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SCOTUS limits reach of federal law mandating property forfeiture for drug offenses

Terry Michael Honeycutt v. United States, USSC No. 16-142, 2017 WL 2407468 (June 5, 2017), reversing United States v. Honeycutt, 816 F.3d 362 (6th Cir. 2016); Scotusblog page (including links to briefs and commentary)

A federal statute—21 U.S.C. § 853—mandates forfeiture of “any property constituting, or derived from, any proceeds the person obtained, directly or indirectly, as the result of” certain drug crimes. This case concerns how § 853 operates when two or more defendants act as part of a conspiracy. Specifically, the issue is whether, under § 853, a defendant may be held jointly and severally liable for property that his co-conspirator derived from the crime but that the defendant himself did not acquire. The Court holds that such liability is inconsistent with the statute’s text and structure. (Slip op. at 1).

Terry Honeycutt managed sales and inventory at a business owned by his brother, Tony. The business sold large amounts of Polar Pure, an iodine-based water-purification product, to people who used it to make methamphetamine. The brothers were convicted of conspiring to commit various federal crimes by selling the product knowing or having reason to believe it would be used to make methamphetamine. The government then sought forfeiture judgments for the business’s profits from the illicit sales. Based on the conspiracy conviction the government argued each brother should be jointly liable for the full amount, even though it conceded that Tony owned the business and that Terry was only a salaried employee who received no share of the profits. (Slip op. at 1-3).

The Sixth Circuit agreed with the government, but the Supreme Court reverses, unanimously holding that Terry can’t be liable for the ill-gotten profits:

Forfeiture pursuant to § 853(a)(1) is limited to property the defendant himself actually acquired as the result of the crime. In this case, the Government has conceded that Terry Honeycutt had no ownership interest in his brother’s store and did not personally benefit from the Polar Pure sales. …. Because Honeycutt never obtained tainted property as a result of the crime, § 853 does not require any forfeiture. (Slip op. at 11).

This decision will interest federal practitioners, as it resolves a circuit split; as the Court notes, a majority of the circuit courts had adopted the same broad view of the federal forfeiture statute as the Sixth Circuit. (Slip op. at 3 n.1). The Seventh Circuit hasn’t addressed the issue.

As for its impact on Wisconsin practice: The language in § 961.55, our drug crime forfeiture statute, differs in diverse ways from the language in the federal statute; nonetheless, § 961.55 is based on the Uniform Controlled Substances Act, which in turn was based on the federal Controlled Substances Act, and Wisconsin courts have used that connection to justify looking to federal cases for guidance on interpreting our statute. State v. Kirch, 222 Wis. 2d 598, 605, 587 N.W.2d 919 (Ct. App. 1998). And even with the differences in language, the purposes of the state and federal statutes are the same, so the logic of the Court’s interpretation of the federal statute (slip op. at 3-10) should apply with equal force to § 961.55.

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