United States v. Vassily Thompson ( 2021 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 18-30206
Plaintiff-Appellee,
D.C. No.
v. 2:16-cr-00145-TOR-1
VASSILY ANTHONY
THOMPSON,
Defendant-Appellant.
UNITED STATES OF AMERICA, No. 18-30208
Plaintiff-Appellee,
D.C. No.
v. 2:16-cr-00145-TOR-2
DERRICK JOHN FINCHER,
Defendant-Appellant. OPINION
Appeal from the United States District Court
for the Eastern District of Washington
Thomas O. Rice, District Judge, Presiding
Argued and Submitted May 4, 2020
Seattle, Washington
Filed March 3, 2021
2 UNITED STATES V. THOMPSON
Before: Andrew J. Kleinfeld, William A. Fletcher, and
Johnnie B. Rawlinson, Circuit Judges.
Opinion by Judge Kleinfeld
SUMMARY*
Criminal Law
The panel affirmed in part, reversed in part, and remanded
in a case in which two defendants appealed (1) their
convictions for conspiracy to commit wire fraud in violation
of 18 U.S.C. §§ 1343 and 1349, and (2) the forfeiture
provisions of their sentences.
Appellants argued that because the indictment charged
their crimes as it would for an 18 U.S.C. § 371 conspiracy by
including “Overt Acts,” the indictment should be treated as
conspiracy under Section 371, and that allowing the jury to
convict Appellants of a Section 1349 conspiracy in effect
amended the indictment improperly. Appellants, who were
sentenced to 108 and 135 months respectively, asserted that
this court should therefore remand for resentencing under
Section 371, which would reduce their maximum exposure to
five years. Rejecting this argument, the panel wrote that the
overt-acts language was surplusage with respect to what
Appellants were actually charged with and convicted of, and
there is no constructive amendment of the indictment because
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
UNITED STATES V. THOMPSON 3
the indictment alleged all of the elements of Sections 1343
and 1349.
The panel vacated the forfeiture judgment against
Appellants and remanded because the judgment amounted to
joint and several liability contrary to Honeycutt v. United
States, 137 S. Ct. 1626 (2017), in which the Supreme Court
held that, in a conspiracy, a defendant may not, for purposes
of forfeiture, be held jointly and severally liable for property
that his co-conspirator derived from the crime but that the
defendant himself did not acquire. The panel held that
Honeycutt, which involved 21 U.S.C. § 853, applies to
18 U.S.C. § 981 because the differences between the two
statutes are immaterial in light of Honeycutt’s reasoning and
language. The panel explained that the text of Section 981
and its roots in common law forfeiture, like the statute in
Honeycutt, necessitate a connection to tainted property. The
panel wrote that, on remand, the district court should make
findings denoting approximately how much of the proceeds
of the crime came to rest with each of the conspirators; and
that the forfeiture judgments must be separate, for the
approximate separate amounts that came to rest with each of
them after the loot was divided among the swindlers.
COUNSEL
Stephen R. Hormel (argued), Hormel Law Office LLC,
Spokane Valley, Washington; Nicolas Vernon Vieth (argued),
Vieth Law Offices Chtd., Coeur d’Alene, Idaho; for
Defendants-Appellants.
4 UNITED STATES V. THOMPSON
Joseph P. Derrig (argued) and Brian M. Donovan (argued),
Assistant United States Attorneys; William D. Hyslop, United
States Attorney; United States Attorney’s Office, Spokane,
Washington; for Plaintiff-Appellee.
OPINION
KLEINFELD, Circuit Judge:
We address two issues, whether the indictment was in
effect improperly amended, and whether the forfeitures as
imposed were contrary to the recent Supreme Court decision
in Honeycutt v. United States.1 The first issue is a
straightforward application of established authority, but the
second requires us to work through a new problem for our
court.
Three people, Vassily Anthony Thompson, Derrick John
Fincher, and John Patrick Nixon, stole a great deal of money
from several people and firms with a classic “advance pay”
scheme. In this kind of swindle, the victim is persuaded to
pay money to the swindler in order to receive a much larger
sum. The Thompson-Fincher-Nixon version persuaded the
victims that the swindlers had access to considerable capital
that could be loaned to the victims, but the victims would
have to advance cash for fees and expenses. There was no
capital available for the prospective loans, and the swindlers
stole the advances. In this type of “long con,” the maxim
“you cannot cheat an honest man,” does not apply. One can.
