Rationalizing Criminal Forfeiture David J

Journal of Criminal Law and Criminology Volume 79 Article 2 Issue 2 Summer Summer 1988 Rationalizing Criminal Forfeiture David J. Fried Follow this and additional works at: https://scholarlycommons.law.northwestern.edu/jclc Part of the Criminal Law Commons, Criminology Commons, and the Criminology and Criminal Justice Commons Recommended Citation David J. Fried, Rationalizing Criminal Forfeiture, 79 J. Crim. L. & Criminology 328 (1988-1989) This Criminal Law is brought to you for free and open access by Northwestern University School of Law Scholarly Commons. It has been accepted for inclusion in Journal of Criminal Law and Criminology by an authorized editor of Northwestern University School of Law Scholarly Commons. 0091-4169/88/7902-328 THE JOURNAL OF CRIMINAL LAw & CRIMINOLOGY Vol. 79, No. 2 Copyright © 1988 by Northwestern University, School of Law Printed in U.S.A. RATIONALIZING CRIMINAL FORFEITURE DAVID J. FRIED* TABLE OF CONTENTS I. Introduction and Summary ............................ 329 II. The Evolution of Criminal Forfeiture Since 1970: Judicial Interpretation and Congressional Reaction ..... 335 A. The Re-Introduction of In Personam Forfeiture: Legislative History and Contemporary Comment... 338 B. RICO Forfeitures in Practice: 1970-84 ............. 339 C. The 1984 Reforms and the Reaction of the Courts. 346 III. The Purpose of Criminal Forfeiture .................... 357 A. "A Huge Business for the Federal Government:" Forfeiture as Privateering .......................... 360 B. Forfeiture as Specific Deterrent: The H eroic Fallacy ..................................... 366 C. Disproportionate Forfeitures as a Deterrent: Efficacy and Fairness .............................. 372 1. "Proceeds" or "profits": may criminals deduct their expenses? ................................ 375 2. The forfeiture of the "instrumentalities" of crime as a punishment ...................... 380 3. The forfeiture of interests in an enterprise as a punishment .............................. 388 4. The presumption of forfeitability of income from an unknown source ....................... 401 IV. The Forfeiture of Profits as the Usual Penalty for Crim e .............................................. 410 A. The Growth of Restitution as a Criminal Penalty ... 412 * Visiting Associate Professor, University of Maine School of Law. B.A. 1971, Cor- nell University;J.D. 1976, Harvard Law School. The author gratefully acknowledges the research assistance of Sean McMurtry and the invaluable advice and help of Professors Michael C. Durst and John H. Robinson. Notre Dame Law School provided financial and other support during the author's term as a visitor without which this article could not have been written. 328 1988] RATIONALIZING CRIMINAL FORFEITURE 329 B. The Conflict Between Restitution and Forfeiture ... 420 C. Criminal Forfeiture and the Just Claims of Third Party Creditors .................................... 424 V. Conclusion ............................................ 434 I. INTRODUCTION AND SUMMARY Eighteen years have passed since the penalty of criminal forfeiture' was reintroduced into American law by the Racketeer Influ- enced and Corrupt Organizations Act 2 ("RICO") and the Continuing Criminal Enterprises Act ("CCE").3 Despite early disa- greement, the courts have settled most doubts about the reach of criminal forfeiture in favor of an expansive interpretation. 4 Con- gress effectively set its seal of approval on such interpretation by the Comprehensive Forfeiture Act of 1984,5 ("CFA") which also expanded RICO by adding predicate offenses, 6 by providing for pre- 1 Criminal forfeiture, also known as in personam forfeiture, is the taking of property by the state as an incident of conviction for crime. United States v. Seifuddin, 820 F.2d 1074, 1076 (9th Cir. 1987). It is thus opposed to civil or in rem forfeiture, the taking of property in some way connected with the commission of a crime regardless of the criminal guilt of its possessor or owner. In civil forfeitures, the owner of the property has the burden of proof once the government has shown probable cause to believe that the property is "guilty," in other words, connected with the prohibited activity. The stan- dard of proof is a preponderance of the evidence. United States v. $250,000 in United States Currency, 808 F.2d 895, 900 (1st Cir. 1987); United States v. Brock, 747 F.2d 761, 762 (D.C. Cir. 1984). For centuries "forfeiture of estate," a form of criminal forfeiture, was a mandatory incident of all common law and most statutory felony convictions. Forfeiture of estate was the taking by the Crown of all of the felon's real and personal property. It went hand in hand with "corruption of blood" or "attaint," the prohibition on tracing title to property through