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EILEEN M. DECKER
United States Attorney
LAWRENCE S. MIDDLETON
Assistant United States Attorney
Chief, Criminal Division
STEVEN R. WELK
Assistant United States Attorney
Chief, Asset Forfeiture Section
FRANK D. KORTUM
Assistant United States Attorney
California Bar No. 110984
Federal Courthouse, 14th Floor
312 North Spring Street
Los Angeles, California 90012
Telephone: (213) 894-5710
Facsimile: (213) 894-7177
E-mail: Frank.Kortum@usdoj.gov
Attorneys for Plaintiff
UNITED STATES OF AMERICA
UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF CALIFORNIA
EASTERN DIVISION
UNITED STATES OF AMERICA,
Plaintiff,
v.
ALL MONIES, INCLUDING INSURANCE
BENEFITS AND INTEREST, PAYABLE
PURSUANT TO CLAIM NUMBER 1179068
UNDER MINNESOTA LIFE INSURANCE
GROUP POLICY NO. 33772-G, FOR
BASIC LIFE INSURANCE COVERAGE IN
THE AMOUNT OF $25,000, AND
SUPPLEMENTAL LIFE INSURANCE
COVERAGE IN THE AMOUNT OF
$250,000,
Defendant.
No. EDCV 16-01129 JGB(JPRx)
GOVERNMENT’S MEMORANDUM OF POINTS
AND AUTHORITIES IN RESPONSE TO THE
COURT’S ORDER RE LEGAL BASES FOR
ISSUANCE OF ARREST WARRANT IN REM
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TABLE OF CONTENTS
DESCRIPTION PAGE
TABLE OF AUTHORITIES...............................................ii
MEMORANDUM OF POINTS AND AUTHORITIES................................1
I. INTRODUCTION...................................................1
II. ARGUMENT.......................................................4
A. The Defendant Policy Benefits Are “Derived From” the
Underlying Federal Crime of Terrorism.....................4
1. Congress Designed § 981(a)(1)(G)(iii) to Sweep
Extremely Broadly, Covering All Assets Derived
From a Terrorist Attack, Not Merely Proceeds.........5
2. The Plain Language of § 981(a)(1)(G)(iii) Is
Broader Than Other Provisions In § 981 And Is Not
Limited To Proceeds..................................8
3. Farook’s Policy Benefits Have a Close Nexus With
And Are Thus Derived From His Terrorist Crimes
Under Any Standard..................................12
B. The Substantial Connection Test Does Not Apply to
Forfeiture Claims Against Assets Derived From
Terrorism................................................14
C. If the Court Denies the Arrest Warrant In Rem, It Must
Terminate the Case.......................................17
III. CONCLUSION....................................................18
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TABLE OF AUTHORITIES
DESCRIPTION PAGE
FEDERAL CASES
Alyeska Pipeline Service Co. v. Vessel Bay Ridge,
703 F.2d 381 (9th Cir. 1983).................................17
Clapp v. Heiner,
51 F.2d 224 (3d Cir. 1931)....................................9
Do Sung Uhm v. Humana, Inc.,
620 F.3d 1134 (9th Cir. 2010).................................9
Fleck v. KDI Sylvan Pools, Inc.,
981 F.2d 107 (3d Cir. 1992)...................................9
Haig v. Agee,
453 U.S. 280 (1981)...........................................8
Hibbs v. Winn,
542 U.S. 88 (2004)............................................7
Higa v. Transocean Airlines,
230 F.2d 780 (9th Cir. 1956)..................................9
Humanitarian Law Project v. Reno,
205 F.3d 1130 (9th Cir. 2000)................................11
Illinois v. Gates,
462 U.S. 213 (1983)...........................................4
Libretti v. United States,
516 U.S. 29 (1995)............................................6
Marine Midland Bank v. United States,
11 F.3d 1119 (9th Cir. 1993)..................................4
Penn Gen. Casualty Co. v. Pennsylvania,
294 U.S. 189 (1935)...........................................17
Robinson v. Shell Oil Co.,
519 U.S. 337 (1997)...........................................7
Russello v. United States,
464 U.S. 16 (1983).....................................7, 8, 11
United States v. Am. Trucking Ass’n,
310 U.S. 534 (1940)...........................................5
United States v. Angiulo,
897 F.2d 1169 (1st Cir. 1990)................................12
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TABLE OF AUTHORITIES (CONTINUED)
FEDERAL CASES PAGE
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United States v. Bajakajian,
524 U.S. 321 (1998)..........................................11
United States v. Davenport,
668 F.3d 1316 (11th Cir. 2012)................................6
United States v. DeFries,
129 F.3d 1293 (D.C. Cir. 1997)...............................12
United States v. Hassan,
742 F.3d 104 (4th Cir. 2014).................................13
United States v. Havelock,
664 F.3d 1284 (9th Cir. 2012).................................6
United States v. Horak,
833 F.2d 1235 (7th Cir. 1987)................................12
United States v. Melrose East Subdivision,
357 F.3d 493 (5th Cir. 2004)..................................4
United States v. Olfchinick,
883 F.2d 1172 (3rd Cir. 1989)................................12
United States v. One 1986 Ford Pickup,
56 F.3d 1181 (9th Cir. 1995).................................16
United States v. One Parcel . . . 916 Douglas Ave.,
