U.S. v. Newman

• Decision Date: 28 October 2011
• Docket Number: 10–10444.,Nos. 10–10430,10–10431,s. 10–10430
• Citation: 11 Cal. Daily Op. Serv. 13293,659 F.3d 1235
• Parties: UNITED STATES of America, Plaintiff–Appellant,v.David Ray NEWMAN, Defendant–Appellee.United States of America, Plaintiff–Appellant,v.Jon Tedesco, Defendant–Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

659 F.3d 1235
11 Cal. Daily Op. Serv. 13,293

UNITED STATES of America, Plaintiff–Appellant,
v.
David Ray NEWMAN, Defendant–Appellee.United States of America, Plaintiff–Appellant,
v.
Jon Tedesco, Defendant–Appellee.

Nos. 10–10430

10–10431

10–10444.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Aug. 10, 2011.Filed Oct. 28, 2011.

[659 F.3d 1237]

Robert L. Ellman, Appellate Chief and Assistant United States Attorney, and Daniel D. Hollingsworth, Assistant United States Attorney, Las Vegas, NV, for the plaintiff-appellant.Dan C. Maloney, and Michael K. Powell, Assistant Federal Public Defender, Reno, NV, for the defendants-appellees.Appeals from the United States District Court for the District of Nevada, James C. Mahan, District Judge, Presiding. D.C. Nos. 2:09–cr–00426–JCM–PAL–1, 2:10–cr–

[659 F.3d 1238]

00003–JCM–PAL2, 2:09–cr–00472–JCM–LRL–1.Before: ALEX KOZINSKI, Chief Judge, DIARMUID F. O'SCANNLAIN and SUSAN P. GRABER, Circuit Judges.OPINION GRABER, Circuit Judge:

Defendants David Ray Newman and Jon Tedesco committed crimes that subject them to criminal forfeiture: Newman robbed two banks, and Tedesco conspired to defraud banks. Defendants each pleaded guilty and agreed to forfeit a specific amount of money. The district court nevertheless eliminated criminal forfeiture or reduced it to a trivial amount. The government timely appeals. Because the district court's reasoning in the two cases is substantially similar, we issue this joint opinion.

FACTUAL AND PROCEDURAL HISTORY A. Newman

Newman robbed a bank and stole $1,152. The government indicted him on one count of violating 18 U.S.C. § 2113(a). The indictment included a forfeiture allegation, pursuant to 18 U.S.C. § 981(a)(1)(C) and 28 U.S.C. § 2461(c), for a criminal money judgment up to $1,152.

While on pretrial release, Newman robbed another bank and, this time, stole $3,950. The government again indicted him. The indictment included a forfeiture allegation, pursuant to 18 U.S.C. § 981(a)(1)(C) and 28 U.S.C. § 2461(c), for a criminal money judgment up to $3,950.

The parties entered into a plea agreement in which Newman “knowingly and voluntarily agree[d] to ... the criminal forfeiture of an in personam criminal forfeiture money judgment of $3,950 ... and an in personam criminal forfeiture money judgment of $1,152” for a total of $5,102. After the plea hearing, Newman filed a “brief regarding forfeiture of assets which are not proceeds of [the] offense.”

At sentencing, the district court decided not to order criminal forfeiture. The government filed a motion for reconsideration, which the district court denied. The district court entered judgment against Newman in both cases but did not order forfeiture of any amount. The government sought, and the district court ordered, restitution of an amount less than $5,102 because some of the money had been returned to one of the banks after Newman was caught. ¹ The government timely appeals.

B. Tedesco

Tedesco entered into a conspiracy “to obtain money and property by using straw buyers to apply for mortgage loans from federally insured financial institutions to purchase properties.” The government charged him with one count of conspiracy to violate 18 U.S.C. § 1344. The criminal information included a forfeiture allegation, pursuant to 18 U.S.C. § 982(a)(2)(A), for a criminal money judgment up to $1 million.

The parties entered into a plea agreement in which Tedesco “knowingly and voluntarily agree[d] to ... the criminal forfeiture of a money judgment of $1,000,000.” Tedesco pleaded guilty, and the district court entered a preliminary

[659 F.3d 1239]

order of forfeiture of $1 million against Tedesco.

At sentencing, the district court stated that, contrary to the preliminary order, it would not impose any amount of forfeiture. Ultimately, however, the district court entered a judgment that included a final order of forfeiture of $100. The government sought, and the district court ordered, restitution of an amount less than $1 million because the loss to the financial institution from the specified property transaction was less than $1 million. The government timely appeals.

DISCUSSION ² A. Mandatory Criminal Forfeiture

Two distinct statutory provisions for criminal forfeiture apply here. As discussed below, both statutes provide that, when the government meets the applicable requirements, the district court must impose criminal forfeiture in the amount of the “proceeds” of the crime.

