Forfeiture - Extent of Forfeiture; Proportionality; Excessive Fine

Austin v. United States, 509 U.S. 602 (1993)

The Eighth Amendment applies to civil forfeiture proceedings under 21 U.S.C. §881. The Eighth Amendment is not limited to criminal cases – it applies to any form of punishment and civil forfeiture amounts to punishment.

Alexander v. United States, 509 U.S. 544 (1993)

Pursuant to 18 U.S.C. §1963, the RICO in personam forfeiture procedure, the forfeiture of defendant’s entire adult entertainment inventory (including constitutionally protected material) was not violative of the First Amendment. However, the in personam nature of the forfeiture proceeding must pass muster under the excessive fines clause of the Eighth Amendment.

United States v. Bajakajian, 118 S.Ct. 2028 (1998)

The defendant was arrested as he was about to depart from the L.A. airport on a flight to Italy. He was found to be in possession of $357,144 in currency which he failed to report. Reporting the transfer of currency in excess of $10,000 across the border is required by the currency transaction laws, 31 U.S.C. §5316(a)(1)(A). In addition to prosecuting the defendant for making a false statement and for the currency transaction violation, the government also sought to forfeit the entire amount of money pursuant to 18 U.S.C. §982(a)(1), which provides that all property “involved in the offense” shall be forfeited. The defendant contested the forfeiture on Eighth Amendment grounds and the Supreme Court agreed. First, the Court concluded that the forfeiture in this case amounted to a “fine” for Eighth Amendment purposes. Section 982 forfeitures are punitive and are imposed as part of the sentence following conviction for the underlying offense. Second, the Court decided that in analyzing whether a forfeiture amounts to an Excessive Fine, the appropriate analysis is simply the “proportionality test”: The amount of the forfeiture must bear some relationship to the gravity of the offense that it is designed to punish. A fine is excessive if it is grossly disproportional to the gravity of a defendant’s offense. In this case, the fine was disproportional, because the money was not proceeds of any criminal offense, nor intended to be used for a criminal offense, but was simply not properly reported – an information-gathering offense. A fine in the amount of $357,144, for failing to properly fill out a form is grossly disproportionate to the offense.

United States v. Abair, 746 F.3d 260 (7th Cir. 2014)

Though not issuing a conclusive holding, the Seventh Circuit observed that the forfeiture of the defendant’s house based on a conviction for structuring offenses was disproportionate to the offense. There was no need to decide this question, because the conviction was reversed on other grounds.

United States v. Mahaffy, 693 F.3d 113 (2d Cir. 2012)

The definition of “proceeds” differs in a criminal forfeiture proceeding depending on whether the crime involved the sale of a lawful product in an unlawful manner, versus the sale of an unlawful product. 18 U.S.C. § 981(a)(2). In this case, the defendants were charged withselling securities with the improper use of confidential information. The Second Circuit concluded that this constituted the sale of a lawful product in an unlawful manner, which means that the forfeiture was limited to the profit, as opposed to gross proceeds.

United States v. Contorinis, 692 F.3d 136 (2d Cir. 2012)

In a criminal forfeiture proceeding, a defendant may not be ordered to forfeit funds never acquired by him or someone working in concert with him. Though an order of forfeiture may apply to funds no longer in the defendant’s control, at some point, the funds must have been in his control, or the control of someone with whom the defendant was working.

United States v. Seher, 562 F.3d 1344 (11th Cir. 2009)

The trial court erred in ordering the forfeiture of a certain bank account based on the defendants’ CTR and money laundering convictions, without a showing that those accounts were involved in the offenses of conviction.

United States v. Levesque, 546 F.3d 78 (1st Cir. 2008)

The First Circuit holds that the Excessive Fines Clause analysis requires the court to determine whether a forfeiture order will deprive the defendant of her livelihood. The court remands the case to the district court to re-evaluate the Eighth Amendment claim in this case, in which the court imposed a multi-million money judgment on the defendant, a mule who regularly transported marijuana for the conspiracy, but made little profit, herself.

Von Hofe v. United States, 492 F.3d 175 (2d Cir. 2007)

A civil forfeiture action was brought against the house of the claimant and her husband. Both had been convicted in state court of using the house to cultivate marijuana, but the evidence against the wife/claimant was limited to her knowledge that marijuana was being grown for personal use of the husband. The Second Circuit held that forfeiting the entire interest of the wife violated the Eighth Amendment. She was not aware of any distribution activities and her knowledge of personal use cultivation did not support the forfeiture of her entire interest. See generally United States v. Bajakajian, 524 U.S. 321, 118 S.Ct. 2028 (1998); Austin v. United States, 509 U.S. 602 (1993). This case contains a lengthy analysis of the factors that the court should consider in evaluating an Excessive Fine claim in an in rem forfeiture case.

United States v. $100,348 in U.S. Currency, 354 F.3d 1110 (9th Cir. 2004)

The defendant was arrested at the airport and charged with failing to report the transportation of the currency that was the subject of this forfeiture action. He claimed that he was a “gratuitous bailee” – he was carrying the money for someone else. The forfeiture proceedings concluded with the trial court deciding that the forfeiture of the entire amount was excessive. The government appealed, arguing that the bailee had not right to contend that it was an excessive fine. The Ninth Circuit upheld the lower court’s decision. The Civil Asset Forfeiture Reform Act expressly provides that a claimant may mount an excessive fine defense and this is not limited by the nature of the claim.

United States v. 3814 NW Thurman St., Portland, Or., 164 F.3d 1191 (9th Cir. 1999)

The government sought to forfeit the defendant’s property on the basis that she obtained a mortgage loan in the amount of $322,500 on the property based on numerous false statements that were submitted to the bank. The Ninth Circuit identified several factors that should be considered in determining whether a forfeiture is excessive: (1) Other related illegal activity; (2) Other penalties – in this regard, the court stressed that the possible Guideline sentence, rather than the statutory sentence should be the focus; (3) Harm caused; (4) Gravity of the offense vs. the amount of the forfeiture. Considering all these factors, the court decided that forfeiture of $200,686 (the increase in equity in the property) was excessive.

United States v. $273,969.04 U.S. Currency, 164 F.3d 462 (9th Cir. 1999)

A remand was necessary to determine whether the forfeiture of the currency was grossly disproportionate to the gravity of the defendant’s offense. See United States v. Bajakajian, 524 U.S. 321, 118 S. Ct. 2028 (1998). The currency was seized from the claimant (along with jewelry and British currency) at the airport. She was charged with failing to comply with monetary transaction reporting requirements.