United States v. Finn Batato
833 F.3d 413
| 4th Cir. | 2016Background
- Federal indictment (2012) charged claimants in a large-scale copyright-infringement and money-laundering scheme; assets seized or restrained in New Zealand and Hong Kong.
- U.S. filed a civil forfeiture action in E.D. Va. (July 2014) against assets located abroad; claimants filed claims but largely remained outside the U.S. and resisted extradition.
- Government moved to strike claims under the fugitive-disentitlement statute, 28 U.S.C. § 2466; district court granted disentitlement and entered default forfeiture judgments (March 2015).
- Claimants appealed, arguing: lack of in rem jurisdiction over foreign assets; § 2466 violates due process; claimants are not fugitives under the statute; international law and spouse’s standing arguments.
- Fourth Circuit majority affirmed: § 1355(b) is jurisdictional; minimum contacts satisfied by extensive use/control of servers in E.D. Va.; § 2466 constitutional and properly applied under a specific-intent standard; Mona Dotcom lacked Article III standing to sustain marital claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Jurisdiction under 28 U.S.C. § 1355(b)(2) for property located abroad | § 1355(b) is only a venue provision and cannot supply in rem jurisdiction over foreign res | § 1355(b) (with § 1355(d)) grants district courts jurisdiction over foreign-located forfeiture res; E.D. Va. had acts giving rise to forfeiture (servers) | § 1355(b) is jurisdictional; E.D. Va. had statutory jurisdiction because acts (servers) occurred there — affirmed |
| Due Process / minimum contacts for in rem jurisdiction | Constitutional minimum-contacts analysis forbids assertion of jurisdiction over res absent sufficient contacts with forum | Even if Shaffer-type contacts test applies, claimants purposefully availed themselves given hundreds of servers in E.D. Va. used to effect the scheme | Assuming minimum-contacts test, contacts (525 servers, tens of millions spent) suffice; due process not violated — affirmed |
| Constitutionality of statutory fugitive disentitlement, 28 U.S.C. § 2466 | § 2466 deprives claimants of the right to be heard and conflicts with Degen; disentitlement violates Fifth Amendment due process | Congress authorized disentitlement by statute; § 2466 requires notice and discretion; it presumes specific intent to avoid prosecution and does not eliminate all opportunity to be heard | § 2466 is constitutional as applied; does not contravene due process where claimants knowingly declined to submit and evidence shows intent to avoid prosecution — affirmed |
| Application of § 2466: required intent and proof of fugitive status | Statute requires that avoiding prosecution be the sole or principal reason for staying abroad; government failed to prove specific intent for many claimants | Statute requires specific intent (not sole/principal reason); evidence of resisting extradition, statements, and conduct supports intent | Court adopts specific-intent standard; factual findings of intent were not clearly erroneous — affirmed |
Key Cases Cited
- Degen v. United States, 517 U.S. 820 (Supreme Court) (addressed judicial civil disentitlement; left open constitutionality of statutory disentitlement)
- Shaffer v. Heitner, 433 U.S. 186 (Supreme Court) (held minimum-contacts principles relevant to in rem jurisdiction)
- United States v. James Daniel Good Real Property, 510 U.S. 43 (Supreme Court) (procedural protections required before depriving property in rem)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (Supreme Court) (redressability and standing standards)
- R.M.S. Titanic, Inc. v. Haver, 171 F.3d 943 (4th Cir.) (admiralty/in rem limits where court lacks control of res)
- R.M.S. Titanic, Inc. v. The Wrecked & Abandoned Vessel, 435 F.3d 521 (4th Cir.) (limits on constructive in rem jurisdiction where res lies in another sovereign)
- Collazos v. United States, 368 F.3d 190 (2d Cir.) (treatment of disentitlement and waiver in civil forfeiture contexts)