Department of Justice

From the SelectedWorks of Stefan D Cassella

January, 2004

The Forfeiture of Property Involved in MoneyLaundering OffensesStefan D Cassella

Available at: https://works.bepress.com/stefan_cassella/4/

Buffalo Criminal Law ReviewVOLUME 7 2004 NUMBER 2 TheForfeitureofPropertylnvolvedin

MoneyLaunderingOffenses

- StefanD. CassellatFORUM Legitimate Punishment in Li beral Democracy

SharonDolovich Introduction 585

I. Forfeiture for Currency Reporting Offenses:Comments 31 U.S.C. § 5317(c) 587StephenP. Garvey A. The CurrencyReportingOffenses 587SimoneChambers

B. What Property Is Involved in a Currency

Reply ReportingOffense7 591SharonDolovjch C. Forfeiturefor CMIR Violations 592

a D, Form8300 forfeitures 596ARTICLES Imputation in Criminal Law and the Conditions for Norm E. Application of theExcessiveFinesClause 598

Validity 1. Standing to Raisethe Eighth Amendment..602Gunther Jakobs F. StructuringCases 605

Victim Behavior and Offender Liability: A European Bulk Cash Smuggling: 31 U.S.C. § 5332 606Perspective A. The Missing Subsection(d) 608ManuelCanclo Melia III. Money Transmitting Businesses: 18 U.S.C.

§ 1960 609The System of CriminalWrongs: The Concept of Legal Goods IV. Money Laundering: 18 U.S.C. §~1956and 1957.611and Victim-based Jurisprudence asa Bridge between the A. The Money Laundering Statutes 611General and Special Parts of the Criminal Code .

Bernd Schunemann B. What Property Is Involved in a Violation of• §1956or~19577 614

The Forf&ture of Property involved in Money Laundering 1. The Proceeds of the SUA Offense 61.6Offenses a. Applying theExcessiveFines’~Clause 619StefanD. Cassella 2. Property That Is theSubjectMatter of the

Money Laundering Offense 620a. Reverse Money Laundering: Violations

of~1956(aX2)(A) 620

The authoris theDeputychieffor LegalPolicy of theAssetForfeitureandMoney Launderiog Section of the U.S. Department of Justice. The viewsexpressedin this article, however, are soleiy those of the author and do not

necessarilyrepresentthe viewsor policiesof the Departmentof Justiceor any ol~Buffalo Criminal Law Center its agencies.

20041 FORFEiTUREOFPROPERTY 585

b. Property Involved in a Purchase, Saleor Exchange 623

i. Digression Double Recovery 627ii. Forfeiture Is Not limited to

Net Profits 629c. Commingled Property 630

i. Using the “Subject Matter”Theory to Moot Out TracingIssues 636

ii. Application, of the EighthAmendment 639

3. Facilitating property 641a. The Substantial Connection

Requirement 642b. Property Used to Conceal or Disguise .... 644c. Facilitating Property Outside of

“Conceal and Disguise” Cases 650d. Application of the Eighth Amendment...652

e. Summary Thus Far 6534. Property That Is Central to the Entire

Scheme, Including the Underlying SUAOffense 655a. The Proceeds Left Behind 655b. Other Property Involved in the

Underlying SUA 656659

The forfeiture statutesfor money laundering offenseshavegivenprosecutorsthe authority to confiscatenot on~ytheproceedsof crime, but alsoproperty that is commingledwith the proceeds or is used to fbcilitate the moneylaunderingoffense.

INTRODUCTION

Most federal criminal statutes now authorize theforfeiture of assets as part of the punishment that may heimposed when a defendant is convicted of a criminaloffense. But not all forfeiture provisions are created equal.Most statutesauthorizing forfeiture are narrow provisionsthat allow the government to confiscate the proceeds of thecrime giving rise to th•e forfeiture, and the property that isdirectly traceable to it, but nothing in•ore. •A person whoengages in corporate fraud or makes off with public fundsmay have to forfeit the ill-gotten gains, but in most cases,he cannot be made to part with the untainted property thathe used to commit the crime. Other statutes go a stepfurther, permitting the forfeiture of “facilitating property,”like the drug smuggler’s car or the counterfeiter’scomputer, that made the crime easier to commit or harderto detect.

In money laundering cases, however, the statutes arebroader still, authorizing the forfeiture of any “propertyinvolved” in the money laundering offense.1 As we shallsee, that means that in the appropriate circumstances thegovernment can recover the money being laundered, themoney or other property that is commingled with it or

obtained in exchange for it when the money launderingtransaction takes place, and other property that facilitatesthe money laundering offense. Examples include cleanmoney the defendant used to conceal or disguise launderedfunds, the legitimate business he used as a front for hismoney laundering operations, and real property, securities,

584 BUFFALOCRIMiNAl~LAWREVIEW [Vol. 7:583

Conclusion

1. See18 u.s.c.§~981(a)(1XA), 952(a)(1)(2003); 31 u.s.c.§~531

7(c), 5332(2003).

586 BUFFALO CRIMINAL LAWREVIEW [Vol. 7:583 20041 FORFEITUREOFPROPER’Jy 587

and luxury items in which he invested the laundered fundsto keep them hidden from view. Only the forfeiturestatutes for RICO and terrorism offenses provide thegovernment with a law enforcement tool that is sosweeping in scope or so powerful in application.2

To appreciate the difference between the moneylaundering statutes and their narrower cousins, consider acase in which the government is prosecuting a defendantfor mail or wire fraud. Under the forfeiture statute forfraud offenses,3 the government can only recover theproceeds of the fraud itself and the property directlytraceable to it. If the defendant hides his fraud proceeds byinvesting them in a ranch, or uses the ditty money alongwith other funds to buy a bag of diamonds, the governmentcan forfeit only the portion of the property traceable to theunderlying crime.4 The ranch, in other words, would haveto be sold, with the proceeds of the sale divided between thegovernment and the defendant. The diamonds likewisewould have to be apportioned so that the government tookthose traceable to the crime, and the defendant retainedthose acquired with clean money. But if the governmentprosecuted the investment of the fraud proceeds in theranch or the diamonds as a money laundering offense, itcould forfeit the property in its entirety as “propertyinvolved” in the money laundering violation, and thedefendant would have no basis to object that the forfeitureshould be cabined within the bounds of the narrowerstatute.5

2. See 15 u.s.c.§ 1963(a)(2003) (authorizing the forfeiture of all property“affording a source of influence” over a RICO enterprise), and 18 U.S.C.§ 981(a)(1XG) (2003) (authorizing the forfeiture of “kIll assets”of a personengagedin terrorism).

3. 18 U.S.C. § 981(aX1)(C)(2003).4. SeeUnitedStatesv. One1980 Rolls Royce, 905 F.2d89, 90 (5th Cir. 1990)

(only the portion of the propertytraceableto the proceedsof thecriminaloffenseis subject to forfeiture); United States v. 352 Northup St., 40 F. Supp. 2d 74(D.R.I. 1999) (in “proceeds” cases,forfeiture is limited to portion of propertypurchasedwith drugmoney; theportion traceableto the subsequentinvestmentoflegitimatefunds is not forfeitable; the propertyis apportionedafterthe sale).

5. SeeUnitedStatesv. Hawkey, 148 F.3d920, 927 (8th Cir. 1998) (whenthe

defendantis convicted of both § 1957 and the underlying SUA, forfeiture is

This article will discuss the various money launderingoffenses that give rise to forfeiture, and how the courtshave interpreted the term “property involved” in theoffense. We begin with 31 U.S.C. §~5317(c) and 5332,which authorize forfeiture in currency reporting and hulkcash smuggling cases, and conclude with 18 U.S.C.§~981(aXl)(A) and 982(a)(1), which provide for civil andcriminal forfeiture in the traditional money launderingcases covered by 18 U.S.C. §~1956, 1957 and 1960.6

I. FORFEITUREFOR CURRENCY REPORTINGOFFENSES:31

U.S.C. §5317(c)

A. TheCurrencyReportingOfiènses

Section 5317(c) of title 31, United States Code,authorizesbothcivil and criminal forfeiture of all “propertyinvolved” in any violation of; or any conspiracy to violate,any of the currency reporting requirements set forth in theBank Secrecy Act, which is codified at Chapter 53 of rj~it1e,

31? What offenses are we talking about?

properly imposedunderthe broadermoneylaunderingstatute,§ 982(a)(I),and is

not limited to the forfeiture of “proceeds” under § 982(a)(2)); united Statesv,

McGauley,279 F.3d 62 (1st Cir. 2002) (distinguishingforfeiture under§ 982a31)

from a “proceeds”forfeiture; themoneylaunderingforfeiture is broaderand is notlimited to theproceedsbeinglaundered).

6. The focusof this article is on whatcan be forfeited in a moneylaunderingcase,not on how the forfeiture is accomplished. Thus, the article doe~notattemptto deal with proceduralissuessuchas the form of a forfeiture allegationin an indictment, the trial procedureand burden of proof, the duty of thegovernmentto traceassets,the availability of moneyjudgmentsnnd substituteassets,and the myriadof other proceduralissuesthat arisein moneylaunderingand othercriminal and civil forfeiture cases.

7. 31 U.S.C. § 5317(c)(2003). Section

5317(c)was enactedin its presentlbrm

by § 372 of the USA Patriot Act, 115 Stat. 338 (2001). Aside from the languagerelating to conspiracies,however, the new statute is simply a re-codificationofpre-existingforfeiture provisionsthat werefound in theolder versionof~

53l7(c),

and in 18 U.S.C. §i 981(a)(1)(A),9

S2

(a)(I) (2003). The text of § 53l7(c) is as

follows:(c) Forfeiture.——.

(1) CriminalForfejture....

(A) In General—Thecourt in imposing sentencefor any violation ofsection 5313, 5316, or 5324 ef this title, or any conspiracyto commit.

588 BUFFALOCRIMINAL LAW REVIEW [Vol. 7:583 2004} FORFEITUREOFPROPERTY 589

First, under the Bank Secrecy Act, banks and otherfinancial institutions are required to file currencytransaction reports (CTRs) for all cash transactions inexcess of $10,000.8 Banks and other financial institutionsare also subject to certain record-keeping and reportingrequirements with respect to transactions involving morethan $3,000 in bank checks, travelers checks, or moneyorders.9 Financial institutions that fail to comply withthese requirements are guilty of a criminal offense.1°Moreover, it is an offense for anyone either inside oroutside of the financial institution to cause the institutionnot to file a required report, to file a false report, or tostructure currency transactions for the purpose of evadingthe reporting requirements.”

So, for example, if John Smith walks into a bank witha pedlar’s pack of cash flung over his back and seeks todeposit $50,000, the bank has to file a CTR. If the bankfails to do so, it violates § 5313. If the teller, through act oromission, causes the bank to fail to file, she violates§ 5324(aX 1). If Smith does something to cause the bank tofail to file, or gives the bank false information, he violates§ 5324(a)(1) or (2). And if Smith, after learning of thereporting requirement, leaves the bank and returns once aday for several days with just under $10,000 in cash, until

suchviolation, shall orderthe defendantto forfeit all property, real orpersonal,involvedin theoffenseandanypropertytraceablethereto.(B) Procedure.—Forfeituresunder this paragraphshall be governedbythe proceduresestablishedin section413 of the ControlledSubstaacesAct.

(2) Civil Forfeiture—Anypropertyinvolvedin aviolation of section5313,5316,or 5324of this title, or anyconspiracyto commitanysuchviolation,andany property traceableto anysuchviolation or conspiracy,may beseized and forfeited to the United States in accordancewith theprocedures governing civil forfeitures in money laundering casespursuantto section951(a)(U(A)of title 15, UnitedStatesCode.

8. See31 U.S.C. § 5313 (2003).9. See31 U.S.C. § 5325 (2003). Thesedollar thresholdscan be lowered

pursuantto the orderof the Secretaryof Treasury. See31 U.S.C. § 5326 (2003)(authorizinggeographictargetingorders),

10, See31 U.S.C. § 5322 (2003).11. See31 U.S.C. § 5324(a),(d) (2003),

all the cash is deposited, he is guilty of a structuringoffense under § 5324(a)(3).

Those offenses all relate to the reporting of domesticcurrency transactions involving financial institutions.Similarly, it is an offense for any person to transport ortransfer more than $10,000 in currency or bearerinstruments into or out of the United States without tilinga Currency and Monetary Instrument Report (CMIR) withthe U.S. Customs Service?’ And it is an offense for anyperson to cause another to fail to file that report, to file afalse report, or to structure transactions to evade thereporting requirement?3

Thus, if John Smith takes his pile of cash and boardsan airplane at JFK Airport in New York bound forAmsterdam, he must file a CMIR report because he iscarrying more than $10,000 in currency out of the country.The failure to file the report constitutes a violation of§~5316 and 5324(c)(1), and filing a false report would be aviolation of~5324(c)(2),

Finally, any person engaged in a trade or businessmust file a report with the Internal Revenue Service,commonly called a Form 8300, regard.ing any sale of goodsor services involvin.g more than $10,000 in cash.’4 This issimilar to the CTR report that banks and other financialinstitutions must file, and it is an offense for any personeither inside or outside of the trade or business to fail tofile, or to cause someone to fail to file a report, to file a falsereport, or to structure a transaction to evade the reportingrequirement.”

So, if the infamous John Smith takes his pediar’s packnot to a bank but to his friendly car dealership, and pays$50,000 in cash, for a luxury automobile, the dealership isrequired to file a Form 8300. If the sales manager causesthe dealership to fail to file the report, he is guilty of aviolation of~5324(b)(1). If Smith gives false information to

12. See31 U.S.C. § 5316(2003),13. See31 U.S.C.§ S324(e),(dl (2003).14. See31 U.S.C.§ 5331 (2003).15. See31 U.S.C. §i 5324(b),(d), 5331 (2003).

20041 FORFEITUREOFPROPERTY 1391590 BUFFALOCRIMINALLAWREVIEW [Vol. 7:583

the manager so that the dealership files a false report, hecommits a violation of § 5324(b)(2). And if the salesmanager and Smith agree to allow Smith to break up thecash mto amounts under $10,000 to evade the Form 8300requirement, they are guilty of conspirmg to violate§ 5324(b)(3).

Before 2001, civil and criminal forfeiture authority forthese offenses was scattered over the U.S. Code, or in thecase of the Form 8300 requirement, did not exist at all.But. in 2001, Congress placed the authority to forfeit theproperty involved in all of these violations in 31 U.S.C.§ 5317(c), and made them applicable, for the first time, toconspiracies as well as to substantive offenses. A chartsummarizing the three categories of currency reportingviolations for which forfeiture is authorized by § 5317(c)appears in figure 1. The criminal forfeiture statute is§ 5317(c)(1), and the civil forfeiture statute is § 5317(c)(2).Both statutes say the same thing: the government canforfeit all “property involved” in the currency reportingoffense.

Civit and Ccirninal ForfeitureUnder 31 u,S.C.~53I7(c)

eTHs / / <t 1RS~ ~6hVndbs

• 5313 ~IflFt~41~Vk :uZ4M* §5324~aY i$$2~ 5331

Figure 1

B. What Property Is “Involved in” a Currency ReportingOffense?

There is nothing complicated about what constitutesthe “property involved” in a currency reporting violation. Ifsomeone fails to report a currency transaction, or files afalse or incomplete report regarding that transaction, thegovernment is entitled to forfeit all of the unreported orfalsely reported funds (or property traceable thereto).Likewise, in a structuring case, the government may forfeitthe entire sum that was divided up into smaller parts hoevade the reporting requirement’6 (or property traceablethereto).

In the above examples, the government could forfiiit.the $50,000 that John Smith deposited in his bank account.in violation of the CTR requirement. In United Statesi.$557,933.89,Moreor Less,in US. Funds,t8the governmentseized more than half a million dollars in money ordersfrom a traveler at LaGuardia Airport in New York when analert airport security guard spotted enormous bundles ofmoney orders in the traveler’s carry-oil luggage. Themoney orders were in small denominations, bore no payoror payee information, and had been purchased over two orthree days at various locations in New York. Thegovernment’s theory was that someone had purchased themoney orders in small amounts in order to avoid providingthe identification required when a buyer purchases more

16. SeeUnited Statesv. Fundsin the .Arnount ot $170,926.00,985 F. Supp.810 (ND. 111. 1997) (denyingmotionto dismisscomplaintallegingfu~dswere thesubjectof structuredcashdepositsinto bankaccount).

17. SeeUnitedStatesv.Abmad,213 F.3d805 (4th Cir. 2000)(amountdirectlytraceableto structureddepositsis forfeitable);United Statesv. 874 Cartel Drive,79 F.3d 9i.5 (9th Cir. 199€) (forfeiture of real property purchasedwith tencashier’schecks in amountsunder $10,000);United Statesv. 1988 OldsmobileCutlass Supreme,983 F.2d 670 (5th Cii. 1993) (cars purchasedwith cashier’schecksacquiredin structuredtransactionfbrfeited); UnitedStatesv. Rogers,No.94~CR-135(FJS),93Cv-156(FJS), 1996 WL 252659 (N.D.N.Y. 1996) (same);United States v. 5709 Hillingdoa Rd., 919 F. Supp. 863 (W.D.N.C. 1990)(forfeitureof propertytraceableto thirty.threestructureddeposits),rev’d on othergrounds,UnitedStatesv. Leak,123 F.3d 787 (4th Cir. 1997).

iS. 257F.3d66 (2d Cir. 2002).

592 BUFFALOCRIMINAL LAWREVIEW [Vol. 7:583 2004J FORFEITUREOFPROPERIT 593

19. See31 U.S.C. § 5325(2003)..20. Seefig. 2.21. Forfeitures for violating the currency reporting statutes, including the

CMIE requirement,of course,like all other civil and criminal forfeitures, aresubjectto the ExcessiveFines Clauseof the Eighth Amendment. The leading

EighthAmendmentcasein the forfeiture field, United Statesv. Bajak~ian,524U.S. 32i (1998), was, in fact, basedon a CMIR violation, But thediscussionhereconcernswhat is forfeitable under the applicablestatute. The limitations thatthe ExcessiveFines Clauseplaceson forfeitures basedon currency reportingviolationswill bediscussedin a moment.

22. SeeUnitedStatesv. $173,081.04in U.S. Currency,835 F.2d114] (5th Cir.1988) (even though misstatementapplied to only a portion of the reporodcurrency,all of it was subject to forfeiture); United States v. Six NegotinhleChecks,207 F. Supp. 2d 677 (ED. Mich. 2002) (claimant getsno credit (hr the$8,500 in cash that she declared on the CMIR form); United States v U.S.Currency ($883,506), No. 96-Cv-1004 (CEA) (E.D.N,Y. July 23, 1997)(unpublished)(no credit given for the $60,000that defendantdid declareon theCMIR form), following United States v. U.S. Currency in the Amount of$80,320.00,More orLess,No. CV 90-2722(RJD) 1992 WL 72957(E.D.N,Y. 1992).

