United States. Congress. House. Committee on the J.

Civil Asset Forfeiture Reform Act : hearing before the Committee on the Judiciary, House of Representatives, One Hundred Fourth Congress, second session, on H.R. 1916 ... July 22, 1996 online

. (page 16 of 37)
Online LibraryUnited States. Congress. House. Committee on the JCivil Asset Forfeiture Reform Act : hearing before the Committee on the Judiciary, House of Representatives, One Hundred Fourth Congress, second session, on H.R. 1916 ... July 22, 1996 → online text (page 16 of 37)
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(b) DRUG FORFEITURE. - Section 413 of the Controlled Sub-
stances Act (21 U.S.C. 853) is amended by adding at the end
thereof the following new subsection:

"Non- abatement of forfei t ure order
" (q) An order of forfeiture under this section shall not
abate by reason of the death thereafter of any or all of the
defendants or petitioners or potential petitioners."
SEC. 203. REPATRIATION OF PROPERTY PLACED BEYOND THE JURISDICTION
OF THE COURT
Section 413 (p) of the Controlled Substances Act (21 U.S.C.
§ 853 (p) ) and Section 1963 (m) of title 18, United States Code,
are each amended by inserting the following at the end:

"In the case of property described in paragraph (3), the
court may, in addition, order the defendant to return the
property to the jurisdiction of the court so that it may be



DRAFT - August 23, 1996 38



157



seized and forfeited. Pursuant to its authority to enter a
pre-trial restraining order under this section, including
its authority to restrain any property forfeitable as
substitute assets, the court may also order the defendant to
repatriate any property subject to forfeiture pending trial,
and to deposit that property in the registry of the court,
or with the United States Marshals Service or the Secretary
of the Treasury, in an interest -bearing account. Failure to
comply with an order under this subsection shall be punish-
able as a civil or criminal contempt of court, and may also
result in an enhancement of the sentence for th offense
giving rise to the forfeiture under the obstruction of
justice provision of Section 3C1.1 of the United States
Sentencing Guidelines."
SEC. 204, MOTION AND DISCOVERY PROCEDURES FOR ANCILLARY HEARINGS,

(a) IN GENERAL. - Section 1963(1) (4) of title 18, United
States Code, and Section 413 (n) (4) of the Controlled Substances
Act (21 U.S.C. § 853 (n) (4)) are each amended by designating the
present matter as sub-paragraph (A) , and by inserting the follow-
ing new sub-paragraphs :

" (B) Before conducting a hearing, the court may enter-
tain a motion to dismiss the petition for lack of standing,
for failure to state a claim upon which relief could be
granted under this section, or for any other ground. For
the purposes of such motion, all facts set forth in the
petition shall be assumed to be true.

DRAFT - August 23, 1996 39



35-668 96-6



158



(C) If a motion referred to in subparagraph (B) is
denied, or if no such motion is made, the court may, in its
discretion, permit the parties to conduct discovery in
accordance with the Federal Rules of Civil Procedure to the
extent that the court deteirmines such discovery to be
necessary or desirable to resolve factual issues before the
hearing. At the conclusion of such discovery, either party
may seek to have the court dispose of the petition on a
motion for summary judgment in the manner described in Rule
56 of the Federal Rules of Civil Procedure.

" (D) Any order disposing of a petition pursuant to a
motion or pursuant to a hearing on the merits of the claim
shall be appealable in accordance with the Federal Rules of
Appellate Procedure applicable to civil cases. However,
where multiple petitions are filed in the same case, an
order dismissing or granting fewer than all of the petitions
shall not be appealable until all petitions are resolved,
unless the court expressly determines that there is no just
reason for delay and directs the entry of final judgment
with respect to one or more but fewer than all of the
petitions.

" (E) The district court shall retain jurisdiction over
a petition filed pursuant to this subsection notwithstanding
any appeal filed by the defendant in the criminal case."
(b) INTERVENTION BY THE DEFENDANT. - Section 1963(1) of
title 18, United States Code, and Section 413 (n) of the Con-

40



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trolled Substances Act (21 U.S.C 853 (n) ) are each amended by

adding a new paragraph (8) as follows:

" (8) If the defendant has filed a timely appeal from a
conviction under this section and the appeal is pending, any
person filing a petition under this subsection shall serve a
copy of the petition upon the defendant, and the defendant
shall have a right to intervene in the ancillary proceeding
with respect to the petition in accordance with Rule 24 of
the Federal Rules of Civil Procedure solely for the purpose
of contesting the petitioner's alleged interest in the
property ordered forfeited. The defendant shall have 20
days from the date of service of the petition to intervene.
If the defendant does not intervene within such time period,
he or she shall have waived the right to challenge in any
forum any adjudication of the petitioner's interest in the
property pursuant to this subsection, regardless of the
outcome of the appeal. Whether or not the defendant inter-
venes in the proceedings pursuant to this subsection, the
hearing provided for in this subsection shall be limited to
an adjudication of the validity of the petitioner's legal
right, title or interest in the property ordered forfeited,
and shall not provide a forum to re-litigate the forfeita-
bility of the property."