The “long con” in this case was perfected with extremely
1
137 S. Ct. 1626 (2017).
UNITED STATES V. THOMPSON 5
elaborate and complex business documents and escrows,
lulling the victims into victimhood, and appearing, until the
victims sought the promised loans or to get their money back,
to be genuine.
Eventually, the swindlers were caught. Nixon pleaded
guilty pursuant to a plea bargain, and Thompson and Fincher
were convicted in a jury trial and sentenced. Thompson and
Fincher appeal the convictions and the forfeiture provisions
of their sentences. We have jurisdiction under 28 U.S.C.
§ 1291. We lay out more details below, insofar as they bear
on the legal issues.
The Indictment
The superseding indictment under which the swindlers
were convicted says in the title area that they were charged
with conspiracy to commit wire fraud in violation of
18 U.S.C. §§ 1343 and 1349 and aggravated identity theft in
violation of 18 U.S.C. § 1028A(a)(1). The identity theft
charge was dropped and is not an issue in this appeal. The
general allegations in the superseding indictment were that
the three “worked with one another to offer false and
fictitious loans to various parties in Idaho, Montana, and
North Carolina.” The loans and lines of credit would be
offered after Thompson, Fincher, and Nixon “collected fees
from these parties under the guise that the fees were being
used to acquire the loans. No such loans or lines of credit
existed.”
The Idaho scheme promised a $6 million line of credit,
but required a $160,000 advance fee to be sent to an escrow
agent in Georgia, a law firm specializing in escrows. An
email promised that the $160,000 would be disbursed to an
6 UNITED STATES V. THOMPSON
imaginary bank if the imaginary loan were approved, or
returned if the customer cancelled the escrow. Of course, the
imaginary loan was not made available, and the $160,000 was
not returned.
The Montana deal required a $300,000 advance fee,
supplemented by another $1 million, to get a $60 million or
$70 million line of credit. The fees were deposited in a trust
account maintained by another attorney, but no line of credit
was made available.
The North Carolina scheme asked for an $855,000
advance to secure a fictitious $10 million line of credit, with
the advance to be deposited into the trust account of a third
attorney’s firm.
The swindlers dressed the entire scheme up with genuine-
looking escrow agreements, a memorandum of
understanding, claims that Bank of America, Barclay’s Bank,
JP Morgan, the Federal Export Import Bank, RBC Royal
Bank, and Landes Capital Management were involved, and
lengthy, complex, and apparently genuine documentation.
The indictment recites all these facts in considerably
greater detail, and then under a heading, “Overt Acts,”
incorporates them by reference. It then alleges multiple
counts of wire fraud under 18 U.S.C. §§ 1343 and 1349 for
the wire communications used to dupe the victims out of their
money. The indictment also gives notice of criminal
forfeiture allegations under 18 U.S.C. § 981(a)(1)(C) and
28 U.S.C. § 2461(c) for property derived from proceeds
traceable to the offenses or substitute property under
21 U.S.C. § 853(p). The jury was instructed on conspiracy to
UNITED STATES V. THOMPSON 7
commit wire fraud and convicted Thompson and Fincher
under 18 U.S. C. §§ 1343 and 1349.
Appellants argue that because the indictment charges their
crimes as it would for an 18 U.S.C. § 371 conspiracy by
including “Overt Acts,” it should be treated as so charging.
Thus, allowing the jury to convict them of an 18 U.S.C.
§ 1349 conspiracy in effect amended the indictment
improperly. This objection was not raised in district court,
but appellants argue that the improper amendment,
effectively convicting them of something the grand jury did
not charge, was plain error. This statutory distinction matters
a great deal because a Section 371 conspiracy has a five year
limit on the sentence, but a Section 1349 conspiracy has a
twenty year limit. Thompson and Fincher were sentenced to
108 and 135 months (nine and over eleven years),
respectively.
The indictment does indeed read, in many respects, as
though it was drafted to charge a Section 371 conspiracy. It
charges a conspiracy against the United States and alleges
overt acts, which are necessary for a Section 371 conspiracy.2
Relying on the rule that an indictment may not be broadened
or altered to charge a different offense except by the grand
jury itself,3 the appellants challenge their conviction for wire
fraud under Section 1349. Appellants assert that they were in
2
See United States v. Grasso, 724 F.3d 1077, 1086 (9th Cir. 2013)
(requiring an overt act for a Section 371 conspiracy).
3
United States v. Miller, 471 U.S. 130, 144–45 (1985); Stirone v.