23. United States v. $100,348 U.S. Currency, 354 F.3d 1110, 1116 (9th Cir2004); see also Six Negotiable Checks, 207 F. Supp. 2d 677 (whatever therequirementin criminal casesmay be, i~o~’anceof the reporting requiren,E.r,tisno defenseto civil forfeiture under § 53

17(c);thetraveleronly needsto know thatshe is carrying more than $10,000); United States v. Three MoneniryInstruments,No, 99-1173~FR(D. Or. Oct. 2, 2003) (unpub.) (there is no need toshow claimant“violated section5316 willfully or had knowledgeof the reportingrequirement”),

than $3,000 in money orders from the same seller incontemporaneous transactions~

It is an offense under § 5324(a) to structure thepurchase of money orders with the intent to evade therequirements of § 5325. Thus, the $557,933.89 in moneyorders was subject to forfeiture as property involved theviolation of § 5324(a).2°

Forfeiture of $557,993.89in Money Orders

One wrinkle that applies to CMIR cases concerns aperson who transports a given sum of money into oi’ out ofthe United States and, for whatever reason, reports some,but not all, of the money to the Customs Service. In suchcases, the person who fails to file the report receives nocredit for the fraction that was reported. All of the moneyis forfeitable as property involved in the reportingviolation 22

There are also several points worth noting with respectto civil forfeiture cases based on a CMIR violation. First, insuch cases, it is not necessary for the government to provethat the person transporting’ the currency knew about thereporting requirement or willfully intended to violate it. Itis only necessary to show that the person knew he had thecurrency and did not disclose it. Even an acquittal on theunderlying criminal charge under § 5316 would not bar’ thecivil forfeiture of the unreported currency.2’

Second, in civil forfeiture cases, it is unnecessary forthe government to show that the person carrying themoney to or across the border—i.e., the courier—was theperson guilty of committing the CMIR offense. It is

. ‘~ sr

, 5J24a9

, 050,5,’I slsovode

5325

‘0

Figure 2

C. Forfeiture for CMIRViolations

Similarly, there is nothing complicated about forfeiturefor violating the CMIR reporting requirement whentransporting or transferring more than $10,000 in currencyinto or out of the United States. The entire amount ofunreported currency is subject to forfeiture as “propertyinvolved” in the offense.21

,594 BUFFALOCRIMINALLAWREVIEW [Vol. 7:583

sufficient to show that someonecommitted the offense, andthat the property in the courier’s possession was theproperty involved in that offense For example, in a recentcase, the government was able to forfeit more than $1 7million concealed in a truck when the driver stated that heintended to cross the border into Mexico but denied anyknowledge of the currency In that case, it was clear thatsomeone was attempting to cause the courier to fail to file aCMIR, making the money forfeitable as property involvedin a violation of 5324(c).24

Finally, a relatively new issue concerns the applicationof the Innocent Owner Defense, 18 U.S.C. § 983(d), toCMIR forfeitures in civil forfeiture cases.25 The issue ariseswhen the owner of the currency being transported into orout of the United States claims that he did not realize thathis courier—i.e., the person physically transporting thecurrency across the border—would fail to comply with thereporting requirement.

Prior to the enactment of the Civil Asset ForfeitureReform Act of 2000 (CAFRA),2° there was no innocentowner provision for forfeitures based on a failure to file aCMIR report. Thus, property involved in a CMIR offensewas forfeitable to the United States whether the owner ofthe money was aware of the courier’s failure to file thereport or not.27 But under § 983(d)(2)—which was enactedas part of CAFRA and applies to all civil forfeitures except

24. See United Statesv, $1,790,021in U.S. Currency, 261 F. Supp. 2d 310(M.D. Pa. 2003).

25. For a detailed discussionof the innocent owner defense,see Stefan D.Cassella,The Uniform innocentOwner Defenseto Civil AssetForfeiture,89 Ky.L.J. 653 (2001).

26. Pub.L. No. 106-185, 114 Stat.202 (2000).27. See United Statesv. $124,813 in U.S. Currency, 53 F.3d 108 (5th Cir.

1995) (the SupremeCourt’s decision in Calera-Toledo v. PearsonYacht LeasingCo., 416 U.S. 663 (1974), did not create a general innocent owner defenseapplicableto § 5317 forfeitures); United Statesv. $83,132.00in U.S. Currency,No. 9s~cv-2s44,1996 WL 599725 (EDNA’. 1996) (underthe SupremeCourt’sdecisionin Dennisv. Michigan, 516 U.S. 442 (1996), thereis no innocentownerdefensein CMIII cases);but seeUnitedStatesv. $69,292.00in U.S. Currency,62F.Sd1161 (9thCii. 1995)(eventhough§ 5317 doesnotcontain an innocentownerprovision, ownerwho took all reasonablestepsto preventillegal usemay defeatforfeiture).

2004] FORFEITUREOFPROPERIT

thosespecificallycarved out by § 983(i)—a person who doesnot know that his property is being used in a manner thatsubjects it to forfeiture, or who takes all reasonable steps toprevent that illegal use, can contest the forfeiture as aninnocent owner. Accordingly, at least one court hassuggested that a person who did not know that his courierwould fail to report the currency to the Customs Service atthe border may be entitled to assert an innocent ownerdefense under § 983(d)(2).25

Such an interpretation of the interplay between§* S317(c) and 983(d)(2) would, of course, blow a huge holein the government’s effort to control the smuggling of bulkcash into or out of the United States. Currency smugglerswould simply give their money to couriers and claimsurprise that th.e courier had not reported the currency toCustoms at the border, But under the applicableregulations, the person physically transporting currencyacross the border and the person who causes him totransport it are both responsible for making sure that aCMIR report is filed.2° Moreover, the owner of the currencycan always prevent the violation by filing the CMIR form

28. SeeSix NegotiableChecks,207F. Supp.2d 677.29, See 31 C.F,R. § 1.03,23(d) (2004)which provides, in pertinentpart, as

follows:This sectiondoesnot requirethat morethan one report be filed coveringaparticular transportation, mailing or shipping of currency or othermonetaryinstrumentswith respectto which acompleteandtruthful reporthasbeen filed by a person, However, no personrequiredby paragraph(a~or (b) of this section to file a report shall be excusedfrom~liability forfailure to do so if’, in fact,a completeand truthful reporthasnotbeen filed,

31 C.F.R.§ lO3

.2

3(a),providesthat:Each person who physically transports, mails, or ships, or causesto he

physically transported, innfled or shipped, or attempts to physicallytransport, mail or ship, or attempts to causeto be physically transported,‘nailed orshipped,currencyor othermonetaryinstrumentsin an aggregateamountexceeding$10,000at onetime from the UnitedStatesto any placeoutsidetheUnited States,or into the UnitedStatesfrom anyplaceoutsidethe UnitedStates,shall makea report thereof A personis deemedto hatecausedsuch transportation, mailing or shipping when he aids, abets.counsels,commands,procures, or requests it to be done by a financialinstitution or anyotherperson,

(Emphasisadded).

595

596 BUFFALOCRIMINAL LAWREVJEW [Vol. 7:583

himself, even if he is not the person physically transportingthe currency.°° A person who is himself guilty of the act oromission giving rise to the forfeiture, or who could havetaken reasonable steps to prevent the offense, cannot be aninnocent owner of the property involved in that offense.3’Thus, even with the advent of § 983(d), it seems unlikelythat there will be many cases where the owner ofunreported currency is able to defend against its forfeitureby claiming that he was unawarethat his courier wouldfail to comply with the reporting requirement.

D. Form 8300Forfeitures

Forfeiture authority for Form 8300 offenses did notexist before 2001. That was because the filing requirementwas previously codified in title 26, § 60501, and there wasno statutory forfeiture authority for such title 26 offenses.But the USA Patriot Act recodified the Form 8300 filingrequirement at 31 U.S.C. § 5331,32 which, through asomewhat convoluted process, makes it possible for thegovernment to use § 5317(c) to forfeit property involved inForm 8300 cases. That process is illustrated by figure 3.

Figure3

It works like this, Section 5317(c) doesn’t say anythingabout forfeitures for Form 8300 violations or about § 5331.But the USA Patriot Act amended 31 U.S.C. § 5324(h) tomake it a crime to cause a trade or business to fail to file areport on a $10,000 cash transaction in violation of § 5331.So, if causing a business to fail to file a Form 8300 is anoffense under § 5324(b), and if § 5317(c) authorizes theforfeiture of any property involved in any violation of§ 5324, the government can use § 5317(c) to bring acriminal or civil forfeiture action againstcurrency or the merchandise traceable thereto,~

Thus, if John Smith uses his $50,000 in cash to buy hisluxury automobile, and he and the sales manager agreethat the dealership will not file a Form 8300, thegovernment can forfeit both the cash used to buy the carand the car itself under § 5317(c), because both areinvolved in the violation of § 5324(b). (If either Smith orthe dealership qualifies as an innocent owner under§ 983(d), of course, they would have an affirmative defenseto the forfeiture)

2004] FORFEITUREOFPROPERTY b97

Forfeiture forReporting

Form 8300Violation

§ 8317(c)

Atitho zesIa f It,, for

mat tansof

5324(b)

We S makesit 0 offenss to1st to comply with

31

Whim, IS romm 100rage, a ml,

30. See31 C.F.R. § 103.27(a)(3)(2004); United States v. $170,000, 903 F.Supp. 373 (E.D.N.Y. 1995) (property becomesforfeitable at the time the ownerleavesit with acommoncarrierandfails to file CMIII form).

31, Sbc NegotiableChecks,207 F. Sapp. 2d at 687 (personrequiredto fileCMIII who fails to file cannotbean innocentownerbecausesheis clearly awareof theinvolvementof herpropertyin theviolation).

32. The Treasury Department’sFinancial Crimes Enforcement Network(FinCEN) promulgatedregulationsfor filing Form 8300’s under title 31 inJanuary2002. See31 C.F.II. § 103.30 (2004). Thereportingrequirementcodifiedat 31 U.S.C. § 5331 hasbeenin effectsincethat time.

unreported

598 BUFFALOCRIMINAL LAWREVIEW {Vol. 7:583 I 2004] FORFEITUREOFPROPERTY 599

Note, however, that as originally enacted, § 5324(b)contained a typographical error making reference to a non-existent “~ 5333” instead of § 5331. As of this writing,Congress had not yet fixed this problem. Nevertheless, as,the legislative history makes it absolutely clear that thereference was intended to be to § 5331, the typographicalerror should not affect the validity of enforcement actionsunder the new statute.

E. Application oftheExcessiveFinesClause

If all that the court had to be concerned about waswhether the forfeiture of the property involved in acurrency reporting violation was authorized by statute,forfeitures for GTE, CMIR, and Form 8300 violations wouldbe a simple matter. The unreported or structured currencyis obviously “involved” in the reporting offense. But findingthat the property is subject to forfeiture under theapplicable statute does not end the inquiry. In everyforfeiture case, civil or criminal, the court must alsodetermine whether a forfeiture that is authorized bystatute would nevertheless violate the Excessive FinesClause of the Eighth Amendment.33 This has become acritical issue in forfeiture cases involving the currencyreporting offenses.

In UnitedStatesv. Bajakajian,34a travelerleavingLosAngeles International Airport was stopped with $357,000in currency concealed in his luggage, and was charged witha criminal violation for failing to file the required CMIRform. He was convicted, but the district court declined toorder the forfeiture of the full amount of the unreported

S33. United States v. Bajak~ian,524 U.S. 321 (1998) (applying the Eighth

Amendmentto a criminal forfeiture); see‘United Statesv. Abmad, 213 F.3d505(4th Cir, 2000) (Bajakajian applies equally te criminal forfeitures and to civilforfeituresof non-inatrumentalities);UnitedStatesv. $359,500in U.S. Currency,25 F. Supp.2d 140 (w.D.N.Y. 1998) (civil forfeiture under § 5317(c)is subjecttosameexcessivefines analysisas theSupremeCourt applied in Bajakajian). Forcivil forfeiture cases,the Eighth Amendmentanalysis has been codified at 15US C. §953(g).

34. 524 U.S. 321.

currency on the ground that the forfeiture would constitutean excessive fine. When Court of Appeals for the NinthCircuit agreed, the government sought review by theSupreme Court. Ultimately, the Supreme Court held thatbecause a CMIH offense is not a very serious crime, andbecause the unreported currency is not, in any event, thecorpus delicti of the crime, the full forfeiture o.f theunreported currency would be “grossly disproportional tothe gravity of the defendant’s offense,” unless the currencywas involved in some other criminal activity.30

Accordingly, since Bajakajian was decided in 1998,courts imposing either civil or criminal forfeiture in acurrency reporting case have had to conduct a post-forfeiture analysis to determine whether the forfeiture ofthe full amount of the unreported currency would violatethe Excessive Fines Clause of the Eighth Amendment. Todate, there has been no consensus on how theconstitutional analysis should he applied,36 but some rulesare beginning to emerge.

First, as already mentioned, although. Bajakajian wasa criminal case, it is clear that the proportionality analysisapplies equally to civil cases.37

Second, it is clear that Bajakajian does not apply whenthe undeclared money is the proceeds of another offense, oris intended to be used to commit another offense.~~

35. Id, at337-38,36. SeeUnitedStatesv. Beras, 183 Fad 22 (lst Cir. 1999)(criminal forThiture

of entire $135,794 defendant failed to declare on a CMIR form was

unconstitutionalunder Bqjakajran’ on remand,district court iuust consider’ theharm causedby Defendant’s conduct, whetherthe money was derivedfrom anillegal source, and what the maximum fine would be under the SentencingGuidelines);United Statesv. $273,969.04U.S. Currency, 164 R3d 462 (9th Cii’,1.999) (Bajakajian applies to civil CMIR forfeiture under § 5317; remanded Ibmgross disproportionalityanalysis);but seeOlabisi v. United States, No. 97-CU.5219(JLQ), 199s WL 661459(E.D.N.Y. 1998) (Bejakaj’ian, heldthat theIbrlbitureor $357,000would be excessive;it doesnot Ibliow that the forfeiture of $57,280isexcessive,andthe court holdsthat it is not).

37. Seesupranote33.38. See United States v. U.S. Currency ($895,719.00) 2003 WL 21544283

(w.D, Mo. 2003) (Bajakqjinn doesnot bar full forfeiture under §5

317(c)of drugmoneytransportedinto theUnited Stateswithout filing a CMIII); United Statesv. ThreeMonetary Instruments,No. 99-1173-FR(D. Or. Oct. 2, 2003) (no Eighth

600 BUFFALOCRIMINALLAWREVIEW [Vol. 7:583 2004] FORFEITUREOFPROPERTY 601

Therefore, in every GTE, CMIR, or Form 8300 forfeiturecase, the first issue is whether there is a connectionbetween the unreported currency and another crime. Ifthere is, there is no constitutional violation in forfeiting100% of the currency as § 53 17(c) provides.

Third, even if the money is unrelated to any othercrime, Bajakajian only requires that the forfeiture bemitigated to avoid the Eighth Amendment violation. Itdoes not require that the forfeiture be reduced to zero,3° noris the Court free simply to set aside the forfeiture statuteand impose any amount of forfeiture that it sees fit. Inenacting the forfeiture statutes, Congress has providedthat all of the property involved in the offense is subject toforfeiture—limited only by the constitutional proscriptionsembodied in the Excessive Fines Clause. In other words,the congressional mandate that all of the property involvedin an offense be forfeited to the United States remains ineffect, up to the point where any additional forfeiture wouldbe constitutionally excessive.

Forfeiture statutes are therefore entirely unlikestatutes that set forth a maximum civil or criminal fine and

Amendmentviolation whereCMIII violation was in furtheranceof tax evasion);United Statesv. U.S. Currencyin the Sum of $97,253.00,No. 95-Cv-39s2(JG),2000 WL 194683 (E,D.N.Y. 2000)(if the undeclaredfinds in a CMIII casearedrugproceedsthereis nothingdisproportionalaboutforfeiting theentireamount,either because Bajakajian does not apply to the nonpunitive forfeiture ofproceeds,or if it doesapply, becausethe court comparesthe forfeiture to thegravity of the drugoffense,not to the gravity of the CMIII violation); cf. UnitedStatesv. Suarex,225 F.3d 777, 780 (7th Cir. 2000) (sentencingcase:mannerinwhich moneywas packagedto avoid detection;defendant’sfalse statementthatshewas not carrying more than $10,000and further false statementas to thesourceof the money and lack of legitimate income supportedconclusionthatmoney was from an illegal source; “Lying about the sourcegives rise to aninferencethat thesourceis i~legitimate,”).

39. See United States v, $100,348, 354 Fad 1110, 1122 (9th Cir. 2004)(applying the four Bajakajian factors,the court holds that reducing $100,000forfeiture to $10,000 did not violate the Eighth Amendment);United States v.U.S. Currencyin theAmountof $119,954.00,304 Fad 165, 175 n.7 (2d Cir. 2002)(noting that Bajakajiandoesnot bar forfeiture of someamount less than 100 percentof the seizedcurrencybut greaterthan zero when thereis no connectiontootherillegal activity); UnitedStatesv. 6380Little CanyonRd., 59 Fad 974, 986-87 (9th Cir. 1995)(the court mustlimit a civil forfeiture to anappropriateportionoftheassetto avoidan EighthAmendmentviolation).

give the court the unfettered discretion to impose any finewithin the specified range. To the contrary, a forfeiturestatute is like a statute imposing a mandatory fine whichmust be imposed unless doing so would violate theExcessive Fines Clause.4° Stated differently, a statute suchas 31 U.S.C. § 5317(c) embodies Congress’s intent that allof the property involved in a criminal offense be forfeited tothe United States, to the extent that it is constitutional todo so.

The best way to conceptualize the issue might be toenvision a line on a graph that begins to rise linearly butthen begins to curve and flatten as mitigating andaggravating factors representing the limitations imposedby the Eighth Amendment are taken into account. Without;these factors, the line would continue to rise linearly,because the amount to be forfeited would be equal to theamount involved in the reporting offense, as § 531.7(c)provides. But the Eighth Amendment factors—e.g., theabsence of a connection between. the property and anothercrime and the maximum statutory fine—in effect weighdown the rising line so that it rises more slowly, regardlessof how much money was involved in the currency reportingoffense. That line represents the maximum amount offorfeiture permissible under the Excessive Fines Clause,and hence the forfeiture that the court is required toimpose.41

40. Cf. United Statesv. Monsanto,491 U.S. 600, 607 (1989) (“Congresscouldnothavechosenstrongerwordsto expressits intentthat f’orf~dturehe mandatoryin caseswhere thestatuteapplied ); UnitedStatesv. Corrado,227 F.3d 543(6th Cir. 2000) (criminal forfeiture is a mandatory aspectof the deh’rodant.’ssentence);United Statesv. Hill, 167 Fad 1055 (6th Cit. 1999) (court may not.ignore mandatory languageof forfeiture statute and give defendantoption ofsubstitutingcashfor forfeited items, unless§ 858(p)applies). ‘fhe foregoingcasesinvolved criminal forfeiture. There is no reasonto believe that civil forfeiture isanydifferent, andtheredoesnot appearto be any caseholding that a court hasthe discretion to mitigate a civil forfeiture other than on Eighth Ameio.lmontgrounds. If the rule were otherwise,Bojakojian. would applydifferently in civiland criminal caseswhereas,to the contrary, the courts uniformly hold t hit it.appliesequallyin both contexts.