903 F.2d 490 (7th Cir. 1990).................................16
United States v. Porcelli,
865 F.2d 1352 (2d Cir. 1989).................................12
United States v. $125,938.62 Proceeds of Certificates of
Deposit,
537 F.3d 1287 (11th Cir. 2008)...............................15
United States v. Rahman,
189 F.3d 88 (2d Cir. 1999)...................................13
United States v. Real Property Located at 475 Martin Lane,
545 F.3d 1134 (9th Cir. 2008).................................5
United States v. Real Property Located at 5208 Los Franciscos
Way,
385 F.3d 1187 (9th Cir. 2004).................................4
United States v. Real Property 874 Gartel Drive,
79 F.3d 918 (9th Cir. 1996)...................................4
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TABLE OF AUTHORITIES (CONTINUED)
FEDERAL CASES PAGE
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United States v. Real Property with any Improvements Thereon
Located at 40 Clark Road, Sandisfield, Mass.,
52 F. Supp. 2d 254 (D. Mass. 1999)...........................16
United States v. Santoro,
866 F.2d 1538 (4th Cir. 1989)................................16
United States v. Ursery,
518 U.S. 267 (1996)...........................................5
United States v. $62,552.00 in U.S. Currency,
2015 WL 251242 (D. Mass. Jan. 20, 2015)......................16
United States v. $242,484.00 in U.S. Currency,
389 F.3d 1149 (11th Cir. 2004).................................4
FEDERAL STATUTES
18 U.S.C. § 981................................................passim
18 U.S.C. § 983(c)(3)...........................................2, 14
18 U.S.C. § 1963................................................9, 12
OTHER AUTHORITIES
3A Sutherland, Statutory Construction (7th ed.)....................11
147 Cong. Rec. (2001).............................................6,8
Matthew Levitt, Hamas: Politics, Charity, and Terrorism in
Service of Jihad 178 (Yale Univ. Press 2007)..................11
Pub. L. No. 107-56, §§ 302(a)(8), (b)(1), (b)(3), 316, 320, 115
Stat, 272 .....................................................9
Webster's Third New International Dictionary 608 (1961).............7
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MEMORANDUM OF POINTS AND AUTHORITIES
I. INTRODUCTION
At issue here are the life insurance benefits of Syed Rizwan
Farook (“Farook”), a terrorist who died in the course of carrying out
an attack in San Bernardino killing 14 people, injuring at least 22
others, and ending in a firefight with law enforcement on December 2,
2015 (the “San Bernardino Attack”).
Farook -- an adherent and promoter of violent jihadist ideology
that teaches “death while furthering jihad will result in martyrdom”
–- began planning to commit violent attacks at least as early as 2011
and obtained life insurance coverage after initiating his plans,
including after acquiring two of the firearms used on December 2nd.
(Complaint ¶¶ 8, 12, 16, 19(f).) He anticipated dying in the course
of the attack that day, and his expectation proved correct. (Id. ¶¶
8, 15, 18, 19(g).) In 2012 and 2013, Farook obtained substantial
life insurance coverage so that when he died, his chosen beneficiary
would receive $275,000 (the “Policy Benefits”). (Id. ¶ 20.) The
beneficiary was not Farook’s wife -- with whom he would carry out the
murderous attack (id. ¶ 19) -- but rather his mother, with whom
Farook and his wife lived. (Id. ¶ 18.)
Minutes after commencing the San Bernardino Attack, Farook’s
wife pledged allegiance in a Facebook post to the Islamic State of
Iraq and the Levant (“ISIL”). (Id. ¶ 19(c).) Farook and his wife
did not flee after the initial shooting; instead, armed with a remote
detonator for an explosive device Farook planted at the scene of the
initial shooting, as well as with four firearms and thousands of
rounds of ammunition, they circled the area in their SUV until they
encountered law enforcement. (Id. ¶ 19(d), (f)-(g).) Farook and his
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wife continued their rampage as they shot at law enforcement
officers. (Id. ¶ 19(e).) As they expected, the couple died in the
ensuing firefight that ended the attack. (Id. ¶ 19(f).) The Policy
Benefits only became payable upon Farook’s death. (Id. ¶ 20.)
On May 31, 2016, the government filed a verified complaint for
forfeiture of the Policy Benefits. Contemporaneously, the government
applied for an arrest warrant in rem to allow the government to take
custody of the Policy Benefits and thereby perfect the Court’s in rem
jurisdiction in the forfeiture action. The requested arrest warrant
would authorize the government to hold the proceeds of the insurance
policy until the Court resolves claims to the defendant assets. On
June 2, 2016, the Court issued an order (the “June 2 Order”)
directing the government to answer three questions regarding the
requested warrant:
1. What authority supports the government’s contention that
the allegations in the complaint, taken as true, establish
probable cause to believe that the proceeds were “derived
from” the terrorist act as required by 18 U.S.C.