(c) IN PERSONAM JUDGMENTS. - Section 1963 (1) (1) of title 18,
United States Code, and Section 413 (n) (1) of the Controlled Sub-



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stances Act (21 U.S.C. 853{n)(l)) are each amended by adding
the following sentence at the end:

"To the extent that the order of forfeiture includes only an
in personam money judgment against the defendant, no proceeding
under this subsection shall be necessary."
SEC. 205. PRE-TRIAL RESTRAINT OF SUBSTITDTE ASSETS.

(a) IN GENERAL. - Section 413(e)(1) of the Controlled
Substances Act (21 U.S.C. 853(e)(1)) is amended by striking
" (a) " and inserting " (a) or (p) " .

(b) RICO. - Section 1963(d)(1) of title 18, United States
Code, is amended by striking "(a)" and inserting "(a) or (m) " .
SEC. 206. DEFENSES APPLICABLE TO ANCILLARY PROCEEDINGS IN CRIMI-
NAL FORFEITURE CASES.

(a) IN GENERAL. - Section 413(n)(6) of the Controlled
Substances Act (21 U.S.C. 853 (n) (6)) i-s-araended by striking
subparagraphs (A) and (B) and the dash that precedes them, and
inserting "the petitioner is an innocent owner of the property as
defined in section 983 of title 18, United States Code,".

(b) RICO. - Section 1963(1) of title 18, United States Code,
is amended by striking subparagraphs (A) and (B) and inserting
"the petitioner is an innocent owner of the property as defined
in section 983 of this title,".

SEC. 207. UNIFORM PROCEDURES FOR CRIMINAL FORFEITURE

Section 982(b)(1) of title 18, United States Code, is
amended to read as follows:



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" (b) (1) The forfeiture of property under this section,
including any seizure and disposition of the property and any
related administrative or judicial proceeding, shall be governed
by the provisions of section 413 of the Comprehensive Drug Abuse
Prevention and Control Act of 1970 (21 U.S.C 853), except for
subsection 413 (d) which shall not apply to forfeitures under this
section. "
SEC. 208. CRIMINAL SEIZURE WARRANTS

(a) IN GENERAL. - Section 513(f) of the Controlled Substanc-
es Act (21 U.S.C. 853(f)) is amended to read as follows:

" (f ) Property subject to forfeiture under this section
may be seized pursuant to Section 981(b) of title 18, United
States Code . "

(b) RICO. - Section 1963 of title 18, United States Code, is
amended by adding the following new subeeetion:

" (n) Property subject to forfeiture under this section
may be seized pursuant to Section 981(b) of this title."
SEC. 209. FORFEITABLE PROPERTY TRANSFERRED TO THIRD PARTIES.

Sections 1963(c) of title 18, United States Code, and
section 413(c) of the Controlled Substances Act (21 U.S.C.

853 (c) ) are each amended by designating the present matter as
paragraph (1) and adding the following new paragraph:

" (2) If, as provided in paragraph (1) , property trans-
ferred to a transferee is ordered forfeited and the trans-
feree fails to establish that he is a bona fide purchaser,
but the transferee is unable, due to the transferee's act or

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omission, to turn the property over to the United States,
the transferee shall owe the United States a sum of money up
to the value of the property transferred by the defendant,
plus interest from the time of the transfer. Once the
ancillary proceedings regarding the transferee's claim to be
a bona fide purchaser are concluded, the district court that
issued the order of forfeiture shall issue a judgment in
favor of the United States and against the transferree for
the amount of money to which the United States is entitled."
SEC. 210. RIGHT OF THIRD PARTIES TO CONTEST FORFEITURE OF SUBSTI-
TUTE ASSETS

(a) IN GENERAL. - Section 413(c) of the Controlled Substanc-
es Act (21 U.S.C. 853(c)), as amended by this Act, is further
amended by -

(1) inserting the following after -tie first sentence:
"All right, title and interest in property described in

subsection (p) of this section vests in the United States at the
time an indictment, information or bill of particulars describing
the property as substitute assets is filed."; and

(2) by striking "Any such property that is subsequently
transferred to a person other than the defendant" and inserting
"Any property that is transferred to a person other than the
defendant after the United States' interest in the property has
vested pursuant to this subsection" .

