United States v. Rosie Farr ( 2021 )


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  •                  United States Court of Appeals
    For the Eighth Circuit
    ___________________________
    No. 20-2790
    ___________________________
    United States of America
    lllllllllllllllllllllPlaintiff - Appellee
    v.
    Jacqueline D. Mills
    lllllllllllllllDefendant
    Rosie Farr; John Farr
    lllllllllllllllllllll  Claimants - Appellants
    ____________
    Appeal from United States District Court
    for the Eastern District of Arkansas - Central
    ____________
    Submitted: September 24, 2021
    Filed: November 18, 2021
    ____________
    Before LOKEN, COLLOTON, and BENTON, Circuit Judges.
    ____________
    LOKEN, Circuit Judge.
    A jury convicted Jacqueline Mills of multiple counts of wire fraud, money
    laundering, and bribery, parts of a years-long scheme to defraud the United States of
    monies intended to feed low-income children. The indictment included criminal
    forfeiture allegations, triggering the forfeiture provisions of Rule 32.2 of the Federal
    Rules of Criminal Procedure, 
    18 U.S.C. § 982
    , and 
    21 U.S.C. § 853
    . After the jury
    found Mills guilty, the government presented evidence relating to the properties it
    sought to forfeit. See Criminal Rules 32.2(a), (b)(1). The jury found that fourteen
    properties and monies were traceable to the proceeds of Mills’s fraud, including
    monies seized from Southern Bancorp account number xxx1086, the property at issue
    on this appeal. Pursuant to the jury’s determinations, the district court1 issued a
    preliminary order of forfeiture prior to sentencing Mills, directing that these monies
    and properties would be forfeited and applied against Mills’s $3.1 million personal
    money judgment for her crimes. See Criminal Rule 32.2(b)(2). In accordance with
    
    21 U.S.C. § 853
    (n)(1), the United States published notice of the forfeiture order and
    directly notified Mills’s mother and stepfather, appellants Rosie and John Farr.
    The Farrs timely filed third party petitions asserting interests in various
    properties to be forfeited, including monies from Southern Bancorp account number
    xxx1086. See 
    21 U.S.C. § 853
    (n)(2). The petitions commenced proceedings
    ancillary to Mills’s criminal case to determine whether either of the Farrs have
    ownership interests superior to the government’s forfeiture claims. See Criminal
    Rule 32.2(c). The forfeiture order became final as to Mills when she was sentenced,
    but it remained preliminary as to the Farrs until the ancillary proceeding concluded.
    See Criminal Rule 32.2(b)(4).
    In the ancillary proceeding, the government exercised its discovery rights under
    Criminal Rule 32.2(c)(1)(B), requesting admissions and the production of documents
    that would substantiate the Farrs’ ownership claims. Over two years later, when the
    Farrs had provided only limited responses and produced no evidence rebutting the
    jury finding that the seized assets were derived from Mills’s fraud, the government
    1
    The Honorable James M. Moody Jr., United States District Judge for the
    Eastern District of Arkansas.
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    moved for summary judgment, supported by an extensive statement of undisputed
    material facts. The Farrs failed to respond. Invoking Eastern District of Arkansas
    Local Rule 56.1(c), the local counterpart to Rule 56(e) of the Federal Rules of Civil
    Procedure, the district court treated the non-response as admissions, adopted the
    government’s factual findings, granted summary judgment dismissing the Farrs’
    ancillary third party petitions, and issued a final order of forfeiture regarding the
    properties at issue. See Criminal Rule 32.2(c)(2).
    The Farrs appeal the forfeiture of $187,340.67 seized from Southern Bancorp
    account xxx1086, a business account in which Mills and the Farrs were joint account
    signatories, and $9,000 cash withdrawn from that account and seized from Rosie Farr.
    They urge us to remand for a hearing at which they can show by a preponderance of
    the evidence how much of the nearly $200,000 “belongs to them.” Reviewing the
    district court’s grant of summary judgment de novo, we affirm. Torgerson v. City of
    Rochester, 
    643 F.3d 1031
    , 1042 (8th Cir.) (en banc) (standard of review), cert.
    denied, 
    565 U.S. 978
     (2011).
    When a third party files a petition claiming a superior interest in property
    subject to a criminal forfeiture order, the petition commences an ancillary proceeding
    that incorporates certain procedures prescribed by the Federal Rules of Civil
    Procedure, such as discovery and motions to dismiss or to grant summary judgment.
    Criminal Rule 32.2(c)(1); see United States v. Moser, 
    586 F.3d 1089
    , 1092-94 (8th
    Cir. 2009), cert. denied, 
    560 U.S. 907
     (2010). The petitioning third party may not
    relitigate the underlying forfeiture order against the criminal defendant. Rather, the
    third party must prove, by a preponderance of the evidence, that he or she has an
    ownership interest in the property that is superior to the government’s forfeiture claim
    -- either “a legal right, title, or interest . . . superior to any right, title, or interest of the
    defendant at the time of the commission of the acts which gave rise to the forfeiture,”
    or that the third party “is a bona fide purchaser for value.” 
    21 U.S.C. § 853
    (n)(6). “A
    § 853(n) ancillary proceeding is the only avenue by which a third-party claimant may
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    seek to assert an interest in property that has been included in an indictment alleging
    that the property is subject to forfeiture.” United States v. Puig, 
    419 F.3d 700
    , 703
    (8th Cir. 2005).
    In the two years between the Farrs filing their third party petitions and the
    government moving for summary judgment, the Farrs failed to present evidence
    supporting their claims of a superior ownership interest in Southern Bancorp account
    xxx1086. In support of its motion for summary judgment, the government’s
    statement of undisputed material facts included, consistent with the testimony of an
    FBI forensic accounting expert at trial and at the post-trial forfeiture proceeding, the
    fact that funds flowing into Southern Bancorp account xxx1086 during the period in
    question were derived from Mills’s fraud. When the Farrs failed to respond, the
    district court properly adopted the government’s statement of undisputed facts. See
    Fed. R. Civ. P. 56(e)(2).
    On this record, the Farrs failed to prove a prior interest in the property under
    
