Criminal Forfeiture Statute Trumps Third Party Petition and the Terrorism Risk Insurance Act

United States v. Holy Land Found. for Relief & Dev., No. 11-10535 (5th Cir. June 25, 2013) (Wiener, Clement, Prado)

If you have a claim to assets blocked as belonging to a terrorist party, you better file your claim before the government restrains them under 21 U.S.C. § 853 to preserve their availability for criminal forfeiture proceedings.

The Rubins, who were victims of a terrorist attack in 1997, filed a third party petition under 21 U.S.C. § 853(n) to assert their interest in the Holy Land Foundation for Relief’s assets.  In 2001, HLF was deemed an arm of Hamas and its funds were blocked.  In 2004, while HLF’s assets were still blocked, the government filed an indictment including its notice to seek criminal forfeiture. In denying the government’s motion to dismiss the Rubins’ petition, the district court held that the Terrorism Risk Insurance Act of 2002 (TRIA) allowed the Rubins to execute against HLF’s assets notwithstanding the government’s forfeiture proceedings. The government appealed, however, and the panel reversed, holding that the Rubins failed to demonstrate an entitlement to recovery under either 21 U.S.C. § 853 or the TRIA.

The panel held that the Rubins cannot prevail under 21 U.S.C. § 853 because the criminal forfeiture statute bars a third party claiming an interest in forfeitable property from intervening in the criminal trial or appeal, and also prohibits a third party from commencing a separate action against the United States on the basis of that party’s interest in the property. In regards to the TRIA argument, the panel reasoned that, since TRIA only applies to blocked assets of a terrorist party, it did not apply here since the assets became unblocked once the government filed its forfeiture.  Lastly, the panel held that the clause “notwithstanding any other provision of law” of TRIA does not trump the criminal forfeiture statute.

Thanks to FPD Intern Matthew Gonzalez for this post.

30-Day Forfeiture Deadline Applies to Minors

United States v. Alvarez, No. 11-41371 (Higginbotham, Smith, Elrod)

The moral of this story could be that deadlines matter and, if you miss one, ask for an extension instead of (or in addition to) arguing that the deadline doesn’t apply to you.

Claimant, the minor child of Defendant Alvarez, appealed an order of forfeiture regarding property that Alvarez agreed to forfeit in his plea agreement because it was used in furtherance of the conspiracy to distribute cocaine. The government attempted to notify the minor child and her mother of the preliminary forfeiture and the thirty days to file a claim by posting on the government’s forfeiture website and by personal service to the mother and to the grandmother. Seventy-four days after service, the mother filed a claim on the minor’s behalf. The government moved for dismissal on various grounds, including the minor’s failure to file timely, and the district court dismissed the claim.

The panel considered only the failure to file timely. It found that the government made a reasonable effort to provide the minor notice and rejected arguments that the deadline should be more flexible for minors. The panel affirmed dismissal of the minor’s claim but remanded so the judgment could be corrected to include the forfeiture as required by Federal Rule of Criminal Procedure 32.2(b)(4)(B).

The panel noted that the minor did not move to extend the deadline under Rule 6(b)(1) due to excusable neglect. Perhaps if the minor had done so, the panel would have had to address the other issue raised on appeal: whether the minor was a bona fide purchaser for value or holder of a legal interest in the property under 21 U.S.C. § 853(n).