Under 21 U.S.C. § 853(a)(1), is a co-conspirator of a defendant who has been convicted of violating a federal drug law liable for the forfeiture of the crime’s proceeds, even if the co-conspirator was never in possession of them?
When a person is convicted of a federal crime, the United States government can often seize the property or proceeds obtained through the commission of the crime. Under 21 U.S.C. § 853(a)(1), Congress mandates that a person who is convicted of a Chapter 13 federal drug crime must forfeit the “property constituting, or derived from, any proceeds the person obtained, directly or indirectly, as the result of such violation.” It is unclear, however, whether the government can hold a co-conspirator of a drug crime liable to forfeit the proceeds of such violation when the co-conspirator never actually received any of the proceeds of the crime. Petitioner Terry Honeycutt argues that the statute only reaches the persons who have actually individually obtained the proceeds of the crime. The United States, on the other hand, argues that a co-conspirator of a federal drug crime under Chapter 13 is jointly-and-severally liable for the forfeiture of the crime’s proceeds, regardless of whether that person ever obtained the proceeds. The outcome of this case will determine the reach of the government’s seizure power under 21 U.S.C. § 853.
Questions as Framed for the Court by the Parties
Under 21 U.S.C. §853(a)(1), a person convicted of violating a federal drug law must forfeit to the government “any property constituting, or derived from, any proceeds the person obtained, directly or
indirectly, as the result of such violation.”
The question presented is:
Does 21 U.S.C. § 853(a)(1) mandate joint-and-several liability among co-conspirators for forfeiture of the reasonably foreseeable proceeds of a drug conspiracy?
Terry Honeycutt was a salaried employee at his brother’s store where he oversaw sales and product inventory. United States v. Honeycutt, No. 1:12-cr-00144 at 2 (6th Cir. Mar. 4, 2016). In 2008, Honeycutt noticed that an increasing number of customers were purchasing Polar Pure, a water purification product that was being used to manufacture methamphetamine around the area. See id. Although Honeycutt was warned by the Director of the Tennessee Meth and Pharmaceutical Task Force not to sell Polar Pure if he felt uncomfortable doing so, Honeycutt never stopped. See id. Over the next year, Honeycutt continued to sell Polar Pure until, in 2009, the Drug Enforcement Administration (“DEA”) began to investigate the store. See id. at 2–3. The DEA’s investigation revealed that Polar Pure became the store’s best-selling item and, upon questioning Honeycutt, the DEA discovered that he and his brother had adopted a “don’t-ask-don’t-tell” policy regarding the product. See id. at 3. The DEA executed a warrant to seize the store’s inventory of Polar Pure, and the store closed. See id. After the store closed, the methamphetamine labs that used Polar Pure to produce their products became “fairly non-existent” in the region. See id.
A federal grand jury then indicted the brothers on charges related to the distribution of the Polar Pure “while knowing or having reasonable cause to believe” that it was being used to make methamphetamine. See Honeycutt, No. 1:12-cr-00144 at 3. Honeycutt’s brother pled guilty, but Honeycutt went to trial. See id. At trial, Honeycutt was eventually convicted on charges of conspiracy to distribute the Polar Pure for illegal purposes, in violation of several federal laws. See id. The district court sentenced Honeycutt to a concurrent term of 60 months in prison for each count. See id. However, reasoning that because Honeycutt was a salaried employee and therefore did not reap the proceeds from the Polar Pure sales, the district court did not order forfeiture of such proceeds from Honeycutt. See id.