41. Seefig. 4.

602 BUFFALOCRIMINALLAWREVIEW IVol. 7:583FORFEITUREOFPROPERTY

Mitigation of Forfeiture Underthe Eighth Amendment

Figure 4

If the court were free to pick a level of forfeiture alongthe continuum between zero and some maximum level, asit would do when imposing a discretionary fine, it couldpick any point on or below the line on the graph torepresent the amount of forfeiture to impose. But it is theduty of the court in a forfeiture case to mitigate theforfeiture to the maximum level that would accord with theforfeiture statute without violating the EighthAmendment, not to pick any arbitrary point based onconsiderations not mandated by Eighth Amendmentanalysis. Thus it must pick a point on the linecorresponding to the maximum allowable forfeiture, just asit would do if the Eighth Amendment factors werenegligible and the. line rose linearly in relation to theamount of money involved in the offense.

1. Standing to Raise the Eighth Amendment

The degree to which a forfeiture must be mitigated toavoid an Eighth Amendment violation is inextricably

related to a separate question: who is the person who iscontesting the forfeiture on Eighth Amendment grounds?In United Statesv. $100,348,the Court of Appeals for theNinth Circuit held that a courier who was stopped at theLos Angeles airport carrying $100,348 in currency for athird party, and who did not file the required CMIR form,had standing to contest the forfeiture action on the groundthat the forfeiture violated the Excessive Fines Clause.41

The court then applied the Bajahajian analysis andreduced the forfeiture to $10,000.

On the narrow issue of standing, the decision isunexceptional: if a bailee in possession of currency hasArticle Iii standing to contest a forfeiture action at. all, itfollows that such a person can contest the forfeiture on anylegal grounds that might he available, includingunconstitutional excessiveness.43 The Eighth Amendmentanalysis that applies in that case, however, is very difIdrentif the person asserting the claim is not the owner of theproperty and hence cannot possibly suffer any economicharm if th.e property is forfeited.

The Eighth Amendment creates a personal right thatprotects individuals from the imposition of an excessivefine.44 Thus, the core of the Eighth Amendment analysis isa balancing test between the gravity of the wrongdoer’soffense and the magnitude of the punishment imposed.Depriving a courier of currency that belonged to someoneelse punishes the courier not at all. Yet, in $100,343, theNinth Circuit applied the Eighth Amendment analysisfrom Bajakajian without taking into account therelationship of the courier to the money, or the fact that theforfeiture would not have any economic coasequence as faras the courier was concerned.

42, United Statesv. $100,348,354 F.3d1110, 111.9(9thCii’. 2004).

43. $100,348,354 Fad at 1119 (noting that underOAFRA, 18 U.S.C. § 983(g),any claimant has standing to contest a civil fbrfeiture action on EighthAmendmentgrounds).

44. Analogously,becausethe Fourth Amendmentprotects individuals, onlythepersonwhoseexpectationof privacyis violatedmaymoveto suppressillegallyseizedevidence, Rakas v. Illinois, 439 U.S. 128, 133-34 (1975); Rawlings v.Kentucky,448 U.S.98, 104-06(1980).

2004) 60$

y~ — Poittitir, tuitiio,lz,d— by stat,,, (y’t)V •0

1•~I -0~2PorOritur, limit’s by

$ Not Declared x

604 BUFFALOCRIMINALLAWREVIEw [Vol. 7:58320041 FORFEITUREOF PROPERTY 605

This approach seems to be clearly wrong. The EighthAmendment analysis is not a one-size-fitsall test that canbe applied blindly in every case without taking into accountthe relationship of the wrongdoer to the property to beforfeited. In affirming the reduction of the forfeiture in$100,348to $l0,ooo, the court accounted for the gravity ofthe offense, the harm it caused, the relationship of theoffense to other criminal conduct, and the other penaltiesthat could have been imposed.~~But it did not take intoaccount the fact that the property belonged to a third partywho did not file a timely claim! The proper approach wouldhave been to consider whether the forfeiture of the$100,348 in unreported currency would have deprived thenon-owner courier of any significant property interest, andto conclude that inasmuch as it would have deprived him ofno property interest at all, the forfeiture of the entire$100,348 could not have violated his rights under theEighth Amendment. Thus, the entire amount should havebeen forfeited_just as the forfeiture statute prescribes~°

45, Id.46. The Ninth Circuit’s decision in $100,348 representsa 180 degree

turnarouy~~from the same court’s pre-BajakajianEighth Amendment analysis,which relied heavily on “subjective factors,” such as how the forfeiture wouldeffect the personassertingthe Eighth Amendment claim, and his family. SeeUnited Statesv. Real PropertyLocatedin El DoradoCounty, 59 Fad 974 (9thCir. 1995) (court must comp~etan~bleand intangibls/subjec~j~~value of theproperty_e.g., whether it is the family home_and the hardship to thedefendant_includingeffect on family and on defendant’sfinancial condition._againsttheculpability of the ownerand the harm causedby theillegal activity).That approach, which represents the other extreme in Eighth Amendmentjurispn.~de~~~has been discredited, and rightly so. A forfeiture cannot beunconstitutional in one case and constitutional in anotherjust becausethewrongdoerin one easewas poor—and so felt a greaterloss on accountof theforfeitur~_anothewrongdoerin the othercasewaswealthy_aadso couldaffordthe loss of his forfeited property. See United States v. 817 N.E. 29th Drive,Wilton Manors, 175 F.3d 1304(-11thCir. 1999)(the personalcharacte,-isticsof theowner, the characterof his/herproperty and the value of any remainingassetsere irrelevant); United States v. Dicter, 198 F.3d 1284 (11th Cir. 1999) (thepersonalimpactof the forfeiture on a specificdefendantis not oneof the factersthe courtconsidersin determiningif a forfeiture is excessiveunderBajakajian)-UnitedStatesv. TwoParcelsofRealProperty..,101 NorthLiberty Street,SOP.Supp.2d 1298 (M.D. Ala. 2000)(defendant’swealthand theeffect of the forfeitureon the defendantare irrelevant to the Eighth Amendment) Eut that doesnotmeanthat thecourt shouldgranta windfall in the guiseofvindicatingtherights

F. StructuringCases

Finally, it appears that structuring cases may betreated differently from ordinary failure-to-report cases forEighth Amendment purposes. In the leading case, UnitedStates v. Ahtnad,47the Fourth Circuit strongly suggested,but found it unnecessary to hold, that Bajakajian does noteven apply to structuring cases. In Bajakqjian, the SupremeCourt drew a distinction between the corpus delicti, or“instrumentalities” of a crime (such as the smuggled goodsin a smuggling case), the forfeiture of which is neverunconstitutionally excessive, and other property or non-instrumentalities which are less integrally involved in theoffense giving rise to the foribiture (such as the unreportedcurrency in a CMIR case).48 If’, as the Fourth Circuitsuggested, structuredfunds are more like smuggled goods,and less like unreported currency, there is no need to enga~,ein an excessiveness analysis at all in structuring cases.4°

In any event, in Ahmad,the Fourth Circuit held thateven if Bajaleajian appliesto structuring, the forfeiture ofstructured funds is not excessive. That is becausestructuring is inherently more serious than a reportingviolation: it involves repeated, affirmative conduct, not aone-time omission; it involves an innocent intermediary(the bank) which is being used to commit the violation; andit causes harm to a third party, if the defendant is in factstructuring a third party’s money, because by committingthe offense, the defendant exposes the third party’s moneyto forfeitute .

protectedby the Eighth Amendment to a personwith no economicconnectiontotheforfeitedproperty.

47. 213F.3d505 (4th Cir. 2000).48. 524 U.S. 321, 340-44(1998) (contrastingforfeiture of non-instrumentality

with historically approvedforihitures ofsmuggledgoods in Customscases).49. Ahmad,213 Fad at 814, 815 n.3 (Bajakajian limits Austin’s applicationof

the ExcessiveFines clauseto all civil forfeitures that are punitive to somedegree; the Eighth Amendment does not apply to the civil forfeiture ofinstrumentalities; the presenceof an innocent ownerprovision in the forfeiturestatutedoesnot supersedethe“instrumentality inquiry”).

50. Ahmad,213 F-3d at 817; seet.JnitedStatesv, Contentsof AccountNumber901121707,36 F. Su.pp.2d 614 (S.D.N.Y. 1999) (where claimant structuretl over

606 BUFFAJJOCRJMIN~J~wREvJEw[Vol. 7:583

II. BULK CASH SMUGGLING: 31 U.S.C § 5332

The distinction that the Supreme Court drew betweensiriuggling cases and currency reporting cases inBajakajj~~has led lower courts to conclude that theCXCcssive fines analysis does not apply to traditionalsmugglingcases where the smuggled goods being forfeitedrepresent the instrumentalities of the crime ~ The samereasoning led directly to the enactment of a new “bulk cashsmuggling’statute, 31 U.S.C. § 5332, as part of the USAPatriotAct in 200j.

In the Patriot Act, Congress found’ that smugglingcurrency in the form of “bulk cash” is a favored dovice ofdrug traffickers, money launderers tax evaders, andpenons financing terrorist operations, and that it “is the~quivale~~of, and creates the same harm as, the smugglingof goods.”~~ Moreover, Con~essfound that “only theconfiscation of smuggled bulk cash can effectively break thecycle of criminal activity of which the laundering of the

Ilk cash is a critical part.”53 Finally, picking up on thedistinction between instrumentalities and non-:nstrumentalities in forfeiture law, Congress noted that as1ong as bulk cash smuggling was considered only acurrency reporting offense, the penalties, as limited byi3ajakajj~~could not “adequately provide for theconfiscation ofsmuggled currency.”sl In contrast, Congressconcludeij “if the smuggling of bulk cash were itself anofi~nsethe cash could be Confiscated as the corpus delictiof the smuggling offense”aa

~not derivedfrom an illegal source).

~1. SeeUnited StatesV. $273,96904 U.S. Currency 164 Fad 462 (9th Cir.1999) Q~U.S.C. § 1497 forfeitures for smugglingoffenseslie Outsidescope ofewes~ivefinesanalysis;Bajakaji~

4doesnot apply),

:32. “Fthdings” includedat section371 of Pub, L. No. 107-55 115 Stat. 272,337(2001).

53. Id.54. Id,55. Id.

2004] FORFEITUREOFPROPERTY 607

These findings are summarized in the CommitteeReport accompanying the money laundering provisions ofthe Patriot Act:

The Committee believes. . , that bulk cash smuggling is aninherently more serious offense than simply failing to file aCustoms report. Because the constitutionality of aforfeiture is dependent on the “gravity of the offense” under[United Statesu. Bajakajian], it is anticipatedthat the fullforfeiture of smuggled money will withstand constitutionalscrutiny in most cases. For the confiscation to be reduced atall, the smugglerwill have to show that the money wasderived from a legitimate source and not intended to beusedfor any unlawful purpose. Even then., the court’s dutywill be to reduce the amount of confiscation to the maximumthat would he permitted in accordance with the EighthAmendment and the aggravating and mitigating factors setforth in the statute.’t’

In short, Congress found that the clandestinemovement of bulk cash across the border is really more like

a smuggling offense than like the simple failure to file acurrency transaction report. Smuggling currency, after all,does more than deprive the government of information thatmay be used to create a paper trail. It is an integral part of’the recycling of drug proceeds, the financing of terrorism,the evasion of income taxes, and other crimes that rely onextracting currency from, or injecting foreign funds into,the U.S. economy without using the traditional banking orwire transfer systems. In fact, smuggling currency createsthe same type of harm as other fbrms of smuggling,including the smuggling of firearms, counterfeit goods,adulterated foods, and unapproved medicines.

Thus, Congress enacted § 5332 which makes it anoffense to smuggle currency into or out of the United Stateswithout filing a OMIR form, and expressly provided that allof the smuggled currency would be subject to civil andcriminal forfeiture whether the government is able to

56. HR. Rep.No. 107-250,at 52(2001).

608 BUFF24JJOGRIMJN4UJ~LAWREVIEW [Vol. 7:583

establish a nexus between the currency and another crimeor not.’7 Accordingly, if Mr. Bajakajian were to try todepart from LAX today with $357,000 in currencyconcealed in the false bottom of his suitcase, he could beprosecuted under § 5332 and 100% of the currency could beforfeited as the instrumentality of the smuggling offense.~~

A. TheMissing“Subsection(d)”

There is one oddity in § 5332: both the civil and thecriminal forfeiture provisions state that the property shallbe forfeited “subject to subsection (d), of this Section.”°However, no “subsection (d)” was enacted.

The language proposed as subsection (d), which is setforth in the margin,ao was part of § 5332 when it passed theSenate and when the bill was reported out of the HouseFinancial Services Committee but it was dropped on the

~.SC~5332(b)(c)(2o03)EStatesSentencingCommissionhas set the offbnse level for violations of § 5332two levels above the offense level for CMIR offenses to reflect the greaterseriousnessof theoffense SeeU.S.S.Q§ 251,3(2003).

58.5

ee Stefan P. Cassefla Bulk Cash Smuggling and the GlobalizationofCrime, 22 BerkeleyJ. Int’l L. 98 (2004).

59. 31 U.S.C.§ 5332(b)(2), (c)(1) (2003).60. H. Rep.No. 107-250,supranote56.(a) Proportionaatyof Forfeiture......

(1) In Oeneral._upena showing by the property owner by apreponderanceoftheevidencethat thecurrencyor monetaryinstrumentsinvolved in the offense ~ving rise to the forfeiture were derivedfrom ale&timate source andwere intendedfor a lawful purpose,thecourt shallreduce the forfeiture to the maximum amount that is not grosslydisproportjonajto thegravity of theoffease.(2) Factors to Be Considered....j~determining the amount of thoforfeiture, the court shall considerall aggravatingand mitigating factsand circumstancesthat have a bearing on the gravity of the offense,including thefol] owing:

(A) Thevalueofthecurrencyor othermonetaryinstrumentsinvolved intheoffense.

(B) Efforts by the personcommitting the offenseto structurecurrencytransactions,concealproperty, orotherwiseobstructjustice.(C) l~etherthe offense is part of a patternof repeatedviolations ofFederallaw.

2004] FORFEITUREOFPROPERTY 609House floor. No conformingamendment striking the two

references to subsection (d) was made.

HI. MONEY TRANSMITTING BUSINESSES: 18 U.S.C. § 1960

Before moving on to forfeitures for the traditionalmoney laundering statutes—18 U.S.C. §* 1956 and 1957—it is worth pausing for a moment to note the availability offorfeiture for violations of a heretofore little-used moneylaundering provision: 18 U.S.C. § 1960.

Section 1960 is something of a hybrid between acurrency reporting offense and a money laundering offenseunder §~1956 and 1957. As amended in 2001 by the USAPatriot Act, § 1960 makes it an offense to operate a moneytransmitting business without a State license or withoutregistering the business with FinCEN.°’ Perhaps more?importantly, the statute now also makes it an offense toconduct a money transmitting business knowing that thefunds being transmitted are derived from an illegal source orare intended for an unlawful purpose.” Sections981(a)(1)(A) and 982(a)(1) authorize civil and criminalforfeiture of all property “involved” in a violation of § 1960.’

61. See 15 U.S.C. § 196o(b)(1XA) & (B) ~2oO3), Money transmittingbusinessesare required by statute to register with FinCEN even if they arealreadylicensedto do businessby the State in which they operation. See 31U.S.C. § 5330 (2003) and regulationspromulgatedthereunder,Si C.F.R. 4103.41(2004).

62. See§ 1950(b)(1)(C).63. Seefig. 5.

610FORFEITUREOFPROPERTY 611

BUFFALOCRIMiNALLAWREVIEW [Vol. 7:5832004]

The forfeiture of all property involved in the illegaloperation of the money transmitting business couldinclude, of course, the business itself and all of its assets.What is likely to be of greater importance, however, is thatin the case of funds that the person operating the businessknows are derived from an illegal source or are intended foran unlawful purpose, the forfeiture may include the fundsbeing transmitted.

For example, take the case of a group of individualswho, for a fee, agree to pick up large quantitie5 of cash froma given location, and move it to another locationsomewhere in the United States. The statutes andregulatio~5 governing money transmitting businessesdefine the term “business” broadly to include such informalmoney-movem~11~operationsot and such operations are

64. See 18 U.S.C. ~l960(b)(2) defining money transmlttrng’ to include“transferringfundson behalfof the public by anyandall meansincluding but notlimited to transfers by. . . courier.” SeealsoHR. Rep.No, 107.250,at 54(2001):

IThis SectionJexpandsthedefinition of an unlicensedmoneytransmitting

commonly employed by drug traffickers who need to movebulk cash domestically without using the banking system.Thus, if a police officer stops a courier carrying a largequantity of cash as part of such a money-movementoperation, and the evidence shows that the courier wasaware that the money was derived from an illegal source orintended for an unlawful purpose, the courier can beprosecuted under § 1.960, and the money can be seized andforfeited under § 981(a)t1XA) ~ 982(aXl).6’

IV. MONEY LAUNDERING: 18 U.S.C. §~1956 AND 1957

The entire discussion thus far of forfeiture for moneylaundering offenses has been the overture before the mainevent. We now turn to what is forfeitable for violations ofthe principal money laundering statutes in title 18—§~1956 and 1957.

business t.o include a business engaged in the transportation ortransmiision of funds that the defendant knows are derived from acriminal oflbnse,or areintendedto beusedfor an unlawful purpose. Thus,a personwho agreesto transmit or to transport drugproceedsfor a drugdealer, or Ihods from any sonreefor a terrorist, knowing suchfunds ore tohe usedto commit a terrorist act, would be engagedin tife operationof anunlicensedmoneytransmittingbusiness. It would not be necessaryfbi theCor,ernm.ertt to show that the 6 irs),wiis ,vo.s 0. .store/reat. or other fbrote!businessopen to walk-in trade. To the contrary, it would b

0sulfa rot to

show that the defendantoffrired his servicesas a money transmitter toanother. (Emphasisadded.)

65. SeeStefanD. Cassella,Application ohS U.S.C. § 1960 to Informal MoneyServiceBusinesses,39 Crirn. L. Bull. 590 (2003).

66. See B. Frederic Williams & Frank D. Whitney, Federal MoneyLaundering: Crimes and Forfeitures (1999); Sarah N. Welling et a].. FederalCriminal Law andRelatedActionseh. 18(1998).

