United States v. Nawaf Hasan, 2013 U.S. App. LEXIS 11385

Hasan was convicted of conspiracy and multiple counts of purchasing, possessing, and transporting contraband cigarettes in a Virginia-based sting operation involving ATF undercover sales.
The district court denied Hasan’s due process challenge to the government’s conduct, distinguishing undercover cigarette sales from narcotics cases and citing statutory exemptions for federal agents.
The government sought a forfeiture order of $604,220, based on gross proceeds derived from the contraband distribution scheme.
Hasan argued for a § 981(a)(2)(B) forfeiture framework (profits, not gross proceeds) because contraband cigarettes are lawful goods sold unlawfully, but the district court applied § 981(a)(2)(A) (gross proceeds).
The court adjudicated Hasan guilty and adopted the government’s forfeiture calculation; Hasan appeals both the conviction-related challenge and the forfeiture amount.
On appeal, the Fourth Circuit affirmed, holding the government’s conduct not outrageously unconstitutional and upholding the gross-proceeds forfeiture.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether government conduct was so outrageous as to violate due process	Hasan argues outrageous conduct taints the indictment and requires dismissal or suppression.	The government contends conduct was authorized, not outrageous, and lawful under the CCTA and appropriations.	No due process violation; conduct not shockingly outrageous.
Whether forfeiture should use gross proceeds or net profits	§ 981(a)(2)(B) should apply, yielding profits as proceeds.	§ 981(a)(2)(A) applies because contraband cigarettes are illegal goods, so gross proceeds are forfeitable.	Forfeiture based on gross proceeds sustained; contraband cigarettes are illegal goods.

United States v. Russell, 371 U.S. 423 (U.S. 1973) (outrageous conduct limits explained; entrapment not the only remedy)
Hampton v. United States, 425 U.S. 484 (U.S. 1976) (reaffirms limited scope of outrageous conduct claim)
United States v. Goodwin, 854 F.2d 33 (4th Cir. 1988) (outrageous conduct requires more than offensiveness)
United States v. Osborne, 935 F.2d 32 (4th Cir. 1991) (high shock threshold for due-process challenge)
United States v. Noorani, 188 F. App’x 833 (11th Cir. 2006) (forfeiture of gross proceeds in contraband-cigarette case; illegal goods)
United States v. Mahaffy, 693 F.3d 113 (2d Cir. 2012) (illustrates § 981(a)(2)(A) vs (B) distinction in proceeds)
First Regional Bank v. United States, 639 F. Supp. 2d 1203 (W.D. Wash. 2009) (district court applying gross-proceeds in contraband context)