§ 981(a)(1)(G)(iii)?
2. Is the government required to establish, pursuant to 18
U.S.C. § 983(c)(3), that there is a “substantial
connection” between the life insurance policy benefits and
the terrorist act? If so, how do the allegations in the
complaint, taken as true, establish such a nexus? If not,
what nexus is required between the life insurance policy
benefits and the terrorist act to establish that the
proceeds were “derived from” the terrorist act?
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3. What authority does the Court have, if any, to exercise
jurisdiction over the life insurance policy benefits if the
warrant does not issue?
As discussed more fully below, the rules of statutory
construction make clear that Congress deliberately wrote the term
“derived from” in § 981(a)(1)(G)(iii) to be interpreted as broadly as
possible. In fact, in the immediate aftermath of the September 11,
2001, terrorist attacks, Congress enacted a sweeping expansion of
federal forfeiture law designed to ensure the government’s ability to
eradicate terrorists’ financing and financial incentives. See
generally 18 U.S.C. § 981(a)(1)(G).
Under this statutory provision, and unlike other forfeiture
provisions, a “substantial connection” between the Policy Benefits
and Farook’s terrorism crimes is not required. Instead, the “nexus”
required is that some causal relationship exist between the offense
and the asset. Here, as the verified complaint demonstrates, there
is probable cause to believe that the Policy Benefits were generated
as a direct result of the San Bernardino Attack, as he had planned,
in that Farook died in the course of committing that attack.
However, should the Court disagree and decline to issue the requested
arrest warrant in rem, the Court would lack jurisdiction over the
Policy Benefits for purposes of this case.1
The fundamental answer to the Court’s three questions is that,
in its post-9/11 enactment of § 981(a)(1)(G), Congress passed a
1 The government notes that after the Court issued the June 2
Order, the insurer filed an interpleader action in this district,
Minnesota Life Insurance Company v. Rafia Farook, et al., Case No.
5:16-CV-01206-JFW (SPx), naming the United States, among others, as a
party and including notice that the insurer will deposit the Policy
Benefits with the Clerk of the Court on June 10, 2016.
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statute broad enough to allow this Court, in the first instance, to
“arrest” the Policy Benefits thereby enabling the forfeiture case to
proceed rather than allowing a terrorist to use his death to enrich
his chosen beneficiary. The government respectfully submits that
under the language and structure of § 981(a)(1)(G), and within the
framework of forfeiture law, this Court can and should issue an
arrest warrant for the assets.
II. ARGUMENT
A. The Defendant Policy Benefits Are “Derived From” the
Underlying Federal Crime of Terrorism.
The verified complaint establishes probable cause to believe
that the Policy Benefits are “assets . . . derived from . . . any
Federal crime of terrorism against the United States, citizens or
residents of the United States, or their property.”2 Taking the
facts alleged in the verified complaint as true, as the Court must,
Farook’s horrific crimes constituted Federal crimes of terrorism.
2 The applicable standard is whether the government has
established probable cause to believe that the property sought to be
seized is subject to forfeiture. See generally Marine Midland Bank
v. United States, 11 F.3d 1119, 1125 (9th Cir. 1993); United States
v. Melrose East Subdivision, 357 F.3d 493, 504 (5th Cir. 2004). The
government is not required to satisfy at the pleading stage its
ultimate burden of proving by a preponderance of the evidence that
the property is subject to forfeiture. See United States v. Real
Property Located at 5208 Los Franciscos Way, 385 F.3d 1187, 1193 (9th
Cir. 2004). An arrest warrant is properly issued if, based on the
totality of the circumstances, and with a “common sense view to the
realities of normal life,” the Court finds that there is a “fair
probability” that the defendant assets are subject to forfeiture on
the grounds alleged. See Illinois v. Gates, 462 U.S. 213, 238
(1983); United States v. $242,484.00 in U.S. Currency, 389 F.3d 1149,
1160 (11th Cir. 2004); see also United States v. Real Property 874
Gartel Drive, 79 F.3d 918, 922 (9th Cir. 1996) (“The government need
prove only that it had reasonable grounds to believe that the
property was involved in the alleged offenses, supported by less than
prima facie proof but more than mere suspicion”)(internal quotes
omitted).