Forfeiture for Section 1960 Violation

ØBI(a)(1)(A) and

§ 982(a)(2)

I ~upipn2

e:oqeltu~e~Olallonsof.~

4 19$O(b)(I)(A) * 419~Q(b)(1Xc)

VSat,b~of slAte law V1o~~~f(edsraj Conducjln~!ran SCOQO

e$etlon$ai era ioa4~ knowIng moneyIs dedvedI omunlawfuleelor

Intensfor Un! etapurpese

Figure5

A. TheMoneyLaunderingStatutes

A discussion of all of thewould surely fill a volumepretense here of trying tolaundering law in any kind§ 1956(aXl), the domestic

nuances in §~1956 and 1957of its own, and I make noexplain substantive moneyof detail.66 Very general].y,money laundering statute,

612 BUFFALoCRIMINALLAWREVIEHT [Vol. 7:583

makes it a crime to conduct a financial transactioninvolving “dirty money” in a way that makes the moneyappear “clean,” or to be only slightly more technical, in away that conceals or disguises the source, nature, location,ownership, or control of the dirty money.°7 In this case,“dirty money” is the layman’s term for what the statutecalls “the proceeds of specified unlawful activity” (“StJA”).~~In other words, it is not a crime to launder just anycriminal proceeds, but only to launder the proceeds of oneof the 250 or so state, federal, and foreign crimesdesignated as StJA offenses in the statute.6° That is quite along list of crimes, and it covers all of the most commonlyprosecuted offenses from drug trafficking to mail fraud topublic corruption; but it does not include everything....~~~omission of tax evasion and foreign fraud offenses being themost glaring examples.

In any event, for obvious reasons, this type of moneylaundering is called “concealment money laundering.” Aperson who puts his fraud proceeds in his wife’s bankaccount to conceal his connection to the money, or who putshis drug proceeds in the operating account of his pizzeria tomake the money look like the proceeds of selling pizzas,commits concealment money laundering.~o

That’s one part of § I 956(aj( 1). The other import~tpart of the domestic money laundering statute makes it anoffense to use the dirty money to commit or facilitateanother SUA offense, or to continue the scheme thatgenera~e~the dirty money in the first place.71 This iscalled “promotion money laundering” A person who takesthe proceeds he earns from defrauding one victim of his

~e18UsC~19~68. § I

956(a)(1).

69. See18 U.S.C. § l95

6(c)(7) (listing all oftheSUA offenses).70. See,e.g., United Statesv. Miles, 290 Fad 1841 (11th Cir. 2002)(evidence

that defendantpurchasedhousein sister’snameand gave sistermoneyto paymortgage in her namesufficient to show purposeto concealor disguise SUAproceeds).United States v. Hunt, 272 Fad 485 (7th Cir, 2001) (defendantlaundereddrug dealer’s moneyby bu~ngcar in nameof his own businessandgiving it to drugdealerfor cash).

71. Seeis U.S.C.§ 1956(a)W(A)(i)

2004] FORFEITUREOF PROPERTY

fraud scheme, and uses it in a way that helps defraud thenext victim, commits promotion money laundering.?

Section 1956 also has an international provision. It isvery similar to the domestic money laundering statute,exceptthat if the defendant is transferring or transportingthe money into or out of the United States for the purposeof committing an SUA offense, he is guilty of moneylaundering even if the money was “clean” at the time it wastransported.” In other words, it is really a “reverse moneylaundering” statute: instead of trying to make dirty moneyclean, the defendant is using clean money to finance acriminal offense, thus making the money dirty. A personwho brings money into the United States to finance aterrorist attack commits a violation of the internationalmoney laundering statute.’4

The last part of § 1956 is called the “sting” provision.It makes it a crime to launder money that the defendantthinks is dirty money because it was given to him by anundercover cop who told him that’s what it was.~’° Thesting provision doesn’t enter into forfeiture discussions veryoften, so we won’t dwell on it here, but it does come up fmtnntime to time, as we shall see.

The other money laundering statute that is used dailyby federal prosecutors, and is the basis for manyforfeitures, is § 1957. It is similar to the domesticcomponent of § 1956 in that it makes it a crime to conduct a

72. See, e.g., United Statesv. Johnson,297 Fad 845 (9th Cir, 2002) iusingproceedsof telemarketingfraudto keep lights on end phonesworking promotesscheme);United Statesv. Kosmel, 272 Fad. 501 (7th Cir. 2001) (cashingchecksfor illegal alienspromotesa harboringoffense); UnitedStates~rMasten, 170 F.Scl790 (7th Cir, 1999)(using moneyfrom new investorsto payoil earlier invesi,ora--..-as in a classic Ponri scheme—promotesthe schemebecausei( flusters good willand nurturesfalse impression that investorswho want their moneyback Will hepaid).

73. See15 U.S.C.§ 1956(a)(2)(A).74. SeeUnited Statesv. One 1997 E35 Ford Van, 50 F. Supp.2d 789 (N.H. Ill.

1999) (sending property into the United States to promote Ibreign terrorismviolates § 1956(a)(2)(A); the property need not he the proceedsof anyolik-ose~itneedonly be sentwith intent to promoteanSIJA offense).

75. See Is U.S.C. § 1956(a)(3). See,e.g., United States.v, Mchamh,955 h.2d1284 (4th Cir, 1993) (car dealer convicted of assistingundercover agent oFlaunderingmoneyagenttold him wasdrugproceeds).

61:)

614615

B. What Property Is Involved in a Violation of § 1956 or§ 1957?

Sections 981(a)(1)(A)and 982(a)(1) make all “propertyinvolved” in a violation of either § 1956 or § 1957 subject tocivil and criminal forfeiture, respectively ‘° So, whatproperty is “involved” in such a money laundering offense?

76. See15 U.S.C.§ 1957(a)(2003).

77. SeeUnited Statesv, Brown, 186 F.3d 661, 670 (5th Cir. 1999)(~1956 isnot a money“spending” statute;it is a moneylaunderingstatutethat requireaspecificintent’ in contrast,§ 1957 is amoneyspendingstatute.).

78. SeeUnited Statesv. Rutgard,116 Fad 1270, 1291 (9th Cir. 1997) @ 1957is designedto freezecriminalproceedsoutof thebankingsystem);UnitedStatesv. Allen, 129 Fad 1159 (10th Cir. 1997)(Con~ess’sprima~concernin enacting§ 1957mayhave beenwith third p~tieswho ~ve criminalsopportunity to spendill.gotten gains, but the statuteneverthelessreachesconductof wrongdoer

8who

conduct transactionswith fruits of their own criminal acts.); United States v.Johnson,971 F.2d562, 568 (10thCr. 1992) (thestatutecriminalizes the actionsof third pastieswho have aided drugdealersby allowing them to disposeof drugproceedsbutwhoseconduct isnot coveredby conspiracylaw.).

79. Section9

S1(a)(j (A) providesasfollows:(a)U) Thefollowing propertyis subjectto fothitureto theUnitedStates:(A) Any property, realor personal involved in a transactionor attemptedtransactionin violation of section 1956, 1957 or 1960 of this title, or anypropertytraceableto suchproperty.

Section9

S2

(a)(1)providesas Ibilows:(a)(1) Thecourt, in imposingsentenceon a personconvictedof anoffenseinviolation of section1956, 1957, or 1960 of this title, shall order that thepersonforfeit to the United Statesanyproperty osalor personal,involvedin suchoffense,or anypropertytraceableto suchproperty.

80. See United States v. Fuche, 350 F.3d 1137 (11511 Cir. 2003) ~affirnt jag

moneyjudgment equalto sun., of commissionpaid to moneylaundererandva laoof untainted funds usedto facilitate the offense); United States v. Tencer, 07Fad 1120, 1134 (5th Cir. 1997)(discussinglegislativehistory of 1988 amendmentat 134 Cong.Eec.S17365(daily ed. Nov. 10, 1988));United Statesv. Wyly. 1)13Fad 289 (5th Cir. 1999)(affirming that facilitating propertyis forfeitable under4982(a)(lll; United Statesv. Cornfield, 145 F.3d 1123 (10th Cir. 1998) (followingTencer);UnitedStatesv. Hasvkey,148 F.3d 920, 927-25(8th Cir. 1998)(followingBorrsfietd and Fencer);UnitedStatesv. McCauley, 279 F.3d 62. 76 n.14 (1st Cr.2002) (following Bornfseld, Fencer,Baker, and All Monies and citing legislat.tvehistory); United States v. Baker, 227 F-3d 955 (7th Cir. 2000) (all real andpersonal property used to commit the money laundering offense is subject. i.eforfeiture as property“involved” in theoffense);United Statesv. ?Jatai,173 Fad426, 1999WL 61913.Nns.97-4129,97-4130(4th Cir. 1999)(unpublished)(Table)(under § 982(a)(1), the government may forfeit any property used by thi.’defendantto facilitatethemoneylaunderingoffense); UnitedStatesv. All Meniesin Account Ne. 90-3617-3,754 F. Supp.1467, 1473 (D. Hew. 1991);United Stalesv. CertainAccounts,795 F. Supp.391, 396 (S.D. Fla. 1992);UnitedStatesv. All ofthe Inventoriesof theBus.Known as Khnlife Bros. Jewelry,8061?.SI.ipp. 64.8. 650(ED. Mich. 1992);United Statesv. 1501 West Boulevard,814 F. Sepp.468. 4751n.3? (W.D.N.C. 1993), a0’d subnom. United Statesv. Marsh, 105 F.3d 927 14thCir. 1997);UnitedStntesv. Eleven vehicles, 836 F, Supp. 1147, 1153 (ij3l,), Pu.1993);UnitedStatesv. Krasner,841 F. Supp.649 (M.D. Pa, 1993).

The legislativehistoryse)’s the following, in pertinentpart: “it is the intent.of Congressthat n personwho conductshis financial transactionsin violation ofthe anti-moneylaunderingstatutesforfeits his right, to the propertyinvolvedITIhe term “propertyinvolved” is intendedto include themoneyor other propertybeinglaundered(time corpus),any commissionsor feespaid to the launderer,andany property used to facilitate the launderingoffense.” 1.34 Cong. Eec. 817305(daily ed.Nov. 10, 1988)(statementof Sen.Biden).

BUFFALOCRiMiNAL LAWREVIEW IVol. 7:583

financial transaction involving dirty money. But there isan important difference A defendant can be convicted of a§ 1957 offense even if he had no intent to promote anotheroffense, or to conceal or disgiiise anything about the dirtymoney. Simply spending, depositing or transferring thedirty money is sufficient, provided that at least $10,000was involved.~~Thus, § 1957 is often called the “moneyspending statute.”” Its purpose is to make the criminal’smoney worthless, by making it a felony for him to spend it,or for anyone else to take it, if he knows of its illegalsource.’5

2004] FORFEITUREOFPROPER77

Based on the legislative history, seven Courts of’Appeals and numerous lower courts have held that theterm “property involved” should be read broadly to includethe money or other property being lau.ndered (the “corpus”or “subject matter” of the money laundering offense); anycommissions and fees paid to the money launderer; and anyproperty used to facilitate the money laundering offense.5°No court has held to the contrary.

Applying this definition, we find that the propertysubject to forfeiture in a money laundering case falls intofour categories: 1) the proceeds of the SUA offense being,laundered; 2) property other than the SUA proceeds whichis also part of the subject matter of’ the money launderingoffense; 3) property used to facilitate the money launderingoffense; and 4) property (again other than the proceeds

616 BUFFALOCRIMINAL LAWREVIEW !Vol. 7:583

involved in, or used to commit, the SUA offense.~’ We will

discuss each of these categories in turn.

Four Theories ofMoneyLaundering Forfeiture

2004] FORFEITUREOFPROPER77 617

of 18 U.S.C. § 666 (theft or bribery concerning programsreceiving federal funds),54 and the transfer of the $23,000from the first bank account to the second was charged as amoney laundering offense in violation of § 1956(a)(1)(BXi).In other words, the financial transaction----the actus reus oFthe money laundering offense—was the transfer of $23,000.

I. The proceeds at the SIJA offense.

2. The subject matter of the transaction:a. SectIon 1 956(a)(2)(A) properly.b. Property obtainea in a sale or~axchange,c. “Con1mlng~d”property.

3. FacilItating property.

Stolen Money557,000

4. Property involved in or used to commit the 311,4.

Figure6

1. The proceeds of the SUA offense

Personal

Expenses Ms.U.S. v. Trost

We begin with the simplest case: forfeiture of the SUAproceeds that the defendant is using to commit the moneylaundering offense.

In UnitedStatesu. 2)’ost,~~the defendant was a publicofficial who stole money from the county government wherehe worked. Specifically, he deposited more than $57,000 inchecks intended for the county into his personal bankaccount transferred approximately $23,000 of that amountto the joint account he held with his wife, and then spentthat money on personal expensess3 The underlying theft,or “specified unlawful activity,” was charged as a violation

fig. 6~82, 152 Fad

715(7thCr. 1995).

83. Seefig. 7.

Figure7

Under § 982(a)(1), the government was entitled to theforfeiture of all property involved in the money launderingoffense. What property was involved in the transfer of$23,000 from one account to another? Obviously, $23,000.So at the very least, the government was entitled to theforfeiture of that amount. In other words, ‘frost illustratesthe unsurprising proposition that in a money~launderingcase under §* 1956 and 1957, the government can alwaysforfeit the proceeds of the underlying SUA offensethat arebeing laundered. Moreover, as other courts have held inconspiracyand attempt cases,the governmen.tcan forfeit

84. Section 686 is an SUA becauseit is listed in 18 U.S.C. § 1956(c)I7)U))(2003).

618 BUFJ?44j,~CRIMINALLAWREVIEW {Vol. 7:583

the proceeds that the defendant conspired or attempted tolaunder, even if the offense was not completed~~Suchforfeitures are fairly common and rarely generate muchdiscussion

Nevertheless, this used to be very exciting: UntilCAFRA took effect on August 23, 2000, there was noforfeiture provision for most of the SUA offenses. Therewas no forfeiture for mail or wire fraud, or bribery, orextortion, or theft from a governme~~program. ‘frost waslaundering the proceeds of a § 666 violation, but there wasno forfeiture for a § 666 violation when all of this occurredSo the only way for the governme~~to recover the proceedsof that offense was to convict Trost ofmoney launderingand forfeit the proceeds as property involved in that crime.

Indeed, before 2000, it was commonplace for a federalprosecutor to include a money laundering count in a

85. SeeUnitedStatesv. Bassen,333 Fad 1264 (11thcir. 2003) (forfeitureJotmoneylaundoringconspiracyis not limited to proceedsderivedfrom substantiveoffenseson which defendantwas con~cted,but includes amount derived fromunchargedcondu~and conducton which defendantmay have been acquitted);Baker,227 F.ad955 (in a conspiracycase,defendantforfeits total amountof SUAproceedsinvolved in the conspiracy,not just amount involved in substantiveoffensesor overt acts); United Statesv, $15,27o,s~~69 Fo~erIyon Deposit inAccount No, 8900261137,2000 M~1234593, No, 99 Civ. 10255fflce) (S.D.N.y.2000) (money in a bank accountcan be forfeited as property involved in anattemptto commit a moneylaunderingoffense),

86. See,e.g.,UnitedStatesv. Moyer, 313Fad 1082 (8th Cir. 2002) (affirmingforfeiture of the amount defendantembezzledfrom his pensionplan and usedtopaypersonalcreditorsin violation of § 1957); United Statesv. Stewart, issFad112 (adCir. 1999) ($3 million hi fraudproceedsforfeited as property involved in§ 1957 violation); UnitedStatesv. Ladum,141 Fad 1828 (9th Cir. 1995)(propertyconcealedfrom bankrupteycourt wasSUA proceedsand wasforfeited aspropertyhivolved in subsequentmoneylaunderingdesi~edto concealand disguisetrueownership); United Statesv. Millet, 123 Fad 268 (5th Cit. 1997) (defendantordered to forfeit amount equalto bribe moneyhe receivedand then laundered’no discussion);United Statesv. Zacaboni,221 F. Supp. 2d 104 (D. Mass. 2002)(gambling proceeds paid as salaries to co-defendantsand as winnings tosuccessfulbetters promoted the gambling offense and so was

9nvolved” in the

moneylaundering);UnitedStatesv. Cleveland 1997 wL 537707 No. CRJM.A 96-207 (ED, La. 1997) (property “involved” includesthe proceedsbeinglaundered;the~vornment entitledto aloneyjud~entin that amount);In re McCork)e,972F. Supp.1423 (M.D. Fla. 1997) (Sndingprobablecausefor seizure;bankaccountscontainingfraud proceedsdepositedwith intent to promote continuation of aPonzischemeareforfeitableunder§~981 and

20041 FORFEITUREOFPROPERTY 619

criminal indictment as the means to get a forfeiturejudgment and recover the proceeds of an offense so thatthey could be restored to the victim. But now, thegovernment can forfeit the proceeds of any SUA offensedirectly—that is, without proving a money launderingoffense—by using the forfeiture provision in.§ 981(a)(1)(C).57 Accordingly, the use of the moneylaundering statute for this purpose has decreased, hut theSUA proceeds being laundered can still be forfeited when adefendant is convicted of money laundering.88

a. ApplyingtheExcessiveFinesClause

In light of our discussion of the Excessive Fines Clauseof the Eighth Amendment, and the Supreme Court’s decisionin Bajakajian, however, we must ask: What happens to aforfeiture of the SUA proceeds in a money launderh~gcase ifwe apply the Excessive Fines Clause? But the answer issimple. The forfeiture of the proceeds of an offense is neverdisproportional—never mind “grossly disproport.ional”—-tothe gravity of the offense that generated the proceeds. Theforfeiture of criminal proceeds simply deprives the defendantof something that he had no right to possess in the firstplace.5° Thus, no court has ever held that the fhrfeiture of

87. 18 U.S.C. § 951(a)(1)(C)(2003) (makingthe proceedsof any SUA offense,or a conspiracyto commit an SUA offense, subject to civil forfeiture); see 28U.S.C. § 2461(c) (2003) (making any property subjectto civil forfeiture likewisesubjectto criminal forfeiture.

85. Becausethe cx postfacto clauseapplies to criminal forfeiture, it i.s stillnecessaryfor the government to use the money laundering statutes to fOrfeitproceedsof SUA offensesin criminal casesii’ the offenseoccurredbefore August23, 2000, unless the offensecontinued beyond, or straddled.”that date, SeeUnited Statesv, Colon-Munor,1.92 Fad 210 (1st Cir. 1999) (i 982(a)(2)cannelbeapplied to conspiracythat ended beforeeffective date of the forfeiture stat.ute);United States,‘. Sudeen,2002 WL 1597095, No. eRA. 02~062(ED. La. 2002)(whetherforfeiture of proceedsof fraud conspiracythat straddleselThctivedate ofCAFEA would violatecx post factowill be determinedif thereis u conviction; pm’e~trial motion is premature).

