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| Stefan Cassella |
The defendant argued that the trial judge's failure to comply with the rule was fatal, and barred the court from subsequently entering a forfeiture order at his sentencing hearing.
The U.S. District Court for the Southern District of New York disagreed and entered the forfeiture order, the defendant appealed, and the Supreme Court granted certiorari to resolve the issue.
In a unanimous decision, the Supreme Court held that a district court's failure to enter a preliminary order of forfeiture prior to a defendant's sentencing does not bar the district court from entering a forfeiture order at sentencing.
The rule is merely a "time-related directive" intended to spur trial judges to act promptly, the Supreme Court said — not a deadline that deprives a court of the power to act if the deadline is missed.
But the Supreme Court nevertheless admonished the government for not reminding the district court of its obligation to enter the preliminary order, and for not proposing one prior to sentencing as the U.S. Department of Justice's policy manual instructs prosecutors to do.
The case is unusual in that it resolved an issue on which the lower courts were not divided. Indeed, its holding is in accordance with the view taken by every court that has addressed the issue.
Nevertheless, the Supreme Court's view of the structure of Rule 32.2(b)(2)(B) and the purposes for which it was enacted will likely inform the debate on other aspects of the same rule on which the courts are indeed split.
Facts
In 2011, the government obtained an indictment charging the defendant, Louis McIntosh, with multiple violent robberies under the Hobbs Act, and informing him that it would be seeking the forfeiture of the proceeds of his offense as part of his sentence. The government also provided the defendant with a bill of particulars advising him that his BMW automobile was subject to forfeiture as an asset traceable to those proceeds.
A jury found the defendant guilty on all counts, but — notwithstanding the references to forfeiture in the indictment and the bill of particulars — the government failed to mention forfeiture in its sentencing memorandum and failed to submit a proposed preliminary order of forfeiture prior to sentencing. Consequently, the court did not enter a preliminary order of forfeiture as required by Rule 32.2(b)(2)(B).
The prosecutors, however, did request the entry of a forfeiture order at the sentencing hearing itself, and the court did include a forfeiture money judgment in the amount of $75,000 and the forfeiture of the BMW in both the oral announcement of the defendant's sentence and in the written judgment. It also ordered the government to submit a proposed written forfeiture order "within a week," but the government failed to do so.
The defendant appealed, and the government requested a remand to the district court so that the court could enter the written forfeiture order. The U.S. Court of Appeals for the Second Circuit granted the request, and the case was remanded.
On remand, the defendant objected that because the district court had failed to comply with Rule 32.2(b)(2)(B) by issuing a preliminary order of forfeiture prior to sentencing, the forfeiture order that was orally announced at his sentencing was void, and the court was barred from entering the written order.
The district court held, however, that Rule 32.2(b)(2)(B) is a "time-related directive," not a "mandatory claim-processing rule," and that the court's failure to comply with the rule did not bar it from entering a forfeiture order as part of the defendant's sentence.
Accordingly, the court entered the written order, and when the defendant appealed again, the Second Circuit affirmed the district court.[2]
The Supreme Court granted certiorari to resolve what the defendant claimed was a circuit split on this issue.
The Decision
In a unanimous opinion written by Justice Sonia Sotomayor, the Supreme Court agreed with the government, the district court and the Second Circuit that Rule 32.2(b)(2)(B) is a time-related directive, and that a trial court's failure to follow the rule by entering a preliminary order of forfeiture prior to sentencing does not bar the entry of a forfeiture order at sentencing.
At most, the court said, a trial court's failure to follow the rule would allow a defendant to object to the forfeiture under the harmless error standard, which would allow a defendant to object that the error caused him some substantial prejudice.
The Supreme Court gave several reasons for its ruling. First, Rule 32.2(b)(2)(B) provides that "[u]nless doing so is impractical," a court must enter a preliminary order of forfeiture "sufficiently in advance of sentencing to allow the parties to suggest revisions or modifications before the order becomes final."
"Both the impracticality exception and the sufficiently-in-advance condition," the court said, suggest that the rule "contemplates flexibility" regarding the entry of a preliminary order of forfeiture, and not a "rigid" or "inflexible" claims-processing rule.
