Very interesting criminal forfeiture decision. Today in United States v. Razmilovic (Feinberg, Winter, Sotomayor), the CA2 considered whether the criminal forfeiture statute, 28 U.S.C. § 2461(c), permits a court to freeze a defendant’s assets, pre-trial. The CA2 held that it does not.
Here, defendants were charged with various frauds surrounding the securities of Symbol Technologies. The government secured an indictment against Kenneth Jaeggi, Symbol’s vice president, which included forfeiture allegations. After filing the indictment, the government successfully moved for an ex parte order freezing Jaeggi’s assets, totalling about $7.5 million, that it alleged were forfeitable as the proceeds of his crime.
Section 2461(c) directs that "upon conviction" an order of "forfeiture" shall be entered "in accordance with the procedures" set out in 21 U.S.C. § 853, the forfeiture statute applicable for drug crimes. Section 853, in turn, provides for pre-trial restrain of assets subject to forfeiture. The question is, is that freeze provision incorporated into section 2461(c)?
No, says that CA2:
Section 2461(c)’s use of the term "forfeiture" cannot include pretrial restraint. Forfeiture is the "divestiture of property without compensation." In a criminal case, it constitutes punishment for a crime and necessarily occurs post-conviction. The distinction between forfeiture and pretrial restraint is no technical play on words. Pretrial restraint is a severe remedy independent of a right to damages or property following a finding of liability. Indeed, the Supreme Court has dubbed pretrial restraint as a "nuclear weapon of the law." (Citations omitted).
There’s an extensive discussion of how the court came to this conclusion and in what instances pre-trial asset freezes might be acceptable under other statute, but the bottom line is that 28 U.S.C. § 2461(c) does not permit pre-trial restrain of forfeitable assets which is, to me, a big deal.
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