The Grandmother of a Convicted Drug Dealer Loses Real Estate Because She Did Not Comply With Filing Requirements to Contest a Federal Criminal Forfeiture Entered Against Her Grandson
Federal Forfeiture Laws provide that the government can forfeit property that is used in or derived from drug dealing. Title 21 U.S.C. $ 853 provides that a person convicted of a drug violation shall forfeit to the United States any property constituting or derived from any proceeds that the person obtained directly or indirectly as a result of the violation of the drug laws. The statute, as well as the Federal Rules of Criminal Procedure (Fed.R.Crim.P.), provide that third parties who claim an interest in the property can protect that interest but must do so by strictly following the requirements of the statute and Fed.R.Crim.P.
In United States v. Marion, 562 F.3d 1330 (11th Cir. 2009), the circuit court reversed the ruling of the district court that allowed the grandmother of Mr. Marion to file a claim in court asserting her interest in the property as superior to that of her convicted grandson and retain ownership of the property legally in her name. Mrs. Gray, the grandmother of the defendant, lost the property because her claim was not filed in time.
To understand the problem that arose in this case, one must understand the procedures set forth in the statute and Fed.R.Crim.P. that allows an innocent third party to protect their rights in property that the government seeks to forfeit as a result of the conduct of others.
Title 18 U.S.C. $ 853(a) (1) governs the rights of third parties in property subject to governmental criminal forfeiture.
This statute provides that following the entry of an order of forfeiture, United States shall publish notice of intent to dispose of the property and provide written notice to persons known to have an interest in the property. Thereafter, any person asserting a legal interest in the property which is to be forfeited to the government, may within thirty days of the final publication of notice or the receipt of the notice sent to the person, petition the court to determine the validity of the third parties' claim to the property. The person petitioning the court does not however have a right to a determination by a jury.
Rule 32.2 of the Fed.R.Crim.P. sets forth that the court is to determine what property is subject to forfeiture as soon as practical after the verdict or finding of guilty or plea of guilty or no contest is accepted. The court then enters a preliminary order of forfeiture which becomes final as to the defendant and must be made part of the sentence and included in the judgment.
Rule 32.2(c) provides that the court can only determine whether a third party has an interest in the property if the third party files a claim in an ancillary proceeding, after the court enters its order of preliminary forfeiture.
After the ancillary proceeding is completed, the court must file a final order of forfeiture by amending the preliminary order of forfeiture as necessary to account for any third parties' rights. The Rule also notes that if no third party files a timely petition, the preliminary order becomes the final order of forfeiture if the court finds that the defendant had an interest in the property.
Mrs. Gray's problem was that the petition to enforce her third party rights in the property was not filed within 30 days of the notice she received after the preliminary order of forfeiture. This notice was in the form of a letter directed to her as the legal owner of the property. Mrs. Gray filed the petition within 30 days of the sentencing of her grandson and the courts entry of the final order of forfeiture.
The district court denied the government's motion to dismiss on the grounds that Mrs. Gray's petition was untimely and the district court also ruled that the government had waived this objection by its own late filing of the motion to dismiss. The district court went on to consider evidence as to the grandmother's right to the property and ruled in her favor.
The Eleventh Circuit Court of Appeal ruled that the timing requirement is mandatory and that by not filing her petition within 30 days of the original notice following the preliminary order of forfeiture, Mrs. Gray lost all of her rights to the property. In order to reach this opinion, the court had to distinguish some earlier Eleventh Circuit cases that supported the proposition that the 30 day period to file the claim ran from the final order of forfeiture.
The statutory provisions and criminal rules of forfeiture are obviously made for the purpose of ensuring that the government can, in the most expedited fashion, seize and forfeit property. In a criminal forfeiture proceeding the property owner does not even have a right to have the case heard by a jury but is required to present the matter to the court who heard the criminal case.
This case shows that even when the property owner shows a valid superior interest in the property that would otherwise have overcome a forfeiture, the failure to comply with the strict filing requirements resulted in the loss of the property by its forfeiture to the government. This should be a lesson to all persons and businesses that have interest in not only real estate, but also personal property that is subject to forfeiture. The types of interests that can be forfeited are not only ownership interests, but also lien holder interest.
The lesson to be learned from the case of United States v. Marion is that whenever a notice of forfeiture is provided to an individual or company that claims an interest in property, immediate action should be taken to ensure that the appropriate petition is filed. Otherwise, the property will be lost.