Second, Rule 32.2(b)(2)(B) does not specify a consequence for noncompliance. "In the absence of such a specification," the court said, "courts typically 'will not in the ordinary course impose their own coercive sanction' for noncompliance with a timing directive."
"Indeed," the court continued, "it would be especially strange to prohibit a sentencing court from ordering forfeiture for not complying" with a part of Rule 32.2 that does not specify that consequence for noncompliance, when other parts of Rule 32.2 do bar the entry of a forfeiture order as a consequence for such noncompliance.
For example, a court may not impose a forfeiture order if the government fails to include notice of its intent to seek forfeiture in a defendant's indictment as required by Rule 32.2(a).
Third, the Supreme Court noted that "Rule 32.2(b)(2)(B) governs the conduct of the district court, not the litigants." It does not say that the government must enter a preliminary order but that the court must do so. Indeed, it does not mention the government at all.
That does not mean that the government does not bear some of the blame for what happened in this case. Although Rule 32.2(b)(2)(B) does not put any obligation on the government regarding the entry of a preliminary order of forfeiture, the Justice Department's Asset Forfeiture Policy Manual "instructs its prosecutors to recommend a preliminary order of forfeiture prior to sentencing to assist judges at sentencing."
"Here," the court said, "in circumstances that this Court expects are a rare occurrence," the prosecutors failed to remind the trial court of its obligation to enter a preliminary order, failed to prepare a preliminary order, and failed to comply with the court's order at sentencing to prepare a written order within a week of the sentencing hearing.
Nevertheless, the court held that because "Rule 32.2(b)(2)(B)'s plain terms require a district court, and not the prosecutors, to enter a preliminary order," the prosecutors' failure to follow the policy directive was not a reason to bar the district court from entering a forfeiture order.
So, the court held that the district court's failure to issue a preliminary order of forfeiture did not bar the court from entering a forfeiture order as part of the defendant's sentence.
Moreover, because the defendant did not challenge the district court's harmless-error analysis — which found that the failure to issue the preliminary order had caused him no prejudice — the Supreme Court did not revisit that issue.
Comment
The Supreme Court granted certiorari in this case ostensibly to resolve a circuit split on the consequences of a trial court's failure to adhere to Rule 32.2's requirements. But in fact, there was no such circuit split on the issue that was actually presented in this case.
Indeed, the federal courts of appeals have been unanimous in holding that a trial judge's failure to enter a preliminary order of forfeiture prior to sentencing, as Rule 32.2(b)(2)(B) requires, does not bar the court from entering a forfeiture order at sentencing.[3]
The judgment of the Supreme Court in this case merely affirms that rule. So, why did the Supreme Court grant certiorari in this case?
There are two provisions in Rule 32.2(b) that deal with the entry of a criminal forfeiture order: Rule 32.2(b)(2)(B) involves the entry of a preliminary order prior to sentencing, and Rule 32.2(b)(4)(B) lays out terms for including a forfeiture order in the oral announcement of the defendant's sentence at the sentencing hearing itself.
In his certiorari petition, the defendant conflated the appellate cases involving compliance with Rule 32.2(b)(2)(B) and those involving compliance with Rule 32.2(b)(4)(B).
The courts are indeed split on the consequences of the failure to comply with the latter rule, with some courts holding that the failure to enter a forfeiture order and make it part of the oral announcement of the defendant's sentence at the sentencing hearing is fatal, and others holding that the district court retains the power to enter a forfeiture order at a later time.[4] But compliance with Rule 32.2(b)(4)(B) was not at issue in this case.
In a footnote in the opinion, Justice Sotomayor appears to acknowledge that the court was misled as to the need to render a decision on the issue that was actually presented.[5] Nevertheless, much of the reasoning in McIntosh may apply when the time comes to determine whether the failure to enter a forfeiture order at sentencing in compliance with Rule 32.2(b)(4)(B) is fatal or not.
For example, like the rule pertaining to preliminary orders, the rule governing the entry of a forfeiture order at sentencing does not specify a consequence for noncompliance, and it is directed at the court, not at the litigants.
Citing those two factors, the government is certain to argue that both rules are time-related directives, and that, just as noncompliance with Rule 32.2(b)(2)(B) is not fatal, neither is noncompliance with Rule 32.2(b)(4)(B).
