United States v. $525,695.24, Seized from JPMorgan Chase Bank Inv. Account #XXXXXXXX

• Citation: 869 F.3d 412
• Decision Date: 23 August 2017
• Docket Number: No. 16-3209,16-3209
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. $525,695.24, SEIZED FROM JPMORGAN CHASE BANK INVESTMENT ACCOUNT #XXXXXXXX, et al., Defendants, Sbeih A. Sbeih, Claimant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

869 F.3d 412

UNITED STATES of America, Plaintiff-Appellee,

v.$525,695.24, SEIZED FROM JPMORGAN CHASE BANK INVESTMENT ACCOUNT #XXXXXXXX, et al., Defendants,Sbeih A. Sbeih, Claimant-Appellant.

No. 16-3209

United States Court of Appeals, Sixth Circuit.

Argued: March 7, 2017

Decided and Filed: August 23, 2017

COUNSEL ARGUED: Joan E. Pettinelli, North Royalton, Ohio, for Appellant. Phillip J. Tripi, UNITED STATES ATTORNEY'S OFFICE, Cleveland, Ohio, for Appellee. ON BRIEF: Joan E. Pettinelli, North Royalton, Ohio, for Appellant. Phillip J. Tripi, UNITED STATES ATTORNEY'S OFFICE, Cleveland, Ohio, for Appellee.

Before: CLAY, GIBBONS, and STRANCH, Circuit Judges.

OPINION

CLAY, Circuit Judge.

The United States filed a civil forfeiture complaint against numerous bank accounts, as well as three cars and various real properties, asserting that the named properties were either used in the transportation and sale of controlled substances, were used or intended to be used to facilitate drug trafficking, or were involved in money laundering. The government thus asserted that the properties were subject to forfeiture pursuant to 21 U.S.C. § 881(a)(4), (a)(6), and (a)(7), as well as 18 U.S.C. § 981. Claimant Sbeih Sbeih filed a verified claim to seven of the bank accounts; however, the government moved to strike that claim based on the fugitive disentitlement statute, 28 U.S.C. § 2466. The district court granted the government's motion to strike Sbeih's claim and subsequently ordered the accounts forfeited. Sbeih now appeals the order of forfeiture and the decision by the district court striking his claim. For the reasons set forth below, we VACATE the district court's judgment and REMAND the action for further proceedings consistent with this opinion.

BACKGROUND

On June 3, 2013, the government filed a civil in rem forfeiture complaint against twenty bank accounts, two real properties, three vehicles, and $91,500 in United States currency. This civil forfeiture action is related to the government's investigation of Sbeih and Osama Salouha, a claimant in a related case. Salouha is alleged to have illegally sold prescription drugs, including oxycodone, oxymorphone, and hydrocodone, through the two pharmacies he owns in Ohio, in violation of 21 U.S.C. § 841. Sbeih was a joint owner in one of Salouha's pharmacies, and together Sbeih and Salouha are alleged to have laundered the receipts from Salouha's illegal drug sales through their personal and business accounts, in violation of 18 U.S.C. § 1956. The government sought forfeiture pursuant to 21 U.S.C. § 881(a)(4), (a)(6), and (a)(7), as well as 18 U.S.C. § 981, as the bank accounts contained proceeds from drug trafficking activities, were used to facilitate drug trafficking, or were involved in money laundering.

On August 7, 2013, Sbeih and his wife, Nimeh Ahmad-Sbeih, filed verified claims to seven of the personal bank accounts held in one or both of their names. The case was then stayed for a year because of the related criminal investigation. Sbeih was indicted on June 3, 2014, on one count of conspiracy to commit money laundering, one count of conspiracy to defraud the Internal Revenue Service, and three counts of making and subscribing false income tax returns. When Sbeih failed to appear for his arraignment on his criminal charges, the district court issued a warrant for his arrest.

Meanwhile, the district court lifted the stay on the civil forfeiture case and scheduled a status conference for June 24, 2014.

Sbeih's counsel sought the district court's permission for Sbeih not to attend the conference in person, as he was in Israel. Sbeih alleged that he was in danger of losing his Jerusalem permanent residency permit if he left Israel. The district court granted the motion, excusing Sbeih.

On September 18, 2014, the government filed a motion to strike Sbeih's claim pursuant to the fugitive disentitlement statute. Sbeih opposed that motion. The district court did not immediately rule on the issue and instead waited to see whether the Salouhas, Sbeih's co-defendants in the criminal case, were able to reenter the country, as they were reportedly stuck in Gaza. On April 10, 2015, the government refiled its motion to strike Sbeih's claims pursuant to the fugitive disentitlement statute. After receiving a response from Sbeih, the district court granted the government's motion to strike Sbeih's claim on May 12, 2015. On January 14, 2016, the district court entered judgment against the relevant defendant properties, ordering them forfeited to the United States. This timely appeal followed.¹

DISCUSSION

On appeal, Sbeih challenges the district court's determination that he should be prevented from pursuing his interest in the defendant properties based on his status as a fugitive. We conclude that the district court clearly erred in finding that, based on the record as preserved for appeal, Sbeih should be disentitled because he was evading criminal prosecution by not returning to the United States.

