United States v. Torres

• Decision Date: 05 December 2012
• Docket Number: Docket No. 11–1009–cr.
• Parties: UNITED STATES of America, Appellee, v. Ana TORRES, Defendant–Appellant.
• Court: U.S. Court of Appeals — Second Circuit

703 F.3d 194

UNITED STATES of America, Appellee,

v.Ana TORRES, Defendant–Appellant.

Docket No. 11–1009–cr.

United States Court of Appeals, Second Circuit.

Argued: Feb. 6, 2012.

Decided: Dec. 5, 2012.

Colleen P. Cassidy, Federal Defenders of New York, Inc., New York, NY, for Defendant–Appellant.

Daniel C. Richenthal, Assistant United States Attorney (Iris Lan, Assistant United States Attorney, on the brief), for Preet Bharara, United States Attorney for the Southern District of New York, New York, NY, for Appellee.

Before: WESLEY and CARNEY, Circuit Judges, and CEDARBAUM, District Judge.^*

SUSAN L. CARNEY, Circuit Judge:

Defendant Ana Torres stands convicted of theft of government property arising from the fraud she carried out to obtain subsidized housing benefits in New York City. She appeals from a March 2, 2011 judgment of the United States District Court for the Southern District of New York (Colleen McMahon, Judge ), ordering her, first, to pay $11,724 in restitution to the New York City Housing Authority (NYCHA), and second, to forfeit $11,724 to the United States. The sum that is the subject of each order represents rental subsidies that were paid for Torres's benefit as a result of her deliberate under-reporting of her household's income on applications for subsidized housing in New York City over a period of more than four years.

Torres does not contest the restitution order. As to forfeiture, however, she argues that the district court's order was not authorized by law. There is no dispute that the government may seek forfeiture as a penalty for the crime of which she was convicted. Torres's challenge rests instead on the observation that the United States Department of Housing and Urban Development (HUD) paid the subsidies of which Torres defrauded it directly to NYCHA—her landlord—and not to Torres. Therefore, she contends, she never “obtained” the subsidies within the meaning of the applicable forfeiture statute, 18 U.S.C. § 981, as is required to constitute forfeitable “proceeds” of her offense. Rather, she “retained” money as a result of her fraud, and received only the inchoate and non-forfeitable benefit of residing in subsidized housing at reduced cost.

For the reasons set forth below, we disagree. We conclude that the $11,724 that Torres saved by duping NYCHA and HUD constituted “property” that was “obtained [by Torres] ... indirectly” as a result of her offense, and may also be fairly characterized as “proceeds traceable to” or “net gain” realized from her offense. Each phrase provides an adequate premise under § 981 for the government's forfeiture complaint and the court's forfeiture award.

Moreover, there was nothing improper about the government's decision to seek the imposition of forfeiture and restitution in this case. Restitution and forfeiture are authorized by different statutes and serve different purposes—one of remediating a loss, the other of disgorging a gain. Their concurrent imposition has been judicially examined and upheld on numerous occasions in our Circuit and elsewhere. And, the related orders here contemplate payments to different payees, one municipal and one federal. Thus, no legal bar prevented the government's application for both, and with such applications before it, the district court was bound to grant those applications. Further, once Torres begins making the required payments, an equitable remedy may be available to her. Finally, where restitution and forfeiture are both authorized by law, the decision to pursue both concurrently is committed to the government, not to the courts.

We therefore Affirm the judgment of the district court in toto.

Background

Ana Torres was charged by information with one count of theft of government property in violation of 18 U.S.C. § 641, and four counts of making false statements to the government in violation of 18 U.S.C. § 1001. The charges derived from allegations that, over a four-year period, Torres submitted false affidavits understating her household's earnings level in a successful effort to obtain rental subsidy benefits for her NYCHA-administered housing.¹

In September 2010, Torres pleaded guilty before a magistrate judge to a single count of theft of government property, and one month later, the district court accepted her plea. In her plea colloquy, Torres admitted the charges and acknowledged that, from October 2005 through mid-January 2010, she had paid less in rent for her subsidized apartment than would have been required of her had she accurately reported her income and that of others living in the household.

