UNITED STATES, Appellee, v. Ramon ZORRILLA-ECHEVARRIA, Defendant, Appellant, Andres Castillo-Peña, Claimant, Appellant.
No. 10-1459.
United States Court of Appeals, First Circuit.
Decided Nov. 22, 2011.
Submitted Nov. 9, 2011.
LYNCH, Chief Judge.
This case involves the procedures governing criminal forfeiture, the distinction between a criminal forfeiture that constitutes an in personam money judgment and a criminal forfeiture of specific assets, and the rights of third parties in a forfeiture scenario. We affirm in part, vacate in part, and remand for further proceedings consistent with this opinion. The case provides a cautionary tale for forfeitures in bulk cash smuggling and other cash seizure cases.
I.
On October 5, 2007, Ramon Zorrilla-Echevarría boarded the Carribean Express, a ferry due to travel from Mayaguez, Puerto Rico to the Dominican Republic. Zorrilla-Echevarría checked as luggage two doors, similar to those that would be found on a house, before boarding the ferry. United States Customs and Border Patrol is in charge of inspecting luggage and cargo on ferries making such foreign trips. Customs, through use of a routine X-ray machine on the doors, detected currency totaling approximately $543,801 inside of them. Zorrilla-Echevarría had not declared any of the currency and was arrested. Customs seized the cash located in the doors and appears to have retained possession of it throughout the course of the proceedings in this case.
On October 24, 2007, a grand jury issued a two count indictment against Zorrilla-Echevarría. Count one charged Zorrilla-Echevarría with knowingly and willfully transporting approximately $543,8261 in amount and the $543,801 testified to at trial differ. cash
Count two charged Zorrilla-Echevarría with willfully evading the reporting requirements of
Criminal forfeiture of $543,826, pursuant to
A one-day jury trial was held on January 14, 2008, and the jury found Zorrilla-Echevarría guilty on both counts. The government then moved for a preliminary forfeiture order, for the same amount as detailed in the indictment ($543,826), pursuant to
Zorrilla-Echevarría was sentenced to 41 months’ imprisonment on May 14, 2008. At the sentencing hearing, the government requested that the forfeiture amount be included as part of the judgment; the judge agreed, but as events transpired, that did not happen.
The day after the sentencing hearing, Zorrilla-Echevarría and a third party, Andres Castillo-Peña, filed petitions for ancillary hearings, see
Before these petitions were acted on, the district court entered judgment as to Zorrilla-Echevarría‘s crime. The judgment, however, made no mention of the forfeiture the district court had agreed to im- pose
Zorrilla-Echevarría immediately filed a motion for reconsideration of his sentence, which was denied on June 5. He also filed a notice of appeal from the judgment on June 3, 2008; this became case number 08-1823 on appeal.
The district court denied both petitions for ancillary hearings on June 5, explaining that “[a]ncillary hearings are not appropriate in the context of a money judgment.” Both Zorrilla-Echevarría and Castillo-Peña moved for reconsideration, which was denied on June 25. The district court again explained that the forfeiture was pursuant to a money judgment, rather than a forfeiture of specific property, and “Zorilla and Castillo cannot establish an interest in this money judgment.” A second notice of appeal was filed, by both Castillo-Peña and Zorrilla-Echevarría, from this set of decisions regarding the ancillary hearing on July 11, 2008. This became case number 08-2008 on appeal.
These appeals were consolidated on January 6, 2009. However, neither appeal was ever briefed. There were numerous requests for extensions of time by Zorrilla-Echevarría and Castillo-Peña, and numerous notices of default and intent to dismiss issued by the court for failure to prosecute the appeal. Eventually, Zorrilla-Echevarría filed a motion for voluntary dismissal on December 16, 2009; Castillo-Peña filed a similar motion on March 31, 2010. A judgment dismissing both cases pursuant to
Meanwhile, on October 13, 2009, the government filed in the district court a motion to amend the preliminary forfeiture order to change the amount of forfeiture from “$543,826 in U.S. currency” to “$543,731.”4 However, it also attached a proposed forfeiture order which was not suitable for money judgments. The district court granted this motion on October 20, 2009. The order accompanying this motion, however, discussed the procedures and provisions relevant to a forfeiture of specific property, and not to imposition of a money judgment. The order directed the government to publish notice of the order, so that third parties who might claim an interest in the property could have an opportunity to establish that interest, as is required before a forfeiture of specific property may become final as to third parties. See
Shortly thereafter, on December 23, 2009, Zorrilla-Echevarría filed a motion to strike and for a return of property, claiming that, because the preliminary forfeiture order was for a money judgment, the district court and the government could not now switch tack and attempt to impose a forfeiture of specific property. In a sense, this was a switch in tack by Zorrilla-Echevarría, who had earlier challenged the order as one not for a money judgment. Zorrilla-Echevarría further argued that the time period for amending the judgment had lapsed, and, as a result, that Zorrilla-Echevarría and Castillo-Peña were entitled to a return of the seized cash.
