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the government is making strong efforts to deny to defendants counsel
of their choice.
See, United States v. Sheehan, et al., No. CR F
84198 (REC) (E.D. Cal. 1985); United States v. Rodgers, No. 84-CR
337 (D.C. Colo. 1985).
See also, Buffone, Forfeiture of Attorney
Fees and the Effect of the Crime Control Act of 1984, Drug Law Report, Vol. I, No. 13, Jan.-feb. 1985. Passage of the proposed forfeiture
of forfeitable property as "any money or other property involved in
such an offense" fails to identify the required nexus between the
defendant, the offense, and the property. For example, does "property involved in an offense" include only property actually used to violate
these offens es?
A broad interpretation of
the flexible phrase
"involved in" might lead a
court to conclude that a defendant's
entire bank account, mortgage, stock, or equitable interest in an
asset would be subject to forfeiture regardless of the nexus between
the property and the defendant's criminal conduct.
interpretation, a $10 deposit, for example, would render an entire bank account forfeitable. Such a result is unjust and inequitable.
Application of the flexible phrase "involved in" to the classic money laundering scheme also highlights the imprecise fit between the term and the targeted offense. If a bank teller accepts a deposit
of illicit funds, these funds are "involved in a substantive offens e
but they are also not the teller's funds to forfeit.
are the targeted evil, then the threat of a prison term is the only sanction available against the teller. Of course, current forfeiture
law would apply with full vigor to the depositors' illicit monies.
In a similar manner, the additional description of forfeitable
that "which represents the proceeds of or which is
traceable to such money or property" is equally ill-phrased. If Congress wants to reach the "proceeds" of illicit activity, it can
do so by using the word "proceeds."
See, e.g. 18 U.S.C Sec.
1963(a) (3); 21 U.S.C. Sec. 853 (a) (1).
Adding the prefatory words
"which represents the" can only lead to ambiguity as to what Congress
has attempted to describe.
Additionally, the proposed statute's
listing of property "which represents the proceeds" as an alternative
to property "traceable to such money" raises a fundamental question
as to the meaning of "proceeds" in the first place.
The relation back provision of H.R. 2785 and H.R. 2686 also
establishes the legally operative point of title transfer from the
defendant to the government, is triggered by the "commission of the act giving rise to forfeiture." 21 U.S.C. Sec. 853(c). The proposed
considered the "act giving rise to forfeiture" then title vests in
the federal government from the operative date of every state and
federal felony offense.
Conversely, if the use of the "financial
institution" constitutes the "act giving rise to the forfeiture," then some clarification of the triggering financial event (i.e., deposit, withdrawal, extension of credit, etc.) would appear necessary. Again, the ambiguity is created not by the doctrine itself but rather by its wooden application to a broadened class of
criminal conduct without reference to the enforcement needs that
inspired the criminal offense in the first place. All of these ambi guities are not contained in the current criminal forfeiture laws.
The "substitute asset" provisions of the proposed legislation are also extremely troublesome. These provisions are
constitutional problems with this portion of the proposed legislation. A similar (although not as broad) substitute asset provision was deleted by the Conferees for the comprehensive Forfeiture Act
See Conference Report, No. 1159, 98th Cong. 2d Sess. 419
(1984). The House Report rejecting the concept of substitute assets
At the present time the proposed 'substitute asset' provision appears to be ill-advised, unwor kable and the need for it has not been substantiated. Any attempt to forfeit 'substitute assets' which has no nexus to the criime 'in personam' forfeiture is a giant step in the direction of 'forfeiture of estate' and would needlessly raise constitutional questions which could jeopardize successful prosecutions under this bill for years to come .
A. Rep. No. 845, Part I, 98th Cong. 2d Sess. 12 (1984).
and Senate Conferees on the comprehensive Crime Control Act of 1984
apparently agreed with this assessment;
provision in the Comprehensive Forfeiture Act was deleted. Wholly apart from whether the imposition of "substitute" forfeiture penalty constitutes a prohibited forfeiture of estate, the imposition of criminal forfeiture in a criminal prosecution on assets unrelated to the defendant's criminal conduct raises substantial questions of
The proposed "substitute as sets" provision set forth in A. R. 2785 and H.R. 2786 goes even further than the prior substitute assets
language previously rejected by the 98th Congress. Under the proposed
"substitute assets" language, mandatory forfeiture is imposed not
only for the affirmative acts of
a defendant which diminish the
assets available for forfeiture, but under the proposed legislation, substitute as sets can be forfeit as a result of the defendant's
failure to act in a way which maximizes the assets available for
ultimate forfeiture. Thus, the defendant will be placed in the incongruous position of being a trustee or fiduciary to the govern
ment's unsecured claim of title from the moment of the operative
Enactment of this proposed legislation will require
the federal judiciary to engage in a historical analysis of the
relative success of the defendant's investment strategy for purposes
of determining the defendant's current forfeiture liability.
For the preceding reasons, the proposed expanded forfeiture
sanctions should not be enacted.
Mr. HUGHES. Thank you very much, Mr. Bailor, for a very fine statement. You really gave us a great deal of insight into money laundering, and your recommendations are well taken.
I just want to say, in reference to your last comment, I share your concern about the Justice Department's interpretation of the forfeiture law. You know, the forfeiture law came out of this subcommittee, and we worked on it for about 4 years. It was never our intent, in fact, to trample upon sixth amendment rights, and I share your concern. We'll take a look at that, because it appears that the Justice Department, in fact, is interpreting it and implementing the forfeiture statute contrary to the intent
of the subcommittee.
I just have a couple of questions. First of all, with regard to your recommendation about the $2,000 threshold for Treasury checks, cashier's checks, and so forth, one of the difficulties I see and that occurred to me as you were testifying, is that with the new money market accounts, for instance, you're only permitted three transactions and given three checks.
Mr. BAILOR. That is correct, three is the maximum.
Mr. HUGHES. So, what many folks are doing is, they're getting travelers' checks or cashier's checks and having them written specifically to individuals. So that would present somewhat of a practical problem.
Mr. BAILOR. Well, Mr. Chairman, my recommendation was that for non-account holders, that this $2,000 limit be applied. And I don't think that would apply to a person who had a money market
Mr. HUGHES. So, you're talking about specifically account hold
Mr. BAILOR. Well, specifically that the limit be applied on people who walk in off the street, for example.
Mr. HUGHES. The other problem I see is a practical one. In Mario's case, for instance, most of his transactions were in the $500-to-$2,000 range, and what you would do would be, if you put a $3,000 threshhold, you'd just merely force them to get checks up to $2,000. Even though it would inconvenience them somewhat, I'm not sure we would really address the problem.
Mr. BAILOR. Mr. Chairman, the whole thrust of my making that recommendation is to create a situation that makes it easier for law enforcement to identify. It will stop a lot of the "smurf" transactions, but the major thrust is money laundering probably will not be stopped by legislation, it's going to be stopped by the cop on the street.
Mr. HUGHES. I couldn't agree with you more. I think that the focus of your testimony in describing the need for additional manpower, in particular, commitment to investigate financial transactions, some of the administrative changes that have been recommended, are all well taken. But I think you would agree that what we've got to do is try to approach it in a balanced fashion, and we've got to make sure that, first of all, the changes would really make a difference and not inconvenience the folks that are legitimately conducting business in banks.
Mr. BAILOR. I couldn't agree more, Mr. Chairman.