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U.S. Supreme Court Weighs in on Forfeiture Proceedings

gavel-1238036The United States Supreme Court recently reversed a judgment of the Sixth Circuit in Honeycutt v. United States. In the decision, the United States Supreme Court ruled that under 21 U.S.C. §853(a)(1), which mandates forfeiture of property derived from certain drug crimes under federal law, “a defendant may [not] be held jointly and severally liable for property that his co-conspirator derived from the crime but that the defendant himself did not acquire.”

The background was as follows. “Terry Michael Honeycutt [the petitioner here] managed sales and inventory for a … hardware store owned by his brother, Tony Honeycutt. After observing several “‘edgy looking folks’” purchasing an iodine-based water-purification product known as Polar Pure, Terry Honeycutt contacted the [police] to inquire whether the iodine crystals in the product could be used to manufacture methamphetamine…. An officer confirmed that individuals were using Polar Pure for this purpose and advised [Terry] to cease selling it if the sales made [him] ‘uncomfortable.’…. Notwithstanding the officer’s advice, the store continued to sell large quantities of Polar Pure. Although each bottle of Polar Pure contained enough iodine to purify 500 gallons of water, and despite the fact that most people have no legitimate use for the product in large quantities, the brothers sold as many as 12 bottles in a single transaction to a single customer. Over a 3-year period, the store grossed roughly $400,000 from the sale of more than 20,000 bottles of Polar Pure…. [T]hese sales prompted an investigation” that led to the indictment of “the Honeycutt brothers for various federal crimes relating to their sale of iodine while knowing or having reason to believe it would be used to manufacture methamphetamine.” In addition, “the Government sought forfeiture money judgments against each brother in the amount of $269,751.98, which represented the hardware store’s profits from the sale of Polar Pure. Tony Honeycutt pleaded guilty and agreed to forfeit $200,000. Terry went to trial” and was convicted on numerous counts. “The [federal] District Court sentenced Terry … to 60 months in prison. Despite conceding that Terry had no ‘controlling interest in the store’ and ‘did not stand to benefit personally,’ the Government insisted that the District Court ‘hold [him] jointly liable for the profit from the illegal sales.’…. The Government thus sought a money judgment [against Terry] of $69,751.98, the amount of the conspiracy profits outstanding after Tony[’s] … forfeiture payment. The District Court declined to enter a forfeiture judgment, reasoning that [Terry] was a salaried employee who had not personally received any profits from the iodine sales…. [T]he Sixth Circuit reversed,” opining that the brothers were jointly and severally liable for the proceeds of their crimes and, therefore, “that each brother bore full responsibility for the entire forfeiture judgment.” Terry sought certiorari.

In its decision, the Supreme Court cited the text of 21 U.S.C. §853(a)(1), which “limits forfeiture to ‘property constituting, or derived from, any proceeds the person obtained, directly or indirectly, as the result of’ the crime, i.e., tainted property. In the Court’s view, “the statute does not countenance joint and several liability, which, by its nature, would require forfeiture of untainted property.” In this case, stated the Court, “Terry Honeycutt had no ownership interest in his brother’s store and did not personally benefit from the Polar Pure sales.” Because he never “actually acquired” any “tainted property as a result of the crime, §853[a][1] does not require any forfeiture.”

This case is a particularly important one for defendants charged with drug related crimes, and potentially facing forfeiture proceedings under G. L. c. 94C, § 47 – the Massachusetts forfeiture statute. Forfeiture proceedings are civil proceedings. Although they go hand in hand with criminal cases, the standard of proof necessary for the Commonwealth to prove that forfeiture is warranted (probable cause) is much lower than the standard of proof to needed to prove someone guilty at trial (beyond a reasonable doubt). Therefore, a defendant could be acquitted of criminal charges, but still be subject to forfeiture. Such proceedings may be very high stakes, as the Commonwealth may seek to forfeit cars, property, or substantial sums of money. If you or a loved one is facing criminal charges that involve potential forfeiture, do not underestimate the importance of a skilled attorney who can guide you through both the criminal and forfeiture processes. Attorney Daniel Cappetta is such an attorney – call him for a free consultation today.