The Price of a Drug Conspiracy Conviction: Second Circuit Remands $5 Million Forfeiture Order in Light of Recent Supreme Court Precedent

Patterson Belknap Webb & Tyler LLP

In United States v. Papas (17-cr-1591-cr), the Second Circuit remanded by summary order a $5 million forfeiture order entered in the Southern District of New York (Daniels, J.) after the defendant pleaded guilty to conspiracy to distribute marijuana.  Judges Cabranes, Carney, and Caproni (sitting by designation) were on the panel. 

The $5 million order was premised on the district court’s calculations of not only Mr. Papas’s proceeds from the offense, but also those of his co-conspirators.  However, after the district court entered the order, the Supreme Court held that the government’s ability to seek forfeiture, even in a conspiracy case, is “limited to property the defendant himself actually acquired as a result of the crime.”  Honeycutt v. United States, 137 S. Ct 1626, 1635 (2017).  Accordingly, on appeal, both parties agreed that remand was necessary to recalculate the amount of forfeiture in light of Honeycutt, and the panel remanded for that purpose.

The panel rejected Mr. Papas’s alternative argument that the district court violated Federal Rule of Criminal Procedure 32.2 by failing to calculate the forfeiture amount until long after it had accepted his guilty plea and imposed sentence.  The panel noted that at both proceedings, the parties had jointly requested additional time to investigate, and potentially agree on, the amount of forfeiture appropriate for the offense.  It concluded that this procedure is permitted under Rule 32.2, which provides that a court may enter a “general” forfeiture order when imposing sentence, subject to precise calculation at a later date.  Fed. R. Crim. P. 32.3(b)(2)(C). 

As this case demonstrates, Honeycutt is a major limitation on the government’s use of criminal forfeiture.  Asset forfeiture is meant to seize proceeds or instrumentalities of crime, not unrelated property.  Defendants, like Mr. Papas, can no longer be forced to give to the government property that is unconnected to the underlying crime merely because other co-conspirators have dissipated their proceeds of crime.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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