89. SeeUnited Statesv. Lot 41, Berryhill Farm Estates,128 F.3d last; 00thCiv. 1997)(collectingcases).

620 BUFF44iJJJCRIMINI4iJMWREWEW(Vol. 7:583

the SUA proceeds being laundered in a money launderingcase constituted a violation of the Excessive Fines Clause,00

2. Property That Is the SubjectMatter of the MoneyLaundering Offense

The second category of property subject to forfeiture ina money laundering case is what Congress called the“corpus”ol and I call the “subject matter” of the moneylaundering transaction. Obviously the SUA proceeds beinglaundered (Category One) are part of the subject matter ofthe offense. What I’m referring to in Category Two,however, is property, other than the SUA proceeds, thatwas part of, or integral to, the money launderingtransaction As we will see, this includes “clean” moneybeing used to commit a criminal offense in a reverse moneylaundering transaction; property that is the subject of apurchase, sale or exchange constituting a moneylaundering offense; and property that is commingled withthe SEA proceeds in the course of the money launderingtransaction

a. Reverse Money Laundering: Violations of§ l956(a)(.gi(A)

As already mentioned § l956(a)(2)(A) is theinternational money laundering statute that does notrequire proof that the property transported or transferredto or from the United States involved SEA proceeds It’s

from his pensionplanand usedto paypersonalcreditorsin violadon of~1957notdisproportionni eventhoughfodeiturewasdoublethe amountof lossto victims);United States v. Loc, 248 Fad 449 (5th Cir, 2001) (forfeiture of portion ofproperty traceableto launderedSUA proceedsis not disproportj~~~jat all, nevermind “~oss1ydisproportionaj~~).Lad~,141 Fad 1328 (fothiture of launderedproceedsof banl<rupteyfraudnot excessivebecauseforfeiture deprivesdefendantof propertyhehadno right to retainan~ay);UnitedStatesv. One 1988 PrevostLiberty Motor Home, 952 F, Supp,1180(S.D. Tex. 1996)(forfeituseof motor homepurchasedin the transactionin which SUA proceedswere launderedcannotbeexcessive),

91. Seelegislativehistoryquotedatsupranote80,

6212004] FORFEiTUREOFPROPERTY

enough that the money was transported or transferred withthe intent to promote such an offense. Thus,§ 1956(a)(2)(A) is really’ a “reverse money laundering”statute. Instead of making it a crime to launder dirtymoney to make it clean, it makes it a crime to use cleanmoney for an unlawful purpose, thus making the moneydirty.

If all the government could forfeit in a moneylaundering case were the SUA proceeds, there would benothing to forfeit in a § 1956(aX2)(A) case. But because the,government can forfei.t all property involved in a violationof § 1956(aX2XA), it can forfeit the untainted funds thatare transferred or transported to the United States forsomeunlawful purpose. So if John Smith brings $100,000into the United States to buy an airplane to be used in hisdrug smuggling operation, he commits a violation of§ 1956(a)(2)(A),and the $100,000 in previouslyuntaintedmoney can be forfeited as property involved in that offense.

Of course, the government has to prove that the intentbehind the movement of the funds into or out of the UnitedStates was to promote one of the crimes listed in thedefinition of “specified unlawful activity” in 18 USC,§ 1956(c)(7). But that list is ever~expanding. In fact,nearly fifty new offenses—mostly dealing with potentialterrorist acts and other crimes of violence, but alsoincluding a number of other foreign crimesm_were addedby the USA Patriot Act in 2001.

The way in which, this was done was somewhatindirect, and so might not be obvious to the practitioner.But it works like this: 18 U.S.C. § 2332b(g)(5)(B)containsalong list of federal crimes ranging from the use bf chemicalweapons°3 to attacks against transportation systems°4 thatmight be committed by terrorists. In the Patriot Act,Congress amended 18 U.S.C. § 1961(1)(G) to make all ofthe offenses listed in § 2332b(g)(5XB) RICO predicates.Pursuant to 18 U.S.C. § 1956(c)(7)(D), of course, all RICO

92. See15 U.S.C. § 1956(c)(7)(B).93. 15 U.S.C.§ 229 (2003).94. 18 U.S.C. § 1993 (2003).

622 BUFj?,~aj~CRJMJN~LAWREVIEW EVol. 7:583

predicates are automatically SUA offenses for moneylaundering purposes. Thus, a person who brings $100,000into the United States to finance any crime listed in§ 2332b(gx5)(B) commits a violation of § l956(a)(2xA)making the $100,000 forfeitable under §~&S1(a)(,j)(A) and982(a)(1) as property involved in the money launderingoffensey°

Forfeiture of Section l956(a)(2)(A)Property

Figure sThe reason that this comes up in a discussion of

forfeitures of Property involved in reverse moneylaundering violations is that virtually none of theterrorismrelated offenses listed in § 2332b(g)(5)(B) arelikely to generate proceeds, Unlike criminals who commitmail and wire fraud offenses, persons who plan to blow upa subway system or ~contaminatethe water supply of asmall city do not do so to make money. So a forfeiturestatute that only allows the governrn~~~to confiscate theproceeds of such an offense would be of little use, Muchmore important is to be able to confiscate the money that is

fig. 5.

FORFEITUREOFPROPERTIT 623

used or intended to be used to plan and carry out thatoffense before it takes place.

That is where the authority to forfeit any propertyinvolved in a violation of § 1956(a)(2)(A) comes into play.While the property transported into or out of the UnitedStates for the purpose of promoting an SUA offense doesnot constitute the “proceeds” of’ that crime, it neverthelessrepresents the subject matter of the money laundering‘offense, and so is subject to forfeiture.°6

b. &operty involved in a Purchase, Sale, orExchange

Reverse money laundering cases constitute animportant but rare application of the forfeiture provisionsin §~981(aXlXA) and 982(aXi). Let’s return now to themore typical cases in which the defendant is using dirtymoney to conduct a financial transaction.

As we saw in Trost, such transactions can he simpleone-way transfers of the SUA proceeds from one account toanother. But money laundering offenses often involve morethan just the dirty money. If a person launders his criminalproceeds by buying a car, the car is involved in the offense.If he launders stolen goods by trading them for jewels, thejewels are involved in the offense. And if he laundersfraudulently obtained securities by selling them for cash, thecash is involved in the offense. Indeed, any time the moneylaunderingoffense is committed through a purchase, sale, orexchange, the subject matter of the transaction~thethingbeing purchased or sold or obtained in the exchange——is

2004]

andI

iottoyiz tori io,viol ,i’~n at

~‘195Strict, n ke it crime to bringmoney into th~U S to promote

fly ott ,s toted in• S

Which in orpor I Which ificorporatL ~ :1, (1fl~) , 2~

96. In terc’ocisrn cases,an amendmentmade in 2002 gives the governinririranotheroption. 18 U.s.c. § 2339C (2003) (financingterrorist activity) is an SUAoffense. Thus, any money raised internationally or domestically to financeterrorism maynow be forfeitedas the proceedsof a § 2339C offense, pursuant:to§ 951(a)(1)(C)(authorizingtheforfeiture of all 5UA proceeds).However, lbr non-terrorism offenses,theability to forfeit the propertyinvolved in a c’eversemoneylaunderingoffense under§ 1956(a)(2)(A) remainsthe principal way to confiscatecleanfunds intendedfor anunlawful purpose.

624 BUFFALOCRIMINAL LAWREVIEW [Vol. 7:583

“involved” in the offense and constitutes part of the subjectmatter ofthe crime that can be forfeited.°°

In United States v. Hawkey,°° the defendantmisappropriated $140,450 in funds intended as charitablecontributions and used the money to purchase a number ofitems for his personal use, including a motor home.99 Hewas convicted of mail fraud and money laundering100 andwas ordered to forfeit $140,450 (in a money judgment) andthe motor home as part of his criminal sentence.

97. See United Statesv. Kennedy,201 Fad 1324 (11th cir. 2000) (equitydefendantacquiredwhen he usedSUA proceedsto buy a residenceis forfeitableas propertyinvolved in a violation of* 1957);UnitedStatesv. 657 Acresof Landin Park County, 978 F, Supp. 999 (D. Wyo. 1997) (ranch purchasedwith drugproceedsforfeited under § 981 wheredefendantusedcash to make purchaseinfalsename, thuscommittingviolation of~1

956(a)(fl(B)(i)); UnitedStatesv. One

1988 PrevostLiberty Motor H&me, 952 F. Supp. 1180 (S.D. Tex. 1996) (motor-homepurchasedwith proceedsof bankruptcyfraud forfeited); United Statesv.Basler Turbo~67conversion DC-3 Aircraft, 906 F. Supp. 1332, 1340 (D. Ariz.1995)(aircraft purchasedwith drugmoney is forfeitable underSections981 and1956-57); United Statesv. 3 JadeLane,1995 WL 580072,No. 88-Cv-4683(ED.Pa. 1995) (real property purchasedin a transaction that violates § 1957 isforfeitableas propertyinvolvedin theoffense).

98. 148 Fad920(8thcir. 1998).99. Seefig. 9.

100. 18 U.S.C.§ 1957.

Figure9

U.S. v. Hawkey

The difference between Hawkey and Trost is that inTrost, the financial transaction was a simple one-waytransfer of money from one account to another, whereas inHawkey, there was a two-way transaction with moneybeing transferred from Hawkey to the motor home dealer,and the motor home being transferred to Hawkey. In theone-way transaction there was only one asset involved inthe offense, and hence only one thing to forfeit: the moneybeing transferred. But in Hawkey,there were two assetsinvolved in the offense and hence two things to forfeit: themoney being transferred as purchase money, and the motorhome that Hawkey received in return.

If a prosecutor were presenting this case to a court in amoney laundering case, she would say, ‘Your Honor, themoney laundering offense in this case is the purchase of amotor home. Thus, the question the court must answer indeciding what the government is entitled to forfeit is, Whatproperty is involved in the purchase of a motor home?”Forfeiture law not being rocket science, the answer issimple: two things are involved in the purchase of a motorhome—the purchase money and the motor home. Both

20041 FORFEITUREOF PROPERTI’ 625

Stolen Money$140,450

-— — - - Monay Laundering0 J0 tIe non Motorhome

Purchase

6262004] FORFEITUREOFPROPERTY 627

BUFFALOCRIMINALLAWREVIEW [Vol. 7:583

represent the subject matter of the financial transaction,and both are therefore “involved” in the money launderingoffense.

Now, can the government forfeit either one? Theanswer is yes. If the motor home has been trashed, and isno longer worth anything, the government can get a moneyjudgment for the full purchase price, because that was theamount of money involved in the money launderingoffense.1o1 But if the government would prefer to take themotor home, and not worry about the money judgment, itcan do that too.’°2

Suppose the motor home has appreciated in value, canthe government forfeit the property as it finds it? Or is itentitled only to the value that the property had when itwas involved in the money laundering offense? In Hawkey,the Eighth Circuit held that the government was entitledto the appreciated value, irrespective of whether theappreciation was due to wise investment, effort expendedby the defendant, or the infusion of untainted funds.108 In

101. 148 Fad at 925 (the purchaseprice reflects the amount ‘involved In” themoney laundering offense and is subject to forfeiture even if the defendant’sinvestmentturns out to have beenunwise). Othercasesin which the amountofmoney involved in a money laundering offense was forfeiteble as a moneyjudgmentincludethefollowing: UnitedStatesv. Puche,350 Fad 1137 (11th Cir.2003) moneyjudgmentfor the valueofthepropertyusedto facilitatethe moneylaundering offense); United Statesv. Baker, 227 Fad 955 (7th ~r. 2000) (aforthiture ordermayincludea moneyjudgmentfor the amountof moneyinvolvedin the moneylaunderingoffense;themoneyjudgment acts asa lien againstthedefendantpersonallyfor the duration of his prison term and beyond); UnitedStates v. voigt, 89 Fad 1050, 1054, 1058 (3d Cir. 1996) (the governmentisentitled to a personalmoneyjudgment equalto the amountof moneyinvolved inthemoneylaunderingoffense);UnitedStatesv. lacaboni,221 F. Supp.2d 104(D.Mass.2002) (court entersmoneyjudgment equal to sum of amountsinvolved inall moneylaunderingtransactionsmaking up theconspiracyto laundergamblingproceeds);United Statesv. Cleseland,1997 WL 537707,No. CRuyj.A 96-207,at*11 (ED. La. 1997) (thegover,mo~~~isentitled to a moneyjudgmentequal to theamountof moneythat defendantlaunderedin moneylaunderingcase,adjustedtoeliminatedoublecounting).

102. llawkey, 148 F.Sdat 928.103. Id. (motor home purchasedin violation of § 1957 is forfeitable in its

entirety as property traceableto the money launderingoffense, irrespectiveof

whether the appreciation is due to wise investment,effort expendedby thedefendant,or the infusion of untaintedfunds); seeUnited Statesv. Loe, 49 F.Supp. 2d 514 (E.D, Tex. 1999) (the govemmen~entitled to forfeit appreciated

value of real property purchasedwith launderedfunds); United Statesv. Ilill,2002 WL 31119692, No. 01-6322, 01-6353 (6th Cir, 2002) (Table) (followingflow/cay; stock that appreciatesin valuc is forfeitableas propertytraceableto t,heoriginally forfeitable shares);United Statesv. Tedder, 2003 wU 23204849 (WI).Wis. 2003) (earningson launderedhinds are ihrfeitable as property involved intheoffense);United Statesv. Young, 2001 WL 1644658,No. 5:96-CR-2(DF) ~2n.3(M.D. Ga. 2001) (defendant,whoseresidencewas forfeited upon hia conviction,cannotcomplain that in theyearbetweentheconviction and thetime theorderofforfeiture became final ho continuedto make repairsto the residence).

104. Hawkey, 148 Fad at 928 (governmentmay got a moneyjudgmentfor theamountinvolved in the conversionof SUA proceedsto consumergoods,or it mccvforfeit theconvertedpropertyitself, but it cannotforfeit both).

105. Seefig. 10.

other words, once the motor home is involved in the moneylaundering offense, the government gets the motor home,whatever its value turns out to be at the time the forfeiturejudgment is entered.

i. Digression: Double Recovery

We’ve said that the property involved in the offense—the “subject matter property”—includes both the purchasemoney and the thing being purchased. Both are the subjectmatter of the offense, and the government can forfeit eitherone. In Hawkey’s case, it could get a money judgment forthe purchase money, or it could forfeit the motor home.But if the purchase money is involved in the offense, andthe thing being purchased is also involved in the offense,could the government forfeit both?

Hawhey says no: forfeiting both the purchase moneyand the property purchased would be double counting.°1Fair enough: there can be situations where it might beunfair to make the same defendant pay twice. But supposein a two-way transaction both the buyer and the seller areconvicted of money laundering? For example, suppose JoeDoper gives drug proceeds to Arnold Goldfinger, andGoldfinger gives Doper gold bars in return. If both Doperand Goldfinger are convicted of money laundering,shouldn’t the government be able to forfeit the gold fromDoper and the cash from Goldfinger?°°5

I

628 BUFFALOCRIMINALLAWREVIEW [Vol. 7:58320041 FORFEITUREOF.PROPERTY 629

Gold Dealer Drug Dealer -

Figure 10

$700,000

Cash DrugProceeds

US. v. Heedrlckson

Why not? Both the cash and the gold were involved inthe offense—both were the “subject matter” of the offense—and because both parties were convicted, no one would bemade to pay twice. Goldfinger would lose his cash, andDoperwould lose his gold bars.

This issue, however, is unresolved in the case law. Thecounter-argument is that the government has already beenmade whole by forfeiting the money from one defendant,and should not be allowed to enjoy a double recovery.106But that view misapprehends the nature and purpose ofasset forfeiture. The purpose is not to make thegovernment whole, but to punish each of the defendants,and to make sure that all of the tainted property is takenout of circulation. If two defendants engage in a moneylaundering offense, and one were able to oppose theforfeiture on the ground that the government had alreadyrecovered the laundered money from the other, one party

106, See United Statesv, Covey,282 Fad 641 (8th Cir, 2000) (dissentingopinion) (where two co-defendanteconduct a two-way transaction,governmentmaynot recovertheamountexchangedtwice; majority did notreachthis issue).

would be left in. the position he was in before the offensewas committed, and would suffer no punishment at all,

In the case of the gold bars, it would simply make nosense for Joe Doper to say, “You’ve already taken themoney from Goldflnger; I should get to keep the gold.” Norshould Goldfinger, who knowingly placed his property atrisk by participating in a money laundering offense, bepermitted to say, “You’ve already taken the gold fromDoper, I should get to keep his drug money.” There areonly a few cases, however, that touch on this issue.’°7

ii. Forfeiture is not limited to net profits

Figure 10, which I used to illustrate the double-counting issue, comes from UnitedStatesu. IIendriekson1°~That case actually serves to illustrate a larger point:because all property constitutin.g the subject matter of amoney laundering oifbnse is subject to forfeiture, theforfeiture is not limited to the net profits realized from asale or exchange, but includes any property that wasinvolved in the offense.

In Hendrickson,the defendant gold dealer gave goldthat he had purchased with legitimate funds to a drugdealer in exchange for more than $700,000 in drugproceeds. The net gain to the defendant was only $1O,OOO~but when it came time to calculate the amount of moneysubject to forfeiture, the court found that the entire$700,000 was- involved in the offense, and Hendrickson hadto forfeit that amount)°°

107. SeeUnited Statesv. CheckNo. 25128 in the Amount of $58,654.11,122F.3d 1263 (9th Gir. 1997) (* 881(a)(6)case:thegovernmentmayfortbit thesamemoneymore than once if, throughthe launderingprocess,the amount subjecttoforfeiture hasmultiplied); United Statesv. Li, 973 F. Supp, 567 (h.P. Va. 1997,i(for sentencingpurposes, court may count the same money each time it istransferred,even if that resultsin doubleor triple counting; rejectingargument.that sentencingcalculation is limited to the amount deibndant infused into thescheme); United States v. Tedder, 2003 WL 23204849 (WI). Wis. 20031(describing Gooey as dicta and declining to l’ollow it, but holding that if adefendantlaundersthesame$11,000threetimes, it may heforfeited only once).

108. 22 F.3d 170 (7th Cir. 1994).109. 22 F.3dat 173, 175 (dealerwho sells gold for $742,555 in drug proceedsin

630 BUFFALOCRiMINALLAWREVIEW [Vol. 7:583

Again, the reason is that just as the forfeiture statuteis not limited to the proceeds being laundered, it is notlimited to the proceeds of the laundering offense itself If itwere, Hendrickson might plausibly have argued thatproceeds means net profit, and that therefore he was onlyrequired to forfeit the profit he made on the exchange, But§* 981(a)(I)(A) and 982(a)(1) say that all property, not allproceeds, involved in the offense is subject to forfeiture.When Hendrickson used his gold bars to commit a moneylaundering offense, he placed them and any property hereceived in exchange at risk of forfeiture. When he wascaught, he lost it all.