United States, 361 U.S. 212, 215–17 (1960); Ex parte Bain, 121 U.S. 1,
10, 13 (1887), overruled on other grounds, United States v. Cotton,
535 U.S. 625 (2002).
8 UNITED STATES V. THOMPSON
effect charged with the lesser Section 371 crimes, and that we
should remand for resentencing under Section 371, which
would reduce their maximum exposure to five years of
imprisonment.
Appellants are correct on general principles, but mistaken
regarding application of the principles to this case. The Fifth
Amendment protected them from being convicted of a crime
that the grand jury did not charge, and changes could not be
made at trial charging them with a crime for which they were
not indicted.4 But that did not happen.
The indictment says in the caption that the appellants
were charged with wire fraud and conspiracy to commit wire
fraud under 18 U.S.C. §§ 1343 and 1349. After setting out
the basis of the charges, and unnecessarily stating overt acts,
the indictment says that the alleged acts were “all in violation
of 18 U.S.C. §§ 1343 and 1349.” It never mentions 18 U.S.C.
§ 371. Appellants do not dispute that the indictment sets
forth all the elements of Sections 1343 and 1349. They say
only that it also sets forth all the elements of Section 371.
Perhaps they could have been charged with and convicted of
conspiracy against the United States under Section 371, but
they were not. The language in the indictment that would
have been necessary or appropriate for a Section 371 charge
was surplusage with respect to what they actually were
charged with and convicted of.5 There is no constructive
amendment of the indictment here because the indictment
alleged all the elements of Sections 1343 and 1349.
Appellants were tried and convicted of the crime charged, and
4
See, e.g., Miller, 471 U.S. at 144–45.
5
See United States v. Renzi, 769 F.3d 731, 756–57 (9th Cir. 2014).
UNITED STATES V. THOMPSON 9
there was no reason to include in the jury instructions the
surplusage relating to the Section 371 crime that was not
charged.
Thompson and Fincher could not have been misled by the
language in the indictment that would have been used in a
Section 371 charge. The indictment said consistently in the
caption and the operative language that the charges were for
wire fraud under Sections 1343 and 1349, never mentioning
Section 371.6 As the Supreme Court held in Miller,
As long as the crime and the elements of the
offense that sustain the conviction are fully
and clearly set out in the indictment, the right
to a grand jury is not normally violated by the
fact that the indictment alleges more crimes or
other means of committing the same crime. . .
. A part of the indictment unnecessary to and
independent of the allegations of the offense
proved may normally be treated as “a useless
averment” that “may be ignored.”7
6
See Miller, 471 U.S. at 134–35 (no prejudicial surprise where
competent defense counsel should have been on notice of the offense
charged); see also Renzi, 769 F.3d at 757) (“[A]dditional language in the
indictment was surplusage and could be disregarded.”) (citing Bargas v.
Burns, 179 F.3d 1207, 1216 n.6 (9th Cir. 1999); United States v. Pang,
362 F.3d 1187, 1194 (9th Cir. 2004) (“The district court did not err by
refusing to instruct the jury to find an element that really isn’t an
element. . . . In any event, [defendant] failed to show that he was
ambushed or misled in any way by the extraneous language in the
information.”).
7
Miller, 471 U.S. at 136 (quoting Ford v. United States, 273 U.S.
593, 602 (1927)).
10 UNITED STATES V. THOMPSON
This case falls squarely within Miller.
Forfeiture
Thompson and Fincher also challenge the forfeiture
aspect of each of their sentences. This issue is considerably
more difficult than the indictment issue discussed above
because we must apply the teachings of a recent Supreme
Court decision to distinct facts.
The district court found that the swindlers ultimately stole
$160,000 in the Idaho fraud, $1,000,000 in the Montana
fraud, and $855,000 in the North Carolina fraud, for a total of
$2,015,000.
The $160,000 from the Idaho fraud went to one lawyer’s
trust account before being distributed into several accounts.
At least one account, AEIO Youth, was owned by Thompson.
AEIO Youth then issued Fincher checks totaling some
thousands of dollars. The court said Fincher and Thompson
jointly obtained all the fraud proceeds because it was a joint
decision to have the money initially go into the attorney’s
trust account.
The $1,000,000 from the Montana fraud went to another
attorney’s trust account, directed by Thompson. There was
no evidence that Fincher directed those proceeds. $196,500
was disbursed, however, to an account owned by Fincher in
three separate transactions. Fincher later withdrew some of
this money as a cashier’s check to pay for a pickup truck.
Fincher also wired $9,000 to Thompson.
