On June 5, 2017, the Supreme Court issued a unanimous opinion in Honeycutt v. United States (No. 16-142), holding that a criminal defendant can be held liable to forfeit only crime proceeds the defendant personally obtained, and cannot be made jointly and severally liable for proceeds acquired by a co-conspirator. The decision upends decades of nearly uniform precedent from the federal courts of appeals,1 and will likely have wide-ranging effects on the government's ability to obtain criminal forfeiture. While Honeycutt is a narcotics case, the procedures in the forfeiture statute in question apply to all criminal forfeitures, including criminal forfeiture in cases involving securities fraud, healthcare fraud, corruption, insider trading, economic sanctions, mail fraud and wire fraud.
Background
The case concerns a federal criminal action against Terry Honeycutt and his brother for conspiracy to distribute iodine while having reasonable cause to believe that it would be used to manufacture methamphetamine. Honeycutt was a salaried employee at his brother's hardware store, which sold a water-purification product containing iodine. His position involved stocking shelves and working the cash register; he did not own the store. After Honeycutt was convicted of conspiracy, the government sought to hold him jointly and severally liable for forfeiture of the store's profits from selling iodine. It invoked 21 U.S.C. § 853(a)(1), which requires forfeiture of “any property constituting, or derived from, any proceeds the person obtained, directly or indirectly” as a result of a drug crime.
The district court declined to order Honeycutt to forfeit all of the store's profits from selling the iodine product, on the ground that Honeycutt did not personally obtain any profits from those sales. The Sixth Circuit reversed. Relying on precedent interpreting RICO's analogous forfeiture provision, the majority read § 853(a)(1) to allow joint and several forfeiture liability among co-conspirators.
Decision
The Supreme Court unanimously reversed. In an opinion by Justice Sotomayor, the Court held that § 853(a)'s “provisions, by their terms, limit forfeiture … to tainted property; that is, property flowing from (§ 853(a)(1)), or used in (§ 853(a)(2)), the crime itself.” Slip op. 5 (emphasis added). If joint and several liability were permitted, co-conspirators who obtained less than the full profits of the conspiracy might be required to forfeit untainted assets: property wholly unconnected with the crime. The Court held that this conclusion is supported by the plain meaning of § 853(a)(1)'s reference to property the defendant “obtained … as the result of” the crime. A defendant “obtain[s]” property, in the Court's view, only if he acquires it for himself. Slip op. 6.
The Court also relied on the relationship between § 853(a) and other provisions of § 853 to support its conclusion. The Court observed that § 853(p) provides for forfeiture of untainted substitute property only in limited circumstances where the tainted property is no longer available for forfeiture. Those limitations could be circumvented, the Court explained, if § 853(a)(1) allowed forfeiture of untainted property through the device of joint and several liability. Slip op. 8-9.
The Court rejected the government's theory that co-conspirators should be jointly and severally liable for forfeiture of the proceeds of a conspiracy just as they are substantively liable for their co-conspirators' conduct under Pinkerton v. United States, 328 U.S. 640 (1946). The Court regarded that argument as inconsistent with the traditional distinction between in personam proceedings regarding substantive criminal liability and in rem proceedings regarding forfeiture. Section 853 “effectively merg[es] the in rem forfeiture proceeding with the in personam criminal proceeding,” the Court explained, but it “maintains traditional in rem forfeiture's focus on tainted property.”
Implications for Future Cases
Honeycutt represents a...