A. Jurisdiction

The district court had jurisdiction over this action pursuant to 28 U.S.C. § 1345, which provides that "district courts shall have original jurisdiction of all civil actions, suits or proceedings commenced by the United States." The district court also had jurisdiction pursuant to 28 U.S.C. § 1355, as this is an action for forfeiture. This Court has jurisdiction to hear the appeal pursuant to 28 U.S.C. § 1291.

B. Standard of Review

This Court reviews de novo whether 28 U.S.C. § 2466 is applicable to Sbeih's case, and "to the extent we conclude that the statute is applicable ..., we review the district court's decision to order disentitlement for abuse of discretion." United States v. Salti , 579 F.3d 656, 662–63 (6th Cir. 2009) (alteration in original) (quoting Collazos v. United States , 368 F.3d 190, 195 (2d Cir. 2004) ). We review the district court's factual findings, including the finding as to intent, for clear error. United States v. Batato , 833 F.3d 413, 431 (4th Cir. 2016) (citation omitted).

C. Analysis

The fugitive disentitlement statute, codified as 28 U.S.C. § 2466, states:

(a) A judicial officer may disallow a person from using the resources of the courts of the United States in furtherance of a claim in any related civil forfeiture action or a claim in third party proceedings in any related criminal forfeiture action upon a finding that such person—

(1) after notice or knowledge of the fact that a warrant or process has been issued for his apprehension, in order to avoid criminal prosecution—(A) purposely leaves the jurisdiction of the United States;

(B) declines to enter or reenter the United States to submit to its jurisdiction; or

(C) otherwise evades the jurisdiction of the court in which a criminal case is pending against the person; and

(2) is not confined or held in custody in any other jurisdiction for commission of criminal conduct in that jurisdiction.

Based on the text of this statute, this Court has adopted the following five part test to determine whether disentitlement is appropriate:

(1) a warrant or similar process must have been issued in a criminal case for the claimant's apprehension; (2) the claimant must have had notice or knowledge of the warrant; (3) the criminal case must be related to the forfeiture action; (4) the claimant must not be confined or otherwise held in custody in another jurisdiction; and (5) the claimant must have deliberately avoided prosecution by (A) purposefully leaving the United States, (B) declining to enter or reenter the United States, or (C) otherwise evading the jurisdiction of a court in the United States in which a criminal case is pending against the claimant.

Salti , 579 F.3d at 663 (quoting Collazos , 368 F.3d at 198 ).

In this case, Sbeih only challenged the applicability of the fifth factor—whether he deliberately avoided prosecution by declining to reenter the United States. Sbeih argued that he is remaining in Israel not because he is trying to evade criminal prosecution, but because, if he leaves, he is unlikely to be able to retain his permanent resident status in Jerusalem. In support of his contention that he would not be allowed to retain his permanent residency status in Israel if he left, Sbeih included an affidavit from his lawyer in Israel, as well as an expert report from a professor who reviewed Sbeih's records from his Israeli court proceedings.

Applying the test set forth in Salti , the district court found that disentitlement was appropriate and granted the government's motion to strike Sbeih's claim to seven of the bank accounts listed in the forfeiture complaint. The district court first determined that the government did not need to prove that Sbeih's sole reason for staying outside the United States was to evade criminal prosecution. While Sbeih proffered another reason for staying in Israel—his fear of losing permanent resident status in Israel if he left the country—the district court determined that such fear "does not preclude a finding that [Sbeih] has made a conscious choice not to reenter the United States in order to avoid criminal prosecution." (R. 145, Mem. Op. & Order, PageID #1309.)

The district court then offered the following as its rationale for determining that the fifth factor was satisfied:

Based on the totality of the circumstances, as related by Counsel during the numerous Status Conferences held in this case and briefed repeatedly by the Parties, the Court finds that Mr. Sbeih has made a conscious choice not to reenter the United States for the purpose of avoiding prosecution. Mr. Sbeih is not prohibited from leaving Israel; is not detained in Israel; and, has presented no evidence that he is somehow incapacitated or otherwise unable to travel. Mr. Sbeih's wife has returned to the United States and, although Mr. Sbeih argues he must stay in Jerusalem to care for his parents, Mr. Sbeih has indicated he has siblings who remain in Jerusalem. Prior to 2008, Mr. Sbeih traveled to Jerusalem

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