Opposition Brief — Honeycutt v. United States, 137 S. Ct. 842 (2017) (No. 16-142)

weme €.out, U.S.

RECORD FILED

AND { OCT 31 2016

BRIEFS No. 16-142 CHESS OF THE SUK

In the Supreme Court of the United States

TERRY MICHAEL HONEYCUTT, PETITIONER

v.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

IAN HEATH GERSHENGORN

Acting Solicitor General

Counsel of Record

LESLIE R. CALDWELL

Assistant Attorney General

JAMES I. PEARCE

Aslevaen

a a ners {genre

Was C. 20630-0001

efse@uedoj.gov

(202) 514-2217

QUESTION PRESENTED

Whether 21 U.S.C. 853(a)(1) renders the members

of a drug conspiracy jointly and severally liable for the

forfeiture of the reasonably foreseeable proceeds of

the conspiracy.

(I)

TABLE OF CONTENTS

Page

hatin daa nneitneileitegitcintdensabaghtaiieniiinbiiaianne 1

NE ETS SEAT a ROR od OTE 1

REELS Neen meee Be oR Re RN Tea ET 1

Titer dncettnatiinen schaniceashstincepannlcinniaiineneieunisaiatiiniaieniintnintaininialas 8

Conclusion . LS SL SI TE,

TABLE OF AUTHORITIES

Cases:

Alexander v. United States, 509 U.S. 544 (1993) ............... 17

Libretti v. United States, 516 U.S. 29 (1995) ................c00000 i)

Paroline v. United States, 134 S. Ct. 1710 (2014)........ 17, 18

Pinkerton v. United States, 328 U.S. 640

TI ncrrsctiesisicesiinehinsbbiadtasieasdiadatsitniesntinmnniahnabiiemenmemees 10, 11, 15, 16

Salinas v. United States, 522 U.S. 52 (1997)................. 11, 15

Smith v. United States, 133 S. Ct. 714 (2013)............... 10, 16

United States v. Bajakajian, 524 U.S. 321 (1998)................ 6

United States v. Benevento, 836 F.2d 129 (2d Cir.

1988) ... instantiate

United States v. pen 505 F3d 1229 (11th Cir.

2007), cert. denied, 554 U.S. 918 (2008) ...0..........ecccccceeeees 12

United States v. Bucci, 582 F.3d 108 (1st Cir. 2009)............9

United States v. Candelaria-Silva, 166 F.3d 19

(1st Cir. 1999), cert. denied, 529 U.S. 1055 (2000)........... 12

United States v. Cano-F lores, 796 F.3d 83 (D.C. Cir.

2015), cert. denied, 136 S. Ct. 1688 (2016)............... passim

United States v. Caporale, 806 F.2d 1487 (11th Cir.

1986), cert. denied, 482 U.S. 917, and 483 U.S. 1021

i iiathaictrniciccnduicianeniciasninhieningptennctingminiapiiairnprimenne 12, 13

United States v. Casey, 444 F.3d 1071 (9th Cir.),

cert. denied, 549 U.S. 1010 (2006) ............cecceccecseeseneeeeeees y

(IID)

Cases—Continued: Page

United States v. Christensen, F.3d 763 (9th Cir.

2015), petition for cert. pending, No. 16-461 (filed

Sin cerninnn nciatetehtelaisieheteeldiantabbatanendentenpmrneerecsees 10

United States v. Corrado, 227 F.3d 543 (6th Cir.

a alent tala nin tea iecipaesctepengnnes 7,12

United States v. DeF ries, 129 F.3d 1298 (D.C. Cir.

ESERIES eRe i UN nn 10

United States v. Edwards, 303 F.3d 606 (5th Cir.

2002), cert. denied, 587 U.S. 1192, and 537 U.S.

a aa ileal neal einesemnusennets 12

United States v. Elder, 682 F.3d 1065 (8th Cir. 2012) ....... 12

United States v. Genova, 333 F.3d 750 (7th Cir.

SSA EE coe Nea OO 10, 12

United States v. Hurley, 63 F.3d 1 (1st Cir. 1995),

cert. denied, 517 U.S. 1105 (1996) ........ 10, 12, 14, 16, 17, 20

United States v. Jarrett, 133 F.3d 519 (7th Cir.),

cert. denied, 523 U.S. 1112 (1998) ..........--.ccccccccceesceeereessenens 9

United States v. Keeling, 235 F.3d 533 (10th Cir.

2000), cert. denied, 533 U.S. 940 (2001) ..............cccecseeseeeee )

United States v. Lake, 472 F.3d 1247 (10th Cir.

Stacie aia naatatie tr tcmmmmatincanes 11, 15

United States v. Logan, 542 Fed. Appx. 484 (6th Cir.

2013), cert. denied, 134 S. Ct. 1581 (2014) ...........-.cccceeeees 21

United States y. McHan, 101 F.3d 1027 (4th Cir.

1996), cert. denied, 520 U.S. 1281 (1997)................ 9,11, 12

United States v. Monsanto, 491 U.S. 600 (1989).................. )

United States v. Olguin, 643 F 3d 384 (5th Cir.),

cert. denied, 132 S. Ct. 432, and 132 S. Ct. 439

United States v. Pitt, 193 F.3d 751 (3d Cir. 1999).............. 12

United States v. Roberts, 660 F.3d 149 (2d Cir. 2011),

cert. denied, 132 S. Ct. 1640 (2012) ............cc-ccsseeeeveeeseeese 12

Case—Continued: Page

United States v. Simmons, 154 F.3d 765 (8th Cir.

vali asissscssshiasncnbivtiapiancescesuippeetiuunsinienmniabaididanmiduntianiiats 10, 12

Constitution, statutes, guideline and rule:

Se a Be reenter tictntenistinncnnscssnnensienevorneessaniis 5

Comprehensive Forfeiture Act of 1984, Pub. L. No.

