FRE 1101 And Evidence For Forfeiture

In granting preliminary order of forfeiture based on defendant's conviction for fraud and related offenses, trial court could establish forfeitability of seized assets by considering hearsay evidence because the FRE is not applicable to forfeiture which is a form of sentencing proceeding, in United States v. Capoccia, 503 F.3d 103 (2d Cir. Sept. 19, 2007) (2d Cir. Sept. 19, 2007) (No. 06-0669-cr)

In Libretti v. United States, 516 U.S. 29 (1995), the Supreme Court noted the different procedures available at trial and at sentencing. This included the observation that whether property should be forfeited was not a question of guilt (and accordingly governed by the FRE) but rather was free of the FRE's limitations because it was deemed merely an issue of sentencing to which the FRE did not apply under FRE 1101(d).

It appears no federal circuit has found Libretti weakened in light of more recent cases, such as Apprendi v. New Jersey, 530 U.S. 466 (2000) ("Other than the fact of a prior conviction, any fact that increases the penalty for a crime beyond the prescribed statutory maximum must be submitted to a jury, and proved beyond a reasonable doubt."), or Blakely v. Washington, 542 U.S. 296 (2004) (under state's determinate sentencing law, “the relevant ‘statutory maximum’ is not the maximum sentence a judge may impose after finding additional facts [beyond what the jury has found], but the maximum he may impose without any additional findings.”). United States v. Fruchter, 411 F.3d 377 (2d Cir. 2005) (noting that "Criminal forfeiture is, simply put, a different animal from determinate sentencing.”, and collecting cases)

Several years ago the Second Circuit considered a defendant's insistence that his forfeiture be determined by a jury rather than a judge. This contention came as a more direct challenge to applying the FRE to criminal forfeiture. In the case, a criminal defendant faced a preliminary order of forfeiture based on his conviction for fraud and related offenses. The circuit found no error in the trial judge establishing the forfeitability of seized assets by considering matters outside the FRE, such as hearsay evidence. The circuit reasoned that the FRE was not applicable to forfeiture.

In the case, Defendant Capoccia was an attorney who worked in a debt reduction service targeted at credit card debtors. While in this practice, he misappropriated unearned retainer fees from clients, embezzled client escrow accounts which came to total millions of dollars, using these funds for lavish personal expenses. The defendant was charged and convicted of fraud and receipt of stolen property and was subject to forfeiture, for which he waived his statutory right to a jury determination of the forfeiture amount.

Accordingly, the trial judge conducted a forfeiture hearing pursuant to Fed. R. Crim. P. 32.2(b)(1) (Sentencing court to “determine what property is subject to forfeiture under the applicable statute … based on evidence already in the record, including any written plea agreement or, if the forfeiture is contested, on evidence or information presented by the parties at a hearing after the verdict or finding of guilt.”) Because the defendant challenged the forfeiture, the trial court took evidence finding that all the seized assets were forfeitable. Capoccia, 503 F.3d at 109.

The defendant appealed the forfeiture determination. The focus of his appeal was whether under the Rules of Criminal Procedure the court could base it decision based only on the evidence adduced at the forfeiture hearing conducted by the trial judge, rather than the evidence adduced at trial by the verdict. The circuit noted the “cramped reading” the defendant gave to the rule, explaining that it allowed use of evidence produced both at trial and at the forfeiture hearing, but that this was not a requirement.

The circuit briefly observed that to the extent the defendant objected to exhibits that he alleged were hearsay, “neither the Federal Rules of Evidence nor any other rule prohibits the admission of such materials.” Capoccia, 503 F.3d at 109 (citing FRE 1101(d)(3) (providing that the Rules of Evidence are inapplicable in sentencing proceedings)). The circuit noted that a forfeiture proceeding was part of a sentencing proceeding and therefor not subject to the hearsay restrictions of the FRE. Capoccia, 503 F.3d at 109 (citing Libretti v. United States, 516 U.S. 29, 38-41 (1995) (holding that forfeiture is part of the sentencing process); Fed. R. Crim. P. 32.2(b)(1) (stating that additional “information,” in addition to evidence, may be taken at hearing); United States v. Messino, 382 F.3d 704, 714 (7th Cir. 2004) (rejecting defendant's challenge to forfeiture hearing procedures, which permitted government counsel to “read[ ] portions of the trial transcript to the jurors”)).

In its notes to the case, the Circuit emphasized that special nature of the forfeiture determination in that:

The Supreme Court has held that criminal forfeiture is “an aspect of punishment imposed following conviction of a substantive criminal offense,” and that there is no Sixth Amendment jury trial right to a forfeiture determination. Libretti, 516 U.S. at 39. This Court has applied Libretti since the Supreme Court's decisions in Apprendi v. New Jersey, 530 U.S. 466 (2000), and United States v. Booker, 543 U.S. 220 (2005), and has held that preponderance of the evidence remains the appropriate standard by which to determine forfeiture"
Capoccia, 503 F.3d at 110 n.18.

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