Criminal – Forfeiture – Uncharged conduct – Sentencing

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Where a jury found a defendant guilty on eight of the 18 counts in an indictment (wire fraud, bank fraud and unlawful monetary transaction), a sentence of 150 months and an order requiring the defendant to forfeit more nearly $3 million must be upheld, as the sentencing judge did not err in basing the forfeiture amount, by a preponderance of the evidence, on uncharged relevant conduct.

“Between 2006 and 2008, Sirewl Cox — a real estate developer, agent, and broker — orchestrated a mortgage fraud scheme in Massachusetts. After his scheme was exposed, Cox was charged with multiple counts of bank and wire fraud and money laundering. A jury subsequently found Cox guilty on some of the charged counts, and he was sentenced to a below-guidelines term of 150 months of imprisonment.

“Cox now appeals his sentence on both procedural and substantive grounds. Specifically, he raises a flurry of objections related to the district court’s use of uncharged and acquitted conduct to calculate his Guidelines Sentencing Range, and further contends that the length of his sentence was substantively unreasonable. Cox also challenges the district court’s statutory authority to order the forfeiture of assets related to uncharged relevant conduct, an issue of first impression in this circuit. …

“… The court granted the government’s motion for forfeiture of property in the amount of $2,966,334.37. This amount included all proceeds Cox received from the convicted transactions — $860,210.52, according to the loss chart adopted by the district court — as well as all proceeds Cox received from uncharged relevant conduct.12 Cox contends that the district court erred by including proceeds from uncharged relevant conduct in the forfeiture order because, he claims, ‘the criminal forfeiture statute does not authorize the forfeiture of funds based on unconvicted conduct.’ Although we have not directly addressed this argument before, we join the other circuits that have concluded that a court may order forfeiture of the proceeds from uncharged conduct that was part of the same fraudulent scheme alleged in the counts of conviction.

“… Specifically, 18 U.S.C. section982(a)(2) subjects to forfeiture ‘any property constituting, or derived from, proceeds the person obtained directly or indirectly, as a result of’ certain specified offenses, including bank fraud under 18 U.S.C. section1344. … Similarly, 18 U.S.C. section981(a)(1)(C) authorizes forfeiture for ‘[a]ny property, real or personal, which constitutes or is derived from proceeds traceable to’ the commission of certain crimes, including bank fraud under 18 U.S.C. section1344. The term ‘proceeds’ is defined as ‘property of any kind obtained directly or indirectly, as the result of the commission of the offense giving rise to forfeiture, and any property traceable thereto, and is not limited to the net gain or profit realized from the offense.’ 18 U.S.C. section981(a)(2)(A).

“Both the Seventh and Ninth Circuits relied on this inclusive statutory language to conclude that, in the case of crimes that involve a scheme to defraud, funds ‘obtained . . . as a result’ of the offense ‘consist of the funds involved in that fraudulent scheme, including additional executions of the scheme that were not specifically charged or on which the defendant was acquitted.’ We agree with this reading of the forfeiture statutes and find that it applies here.

“As we already have held, the district court properly concluded by a preponderance of the evidence that all of the uncharged and acquitted conduct was part of the same scheme to defraud. Although Cox asserts that, for purposes of forfeiture, the court was required to find beyond a reasonable doubt that the uncharged conduct was part of the same scheme, we disagree. We have previously observed that a forfeiture award ‘is a part of the sentence rather than the substantive offense.’ … As such, the preponderance of the evidence standard applies. …

“Hence, the district court did not err in including the proceeds of the uncharged relevant conduct in its forfeiture award.”

United States v. Cox (Lawyers Weekly No. 01-065-17) (29 pages) (Lipez, J.) Appealed from a judgment entered by Casper, J., in the U.S. District Court for the District of Massachusetts. Leslie Feldman-Rumpler for the defendant-appellant; Ryan M. DiSantis, with whom Carmen M. Ortiz was on brief, for the United States (Docket No. 14-1033) (March 20, 2017).

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