Honeycutt appealed his convictions to the Sixth Circuit, and the United States cross-appealed the district court’s decision on the issue of forfeiture. See Honeycutt, No. 1:12-cr-00144 at 1. The Sixth Circuit affirmed Honeycutt’s convictions on one count, vacated his sentences on another count, and reversed the district court on the issue of forfeiture. See id. On the question of whether the United States could force Honeycutt to forfeit an amount of money greater than he had received as a participant in the conspiracy, the Sixth Circuit answered that it could. See id. at 19. Specifically, the Sixth Circuit cited the determination of the other circuit courts that 21 U.S.C. § 853 allows joint-and-several liability for drug conspiracies. See id. at 17–18. In likewise arriving at this conclusion, the Sixth Circuit held that joint-and-several liability is proper because otherwise the government would have the unnecessary burden of proving the “specific portion of proceeds for which each defendant is responsible.” See id. at 18. Honeycutt appealed to the United States Supreme Court. See Brief for Petitioner, Terry M. Honeycutt.
SHOULD § 853(1)(a)’s PROVISION REQUIRING THE DEFENDANT “OBTAIN” PROPERTY BE INTERPRETED TEXTUALLY OR IN LIGHT OF PINKERTON?
Terry Honeycutt’s main argument attacks the United States’ interpretation of the word “obtain,” claiming that the United States inappropriately conflates obtaining something indirectly with not ever possessing the thing at all. See Brief for Petitioner, Terry M. Honeycutt at 12. Honeycutt cites a D.C. Circuit Court of Appeals case, United States v. Cano-Flores, 796 F.3d 83 (D.C. Cir. 2015), explaining that “obtaining” property requires actual acquisition and possession of that property rather than merely depriving someone else of it. See id.; United States v. Cano-Flores, 796 F.3d 83, 91 (D.C. Cir. 2015).
Honeycutt also scrutinizes the United States’ focus on the word “indirectly,” which the United States claims yields joint-and-several liability because when one member of a conspiracy obtains property, “all of the co-conspirators ‘indirectly’ obtain it.” See Brief for Petitioner at 11. Honeycutt urges the Court to reject this reasoning by use of an analogy to a $1 million drug conspiracy with 100 couriers and one kingpin. See id. Honeycutt submits that each courier does not “obtain” $1 million—even indirectly—simply because they aided the kingpin in carrying $10,000 at some distant series of points. See id. Honeycutt thus claims that the word “indirectly” was simply written to ensure that property remains forfeitable when proceeds go first from a victim to an intermediary such as an entity or people under the defendant’s control before reaching the defendant—not to trigger anything akin to substantive conspiracy liability doctrine. See id. at 12. Honeycutt argues that the word “indirectly” modifies the ‘however’ obtained rather than ‘whomever.’ See id.
The United States counters that Honeycutt’s view of limiting forfeiture to proceeds that the defendant obtained personally is incorrect because it ignores the traditional application of the Pinkerton rule, which holds that each conspirator in a criminal partnership is legally responsible for his co-conspirators’ reasonably foreseeable acts in furtherance of their common scheme. See Brief for Respondent, United States at 23. The United States also uses an analogy, a drug conspiracy example in which a conspirator may be convicted of possessing drugs with intent to distribute even if the drugs and proceeds from such distribution were physically possessed only by his co-conspirator. See id. at 23.
The United States argues that Honeycutt’s argument pertaining to the phrase “or indirectly” has as its actual purpose “to make clear that a person does not have to take personal, physical possession of the proceeds to ‘obtain’ them.” See Brief for Respondent at 24. The United States thus claims that receipt of proceeds indirectly by a criminal enterprise of which the defendant is a part is analogous, for purposes of proving such proceeds where obtained, to the receipt of proceeds by a lawful agent or alter ego. See id.
SHOULD § 853 BE LIMITED TO THE FORFEITURE OF TAINTED ASSETS?