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Further, the Policy Benefits are an asset. Thus, the only possible
issue -- which the government understands to be the focus of the
Court’s June 2 Order -- is whether the Policy Benefits are “derived
from” the terrorist attack during which Farook died.3
1. Congress Designed § 981(a)(1)(G)(iii) to Sweep
Extremely Broadly, Covering All Assets Derived From a
Terrorist Attack, Not Merely Proceeds
“In the interpretation of statutes, the function of the courts
is easily stated. It is to construe the language so as to give
effect to the intent of Congress.” United States v. Am. Trucking
Ass’n, 310 U.S. 534, 542 (1940). In the immediate aftermath of the
9/11 terrorist attacks, Congress enacted § 981(a)(1)(G) to establish
broad anti-terrorism civil forfeiture authority. The question before
this Court is whether, in doing so, Congress intended to and did
provide a tool broad enough to reach the monetary rewards of an
insurance policy held by a terrorist and triggered by his death in
carrying out an act of terrorism.4 The answer is yes.
3 If this understanding is incorrect, the government
respectfully requests leave to provide further briefing or amend the
complaint.
4 A finding here that the allegations of the complaint
establish probable cause to believe that the Policy Benefits are
forfeitable under § 981(a)(1) is not the end of the forfeiture
process: the government ultimately must prove by a preponderance of
the evidence that the Policy Benefits are subject to forfeiture
under § 983(c)(1), and claimants can intervene and assert defenses
to the forfeiture, including that they are innocent owners of the
asset under § 983(d), or that the forfeiture is Constitutionally
excessive under § 983(g). But those claims come later in the
process, after the defendant asset is “arrested.” See United States
v. Real Property Located at 475 Martin Lane, 545 F.3d 1134, 1144
(9th Cir. 2008); United States v. Ursery, 518 U.S. 267, 295-96
(1996) (Kennedy, J., concurring).
Thus, to hold that the Policy Benefits are covered by
§ 981(a)(1) (and therefore subject to seizure pursuant to § 981(b)),
(footnote cont’d on next page)
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Congress framed § 981(a)(1)(G) in sweeping terms, and subsection
(iii) is no different. It authorizes the forfeiture of “all assets .
. . derived from . . . any Federal crime of terrorism.” 18 U.S.C.
§ 981(a)(1)(G)(iii) (emphasis added).5 The breadth of this provision
is clear not only from its terms but also from its historical context
and legislative history. Congress was adamant that terrorists not be
allowed to use “the world-class services of the American financial
system to underwrite their deadly operations,” much less use
terrorism as a means of enriching themselves or others. 147 Cong.
Rec. 20,028 (2001) (Rep. Oxley).
In interpreting § 981(a)(1)(G)(iii), the Court must “focus[] on
‘the language itself, the specific context in which that language is
used, and the broader context of the statute as a whole.’” United
States v. Havelock, 664 F.3d 1284, 1289 (9th Cir. 2012) (quoting
does not necessarily mean that the government will ultimately
prevail in the civil judicial forfeiture action, but merely that the
benefits can be held by the government while any claims to the asset
are resolved.
5 That Congress chose to enact § 981(a)(1)(G) as a civil (in
rem) rather than a criminal (in personam) forfeiture provision
reflects an intent that the terrorism section apply beyond
circumstances in which a defendant suffers a criminal conviction
because civil forfeiture includes no such requirement. See Libretti
v. United States, 516 U.S. 29, 39 (1995) (criminal forfeiture is part
of a defendant’s sentence following conviction of a substantive
criminal offense); United States v. Davenport, 668 F.3d 1316, 1320
(11th Cir. 2012) (criminal forfeiture applies to property with a
nexus to the crime of conviction). The distinction is important in
the terrorism context, where, as here, a terrorist intends to
“martyr” himself during the course of the terrorist act. In such a
case, criminal prosecution against the deceased terrorist is
impossible and any forfeiture remedies must be civil.
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Robinson v. Shell Oil Co., 519 U.S. 337, 341 (1997)).6 The statute
must be “construed so that effect is given to all its provisions, so
that no part will be inoperative or superfluous, void or
insignificant.” Hibbs v. Winn, 542 U.S. 88, 101 (2004). Further,
the Court should be guided by the principles set forth by the Supreme
Court in Russello v. United States, 464 U.S. 16 (1983), which
interpreted the narrower RICO forfeiture provisions to cover
insurance benefits paid as the result of an arson. Two of Russello’s
holdings particularly illustrate the applicability of
§ 981(a)(1)(G)(iii) here.
First, Russello made clear that in interpreting the terms of the
RICO forfeiture provision, courts could never lose sight of the fact
that “the RICO statute was aimed at organized crime’s economic power
in all its forms.” 464 U.S. at 25. The statute’s terms must
therefore be read as “broad,” so as “to fulfill that aim.” Id.
Thus, the Court rejected a narrow interpretation of the forfeiture
provision that could “blunt the effectiveness of the provision in
combatting illegitimate enterprises.” Id. at 24.
That foundational principle applies with even more force here.
Prior to the enactment of § 981(a)(1)(G), the RICO forfeiture
provisions were the most expansive in the United States Code. That
the forfeiture provisions related to crimes of terrorism were written
to be even broader was in recognition of the fact that “[i]t is
6 The plain meaning of “derive” is broad and varied, but has as
its basic gist “to have or take origin: originate: stem, emanate,”
with the exemplary phrase “stories deriving from his experiences in
Africa.” Webster’s Third New International Dictionary 608 (1961).