(b) RICO. - Section 1963(c) of title 18, United States Code,
as amended by this Act, is further amended by -

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(1) inserting the following after the first sentence:
"All right, title and interest in property described in

subsection (m) of this section vests in the United States at the
time an indictment, information or bill of particulars describing
the property as substitute assets is filed."; and

(2) by striking "Any such property that is subsequently
transferred to a person other than the defendant" and inserting
"Any property that is transferred to a person other than the
defendant after the United States' interest in the property has
vested pursuant to this subsection" .

(c) CONFORMING AMENDMENTS. - Section 1963(1) (6) of title 18,
United States Code, and section 413 (n) (6) of the Controlled
Substances Act (21 U.S.C. 853 (n) (6)) are each amended by adding
at the end the following sentence:

"In the -ease of substitute assets, — fche petitioner must show
that his interest in the property existed at the time the proper-
ty vested in the United States pursuant to subsection (c) , or
that he subsequently acquired his interest in the property as a
bona fide purchaser for value as provided in this subsection."
SEC. 211. HEARINGS ON PRE-TRIAL RESTRAINING ORDERS; ASSETS NEEDED
TO PAY ATTORNEY'S FEES.

(a) RESTRAINING ORDERS. - Section 413(e) of the Controlled
Substances Act (21 U.S.C. 853(e)) is amended -

(1) in paragraph (3) , by adding the following after the
period: "The court shall issue any protective order necessary to
prevent the premature disclosure of any ongoing law enforcement

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operation or investigation or the identity of any witness at the
hearing. In addition, in any case involving an ongoing investi-
gation, the court shall permit the presentation of evidence in
camera or under seal. Rule 65, Federal Rules of Civil Procedure,
shall not apply to restraining orders issued under this subsec-
tion. " ; and

(2) by adding the following new paragraph:

"(4) (A) When property is restrained pre-trial subject
to paragraph (1) (A) , the court may, at the request of the
defendant, hold a pre-trial hearing to determine whether the
restraining order should be vacated or modified with respect
to some or all of the restrained property because -

" (i) it restrains property that would not be subject to
forfeiture even if all of the facts set forth in the indict-
ment were established as true; ^

" (ii) it causes a substantial hardship to the moving
party and less intrusive means exist to preserve the subject
property for forfeiture; or

" (iii) the defendant establishes that he or she has no
assets, other than the restrained property, available to
exercise his or her constitutional right to retain counsel,
and there is no probable cause to believe that the re-
strained property is subject to forfeiture.

" (B) If the defendant files a motion under subparagraph
(A) (iii) , the court shall require the defendant to establish
that he has no access to other assets adequate for the

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payment of criminal defense counsel before conducting any
probable cause inquiry. The government shall have an oppor-
tunity to cross-examine the defendant and any witnesses he
or she may present on this issue. If the court determines
that the defendant has established that he has no access to
other assets, it shall hold a hearing to determine whether
there is probable cause for the forfeiture of the defen-
dant's property. If the court determines that no probable
cause exists for the forfeiture of an asset, it shall modify
the restraining order to the extent necessary to permit the
defendant to use that asset to retain counsel.

" (C) In any hearing under this paragraph where probable
cause is at issue, the court shall limit its inquiry to the
existence of probable cause for the forfeiture, and shall
neither entertain challenges to the_JSfalidity of the indict-
ment, nor require the government to produce additional evi-
dence regarding the facts of the case to support the grand
jury's finding of probable cause regarding the criminal
offense giving rise to the forfeiture. In all cases, the
party requesting the modification of the restraining order
shall bear the burden of proof.

" (D) A person other than the defendant who has a legal
interest in the restrained property may move to modify or
vacate the restraining order for the reasons stated in
subparagraph (A) (ii) . In accordance with subsection (k) ,
however, such person may not object to a restraining order

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on grounds that may be asserted only in the ancillary
hearing pursuant to subsection (n) .

" (E) If the property is restrained is subject to
forfeiture as substitute assets, the court may exempt from
the restraining order assets needed to pay attorneys fees,
other necessary cost of living expenses, and expenses of
maintaining the restrained assets" .