Honeycutt argues that the application of joint-and-several liability under the United States’ logic would erroneously change the application of various provisions of § 853, causing nonsensical consequences and the forfeiture of assets other than the “tainted” assets. See Brief for Petitioner at 13. Honeycutt claims that § 853 should properly concern only tainted assets—meaning “the actual property constituting, or derived from, the proceeds of drug crimes.” See id. Honeycutt demonstrates the absurdity with a hypothetical defendant who uses a 2010 Chevrolet to carry drugs. See id. at 14. Honeycutt submits that it was Congress’s intent under §853(a)(2) to subject the actual 2010 Chevrolet, individually used in the crime, to forfeiture—and no other 2010 Chevrolet. See id. According to Honeycutt, under the United Sates’ interpretation of “indirectly,” the United States could demand the forfeiture of any randomly-selected 2010 Chevrolet as long as any co-conspirator had something of the same description. See id. Honeycutt claims that the United States’ interpretation undermines § 853’s purpose of preventing the reuse of criminal instruments in subsequent crimes. See id. at 15.
The United States emphasizes that § 853 is not limited to the forfeiture of only the tainted property, claiming that § 853 makes a defendant personally liable to forfeit an amount equivalent to the value of the tainted property in the event that the tainted property has been disposed of. See Brief for Respondent at 31–32. The United States counters this notion claiming that unlike § 853(a)(1), provisions like § 853(a)(2) are tied to ownership of specific property, rather than the act of obtaining proceeds. See id. at 37. The United States posits that despite all members of a conspiracy being legally responsible for each other’s acts, no comparable rule would be required to treat conspirators as owners of each other’s property, even if the United States’ argument were endorsed as to subparagraph (1). See id. at 36–37. Thus, courts would not have to apply such liability to other sections like § 853(a)(2). See id.
WOULD JOINT-AND-SEVERAL LIABILITY FOR CRIMINAL FORFEITURE ADVANCE OR UNDERMINE THE LAW’S PURPOSES?
Honeycutt claims that applying joint-and-several liability to § 853(a)(1) undercuts two primary rationales of the statute: (1) ensuring that the property will not be used for subsequent crimes; and (2) depriving wrongdoers of criminal profits. See Brief for Petitioner at 29. For example, Honeycutt argues that a joint-and-several forfeiture obligation would conflate a hypothetical $10,000 that a courier derived from his lawful day job with the $10,000 that a kingpin received from the drug conspiracy. See id. at 30. Honeycutt points out that liability would then primarily fall not on the property more linked to criminal activity, but merely upon whomever the government collects from first. See id. As criminal prosecutions usually work up, not down, a criminal hierarchy, Honeycutt suggests that applying joint-and-several liability makes forfeitures look more like criminal fines contrary to the statute. See id. at 31. Honeycutt believes that such a system, while appropriate in an area such as tort, where the law prioritizes victim compensation even at the risk of unfairness to a still-liable tortfeasor, is inappropriate in criminal forfeiture. See id. Honeycutt argues that as the United States’ theory cannot ensure that the property re-enter the criminal cycle, it cannot serve the statutory purpose that its recipient not retain its profits. See id. at 37–38.
The United States claims the opposite is true considering that Congress enacted § 853 to weaken the economic power of criminal enterprises. See Brief for Respondent at 37. The United States posits that Honeycutt’s logic would require the government to determine the precise allocation of proceeds among conspirators, which would in turn motivate conspirators to “mask the allocation of the proceeds” and possibly avoid forfeiture altogether. See id. at 38–39. The United States claims that this would aggravate an already existing problem, as it is unlikely that a criminal organization will have “maintained accurate files of proportional participation in the group.” See id. Thus, the United States suggests denying forfeiture because “the government cannot prove exactly which defendant received what portion of the pot,” defeating the purpose of § 853 entirely and thwarting the strong governmental interest in obtaining full recovery. See id. In response to Honeycutt’s hypothetical kingpin possibly retaining tainted proceeds at the expense of low-level couriers forfeiting their untainted property, the United States claims this scenario is unlikely. See id. at 40. In fact, the United States counters that the “kingpin” in Honeycutt’s scenario would have greater exposure to forfeiture liability under the United States’ theory because more of the conspiracy’s proceeds would be foreseeable to him than to low-level couriers. See id. Additionally, the United States points out that in the event of asset retention, the kingpin would therefore have more assets to satisfy a future forfeiture obligation––assuming a future obligation could be imposed. See id.