This motion was denied by the district court on March 12, 2010. The district court reiterated that the forfeiture order
At the same time, the district court entered another order that amended two prior orders. First, the order amended the amended preliminary order of forfeiture (which was issued on October 13, 2009) to remove all references to the procedures involved with orders of forfeiture of specific property, and instead to simply provide that Zorrilla-Echevarría “shall forfeit $543,731 in the form of a money judgment to be enforced against him.” Second, the order amended the Judgment to provide that “[t]he defendant shall forfeit to the United States the amount of $543,731.”
Zorrilla-Echevarría and Castillo-Peña have appealed, and this decision is from that appeal.
After the filing of the notice of appeal, on August 9, 2010, the government filed a motion requesting issuance of a final order of forfeiture, in the amount of $543,731. The court granted the motion on August 31, and once again explained that no ancillary proceeding was necessary before the order became final because the forfeiture consisted of a money judgment.
II.
There are three different types of criminal forfeiture; the relevant statutory provisions, and applicable procedures, vary between the types. As this case involves dispute over which type of forfeiture occurred and what procedures were required, a brief description of each type is necessary. Further complicating matters is the fact that
A criminal forfeiture may take the form of either (1) “an in personam judgment against the defendant for the amount of money the defendant obtained as proceeds of the offense,” (2) forfeiture of specific assets related to criminal activity, or (3) forfeiture of “substitute assets” if the specific assets are unavailable. United States v. Candelaria-Silva, 166 F.3d 19, 42 (1st Cir.1999). Only the distinction between the first two types is relevant here.
The beginning of the forfeiture process is the same for both types. The government must include notice of intent to seek forfeiture in the indictment, and as soon as practicable after a verdict or guilty plea, “the court must determine what property is subject to forfeiture under the applicable statute.”
At this point, the procedures diverge. For a money judgment forfeiture, the court “must determine the amount of money that the defendant will be ordered to pay,” and upon such a determination must issue a preliminary notice of forfeiture “setting forth the amount of any money
By contrast, for a forfeiture of specific assets, the court “must determine whether the government has established the requisite nexus between the property and the offense.”
Before this order may become final, under the forfeiture statute at issue in this case,
If no such petition is filed, the order becomes final “if the court finds that the defendant ... had an interest in the property that is forfeitable under the applicable statute.”
If a third-party petition is filed, the court is to determine whether the third party has a valid interest in the property and amend, or leave unaltered, the final order of forfeiture as is appropriate. See
III.
Zorrilla-Echevarría and Castillo-Peña raise distinct arguments on appeal. Zorrilla-Echevarría advances two theories as to why the forfeiture order was improper and the funds should be returned to him. First, he argues that the statutory provi- sions
Castillo-Peña also advances two theories on appeal. First, he claims that he was deprived of due process because he was never granted an ancillary hearing. Second, he argues that the delay between the seizure of property and the initiation of the forfeiture proceedings took so long as to result in a due process violation.
A. Zorrilla-Echevarría‘s Claims
1. Lack of Authority to Enter Money Judgment
Zorrilla-Echevarría argues that the district court lacked the authority to impose a money judgment under the relevant statutory provision. The argument begins with the premise that
We do not consider the merits of this argument,5 as Zorrilla-Echevarría knew that the forfeiture was in the nature of a money judgment at the time his first appeal was docketed, yet he never raised the matter, and that appeal was dismissed. Zorrilla-Echevarría‘s attempt to do so now is untimely; the initial forfeiture decision is not before us. As a result, we need not address the government‘s contention that, if the issue is not waived, review is for plain error.
The version of Rule 32.2 in effect at the time of sentencing explained that “[a]t sentencing ... the order of forfeiture becomes final as to the defendant.”
This is so notwithstanding two potentially contrary considerations. First, it is true that the judgment itself did not contain any mention of the forfeiture, in contravention of the requirements of Rule 32.2(b)(3). See
While this should not have happened, as it is a violation of the Rule, “[t]he appropriate remedy for violation of the Rule depends on context.” United States v. Yeje-Cabrera, 430 F.3d 1, 14 (1st Cir. 2005). The failure to include the forfeiture in the judgment, when a preliminary notice of forfeiture has issued, and at sentencing the forfeiture question was discussed, is “largely a housekeeping” issue and “does not itself go to any fundamental rights of defendants.”6 Id. at 14-15. As a result, there is no reason that the failure to explicitly include the forfeiture in the judgment itself somehow prevented Zorrilla-Echevarría from raising the issue during his first appeal.