The $855,000 from the North Carolina fraud went to a
third attorney’s trust account “controlled and directed” by
UNITED STATES V. THOMPSON 11
Thompson, but from which $275,000 was wired to Fincher’s
bank account.
The court held that Fincher obtained $631,500 of the total
proceeds, even though the court found that less than that
came to rest with Fincher. The court ordered Fincher to
forfeit the pickup truck he had bought with the money he
obtained from the frauds, plus $631,500 “representing the
fraud proceeds Defendant obtained, directly and indirectly.”
The court also ordered Thompson to forfeit the pickup truck
plus $2,015,000, “representing the fraud proceeds Defendant
obtained, directly and indirectly.” There are not two pickup
trucks. The court was referring in the Thompson judgment to
Fincher’s truck. The court did not order any forfeiture from
the third conspirator, Nixon, who had pleaded guilty before
trial, and made no finding as to how much of the loot Nixon
obtained.
In the forfeiture briefing and hearing, the prosecutor said
that the FBI had administratively forfeited $77,882.85 from
Thompson’s bank account and $40,000 from Fincher’s bank
account—for a total of $117,882.85. The government
recommended that this previously forfeited amount be
credited evenly between the two swindlers, $58,941.42 for
Fincher and $58,941.43 for Thompson. The government said
it planned to keep track of what it managed to obtain from its
forfeiture collection efforts, and cap recovery at $2,015,000.
The district court’s order, however, provides no means of
enforcing any of these government promises or
recommendations or so limiting the forfeitures.
Appellants argue that the forfeitures amounted to a joint
and several forfeiture impermissible under the Supreme
Court’s recent decision in Honeycutt, and that the district
12 UNITED STATES V. THOMPSON
court should be required to apportion the total proceeds
obtained individually by Fincher, Thompson, and Nixon, and
enter money judgments against Thompson and Fincher
without joint and several liability. The government argues
that the forfeitures were not joint and several, and that the
joint and several language in the judgment applied only to
restitution. As for Honeycutt, the government argues that it
was satisfied because neither the oral explanation of the
sentences nor the preliminary forfeiture order used the phrase
“joint and several.” The government further argues that
Honeycutt interpreted a different statute, not 18 U.S.C. § 981,
and in any case was satisfied, because the swindlers jointly
obtained and controlled all the money, comparing
conspirators to a husband and wife who together use wire
fraud to steal title to a house as tenants by the entirety.
We begin, of course, with the statute pursuant to which
the forfeitures were ordered, 18 U.S.C. § 981, made
applicable to criminal offenses by 28 U.S.C. § 2461:
(a)(1) The following property is subject to
forfeiture . . .
....
(C) Any property, real or personal, which
constitutes or is derived from proceeds
traceable to . . . any offense constituting
“specified unlawful activity” (as defined
in section 1956(c)(7) of this title), or a
conspiracy to commit such offense.
....
UNITED STATES V. THOMPSON 13
(f) All right, title, and interest in property
described in subsection (a) of this section
shall vest in the United States upon
commission of the act giving rise to forfeiture
under this section.8
It is plain under the language of the statute that the stolen
money and the pickup truck bought with stolen money are
forfeitable, and that the forfeiture extends to the money
traceable to what was sent to the three trust and escrow
accounts. Two things are noticeable, for purposes of this
case, about the language of this statute. First, it uses the
traditional common law concept that title to the tainted
property passes to the United States upon commission of the
criminal act. Second, only property that is traceable to the
proceeds is forfeitable, not other property that the criminal
may own (absent the government going through the
procedures to forfeit substitute property under 21 U.S.C.
§ 853(p)).9
“Historically, statutes authorizing in rem forfeiture
reached only items that were themselves involved in illegal
conduct, not items that simply were purchased with the
proceeds of such conduct. The use of in rem process against
8
18 U.S.C. §§ 981(a)(1)(C), (f). 18 U.S.C. § 1956(c)(7) defines
“specified unlawful activity” to generally include “any act or activity
constituting an offense listed in section 1961(1) of this title.” 18 U.S.C.
§ 1961(1) covers acts indictable under “section 1343 (relating to wire
fraud).”
9
28 U.S.C. § 2461 makes 21 U.S.C. § 853(p) applicable to the current
proceedings.
