Sixth Circuit Holds Government did not Prove Fugitive Disentitlement for Civil Forfeiture (9/1/17)

In United States v. $525,695.23 Seized from JPMorgan Chase Bank, ___ F.3d ___, 2017 U.S. App. LEXIS 16077 (6th Cir. 2017), here, the Court vacated the district court's application of the fugitive disentitlement statute, 28 U.S.C. § 2466.  The case involves civil forfeiture of certain U.S. assets based on drug trafficking and money laundering.  Tax crimes were not involved.  Still the fugitive disentitlement can be implicated in tax crimes cases.  See Ninth Circuit Speaks on FOIA, but Ducks Fugitive Disentitlement (Federal Tax Crimes Blog 3/13/12), here.

I provide the statute and then the Court's general discussion of the requirements for application of the statute.

The statute, § 2466, here, is:

28 U.S. Code § 2466 - Fugitive disentitlement(a) A judicial officer may disallow a person from using the resources of the courts of the United States in furtherance of a claim in any related civil forfeiture action or a claim in third party proceedings in any related criminal forfeiture action upon a finding that such person—
   (1) after notice or knowledge of the fact that a warrant or process has been issued for his apprehension, in order to avoid criminal prosecution—
      (A) purposely leaves the jurisdiction of the United States;
      (B) declines to enter or reenter the United States to submit to its jurisdiction; or
      (C) otherwise evades the jurisdiction of the court in which a criminal case is pending against the person; and
   (2) is not confined or held in custody in any other jurisdiction for commission of criminal conduct in that jurisdiction.
(b) Subsection (a) may be applied to a claim filed by a corporation if any majority shareholder, or individual filing the claim on behalf of the corporation is a person to whom subsection (a) applies.

The Court's summary of the requirements of the statute is:

Based on the text of this statute, this Court has adopted the following five part test to determine whether disentitlement is appropriate: 

(1) a warrant or similar process must have been issued in a criminal case for the claimant's apprehension; (2) the claimant must have had notice or knowledge of the warrant; (3) the criminal case must be related to the forfeiture action; (4) the claimant must not be confined or otherwise held in custody in another jurisdiction; and (5) the claimant must have deliberately avoided prosecution by (A) purposefully leaving the United States, (B) declining to enter or reenter the United States, or (C) otherwise evading the jurisdiction of a court in the United States in which a criminal case is pending against the claimant. 

Salti, 579 F.3d at 663 (quoting Collazos, 368 F.3d at 198). 

The issues the Court addressed are:

Ninth Circuit Speaks on FOIA, but Ducks Fugitive Disentitlement (3/13/12)

A common parry in a tax criminal investigation or prosecution is to file a FOIA request with the IRS.  The IRS / DOJ thrust is to resist.  I provide at the end of this blog a general discussion of FOIA and the theories of resistance.

In Shannahan v. United States, ___ F.3d ___, 2012 U.S. App. LEXIS 5168 (9th Cir. 2012), here, the Ninth Circuit held that the attorney for two fugitives avoiding U.S. prosecution by their absence from the country could not obtain documents under FOIA that the IRS claimed were exempt from disclosure.  The background facts are:

On January 28, 2003, Steven Cheung and Linda Su Cheung, husband and wife, were indicted on one count of conspiracy to defraud the United States. The Cheungs are United States citizens. The indictment charged that the Cheungs concealed their ownership of, and millions of dollars of income derived from, businesses owning commercial parking lots in Hong Kong. Steven Cheung was charged in the same indictment with six counts of filing false or fraudulent income tax returns, five counts of filing false foreign bank account reports, and one count of failing to file a foreign bank account report. The indictment alleges that the Cheungs engaged in financial transactions in the United States, Hong Kong, the Marshall Islands, and the British Virgin Islands and “utilized a web of corporations and other entities” in those countries. When they lived in the United States, their principal residence was in Seattle, Washington.

The Ninth Circuit affirmed the lower court's holding that Exemptions 3 and 7(A) applied.  5 USC 552(b)(3) and (7)(A), here.  The Ninth Circuit's opinion on the application of these FOIA exceptions appear to plough no new ground, but is a good illustration of these exceptions.