United States v. Kennedy , 201 F.3d 1324 ( 2000 )

[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
01/28/2000
THOMAS K. KAHN
No. 98-3455 CLERK
D. C. Docket No. 94-00182-CR-T-23A
UNITED STATES OF AMERICA,
Plaintiff-Appellant,
versus
VERNESS R. KENNEDY,
PINELLAS COUNTY TEACHERS CREDIT UNION,
Interested Parties-Appellees,
CONTINENTAL GRAPHICS CORPORATION,
Interested Parties-Appellants.
Appeals from the United States District Court
for the Middle District of Florida
(January 28, 2000)
Before TJOFLAT and CARNES, Circuit Judges, and GARWOOD*, Senior Circuit
Judge.
_____________________________________________
*Honorable Will L. Garwood, Senior U.S. Circuit Judge for the Fifth Circuit, sitting
by designation.
TJOFLAT, Circuit Judge:
The ultimate question in this case is whether a state divorce court can defease
the United States of its interest in property forfeited under the criminal forfeiture
provisions of 18 U.S.C. § 982 (1994) and 21 U.S.C. § 853 (1994). We answer this
question in the negative.
I.
A.
On January 27, 1995, a federal grand jury in the Middle District of Florida
indicted Byron Kennedy (“Kennedy”) on twelve counts of mail fraud in violation of
18 U.S.C. § 1341 (1994),1 and two counts of unlawful monetary transactions in
1
18 U.S.C. § 1341 provides, in pertinent part:
Whoever, having devised or intending to devise any scheme or artifice
to defraud, or for obtaining money or property by means of false or
fraudulent pretenses, representations, or promises . . . places in any post
office or authorized depository for mail matter, any matter or thing
whatever to be sent or delivered by the Postal Service, or deposits or
causes to be deposited any matter or thing whatever to be sent or
delivered by any private or commercial interstate carrier, or takes or
receives therefrom, any such matter or thing, or knowingly causes to be
delivered by mail or such carrier according to the direction thereon, or
at the place at which it is directed to be delivered by the person to whom
it is addressed, any such matter or thing, shall be fined under this title or
imprisoned not more than five years, or both. If the violation affects a
financial institution, such person shall be fined not more than $1,000,000
or imprisoned not more than 30 years, or both.
2
violation of 18 U.S.C. § 1957 (1994).2 The indictment included a forfeiture count
2
18 U.S.C. § 1957 provides, in pertinent part:
(a) Whoever, in any of the circumstances set forth in subsection (d),
knowingly engages or attempts to engage in a monetary transaction in
criminally derived property that is of a value greater than $10,000 and
is derived from specified unlawful activity, shall be punished as provided
in subsection (b).
(b)(1) Except as provided in paragraph (2), the punishment for an offense
under this section is a fine under title 18, United States Code, or
imprisonment for not more than ten years or both.
(2) The court may impose an alternate fine to that imposable under
paragraph (1) of not more than twice the amount of the criminally
derived property involved in the transaction.
....
(d) The circumstances referred to in subsection (a) are –
(1) that the offense under this section takes place in the United
States . . . .
....
(f) As used in this section –
(1) the term “monetary transaction” means the deposit,
withdrawal, transfer, or exchange, in or affecting interstate or foreign
commerce, of funds or a monetary instrument (as defined in section
1956(c)(5) of this title) by, through, or to a financial institution (as
defined in section 1956 of this title), including any transaction that
would be a financial transaction under section 1956(c)(4)(B) of this title
....
(2) the term “criminally derived property” means any property
constituting, or derived from, proceeds obtained from a criminal offense;
and
(3) the term “specified unlawful activity” has the meaning given
that term in section 1956 of this title.
Section 1956(c)(7)(A) defines “specified unlawful activity” as “any act or activity
constituting an offense listed in section 1961(1) of [title 18] except an act which is
indictable under subchapter II of chapter 53 of title 31.” A violation of section 1341
(relating to mail fraud) is listed as an offense in section 1961(1).
