat motor were subject to forfeiture because they were purchased with money obtained from his misapplication of bank funds. The agreement further provided “that the net funds generated by any forfeiture of the [house, boat, and boat motor] will be credited to the $536,995.00 money judgment.” Id. at 17.

In September 2009, the government filed a motion for a preliminary order of forfeiture. The government requested a personal money judgment against McGinty for $536,995, and forfeiture of McGinty's house and a cashier's check in the amount of $8,500, representing the proceeds from the sale of the boat and boat motor. McGinty filed a response to the government's motion and requested that the forfeiture judgment should be reduced because he repaid $320,000 to the bank. Relatedly, in his sentencing memorandum, McGinty argued that the loss amount of $645,459.55 set forth in the presentence report should also be reduced by the $320,000 amount he had repaid to the bank. McGinty represented to the district court that forfeiture was in the court's discretion, and he requested that the district court reduce the forfeiture judgment amount to the amount of loss, which he calculated to be $325,459.55.

At the sentencing hearing on October 7, 2009, the district court concluded that for purposes of calculating McGinty's offense level under the Sentencing Guidelines, the loss amount should be calculated at $325,459.55, after taking into consideration the $320,000 that McGinty had already repaid to the bank. 1 The district court then heard argument regarding whether it was required to order both restitution and forfeiture. The government requested both, and the district court asked: “Why wouldn't that be a double recovery?” Appellant's App. at 118. The government argued that both restitution and forfeiture were mandatory under the respective statutes, and that ordering both would not result in a double recovery because the restitution would go to the bank, and the forfeiture would go to the United States. McGinty responded that ordering both restitution and the forfeiture of $325,459.55 would be a “double dip.” Id. at 119. The district court asked “Do I have-do I have any alternative in regard to forfeiture? I think it's unfair, the double recovery.” Id. at 120. Again, McGinty suggested that the forfeiture amount was “totally in [the district court's] discretion,” and the government responded that the court was required to order both restitution and forfeiture. Id. The district court then asked: “What would the government prefer? I mean, you've got a check for $325,000. Do you prefer that or do you prefer the forfeiture? I'm not going to order both of them.” Id. at 121. Finally, the district court concluded:

Well, what I'm going to do, then, is I'm going to order the payment to the victim of the $325,000 and I'll order forfeiture of the home and the boat and that will be the limit of my order of restitution. I think that's the only reasonable thing to do under the circumstances, the fair thing to do.
Id. at 123. The district court then sentenced McGinty to eighteen months' imprisonment.

On October 9, 2009, the government filed a motion to correct the sentence pursuant to Federal Rule of Criminal Procedure 35(a), arguing that the district court clearly erred in its forfeiture ruling by failing to include a money judgment in the amount of $325,459.55. The district court entered an order on October 21, 2009, denying the government's motion to correct McGinty's sentence.2 This timely appeal followed.

II

The government contends that it is entitled to the forfeiture of the proceeds of McGinty's misapplication of bank funds, and the district court erred in refusing to order a money judgment representing those proceeds. We agree.

As an initial matter, the parties dispute our standard of review. According to the government, our review is de novo because this appeal presents issues of statutory interpretation. McGinty contends that because criminal forfeiture is imposed at sentencing, our review is for an abuse of discretion, following United States v. Booker, 543 U.S. 220, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005). We agree with the government. Although criminal forfeiture may be imposed at sentencing, the case at bar involves statutory interpretation, which we review de novo. See United States v. Nacchio, 573 F.3d 1062, 1087 (10th Cir.2009); United States v. Jones, 502 F.3d 388, 391 (6th Cir.2007) (This court reviews the district court's interpretation of the federal forfeiture laws de novo.”).

We begin with the plain language of the statute. United States v. Manning, 526 F.3d 611, 614 (10th Cir.2008). The criminal forfeiture statute at issue provides:

The court, in imposing a sentence on a person convicted of a violation of, or a conspiracy to violate-
(A) section ... 656 ... of this title, affecting a financial institution ...
shall order that the person forfeit to the United States any property constituting, or derived from, proceeds the person obtained directly or indirectly, as the result of such violation.

18 U.S.C. § 982(a)(2).

In interpreting another forfeiture statute with nearly identical language, the Supreme Court has explained: Congress could not have chosen stronger words to express its intent that forfeiture be mandatory in cases where the statute applied, or broader words to define the scope of what was to be forfeited.” United States v. Monsanto, 491 U.S. 600, 607, 109 S.Ct. 2657, 105 L.Ed.2d 512 (1989) (interpreting 21 U.S.C. § 853); see also United States v. Bieri, 68 F.3d 232, 235 (8th Cir.1995) ([T]he mandatory language of [§ 853(a) ] does not leave forfeiture to trial court discretion.”). Similarly, the plain language of 18 U.S.C. § 982(a)(2) indicates the mandatory nature and scope of criminal forfeiture.

Section 982(a)(2) directs that the district court “shall order” forfeiture of “any property constituting, or derived from” the unlawful proceeds. These words express Congress's intent that criminal forfeiture is both mandatory and broad. “The Supreme Court and this circuit have made clear that when a statute uses the word ‘shall,’ Congress has imposed a mandatory duty upon the subject of the command.” Forest Guardians v. Babbitt, 174 F.3d 1178, 1187 (10th Cir.1999) (citing Monsanto, 491 U.S. at 607, 109 S.Ct. 2657). “The word ‘shall’ does not convey discretion. It is not a leeway word, but a word of command.” United States v. Fleet, 498 F.3d 1225, 1229 (11th Cir.2007) (quotation omitted) (interpreting 21 U.S.C. §...

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