Thank you for sharing!

Your article was successfully shared with the contacts you provided.
The federal criminal forfeiture statute allows partial forfeitures of real property, the 2nd U.S. Circuit Court of Appeals has ruled. Joining two other circuits, the court said that the use of the term “property” in 21 U.S.C. �853 refers not to a parcel of land but to a defendant’s interest in that land when the two are not the same. The issue arose in U.S. v. Foti, 03-6164, when Barbara Pacheco bought a piece of property in the Bronx from a bank after a foreclosure. At the same time, the property was subject to forfeiture proceedings against John Serendensky, who was under indictment for conspiracy to commit bank fraud and money laundering. Pacheco sought to intervene in the forfeiture proceedings to eliminate the obstacle to her purchase. The government opposed her petition, saying the foreclosure sale through which she acquired title was invalid and that she could not be a bona fide purchaser because she was on notice of the government’s interest. Southern District Judge John Koeltl dismissed Pacheco’s petition after finding that she lacked standing because she had no valid interest in the property. The problem for the 2nd Circuit was that the bank also had an interest in the premises through a mortgage on which it had foreclosed. In the circuit decision, Judge Thomas Meskill wrote that Koeltl’s conclusions would have been correct, assuming that Serendensky forfeited the entire premises. “But that assumption is far from unassailable, especially because the government, throughout, alleged only the forfeiture of Serendensky’s interest in the premises,” Meskill said. “We are therefore required to determine whether the criminal forfeiture statute permits partial forfeitures of real property.” The statute’s definition of the term “property” is ambiguous, the judge wrote, particularly where real property is involved. It is also unclear whether the law compels forfeiture of a “specific parcel of real property as opposed to an interest in that parcel,” he said. “In view of this ambiguity, we note that reading the criminal forfeiture statute to prohibit partial forfeitures raises serious constitutional concerns,” Meskill wrote. “If partial forfeitures are forbidden, then a criminal’s activity may result in the forfeiture of an innocent third party’s interest in property.” Thus, where the government acquires an entire tract of land through forfeiture, that might constitute a deprivation of a third party’s property without due process — a violation of the Fifth Amendment, he said. Meskill noted that courts “have consistently construed the civil forfeiture statute, 21 U.S.C. �881, to permit partial takings,” and while the “criminal and civil forfeiture provisions are not identical,” he said his circuit was joining the 9th and 6th circuits in recognizing the intention of Congress “to vest in the government the same substantive rights under the two statutes, notwithstanding their technical differences.” The panel reversed Koeltl and held that Pacheco could try to her establish her interest in the property. Judges Roger Miner and Robert Katzmann joined in the opinion. Evan Wiederkehr of Delbello Donnellan Weingarten Tartaglia Wise & Wiederkehr of White Plains represented Pacheco. Assistant U.S. Attorney Daniel S. Ruzumna represented the government.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.