The government submits that this plain meaning alone is sufficient to
conclude that the Policy Benefits “derived from” (i.e., had their
origin in) Farook’s death in his terrorist attack.
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‘obvious and unarguable’ that no government interest is more
compelling than the security of the Nation.” Haig v. Agee, 453 U.S.
280, 307 (1981). Congress deliberately designed the law to insure
that “terrorism will be fought in the financial theatre as
aggressively as the war now being waged by our brave men and women in
uniform.” 147 Cong. Rec. 20,444 (Rep. Oxley).7 This language is
strikingly similar to the legislative history that compelled a broad
reading of the RICO statute in Russello, 464 U.S. at 27-28. Here --
unlike with RICO -- the war was quite literal and the necessity all
the more acute.
Second, Russello explained that “where Congress includes
particular language in one section of a statute but omits it in
another section of the same Act, it is generally presumed that
Congress acts intentionally and purposely in the disparate inclusion
or exclusion.” 464 U.S. at 23. Thus, the presence of limiting
language in one provision underscores the breadth of any other
provision in which that limitation is absent. Id.
2. The Plain Language of § 981(a)(1)(G)(iii) Is Broader
Than Other Provisions In § 981 And Is Not Limited To
Proceeds
Here, there is a striking distinction between subsection
(G)(iii) and other subsections of § 981: subsection (G)(iii)
authorizes forfeiture of “all property . . . derived from” the
triggering offense, whereas every other provision authorizes
7 The legislative history shows that Congress was generally
concerned with addressing “inadequate statutory provisions that . . .
make forfeitures more difficult” and “strengthening” existing
forfeiture mechanisms. Pub. L. No. 107-56, §§ 302(a)(8), (b)(1),
(b)(3), 316, 319, 320, 115 Stat. 272 (codified in scattered sections
of the United States Code).
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forfeiture only of “any property . . . derived from proceeds
traceable to” or “proceeds obtained from” a triggering offense. 18
U.S.C. § 981(a)(1)(B), (C), (H), (I) (emphasis added); see also,
e.g., 18 U.S.C. § 1963(a)(3) (RICO).8 Congress thus intended the
reach of § 981(a)(1)(G)(iii) to extend beyond mere “proceeds” and to
encompass all assets derived from the offense.9
Taken together, the established canons of statutory construction
and the particular principles set forth in Russello establish a
framework for how “all assets . . . derived from” Farook’s terrorist
attack must be construed:
(1) The phrase must be construed broadly, consistent with the
language’s breadth (i.e., “all assets,” “any crime of terrorism”) and
the urgent necessity that Congress was addressing.
(2) It must reach assets not covered by other provisions of
§ 981(a)(1) because to do otherwise would “deny effect to . . . part
of [§ 981(a)(1)’s] language.” See generally Higa v. Transocean
Airlines, 230 F.2d 780, 784 (9th Cir. 1956). Therefore, the “derived
from” provision must reach beyond those assets:
(a) belonging to Farook himself, § 981(a)(1)(G)(i);
8 The term “any” is typically construed as broadly as the term
“all.” E.g., Do Sung Uhm v. Humana, Inc., 620 F.3d 1134, 1153 (9th
Cir. 2010) (“The word ‘any’ is generally used in the sense of ‘all’
or ‘every’ and its meaning is most comprehensive.” (quoting Fleck v.
KDI Sylvan Pools, Inc., 981 F.2d 107, 115 (3d Cir. 1992)). To the
extent any distinction can be drawn between them, however, it is that
“all” suggests even greater breadth. Cf. Clapp v. Heiner, 51 F.2d
224, 226 (3d Cir. 1931).
9 For that reason, the government respectfully submits that the
Court’s first question differs from the statute insofar as the
question asks the government to establish probable cause to believe
that the Policy Benefits represent “proceeds [that] were ‘derived
from’ the terrorist act.” Order at 2 (emphasis added). As noted,
§ 981(a)(1)(G)(iii) is expressly not limited to “proceeds.”
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(b) “acquired . . . with the intent . . . of supporting,
planning or concealing” terrorism, § 981(a)(1)(G)(ii);
(c) “involved in, or used or intended to be used to commit”
terrorism, § 981(a)(1)(G)(iii); and
(d) associated with financing terrorism, § 981(a)(1)(H).
(3) It must reach beyond the attack’s “proceeds,” as that
limitation was removed from § 981(a)(1)(G). Thus, it cannot be
narrower than -- and indeed must be broader than -- “all 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) (defining
“proceeds” for “cases involving . . . unlawful activities”).