14 UNITED STATES V. THOMPSON
the latter items is a modern development.”10 Forfeiture is not
the same as other criminal penalties, though it functions as a
deterrent to crime. Very commonly, civil in rem actions are
filed in the district courts against sums of money, ships, and
automobiles independently of any proceedings against the
criminals whose conduct tainted the property.11 For example,
in Alaska, the federal government files many forfeitures
against ships for involvement with illegal fishing, without any
charges against the companies that own the ships.12 Until
curative legislation was promulgated twenty years ago,13
innocence was no defense to forfeiture.
Calero-Toledo v. Pearson Yacht Leasing Co.14 illustrates
the injustice to innocent owners prior to the Civil Asset
Forfeiture Reform Act. The Supreme Court held that the
owner of a yacht, who was neither involved in nor aware that
10
Caleb Nelson, The Constitutionality of Civil Forfeiture, 125 Yale
L.J. 2446, 2455 (2016).
11
See, e.g., United States v. Approximately $1.67 Million (US) in
Cash, Stock & Other Valuable Assets Held by or at 1) Total Aviation Ldt.,
513 F.3d 991 (9th Cir. 2008) (affirming district court’s summary judgment
for United States in its civil forfeiture action); United States v. Kaiyo
Maru No. 53, 699 F.2d 989 (9th Cir. 1983) (reviewing an action filed by
the federal government seeking forfeiture of a Japanese stern trawler);
United States v. One 1976 Porsche 911S, Vin 911-6200323, California
License 090 NXC, 670 F.2d 810 (9th Cir. 1979) (affirming forfeiture of
automobile after marijuana discovered in trunk); see also Fed. R. Civ. P.
Supp. Admiralty and Mar. Claims C (In Rem Actions: Special Provisions).
12
See, e.g., Kaiyo Maru No. 53, 699 F.2d at 991–93.
13
Civil Asset Forfeiture Reform Act of 2000, Pub. L. No. 106-185,
§ 2, 114 Stat. 202, 206–07 (codified at 18 U.S.C. § 983(d)).
14
416 U.S. 663 (1974).
UNITED STATES V. THOMPSON 15
the lessees had marijuana on board, nevertheless had no
protected property right to what had been his yacht.15 The
owner of a leased yacht forfeited the yacht because one
marijuana cigarette, evidently brought on board by his lessee
or the lessee’s guest, was found on board.16 At that time,
“[d]espite [the] proliferation of forfeiture enactments, the
innocence of the owner of property subject to forfeiture [had]
almost uniformly been rejected as a defense.”17
As the Court explained, forfeiture traces from the English
common law concept of deodand (having been given to
God).18 The deodand concept, in turn, traces in part from the
biblical injunction that an ox that fatally gored a human was
to be stoned to death.19 At common law, an object that
caused a person’s death became a deodand and was forfeited
to the king in the expectation that the king would provide the
money for Masses to be said for the good of the victim’s soul
or use the money for charity (thereby purifying the property
that had been tainted by the wrongdoing).20 This common
law origin and development explains why forfeiture is closely
tied to the property involved in the criminal conduct, as
opposed to a criminal fine or restitution, which depends on
guilt but not on any taint on the criminal’s property. Both the
15
See id. at 665–68, 680–90.
16
See id. at 693 (Douglas, J., dissenting).
17
Id. at 683 (majority opinion).
18
Calero-Toledo, 416 U.S. at 680–81, 681 n.16.
19
Id. at 681 & n.17.
20
See id. at 680–81.
16 UNITED STATES V. THOMPSON
possibility that the value of the forfeited property may be
greater than the maximum fine that could be levied, and the
limitation of forfeiture to tainted property, distinguish this
mechanism from other sorts of criminal penalties. Though
forfeiture performs many of the same social functions as fines
and restitution orders, its mechanics are different because of
its unique conceptual basis.
This conceptual difference underlies the recent decision
that counsel and the district court wrestled with in this case,
Honeycutt v. United States. Tony Honeycutt owned a
hardware store that sold an iodine-based water-purification
product.21 He employed his brother, Terry, to manage sales
and inventory.22 Terry, the store manager, became suspicious
of customers buying iodine crystals in large quantities, so he
called the police.23 The police told him that iodine could be
used to manufacture methamphetamine and advised him to
cease selling the product if it made him uncomfortable.24
Despite learning this, the store continued to sell large
quantities of iodine to methamphetamine manufacturers.25
After both Honeycutt brothers were indicted, Tony
pleaded guilty, but Terry went to trial and was convicted of
21
See Honeycutt, 137 S. Ct. at 1630.
22
Id.
23
See id.
24
Id.
25
Id.
