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United States v. Channon.

Nos. 19-2028 & 19-2029. D.N.M. Judge Carson. Forfeiture—Restitution—Mandate—Evidentiary Hearing—Plain Error.

August 31, 2020

Defendants, a married couple, opened numerous OfficeMax rewards accounts using fictitious names and addresses. They fraudulently obtained over $100,000 in store credit, redeemed those credits for merchandise and prepaid debit cards, and then sold that same merchandise on the internet. Defendants were convicted of wire fraud and conspiracy to commit wire fraud.

At sentencing, following an evidentiary hearing, the district court ordered defendants to pay $96,278 in restitution to OfficeMax and entered a separate forfeiture money judgment against defendants jointly and severally in the amount of $105,191. Defendants appealed in 2018, and the case was remanded for further proceedings. On remand, without holding a second evidentiary hearing, the district court amended its order, clarifying that if the government seeks forfeiture of substitute-property—that is, untainted property when the tainted property is unavailable—it must satisfy 18 USC § 853(p)’s requirements at that time.

On appeal, defendants argued that the mandate required a second evidentiary hearing on the proper forfeiture amount because the government failed to prove the amount of profit defendants realized as a result of their scheme. Here, nothing in the prior panel’s holding indicated that the district court erred in calculating the amount of the forfeiture money judgment. Thus, the mandate did not require the district court to hold an evidentiary hearing on the forfeiture amount. Accordingly, the district court retained the discretion to make its own determination on the hearing request.
Defendants further argued that the district court erred by declining to revisit the amount of the money judgment representing the proceeds of the scheme. Defendants specifically claimed that because the district court based both the restitution and forfeiture amounts on OfficeMax’s loss, the forfeiture judgment constitutes a double recovery. Forfeiture, which is punitive in nature, and restitution, which is remedial in nature, are separate remedies. Therefore, requiring a defendant to pay the same amount in both restitution and forfeiture does not amount to a double recovery. Accordingly, the district court did not err.

Defendants also contended that the district court erred in holding them jointly and severally liable for the forfeiture judgment. Defendants did not raise this issue on remand, so the Tenth Circuit reviewed for plain error. Under plain error review, defendants had to show that the district court committed obvious error, which they were unable to do.

Defendants further contended that the district court erred in declining to hold an evidentiary hearing on remand to determine the need for substitution of untainted assets for tainted assets or to determine whether the value of the substituted assets is equal to or less than that of the unavailable tainted assets defendants obtained. The government is required to prove one of the elements of 18 USC § 853(p)(1), the substitute-asset provision, before the district court may order forfeiture of specific substitute property, but it is not required to do so at a sentencing. The government may satisfy § 853(p)’s substitute-asset requirements at the time it seeks forfeiture of substitute assets. Accordingly, the district court did not err.

The order was affirmed.

Official US Court of Appeals for the Tenth Circuit proceedings can be found at the US Court of Appeals for the Tenth Circuit website.

Related Topics

Forfeiture Restitution Mandate Evidentiary Hearing Plain Error

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