Tuesday, January 14, 2014

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

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.



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