SENTENCING PRINCIPLE OF PROPORTIONALITY
The National Association of Criminal Defense Lawyers (“NACDL”), in support of Honeycutt, argues against the Sixth Circuit’s forfeiture holding, claiming that such joint-and-several forfeiture liability violates basic principles of sentencing. Brief of Amicus Curiae the National Association of Criminal Defense Lawyers ("NACDL"), in Support of Petitioner at 3–4. Specifically, the NACDL asserts that a principal Congressional intent of sentencing laws is proportionality, meaning that convicted persons receive “proportionately different sentence[s]” in accordance with the severity of their criminal conduct. See id. However, as the NACDL points out, by imposing joint-and-several forfeiture liability on all members of a criminal conspiracy regardless of each participant’s role in the conspiracy, a court ignores the principle of proportionality. See id. at 4. Therefore, the NACDL argues, the Sixth Circuit violates the Congressional principle of proportionality in sentencing by imposing joint-and-several forfeiture liability on Honeycutt who, unlike his brother, did not receive the proceeds from the conspiracy. See id.
The United States argues, however, that Congress meant to bypass the default sentencing principle of proportionality in order to “combat two of the most serious crime problems facing the country: racketeering and drug trafficking.” See Brief for Respondent, United States at 8. The United States points to § 853’s broad language as proof that Congress intended not only to prevent conspirators from benefitting from their criminal activity but also to dissuade would-be criminals from entering into racketeering and drug trafficking conspiracies in the first place. See id. at 9. Therefore, the United States says, the Sixth Circuit properly sentenced Honeycutt as it was acting to fulfill Congress’s deterrent intentions by imposing joint-and-several forfeiture liability on the less offending conspirator. See id. at 9–10.
DE FACTO CRIMINAL FINES
The NACDL next argues that Congress intended § 853 to be a forfeiture statute, not a fine statute. Brief of NACDL at 8. The difference between a forfeiture and a fine, the NACDL says, is that the former is meant to take away a person’s “ill-gotten gains,” while the latter is “an additional discretionary penalty to be paid from his untainted assets.” See id. at 7–8. The NACDL maintains that when the Sixth Circuit ordered Honeycutt to forfeit the total proceeds from the conspiracy, it was a de facto criminal fine rather than a forfeiture. See id. at 8–9. The NACDL reasons that this is because Honeycutt was not in receipt of the ill-gotten gains from the conspiracy and would thus be paying from his untainted assets. See id. Therefore, the NACDL believes that instead of fulfilling the forfeiture intention of § 853, the Sixth Circuit contravened Congress’s intent by imposing a fine on Honeycutt. See id. at 7–9.
The United States argues, however, that Congress meant § 853 to act as a punitive fine statute, not restitution statute. See Brief for Respondent at 9. Specifically, the United States claims, Congress used the word “proceeds” instead of “profits” in the statute because it did not want the government to have to prove net profits in the defendant’s sales. See id. Moreover, the United States asserts that it is a fundamental policy in conspiracy jurisprudence to hold each conspirator responsible for the actions of the other(s). See id. Therefore, the United States contends that the Sixth Circuit’s imposition of a penalty that amounts to more than what Honeycutt received from the conspiracy was proper. See id. at 8.
- Elizabeth Lowman, Supreme Court to Rule in Drug Forfeiture Case, JURIST (Dec. 10, 2016).
- Kevin Lessmiller, Justices to Answer Forfeiture Question in Drug Cases, Courthouse News Service (Dec. 12, 2016).
- Evan T. Barr, SCOTUS to Decide Joint and Several Liability for Criminal Forfeiture, New York Law Journal (Jan. 27, 2017).