3
which alleged that Kennedy’s interest, to the extent of $177,445.05, in a beach house
located at 2910 Sunset Way, St. Petersburg Beach, Florida, was forfeitable to the
United States pursuant to 18 U.S.C. § 982 because it was acquired with proceeds of
criminal activity.3
Continental Graphics, Inc. (“CGI”)4 was engaged in the business of selling
yearbooks to high school students, and Kennedy was its sales representative for
several Florida schools. The indictment alleged that between April 1984 and
December 1990, Kennedy engaged in a scheme to defraud CGI of over $800,000 by
stealing monies paid by students (to their schools) for yearbooks. The scheme was not
complicated. On April 4, 1984, Kennedy convinced CGI to cease billing the schools
directly, and instead to allow him (through his company, Byron Kennedy & Co.) to
bill them. Kennedy told CGI that he would instruct the schools to mail their payments
to a post office box in St. Petersburg, Florida, which would be under the control of the
3
18 U.S.C. § 982(a)(1) provides, in pertinent part:
The court, in imposing sentence on a person convicted of an offense in
violation of section . . . 1957 . . . of this title, shall order that the person
forfeit to the United States any property, real or personal, involved in
such offense, or any property traceable to such property.
Section 982(b)(1) provides that “[t]he forfeiture of property under this section . . .
shall be governed by . . . [21 U.S.C. § 853].” We discuss section 853, which is at the
heart of this appeal, in part III.
4
CGI was originally named Delmar Printing Company, Inc.; the indictment
reads accordingly.
4
Bank of Florida. The bank was to act as an agent of CGI, and to deposit in a CGI
account all the monies received. All remittances to the account were to be the sole
property of CGI, and Kennedy would not have the right to withdraw or receive any
of the account funds, or to collect any of the payments directly from the schools. The
April 4 agreement provided that Kennedy would instruct the schools to send their
payments to Post Office Box 10933.
Kennedy altered the invoices, however, so as to instruct schools to send their
payments to P.O. Box 10937. Only Kennedy had access to Box 10937. When CGI
became concerned that the new arrangement had led to an alarming rate of past due
invoices, Kennedy told the company that he had no idea why payments were not being
received. In the meantime, Kennedy was pocketing thousands of dollars that schools
had mistakenly sent to his personal post office box, in violation of 18 U.S.C. § 1341.
The indictment also alleged that Kennedy had converted $177,445.05 of the stolen
money by purchasing a beach house at 2910 Sunset Way in St. Petersburg, in violation
of 18 U.S.C. § 1957. On the same day the indictment was returned, the Government
recorded its notice of lis pendens on the property.
On July 28, a jury found Kennedy guilty on all counts and also returned a
special verdict finding that the Sunset Way property “was involved in the unlawful
monetary transaction [prohibited by 18 U.S.C. § 1957] . . . , or is property traceable
5
to property which was involved in the unlawful monetary transaction . . . .” On
November 30, the district court issued an order forfeiting all Kennedy’s right, title,
and interest in the Sunset Way property to the United States, pursuant to 18 U.S.C. §
982.5 The court also sentenced Kennedy to fifty-seven months imprisonment, three
years of supervised release, and ordered restitution in the amount of $832,011 to be
paid to CGI.
B.
5
The court styled its order a “Preliminary Order of Forfeiture,” but we treat it
as a final order because courts are not at liberty to enter preliminary forfeiture orders
at the sentencing phase of a criminal proceeding. Under Federal Rule of Criminal
Procedure 32(d)(2), “[i]f a verdict contains a finding that property is subject to a
criminal forfeiture . . . the court may enter a preliminary order of forfeiture after
providing notice to the defendant and a reasonable opportunity to be heard on the
timing and form of the order.” Preliminary forfeiture orders, however, are primarily
used to enable the Government to marshal the defendant’s assets subject to forfeiture.