In Newman's case, the government included a criminal forfeiture allegation pursuant to 18 U.S.C. § 981 and 28 U.S.C. § 2461(c). Section 981, as its title states, typically governs “civil forfeiture[s],” not criminal forfeitures. See generally United States v. Liquidators of European Fed. Credit Bank, 630 F.3d 1139, 1149 (9th Cir.2011) (describing the differences between civil forfeiture and criminal forfeiture). But 28 U.S.C. § 2461(c) permits the government to seek criminal forfeiture whenever civil forfeiture is available and the defendant is found guilty of the offense:

If a person is charged in a criminal case with a violation of an Act of Congress for which the civil or criminal forfeiture of property is authorized, the Government may include notice of the forfeiture in the indictment or information pursuant to the Federal Rules of Criminal Procedure. If the defendant is convicted of the offense giving rise to the forfeiture, the court shall order the forfeiture of the property as part of the sentence in the criminal case pursuant to the Federal Rules of Criminal Procedure and section 3554 of title 18, United States Code.

The Eleventh Circuit has explained: “Congress enacted 28 U.S.C. § 2461(c), effective August 23, 2000, to make criminal forfeiture available in every case that the criminal forfeiture statute does not reach but for which civil forfeiture is legally authorized.” United States v. Padron, 527 F.3d 1156, 1161–62 (11th Cir.2008); accord United States v. Day, 524 F.3d 1361, 1375–77 (D.C.Cir.2008); United States v. Jennings, 487 F.3d 564, 584–85 (8th Cir.2007); United States v. Edelkind, 467 F.3d 791, 798–800 (1st Cir.2006); United States v. Vampire Nation, 451 F.3d 189, 198–201 (3d Cir.2006).

Relevant to Newman, 18 U.S.C. § 981(a)(1) states:

The following property is subject to forfeiture to the United States:

....

(C) Any property, real or personal, which constitutes or is derived from proceeds traceable to a violation of [specified sections] of this title or any offense constituting “specified unlawful activity” (as defined in section 1956(c)(7) of this title), or a conspiracy to commit such offense.

In turn, 18 U.S.C. § 1956(c)(7) provides that “the term ‘specified unlawful activity’ means—... (D) an offense under

[many [659 F.3d 1240]

specified sections, including] section 2113 or 2114 (relating to bank and postal robbery and theft).” Because Newman pleaded guilty to violating 18 U.S.C. § 2113, criminal forfeiture is available pursuant to § 981(a)(1)(C) and 28 U.S.C. § 2461(c).

In Tedesco's case, the government included a criminal forfeiture allegation pursuant to 18 U.S.C. § 982, which is titled “criminal forfeiture.” ³ Section 982(a)(2) states, in relevant part:

The court, in imposing sentence on a person convicted of a violation of, or a conspiracy to violate—

(A) section ... 1344 of this title....

.....

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.

Because Tedesco pleaded guilty to conspiracy to violate 18 U.S.C. § 1344, he is subject to criminal forfeiture pursuant to § 982(a)(2).

Sifting the statutory provisions, both statutes require that the district court “shall order” forfeiture. 18 U.S.C. § 982(a)(2); 28 U.S.C. § 2461(c). The mandatory nature of that phrase is clear: When the government has met the requirements for criminal forfeiture, the district court must impose criminal forfeiture, subject only to statutory and constitutional limits. See United States v. Casey, 444 F.3d 1071, 1076 (9th Cir.2006) ( “The statute mandates that a defendant forfeit a very specific amount—the proceeds of his criminal activity.”); id. at 1074 (referring to criminal forfeiture as “the mandatory forfeiture sanction Congress intended”); see also United States v. Monsanto, 491 U.S. 600, 607, 109 S.Ct. 2657, 105 L.Ed.2d 512 (1989) (holding that, by using the phrase “shall order” in a different forfeiture statute, “Congress could not have chosen stronger words to express its intent that forfeiture be mandatory in cases where the statute applied”).

Criminal forfeiture is separate from the discretionary sentencing considerations under 18 U.S.C. § 3551. Unlike a fine, which the district court retains discretion to reduce or eliminate, the district court has no discretion to reduce or eliminate mandatory criminal forfeiture. See 18 U.S.C. § 3554 (“The court ... shall order, in addition to the sentence that is imposed pursuant to the provisions of section 3551, that the defendant forfeit property to the United States....” (emphasis added)); 28 U.S.C. § 2461(c) (providing that, for all criminal forfeitures, “the court shall order the forfeiture of the property ... pursuant to the Federal Rules of Criminal Procedure and section 3554 of title 18”). Forfeiture is not a “disguised fine” such that the rules applicable to fines apply equally to forfeiture. See Casey, 444 F.3d at 1076 (“We disagree that allowing money judgments in forfeiture cases erases the distinctions between fines and forfeitures.”).

To be sure, the Supreme Court has recognized that there are constitutional limits to forfeiture. For example, prosecutorial misconduct amounting to a due process violation limits the government's power to seek criminal forfeiture. Libretti v. United States, 516 U.S. 29, 42–43, 116 S.Ct. 356, 133 L.Ed.2d 271 (1995) (citing Caplin & Drysdale, Chartered v. United States, 491 U.S. 617...