(b) RICO. - Section 1963(d) of title 18, United States Code,
is amended -

(1) in paragraph (3), by adding the following after the
period: "The court shall issue any protective order necessary to
prevent the premature disclosure of any ongoing law enforcement
operation or investigation or the identity of any witness at the
hearing. In addition, in any case involving an ongoing investi-
gation, the court shall permit the presentation of evidence in
camera or under seal. Rule 65, Federal Rules of Civil Procedure,
shall not apply to restraining orders issued under this subsec-
tion. " ; and

(2) by adding the following new paragraph:

"(4) (A) When property is restrained pre-trial subject
to paragraph (1) (A) , the court may, at the request of the
defendant, hold a pre-trial hearing to determine whether the
restraining order should be vacated or modified with respect
to some or all of the restrained property because -



48



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" (i) it restrains property that would not be subject to
forfeiture even if all of the facts set forth in the indict-
ment were established as true;

" (ii) it causes a substantial hardship to the moving
party and less intrusive means exist to preserve the subject
property for forfeiture; or

"(iii) the defendant establishes that he or she has no
assets, other than the restrained property, available to
exercise his or her constitutional right to retain counsel,
and there is no probable cause to believe that the re-
strained property is subject to forfeiture.

" (B) If the defendant files a motion under subparagraph
(A) (iii) , the court shall require the defendant to establish
that he has no access to other assets adequate for the
payment of criminal defense counsei— fee^fore conducting any
probable cause inquiry. The government shall have an oppor-
tunity to cross-examine the defendant and any witnesses he
or she may present on this issue. If the court determines
that the defendant has established that he has no access to
other assets, it shall hold a hearing to determine whether
there is probable cause for the forfeiture of the defen-
dant's property. If the court determines that no probable
cause exists for the forfeiture of an asset, it shall modify
the restraining order to the extent necessary to permit the
defendant to use that asset to retain counsel.



49



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" {C^ In any hearing under this paragraph where probable
cause is at issue, the court shall limit its inquiry to the
existence of probable cause for the forfeiture, and shall
neither entertain challenges to the validity of the indict-
ment, nor require the government to produce additional evi-
dence regarding the facts of the case to support the grand
jury's finding of probable cause regarding the criminal
offense giving rise to the forfeiture. In all cases, the
party requesting the modification of the restraining order
shall bear the burden of proof.

" (D) A person other than the defendant who has a legal
interest in the restrained property may move to modify or
vacate the restraining order for the reasons stated in
subparagraph (A) (ii) . In accordance with subsection (i) ,
however, -such person may not objeofe— feo a restraining order
on grounds that may be asserted only in the ancillary
hearing pursuant to subsection (1) .

" (E) If the property is restrained is subject to
forfeiture as substitute assets, the court may exempt from
the restraining order assets needed to pay attorneys fees,
other necessary cost of living expenses, and expenses of
maintaining the restrained assets".

(c) CONFORMING AMENDMENT. - Section 1345(b) of title 18,
United States Code, is amended by striking the last sentence and
inserting the following: "In preparation for such hearing, the
court may authorize the parties to conduct discovery pursuant to

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Rule 16, FederaJ Rules of Criminal Procedure; however, where a
restraining order or injunction is sought pre- indictment , the
court shall issue any protective order necessary to prevent the
premature disclosure of any ongoing law enforcement operation or
investigation or the identity of any witness. In addition, in
any case involving an ongoing investigation, the court shall
permit the presentation of evidence in camera or under seal .
Rule 65, Federal Rules of Civil Procedure, shall not apply to re-
straining orders issued under this subsection."
SEC. 212. AVAILABILITY OF CRIMINAL FORFEITORE

Section 2461 of title 28, United States Code, is amended by
adding the following subsection:

" (c) Whenever a forfeiture of property is authorized in
connection with a violation of an Act of Congress, and any
person Ls charged in an indictment_j3r .information with such
violation but no specific statutory provision is made for
criminal forfeiture upon conviction, the government may
include the forfeiture in the indictment or information in
accordance with Rule 7 of the Federal Rules of Criminal
Procedure, and upon conviction, the court shall order the
forfeiture of the property in accordance with the procedures
set forth in section 982 of title 18, United States Code."
SEC. 213. APPEALS IN CRIMINAL FORFEITURE CASES.

(a) PRE-TRIAL DISMISSAL OF FORFEITURE COUNT. - Section 3731
of title 18, United States Code, is amended in the first unnum-
bered paragraph by inserting ", or dismissing a forfeiture count

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in whole or in part," after "order of a crstrict court dismissing
an indictment or information" .