98-478, Tit. II, ch. TIT, 98 Stat. 2040.00... ceccccseescsensenees 8

Racketeer Influenced and Corrupt Organizations

Re Fe ee ie secsccasscnctnssnecneteccinsscnsictetsecnsonscnigni 6

aa pinnccnenscincosercosesetiventsinnliniiicempsiinalail 7

A TS

RE a ERIN TEES : 13

I vrcsciiccccsencscssemunsitintnnveniaminesiiaa 13

ee ctiintersctnstnnsncccsennersmnstptnnpinnsenninaaa 15

nots cccscninesnsienctsnctiniesdibniiiadineinccaueidebaiaadiaalals 2

TLASILA CELL TE ILI NS. 2

i tcicdiitercnsnssenesernnstsiictsenenenininniagaaanidill 1,2

Be WE iereresevvosnce roxicsecsesseevensiacciavmenscsneatieniniitite passim

a cccriccsstsectienesiectneititstnasnmanpiaiaainesame 8, 21

Se eR crrncctrssemnctnscneeeintinnnnnicnmnatie passim

By cticcnscnssecrcestennsgeicnesccqsnsinmieatiebnenasiiniaalal 9,17

Be Ce asccencimnecccsenncansteqnaiesseenatanninsinaininsiianiatenstieiain 10

United States Sentencing Guidelines § 1B1.3(a)(1)(B)...... 16

Fed. R. Crim. P. 32.2(c) advisory committee’s note

i stttentiascemnnnninmensrvinesescesnpaticrnnninieaapinanesiiipaniibiesteins 13

Miscellaneous:

Jn the Supreme Court of the United States

No. 16-142

TERRY MICHAEL HONEYCUTT, PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINION BELOW

The opinion of the court of appeals (Pet. App.

la-34a) is reported at 816 F.3d 362.

JURISDICTION

The judgment of the court of appeals was entered

on March 4, 2016. A petition for rehearing was denied

on May 31, 2016 (Pet. App. 47a-48a). The petition for

a writ of certiorari was filed on July 29, 2016. The

jurisdiction of this Court is invoked under 28 U.S.C.

1254(1).

STATEMENT

Following a jury trial in the United States District

Court for the Eastern District of Tennessee, petition-

er was convicted on one count of conspiracy to distrib-

ute iodine, knowing it would be used to manufacture

methamphetamine, in violation of 21 U.S.C. 846 and

841(c)(2); one count of conspiracy to distribute chemi-

cals and products that would be used to manufacture

(1)

2

methamphetamine, in violation of 21 U.S.C. 846 and

843(a)(6); two counts of distribution of iodine, knowing

it would be used to manufacture methamphetamine, in

violation of 21 U.S.C. 841(c); six counts of distribution

of chemicals and products that would be used to man-

ufacture methamphetamine, in violation of 21 U.S.C.

843(a)(6); and one count of distribution of iodine,

knowing it would be used to manufacture metham-

phetamine, in violation of 21 U.S.C. 841(c). Judgment

2-3. Petitioner was sentenced to 60 months of impris-

onment, to be followed by two years of supervised

release. Jd. at 4-5. The court of appeals affirmed in

part, reversed in part, vacated in part, and remanded.

Pet. App. la-34a.

1. Petitioner and his brother ran the Brainerd Ar-

my Store, an outdoor-gear retailer in Chattanooga,

Tennessee. Petitioner’s brother co-owned the store,

and petitioner worked as the salaried manager in

charge of sales and inventory. The store sold a prod-

uct called “Polar Pure,” a water purifier containing

99% pure iodine crystals. lodine is an outdated water-

purification method, and before 2008 the store appar-

ently sold only small quantities of Polar Pure—for

example, the store’s records show just two sales dur-

ing 2007. Pet. App. 2a; Revised Presentence Investi-

gation Report (PSR) 91 5, 7; Gov’t C.A. Br. 4-5.'

Iodine is also a precursor chemical used in a popu-

lar method of manufacturing methamphetamine, and

the pure form of the chemical found in Polar Pure is

preferred by illicit methamphetamine cooks because it

does not have to be processed before use. In early

2008, petitioner noticed a growing number of “edgy

' References to “Gov't C.A. Br.” refer to the government's Cor-

rected Second Brief filed on June 11, 2015.

3

looking folks” buying Polar Pure at the store, and he

called the Chattanooga Police Department to ask

whether the iodine in Polar Pure could be used to

make methamphetamine. Petitioner ultimately spoke

to the Director of the Tennessee Methamphetamine

Task Force, who explained that “Polar Pure was being

used to manufacture methamphetamine throughout

the community and urged [petitioner] not to sell it ‘if

he felt uncomfortable.’” Pet. App. 2a (brackets omit-

ted); Gov’t C.A. Br. 5-6.

Despite that warning, petitioner and his brother

continued to sell increasing quantities of Polar Pure to

methamphetamine cooks. Pet. App. 2a-3a. They sold

more than 2800 bottles in 2008, and more than 13,000

bottles in 2009. Gov’t C.A. Br. 4. Polar Pure became

the store’s highest-grossing item by a large margin,

bringing in roughly $400,000 in revenues and $270,000

in profits between 2008 and November 2010. /d. at 4

& n.4; see 1/22/14 Trial Tr. 249-252.

Only petitioner and his brother—and not the

store’s other employees—sold Polar Pure. They kept

it hidden behind the counter, so that customers had to

ask for it. And although each bottle of Polar Pure

contained enough iodine to purify 500 gallons of water,

petitioner and his brother sold up to 12 or more bot-

tles at a time and made sales to customers who re-

turned multiple times per week, and even on consecu-

tive days. Pet. App. 2a-3a; Gov't C.A. Br. 6-9.