    21 U.S.C. § 853
    (n)(6)(A) because “the proceeds of an offense do not exist before the
    offense is committed, and when they come into existence, the government’s interest
    under the relation-back doctrine immediately vests.” United States v. Timley, 
    507 F.3d 1125
    , 1130 (8th Cir. 2007). Nor did the Farrs present evidence they qualify as
    bona fide purchasers for value under § 853(n)(6)(B). As in United States v. Porchay,
    
    533 F.3d 704
    , 709 (8th Cir. 2008), the Farrs’ failure to present evidence of superior
    ownership interests “irreparably crippled” their third party claims.
    After the district court granted the government’s motion for summary
    judgment, Rosie Farr filed a pro se motion to reconsider, citing her husband’s illness
    and her lawyer’s lack of diligence. The district court treated this as a Rule 60(b)(1)
    motion and denied it for failure to show “excusable neglect.” On appeal, the Farrs
    again argue their failure to respond to discovery requests and the government’s
    motion for summary judgment was due to their attorney’s lack of diligence. “It is
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    generally held that ‘excusable neglect’ under Rule 60(b) does not include ignorance
    or carelessness on the part of an attorney.” Noah v. Bond Cold Storage, 
    408 F.3d 1043
    , 1045 (8th Cir. 2005). The district court did not abuse its discretion in applying
    that general rule in this case.
    The Farrs further argue their failure to respond was due to the preliminary
    forfeiture order citing the criminal forfeiture statute, 
    18 U.S.C. § 982
    (a)(3)(F), which
    by its terms is inapplicable against third parties. This contention is without merit. A
    preliminary forfeiture order is part of the criminal forfeiture process, intended in part
    to give third parties notice of the impending forfeiture and an opportunity to claim a
    superior interest in an ancillary proceeding governed by rules of civil procedure. If
    a third party prevails in the ancillary proceeding, the criminal forfeiture fails as to that
    property, and it will be transferred to the third party owner unless the government
    commences a successful civil forfeiture proceeding against the third party under 
    18 U.S.C. § 981
    . But here, the Farrs’ third party claims failed, and the district court
    properly entered a final forfeiture order pursuant to 
    21 U.S.C. § 853
    (n)(7) and
    Criminal Rule 32.2(c)(2). As in United States v. Waits, it is clear that the Farrs as
    third parties had adequate notice the government intended to seek forfeiture, as their
    timely third party petitions confirmed. 830 F. App’x 790 (8th Cir. 2020), cert. denied,
    -- S. Ct. --, 
    2021 WL 4508223
     (Oct. 4, 2021).
    The Orders of the district court dated June 2 and August 10, 2020 are affirmed.
    ______________________________
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