UNITED STATES V. THOMPSON 17
conspiracy to sell and distribute the iodine crystals.26 The
government sought criminal forfeiture money judgments
against each brother for the total profits from the sales,
$269,751.98.27 Tony, the store owner who had pleaded
guilty, agreed to forfeit $200,000, so the government sought
forfeiture of the remaining $69,751.98 from Terry, the store
manager.28 The district court did not enter a forfeiture
judgment against Terry because Terry was merely a salaried
employee and had not personally received any of the profits
from the sales.29
The Sixth Circuit reversed, holding that, because the
brothers were co-conspirators, they were jointly and severally
liable for the proceeds and each bore full responsibility for
the entire forfeiture judgment.30 That is similar to what the
district court did in this case. The Supreme Court reversed
the Sixth Circuit, holding that, in a conspiracy, a defendant
may not, for purposes of forfeiture, be held jointly and
severally liable “for property that his co-conspirator derived
from the crime but that the defendant himself did not
acquire.”31
26
See id. (citing 21 U.S.C. §§ 841(c)(2), 843(a)(6), 846).
27
See id. at 1630–31.
28
See id.29
Id. at 1631.
30
Id.31
Id. at 1630, 1635.
18 UNITED STATES V. THOMPSON
The Court explained that “[c]riminal forfeiture statutes
empower the Government to confiscate property derived from
or used to facilitate criminal activity,” thereby “separating a
criminal from his ill-gotten gains,” as well as facilitating
restitution and “lessening the economic power of criminal
enterprises.”32 Joint and several liability is a creature of tort
law, which allows a plaintiff to recover up to the full amount
of his judgment from any defendant if multiple defendants are
legally responsible for the harm.33
The Court gave an example to illustrate joint and several
liability in the context of forfeiture: a farmer who runs a
marijuana business and recruits a college student to sell the
marijuana on the student’s campus.34 The farmer earns
$3 million, but he pays the student only $300 a month, or
$3,600 per year.35 Under joint and several liability, the
student would be liable for the proceeds of the scheme,
$3 million.36 Under the Court’s analysis, he would not forfeit
$3 million because he only “personally acquired” $3,600. 37
The Court held that the 21 U.S.C. § 853 provisions limit
forfeiture to “tainted property,” and the forfeiture statute
32
Id. at 1631 (quotation marks and brackets omitted) (citing Caplin
& Drysdale, Chartered v. United States, 491 U.S. 617, 629–630 (1989)).
33
See id.34
Id.35
Id.36
Id.37
Id. at 1631–32.
UNITED STATES V. THOMPSON 19
“does not countenance joint and several liability, which, by
its nature, would require forfeiture of untainted property.”38
The key word in the statute was “obtain,” and even if the
farmer had customers pay the student, who then turned the
money over to the farmer, the farmer “ultimately ‘obtains’ the
property—whether ‘directly or indirectly.’” 39
The criminal forfeiture statute “maintain[ed] traditional
in rem forfeiture’s focus on tainted property.”40 This
limitation, together with the statute’s text, foreclosed joint
and several liability.41 The manager brother was held not to
have “obtained” tainted property, even though the property
passed from the iodine crystals purchasers into his hands
before going to his brother.42 He could not be subjected to
any forfeiture at all.43
Our sister circuits are split on whether Honeycutt applies
to 18 U.S.C. § 981. The Third Circuit, in United States v.
Gjeli44 holds that the text and structure of Section 981 is
“substantially the same” as the forfeiture statute in Honeycutt,
so Honeycutt applies with equal force to 18 U.S.C.
38
Id. at 1632.
39
Id. at 1632–33.
40
Id. at 1635.
41
Id. at 1633.
42
See id. at 1630–31, 1635.
43
Id. at 1635.
44
867 F.3d 418 (3d Cir. 2017).
20 UNITED STATES V. THOMPSON
§ 981(a)(1)(C).45 On the other hand, the Sixth Circuit, in
United States v. Sexton,46 holds that Honeycutt does not apply
to 18 U.S.C. § 981(a)(1)(C).47 It reasoned that, unlike the
statute at issue in Honeycutt, 18 U.S.C. § 981(a)(1)(C) does
not limit the forfeiture to proceeds “the person obtained.”48
So, even though the forfeited property has to be traceable to
the crime, it does not need to have been received by the
individual forfeiting it.49 The Eighth Circuit has joined the
Sixth Circuit in holding that Honeycutt does not apply to
forfeitures under 18 U.S.C. § 981(a)(1)(C).50
We agree with the Third Circuit. We hold that Honeycutt
does apply to 18 U.S.C. § 981(a)(1)(C). The textual
differences between it and 21 U.S.C. § 853 appear to us to be
immaterial, in light of the reasoning and language in
Honeycutt. Honeycutt treats forfeiture, in accord with its
development at common law over many centuries, as
applicable only to “tainted” property. The property carries
the taint, as in Calero-Toledo.51 Although the phrase “the
person obtained” does not appear in Section 981, the statute’s
45
Id. at 427–28, 427 n.16.
