Notable Forfeiture Cases

Steven L. Kessler has been involved in many important forfeiture cases nationwide. Below is a representative sampling of cases in which Mr. Kessler was the lead attorney or handled the lower court proceedings which the appellate decision affirmed or reinstated.

Federal Cases

United States v. Swartz Family Trust, 67 F.4th 505 (2d Cir. 2023)

The Second Circuit reaffirmed the fundamental principle that criminal forfeiture is limited to property in which the defendant has an interest, setting up a potential clash with the government’s recent attempts to forfeit any and all property alleged to have a nexus to the criminal activity, regardless of who owns it, in violation of the in personam jurisdictional limitations of criminal forfeiture and the principles underlying Rule 32.2 of the Federal Rules of Criminal Procedure. Unfortunately, the Court did not follow its previous precedent and affirmed the lower court’s dismissal of the Swartz Family Trust’s Petition due to its filing beyond the statutory time limit.

United States v. Real Property Located at 1407 North Collins Street, Arlington, Texas, 901 F.3d 268 (5th Cir. 2018)

In its first significant decision in more than a decade on appeals from pretrial restraints of property in forfeiture proceedings, the Fifth Circuit rejected the government’s position and exercised appellate jurisdiction over client’s appeal from the District Court’s denial of his motion to release restrained property in related civil and criminal forfeiture proceedings; further, in its first ruling since 1972, the Fifth Circuit exercised appellate jurisdiction over an appeal from the denial of motion to lift lis pendens restraining real property.

United States v. Cosme, 796 F.3d 226 (2d Cir. 2015)

The court agreed with client’s position in that the District Court had restrained client’s property without making the requisite findings of probable cause; Second Circuit vacated the trial court’s order denying motion to lift restraints and remanded for further proceedings.

United States v. Kogan, 2022 WL 3362452, 2022 U.S. Dist. LEXIS 145659 (S.D.N.Y. Aug. 15, 2022):

In a strong rebuke to the government on an issue of great importance, the District Court rejected the government’s attempt to forfeit the interest of the spouses of two criminal defendants in real property held as tenants by the entireties in New Jersey and New York. The court held that the spouses’ interest in the properties, including their rights of possession and survivorship, were protected under the ancient real property doctrine, thereby precluding the government from forfeiting the real properties involved

United States v. Rodriguez-Perez, _ F. Supp. 3d _, 2019 U.S. Dist. LEXIS 6413 (S.D.N.Y., Jan 11, 2019) (Swain, J.)

On an issue of first impression, the court ruled that the relation-back of mortgage assignments under New York State law gave the client a superior interest in the property because the original mortgage predated the government’s interest under the relation-back provision of 853(c), finding correctly that state law reflects the party’s interest in the property, even in federal criminal forfeiture cases.

United States v. Surgent, _ F. Supp. 2d _, 2009 WL 2525137, 2009 U.S. Dist. LEXIS 72563, 04-CR-364 (E.D.N.Y. Aug 17, 2009) (Gleeson, J.)

In a ruling protecting client’s home from forfeiture, the court issued a groundbreaking 57-page opinion, reasoning that ‘money judgment forfeitures’ are invalid because they are not specifically authorized by Congress, applying a similar analysis to that of the United States Supreme Court eight years later, in Honeycutt v. United States, 581 U.S. ___, 137 S. Ct. 1626 (2017), barring the application of joint and several liability to federal criminal forfeiture cases.

Commodity Futures Trading Commission v. Walsh, et al., 658 F.3d 194 (2d Cir. 2011)

On an issue of first impression regarding both New York and federal law, the Second Circuit ruled, on certified questions answered by the New York Court of Appeals, that client, ex-wife of defendant, was ‘bona fide purchaser for value’ of proceeds of a divorce settlement, even assuming funds were proceeds of the defendant’s fraud, because ex-wife provided “intangible consideration” as a spouse and mother during lengthy marriage under principles of equitable distribution codified in section 236 of the New York Domestic Relations Law.

United States v. Currency Aggregating $829,964.10, _ F. Supp. 2d _, 2005 WL 1586093 (N.D. W.Va. June 6, 2005) (Keeley, J.)

The court granted client’s motion for summary judgment against client’s ex-husband under CAFRA fugitive disentitlement statute.

State Cases

Commodity Futures Trading Commission v. Walsh, et al., 17 N.Y.3d 162, 927 N.Y.S.2d 821 (2011)

On certified questions from the Second Circuit Court of Appeals resolving issues of first impression involving the interplay between equitable distribution law, debtor-creditor law and “significant public policy considerations,” New York State’s highest Court ruled 7-0 in client’s favor on whether an ex-spouse of a criminal defendant can have a legitimate claim to fraud proceeds received pursuant to a valid New York divorce agreement and ruled 5-2 in client’s favor on whether a divorcing spouse can be deemed to have paid “fair consideration” for fraud proceeds received pursuant to a divorce if he or she acted in good faith and provided “intangible consideration” within the meaning of the equitable distribution laws in the form of spousal and parental services providing during the course of a marriage.

Trofimov v. Furmanov, 38 A.D.3d 530, 832 N.Y.S.2d 67 (2d Dep’t 2007)

Reversing the lower court’s dismissal of client’s defamation claim on service of process grounds, Appellate Division found that defendant’s evidence at hearing on service was “riddled with inconsistencies and contradictions” and reinstated default judgment in favor of client for the entire amount sought in the complaint.

Kempf v. Magida, 116 A.D.3d 736, 982 N.Y.S.2d 916 (2d Dep’t 2014)

The court affirmed the denial of defendant’s motion for summary judgment seeking to dismiss clients’ legal malpractice claim, finding that defendant failed to demonstrate, with admissible evidence, that clients could not prove at least one of the essential elements of their claim.

Spota v. Astra Motors, 28 A.D.3d 471, 813 N.Y.S.2d 194 (2d Dep’t 2006)

After the lower court granted motion to dismiss forfeiture claims and ordered the return of all restrained funds to client, plus interest, Appellate Division, on issue of first impression, held that, although client was entitled to all interest actually earned on restrained funds, it was not entitled to interest at the statutory rate because New York civil forfeiture law has a specific provision that overrides general law and requires proof that defendant’s property was restrained in bad faith, which was not supported by the record.

Cuomo v. Levy et al., _ Misc.3d _ (Sup. Ct. Kings County, Nov. 12, 2009) (Ingram, J.)

The court granted the motion to quash subpoenas for deposition of the client to find assets for restraint and forfeiture, holding that such depositions are not authorized by New York’s forfeiture law, a staying civil proceeding pending litigation of related criminal action.

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