Between 2008 and 2010, law enforcement officers

found Polar Pure in use at illicit methamphetamine

labs across the Chattanooga area. The Brainerd Ar-

my Store was the area’s only supplier of Polar Pure.

Officers visited the store several times and tried to

convince petitioner and his brother to step selling the

4

product to methamphetamine cooks, but the brothers

refused. When questioned by the officers, petitioner

denied recognizing pictures of people who had bought

Polar Pure from him multiple times. He also told

officers that the store was selling one case of Polar

Pure each month when it was actually selling eight.

Petitioner would later tell officers that he and his

brother had adopted a “don’t-ask-don’t-tell policy” for

iodine sales. Pet. App. 2a-3a; see Gov't C.A. Br. 9-12.

In November 2010, law enforcement officers halted

the brothers’ distribution of iodine by executing a

search warrant at the Brainerd Army Store and seiz-

ing its inventory of Polar Pure. Thereafter, metham-

phetamine labs using iodine—which had previously

been common in the Chattanooga area—became “fair-

ly non-existent.” Pet. App. 3a.

2. Petitioner and his brother were indicted on con-

spiracy and substantive charges related to the distri-

bution of chemicals, knowing or having reasonable

cause to believe that they would be used to manufac-

ture methamphetamine. Indictment 1-2. The indict-

ment included a forfeiture allegation under 21 U.S.C.

853, which sought a money judgment holding petition-

er and his brother jointly and severally liable for

$269,751.98 in proceeds from their offenses. Indict-

ment 2-3; see Pet. App. 67a (second superseding in-

dictment including the same allegations).

Petitioner’s brother pleaded guilty and agreed to

satisfy $200,000 of the forfeiture sought in the indict-

ment. Petitioner proceeded to trial. The jury acquit-

ted him on three substantive counts and convicted on

the remaining 11 counts, including both substantive

and conspiracy charges. Pet. App. 4a, 39a.

5

The district court sentenced petitioner to 60

months of imprisonment, 37 months below the appli-

cable Sentencing Guidelines range. Pet. App. 4a; PSR

444. The court then solicited briefing on the appro-

priate amount of forfeiture under 21 U.S.C. 853(a)(1).,

which provides that “[a]ny person convicted of” cer-

tain drug offenses “shall forfeit to the United States

* * * any property constituting, or derived from, any

proceeds the person obtained, directly or indirectly, us

the result of such violation.” See 5/12/14 Sent. Tr. 68.

The court observed that petitioner's brother had al-

ready paid $200,000, but asked the parties to address

whether petitioncr should be liable for the remaining

$69,751.98. Id. at 66.

Although petitioner acknowledged circuit prece

dent holding that co-conspirators are “jointly and

severally liable for any proceeds of the conspiracy

reasonably foreseeable from conspiratorial opera-

tions,” he nonetheless argued aguinst any forfeiture.

D. Ct. Doe. 107, at 2 (Apr. 14, 2014). He contended (1)

that he had not “personally realize[d] any profits” and

therefore had not directly or indirectly obtained any

proceeds frum the sale of Polar Pure; and (2) that

imposition of a money judgment would violate the

Eighth Amendment's prohibition von excessive fines.

Id. at 2-6. The government responded that forfeiture

of the remaining $69,751.98 was required under Sec-

tion 853(a)(1). Among other things, the government

noted that petitioner had been “directly involved in

deriving the proceeds” from the sale of Polar Pure,

including by “workling] at the cash register” and

“mak{ing| the actual sales of iodine.” Pet. App. 53a.

The government also argued that a forfeiture of

$69,751.98 was consistent with the Kighth Amendment

6

standard articulated in this Court’s decision in United

States v. Bajakajian, 524 U.S. 321 (1998). Pet. App.

53a-55a.

The district court declined to impose a forfeiture.

Pet. App. 37a. The court stated that the Brainerd

Army Store was not a criminal enterprise; that some

sales of Polar Pure were probably for legal uses; and

that, as a salaried employee with no ownership inter-

est in the store, petitioner had not personally profited

from the conspiracy. Jd. at 38a-40a.

3. Petitioner appealed his convictions, and the gov-

ernment cross-appealed the denial of a forfeiture. The

court of appeals affirmed the convictions and reversed

the denial of a forfeiture. Pet. App. 24a-29a.”

a. The court of appeals explained that the Second,

Third, Fourth, and Eighth Circuits have concluded

that 21 U.S.C. 853(a)(1) “mandates joint and several

liability among coconspirators for the proceeds of a

drug conspiracy.” Pet. App. 25a-26a. It acknowl-

edged that the D.C. Circuit reached a contrary con-

clusion in United States v. Cano-Flores, 796 F.3d 83

(2015), cert. denied, 136 S. Ct. 1688 (2016). Pet. App.

26a. But the court of appeals found it “unnecessary to

probe the reasoning of Cano-Flores,” ibid., because it

concluded that it was bound by circuit precedent in-

terpreting the forfeiture provision in the Racketeer

Influenced and Corrupt Organizations Act (RICO), 18

U.S.C. 1961 et seqg., which likewise requires the forfei-

* The court of appeals also vacated petitioner's sentences on

three counts for which the district court had imposed terms above

the applicable statutory maximum. Pet. App. 23a, 28a-29a. Be-

cause petitioner was sentenced to concurrent terms on all of the

counts of conviction, that vacatur did not affect his total term of

imprisonment. /d. at 23a.

7

ture of “any property constituting, or derived from,

any proceeds which the person obtained, directly or

indirectly, from [certain criminal offenses],” 18 U.S.C.