The Pre–Sentence Report (PSR) stated, and Torres did not dispute, that the sum she was excused from paying to NYCHA during that time period because of her fraud was $11,724.² The PSR further informed the district court, also without dispute by Torres, that in 2004 Torres had moved to an apartment in Rhode Island, where she conducted a parallel fraud causing HUD a loss of $25,155.³ Despite her residence elsewhere, Torres reported to NYCHA that she was living in the New York apartment, and, on her income affidavits, Torres understated both her own income and the income attributable to her children. She also failed to report that another adult was living in the New York apartment and earning income.

The falsely-reported income information served as NYCHA's basis for calculating the amount of rent that Torres, as tenant of record, would be required to pay for the New York City apartment. Subsidies from HUD covered the difference between what Torres ostensibly could afford and the total rent charged by NYCHA. After the district court accepted Torres's guilty plea, ⁴ the government applied for a forfeiture order in the amount of $11,724 under 28 U.S.C. § 2461(c) and 18 U.S.C. § 981(a)(1)(C). The former statute permits the government to request forfeiture in any criminal case in which either civil or criminal forfeiture is authorized for the charged offense.⁵ The latter statute authorizes civil forfeiture for any offense constituting “specified unlawful activity” as defined by 18 U.S.C. § 1956(c)(7), which includes the offense of Torres's conviction: theft of government property in violation of 18 U.S.C. § 641.

Under § 981, any property that “constitutes or is derived from [the] proceeds traceable to” the offense is subject to forfeiture. 18 U.S.C. § 981(a)(1)(C). Section 981(a)(2)(A) defines “proceeds” (for purposes of Torres's crime) as “property of any kind obtained directly or indirectly, as the result of the commission of the offense giving rise to forfeiture, and any property traceable thereto, and is not limited to the net gain or profit realized from the offense.” 18 U.S.C. § 981(a)(2)(A).

The district court sentenced Torres to a term of three years' probation and restitutionto NYCHA as described above. It also granted the requested forfeiture order, requiring Torres to pay $11,724 to the United States Attorney's Office. Torres opposed the forfeiture order, arguing that § 981 did not apply to any funds held by her because she had not “obtained” funds as a result of her offense; rather, she had received only “the intangible benefit of the right to live in subsidized housing.” A. 154. The court rejected Torres's challenge, reasoning that, by fraudulently applying for and receiving the rental subsidies, Torres had “obtained” these funds: she had been able to keep and use as she chose $11,724 that she would otherwise have had to pay in rent.⁶

Torres appeals the forfeiture order to this Court, largely reprising the arguments she presented in the district court. She does not directly challenge the legality of the district court's concurrent application of the restitution and forfeiture statutes, but because she contends that their simultaneous imposition is unusual in practice and harsh in result, we consider whether any legal doctrine bars forfeiture when imposed in addition to restitution in the circumstances presented here.

Discussion

A. Interpreting Section 981

As set forth above, § 981 of title 18, entitled “Civil forfeiture,” makes subject to forfeiture “any property, real or personal, which constitutes or is derived from proceeds traceable to ... any offense constituting ‘specified unlawful activity’ (as defined in section 1956(c)(7) of this title).” 18 U.S.C. § 981(a)(1)(C). No one disputes that “specified unlawful activity” includes the crime of Torres's conviction, theft of government property under 18 U.S.C. § 641. We therefore begin our analysis by looking to the definition of “proceeds” provided in § 981 to determine whether Torres held any property that “constitutes or is derived from” such proceeds.

In cases involving “unlawful activities” such as those Torres pursued, “proceeds” means “property of any kind obtained directly or indirectly, as the result of the commission of the offense giving rise to forfeiture, and any property traceable thereto, and is not limited to the net gain or profit realized from the offense.” 18 U.S.C. § 981(a)(2)(A) (emphasis supplied). ⁷The statute thus broadly treats as “proceeds,” in Torres's case, any “property” that was “obtained directly or indirectly[ ] as a result of the commission” of the theft of government property. Id. It captures property “traceable to” that theft. Id. And it covers the “net gain or profit realized from the offense.” Id.

Torres contends that she did not “obtain” any property through her theft because she never had possession or control over the subsidy funds, which were paid to NYCHA on her behalf. She argues that, at most, she derived the benefit of living in an apartment at a below-market rate, but that benefit does not constitute “property,” and although money changed hands on her behalf, those funds were never sufficiently in her control to be subject to forfeiture now.

It is true that the unadorned word “obtain” is defined as “to succeed in gaining possession of ...; procure or acquire.” American Heritage Dictionary...