Forfeiture – Money judgment – Notice

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Where a judgment in a forfeiture proceeding has been challenged, a remand should be ordered for the purposes of providing notice to potential third-party claimants.

1st Circuit’s analysis

“This case involves the procedures governing criminal forfeiture, the distinction between a criminal forfeiture that constitutes an in personam money judgment and a criminal forfeiture of specific assets, and the rights of third parties in a forfeiture scenario. We affirm in part, vacate in part, and remand for further proceedings consistent with this opinion. The case provides a cautionary tale for forfeitures in bulk cash smuggling and other cash seizure cases. …

“[T]he fact that the district court did not initially include the forfeiture in the judgment does not render the forfeiture invalid, given that the district court issued a preliminary notice of forfeiture and included the forfeiture during the sentencing hearing. …

“[Andres] Castillo-Peña argues that he was deprived of due process, because he filed a third party petition asserting that he had a property interest in the seized funds that were in the possession of Customs, but received no hearing to determine his interest in those funds. Castillo-Peña also makes a second argument that the delay ‘between seizure of property and the institution of forfeiture proceedings’ was sufficient, of itself, to cause a constitutional violation of due process. …

“Castillo-Peña was not entitled to invoke the ancillary proceeding provisions of 21 U.S.C. section853(n) and Federal Rule of Criminal Procedure 32.2, as the forfeiture was in the nature of a money judgment. It is clear that ‘no ancillary proceeding is required to the extent that the forfeiture consists of a money judgment,’ Fed. R. Crim. P. 32.2(c)(1) (2008), because such a judgment ‘is an in personam judgment against the defendant and not an order directed at specific assets in which any third party could have any interest,’ Fed. R. Crim. P. 32.2 advisory committee’s notes on the 2000 amendments.

“However, two considerations lead us to accept the government’s invitation to remand. First, at issue is not solely the money judgment, but also the fact that the government seized physical cash at the time of [Ramon] Zorrilla-Echevarría’s arrest. To satisfy the money judgment forfeiture, the district court ordered, on March 12, 2010 (in the same set of orders that amended the judgment to include the forfeiture and amended the preliminary forfeiture order), an attachment of those funds pursuant to Federal Rule of Civil Procedure 64 and Puerto Rico Rule of Civil Procedure 56. This was done without a hearing, which Castillo-Peña contends violates due process.

“Second, there was some confusion … as to the nature of the forfeiture order, for which the government bears much of the responsibility.

“The government ‘concedes the case should be remanded to the district court so that the government may properly notify potential third parties, including Castillo-Peña,’ as the attachment of the actual, physical currency ‘only became clear’ in the district court’s March 12 order. To allow this to happen, the government requests that we vacate that portion of the final order of forfeiture which uses the attached funds to satisfy the money judgment against Zorrilla-Echevarría. Whether or not this is required, there has been no objection, so we follow the government’s suggestion. Accordingly, we vacate the final order of forfeiture and remand to the district court to provide Castillo-Peña with an opportunity to challenge the attachment of the $543,731 used to satisfy the money judgment against Zorrilla-Echevarría. We leave it to the district court to determine the appropriate procedures to use to provide an adequate opportunity to contest the attachment. …

“Castillo-Peña’s second claim is that the delay between the seizure of the property and the institution of forfeiture proceedings was sufficient, of itself, to cause a deprivation of property in violation of the due process clause. This is not so.

“Castillo-Peña relies on United States v. $8,850, 461 U.S. 555 (1983), for this argument. There, the Supreme Court assessed whether ‘the Government’s delay in filing a civil forfeiture proceeding violated [a criminal defendant’s] due process right to a hearing “at a meaningful time.”‘ … The Court, analogizing to a defendant’s right to a speedy trial, explained that the same four factors should determine whether a delay in instituting forfeiture proceedings amounts to a constitutional violation: ‘length of delay, the reason for the delay, the defendant’s assertion of his right, and prejudice to the defendant.’ …

“We do not need to address whether or not there is a distinction for due process purposes between the status of a defendant, as in $8,850, and the status of a third-party claimant, as here. The only delay complained about here was not in the starting of the forfeiture procedures, but to hearing Castillo-Peña’s claim to the money.

“While the confusion in the district court, largely induced by the government’s sloppiness, about whether this was a money judgment or a forfeiture of the specific cash seized was unfortunate, there was no denial of due process. Castillo-Peña also had alternatives available to him which he did not take.

“Castillo-Peña will receive a hearing on remand under the government’s concession and we see no prejudice to him. As a result, Castillo-Peña’s claim that the delay itself constituted a deprivation of property without due process fails. …

“We affirm the entry of the money judgment order of forfeiture with respect to Zorrilla-Echevarría. We vacate the portion of the final order of forfeiture ordering that the attached $543,731 in cash shall be used to satisfy the money judgment, and remand to the district court for further proceedings consistent with this opinion.”

United States v. Zorrilla-Echevarría (Lawyers Weekly No. 01-300-11) (25 pages) (Lynch, C.J.) (1st Circuit) Appealed from the U.S. District Court for the District of Puerto Rico (Docket No. 10-1459) (Nov. 22, 2011).

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