1963(a)(3). Pet. App. 26a-27a.

In United States v. Corrado, 227 F.3d 543 (6th Cir.

2000), the court of appeals had held that “co-

conspirators in a RICO enterprise should be held

jointly and severally liable for any proceeds of the

conspiracy.” Pet. App. 27a (quoting Corrado, 227 F.3d

at 553). Agreeing with numerous other circuits, Cor-

rado reasoned that requiring the government to

“prove the specific portion of the proceeds for which

each defendant is responsible” would permit defend-

ants “to mask the allocation of the proceeds to avoid

forfeiting them altogether.” Jbid. (quoting Corrado,

227 F.3d at 553) (internal quotation marks omitted).

In this case, the court concluded that Corrado con-

trolled the interpretation of the “virtually identical”

forfeiture provision in 21 U.S.C. 853, and it therefore

held that petitioner was jointly and severally liable for

all of the proceeds of the conspiracy. /bid.

b. Judge Moore concurred in the judgment. Pet.

App. 29a-34a. She agreed that the panel was bound by

Corrado, but she wrote separately to cxpress her

agreement with the D.C. Circuit’s decision in Cano-

Flores and “to suggest that the full court consider the

issue en banc.” Jd. at 29a.

4. Petitioner sought rehearing and rehearing en

bane. After the government filed a response arguing

(at 3) that this case “is not a good vehicle” in which to

consider the disagreement created by Cano-Flores,

the court of appeals denied rehearing en banc with no

judge requesting a vote. Pet. App. 47a-48a.

8

ARGUMENT

Petitioner contends (Pet. 9-25) that 21 U.S.C.

853(a)(1) requires a participant in a drug conspiracy to

forfeit only the proceeds of the conspiracy that he

personally obtained, and not the proceeds foreseeably

obtained by his co-conspirators. The court of appeals

correctly rejected that argument, as have at least

eight other circuits interpreting Section 853(a)(1) or

the parallel forfeiture provision in RICO. Petitioner

correctly notes (Pet. 13-16) that the D.C. Circuit de-

parted from that consensus view in United States v.

Cano-F lores, 796 F.3d 83 (2015), cert. denied, 136 S.

Ct. 1688 (2016). But the resulting circuit conflict is

lopsided and recent. And even if that conflict other-

wise warranted this Court’s review, this case would

not be an appropriate vehicle in which to resolve it

because petitioner would be liable for the forfeiture

the government seeks here even under the rule adopt-

ed in Cano-Flores. The petition for a writ of certiorari

should be denied.

1. The court of appeals correctly held that, under

21 U.S.C. 853(a)(1), the members of a drug conspiracy

are jointly and severally liable for the forfeiture of the

reasonably foreseeable proceeds of the conspiracy.

a. Congress enacted Section 853 and RICO’s paral-

lel forfeiture provision in the Comprehensive Forfei-

ture Act of 1984, Pub. L. No. 98-473, Tit. I1, ch. III, 98

Stat. 2040. Congress sought to “enhance the use of

forfeiture, and in particular, the sanction of criminal

forfeiture, as a law enforcement tool in combatting

two of the most serious crime problems facing the

country: racketeering and drug trafficking.” S. Rep.

No. 225, 98th Cong., Ist Sess. 191 (1983) (Senate Re-

port). Under those provisions, forfeiture “operate[s|

9

as punishment for criminal conduct in violation of the

federal drug and racketeering laws.” Libretti v. Unit-

ed States, 516 U.S. 29, 39 (1995).

Section 853(a)(1) provides that “[aJny person con-

victed of a violation” of specified drug laws “shall

forfeit to the United States,” among other things, “any

property constituting, or derived from, any proceeds

the person obtained, directly or indirectly, as the

result of such violation.” Congress further provided

that the provisions of Section 853 “shall be liberally

construed to effectuate its remedial purposes.” 21

U.S.C. 853(0). As this Court has observed, “Congress

could not have chosen * * * broader words to define

the scope of what was to be forfeited.” United States

v. Monsanto, 491 U.S. 600, 607 (1989).

For example, Congress used “the term ‘proceeds’

* * * in lieu of the term ‘profits’” because it conclud-

ed that the government should not have to prove the

defendant’s “net profits.” Senate Report 199. The

statute thus requires a defendant to forfeit “all gross

receipts” from the criminal offense, “not just the prof-

its.” United States v. Oiguin, 643 F.3d 384, 399 (Sth

Cir.), cert. denied, 132 S. Ct. 432, and 132 S. Ct. 489

(2011).* And by providing for the forfeiture of pro-

* With a single exception, every court of appeals to consider the

issue has held that Section 853(a)(1) requires the forfeiture of

gross receipts rather than net profits. See, ¢.g.. United States v.

Bueei, S82 Foid 108, 121-124 (lst Cir, 2009); Cvited States vy.

Casey, 444 P.3a L071, L076 ad (th Ciro. cert. denied, 549 U.S,

LO10 (2000); United States v. Keeling, 235 P30 5383, 5387 0th Cir.

2000), cert. denied, 533 U.S. 940 (2001); United States v. McHan,

101 F.3d 1027, 1041-1042 (4th Cir. 1996), cert. denied, 520 U.S.

1281 (1997); but see United States v. Jarrett, 133 F.3d 619, 530-531

(7th Cir.), cert. denied, 523 U.S. 1112 (1998). Again with the excep-

tion of the Seventh Circuit, courts of appeals have likewise held

10

ceeds “obtained” by a defendant as the result of the

offense, the statute reaches not only property that a

defendant ultimately retained, but also property that

a defendant “held in custody” before transferring it to

a confederate. United States v. Hurley, 63 F.3d 1, 21

(ist Cir. 1995), cert. denied, 517 U.S. 1105 (1996).

