United States v. Maddux

37 F.4th 1170

UNITED STATES of America, Plaintiff-Appellee,

v.John MADDUX, Jr.; Christina Carman, Defendants-Appellants.

No. 20-5972

United States Court of Appeals, Sixth Circuit.

Decided and Filed: June 22, 2022

ON BRIEF: Kent Wicker, DRESSMAN BENZINGER LA VELLE PSC, Louisville, Kentucky, for Appellants. Haley Trogdlen McCauley, Charles P. Wisdom, Jr., UNITED STATES ATTORNEY'S OFFICE, Lexington, Kentucky, for Appellee.

Before: SUHRHEINRICH, GIBBONS, and KETHLEDGE, Circuit Judges.

SUHRHEINRICH, Circuit Judge.

OPINION

Nothing is certain but death and taxes, and cigarettes often beget both. But John Maddux, Jr., and his wife, Christina Carman, along with some friends and family, found a way to skirt the tax part: for years they trafficked cigarettes in a way that bypassed governmental taxing authorities. This enabled them to sell untaxed cigarettes directly to consumers at a steep discount—converting what would have been taxes into profits for themselves. The law caught up with them, they were convicted and sentenced, and we affirmed in full. See generally United States v. Maddux , 917 F.3d 437 (6th Cir. 2019).

If we can be certain of anything else, it is that criminal sentences rarely change (let alone grow) after that point, subject to a few narrow exceptions. Yet we have this case. Before Maddux's and Carman's sentencing hearings, the government sought two multi-million-dollar money judgments against each of them—forfeiture orders representing the gross proceeds of their scheme. So far, good enough. By the time of their sentencings, however, the district court failed to enter preliminary forfeiture orders, nor did it include the money judgments as "part of the sentence[s]" announced. 28 U.S.C. § 2461(c) ; see Fed. R. Crim. P. 32.2(b)(2)(B), (b)(4)(A)–(B). Instead, years after their sentences became final—and affirmed by this court— the district court imposed the two money judgments sought, which Maddux and Carman now appeal.

All agree (including the district court) that that chain of events ignored Federal Rule of Criminal Procedure 32.2(b). That rule provides the procedures for effecting criminal forfeiture, requiring that a preliminary forfeiture order is entered well before sentencing, that forfeiture is included in the sentence, and that any forfeiture (or lack thereof) becomes final at sentencing. The district court, however, justified its late-issued money judgments by calling Rule 32.2(b) ’s procedural requirements time-related directives—deadlines that may be violated so long as the defendant receives adequate notice and a hearing. Because we conclude that Rule 32.2(b) is a mandatory claims-processing rule, rather than a time-related directive, we reverse the money judgments in this published opinion. Carman separately appeals two orders entered in her ancillary proceedings below, in which she claims a superior interest in specific property forfeited by Maddux. We affirm those orders in an unpublished appendix to this opinion.

I.

Maddux and Carman were indicted in 2014. The indictment included a notice of forfeiture with a laundry list of specific real and personal property, which Maddux ultimately agreed to forfeit. The indictment also gave notice of a forfeiture money judgment of "up to at least $45,000,000.00, derived from the conspiracies, schemes to defraud and money laundering and for which the defendants are jointly and severally liable." R. 1 at 70. Maddux pleaded guilty, and Carman went to trial. The two money judgments came in 2020, upon the government's renewed request for them in the district court.

Presentencing Proceedings. Carman was convicted by a jury in January 2016 on two conspiracy counts, one to commit mail and wire fraud, and one to commit concealment money laundering.¹ The day after the jury rendered its verdict, the court held a hearing to discuss forfeiture. During that hearing, the government stated that the only items of specific property sought from Carman were two Cadillac Escalades purchased with proceeds of the scheme, items that Carman agreed to forfeit. That left the issue of a money judgment, which the parties agreed to submit on briefs. The government moved for a $34,934,514.12 money judgment as to Carman (and for separate money judgments as to three other co-defendants, but not Maddux) in late-February 2016.

Unlike Carman, Maddux pleaded guilty in May 2016 to multiple counts of conspiracy to commit mail and wire fraud, money laundering, and defrauding the United States, as well as three counts of making false statements. The government moved in mid-July 2016—roughly nine weeks later and only six weeks prior to his sentencing—for a $45 million money judgment against him.

