SDNY Judge Rules that Criminal Forfeiture Order is Personal Money Judgment Against Defendant, Regardless of His Current Assets

The collateral consequences of criminal convictions can sometimes be worse and have more lasting impact than the actual sentence imposed.  Deportation is an obvious example.  Another is a criminal forfeiture order, as underlined in a recent SDNY ruling, United States v. Awad, 2007 WL 3120907 (S.D.NY. October 24, 2007). 

In Awad, the court faced an issue of first impression in this circuit: whether a criminal forfeiture order under 21 U.S.C § 853 (which covers drug cases, but is incorporated by reference into numerous other statutes involving non-drug offenses) is a money judgment against the defendant personally, or simply a judgment against specific property.  If against the defendant personally, of course, it can be satisfied by the defendant's substitute and future assets, even those obtained legitimately.  For Awad and his co-defendant, convicted after trial of conspiracy to import cathinone, the orders were not insignificant: $10 million and $4.6 million, respectively.

The defendants argued variously that § 853, unlike the RICO forfeiture provision, was not intended to permit forfeiture orders in the form of money judgments, and in any event, the language of the statute precludes the imposition of a money judgment on the defendant.  In particular, they argued that "one cannot forfeit something [one] does not possess."

Noting that these arguments had already been rejected by the 1st, 3rd, 7th and 9th Circuit Courts of Appeals, the district judge held that the imposition of a personal money judgment was consistent with both the purpose and language of § 853.  As the court noted, "Congress has made plain that criminal forfeiture is meant to constitute part of a defendant's sentence in drug crimes, and that the criminal forfeiture statute should be 'liberally construed' to effectuate its remedial purposes."  She went on to reject the defendants' "narrow" reading of the language of the statute.  "Neither the definition of 'property' as provided by the statute, nor the dictionary and common-sense definitions of 'forfeit' limit the entry of money judgments to assets held by the defendant at the time of sentencing."  Although this issue has not yet been addressed directly by the Second Circuit, the Awad court noted that the Second Circuit has at least held that "assets subject to forfeiture orders need not be in the possession of the defendant at the time of sentencing."  See United States v. Lizza Indus., Inc., 775 F.2d 492, 499 (2d Cir. 1985). 

This is a decision with far-reaching implications, and this issue will no doubt be addressed directly at some point by the Second Circuit.  In the meantime, practitioners should advise clients of the holding in Awad and factor the possibility that forfeiture orders attach future assets into any negotiations or litigation strategy regarding the amount of any forfeiture order, restitution or fine that may be imposed.