Consistent with that broad liability, Section 853 au-

thorizes the imposition of personal money judgments,

not just the forfeiture of identifiable property in a

defendant’s possession. Olguin, 643 F.3d at 397 (col-

lecting cases); see 21 U.S.C. 853(p) (permitting the

forfeiture of substitute property if the property sub-

ject to forfeiture has been transferred or is otherwise

unavailable).

b. Section 853(a)(1) does not expressly address the

scope of forfeiture liability in conspiracy cases. But a

fundamental principle of federal conspiracy law, car-

ried forward from the common law, is that a person

who joins a conspiracy “becomes responsible for the

acts of his co-conspirators in pursuit of their common

plot.” Smith v. United States, 133 S. Ct. 714, 719

(2013). A “conspiracy is a partnership in crime,” and

“so long as the partnership in crime continues, the

partners act for each other in carrying it forward.”

Pinkerton v. United States, 328 U.S. 640, 644, 646

(1946). One familiar consequence of that principle is

the Pinkerton rule, which holds that a defendant who

that “‘proceeds’ in the RICO forfeiture statute refers to gross

receipts rather than net profits.” United States v. Christensen,

F.3d 7638, 822-824 (9th Cir. 2015), petition for cert. pending,

No. 16-461 (filed Oct. 5, 2016); see, ¢.g., United States v. Simmons,

154 F.3d 765, 770-771 (8th Cir. 1998); United States v. DeF ries, 129

F.3d 1293, 1313-1314 (D.C. Cir. 1997); United States v. Hurley, 63

F.3d 1, 21 (1st Cir. 1995), cert. denied, 517 U.S. 1106 (1996); but

see United States v. Genova, 333 F.3d 750, 761 (7th Cir. 2003).

11

joins a conspiracy may be convicted of the “substan-

tive offense[s]” committed by his co-conspirators so

long as those substantive offenses were reasonably

foreseeable to the defendant and were committed “in

furtherance of the conspiracy.” /d. at 647.

Congress legislates against the backdrop of these

“well-established principles,” and the legislature

should not lightly be assumed to have “erode[d] the

common-law principle that, so long as they share a

common purpose, conspirators are liable for the acts

of their co-conspirators.” Salinas v. United States,

522 U.S. 52, 63-64 (1997); see, e.g., United States v.

Lake, 472 F.3d 1247, 1266 (10th Cir. 2007) (“The liabil-

ity of coconspirators is a well-entrenched feature of

federal criminal law. If Congress wishes to limit it in

certain circumstances, we would expect it to be explic-

it about what it is doing.”).

In enacting Section 853(a)(1), Congress did not

suggest any intent to depart from settled principles

governing co-conspirators’ responsibility for each

other’s acts. To the contrary, Congress broadly pro-

vided that a defendant is liable to forfeit any property

“obtained, directly or indirectly, as the result” of a

drug offense. 21 U.S.C. 853(a)(1) (emphasis added).

That language readily encompasses the traditional

principle that a member of a conspiracy is vicariously

liable for the foreseeable acts of his co-conspirators.

Accordingly, Section 853(a)(1)’s forfeiture obligation

“is not limited to property that the defendant acquired

individually but includes all property that the defend-

ant derived indirectly from those who acted in concert

with him in furthering the criminal enterprise.” Unit-

ed States v. McHan, 101 F.3d 1027, 1043 (4th Cir.

1996), cert. denied, 520 U.S. 1281 (1997).

12

At least five other courts of appeals have adopted

that view, holding that “[iJn a drug conspiracy case,

defendants may be held jointly and severally liable in

a money judgment for all of the foreseeable proceeds

of the conspiracy.” United States v. Elder, 682 F.3d

1065, 1072 (8th Cir. 2012) (brackets and citation omit-

ted); accord United States v. Roberts, 660 F.3d 149,

165 (2d Cir. 2011), cert. denied, 132 S. Ct. 1640 (2012);

United States v. Pitt, 198 F.3d 751, 765 (3d Cir. 1999);

United States v. Candelaria-Silva, 166 F.3d 19, 44

(Ist Cir. 1999), cert. denied, 529 U.S. 1055 (2000);

McHazn, 101 F.3d at 1043 (4th Cir.).

Numerous courts of appeals have adopted the same

interpretation of the parallel RICO forfeiture statute,

likewise applying “the familiar rule that a member of

a conspiracy is responsible for the foreseeable acts of

other members of the conspiracy taken in furtherance

of the conspiracy.” Hurley, 63 F.3d at 22 (1st Cir.);

see United States v. Genova, 333 F.3d 750, 762 (7th

Cir. 2003); United States v. Edwards, 303 F.3d 606,

643-644 (5th Cir. 2002), cert. denied, 537 U.S. 1192,

and 537 U.S. 1240 (2003); United States v. Corrado,

227 F.3d 543, 553 (6th Cir. 2000); United States v.

Simmons, 154 F.3d 765, 769-770 (8th Cir. 1998); Unit-

ed States v. Benevento, 836 F.2d 129, 130 (2d Cir.

1988); United States v. Caporale, 806 F.2d 1487, 1507-

1508 (11th Cir. 1986), cert. denied, 482 U.S. 917, and

483 U.S. 1021 (1987).* And the advisory committee’s

notes to the Federal Rule of Criminal Procedure gov-

* The Eleventh Circuit has concluded that in some circumstances

a co-conspirator may be required to forfeit the proceeds of the

conspiracy even if those proceeds were not reasonably foreseeable.

United States vy. Browne, 505 F.3d 1229, 1279-1280 (2007), cert.

denied, 554 U.S. 918 (2008).