46
894 F.3d 787 (6th Cir. 2018).
47
Id. at 799.
48
Id.49
Id.50
United States v. Peithman, 917 F.3d 635, 652 (8th Cir.), cert.
denied, 140 S. Ct. 340 (2019).
51
Calero-Toledo, 416 U.S. at 684.
UNITED STATES V. THOMPSON 21
language similarly limits forfeiture to tainted property. The
forfeited “property,” under Section 981(a)(1)(C), has to be
“traceable” to the proceeds “derived” from the wire fraud.
Also, the absence of the phrase, “the person obtained” in
Section 981 strikes us as immaterial in light of the reasoning
in Honeycutt, that “the most important background principles
underlying § 853” are “those of forfeiture.”52 The same
principles animate Section 981. The text of this statute and
its roots in common law forfeiture, like the statute in
Honeycutt, necessitate a connection to tainted property.
Granted, Section 981(a)(1)(C) is not strictly limited to the
“tainted” property itself, such as the ox in the Bible, because
it extends to “proceeds traceable” to the tainted property.
This is broader than the traditional notion of deodand,53 but it
does not, and cannot under Honeycutt, extend to all the
criminal’s property, “traceable” or not. Such an application
would be inconsistent with the common law conception of
forfeiture upon which the statute rests. There is nothing in
the text of Section 981 that extends forfeiture to property of
a defendant that is not traceable to the proceeds of the crime
(outside the procedures set forth in Section 853(p)).
That leaves for our consideration only the question
whether the district court’s forfeiture judgment did or did not
impose joint and several liability. As the Court explained in
Honeycutt, the concept of joint and several liability comes
from tort law, not criminal law.
52
Honeycutt, 137 S. Ct. at 1634.
53
See Nelson, supra note 10, at 2475–76.
22 UNITED STATES V. THOMPSON
In tort law, several liability distinguishes the amount
owed by one defendant from the amount owed by another.54
Joint liability means that each wrongdoer owes the victim the
full amount of the damages.55 Thus, each tortfeasor is “liable
for the entire damage done, although one might have battered,
while another imprisoned the plaintiff, and a third stole the
plaintiff’s silver buttons.”56 In modern times, if two drivers
negligently cause an accident creating $100,000 in damages
to a victim, the victim is entitled under joint and several
liability to collect the $100,000 from either one of the
tortfeasors, whether he gets a portion from each driver or the
entire amount from only one. The tortfeasors are left to
whatever remedies in the nature of contribution or indemnity
that they may have against each other.57
Applying joint and several liability to criminal forfeiture
would have meant that, in Honeycutt, the government could
have forfeited the entire proceeds of the conspiracy from the
store manager, and left it to him to pursue his brother, the
owner of the store with whom all the profits came to rest.
And in the Court’s hypothetical case, the government could,
if conspirators were jointly liable, obtain by forfeiture the
entire $3 million from the college student who dealt the
marijuana, or however much it could get from him, instead of
limiting his forfeiture to the $3,600 the farmer paid him.
54
See Restatement (Third) of Torts § 11 (Am. Law Inst. 2000).
55
See id. § 10.
56
Prosser & Keeton on Torts § 46 (W. Page Keeton et al. eds., 5th ed.
1984) (citing Smithson v. Garth (1601) 83 Eng. Rep. 711, 3 Lev. 324).
57
See Restatement, supra note 54, §§ 22–23.
UNITED STATES V. THOMPSON 23
In the case before us, we cannot see how the district
court’s judgment can be viewed as anything but joint and
several liability. While the judgment may not use the express
words “joint and several” with regards to forfeiture, the
district court granted a forfeiture order against Thompson for
the whole amount of the proceeds from the conspiracy,
despite the fact that some of the proceeds came to rest with
Fincher and not Thompson. The district court also held
Fincher liable for the entire $160,000 in proceeds from the
Idaho fraud, even though apparently much less came to rest
with him. No finding was made establishing what came to
rest with Nixon, though Nixon’s share of the loot must have
reduced Thompson and Fincher’s share. As in many thefts,
after obtaining the loot, the thieves divided it up.