Second, it is also true that there was some ambiguity in the district court‘s preliminary forfeiture order as to whether that order imposed a money judgment or a forfeiture of specific property.7 However, the money judgment nature of the forfeiture order was made clear when Zorrilla-Echevarría and Castillo-Peña‘s motions for ancillary hearings were denied. There, the district court explained that such hearings “are not appropriate in the context of a money judgment.” The district court again explained, in denying the motion for reconsideration regarding the ancillary hearing request, that the court “ordered forfeiture pursuant to a money judgment, not the forfeiture of specific property.... Accordingly, the amount that must be turned over ... is not the actual currency involved in the offense, but an amount equivalent to it.” This clarification was provided after the first notice of appeal was filed. Nevertheless, the clarification took place well before the appeal was actually docketed in the First Circuit, giving Zorrilla-Echevarría ample opportunity to challenge the imposition of the money judgment.8
The fact that the judgment was amended to include the forfeiture, and that the preliminary order of forfeiture was amended to slightly alter the value, explicitly include the phrase “money judgment,” and omit the “in U.S. currency” language does not permit Zorrilla-Echevarría to raise this challenge that could have been
Here, the change in the judgment consisted of (1) complying with the formal requirement that the judgment include the forfeiture, (2) a slight change in the dollar amount to be forfeited, (3) an explicit inclusion of the phrase “money judgment” in the preliminary order of forfeiture, and (4) omission of the phrase “in U.S. Currency” after the statement of the dollar amount. None of these changes conferred upon Zorrilla-Echevarría the ability to attack the court‘s authority to impose a money judgment, when it was perfectly clear during the pendency of the prior appeal that such a judgment was what the court had in fact imposed.10
2. Amendment of the Judgment to Include Forfeiture
Zorrilla-Echevarría‘s second argument is that, even if the district court had the authority to impose a personal money judgment, the process it used was procedurally improper, and thus the final forfeiture is unenforceable. This argument is premised on the fact that the court‘s failure to include the forfeiture in the judgment was error and his argument that this type of error could not be corrected by amendment. He contends this error renders the forfeiture invalid.
This is incorrect.
States v. Quintero, 572 F.3d 351, 353 (7th Cir.2009) (“[T]he failure to include forfeiture in a judgment, that everyone intended to be included, constitutes a clerical error, correctable under Rule 36.“) (applying pre-2009 Rule 32.2).
This conclusion is reinforced by a 2009 amendment to Rule 32.2 (which was not in force at the time of the original judgment), providing that “[t]he court must also include the forfeiture order, directly or by reference, in the judgment, but the court‘s failure to do so may be corrected at any time under Rule 36.”
As a result, the fact that the district court did not initially include the forfeiture in the judgment does not render the forfeiture invalid, given that the district court issued a preliminary notice of forfeiture and included the forfeiture during the sentencing hearing.
B. Castillo-Peña‘s Claims
Castillo-Peña argues that he was deprived of due process, because he filed a third party petition asserting that he had a property interest in the seized funds that were in the possession of Customs, but received no hearing to determine his interest in those funds. Castillo-Peña also makes a second argument that the delay “between seizure of property and the institution of forfeiture proceedings” was sufficient, of itself, to cause a constitutional violation of due process.
1. Third-Party Hearing
Castillo-Peña was not entitled to invoke the ancillary proceeding provisions of
However, two considerations lead us to accept the government‘s invitation to remand. First, at issue is not solely the money judgment, but also the fact that the government seized physical cash at the time of Zorrilla-Echevarría‘s arrest. To satisfy the money judgment forfeiture, the district court ordered, on March 12, 2010 (in the same set of orders that amended the judgment to include the forfeiture and amended the preliminary forfeiture order), an attachment of those funds pursuant to
Second, there was some confusion, as we have outlined, as to the nature of the forfeiture order, for which the government bears much of the responsibility.
2. Delay
Castillo-Peña‘s second claim is that the delay between the seizure of the property and the institution of forfeiture proceedings was sufficient, of itself, to cause a deprivation of property in violation of the due process clause. This is not so.
Castillo-Peña relies on United States v. $8,850, 461 U.S. 555, 103 S.Ct. 2005, 76 L.Ed.2d 143 (1983), for this argument. There, the Supreme Court assessed whether “the Government‘s delay in filing a civil forfeiture proceeding violated [a criminal defendant‘s] due process right to a hearing ‘at a meaningful time.‘” Id. at 562, 103 S.Ct. 2005 (quoting Fuentes v. Shevin, 407 U.S. 67, 80, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972)). The Court, analogizing to a defendant‘s right to a speedy trial, explained that the same four factors should determine whether a delay in instituting forfeiture proceedings amounts to a
We do not need to address whether or not there is a distinction for due process purposes between the status of a defendant, as in $8,850, and the status of a third-party claimant, as here. The only delay complained about here was not in the starting of the forfeiture procedures, but to hearing Castillo-Peña‘s claim to the money.
While the confusion in the district court, largely induced by the government‘s sloppiness, about whether this was a money judgment or a forfeiture of the specific cash seized was unfortunate, there was no denial of due process. Castillo-Peña also had alternatives available to him which he did not take.16
Castillo-Peña will receive a hearing on remand under the government‘s concession and we see no prejudice to him. As a result, Castillo-Peña‘s claim that the delay itself constituted a deprivation of property without due process fails.
IV.
We affirm the entry of the money judgment order of forfeiture with respect to Zorrilla-Echevarría. We vacate the portion of the final order of forfeiture ordering that the attached $543,731 in cash shall be used to satisfy the money judgment, and remand to the district court for further proceedings consistent with this opinion. So ordered.