13

erning forfeiture proceedings likewise recognize that

“[c]riminal defendants may be jointly and severally

liable for the forfeiture of the entire proceeds of the

criminal offense.” Fed. R. Crim. P. 32.2(c) advisory

committee’s note at 144.°

As the courts of appeals have explained, a contrary

interpretation would severely undermine the purpose

of the forfeiture provisions Congress enacted in 1984.

Recognizing that a conviction of drug defendants that

leaves intact their “economic power base[]” is “of only

limited effectiveness,” Congress designed forfeiture

provisions to “strip these offenders * * * of their

economic power.” Senate Report 191. And Congress

was particularly concerned that existing forfeiture

provisions “fail[ed] adequately to address the phe-

nomenon of defendants defeating forfeiture by remov-

ing, transferring, or concealing their assets prior to

conviction.” Jd. at 195. A requirement that the gov-

ernm nt “determine the precise allocation” of pro-

ceeds among co-conspirators would recreate a version

of the same problem, allowing conspirators to “mask

the allocation of the proceeds” among themselves and

thereby “avoid forfeiting them altogether.” Caporale,

806 F.2d at 1508. Denying forfeiture because “the

government cannot prove exactly which defendant

received how much of the pot” would “defeat{] the

purpose of the [forfeiture] provision.” /bid.

° Other forfeiture statutes contain language similar to that found

in Section 853(a)(1) and the parallel provision of RICO. See, e¢.g.,

18 U.S.C. 982(a)(2) (various offenses, including mail fraud, wire

fraud, and bank fraud affecting a financial institution); 18 U.S.C.

982(a)(8)(B) (telemarketing fraud); 18 U.S.C. 1080(i1)(B) (com-

puter fraud). The government is not aware of any decision reject-

ing application of co-conspirator liability under those provisions.

14

Moreover, a contrary interpretation of Section

853(a)(1) would create anomalous results by giving

“eonclusive weight” to whether a particular co-

conspirator “physically handled the money.” Hurley,

63 F.3d at 22. It would mean, for example, that low-

level couriers could be subject to greater forfeitures

than “higher level” conspirators who played larger

roles in the offense, but handled less of the cash. bid.

Rather than fixing the amount of forfeiture based on

“whether an individual co-conspirator happened to

possess” the proceeds—a fact that may be “largely

fortuitous”—the “foreseeable amount” of proceeds

from the conspiracy “represents the sounder measure

of liability.” Ibid.

c. Petitioner identifies no valid reason to abandon

the rule of co-conspirator liability that has long pre-

vailed in the vast majority of the circuits.

First, petitioner asserts (Pet. 20-21) that co-

conspirator liability is inconsistent with the text of

Section 853(a)(1) because a defendant only “obtain|[s]”

the “proceeds that actually reach that defendant.”

But Congress imposed forfeiture liability for proceeds

that a defendant obtains “directly or indirectly.” 21

U.S.C. 853(a)(1) (emphasis added). As even petitioner

concedes, that language indicates that forfeiture is not

limited to proceeds that the defendant personally

obtains. Petitioner acknowledges, for example, that a

defendant “indirectly” obtains proceeds that flow to

“persons or entities that are under the defendant’s

control,” or “persons for whom th{e] defendant has a

legal or moral obligation of support.” Pet. 21 (quoting

Cano-Flores, 796 F.3d at 92). It is equally sensible to

say that when a joint criminal enterprise foreseeably

obtains property, all of the co-conspirators “indirect-

15

ly” obtain those proceeds, without regard to how they

then choose to allocate the funds amongst themselves.

That is particularly true in light of the settled rule

that a conspiracy is a “partnership in crime” in which

the members “act for each other in carrying it for-

ward.” Pinkerton, 328 U.S. at 646.

Petitioner objects (Pet. 22) that Congress did not

expressly provide for co-conspirator liability in Sec-

tion 853. But the rule that “conspirators are liable for

the acts of their co-conspirators” is a “well-

established” principle of federal criminal law that

forms part of the backdrop against which Congress

legislates. Salinas, 522 U.S. at 63-64. Congress need

not expressly provide for co-conspirator liability in

each federal criminal statute; to the contrary, Con-

gress is presumed to have incorporated that well-

settled background rule absent some indication to the

contrary. See id. at 64; see also, e.g., Lake, 472 F.3d

at 1266 (holding that restrictive language in a criminal

statute is not “an implied repeal of traditional liability

for partners in crime”).°

Second, petitioner contends that the general prin-

ciple of co-cwnspirator liability is inapplicable to for-

feitures because “Pinkerton ** * is a doctrine

which speaks only to a defendant’s substantive

liability—not to the consequences of such liability.”

* Petitioner therefore draws the wrong inference (Pet. 22) from

18 U.S.C. 3664(h), which provides that a court imposing a restitu-

tion order may either “make each defendant liable for payment of

the full amount of restitution” or “apportion liability among the

defendants.” That provision shows that Congress can depart from

the background rule of co-conspirator liability when it wishes to do

so, but Congress’s failure to depart from that rule in Section 853

confirms that the usual rule of co-conspirator liability applies.

16

Pet. 24 (quoting Cano-F'lores, 796 F.3d at 94). But

Pinkerton liability for substantive crimes committed

by a defendant's co-conspirators is simply one applica-

tion of the broader principle that a person who joins a

conspiracy “becomes responsible for the acts of his co-

conspirators in pursuit of their common plot.” Smith,

133 S. Ct. at 719; see Pinkerton, 328 U.S. at 646-647.

That principle also applies in other contexts, including

in determining the consequences of substantive crimi-

nal liability. For example, the Sentencing Guidelines

permit attribution to a defendant for sentencing pur-

poses of the reasonably forcseeable conduct of jointly

undertaken criminal activity. Sentencing Guidelines

§ 1B1.3(a)(1)(B). Accordingly, “[iJt would be odd

* * * to depart from thie] principle of attributed

conduct when it comes to apply the forfeiture rules,

which have aspects of both substantive liability and of

penalty.” Hurley, 63 F.3d at 22."

