Nearly eighty Pakistanis wished to transfer several thousand dollars from New York to Pakistan and entrusted their funds to three couriers on what they believed would be an overnight flight. The three couriers were also carrying some of their own money when they were apprehended as they were about to board a flight to Pakistan in September 2002, and were subsequently convicted under the bulk cash smuggling provision of the USA PATRIOT Act.

The Pakistanis who had entrusted their funds to the three couriers had violated no law. The appeals court recognized that “that many aliens use couriers to deliver money to friends and relatives because the couriers speak their language, charge no fees, and serve areas remote from the nearest Western Union branch.”  

After three years of litigation the government returned the seized funds to the innocent claimants.  The US District Court of the Eastern District of New York also concluded that only 50% of the funds owned by the convicted couriers could be forfeited to the government without violating the Excessive Fines Clause of the Eighth Amendment. 

Attorneys David B. Smith and John P. Donohue represented many of the innocent claimants as well as two of the three convicted couriers.  The two attorneys sought fees in an amount of $157,888 for their work representing claimants during the three years it took to recover the funds. However, the district court denied the attorney fee request because it determined there were "competing claims" to the same property within the meaning of CAFRA’s 28 U.S.C. § 2465(b)(2)(ii).  The district judge also denied an alternative award of fees under the Equal Access to Justice Act.¹   

The Second Circuit affirmed, holding that “CAFRA is exclusive of all other remedies” for award of attorney fees in forfeiture cases, because CAFRA “preempted” the Equal Access to Justice Act.  “Section 2465(b)(2)(A) expressly and unequivocally provides that ‘[t]he United States shall not be required to … make any other payments to the claimant not specifically authorized by this subsection.’”

The Second Circuit also agreed with the district court that CAFRA’s attorney fees provision does not apply for work on behalf of convicted claimants because the government had been "substantially justified" in seeking forfeiture of their money from the convicted couriers.²  Regarding fees for work representing the innocent Pakistanis who “substantially prevailed” in the civil forfeiture proceeding pursuant to 28 USC § 2465(b)(1)(A): the Second Circuit stated:

In passing CAFRA, Congress was reacting to public outcry over the government’s too-zealous pursuit of civil and criminal forfeiture.³   As part and parcel of this effort to deter government overreaching, Congress provided for the payment of “reasonable attorney fees and other litigation costs” to claimants who “substantially prevail[ ]” in a “civil proceeding to forfeit property.”⁴  However, Congress had no wish to expand government liability respecting legitimate seizures of property plausibly subject to forfeiture; thus CAFRA also provides that,

[i]f there are multiple claims to the same property, the United States shall not be liable for costs and attorneys fees associated with any such claim if the United States—

(i) promptly recognizes such claim;

(ii) promptly returns the interest of the claimant in the property to the claimant, if the property can be divided without difficulty and there are no competing claims to that portion of the property;

(iii) does not cause the claimant to incur additional, reasonable costs or fees; and

The appeals court disagreed with appellants’ arguments that: 1) because each dollar bill is a discrete parcel of property, the cash seized from the convicted claimants is not the “same property” within the meaning of the multiple claims exception; and 2) even if it is, the government did not comply with the four requirements of the exemption.  The Court held that CAFRA’s “multiple claims exception” applies where the “same property” is “a pool of fungible currency that matches or exceeds the ‘multiple’ but non-exclusive claims lodged against it.” 

The panel also rejected appellants’ argument that the government’s discovery practice caused the innocent claimants to incur additional fees. Rather, the appellate judges agreed with the district court that the government was “doing its job in trying to find out whether these are the people or in fact criminals taking money out illegally.” The panel ruled that, all things considered, “the government acted with reasonable dispatch under these complicated circumstances.”

Judge John Walker concluded for the appeals panel that

complications often attend transactions involving scores of persons, across many miles, and involving several hundreds of thousands of dollars. Untangling the skein of ownership in cases like this one is a difficult and complicated task. Those complications will often mean that attorney’s fees are properly withheld, even from innocent contributors. While we understand that many aliens use couriers to deliver money to friends and relatives because the couriers speak their language, charge no fees, and serve areas remote from the nearest Western Union branch, and while we are equally mindful that Donohue and Smith invested considerable time in helping the [innocent] claimants recover their money, under CAFRA those facts cannot justify the imposition of another burden on the public fisc.

Corrupt government officials may well conclude from this decision that, at least in the Second Circuit, the government may avoid paying innocent owners’ attorney fees simply by seizing property from multiple innocent owners whenever they might otherwise be held liable for the attorney fees incurred for defending property seized from a single innocent owner—the more the merrier for the “public fisc.”

Endnotes:

1.   The court also ruled the attorneys could not receive fees for their work on behalf of the convicted couriers.

2.   28 U.S.C. § 2465(b)(2)(B).

3.  Cf. Untied States v. Funds Held in the name of for the Benefit of Wetterer, 210 F.3d 96, 110 (2d Cir. 2000) (“[W]e see aggressive but marginal claims asserted on dubious jurisdiction to seize charitable funds raised for the relief of abject orphans in an impoverished country, so that the money can be diverted for expenditure by the Department of Justice”).

4.  28 U.S.C. § 2465(b)(1)(A).

5.  Citing 28 U.S.C. § 2465(b)(2)(C).