About a month later, the government and Maddux submitted a joint proposed preliminary order of forfeiture, in which Maddux agreed to forfeit the lengthy list of specific property referenced above, but not a money judgment. The court entered that order on the day of Maddux's sentencing without incorporating a money judgment. The government's two money-judgment motions, both of which were fully briefed by July 2016, thus remained pending prior to Maddux's and Carman's sentencings.

Sentencings. Maddux and Carman were both sentenced on August 30, 2016. During Carman's hearing, the court failed to order (or even mention) a money judgment.² The government did not object to the omitted money judgment. Maddux's sentencing tells a similar story, during which the court forthrightly stated that it would "have to take up later" the issue of "any amendment to any of these judgments to reflect any money judgments." R. 623 at 7339. Again, the government did not object.

Both of Maddux's and Carman's criminal judgments, which were entered the next day, cryptically stated that they each forfeited "[a]ll items" listed as forfeitable in the indictment, but neither specifically mentioned a money judgment. R. 536 at 4403; R. 541 at 4423.³ The government's motions for money judgments thus remained pending after Maddux's and Carman's sentences became final. The government did not appeal the lack of money judgments in either sentence. See generally Fed. R. Crim. P. 32.2(b)(4)(B).

Intervening Appeals. Both Carman and Maddux appealed their convictions and sentences, and we affirmed in February 2019. Maddux , 917 F.3d at 443–46, 450–51. However, in January 2017—five months after Carman's sentencing and while her appeal was pending—the district court finally granted in part the government's motion for a preliminary forfeiture order as to Carman, imposing a money judgment of about $17.5 million. For some reason not clear from the record, however, the court did not issue a money judgment as to Maddux. The court amended Carman's judgment to reflect the new forfeiture order. Carman separately appealed that order.

Reviewing that money judgment in a later-issued opinion, we held that Carman's first appeal of her convictions and sentence transferred adjudicatory authority from the district court to this court over all aspects of Carman's sentence. And, because forfeiture is part of the sentence, we held that the district court lacked authority to enter the money judgment once Carman appealed her sentence. United States v. Carman , 933 F.3d 614, 617 (6th Cir. 2019). We likewise rejected the government's request to affirm Carman's money judgment on so-called pragmatic grounds, reasoning that "the government nowhere explains how the Criminal Rules would permit entry of that order [on remand] over Carman's objection, after her sentence was not only imposed in the district court but affirmed on appeal." Id. at 618. We vacated the money judgment and remanded. Id.

Money Judgments Entered on Remand . After we vacated Carman's money judgment and remanded, the government renewed its motions for money judgments as to both Maddux and Carman. They both opposed the motions, arguing that the court lacked authority under Rule 32.2 to modify their sentences (by adding additional forfeiture) long after those sentences became final.

The district court disagreed, finding that "[t]he deadlines in Rule 32.2 are ‘time-related directives,’ which are ‘ "legally enforceable but do not deprive a judge or other public official of the power to take the action to which the deadline applies if the deadline is missed." ’ " R. 791 at 9830 (quoting United States v. Martin , 662 F.3d 301, 308 (4th Cir. 2011) ). As long as Maddux and Carman received "notice and [an] opportunity to be heard," the court reasoned, it could impose money judgments at any time. Id. at 9831 (quoting United States v. Schwartz , 503 F. Appx 443, 448 (6th Cir. 2012) ). It thus concluded: "[w]hile the niceties of Rule 32.2 were not observed, both Defendants had ample notice of the United States’ intention to seek a forfeiture money judgment and were not deprived of the opportunity to be heard in that regard." Id. at 9832. It imposed the two money judgments sought: $45 million as to Maddux and nearly $17.5 million as to Carman. They now appeal.

II.

A forfeiture order, including a money judgment, is "part of the [defendant's] sentence in the criminal case."

28 U.S.C. § 2461(c) ; see also Fed. R. Crim. P. 32.2(b)(4)(B) ; Libretti v. United States , 516 U.S. 29, 38–39, 116 S.Ct. 356, 133 L.Ed.2d 271 (1995). And, once a court imposes a sentence, generally it may not "change or modify that sentence unless such authority is expressly granted by statute." United States v. Hammond , 712 F.3d 333, 335 (6th Cir. 2013) (per curiam); see also 18 U.S.C. § 3582(c).

Federal Rule of Criminal Procedure 32.2 thus provides a rigid procedure to ensure that any forfeiture order is correct before it becomes final at sentencing—which furthers interests in due process and judicial economy. Whenever possible, the court "must promptly enter [after guilt is established] a preliminary order of forfeiture setting forth the amount of any money judgment ... sufficiently in advance of sentencing to allow the parties to suggest...