Under Section 981, forfeiture cannot extend beyond the
tainted property and proceeds traceable to it, such as the
pickup truck Fincher bought with the stolen money. Yet the
money judgments against Thompson and Fincher were not
based on findings of how much of the proceeds came to rest
with them, nor has the government shown that it complied
with Section 853(p) to obtain substitute property. To forfeit
money from Thompson, the district court was required by
Section 981 to find that the amount forfeited came to rest
with him as a result of his crimes. The same goes for
Fincher. The district court made no findings establishing how
the loot was divided among the conspirators.
The government argues that the forfeiture orders were
appropriate because the fraud proceeds passed from the
victims to the trust and escrow accounts of the three separate
lawyers in Georgia, Nevada, and Virginia (for the Idaho,
Montana, and North Carolina frauds, respectively). The
theory is that because the swindlers directed the money to the
24 UNITED STATES V. THOMPSON
escrow accounts, they each received all the money. That
theory cannot withstand the holding in Honeycutt, that the
college student and the store manager, who each at some
point had physical control of all the money, were nevertheless
not subject to forfeiture for money that did not come to rest
with them.
In this conspiracy, as in many, physical control over the
property changed from time to time. That was true of the
store manager in Honeycutt, the student marijuana dealer in
the hypothetical case in Honeycutt, and in any conspiracy
where the co-conspirators do not all jointly control all the
proceeds all the time. The split may occur after the proceeds
are received, as when the store manager in Honeycutt passed
the money in his cash register over to his brother the store
owner, and in the hypothetical case where the salaried college
student passes the proceeds of his marijuana sales over to the
farmer, and in a simple bank robbery, where the split is
accomplished after the getaway.
Honeycutt does not allow for an interpretation that any
conspirator who at some point had physical control is subject
to forfeiture of all the proceeds. This case would be different
if, say, Thompson and Fincher had a joint bank account, or
were married tenants by the entirety in a house they bought
with the stolen money. If the money came to rest in a joint
account, or property owned jointly or as tenants by the
entirety, the swindlers would each have an unfettered right to
enjoy the whole, as in United States v. Cingari.58 But here,
the trust accounts and escrows were stops on the way to
splitting up the money, not jointly controlled deposits where
the money came to rest after the swindlers split it up.
58
952 F.3d 1301, 1306 (11th Cir. 2020).
UNITED STATES V. THOMPSON 25
The liability that the judgment imposed on Thompson and
Fincher for more, in total, than they each acquired in their
swindles amounts to joint and several liability, regardless of
whether the district court called it that. And it conflicted with
our interpretation of forfeiture in United States v Nejad,59
holding that when Section 853 applies, “the government may
not enforce a personal money judgment through the same
means it would use to enforce an ordinary in personam civil
judgment.”60 Rather, the government must establish that the
requirements of Section 853 have been met before forfeiting
untainted property.61
Because the forfeiture judgment against Thompson and
Fincher amounted to joint and several liability contrary to
Honeycutt, we must vacate and remand it. On remand, the
district court should make findings denoting approximately
how much of the proceeds of the crime came to rest with each
of the three conspirators, Thompson, Fincher, and Nixon.
Though no forfeiture judgment was issued against Nixon,
neither Thompson nor Fincher can be subjected to forfeiture
of amounts that came to rest with Nixon, since those amounts
were not proceeds that came to rest with them. The forfeiture
judgments must be separate, for the approximate separate
amounts that came to rest with each of them after the loot was
divided among the swindlers.
The district court should determine how our recent
decision in Nejad will apply. As in Nejad, control over the
59
933 F.3d 1162 (9th Cir. 2019).
60
Id. at 1166.
61
Id.26 UNITED STATES V. THOMPSON
forfeiture process lies with the court, not with the
prosecution. Only when the procedures under Section 853(p)
are followed may the government satisfy a personal money
judgment from a defendant’s untainted assets.62 The numbers
used throughout this opinion of course may be approximate
because swindlers and other criminals may be less than
honest and conscientious about their bookkeeping and
testimony about what each of them ended up with.
In the end, the prohibition on joint and several liability in
forfeiture judgments may not make much of a difference for
these particular swindlers. Thompson and Fincher jointly
owe restitution under their sentences, in addition to their
forfeitures and prison sentences. The forfeitures, though,
cannot, under Honeycutt, be joint as well as several.
AFFIRMED IN PART, REVERSED IN PART, and
REMANDED.
62
Id.