United States v. Technodyne LLC
2014 U.S. App. LEXIS 10242
| 2d Cir. | 2014Background
- Technodyne LLC and its owners Padma and Reddy Allen (U.S. citizens) were indicted in June 2011 in connection with alleged frauds on New York City's CityTime payroll project; after indictment the Allens left the U.S. (Padma to India in Feb. 2011; Reddy to Indonesia/India in Mar. 2011) and did not return.
- The government froze bank accounts and later filed a civil in rem forfeiture complaint (March 2012) seeking forfeiture of 19 bank accounts and 7 real properties as proceeds of the alleged crimes and moved to strike claimants’ claims under the fugitive disentitlement statute, 28 U.S.C. § 2466.
- The Allens and Technodyne submitted declarations asserting they left for business/family reasons, were cooperative through counsel, and remained abroad because of financial and reputational harms from the asset freeze and publicity.
- The government submitted declarations and records (including transfers of >$10 million to Indian accounts controlled by a related entity) and evidence of communications in which the Allens’ counsel sought conditions for return (including bail and limited release of frozen funds).
- The district court, after briefing and oral argument, found by factual determination that the Allens declined to reenter the U.S. “in order to avoid criminal prosecution,” struck their claims to 23 defendant properties under § 2466, and default forfeiture judgments followed; claimants appealed.
Issues
| Issue | Claimants' Argument | Government's Argument | Held |
|---|---|---|---|
| Proper intent standard under § 2466 (meaning of "in order to avoid criminal prosecution") | Court must find claimant had specific, dominant/sole intent to avoid prosecution before disentitlement | § 2466 requires proof the claimant deliberately avoided prosecution; the government need not prove sole motive | Court: Specific intent to avoid prosecution is required, but it need not be sole or principal motive; any motivating intent to avoid prosecution suffices under § 2466. |
| Burden of proof / standing on disentitlement facts | Government bears burden to prove elements of § 2466 (including intent) | Government argued Rule G(8)(c) shifts burden on claimants to establish standing to oppose forfeiture | Court: Government bears burden to prove § 2466 prerequisites; claimants had statutory and Article III standing to contest forfeiture. |
| Standard of adjudication for § 2466 motions (summary judgment vs. discretionary factual finding) | Court should apply summary-judgment standards and draw inferences for claimants where factual disputes exist | Disentitlement is discretionary and requires factual findings; court may weigh evidence and is not confined to Rule 56 standards | Court: Summary judgment standards do not govern § 2466 motions; district courts may make factual findings on submitted evidence and exercise discretion in ordering disentitlement. |
| Sufficiency of evidence that Allens intended to avoid prosecution | Claimants’ declarations and alternative motives (financial ruin, family, children’s schooling) created genuine disputes | Government points to circumstantial evidence: timing of departures, failure to return, asset transfers abroad, counsel’s requests for bail/limited release as condition for return | Court: Considering the totality of circumstances, the district court’s factual finding of intent to avoid prosecution was not clearly erroneous and disentitlement was within its discretion. |
Key Cases Cited
- Degen v. United States, 517 U.S. 820 (context: undesirable result of allowing absent criminal defendants to litigate civil claims from abroad)
- Collazos v. United States, 368 F.3d 190 (2d Cir. 2004) (interpreting § 2466 and identifying five prerequisites for disentitlement)
- United States v. Eng, 951 F.2d 461 (2d Cir. 1991) (discussed in background on disentitlement policy)
- Anderson v. Liberty Lobby, 477 U.S. 242 (standard for summary judgment and court weighing of evidence contrasted with § 2466 process)
- United States v. $6,976,934.65, Plus Interest, 554 F.3d 123 (D.C. Cir. 2009) (held summary-judgment treatment in disentitlement context where genuine disputes existed)
- United States v. Salti, 579 F.3d 656 (6th Cir. 2009) (relied on D.C. Circuit treatment)
- United States v. $671,160.00 in U.S. Currency, 730 F.3d 1051 (9th Cir. 2013) (recognized that avoidance-of-prosecution need not be sole motive)
- FDIC v. Providence College, 115 F.3d 136 (2d Cir. 1997) (standard for reviewing district-court factual findings)