Third, petitioner contends (Pet. 22-23) that co-

conspirator liability is inconsistent with the purpose of

Section 853 because requiring a defendant to forfeit

money that the defendant did not personally receive

makes forfeiture tantamount to a punitive “criminal

fine[].” But Section 853’s purpose extends beyond

* For much the same reason, petitioner is wrong to assert

(Pet. 24) that “joint-and-several liability is contrary to the Pinker-

ton rule” because Pinkerton results in individual convictions and

co-conspirators are responsible for each other’s acts is the same in

each context. Joint-and-several liability in the forfeiture context is

simply the result of the rule that the government cannot twice col-

lect the proceeds of the offense. See Hurley, 63 F.3d at 23 (“The

government can collect [the proceeds of a conspiracy] only once

but, subject to that cap, it can collect from any [conspirator] so

much of that amount as was foreseeable to that [conspirator).”).

17

merely requiring defendants to “give up [tainted]

assets, so as not to benefit from [their] crimes”

(Pet. 22). As explained above, Section 853(a)(1) re-

quires forfeiture of the gross receipts from criminal

activity, not just its net profits; extends to proceeds

that the defendant merely held before transferring to

others; and permits the imposition of a personal mon-

ey judgment, not just the forfeiture of specific tainted

assets. See pp. 9-10 & note 3, supra. As this Court

has explained, an “in personam criminal forfeiture”

like the one at issue here “is clearly a form of mone-

tary punishment” analogous to a “traditional ‘fine.’”

Alexander v. United States, 509 U.S. 544, 558 (1993).

And although co-conspirator liability can result in “a

formidable penalty” under Section 853 and the paral-

lel provision in RICO, “there is no reason to think that

this result is unattractive to Congress, which request-

ed a broad construction” of both forfeiture statutes.

Hurley, 63 F.3d at 23; see 21 U.S.C. 853(0).

Finally, petitioner errs in suggesting (Pet. 24-25)

that the absence of a federal right to seek contribution

from co-conspirators indicates that Congress did not

intend to impose joint-and-several liability. Petition-

er’s argument relies on Paroline v. United States, 134

S. Ct. 1710 (2014), which relied in part on the absence

of a federal right to contribution in holding that Con-

gress did not make every possessor of an image of

child pornography jointly and severally liable for the

victim’s “entire losses.” /d. at 1725. But the Court

rejected joint-and-several liability primarily because

that case “d[id] not involve a set of wrongdoers acting

in concert” and because joint-and-several liability

would have made a single defendant liable for the

combined consequences of the acts of “tens of thou-

18

sands” of “independently acting offenders.” Jbid. No

such incongruity exists in applying the familiar rule

that the confederates in a single conspiracy are re-

sponsible for each other’s foreseeable acts in further-

ance of their joint criminal enterprise.

2. Petitioner contends (Pet. 10-18) that this Court

should grant review to resolve the circuit conflict

created by the D.C. Circuit’s decision in Cano-F lores.

But that lopsided and newly minted split does not

warrant this Court’s intervention. And even if it did,

this case would not be an appropriate vehicle in which

to resolve the question presented because petitioner

would be liable for the forfeiture the government

seeks even under the rule announced in Cano-F lores.

a. Cano-Flores arose from the prosecution of a

“mid-level manager” in the Gulf Cartel, “one of the

largest and most infamous drug cartels in Mexico.”

73 F.3d at 85, 94. The defendunt was convicted of

conspiring to manufacture and distribute cocaine and

marijuana for importation into the United States, and

the district court ordered a $15 billion forfeiture un-

der 21 U.S.C. 853(a)(1). Cano-Flores, 796 F.3d at 85,

90. That amount reflected an estimate of the “gross

cartel proceeds that were reasonably foreseeable” to

the defendant. Jd. at 90.

The D.C. Circuit vacated the forfeiture order. Ac-

knowledging its disagreement with every other court

of appeals to have considered the issue, the D.C. Cir-

cuit held that Section 853(a)(1) “does not authorize

imposition of a forfeiture based on the total revenues

of a conspiracy simply because they may have been

reasonably foreseeable.” Cano-Flores, 796 F.3d at 91.

Instead, the court held that Section 853(a)(1) princi-

pally encompasses “funds that actually reach the de-

19

fendant.” Jd. at 92. But the court indicated that a

defendant “obtain|s|” proceeds for purposes of Section

853(a)(1) even if he serves as an intermediary who

passes the funds along to another conspirator. See

ibid. (explaining that the ultimate recipient in such a

transaction obtains proceeds “indirectly” while the

intermediary receives the funds “directly”).

The D.C. Circuit also acknowledged that its rule

could encompass “cases where the flow of funds is a

good deal mure subtle.” Cano-Florcs, 796 F.3d at 92.

The D.C. Circuit suggested, for example, that a de-

fendant may be deemed to have “obtain[ed]” proceeds

if she “receivjed] increased compensation as an indi-

rect benefit” of the offense. Ibid. And the court indi-

cated that a defendant may be regarded as “indirect-

ly” obtaining proceeds even in some circumstances in

which the defendant cdves not personally receive

them—for example, where the proceeds are “received

by persons or entities that are under the defendant's

control” or by family members or other “persons for

whom th[e] defendant has a legal or moral obligation

of support.” Thid. .

b. The conflict created by the D.C. Circuit’s deci-

sion in Cano-Flores does not warrant this Court’s

intervention. Cano-Flores involved highly unusual

facts and an exceptionally large forfeiture award. The

government did not seek rehearing en banc of the

panel's interlocutory decision, and no subsequent case

has given the D.C. Cireuit the opportunity to revisit

the panel's interpretation of Section 853(a)(1)—vor to

apply that interpretation to circumstances involving

more typical flows of funds among co-conspirators.