If the law were otherwise, of course, there would be noeconomic risk to the merchant who was willing to use hismerchandise to perpetrate a money laundering scheme.The worst that could happen was that he might lose theprofit he hoped to make. No matter what happened, hecould always count on recovering the value of the gold orjewels or automobiles that he sold to the criminal who wastrying to launder his dirty money. But crime has its risks,and one of those is that money launderers lose the propertythat they use to launder money, not just the profit theymight make on the deal. There is no doubt that Congressintended exactly that result.~°

C. CommingledProperty

In each of the examples I’ve used so far, all of themoney involved in at least one side of the transfer,purchase or exchange consisted of SUA proceeds. None ofthe money that Trost transferred to his second bankaccount, or that Hawkey used to buy the motor home, orthat Hendrickson received in exchange for his gold includedany untainted funds. Moreover, in all of these cases the

violation of~1957 is required to forfeit that sum, notjust the profit on the sale).110. “It is the intent of’ Congress that a person who conducts his financialtransactions in violation of the anti-money laundering statutes forfeits his rightto the property involved,..,” 284 Cong. Ree. S17365 (daily ed. Nov. 10, 1988)(statement of Sen. Biden).

2004] FORFEITUREOFPROPERlY 631

money laundering transaction constituted the elltirepayment for the item being purchased or sold. None wasonly a down payment -followed by the later infusion of cleanfunds.

But suppose the SUA proceeds were commingled withother funds when the transaction took place. Or supposethe defendant made later payments on the property withclean funds, Could we still forfeit the property involved inthe offense in its entirety? The answer is yes: if property is“involved” in a money laundering offense it is subject toforfeiture. That the offense was committed usingcommingled funds is irrelevant.

The money laundering statutes themselves contain norequirement that the offense be committed only withtainted funds. To the contrary, a great many cases holdthat a money laundering transaction can involvecommingled money. Section 1956 requires only that thefinancial transaction “involve” SUA proceeds. Thus, if theother elements of the offense are satisfied, a transactioninvolving as little as one dollar in tainted funds can be amoney laundering offense?1

111. SeeUnitedStatesv. Rodriguez,278 F.3d486 (5th Cir. 2002)(jury wasfreeto convict alien smuggler of money laundering despiteevidencethat he usedcommingled funds to conduct his financial transactions); United States v,McGauley,279 Fad 62(1st Cir. 2002)(transfer of $49,000,of which only $155 isfraud proceeds,is a money laundering offense; there is no de minimus rulerequiringproofthat a givenfractionof the funds beSUA proceeds);UnitedStni,esv. Braxtonbrown~Smith,278 F.3d 1348 (D.C. Cir. 2002)(sufficient fur governmentto show defendantwithdrew funds from commingledaccount;strict tracingwouldbe impossible given the fungible nature of money, and requiring such tracingwould lead te nonsensicalresults); United Statesv. Ahbell, 271 Fad 1286 (11thCir. 2001)(evidencethat defendanthadsomelegitimate income showctl.at best.that his money launderingtransactionsinvolved comniingled funds, which wassufficient for conviction); UnitedStatesv. Ward, 197 Fad 1076, 1083 (11th Fir,1999)(“there is no requirementthat a ‘substantialportion’ of thefunds hederivedfrom a ISUAJ”; “the govurnmentmustprove only that the taintedproceedswere.commingledwith other funds”); United Statesv. Stroh, 176 F.3d 439 (8th Fir,1999)(notwithstandingevidencethat wire transfersinvolved personalfunds froma legitimate source, conviction was properly based on testimony that suchtransfersalso includeddrugproceeds);UnitedStatesv. Wilkinson, 137 F.3d214,222 (4th Cir. 1995) (where money is drawn on a commingled account, thegovernmentis entitled to presumethat funds “up te the firIl amount originallyderivedfrom crime” were involved in the transaction);United States v. Tencer,

632 BUFFALOCRIMINALLAWREV,jg~[Vol. 7:583

For ~ 1957 cases, the rule is a littje different: theremust be at least $10,000 in tainted funds!22 But it is stilltrue that not all of the money needs to be ST.JA proceeds.

So, suppose Hawkey had commingled clean moneywith the fraud proceeds before he purchased the motorhome. Or suppose he made a down payment with dirtymoney and later paid off the balance with clean funds. Thetransaction would still have been a money launderingoffense under § 1957. And what property would have beeninvolved in that offense? The answer would be the same asbefore: the purchase money plus the motor home. Thepoint is this: if a money laundering offense can be

107F.3d1120, 1131 (5th Cit. 1997)(wheredefendantdeposited$451,000in fraudproceedsand$2.2 million in otherfundsinto accounts,subsequenttransfersfromthoseaccountsinvolved SUA proceeds);United States v. Habhab,132 F’.3d 410(8th Cit. 1997) (check written on account into which fraud proceeds weredepositedinvolved SUA proceeds);United States v. Cancelliere 69 F.3d 1116,1120 (11th Cir. 1995) (the govern~en~met burdenof showingcheckdrawn onAccount involved SUA proceedsby showing that $80,000 in proceedswasdepositedinto the accountand commingledwith other funds; strict tracing notrequired); United States v, Suba, 132 Fad 662, 674 n.23 (11th Cir. 1995)(following Cancelliere; transferof $1.7 million involvedSIJA proceedseventhoughdefendanthad obtainedonly $1.4 million in fraud proceeds);United States v.Rodriguez, 53 Fad 1439 (7th Cir, 1995) (purchase of house involved SUAproceedseven though only $1,000of $17,000paymentwasdrug money);UnitedStatesv, Garcia,37 F.36 1359, 1865 (9th Cir. 1994)(“it is sufficientto prove thatthe funds in question came from an account in which taintedproceedswerecommingledwith other funds”); United Statesv. English, 92 F.3d 909 (9th Cii,.1996) (following Garcia); UnitedStatesv. Marbella, 73 Fad 1508 (9th Cir. 1996)(onceSUA proceedsare commingled in an account,any withdrawal from thataccount involves proceeds._evenif the balance in the accountdrops to zerobetweenthe time the proceedsare depositedand the time of the withdrawafl;United Statesv. Rutgard, 116 Fad 1270 (9th Cir. 1997) (‘[ijf * 1956 requiredtracing of specific funds, it couldbe wholly frustratedby commingling”); UnitedStatesv. Bencs, 28 F.3d 555 (6th Cit. 1994) (money launderermay not escapeliability by commingling drug proceedswith other assets);United States v.Jackson, 935 F.2d 832, 840 47th Cir. 1991) (transactionsdrawn on accountcontainingcommingledfundsinvolve proceedsof SiLk); UnitedStatesv. Jackson,983 F.2d 757 (7th Cir. 1993) (jury instruction that “substantial portion” oflaundered funds had to be SUA proceeds was unnecessarily favorable todefendant;only someofcommingledfundsneedbeproceeds).

112. SeeUnited Statesv. Rutgard, 108 F.3d 1041 (9th Cir. 1997) (withdrawalof commingledmoneydoesnot meet$10,000thresholdif the remainingbalanceexceedsthe amountof thetaintedfunds; dirty moneyis presumedto be“last out”;§ 1956 case law, holding that the transaction need only “involve” criminalproceeds,isnotapplicableto § 1957).

113. 90 F. Supp. 2d 737 (ND. Tex. 2000),affd 250 Fad 738 (5th Fir. 200It,Seefig. ii.

114. 90 F. Supp.2d at 739-40.

20041 FORFEITUREOFPROPERTY 633

committed with commingled funds, then it follows that forforfeiture purposes the “property involved” in the offensecan be commingled funds. indeed, the ability to forfeitcommingled funds constituting the corpus of the moneylaundering transaction is what makes the subject mattertheory so powerful a law enforcement tool.

A good illustration of this comes from a civil forfeiturecase called United Statesv. 1700 DuncanvitleRoad.’t3 inthat case, when the defendant deposited $452,000 into abank account, 82% of the money was the proceeds of a foodstamp fraud offense. He then moved $133,000 from thiscommingled account into a custodial account held in thename of his minor child, where it was commingled withmore untainted money. Next the defendant used $144,000of these commingled funds to make the down payment onthe real property at Duncanvi]le Road. Finally, he paid thebalance of the purchase price of $300,000 with money froman unknown source!t4

634 BUFFALOCRIMINALLAWREVIEW fVoJ. 7:5832004! FORFEITUREOFPROPERTY

Food Stamp Fraud$452,000

824 ~raudProceeds

CUS~odW

Clean 1 em ‘?W~I eon 1957 OffenseMoney

U.S. v. 1700 Duncanvj/Je Rd.

Figure iiAt the end of the day it was clear that the defendant

had laundered food stamp fraud proceeds through a seriesof transactions and invested the money in a parcel of realproperty. But it was also clear that much less than half ofthe value of the property was traceable to SUA proceeds.”6

If this had been a “straight proceeds” case, the amountthe government would have been able to forfeit would havebeen the fraction of the real property that was traceable tothe fraud proceeds.”6 But the governrnen~charged thepurchase of the real property as the money launderingoffense, and for forfeiture purposes asked the district courta simple question: What property was involved in thepurchase of 1700 Duncanyille Road? The answer, of course,was “1700 Duncanville Road.”

In other words, the court held that the real propertywas forfeitable in. its entirety because the purchase itselfwas a violation of § 1957: “Since the purchase of the subjectproperties was itself a money laundering transaction undersection 1957,” the court said, “it is immaterial thatclaimants may have also used untainted funds for itspurchase.”t3’ The defendant argued strenuously that theforfeiture should be limited to the portion of the real~roperty that was traceable to th.e food stamp fraudoffense—as it would be if the forfeiture were based on a“proceeds” theory. But on appeal, the Fifth Circuit had noproblem sustaining the forfeiture of the entire parceL”5

Again, the notion that the court can order theforfeiture of the property involved in the offense in itsentirety is what makes the “subject matter” theory soappealing to prosecutors. If forfeiture in money launderingcases were limited to the proceeds involved in the financialtransaction, the government would only be able to forfeitthe portion of the property that was traceable to the SIJAproceeds, But if the money laundering offense is apurchase, sale, or exchange, the property involved in thattransaction is the subject matter of the offense, and can beforfeited without regard to whether any clean money wascommingled with the dirty money involved in thetransaction.

So if Joe Doper buys a car with $10,000 in dirty moneyand $10,000 from his grandmother, and the governmentcharges the purchase of the car as the money launderingoffense, the car, as the subject matter of the transaction, is“property involved” in the offense and can be forfeited in itsentirety.”°

115. The dsstnctcourt calculatedthat, at most, 75.8%of the downpayme,,!on1700 DuncanvilleRoad was traceableto the original fraud proceeds. Id. Thefractionof theentire propertythewasso traceablewasthereforemuchless,giventheappreciationon the propertyandthe fact that thedown paymentrepresentedlessthanhalfof thepurchaseprice.

116. Seesupranote 4.

117. 90 F. Supp.2d at741.118. 250 F.3d 738 (affirming judgment of the district court without written

opinion).119, SeealsoUnited Statesv. All Fundson Depositat DimeSavingsBank. 253

F. Supp. 2d 56 (E.D.N.Y. 2003) (if defendantusescommingledfundsto acquirethe equity in his house,and then usesthat equity to securea mortgage, themortgageproceedswould be forfeitable in their entirety); United Statesv. One1987 MercedesBenz 3005, 820 F. Supp.248, 252 (ED. va. 1993) (where§ 1956and§ 1957 financial transactionis car payment,car is “involved in” the money

635

V~foe5300,000 + Appreclatio,l

636 BUFFALOCRIMINAL LAW REVIEW [Vol. 7:583

i. Using the “Subject Matter” Theory to

Moot Out Tracing IssuesProsecutors like to use this aspect of the subject

matter theory to eliminate tracing issues that otherwisepop up in forfeiture cases. If the government is seekingforfeiture of property on a “proceeds” theory, and theoriginal proceeds have moved from asset to asset in a seriesof transactions, the government is required to trace themoney through each transaction, so that it can, in the end,establish that the last asset represents the proceeds of theunderlying offense.’2° But if the government can use thesubject matter theory in a money laundering case, all ofthat is unnecessary. The best example of this is whathappened in UnitedStatesv. Voigt.’2’

Figure12

In Voigt, the defendant received $1.6 million in fraudproceeds and laundered it by transferring the money fromAccount A to Account B where it was commingled withother funds. Then the defendant withdrew the money fromAccount B and used it to purchase jewelry. Th.egovernment charged the transfer from Account A toAccount B as the money ~~~nderingoffense. When Voigtwas convicted, the question before the court was, whattheory would support the forfeiture of the jewelry?

First, the court held that the government was entitledto a money judgment for the $1.6 million, because that wasthe amount of money involved in the money launderingoffense;”2 but a money judgment doesn’t let thegovernment seize anything: it is simply ~i personaljudgment against the defendant that the government musttry to enforce by levying against the defendant’s assets asany other creditor might do, or by forfeiting substituteassets.

122. Id. at 1084.123. Id. at 1088.

20041 FORFEITUREOFPROPERTY 637

Stolen Money...

$1.6 MUflon

Money — — ~ iewein’Launde~°ll ~1 6M Glean

U.S. V. Vo!gt

launderingoffense andis forfeitable in its entirety evenif legitimate fundsareusedto makeother payments);United Statesv. Four contiguousParcels, 191F.3d461, 1999 WL 701914,Nos. 98-F292,98-F317(6th Cir. 1999)(Table)(wheredefendantinvestedboth cleanandtaintedfundsin purchaseof realproperty,andusedthe purchaseas adevice for launderingthe dirty money,the real propertywasforfeitable in its entirety;no Eighth Amendmentviolation); but seeUnitedStatesv. Tedder,2003 WL 23204849(~.D.Wis. 2003) (commingledfunds areforfeitableunderthefacilitationtheoryif theyconcealordisguise,but notif theyaremerelypresentwhen the transactiontakesplace);United Statesv. Pergler,1998 WL 887113, No. 98 CR 469 (ND. Ill, 1998) (car purchasedwith SUAproceedsis forfeitable only to theextent the defendantinvestedtaintedfunds;rejectingMercedes Benz and Hawkey, and treating the caseas one involvingproperty“traceableto” theoffense,insteadof property“involved in” theoffense).

120. SeeUnitedStatesv. 170westfieldDrive, 34 F. Supp.2d 107 (DiLl. 1999)(applying “last out” and “first out” principles of accountingto trace moneythroughbank accountscontainingcommingledfunds; the governmentmayelectwhichruleto applydependingon thecircumstances).

121. 89 Fad 1050 (3dCir. 1996). Seefig. 12.

638 BUFFALOCRIMINALLAWREVJRWfVol. 7:583

If it wanted to forfeit the jewelry under the substituteassets theory, it could do so, the court said;”~but thegovernmen~’5goal was to forfeit the jewelry not as asubstitute asset, but as property traceable to the moneylaundering offense.126 In short, the government argued thatbecause the funds used to buy the jewelry came from theaccount that was involved in the money laundering offensewhen the criminal proceeds were moved from Account A toAccount B, the jewelry was forfeitable as “traceableproperty.” But the Third Circuit held that because of thecommingling of clean money with the laundered money inAccount B, the jewelry was not traceable to the moneylaundering offense. There was no way the governmentcould establish, the court said, that the defendant had usedthe laundered money and not the commingled clean fundsto make the purchase.126

There are a number of reasons to disagree with thepanel’s conclusion on that point; but the nuances of tracingmoney through a commingled bank account is a topic untoitself that we need not address here. The point is that thegovernment could have avoided the tracing issue alltogether if it had charged the money laundering violationanother way and relied on the subject matter theory offorfeiture.

125. There are a numberof reasonswhy the governmentprefersto forfeitproperty directly rather than as substituteassets. Most important, in mostcircuits,directlyforfeitable propertyis subjectto pre-trialrestraintbut substituteassetsarenot. Moreover the point at which thegovernme~~’0interest in theforfeited property vestsvis-A.vis third partiesmayoccurearlierwith respecttodirectly forfeitablepropertythenit doeswith respectto substituteassets.Takentogether,theseproblemsmakeit mucheasierfor the governme~~to preventadefendantfrom transfeninghis property to a third party if the property isdirectly traceableto theoffensethenif it is forfeitableonly assubstituteasset.

126. 89 Padat 1087, Seealso UnitedStatesv .Loe, 49 F. Supp.2d 514 (ED.Tex. 1999) (where 52.6% of the money used to buy real property was SUAproceeds,and the rest was clean money, the governme~~was entitled only toforfeit 52.6% of the property, becauseinsteadof chargingthe purchaseof theproperty as the money launderingoffense,it chargedan earlier transactionasmoneylaunderingandsought forfeiture of the houseas property “traceableto”thatoffense),

FORFEiTUREOF PROPERTY

How else could this have been charged to make thejewelry directly subject to forfeiture? Instead of chargingthe movement of the money from Account A to Account Bas the money laundering offense, the government couldhave alleged that the purchase of the jewelry itself was afinancial transaction conducted in violation of either § 1956or § 1957. If that had been the case, then the jewelry, justlike Hawkey’s motor home, and the real property located at.1700 Duncanvilie Road, would have been for:feitable as thesubject matter of the money laundering offense, even if themoney used to buy it included commingled funds. That’sbecause property obtained or exchanged in a moneylaundering transaction is subject to forfeiture in itsentirety as the subject matter of the offense even if thefunds being exchanged for that property includedcommingled property.

ii.. Application of the Eighth Amendment

Does the Eighth Amendment limit the scope of whatthe government can forfeit under the “subject matter”theory? It surely does. If some of the money used tocommit the money laundering offense—like the purchase ofthe real property in Duncanville Road—is dirty money andsome is clean money, a court could find that forfeiture of’the full amount, while authorized by the statute, would be“grossly disproportional” to the gravity of the offense. Or itmight not. The Fifth Circuit had no problem withupholding the forfeiture in Duncanville Road against anEighth Amendment challenge,’2’ nor have other courts hadany problem ordering forfeiture of other4 propertyrepresenting the subject matter of the offense.”5 Indeed,

127. United Statesv. 1700 DuncanvilleRoad, 90 F. Supp. 2d, 737, 742 (N.D,Tea.2000)(forfeiture of $300,000realpropertynot grossly disproportional,eveo~though lessthanhalfthevaluewastraceableto fraudproceeds,becausethetotalloseto thevictims exceeded$369,000).

