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October 30, 2017
  United States v. Chamberlain -- Fourth Circuit
Overruling Precedent - You Can Keep What's Yours...At Least Until Trial

Areas of Law: Criminal Law, Statutory Interpretation

Issue Presented: Whether Luis v. United States, 136 S. Ct. 1083 (2016), abrogates Fourth Circuit precedent interpreting 21 U.S.C. § 853 to authorize the pre-trial restraint of a criminal defendant's "substitute" (or "untainted") property.

Brief Summary: In a published opinion, the United States Court of Appeals for the Fourth Circuit sitting en banc held that 21 U.S.C. § 853 does not authorize the restraint of a criminal defendant's substitute property prior to trial. The court reasoned that while the Supreme Court in Luis did not overrule Fourth Circuit precedent, the Luis Court emphasized that tainted and untainted assets are treated differently under Section 853, which provided the opportunity for the Fourth Circuit to review its precedent. The Fourth Circuit reexamined its precedent and found that Section 853 permits the government to obtain a pretrial restraining order over only those assets that are directly subject to forfeiture as property traceable to a charged offense, which the court refers to as "tainted property."

Extended Summary: Section 853 is the criminal forfeiture statute which provides for the forfeiture upon conviction of property associated with a defendant's crimes. Specifically, Section 853(a) provides for the forfeiture of tainted property, which is property derived from or used to commit the offense. Section 853(p) provides for the forfeiture of substitute property upon conviction. Substitute property is property of the defendant up to the value of the tainted property, when property identified under Section 853(a) is unavailable or has diminished in value. Section 853(e)(1)(A) "authorizes district courts to enter orders or take other necessary steps 'to preserve the availability of property described in Section 853(a)'" prior to trial.

In this case, Chamberlain allegedly participated in a conspiracy to defraud the government and conspired to steal approximately $200,000 of federal funds. The district court issued an order prohibiting the defendant from selling or otherwise disposing of a necklace worth $200,000 during the pendency of the proceedings against him. The government argued that the court's restraining order was proper under the Fourth Circuit's existing rule that the government may restrain a criminal defendant's substitute property prior to trial under 21 U.S.C. § 853(e)(1)(A). The court acknowledged that Section 853(e)(1)(A) only explicitly provides for the pretrial restraint of tainted property. However, the Fourth Circuit has broadly interpreted Section (e) to permit the pretrial restraint of both tainted and untainted assets prior to trial. See, e.g., United States v. Bollin, 264 F.3d 391 (4th Cir. 2001).

In 2016, the Supreme Court decided Luis v. United States. In that case, the Supreme Court held that "the Constitution prohibits the pretrial restraint of innocently-obtained [untainted] property when it is needed by a criminal defendant to obtain counsel." The Fourth Circuit emphasized that while Luis did not directly address whether Section 853(e)(1)(A) authorizes the pre-trial restraint of substitute property, the Court in that case did indicate "a firm distinction between the government's authority to restrain tainted and untainted assets" under Section 853. Additionally, the Fourth Circuit stated that all other circuits to consider the issue have "expressly rejected the reasoning underlying [the Fourth Circuit's] interpretation of Section 853(e)." The court further emphasized that "when Congress intends to permit the government to restrain both tainted and untainted assets before trial, it has clearly provided for such authority." For those reasons, the court overruled its precedent and held that 21 U.S.C. § 853(e)(1)(A) does not permit the pretrial restraint of substitute assets. Accordingly, the Court of Appeals for the Fourth Circuit vacated the district court's order.

To read the full opinion, click here.

Panel: Judges Gregory, Wilkinson, Niemeyer, Motz, Traxler, King, Shedd, Duncan, Agee, Keenan, Wynn, Diaz, Floyd, Thacker, and Harris

Argument Date: 01/26/2017

Date of Issued Opinion: 08/18/2017

Docket Number: 16-4313

Decided: Affirmed by published opinion.

Case Alert Author: Taylor McAuliffe, Univ. of Maryland Carey School of Law

Counsel: Elliot Sol Abrams, CHESHIRE PARKER SCHNEIDER & BRYAN, PLLC, Raleigh, North Carolina, for Appellant. Stephen Aubrey West, OFFICE OF THE UNITED STATES ATTORNEY, Raleigh, North Carolina, for Appellee. ON BRIEF: Samuel B. Hartzell, WOMBLE CARLYLE SANDRIDGE & RICE, LLP, Raleigh, North Carolina, for Appellant. Kenneth A. Blanco, Acting Assistant Attorney General, Trevor N. McFadden, Deputy Assistant Attorney General, James I. Pearce, Criminal Division, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C.; John Stuart Bruce, United States Attorney, G. Norman Acker, III, Assistant United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Raleigh, North Carolina, for Appellee. Thomas K. Maher, NORTH CAROLINA OFFICE OF INDIGENT DEFENSE SERVICES, Durham, North Carolina; Ilya Shapiro, CATO INSTITUTE, Washington, D.C.; Abbe David Lowell, Scott W. Coyle, CHADBOURNE & PARKE LLP, Washington, D.C., for Amici Curiae.

Author of Opinion: Judge Wynn

Case Alert Supervisor: Professor Renée Hutchins

    Posted By: Renee Hutchins @ 10/30/2017 09:22 AM     4th Circuit  

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