On the other hand, the latter rule contains none of the flexible language regarding the timing of the entry of the order that the former rule does. Where Rule 32.2(b)(2)(B) says that a preliminary order must be entered before sentencing "[u]nless doing so is impractical," Rule 32.2(b)(4)(B) says that the court "must include the forfeiture when orally announcing the sentence or must otherwise ensure that the defendant knows of the forfeiture at sentencing."
Defendants will surely argue that that distinction means that the latter rule is a rigid requirement, the violation of which deprives the defendant of their right to have their entire sentence made known to them at one time.
The other important aspect of this case is the Supreme Court's concern with the prosecutors' failure to follow the DOJ policy manual's instruction to prepare a preliminary order of forfeiture for the court's consideration in advance of sentencing, so that the court is reminded of its obligation to enter such an order in compliance with Rule 32.2(b)(2)(B).
The Supreme Court said, "in circumstances that this Court expects are a rare occurrence," the prosecutors failed to do what they were instructed to do.
Sadly, what occurred in this case is far from a rare occurrence. As all asset forfeiture specialists in the U.S. attorney's offices know, the failure of the criminal assistant U.S. attorneys to follow the letter of Rule 32.2 in the weeks leading up to and including the sentencing hearing is commonplace.
Whether the clear warning from the Supreme Court in McIntosh that this is not acceptable will spur greater compliance with the DOJ policy in future cases remains to be seen, but it is likely that the Justice Department will be urging its prosecutors to take note of the Supreme Court's view.
Stefan D. Cassella is a principal at Asset Forfeiture Law LLC. He is the author of "Federal Money Laundering: Crimes and Forfeiture" and "Asset Forfeiture Law in the United States," as well as the monthly digest "Money Laundering and Forfeiture Digest." He previously served as deputy chief of the DOJ's Asset Forfeiture and Money Laundering Section and as chief of the Asset Forfeiture and Money Laundering Section in the U.S. Attorney's Office for the District of Maryland.
"Perspectives" is a regular feature written by guest authors on access to justice issues. To pitch article ideas, email expertanalysis@law360.com.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of their employer, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
[1] McIntosh v. United States
, 601 U.S. ___, ___ S. Ct. ___, 2024 WL 1642827 (U.S. Apr. 17, 2024).[2] United States v. McIntosh
, 58 F.4th 606 (2nd Cir. 2023.), amending 24 F.4th 857(2nd Cir. 2022).[3] See Stefan D. Cassella, Asset Forfeiture Law in the United States (3d ed. 2022), § 19-2 (collecting cases).
[4] Compare United States v. Marquez
, 685 F.3d 501, 509-10 (5th Cir. 2012) (the provisions of Rule 32.2(b) are "not empty formalities;" they are mandatory; but if the defendant does not object, the district court's failure to enter any forfeiture order until three weeks after sentencing or to mention forfeiture in the oral announcement, while "plainly erroneous," does not render the forfeiture void in the absence of showing of prejudice to the defendant); and United States v. Chittenden , 848 F.3d 188 (4th Cir. 2017) (same) with United States v. Maddux , 37 F.4th 1170, 1178 (6th Cir. 2022) (the procedures in Rule 32.2(b) "ensure defendants receive due process paired with finality and efficiency; they are "claims-processing rules", not "time-related directives," that bind the courts and are not subject to harmless error analysis; unless Rules 35(a) or 36 apply, or the Government appeals, the failure to enter a forfeiture order at sentencing is fatal; following Shakur) and United States v. Shakur , 691 F.3d 979, 988-89 (8th Cir. 2012) (wholesale violation of Rule 32.2(b), including failure to issue preliminary order of forfeiture prior to sentencing, failure to conduct evidentiary hearing and make finding of forfeitability at sentencing, and failure to issue any forfeiture order until 83 days after sentencing, deprived defendant of due process rights and right to appeal all aspects of his sentence at one time; forfeiture order vacated).[5] McIntosh, slip op. at 4 n.3, citing United States v. Lee
, 77 F.4th 565, 577 (7th Cir. 2023) (explaining why the cases holding that the failure to enter a forfeiture order at the sentencing hearing is fatal do not apply to the failure to enter a preliminary order of forfeiture).