128. SeeUnited Statesv. Moyer, 313 Fad 1082 (stl, Cir. 2002)(forfeiture ofamountfraudulentlytokenfrom pensionplanandthenlaundereds.’asnot grosslydisproportionalto the offense, even though defendantwas lawfully entitled tomorethanhalf of the moneyin the plan); UnitedStatesv, Harley, 63 F.3d 1. 23

20041 GRE)

640 BUFFALOCRIMINALLAWREVIEW [Vol. 7:5832004] FORFEITUREOF PROPERTY 641

courts have regularly upheld forfeitures of commingledmoney under the even more aggressive facilitation theory(Category Three) that we will talk about in a moment. Butthis is clearly an area in which the government’s authorityto carry out a forfeiture that is authorized by statute islimited by the Excessive Fines Clause of the EighthAmendment. For example, if the defendant uses $100 indirty money and a $1 million in clean money to buy amarina in South Florida, it is unlikely that the governmentwould be able to forfeit the entire marina as the subjectmatter of the money laundering offense. It is likely theanalysis would turn, in some fashion, on the ratio of theclean money to the dirty money. But so fir there have beenno cases striking a money laundering forfeiture on thesegrounds, and therefore no one knows where the dividingline might be.

On the other hand, if the forfeiture is limited to theproperty comparable in value to the criminal proceeds thatwere laundered, there will be no Eighth Amendmentproblem. If the forfeiture of the proceeds themselves wouldnot be grossly disproportional to the offense, the forfeitureof property of similar value that was exchanged for theproceeds in the money laundering transaction will not begrossly disproportional either.”°

(1st Cir. 1995) (forfeiture of entire amountlaundered,eventhough defendantretainedonly a fraction as his commission,is not excessivebecauseit is “quiterational basedon a proportionalityanalysis”);United Statesv. Four ContiguousParcels,191 Fad 461, 1999 WI. 701914,Nos. 95-F292,98-F317(6th Dir. 1999)(Table) (where defendantinvestsboth cleanandtaintedfundsin real propertyanddoesso to launderthe dirty funds,forfeitureof the entireproperty,includingthe portion traceable to the clean money, does not violate the EighthAmendment);United Statesv. Riedl, 164 F, Supp.2d 1196 (D. Raw. 2001)afi’d2003 WL 22805176(9th Dir. 2003);(forfeitureof realpropertyworth$1.2 million,whichwastwelvetimes the maximumfine underthe sentencingguidelines,notgrosslydisproportionalwheredefendantintendedto launder$2.6 million in drugproceeds); United Statesv. Tedder, 2003 WI, 23204849 (W.D. Wis. 2003)“permitting forfeiture of the amount of money defendant handled is anappropriateresponseto his criminal conductandnot an excessivefine”); UnitedStatesv. One1997 E35Ford van,50 F. Supp.2d 789 (ND. ill. 1999)(moneysentinto the UnitedStatesto promoteterrorismin violation of § 1956(a)(2)(A)is aninstrumentalityof thecrime;forfeiturecannotbe excessive).

129. SeeUnitedStatesv.Loe, 248 F,3d449(5thDir. 2001)(forfeitureof portion

3. Facilitating property

So far, we’ve talked about two theories of forfeiture inmoney laundering cases: 1) the forfeiture of the SUAproceeds; and 2) the forfeiture of “subject matter property,”or property other than the SUA proceeds that was part ofthe financial transaction constituting the moneylaundering offense. The third theory is much broader,permitting the forfeiture of any property used to “facilitate”the money laundering offense.

“Facilitating property” includes property that isexternal to the money laundering offense—i.e., propertythat is not part of the financial transaction itself—but isnevertheless “involved” in the transaction in the sense thatit makes the offense easier to commit or harder to detect.5

Clean money that is used to conceal or disguise dirtymoney, and businesses used as fronts for money launderingoperations are examples of external property that facilitatethe commission of the money laundering offense without.necessarily being part of the illegal financial transaction.

“Subject matter” property is, by definition, propertythat is part and parcel of the financial transactionconstituting the money laundering offense. The proceedsbeing laundered, the money that is commingled with theseproceeds when they are shifted from one account to anotheror used to make an investment, the property obtained in apurchase, sale, or exchange—all of those assets are part ofthe financial transaction itself; and thu.s are “involved” in

of property traceableto launderedSUA proceedsis not disproportionalat. all,nevermind “grosslydisproportional”).

130. Facilitating property is generally defined in forfeiture cases as anypropertythat makesthe underlyingcrimeeasierto commit or harderto detect.Thatsamedefinition applieswhenthe facilitationtheoryis appliedto forfeituresin a moneylaunderingcase.SeeUnited Statesv, Wyly, 193 F’.3d 259, 302 (5thDir. 1999) (forfeiture underthe facilitation theory is not limited to commingledmoney;facilitatingpropertyis anythingthatmakesthe moneylaunderingofihnselessdifficult or moreor lessfreefrom obstructionorhindrance);United Statesv.Hawkey, 148 F.3d920 (8th Dir. 1998) (same);United Statesv. Tencer, 107 F.3d1120, 1134 (5th Dir. 1997) (“ff)acilitation occurs when the property makes: theprohibited conduct ‘less difficult or more or less free from obstruction orhindrance.”).

642 BUFFALOCRiMINALLAWREVIEW [Vol. 7:583

the money laundering offense in the sense of beinginextricably intertwined with the illegal transaction in atangible, physical Way. One cannot, for example, purchasejewelry without the jewelry being involved in thetransaction. Thus, “subject matter” property is forfeitableas “property involved” in the offense whether it makes theoffense easier to commit or harder to detect or not.

“Subject matter” property can, of course, facilitate amoney laundering offense. Property that is not only part ofthe financial transaction but also makes the offi?nse easierto commit or harder to detect can be forfeited either as the“corpus” of the transaction or as facilitating property. Butfacilitating property is not limited to things that arephysically pan of the illegal transaction. It can includeanything external to the transaction that the offender usesto commit the crime.

a. TheSubstantialConnectionRequirement

Of course, there are limits on what can be forfeited asfacilitating property. Although the theory permits theforfeiture of property that is external to the moneylaundering transaction, there nevertheless must be a“substantial connection” between the property and themoney laundering offense.’3’ in UnitedStatesv. One 1989Jaguar XJG,”2 a would-be money launderer drove hisJaguar to the Chicago airport where he planned toperpetrate a money laundering offense through misuse ofan automatic teller machine. When he attempted to leavethe airport parking lot, the government seized the car andbrought a forfeiture action against it on the ground that ithad been used to facilitate the money laundering offense.But the district court rejected that theory, holding that the

181. See18 USC. § 983(c)(3) (2003): “if theGovernment’stheo,yof forfeitureis that thepropertywasusedto commitor facilitatethecommissionof acriminaloffense,or wasinvolved in thecommissionofa criminal offense,the Governmentshall establishthat therewasasubstantialconnectionbetweenthepropertyandtheoffense,”

132. 1993WL 157630,No. 92 c 1491 (N.D. Ill, 1993),

FORFEITUREOFPROPERTY 643

use of the car was too incidental to the money launderingtransaction to satisfy the “substantial connection”requirement.

To satisfy the substantial connection requirement, theconnection between the property and the offense must bemore than merely incidental or fortuitous)’3 Thegovernment has to show that the property aided in thecommission of the money laundering offense in somesubstantial way. A car that simply serves as the means oftransportation to the situs of the money launderingtransaction generally will not qualify, nor will theresidence where the laundered cash happens to have beendropped off on a single occasion.’ But a car that is used totransport laundered cash in large quantities from one placeto another, or a residence that is used routinely as a stashhouse, would qualify as facilitating property.

The notion of forfeiting facilitating property in amoney laundering case comes, of course, from drug caseslike United Statesv. Rivera,t3’ where livestock on a ranchused as a cover for a drug operation was forfeited because itfacilitated the drug offense by making the ranch appear tobe something that it was not. In that case, the defendantargued that his livestock was not part of the drugoperation, but the court held that by providing thedefendant’s operation with an aura of legitimacy—makingthe operation appear to be a working ranch when it wasreally the base for a heroin trafficking business—thelivestock had made the drug offense easier to commit andharder to detect.

20041

133. SeeUnited Statesv. SwankCorp., 797 F. Supp.497, 500 lED. va. 1992(“facilitation” reqoires“substantialconnection”betweencriminalact andforfeitedproperty);United Statesv. Certain Accounts, 795 F. Supp. 391., 395 (S.D. Fla,1992)(same);United Statesv. All of theInventoriesof theBus. lthown asKhalili:’Bros. Jewelry,806 F. Supp.648, 650 (S.D. Micb. 1992) (same);United Statesv,lacaboni,221F. Supp.2d 104 (D. Mass2002)(housethatwasmerelyplacewhereco~defendantsdroppedoff cashwas only incidentally connectedto the moneylaunderingoffense;failure to establisha substantialconnectionbarsforfeiturehbut seeUnitedStatesv. 613WarwickRd., 1.995WL 214451,No. 95.339(S.D. Pa.1995) (denying notion to dismiss § 981 forfeiture of building wheredefendantsmetto planto cashchecksin violation of~1957).

134. 884F.2d544 (11thDir. 1989).

644 BUFFALOCRIMINAL LAWREVIEW [Vol. 7:583 20041 FORFEITUREOFPROPERTY 645

The same is true in money laundering cases. Adefendant may argue that property that is external to theillegal financial transaction was not part of the moneylaundering offense, but if the property made the offenseeasier to commit or harder to detect—by providing a coverfor the illegal activity, or hiding the illegal funds bycommingling them with other legitimate property—it maybe forfeited as property “involved” in the money launderingoffense.

b. PropertyUsedto Concealor Disguise

The best examples of this theory come from caseswhere the government established that the defendantcommitted concealment money laundering, i.e., a violationof § 1956(a)(1)(B)(i), and used legitimate property of somekind to help him conceal or disguise his dirty money. Mostoften, the facilitating property has been clean moneycommingled with dirty money in a bank account.

In UnitedStatesv. Tencer,’3’ a healthcareprovider inLouisiana distributed fraudulently obtained proceeds tonumerous bank accounts in other parts of the countrywhere they were commingled with other money from othersources. All together, the defendant mixed approximatelyhalf a million dollars in dirty money with another half amillion dollars in clean money in these accounts, beforeconsolidating all of the money in a single bank account inLas Vegas.”8 When he attempted to liquidate the LasVegas account by converting the entire million dollars tocash, the government seized the money and sought toforfeit all of it as part of the criminal money launderingcase.”7

Figure 13

The defendant argued that the clean money was notpart of the money laundering transaction, but the FifthCircuit applied the facilitation theory and held that theclean money was subject to forfeiture because it had aidedthe defendant in concealing and disguising the nature,source, location, ownership, and control of the proceeds ofhis health care fraud offense.”8 Quoting from a districtcourt opinion from the Southern District of New York, thepanel said the following:

IL]imiting the forfeiture of funds under these circuqtstancesto the proceedsof the initial fraudulent activity wouldeffectively undermine the purpose of the forfeiture statute.Criminal activity such as money laundering largely dependsupon the use of legitimate monies to advance or facilitatethe scheme. It is precisely the commingling of tainted funds

138. Id. at 1135 (entire bank accountbalance is forf’eitable even though lessthanhalf the balancewascriminal proceedsif the purposeof the depositwas I.e

concealor disguiseproceedsamonglegitimatefunds; distinguishing caseswherecomminglingof SUA proceedswith untaintedfundswasmerelyfortuitous),

Fraud Proceeds

CommingledAccount

P I~LI1~~Pi

RegionalAccounts

$1,000,000

CommingledAccount

~jntilgjJi--3:

Cash

u,S, V. Tencer

135. 107F.3d 1120(5thDir. 1997).136. Seefig. 13.137. 107F.3dat 1129.

646 BUFFALOCRIMINALLAWREVIEW [Vol. 7:583 2004] FORFEITUREOFPROPERTY 647

with legitimate money that facilitates the laundering andenables it to continue.”9

139. Id., quotingUnitedStatesv. ContentsofAccount Numbers208-06070and208-060684-2,847 F. Supp.329, 334-35(S.D,N.Y. 1994).

140. 754 F. Supp.1467, 1475-76(D. Haw, 1991).141. SeeUnited Statesv. Bornfield, 145 F.3d 1123 (10thDir. 1998)(forfeiture

of legitimateandillegitimate fundscommingledin an accountis properaslong asthegovernmentdemonstratesthat thedefendantpooledthe funds to facilitate—i.e., disguise—the nature and sourceof his scheme);id. (if money launderingoffense consists of writing check on bank account, money remaining in theaccountis not the“corpus,” but maybe forfeitableasfacilitating property);UnitedStatesv. Hawkey, 148 F.3d920, 928 niB (8th Dir. 1998) (dicta) (citingBornfieldwith approval,and noting that in someinstancesit maybe appropriateto ordertheforfeiture of an accountcontainingcommingledtaintedanduntaintedfunds);UnitedStatesv. Trost,152 Fad 715 (7th Dir. 1998) (dicta)(legitimate fundsmaybe forfeited if usedto disguiseillegitimatefunds);UnitedStatesv. lacaboni, 221F. Supp. 2d 104 (D. Mass. 2002) (commingling clean money with gamblingproceedsto concealnatureof transactionrenderedentire sumforfeitable);UnitedStatesv. Certain Fundson Deposit in Account No. 01-0-71417,769 F. Supp.50,84-85 (E.D.N.Y. 1991) (same);United States v. Certain Accounts, 795 F. Supp.391, 397 (S.D. Fla. 1992);United Statesv. Contentsof Account Numbers208-06070,847 F. Supp.329, 334-35(S.D.N.Y. 1994)(legitimatefundsusedto concealor disguise laundering forfeited; cases involving structuring offensesdistinguished).

142. 350 F.3d 1137 (11thDir. 2003).

143. Othercasesin which businessassetswere forfeited under the facilitationtheory include the following: United Statesv. All of the Inventoriesof the n,is.Known as Khalife Bros. Jewelry, 806 F. Supp. 648, 650 (S.D. Mich. 19921(following All Monies, inventmy of jewelry businessfhrfeitable as facilitatingproperty);United Statesv. Tencer, 1993 WL 310527, No. 92-570(ED. La. I,993t(car used to facilitate laundering offense may be forfeited undeir § 981 if theconnectionto the offensewas substantial and not “merely fortuitous”), affd on

othergrounds,107 Fad 1120 (5th Dir. 1997);Hawkey, 148 F.3d at 928 (dicta’ (ifdefendant had used a personal computer to facilitate the illegal monetarytransaction in violation of § 1957, the computer would have been subject. toforfeiture as facilitating property); United States v. Sonny Cook Motors, 819 F’.Supp. 1015, 1018 (ND. Ala. 1993) (entire parcel of real property on which cardealershipis locatedis “involved in” effort to laundermoneythroughthe businessin “sting” case);United Statesv. 1501 West Boulevard,814 F. Supp. 468, 479~~S0(w.D.N.C. 1993) (wheredrugmoneyis hiddenby usingit to payfor construcl,ionof a valuable building on land, the land is involved in and facilitates thelaunderingoffense;thereforethe entire parcelis forfeitable, not just the portiontraceableto thedrugmoney).

Similarly, in United Statesv. All Monies,”° a districtcourt held that the untainted money in a Peruvian moneyexchanger’s bank account was forfeitable under thefacilitation theory because it provided “cover” for the use ofthat account to launder the proceeds of cocaine trafficking.A number of other cases say the same thing.’4’

The facilitation theory has also been applied to “sting”cases. In United Statesv. Puche,’42 DEA ran a stingoperation in which undercover agents posed as drugdealers in need of money laundering services in SouthFlorida. Over the course of several weeks, the agentsbrought approximately $700,000 in cash to the defendantswho ran a money transmitting business, and asked them towire the money to foreign bank accounts. The defendantsaccepted the currency, deposited it into bank accounts thatcontained other funds from their business, and wired theagents’ money to the accounts that they designated.

When the defendants were convicted of conspiring toviolate the money laundering sting statute, 18 U.S,C,§ 1956(a)(3), they were ordered to pay a money judgmentequal to the amount of money involved in the moneylaundering offense. The court calculated. that amount toinclude the $22,375 in commissions paid to the defendantsfor their service, and over $1 million in other funds thatwere in the defendants’ bank accounts when the stingmoney was deposited, and which served to facilitate thelaundering of the supposedly illicit funds.

Quoting from the Fifth Circuit’s decision Tencer, thecourt said, “Criminal activity such as money launderinglargely depends upon the use of legitimate monies toadvance or facilitate the scheme. It is precisely thecommingling of tainted funds with legitimate money thatfacilitates the laundering and enables it to continue.” Inthis case the jury was entitled to find that the pooling ofthe funds facilitated the laundering of the supposed]yillegal funds by “acting as a cover” and hence reducingsuspicion regarding the source of the tainted funds. I-Ience,the district court was correct to include the value of themoney that was in the defendants’ bank account at th.etime the money laundering offense occurred in thecalculation of the money judgment.’4’

I

648 BUFFALO CRIMINALLAWREVIEW [Vol. 7:583

Indeed, the facilitation theory has been used to forfeitentire businesses that provided the cover of legitimacy for amoney laundering operation by allowing the defendant torun criminal proceeds through the business’s operatingaccount, or by using the criminal proceeds to add to thebusiness’s inventory. For example, in United States v.Baker,’44 the Seventh Circuit upheld the forfeiture of a sex-oriented business called Fantasyland on the ground thatthe entire business, including its legitimate operations, wasused to launder the proceeds of the prostitution and otherillegal activities taking place on the premises. Otherbusiness forfeitures in money laundering cases haveinvolved car dealerships, a trucking business, and otherlegitimate retail and wholesale operations that were usedas a cover for the money laundering offenses.’4’

Another recent example of the application of thefacilitation theory is the First Circuit’s decision in UnitedStatesv. McGauley.’4’ McGauleywas a kleptomaniac whostole tens of thousands of dollars worth of women’s clothesand returned them to department stores for refunds. Overa period of time, she deposited more than $55,000 in suchrefunds into several bank accounts held in her own name.Then, on the day that police officers searched her home(and found stockpiles of additional stolen clothing),McGauley closed all of her bank accounts and transferred

FORFEITUREOFPROPERTY 649

the balances, which totaled more than $243,000, to newaccounts she held jointly with her parents.’47 She wasconvicted of mail fraud and money laundering and orderedto forfeit $243,000, but appealed, arguing inter alia thatthe forfeiture order should have been limited to the amountof actual proceeds.

