Under Honeycutt, the son of the President of Honduras, who assisted in smuggling hundreds of kilos of cocaine into the US, is liable to forfeit only the amount of money the Government could prove that he personally received from the drug traffickers.
A defendant, one of five individuals who received a $300,000 kickback as part of a money laundering scheme, is not liable for the forfeiture of any part of the money unless the Government can prove how the kickback was divided among the conspirators.
United States v. Lobo, 2017 WL 2838187 (S.D.N.Y. June 30, 2017).
S.D.N.Y. * Defendant, the son of the President of Honduras, was convicted of conspiring with the Cachiros, a Honduran drug trafficking organization, to import hundreds of kilograms of cocaine into the United States. Defendant’s role was to provide “security and logistical support” for the Cachiros in connection with two of the cocaine shipments.
The Government initially sought a forfeiture money judgment against Defendant in the amount of $13.1 million, reflecting Defendant’s joint and several liability for the gross proceeds of the conspiracy. Following the Supreme Court’s decision in Honeycutt, however, the court held that Defendant would be liable only for the amount that he personally obtained, and ordered rebriefing on the forfeiture issue.
In its revised forfeiture memorandum, the Government argued that Defendant personally received and thus should forfeit $326,667. The court held that the Government had established Defendant’s liability for some of that amount, but not all of it.
The court found that other members of the conspiracy paid Defendant a total of $267,667 for information regarding asset seizures and for personally escorting the cocaine shipments. With respect to another $60,000, however, the Government proved only that Defendant was one of five individuals who received, as a group, a total of $300,000 in kickbacks when the Government awarded contracts to businesses used to launder the Cachiros’ drug proceeds.
The Government reasoned that Defendant – as one of five people to receive the $300,000 – should be liable to forfeit one-fifth of that amount. But the court held that the Government’s burden was to establish by a preponderance of the evidence the amount, if any, that Defendant actually received. Because it could not show how the $300,000 in kickbacks was divided among the five individuals, the Government could not hold Defendant liable for any of it.
So the court entered a forfeiture order limited to $267,667. SDC
Comment: This is only the beginning of the fallout from the Supreme Court’s decision overturning decades of joint and several liability law in Honeycutt v. United States, ___S. Ct. ___ 2017 WL 2407468 (June 5, 2017).
Previously, the son of the President of Honduras, who provided security and logistical support for an organization importing hundreds of kilograms of cocaine worth over $13 million into the United States, would have been liable, along with all of the other co-conspirators, for the forfeiture of the proceeds of the entire conspiracy, regardless of how much of that money he personally obtained.
Moreover, if the Government proved – as it did here – that the defendant was one of five individuals who were paid, collectively, $300,000 in kickbacks for setting up a money laundering operation using Government contracts, each defendant would have been liable for the entire $300,000 regardless of how they divided the money among themselves.
Here, after Honeycutt, because the Government was not able to show how the money was divided it was not able even to hold defendant liable for his one-fifth share of the money. Instead, defendant was required to forfeit nothing at all in regard to the kickbacks. SDC
This case summary is an excerpt from the upcoming August issue of the Money Laundering and Forfeiture Digest.