The [preliminary] order of forfeiture shall authorize the Attorney General
to seize the property subject to forfeiture, to conduct any discovery that
the court considers proper to help identify, locate, or dispose of the
property, and to begin proceedings consistent with any statutory
requirements pertaining to ancillary hearings and the rights of third
parties.
Fed. R. Crim. P. 32(d)(2). The rule makes clear that “[a]t sentencing, a final order of
forfeiture shall be made part of the sentence and included in the judgment.” Id.
Because the district court entered its order at the time it sentenced Kennedy, the order
was properly a final order of forfeiture.
6
After the court entered its order of forfeiture, three parties filed petitions in the
district court seeking to adjudicate their interests in the Sunset Way property in
accordance with 21 U.S.C. § 853(n)(2):6 (1) CGI; (2) Verness Kennedy (“Mrs.
Kennedy”), Kennedy’s former spouse; and (3) the Pinellas County Teachers Credit
Union (the “Credit Union”), which held a mortgage on the Sunset Way property. The
district court assigned the case to a magistrate judge who held a hearing and made
appropriate findings of fact. Following, we summarize the findings of fact adopted
by the district court pertaining to the interests of CGI, Mrs. Kennedy, and the Credit
Union.
In June 1989, the Kennedys entered into a real estate contract to purchase the
Sunset Way beach house for $542,500. By then they had been married for almost
6
As noted, supra, section 982(b)(1) provides that forfeiture of property under
that section is governed by the criminal forfeiture provisions of 21 U.S.C. § 853.
Under section 853(k), third parties are barred from attempting to establish their
interest in property subject to forfeiture until a final order of forfeiture has been
entered. They may not intervene in the criminal action against the defendant in which
the Government establishes its right to forfeiture, nor may they initiate a civil action
to adjudicate the validity of their interest once an indictment or information has been
filed. See 21 U.S.C. § 853(k). Section 853(n)(2) provides that following the entry of
an order of forfeiture,
[a]ny person, other than the defendant, asserting a legal interest in
property which has been ordered forfeited to the United states pursuant
to this section may, within thirty days of the final publication of notice
or his receipt of notice . . . , whichever is earlier, petition the court for a
hearing to adjudicate the validity of his alleged interest in the property.
7
thirty-one years. Their four sons were grown. Mrs. Kennedy considered their old
house too large and costly to upkeep, and she no longer liked their old neighborhood.
To her, the beach house she had spotted for sale offered more. Her husband, however,
did not share her enthusiasm. Because of his reluctance and her desire for change,
Mrs. Kennedy committed much of her personal wealth to convince him to join her in
purchasing the residence.
Mrs. Kennedy had worked throughout most of the marriage. She taught in the
public school system, modeled, refinished furniture, and owned (and continues to
own) Patti and Friends Antique Mall, a business that rents booths to about eighty
vendors. She had inherited securities after her mother’s death in 1968, and knew by
June 1989 that she could expect to receive a significant inheritance due to her father’s
recent death. Consequently, Mrs. Kennedy thought she would have the financial
means to contribute toward the purchase of the new home.
Unfortunately, at the time she wanted to execute a contract on the Sunset Way
property, Mrs. Kennedy did not have the means in hand. Her inheritance had not
come through, and the Kennedys had not yet sold their old residence. Therefore, in
June 1989, Mrs. Kennedy promised to repay her husband if he would make the
$50,000 earnest money deposit. Kennedy agreed, telling his wife that he would
borrow the money from his business.
8
The couple acquired the property in September 1989. At the closing, they paid
the sellers $134,445.05 in cash and assumed an existing $356,000 mortgage held by
the Credit Union. As with the earnest money deposit, Kennedy advanced the cash
payment (again telling his wife that he was borrowing the money from his business)
with the understanding that Mrs. Kennedy would repay him either when she received
her inheritance or when their old house sold. Though Mrs. Kennedy was unaware of
her husband’s improprieties, it is undisputed that the $184,445.05.7 contributed by
Kennedy toward the purchase of the beach house was money stolen from CGI.
