Supreme Court Limits US Government’s Forfeiture of Assets in Drug Cases
June 5th, 2017 saw the Supreme Court of the United States pass a ruling in Honeycutt v. United States (No.16-142), declaring that a criminal defendant can only be held accountable for crime proceeds that he directly acquired and benefited from, and cannot be made jointly liable for proceeds acquired by a co-conspirator.
The decision is a change from decades of nearly uniform policy in drug cases which penalized drug offenders for the collective profit earned by a group regardless of how much of the profits were kept by each member of the group.
The case involved two brothers, Terry Honeycutt and Tony Honeycutt. Tony was the owner of a hardware store of which his brother Terry was the manager. The two brothers were found guilty of knowingly selling $400,000 worth of an iodine based water purification product known as Polar Pure to methamphetamine manufacturers, fully aware that the product would be used to illegally manufacture a controlled substance.
The state sought forfeiture payments from each brother in ratio to the stores profits from selling Polar Pure to methamphetamine manufacturers, which amounted to $269, 751.98. Tony plead guilty and agreed to pay $200,000 while Terry went to Trial, arguing that as he did not own the store, he did not benefit from any of the stores profits from selling Polar Pure.
Eventually, even though the district court declined to order Terry Honeycutt to forfeit any of the stores profits on the ground that he made no financial gain from them, The Sixth Circuit reversed the district courts forfeiture ruling on the grounds that Terry Honeycutt was a part of the drug conspiracy and was instrumental in the conspiracy being able to make a profit regardless of whether he received any portion of those profits.
The Supreme Court unanimously reversed the Sixth Circuit decision. The court held that the § 853(a)’s “provisions, by their terms, limit forfeiture … to tainted property; that is, property flowing from (§ 853(a)(1)), or used in (§ 853(a)(2)), the crime itself.” Slip op. 5 (emphasis added). If joint and several liability were permitted, co-conspirators who obtained less than the full profits of the conspiracy might be required to forfeit untainted assets: property wholly unconnected with the crime.
Essentially, the law in question in this trial pertains to property acquired as a result of the crime and the courts definition of “acquire” involving a defendant taking something for himself.
The Honeycutt trial has implications that will go far beyond narcotics cases. Prior to this case, courts ordered criminal defendants to forfeit the value of assets obtained from an entire criminal plan regardless of how much of the profits each criminal kept. This will no longer be the case. The Government prosecutors routinely sought forfeiture payments from parties which were wealthy enough to pay them like corporate defendants or particularly rich defendants. In the aftermath of the Honeycutt case, it seems like this will no longer be the case.