Given that “assets . . . derived from” Farook’s terrorist attack
must include assets belonging to third parties who are not themselves
involved in the underlying violation, and must include assets that
were neither involved in the offense nor directly obtained during the
offense, § 981(a)(1)(G)(iii) must reach the benefits of Farook’s life
insurance policy. Indeed, among the kind of assets not covered by
other provisions of § 981(a)(1), it is hard to imagine anything with
a closer “nexus” to the offense than the defendant assets in this
case. The Policy Benefits are intimately connected both to the
terrorist (the insured) and his crimes of terrorism (the cause of his
death).
To return to the question with which the analysis began, it is
indisputable that Congress would have intended to prevent Farook from
enriching his designated beneficiaries through his death in a
terrorist attack, or at least to provide the government the means to
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arrest the assets in the first instance so that any claimants could
have their claims adjudicated by a court. At a general level, the
sheer breadth of § 981(a)(1)(G)’s provisions -- for example,
authorizing the forfeiture of all of a terrorist’s property, whether
related to the offense or not, id. (G)(i)10 -- along with the
historical context and legislative history, establish Congress’s
intent to sweep as broadly as possible. See Russello, 464 U.S. at
24, 25.11 At a specific level, there has long been acute concern
about terrorists being motivated by life insurance policies
benefitting their families. See, e.g., Humanitarian Law Project v.
Reno, 205 F.3d 1130, 1136 (9th Cir. 2000) (money paid “to the
families of those killed while carrying out terrorist acts . . .
mak[es] the decision to engage in terrorism more attractive”);
Matthew Levitt, Hamas: Politics, Charity, and Terrorism in Service of
10 The provision does not even require the actual commission of a
terrorist act: planning alone is enough to trigger the forfeiture of
an individual’s assets under § 981(a)(1)(G)(i).
11 To the extent limiting principles are sought for the broad
sweep of § 981(a)(1)(G)’s language and policy, those principles are
already deeply embedded in the statutory forfeiture scheme. See 3A
Sutherland, Statutory Construction § 68:5 (7th ed.) (“The various
parts of a statutory enactment are understood in the context of the
statutory framework as a whole, which includes the pre-existing
common law . . . and the Constitution.”). In some cases -- though
certainly not in this case -- limits could be found in the statutory
innocent owner defense in § 983(d), the Due Process Clause of the
Fifth Amendment, or the Excessive Fines Clause of the Eighth
Amendment, which is codified in § 983(g). The existence of arguments
that can be raised by a claimant later in the action further counsels
against importing extratextual limitations into § 981(a)(1)(G) or
reading “derived from” narrowly, contrary to Congressional intent.
Cf. Russello, 464 U.S. at 21-29.
The Eighth Amendment’s limitations help underscore the propriety
of applying § 981(a)(1)(G) here, for the forfeiture of the benefits
of a mass-murdering terrorist’s life insurance policy plainly
“bear[s] some relationship to the gravity of the offense” and is not
“grossly disproportional” to the crime. United States v. Bajakajian,
524 U.S. 321, 334 (1998).
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Jihad 178 (Yale Univ. Press 2007) (“[T]hese funds [paid to surviving
family members] amounted to an annuity or life insurance policy for
Hamas terrorists and served as a financial incentive . . . to engage
in acts of terror.”).
3. Farook’s Policy Benefits Have a Close Nexus With And
Are Thus Derived From His Terrorist Crimes Under Any
Standard
Where property has a causal connection with, or an origin in, an
act of terrorism, it is “derived from” terrorism and therefore
forfeitable under § 981(a)(1)(G)(iii). Indeed, even in narrower
civil forfeiture statutes, many courts have required only a “but-for”
causal relationship between the crime and the asset’s existence. See
United States v. Horak, 833 F.2d 1235, 1242-43 (7th Cir. 1987) (under
18 U.S.C. § 1963(a)(1) of the RICO forfeiture scheme, “in order to
win a forfeiture order, the government must show [the criminal acts]
were a cause in fact of the acquisition or maintenance of [the
property]”); see also, e.g., United States v. DeFries, 129 F.3d 1293,
1313 (D.C. Cir. 1997) (in which the Court expanded the “but-for” test
to include forfeitures sought under § 1963(a)(3), authorizing the
forfeiture of any property “constituting, or derived from, any
proceeds . . . obtained, directly or indirectly, from” racketeering
activity (emphasis added)); United States v. Angiulo, 897 F.2d 1169,
1213 (1st Cir. 1990); United States v. Olfchinick, 883 F.2d 1172,
1183 (3rd Cir. 1989); United States v. Porcelli, 865 F.2d 1352, 1365
(2d Cir. 1989) (applying “but for” test to assess “nexus between
property and [unlawful activity]”).
But even if the Court were to require some greater nexus, such
as proximate causation -- which would contradict Congress’s intent as
expressed in the statutory text and the legislative history and break
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from established forfeiture practice -- the allegations of the
complaint would still establish probable cause.