The district court found that when the Kennedys closed on the beach house in
September 1989, they owned the property as tenants by the entireties, meaning that
each spouse had “an indivisible right to own and occupy the entire property.” United
States v. One Single Family Residence With Out Bldgs., 894 F.2d 1511, 1515 (11th
Cir. 1990). Despite their joint ownership, Mrs. Kennedy kept her promise to repay her
husband almost the full amount of the funds that he had contributed toward the
purchase of the residence. After her inheritance came through, and the couple’s old
house sold, Mrs. Kennedy wrote her husband three checks totaling $180,000.8
7
The $184,445.05 figure comprises the sum of the $50,000 earnest money
deposit and the $134,445.05 cash payment made to the sellers at closing.
8
The dates of the three checks written by Mrs. Kennedy to her husband were
December 17, 1989 ($100,000), February 15, 1991 ($40,000), and March 7, 1991
9
Mrs. Kennedy first learned of her husband’s fraud in May 1991. As noted
above, Kennedy was indicted on charges of mail fraud and unlawful monetary
transactions a little less than four years later, on January 27, 1995; this was the same
day that the Government recorded its notice of lis pendens on the Sunset Way
residence. Two months later, Mrs. Kennedy filed for a divorce. At a domestic
mediation conference held to establish the financial terms of the divorce, the parties
agreed that Mrs. Kennedy had a “special equity” in the beach house; this was largely
because, including the funds Mrs. Kennedy had used to repay her husband for his
contributions at the time of purchase, Mrs. Kennedy produced checks totaling more
than $392,412 that she had invested in the property.9 Accordingly, Kennedy agreed
to transfer any rights he possessed in the property to her. On September 19, 1995, the
state court entered a divorce decree which adopted the mediation agreement, awarded
the Sunset Way property to Mrs. Kennedy because of her agreed upon special equity
in the residence, and dissolved the marriage.10 More than a month later on November
($40,000). Her last check to her husband was actually written for $119,000, but it
included his share of the proceeds from the sale of their former residence ($79,000).
9
In addition to repaying her husband, the district court found that Mrs.
Kennedy made 87% of the mortgage payments, paid the taxes on the property, and
took care of most of the maintenance costs.
10
Through an oversight, the final divorce decree entered on September 19, 1995
did not address the disposition of the Sunset Way property. The Kennedys brought
10
30, 1995, the United States District Court for the Middle District of Florida entered
its order forfeiting to the United States all Kennedy’s right, title, and interest in the
Sunset Way property.
C.
Under 21 U.S.C. § 853(n)(6), third party petitioners can establish their interest
in forfeited property in only two ways. See United States v. Reckmeyer, 836 F.2d
200, 203 (4th Cir. 1987) (“Subsection (n) provides the only means for third parties to
establish their interest in forfeited property.”). The statute provides:
If, after the hearing, the court determines that the petitioner has
established by a preponderance of the evidence that–
(A) the petitioner has a legal right, title, or interest in the property,
and such right, title, or interest renders the order of forfeiture invalid in
whole or in part because the right, title, or interest was vested in the
petitioner rather than the defendant or was superior to any right, title, or
interest of the defendant at the time of the commission of the acts which
gave rise to the forfeiture of the property under this section; or
(B) the petitioner is a bona fide purchaser for value of the right,
title, or interest in the property and was at the time of purchase
reasonably without cause to believe that the property was subject to
forfeiture under this section;
this omission to the attention of the divorce court which, on January 2, 1996, corrected
its error; the court entered an order, awarding Mrs. Kennedy a special equity in the
house, nunc pro tunc to September 19, 1995. In its findings, the district court
characterized the divorce court’s omission as “scrivener’s error.”
11
the court shall amend the order of forfeiture in accordance with its
determination.