the felon's estate, thus assuring that his descendants could inherit nothing from more remote ancestors. "[T]he Corruption of Blood stops the Course of regular Descent, as to Estates, over which the Criminal could have no Power, because he never enjoyed them." C. YORKE, SOME CONSIDERATIONS ON THE LAW OF FORFEITURE FOR HIGH TREASON 26 (2d ed. 1746). Forfeiture of estate was abolished in the United States in the early nineteenth century and in England by 1870, 33 & 34 Vict., ch. 23, but civil forfeiture of, for example, contraband, smuggled goods and instrumentalities of crime, has continued to the present day and indeed has been significantly expanded, see infra notes 239-76 and accompanying text. 2 18 U.S.C. §§ 1961-68 (1982 & Supp. III 1985). 3 21 U.S.C. § 848 (1982 & Supp. III 1985). 4 See infra notes 57-81 and accompanying text. 5 Comprehensive Forfeiture Act of 1984, Pub. L. No. 98-473, § 302, 98 Stat. 2040 (codified as amended at 18 U.S.C. § 1963(a)(3) (Supp. III 1985))("any property consti- tuting, or derived from, any proceeds which the person obtained, directly or indirectly, from racketeering activity or unlawful debt collection .... ). 6 Including any state felony for dealing in obscene matter, Comprehensive Crime Control Act of 1984, Pub. L. No. 98-473, § 1020(1). 98 Stat. 2143 (amending 18 U.S.C. § 1961(1)(A) (Supp. III 1985)), and any indictable violation of the Currency and Foreign Transactions Reporting Act, Comprehensive Crime Control Act of 1984, Pub. L. No. 98-473, § 9 01(g)( 2 ), 98 Stat. 2136 (amending 18 U.S.C. § 1961(1)(B) (Supp. III 1985)). 330 DAVID J. FRIED [Vol. 79 indictment and post-indictment restraining orders on the transfer of property subject to forfeiture free of the procedural barriers erected by some courts, 7 and by codifying the "relation-back" theory of forfeiture,8 the theory that title to forfeitable property vests in the government from the moment the criminal act is committed, potentially making voidable all later transfers.9 In addition, Congress has ex- tended the penalty of criminal forfeiture to most federal drug offenses 0 and to trafficking in child pornography." This endorsement and expansion of criminal forfeiture, which made it possible for the government to seek forfeiture more aggres- sively and with a greater likelihood of success, has created a scholarly and public uproar. So far commentators have focused on an important but narrow set of issues: the constitutionality and propri- ety of restraining orders which prevent defendants from paying their attorneys, and the threat of forfeiture of attorney's fees already paid upon conviction. 12 All the circuit courts of appeal which have considered the matter have agreed that Congress intended to au- thorize such forfeitures and that they do not violate the fifth or sixth amendment rights of defendants.13 The focus on attorneys' fees has unfortunately diverted atten- tion from larger and more important questions. Criminal forfeiture is, in effect, the first new punishment for crime since the rise of the penitentiary in the early nineteenth century.14 Why was so obvious a penalty enacted after being so long overlooked? What is its appro- priate relationship to other criminal and civil penalties? To what extent can criminal forfeiture be justified in terms of such traditional 7 See infra notes 86-88 and accompanying text. 8 18 U.S.C. § 1963(c) (Supp. III 1985). 9 Id. 10 21 U.S.C. § 853(a) (Supp. III 1985). 11 Child Protection Act of 1984, Pub. L. No. 98-292, § 6, 98 Stat. 205 (amending 18 U.S.C. § 2253 (Supp. III 1985)). 12 See, e.g., Note, Forfeiture of Attorney's Fees: Should Defendants be Allowed to Retain the "Rolls Royce of Attorneys" with the "Fruits of the Crime"?, 39 STAN. L. REv. 663 (1987); Cloud, Forfeiting Defense Attorneys'Fees: Applying an InstitutionalRole Theory to Define Individ- ual ConstitutionalRights, 1987 Wis. L. REV. 1; Note, Attorneys' Fees Forfeiture under the Com- prehensive Forfeiture Act of 1984: Can We Protect Against Sham Transfers to Attorneys?, 62 NOTRE DAME L. REV. 734 (1987); Note, Against Forfeiture of Attorneys' Fees Under RICO: Protecting the Constitutional Rights of Criminal Defendants, 61 N.Y.U. L. REV. 124 (1986); Note, Forfeitability of Attorney's Fees Traceable as Proceeds From a RICO Violation Under the Comprehensive Crime ControlAct of 1984, 32 WAYNE L. REV. 1499 (1986). 13 See infra notes 118-123 and accompanying text. 14 For the introduction of the penitentiary as the usual punishment for serious crime see generally M. FOUCAULT, DISCIPLINE AND PUNISH: THE BIRTH OF THE PRISON (1st Am. ed. 1977). 1988] RATIONALIZING CRIMINAL FORFEITURE 331 objectives of punishment as deterrence and retribution? 15 Finally, should criminal forfeiture be imposed as a penalty

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