Here, Farook -- an adherent and promoter of violent jihadist
ideology12 teaching that “death while furthering jihad will result in
martyrdom” –- began planning to commit terrorist attacks at least as
early as 2011 and obtained life insurance coverage “after [he]
initiated plans to conduct” violent attacks, including after
acquiring two of the firearms used on December 2nd. (Complaint ¶¶ 8,
12, 16, 19(f).) He expected to die in the course of the San
Bernardino Attack and he did.13 (Complaint ¶¶ 8, 15, 18, 19(g).) The
Policy Benefits became payable upon his death. (Complaint ¶ 20).
That is, but for his commission of the Federal crimes of terrorism
described in the complaint, there would be no death benefits to
recover. And as Humanitarian Law Project and common sense dictate,
there is a practical and moral connection between a terrorist’s death
benefits and his death in the cause of terrorism. The defendant
Policy Benefits are therefore derived from qualifying triggering
12 One of the goals of violent jihad is the pursuit of holy war
against the United States in retaliation for government policies such
as support of Israel. See, e.g., United States v. Rahman, 189 F.3d
88, 104 (2d Cir. 1999). Farook’s execution of the San Bernardino
Attack furthered a violent jihadist agenda of retaliation against the
government. A defendant’s actions are “calculated to influence or
affect the conduct of government by intimidation or coercion, or to
retaliate against government conduct” within the meaning of
§ 2332b(g)(5) where those actions included “advancing jihadist
propaganda,” as well as “trying to offer himself as a fighter and
supporting terrorism and extremism by ‘attempting to be part of it on
the battlefield, and supporting those who would [engage in jihad].’”
United States v. Hassan, 742 F.3d 104, 149 (4th Cir. 2014).
13 The government submits that it need not establish Farook
obtained the insurance policies with the intent of triggering them
through his death in a terrorist attack, but the record certainly
supports that inference.
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offenses within the meaning of § 981(a)(1)(G)(iii) and are subject to
forfeiture.
Similarly, although proximate causation is not required, the
verified complaint’s allegations establish that Farook’s death was
the foreseeable outcome of his commission of mass murder in the cause
of violent jihad, and there is likewise little reason to think that
Farook would have died otherwise on December 2, 2015 had he not
engaged in the San Bernardino Attack. The generation of the Policy
Benefits therefore was equally foreseeable if not intended as that is
the express purpose of life insurance. In short, even under a
proximate cause test, the Policy Benefits would remain derived from a
qualifying offense and thus subject to forfeiture.
For all of these reasons, the government submits that the
allegations of the complaint amply establish probable cause to
believe that the Policy Benefits are subject to forfeiture pursuant
to § 981(a)(1)(G)(iii) on the ground that they were “derived from”
the terrorist crimes that ended with Farook’s death. The proposed
arrest warrant in rem should issue.
B. The Substantial Connection Test Does Not Apply to
Forfeiture Claims Against Assets Derived From Terrorism
The Court’s second inquiry was whether the government is
required to establish, pursuant to 18 U.S.C. § 983(c)(3), a
“substantial connection” between the Policy Benefits and the San
Bernardino Attack. There is no such requirement. Section 983(c)(3)
is expressly limited to circumstances in which the government seeks
to forfeit property “used to commit or facilitate” the underlying
offense, or that “was involved in the commission” of the offense.
The government proceeds under neither theory here. Rather, as noted,
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the government’s theory is that the Policy Benefits were “derived
from” the underlying Federal crimes of terrorism.
Congress has created essentially four types of forfeiture
authority in the United States Code: (1) authority allowing for the
forfeiture of proceeds or property “derived from” a triggering
offense; (2) authority allowing for the forfeiture of property that
“facilitates” a triggering offense; (3) authority allowing for the
forfeiture of property that is “involved in” a triggering offense;
and (4) authority allowing for the forfeiture of property that
“affords a source of influence” over certain persons, entities or
enterprises. Section 983(a)(1)(G)(iii) provides for three separate
forms of forfeiture, targeting assets “derived from,” “facilitating,”
or “involved in” a crime of terrorism. The government seeks
forfeiture of the Policy Benefits solely on the first of these
theories.
Section 983(c)(2)’s “substantial connection” requirement is
expressly limited to the second and third kinds of forfeiture: “if
the Government’s theory of forfeiture is that the property was used
to commit or facilitate the commission of a criminal offense, or was
involved in the commission of a criminal offense, the Government
shall establish that there was a substantial connection between the
property and the offense.” (Emphases added.) This limitation is
plain and unambiguous, is affirmed in settled precedent, see, e.g.,
United States v. $125,938.62 Proceeds of Certificates of Deposit, 537
F.3d 1287, 1293 n.2 (11th Cir. 2008) (when proceeding under a
proceeds theory, “the Government was required to demonstrate only
that the funds were derived from or were traceable to, any proceeds
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obtained directly or indirectly from the embezzlement of public funds
from the Nicaraguan treasury.”), and reflects sound policy.