Conversely, with the exception of the decision below,

no other court of appeals has had the opportunity to

20

reconsider its interpretation of Section 853(a)(1) in

light of Cano-Flores or to respond to the D.C. Cir-

cuit’s arguments. Under the circumstances, this

Court’s review would be premature.

c. In any event, this case would not be an appro-

priate vehicle in which to consider the question pre-

sented even if that question otherwise warranted this

Court’s review. The forfeiture the government seeks

here would be appropriate even under the standard

adopted in Cano-Flores, and the resolution of the

question presented thus would not affect petitioner’s

liability.

Petitioner contends (Pet. 19-20) that this case is an

appropriate vehicle because he did not have an owner-

ship interest in the Brainerd Army Store and thus did

not share in the profits from the store’s sales of Polar

Pure. But Cano-Flores did not hold that a defendant

“obtains” the proceeds of an offense only if he is the

ultimate financial beneficiary. To the contrary, the

D.C. Circuit indicated that a defendant obtains any

proceeds “that actually reach the defendant,” even if

the defendant then passes them along to a co

conspirator. 796 F.3d at 92; see Hurley, 63 F.3d 21.

That is exactly what happened here. Petitioner

was the manager of the Brainerd Army Store “in

charge of sales and inventory.” Pet. App. 2a. Only

petitioner and his brother sold Polar Pure, and the

evidence at trial established that petitioner personally

sold a substantial amount of the iodine distributed

during the conspiracy. Jbid.; see, e.g., 1/21/14 Trial

Tr. 56-57 (petitioner sold four bottles to an undercover

officer on October 26, 2009); id. at 66-67 (same on

November 2, 2009); id. at 72-73 (petitioner sold the

officer 15 bottles on November 6, 2009); id. at 81-82

21

(same on November 18, 2009); id. at 92 (petitioner sold

the officer one bottle on November 8, 2010).°

Each time petitioner personally made an unlawful

sale of Polar Pure, he “directly” obtained the proceeds

from that sale. And particularly because the govern-

ment seeks a forfeiture of only $69,751.98—roughly a

quarter of the store’s profits from sales of Polar Pure

and less than a fifth of its gross receipts, see Gov't

C.A. Br. 4—those personal sales alone would provide a

sufficient basis for the forfeiture even under Cano-

Flores’s interpretation of Section 853(a).°

Even setting aside petitioner's personal sales,

moreover, he would properly be regarded as having

“indirectly” received the proceeds of the Brainerd

Army Store’s sales of Polar Pure even without the

application of co-conspirator liability. This is a case

involving what Cano-Flores termed a “more subtle”

flow of funds. 796 F.3d at 92. The conspiracy was run

out of a small, family-owned business, and petitioner

* At trial, petitioner asserted that his brother worker the sales

counter more «often than he «lid. 1/2/14 Trial Tr. 445-446. But

petitioner sold the bulk of the iodine purchased by the undercover

officer who testified at trial, and other witnesses who visited the

store stated that they found the bruthers at the counter in “equal

amounts.” 1/22/14 Trial Tr. 171; sce, eg., id at 304 (cooperating

witness testified that he bought from each brother “on more than

one occasion” and could not say which one was at the counter more

often).

* In this case, the government has sought forfeiture in an

amount ejual to the profits from the Brainerd Army Store’s xalex

of Polar Pure. Indictment 2. But as the government observe:!

bwlow, Section 853(41) provides for the forfeiture of gross re-

eeipls, not merely profits. Guv't (A. Fourth br. 7 (citing (/nited

States v. Logan, 542 Fed. Appx. 4%4, 498 (6th Cir. 2014). cert.

denied, 134 S. Ct. 1531 (2014)); see p. 9 & note 3, supra.

22

was directly involved in all of the store’s sales of Polar

Pure because he was solely responsible for maintain-

ing its inventory. 1/23/14 Trial Tr. 498. Even where

petitioner did not personally handle the proceeds of

the sales, those proceeds ultimately went to a store

owned by his brother. And although petitioner was

paid by salary, he received an “indirect benefit” from

the sales of Polar Pure, Cano-Flores, 796 F.3d at 92,

which became the store’s top-selling and most-

profitable product and contributed substantially to its

total revenue, 1/22/14 Trial Tr. 249-252. This case is

thus far removed from Cano-F lores, which involved a

$15 billion forfeiture imposed on a mid-level member

of a vast conspiracy involving “tens of thousands” of

other participants. 796 F.3d at 90. The D.C. Circuit’s

vacatur of the forfeiture award at issue there does not

suggest that it would conclude that a $69,751.98 forfei-

ture is inappropriate under the very different circum-

stances presented here.

At a minimum, these complications would make this

case a poor vehicle in which to resolve the disagree-

ment created by Cano-Flores. At the panel stage,

Judge Moore expressed her agreement with Cano-

Flores and “suggest{[ed] that the full court consider

the issue en banc.” Pet. App. 29a. But after the gov-

ernment highlighted the vehicle problems described

above in its response to a petition for rehearing en

banc (at 3-6), the court of appeals denied rehearing en

bane with neither Judge Moore nor any of her col-

leagues requesting a vote. Pet. App. 47a-48a. Even if

this Court were otherwise inclined to take up the

question presented, it should likewise await an appro-

priate vehicle.

23

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

IAN HEATH GERSHENGORN

Acting Solicitor General

LESLIE R. CALDWELL

Assistant Attorney General

OCTOBER 2016