Judge John Koeltl
Federal Insurance Co. agreed to pay King $175,000 to settle a contract breach lawsuit asserting improper actions by insurers which otherwise would have covered her costs in defending a lawsuit by a labor union from which King was accused of embezzling $40 million. King retained Rosenfeld to represent her in her breach action against the insurers. Later, she pleaded guilty to embezzlement for, employee benefit plans and signed a consent order of forfeiture that included the $175,000 in settlement funds. Pursuant to 21 USC §853(n) Rosenfeld asserted an interest in $87,500, half the $175,00 in settlement funds subject to forfeiture. Granting the government summary judgment, the court denied Rosenfeld’ claim of entitlement to the $87,5000 under his retainer agreement with King. The court concluded, among other things, that Rosenfeld had no vested property interest in the settlement fundspreviously found traceable to crime proceeds because they reimbursed King for attorneys fees paid with embezzled fundsat the time of the commission of the criminal acts giving rise to forfeiture. Like all other crime proceeds, the settlement funds were not in existence at the time the criminal activity occurred.