The rationale behind the “substantial connection” requirement is
that, absent such a limitation, a criminal could cause the property
of a third party to be targeted for forfeiture property merely by
using it in the commission of a crime that triggers forfeiture, for
example by arranging a single illicit drug transaction to occur at a
family member’s house while the owner is out of town. See United
States v. Santoro, 866 F.2d 1538, 1542 (4th Cir. 1989) (the
requirement is “consonant with the congressional intent that the
instrumentalities of [crime] be reached, while ensuring that property
only fortuitously connected with [crime] be preserved”); accord
United States v. One 1986 Ford Pickup, 56 F.3d 1181, 1186 (9th Cir.
1995); United States v. One Parcel . . . 916 Douglas Ave., 903 F.2d
490, 494 (7th Cir. 1990). That rationale is absent in “derived from”
cases where the relationship between the crime and the asset is not
“fortuitous” but causal.14
The “nexus” required is not a “substantial connection” but
rather the nexus implicit in the “derived from” test, discussed
above: namely, that some causal relationship exist between the
14 For that reason, even if “derived from” forfeiture were not
expressly beyond the reach of the “substantial connection”
requirement, an asset forfeited on the ground that it “derived from”
the offense or the proceeds of the offense would necessarily have a
substantial connection to the offense. See, e.g., United States v.
$62,552.00 in U.S. Currency, 2015 WL 251242, at *3 (D. Mass. Jan. 20,
2015) (“The substantial connection ‘requirement will generally be
satisfied if the items under forfeiture are shown to be proceeds of
the illegal activity [or] derived from such proceeds . . . .”
(quoting United States v. Real Property with any Improvements Thereon
Located at 40 Clark Road, Sandisfield, Mass., 52 F. Supp. 2d 254, 261
(D. Mass. 1999)).
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offense and the asset. Here, as the government has demonstrated,
there is probable cause to believe that the Policy Benefits were
generated as a direct result of the San Bernardino Attack, insofar as
Farook died during that attack, thereby triggering the obligation to
pay under his insurance policy. While the government should not be
required to demonstrate Farook’s mental state -- which is separate
from the extrinsic derivation of the assets from his death in the
attack -- the government also submits that there is probable cause
that Farook foresaw and even intended to die during the attacks.
Under those circumstances, there is an ample nexus between the
Policy Benefits and the crime, a nexus sufficient to satisfy but-for
causation, proximate causation, or the substantial connection test.
C. If the Court Denies the Arrest Warrant In Rem, It Must
Terminate the Case
The Court’s third inquiry was whether it can exercise
jurisdiction over the Policy Benefits if the arrest warrant in rem
does not issue. As explained in the government’s ex parte
application for the arrest warrant, where -- as here -- the
government does not have custody of the defendant res prior to the
filing of its verified complaint, the Court’s in rem jurisdiction
over the property is not perfected until the warrant’s execution.
See Penn Gen. Casualty Co. v. Pennsylvania, 294 U.S. 189, 196 (1935)
(in rem jurisdiction attaches when a complaint is filed and “process
subsequently issues in due course”); Alyeska Pipeline Service Co. v.
Vessel Bay Ridge, 703 F.2d 381, 384 (9th Cir. 1983) (“Jurisdiction
over the res is obtained by arrest under process of the court. In
absence of an arrest, no decree in rem can be rendered against the
res.”). For that reason, the Court’s jurisdiction to proceed to the
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merits of this case, and the government’s right as a party to bring
the action, turns upon first issuing the warrant.
Accordingly, should the Court deny the government’s arrest
warrant, the government respectfully requests that the Court order
the case dismissed without prejudice so that the government may move
to stay the interpleader action and have an opportunity to pursue
appellate review and/or attempt to replead the complaint.
III. CONCLUSION
The defendant Policy Benefits -- which accrued as a consequence
of Farook’s death in carrying out a terrorist attack -- are exactly
the kind of asset that Congress intended to reach, and did reach, in
enacting § 981(a)(1)(G)(iii). That the Policy Benefits are
forfeitable is clear under the broad statutory language, the need to
give purpose to every forfeiture provision Congress included and
limitation it omitted, the legislative history, and historical
context. The government respectfully submits that the Court should
issue the warrant to arrest the Policy Benefits, such that the
forfeiture process can proceed as Congress intended, allowing the
government to
///
///
///
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prove forfeitability and any claimants to attempt to establish any
defense they may have.
Dated: June 9, 2016 Respectfully submitted,
EILEEN M. DECKER
United States Attorney
LAWRENCE S. MIDDLETON
Assistant United States Attorney
Chief, Criminal Division
STEVEN R. WELK
Assistant United States Attorney
Chief, Asset Forfeiture Section
/s/
FRANK D. KORTUM
Assistant United States Attorney
Attorneys for Plaintiff
UNITED STATES OF AMERICA
Case 5:16-cv-01129-JGB-JPR Document 11 Filed 06/09/16 Page 24 of 24 Page ID #:61