Personal 000 oCr I (91 rar

Accounts r&urs fun rrIIInri

494~ \ 40

Accounts ~ uS uS It~I~II~!~.$243,000Total

Figure i4

The First Circuit affirmed the forfeiture. Fi.rst, it heldthat each of the transfers from an individual account to ajoint account was a money laundering offense, even thoughthe transfers included commingled money and the portionof the transferred finds traceable to the fraud wassometimes minuscule. For example, one transfer involvedthe movement of nearly $99,000 in commingled funds, ofwhich only $155 was traceable to a fraudulently-obtainedrefund check.’4’ Nevertheless, because there is no deminimus rule that requires the government to prove that acertain portion of commingled funds was derived from a

2004]

United States v. McGau/ey

Slolen othes

144. 227 Fad 955 (7th Dir. 2000).145. See United Statesv. SouthSide Finance, Inc., 755 F. Supp.791, 797-98

(N.D. Ill, 1991) (bank accountsinto which launderedmoneyis deposited,and abusinessthroughwhich suchmoneymoved,forfeitable under § 981 as property“involved” in the moneylaunderingoffense);UnitedStatesv. All Assetsof G.P.S.Automotive Corp., 66 Fad 483, 487 (2d Dir. 1995) (businessused to sell stolenauto parts and launder proceedsforfeited under § 981); Swank Corp., 797 F.Supp. at 502 (proceedsof mail fraud scheme“cleared” throughcorporatebankaccounts; if there is substantial connection betweenbusinessand launderingactivity, entirebusinessand all of its assetsareforfeited regardlessof amountofmoneylaundered);UnitedStatesv. Any andAll Assetsof ShaneCo., 816 F. Supp.389, 397 (M.D.N.C. 1991) (drug proceedslaunderedthrough trucking business);United Statesv, 155 Bemis Rd., 760 F. Supp. 245, 251 (D.N.H. 1991) (businessforfeitable under § 981 because corporate checks were used to make drugtrafficker’s purchaseand improvementof realproperty with drug moneyappearto belegitimatebusinessactivil~r).

146. 279 Fad 62(1stDir. 2002).147. Seefig. 1.4.148. 279 Fadat 70.

650 BUFFALOCRIMINAL LAWREVIEW [Vol. 7:583 2004] FORFEITUREOFPROPERTY 651

“specified unlawful activity,” that transfer, and all of theother transfers of commingled finds, constituted violationsof § 1956(a)(1)ffl)(i).’~°

Second, the court held that forfeitures in moneylaundering cases are not limited to the proceeds of the SUAbeing laundered, and that the “commingling of taintedfunds. . . with legitimate funds is enough to expose thelegitimate funds to forfeiture, if the commingling was donefor the purpose of concealing the nature or source of thetainted funds (that is, if the commingling was done tofacilitate money laundering in violation of 18 U.S.C.§ l956(a)(1)(B)(i))!’lso In other words, the court upheld theforfeiture of the commingled funds under a facilitationtheory because the clean money was used to conceal ox~disguise the fraud proceeds.

The court did not have to go that far, of course. Thefacilitation theory is the broader concept that allows theforfeiture not only of commingled money but also of entirebusinesses and large quantities of personal property thatwere external to the offense but were used to make themoney laundering offense easier to commit or harder todetect. Because each transfer of the commingled funds wasitself a money laundering offense, the transferred funds—including both the clean and the dirty funds—were thesubject matter of the transfer, and such funds wereobviously “involved in” the money laundering offense.Thus, the court could have affirmed the forfeiture of thecommingled property without requiring (and finding) proofthat the clean money was used to conceal or disguise thedirty money.

c. Facilitating Property Outsideof “Conceal andDisguise”Cases

What McGauley,Tencerand most of the other casesapplying the facilitation theory to money laundering

149, Id. at 71.150. Id. at 76.

forfeitures have in common is that, in each case, theunderlying offense was “concealment money laundering.”Thus, the clean property could be forfeited based on thenotion that it was used by the defendant to conceal ordisguise the dirty property. Would the facilitation theorypermit the forfeiture of untainted property if the moneylaundering offense consisted of “promotion moneylaundering,” or a § 1957 violation, or a structuringviolation? Possibly, but it’s much more difficult in suchcases for the government to demonstrate the requisitenexus between the property and the offense.

Structuring cases present., the most difficult hurdle.Several courts have held that clean money that is alreadyin, or is later added to, the account into which structureddeposits are made is “present at the scene of the crime,” U totdoes not make the structuring offense any easier to commitor any harder to detect. Thus, clean money in a structuringcase generally is not “involved in” the offense and cannot heforfeited.”

The point to remember is that it’s not a bank accountthat the government is trying to forfeit, but the money Inthe account.” That a given account was used to commit astructuring offense does not, by itself, mean that the fundsin the account were used to facilitate the money launderingviolation. The focus must be on the connection between themoney in the account and the offense being committed.

The same problem exists in promotion. moneylaundering cases charged under § 1956(a)(1)(A) and incases charged under § 1957. To be sure, money that iscommingled with the dirty money when the financial

151.. SeeUnitedStatesv. All Fundson Depositin GreatEasternBankAccountNo. 11008117,804 F. Supp. 444, 447 (E.D.N.Y. 1992) (legitimate funds in l,aokaccountdo not facilitate structuring; account itself is not subject to fbrfi’iture;casesinvolving facilitation of § 1956 or 1957 offenses distinguished);MarineMidland Bank,NA. v. UnitedStates,1993 WL 158542,Nes. 93 Civ. 0307 l(l’l’.93 Civ. 0357 (111°F), at. ‘7-8 (S.D.N.Y. 1993)(untaintedfundsin interhankaccountusedto “clear” structuredmoneyordersnot forfeitable under fbcilitation theory~,afl’d enethergrounds,11 F.2d 1119 (2d Cir. 1993).

152. SeeUnited Statesv. $448,342.85, 969 F.2d 474, 477 (7th Cir. 1992 (anaccountis just anaddressor routingdevice,not a ressubjectto Ibrlhiture).

2004] FORFEITUREOFPROPERTY 653652 BUFFALOCRIMINAL LAWREVIEW [Vol. 7:583

transaction takes place can be forfeited under the subjectmatter theory that we discussed earlier (Category Two).But it is not obvious how clean money that just happens tobe present in an account can be said to be involved in anoffense that has no conceal or disguise element, but insteadinvolves only the deposit, withdrawal, or expenditure ofdirty money. As one court has said, the facilitation theorymay not be limited to “conceal or disguise” cases under§ 1956, but the clean money does have to be involved in themoney laundering offense in some way.“

ci. Applicationof theEighthAniendment

Obviously, when we talk about forfeiting facilitatingproperty, there are going to be Eighth Amendmentconsiderations; property that makes an offense easier tocommit may conceivably be so valuable that its forfeiture inits entirety would be grossly disproportional the gravity ofthe money laundering offense. But so far, the courts havehad little difficulty in upholding the forfeiture offacilitating property in money laundering cases againstchallenges based on the Excessive Fines Clause.

For example, in United Statesv. Wyly,15” which wediscuss in detail in a moment, the Fifth Circuit held thatthe forfeiture of a $4 million business used to facilitate amoney laundering offense was not grossly disproportionaleven though the offense involved only $175,000. EighthAmendment analysis, the court said, looks not just to thevalue of the forfeited property in comparison to the amountlaundered, but to the scope and duration of the scheme, theharm caused, and the relationship of the property to theoffense. Because the property being forfeited in that casewas central to the entire scheme, and because the schemetook place over a period of time and involved the corruptionof a public official, the forfeiture was notdisproportionate.t55

e. SummaryThusFar

So far we have discussed three theories of forfeiture inmoney laundering cases that permit the court to order theforfeiture of the dirty money being laundered (CategoryOne), property other than the dirty money that is also partof the subject matter of the offense (Category Two), andproperty outside of, or external, to, the money launderingtransaction that is nevertheless involved in the offensebecause it makes the offense easier to commit or harder todetect (Category Three). The various cases brought undereach of these theories fall along a continuum representedby Figure 15. The most obvious, or least aggressive cases,are the ones where the actual SUA proceeds are beingforfeited. Somewhat more aggressive are the internationalmoney laundering cases where ‘untainted money is subjectto forfeiture because it was transported into or out of theUnited States in violation of § 1956(a)(2XA).

2003) ($1.6 million moneyjudgmentrepresentingvalue of unt4inted money thatfacilitated a moneylaunderingoffense,did not violate the ExcessFines Clause;distinguishing Bajako.!ian as limited to reporting violations); United statesv.Hill, 167 F.3d 1055, 1072 (6th Cir. 1999) (maxinium fine for moneylaundering istwice the amountlaundered;therefore, forfeiture of less than twice the amountlaunderedcannotbe excessive);United Statesv. Matai, 173 F.3d426, 1999 WL61913, Nos, 97-41.29, 97-4130(4th Cir. 1999) (unpublished)(Table) (forfeiture ofinventory of clothing store as pioperty used to facilitate a money launderingoffensenot excessiveeventhoughdefendantslaunderedonly $11,000becui.isethemaximum fine is $500,000under § 1956);United Statesv. Tencer,107 F.3d 1120(5th Cir. 1997) (forfeiture of both laundered proceedsand commingled cleanmoneyunder facilitation theory not excessivein light of the amount l.aunderedanddurationof theoffense).

153. UnitedStatesv. Loe, 49 F. Supp.2d 514(ED. ‘rex. 1999).154. 193 Fad 289 (5th Cir. 1999).155. 193 Fad at 303; seealsoUnitedStatesv, Puche,350 Fad 1137 (11thCir.

654 BUFFALOCRIMINAL LAWREVIEW [Vol. 7:583 2004] FORFEITUREOF PROPERTY 655

The Theories of ForfeitureLie Along a Continuum

Subject matterUntainted prop&t~tainted

19j6la1121(At or untainted bidpro~~.ty Cirra,a! to the Facittetrng

Proree’S of transacton propcrtyUntainito andthe SJA ru&riuito time

trensaof~cn

Figure 15

Then come the cases involving real property or chattelsobtained by the money launderer in exchange for dirtymoney as part of a purchase, sale or exchange. As we haveseen, such forfeitures are more aggressive because theproperty involved in the transaction is forfeitable in itsentirety regardless of the amount of dirty money that wasused to commit the underlying offense. Likewise, cleanmoney commingled with dirty money that is transferredfrom one place to another is forfeitable as part of thesubject matter of the offense.

Finally, at the other end of the continuum fall thefacilitation cases where property that is external to thefinancial transaction and is otherwise untainted isnevertheless subject to forfeiture because it was used tomake the money laundering offense easier to commit orharder to detect. Such property, however, is subject toforfeiture only if it was substantially connected to themoney laundering offense.

4. Property That Is Central to the Entire Scheme,Including the Underlying SUA Offense

There is a fourth category of property forfeitable in amoney laundering case that falls outside of this continuum.The theory is that the court may order the forfeiture ofproperty that was not involved in the money launderingoffense itself, but was nevertheless central to the underlyingscheme of which the money laundering offense was a part.Some courts permit the forfeiture of such property under themoney laundering statutes and some do not.

a. TheProceedsLeft Behind

One example of this theory concerns SUA proceedsthat are left behind in a bank account when the defendantcommits the money laundering offense giving rise to theforfeiture. Look again at Figure 7 illustrating whathappened in the Trost case. Recall that the defendant inthat case put $57,000 in SUA proceeds in a bank accountand transferred $23,000 somewhere else. The $23,000 wasthe subject of the money laundering conviction and byanyone’s definition represented “property involved” in themoney laundering offense. That money was clearly subjectto forfeiture. But what about the remainder of the $57,000that the defendant put into the first bank account and leftthere? Was that involved in the offense? Is that subject toforfeiture?

It is easy to understand Trost’s objection to theforfeiture of the remaining money. He was convicted oflaundering $23,000. The money left behind in the accountwas never laundered; in fact, it was never moved out of thefirst bank account. How is it possible, Trost asked, formoney that was never laundered to have been “involved” ina money laundering offense? But th.e Seventh Circuit heldthat when a defendant puts his criminal proceeds in a bankaccount and is convicted of laundering some of it by movingit out of that account, the money left behind i.s also involved

656 BUFFALOCRIMINAL LAWREVIEW [Vol. 7:58320041 FORFEITUREOFPROPERTY 657

in the offense, and is also subject to forfeiture, because it isthe proceeds of the same SUA.’56

In essence, the Seventh Circuit was using commonsense to fill what was then a gap in the money launderingforfeiture regime: While it is true that the money leftbehind was not the subject matter of any money launderingoffense, the court reasoned that if clean money can beforfeited if it facilitates the money laundering offense, itwould make no sense to hold that the dirty money derivedfrom the same SUA could not be forfeited. 157

The gap existed in the statute, of course, because at thetime Trost was convicted, federal law did not authorize theforfeiture of the proceeds of the underlying SUA offense.Thus, if the court had not extended the forfeiture theory tothe unlaundered SUA proceeds, Trost would have been ableto retain the proceeds of his crime. Would a court reach thesame conclusion today now that SUA proceeds areforfeitable under a separate statute? We will have to wait tosee. But it is likely that the government will avoid thisproblem either by alleging that the unlaundered money isforfeitable directly under § 981(a)(1)(C), or by alleging thatthe defendants conspired to launder all of the proceeds oftheir offense. In a conspiracy case, of course, all of themoney that the defendants intended to launder is subject toforfeiture whether they consummated the money launderingtransaction or not.158

b. Other Property Involved in the UnderlyingSUA

In other cases, the government has tried to forfeitproperty that was part of the SUA offense, or was used tofacilitate the SUA offense, but again was not part of themoney laundering transaction itself. The best example isUnitedStatesv. Wyly!5°

156, UnitedStatesv. Trost,152 Fad715 (7th Cir, 1998).157. Id.158, Seesupranote85.159. 193 F.3d289 (5th Cir, 1999), Seefig. 16.

aa~r

f~tHd

U.S. v. Wyly

In Wyly, the defendant was a public official whoaccepted a kickback in return for steering a publicconstruction contract to a particular contractor. Thecontract was for the construction and operation of’ a newprivately-owned county jail. The money sent by the publicbody to the contractor was the SUA proceeds, and thepayment of the kickback by the contractor to the defendan.twas the money laundering offense.

When the defendant was convicted of moneylaundering, the government sought to forfeit the new jail.itself as property involved in the money laundering offense.It was clear that, in the traditional sense at least, the jailwas not part of the money laundering transaction. But itwas also clear that without the jail—which ~as the subjectmatter of the SUA offense—there would have been noscheme and hence no money laundering. Adopting thelatter rationale, the Fifth Circuit extended its earlierdecision in Tencer, and held that the jail was subject toforfeiture.iSo

Public Funds ~

V. a ~

PubOc

citni iai

Figure 16

160. 193 Fad at302.

658 BUFFALOCRIMINALLAWREVIEW [Vol. 7:583 2004] FORFEITUREOFPROPERTY 659

Other courts have reached similar conclusions. Forexample, in United Statesv. Puello,18’ a district court heldthat property used to facilitate food stamp fraud wasforfeitable as property involved in the laundering of thefraud proceeds, even though it was not part of the moneylaundering transaction itself.’82 But other courts hold thatproperty involved only in the SUA offense, and not part ofthe money laundering transaction, is not forfeitable underthe money laundering statutes.

In United States u. Iacaboni,’83 the defendant pledguilty to money laundering and to the underlying gamblingoffense that served as the STJA. The court granted thegovernment’s motion for an order forfeiting the gamblingproceeds that were used to promote the continuation of thegambling offense because the disbursement of those fundsconstituted the money laundering offenses for which thedefendant was convicted.154 In other words, the gamblingproceeds represented the subject matter of the moneylaundering offense. But the court declined to order theforfeiture of the real property that the defendant had usedto facilitate the gambling offense, on the ground that it wasnot involved in, or at least was not substantially connectedto, the money laundering.’65

Similarly, in UnitedStatesv. Loe,’66 the courtheld thatleasing rights that the defendant had used to facilitate theunderlying insurance fraud scheme were not involved inthe subsequent laundering of the fraud proceeds, and socould not be forfeited under § 982(aXl).’67

I tend to think that the courts that have taken themore conservative approach on this issue are correct. Tome, the essence of the money laundering crime is thefinancial transaction, so only property involved in someway in the financial transaction can be forfeited. The jailin Wyly might have been involved in the kickback in thesense that it was the subject matter of the entire kickbackscheme. But property that merely facilitates th.eunderlying SUA and is not involved at all in thesubsequent laundering of the SUA proceeds does not fit, inmy view, within the meaning of the term “propertyinvolved” in the money laundering offense. If it were so,then any automobile used to facilitate a drug offense couldbe forfeited in a subsequent money laundering caseinvolving the laundering of the drug proceeds. It would bebetter if the forfeiture of the automobile in that case werebased on the forfeiture statute for drug offenses, and not onthe statute that authorizes the forfeiture of propertyinvolved in. money laundering.

161. 814 F. Supp.1155 (E.D,N.Y. 1993).162. SeealsoUnitedStatesv. Eleven vehicles, 836 F. Supp. 1147, 1155 (ED.

Pa. 1993) (businessis used to facilitate violation of the Arms Export Act wasforfeitable becausemoney launderingwas essentialto the armsexport scheme);United Statesv. All Assetsof Blue Chip Coffee, Inc., 836 F. Supp. 104, 108(E.D.N.Y. 1993) (propertyused to facilitate underlying § 659 offense forfeitableunder§ 981(a)(1)(A));United Statesv. Matai, 173 Fad426, 1999WL 61913,Nos.97-4129,97-4130(4th Cir. 1999) (unpublished)(Table) (inventory in defendants’clothing businessis forfeitable as facilitating property in a money launderingcase,where defendantsusedthe businessto perpetratea credit card fraudandmoneylaunderingscheme);UnitedStatesv. $448,342.85,969 F.2d 474, 477 (7thCir, 1992) (dicta) (property“involved” in moneylaunderingoffensenot limited tomoneyderivedfrom theSUA, but mayincludefundsthat facilitatedthe SUA).

163, 221 F. Supp.2d 104 (D. Mass.2002).164. Id. at 117-18.165. Id. at 115-17(becausetheforfeiture allegation.in the indictmentbasedthe

forfeiture only on the money laundering offense, and not on the underlyinggambling SUA as well, property involved only in the SUA offensecould not beforfeited;decliningto follow casesthat confusepropertyinvolved in the SUA with

CONCLUSION

The development of the law regarding asset forfeituresin money laundering cases is not yet complete, but it isclear that the statutes authorizing forfeiture in money

property involved in the money laundering). Note: the court in Iecaho,iiapparentlywasunder the mistaken impression thnt the governmentcould havebasedthe criminal forfeiture of the real property on the gambling violation, Itmay have beenunawarethat at the time of the offense in question,which pie-datedtheeffectivedate of CAFRA, therewas no criminal forfeiture authorif:y forgamblingoffensesin violation of 18 U.S.C. § 1955.

166. 49 F. Supp.2d 514 (E.D.Tex, 1999).167. See also United Stntes v, Hawkey, 148 F.3d 920 (8th Cir, 1998)

(emphasizingthat the propertymust have beenusedto facilitate the launderingoffense).

660 BUFFALOCRIMINAL LAWREVIEW [Vol. 7:583

laundering cases are among the broadest and mostpowerful forfeiture provisions in federal law. Withoutdoubt, they will play an increasingly important role as theattention of federal law enforcement turns to terrorismfinancing, recovering the proceeds of corporate crime, andother matters in which the confiscation of propertyinvolved in complex financial transactions serves theinterests ofjustice.