A few months ago, I wrote a blog post predicting that the Fourth Circuit would stop allowing federal prosecutors to seize untainted assets before conviction.
(Buffing fingernails on shirt.)
And now it has.
Okay, my prognostication was not exactly out of left field. After all, the Department of Justice had indicated that this was the right result. The Supreme Court in Luis v. United States, 578 U.S. ___ (2016), had already limited pretrial seizure of untainted assets when the defendant wanted to use untainted funds to hire counsel.
In United States v. Chamberlain (No. 16-4313), issued August 18, 2017, the Fourth Circuit held that
We overrule our precedent construing Section 853 and other identically phrase restraint provisions allowing the pretrial restraint of substitute assets.
There are two wonderful parts of this opinion. First is the holding itself, which is a huge victory for criminal defendantsi in the Fourth Circuit and everyone else. We shouldn’t have to fear the government taking our assets before trial. Second, you can’t help but be amused by the fact that the Fourth Circuit had to admit that even though it previously held that the plain language of the forfeiture statute allowed this type of seizure, it was wrong about that.
The Procedural Posture
It’s worth noting the procedural posture of the case. The case was initially argued before panel of the Fourth Circuit on January 26. The government conceded that the property was not traceable to any crime and therefore was only subject to pretrial restraint as substitute property.
The government tried to avoid the limitations of Luis by arguing that Luis did not abrogate the statute allowing substitute property under Section 853(e)(1)(A). However, after the argument the Solicitor General submitted a brief in Honeycutt the United States pending before the Supreme Court. The SG asserted that Section 853(e)(1)(A) does not permit the pretrial restraint of substitute property.
The Fourth Circuit then voted to decide Chamberlain en banc. There was no argument and the decision was unanimous.
The asset at issue in Chamberlain was a piece of real property owned by the defendant and his wife worth about $200,000. Apparently, the government had no proof that the property was purchased with tainted funds from the scheme. The defendant in Chamberlain did not intend to use substitute assets for attorney’s fees.
The District Court concluded that it was bound by the Fourth Circuit’s pre-Luis precedent. It prevented the defendant from selling or otherwise disposing of the property during the case against him. He appealed.
The Fourth Circuit had been an outlier on this issue for some time. No other circuit permitted seizure of a defendant’s untainted property before conviction. (“Tainted” means there is a proven connection between the property and the crime; “untainted” means there is no such proven connection.)
The Fourth Circuit summarized the forfeiture law that applies when someone is convicted of crime and the property is related to that crime. The court pointed out that Section 853
further authorizes pretrial restraint of certain of a criminal defendant’s assets. Specifically, upon motion of the government, Section 853(e)(1)(A) authorizes district courts to enter orders or take other necessary steps “to preserve the availability of property described in [Section 853(a)]” that “would, in the event of conviction, be subject to forfeiture.”
The Fourth Circuit explained that it had
long interpreted this provision to permit the pretrial restraint of both tainted property subject to forfeiture under Section 853(a) and untainted property – like Section 853(p) substitute property – that there’s no direct relationship to the defendants alleged offense.
It then listed all the circuit courts that had held the opposite. (And there were a lot of them.)
The Fourth Circuit tried to avoid blame for having not reconsidered its holding earlier by explaining that “the Supreme Court has yet to consider squarely whether the government may restrain a defendant’s innocent assets under Section 853 or other identically face provisions.”
My 10-year-old tries this tactic all the time. If we don’t tell him not to do something, then it must be okay to do it, no matter how clearly wrong it is.
The court explained that because of new Supreme Court precedent (Luis), it had to reconsider the “continued viability of our present interpretation of section 853.”
The court said that its existing precedent allowed pretrial restraint of untainted assets based on its reading of the text of Section 853 and its view of Congress’ remedial goals in allowing criminal forfeiture. It admitted that after Luis, these two bases “appear far less certain.”
That’s an understatement.
The Fourth Circuit was therefore forced to admit that even though it had previously relied on the text of Section 853 to allow pretrial restraint of untainted assets, the “plain language of Section 853 indicates that Congress did not intend the statute to permit such restraint.”
The Chamberlain opinion explained that
the Supreme Court has signaled that there is a firm distinction between the government’s authority to restrain tainted and untainted assets and construing Section 853 and related restraint provisions.
As a result, the Fourth Circuit noted that when Congress wants to allow the government to restrain untainted assets “it has clearly provided for such authority.” Because Section 853 does not contain that express authority, then the government cannot seek to restrain untainted assets before trial under it.
What’s amazing about this explanation is that it entirely ignores the elephant in the room: it was never clear under Section 853(e)(1)(A) that the government could seize untainted assets. Never.
At the end of the opinion, the court returned to the awkward position of having to reverse itself even though nothing had changed except that it had been proven dead wrong. It said that in “reevaluating our existing precedent,” it was
mindful of the deference to our colleagues and predecessors, whose carefully reasoned conclusions we are called upon to scrutinize. In the nearly three decades since Billman was decided, however, federal courts have continued to explore the constitutional and statutory limitations of the government’s authority to restrain the property of those who stand accused of violating federal law. With the benefit of those continuing developments, as well as the most recent pronouncements of the Supreme Court and the government’s own evolving views, it is now apparent that our existing precedent construing Section 853 cannot be maintained and a reconsideration of her minority rule is appropriate.
In the End
This is the right decision, and the Fourth Circuit should have reached it long ago like every other court. The statutes governing forfeiture already allow expansive government authority in this area; there was no need to expand it beyond what the statutes actually permit.
There’s something glorious about watching a court admit that its interpretation of the “plain language” of the statute was 100% wrong, particularly when the new ruling benefits those charged with a crime. I’m sure some members of the court did this with teeth gritted and others did it with open arms. At least they reached the correct holding, no matter how they got there.