(b) REVIEW OF A SENTENCE. - Section 3742 of title 18, United
States Code, is amended by inserting the following new subsec-
tion:

" (i) Forfeiture orders. - The government may file
a notice of appeal in the district court of any deci-
sion, judgment, or order of a district court denying a
forfeiture in whole or in part, or mitigating a forfei-
ture for constitutional reasons, except that no appeal
shall lie where the double jeopardy clause of the
United States Constitution prohibits further prosecu-
tion.
SEC. 214. DISCOVERY PROCEDURE FOR LOCATING FORFEITED ASSETS.

Section 1963 (k> of title 18, Unite«h-St-ates Code, and Section
413 (m) of the Controlled Substances Act (21 U.S.C. 853 (m) ) are
each amended by -

(1) adding the following at the end before the period:
"to the extent that the provisions of the Rule are consis-
tent with the purposes for which discovery is conducted under
this subsection" ; and

2) adding the following additional sentence:
"Because this subsection applies only to matters occurring
after the defendant has been convicted and his property has been
declared forfeited, the provisions of Rule 15 requiring the



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consent of the defendant and the presence of the defendant at the

deposition shall not apply."

SEC. 215. SCOPE OF CRIMINAL FORFEITURE

Section 413 of the Controlled Substances Act (21 U.S.C.
853) is amended by adding the following new subsection:

" (t) To avoid the necessity of filing parallel civil forfei-
ture proceedings to adjudicate the interests of third parties who
do not qualify as innocent owners of property subject to forfei-
ture under this section, the interests of third parties may be
forfeited under this section, provided that the defendant has at
least a partial interest in the forfeited property and the
defendant's interest is forfeited. To adjudicate the third
party's interest, the ancillary proceeding described in subsec-
tion (n) shall be an in rem proceeding in which the third party
shall first have the burden of establisiiing standing pursuant to
subsection (n) (2) , after which the government shall have the
burden of establishing the f orf eitability of the third party's
interest, and the third party shall have the burden of establish-
ing an innocent owner defense under subsection (n) (6)."

TITLE III - PROPERTY SUBJECT TO FORFEITURE
SEC. 301. FORFEITURE OF PROCEEDS OF FEDERAL OFFENSES.

(a) FINDINGS. Congress finds that -

Whereas, no person who commits a criminal offense has any
right to retain the proceeds of that offense; and

Whereas, the forfeiture of the proceeds of a criminal
offense deprives a criminal of the benefits of the crime and puts

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the criminal in the position he or she was in before the commis-
sion of the offense, and

Whereas, the forfeiture of criminal proceeds deprives the
criminal of property that could be used to commit additional
criminal offenses, and

Whereas, the forfeiture of criminal proceeds may facilitate
the restoration of property to the victims of crime, and

Whereas, forfeiture of criminal proceeds can offset law
enforcement expenses.

The forfeiture of. criminal proceeds shall be considered
remedial and not punitive in nature.

(b) CIVIL FORFEITURE. - Section 981(a)(1) of title 18,
United States Code, is amended -

(1) in sub-paragraph (C) by strilcing "of section 215" and
all that- follows up to the period -and inserting "of any
offense in this title or a conspiracy to commit such of-
fense"; and

(2) by striking sub -paragraphs (D) , (E) and (F) .

(c) CRIMINAL FORFEITURE. - Section 982(a) of title 18,
United States Code, is amended -

(1) in paragraph (2), by stri)cing "violate - " and subpara-
graphs (A) and (B) and inserting "violate any offense in
this title, "; and

(2) by striking paragraphs (3) , (4) and (5) .
SEC. 302. UNIFORM DEFINITION OF "PROCEEDS"



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(a) CIVIL FORFEITURE. - Section 981(a) of title 18, United
States Code, is amended -

(1) in paragraph (1) , by striking "gross receipts" and
"gross proceeds" wherever those terms appear and inserting "pro-
ceeds " ; and

(2) by adding a new paragraph (3) as follows:

"(3) In this section, "proceeds" means any and all
property of any kind obtained, directly or indirectly, at
any time as the result of the commission of the offense
giving rise to forfeiture, and any property traceable
thereto. "Proceeds" is not limited to the net gain or
profit realized from the commission of the offense."

(b) CRIMINAL FORFEITURE. - Section 982 of title 18, United
States Code, is amended -

(1) in subsection (a) , by striking— ii^ross receipts" and
"gross proceeds" wherever those terms appear and inserting "pro-
ceeds" ; and

(2) by adding the following new paragraph to subsection (b) :



Online LibraryUnited States. Congress. House. Committee on the JCivil Asset Forfeiture Reform Act : hearing before the Committee on the Judiciary, House of Representatives, One Hundred Fourth Congress, second session, on H.R. 1916 ... July 22, 1996 → online text (page 16 of 37)