21 U.S.C. § 853(n)(6).
Thus subsection (n)(6) protects only two classes of petitioners, those
whose legal interests in the property were superior to the defendant[] at
the time the interest of the United States vested through the commission
of an act giving rise to forfeiture and “bona fide purchasers for value”
without knowledge of the forfeitability of the defendant’s assets.
Reckmeyer, 836 F.2d at 204; see also United States v. Jimerson, 5 F.3d 1453, 1455
(11th Cir. 1993).
The district court concluded that Mrs. Kennedy prevails under either section.
The court found that
Mrs. Kennedy is a bona fide purchaser for value and that she has a legal
interest in the Sunset Way property resulting in a superior right to the
defendant’s former interest in the property pursuant to 21 U.S.C. §§
853(n)(6)(A) & (B). Therefore, under the applicable law, forfeiture of
[ Kennedy’s interest in] the residence is inappropriate.
The court thus modified its November 30, 1995 order of forfeiture, and granted both
Mrs. Kennedy’s and the Credit Union’s petitions to establish their interests in the
forfeited property, with the Credit Union having priority as a mortgagee. The court
also denied CGI’s petition to establish its interest in the forfeited property. The
Government and CGI now appeal. All parties agree that the government’s interest,
if any, is limited to Kennedy’s one-half interest in the property. Mrs. Kennedy’s one-
12
half interest was never subject to forfeiture, and it remains unaffected by our decision
today.
II.
We review the district court’s findings of fact for clear error. We independently
review the court’s conclusions of law de novo. See One Single Family Residence,
894 F.2d at 1513. Though CGI challenges some of the district court’s factual
findings, our review of the record convinces us at the outset that the court’s findings
of fact are not clearly erroneous. Our review is therefore limited to questions of law.
III.
The criminal forfeiture provisions of section 853 authorize the government to
seek forfeiture of a defendant’s interest in subject property. See United States v.
Lester, 85 F.3d 1409, 1413 (9th Cir. 1996). This is in contrast to the civil forfeiture
scheme embodied in 21 U.S.C. § 881, involving an in rem proceeding, wherein the
whole property (as opposed to a particular defendant’s interest in the property) is
treated as being itself guilty of wrongdoing. See United States v. One 1976 Mercedes
Benz 280S, 618 F.2d 453, 454 (7th Cir. 1980). Thus, we must decide whether
13
Kennedy’s interest in the Sunset Way property is properly forfeitable to the United
States, or whether Mrs. Kennedy has established either (a) that she is a bona fide
purchaser for value of Kennedy’s interest in the real estate, or (b) that she had an
interest in the property that was superior to Kennedy’s interest at the time he
committed the acts giving rise to the forfeiture.
A.
The district court concluded that Mrs. Kennedy became a bona fide purchaser
for value as of the date that she and her husband closed on the Sunset Way property.
The court found,
Mrs. Kennedy, along with her husband, purchased the Sunset Way
residence from the sellers on September 1, 1989. She was unaware that
the money her husband used toward the down payments was criminally
obtained. Thus, pursuant to § 853(n)(6)(B), Mrs. Kennedy purchased the
residence as a “bona fide purchaser for value” who was both
“reasonable” and “without cause to believe that the property was subject
to forfeiture” at the time of purchase.
This analysis does not address the real question, which is, did Mrs. Kennedy ever
purchase her former husband’s interest in the subject property. Of course Mrs.
Kennedy became a “bona fide purchaser for value” of some part of the Sunset Way
property on September 1, 1989, because along with her then-husband she assumed a
$356,000 mortgage on the property. Specifically, she purchased a spousal interest in
14
a tenancy by the entireties under Florida law, “an indivisible right to own and occupy
the entire property.” One Single Family Residence, 894 F.2d at 1515.11 But this bona
fide purchase for value is irrelevant under section 853(n)(6)(B). The statute asks
whether a third party petitioner ever became a bona fide purchaser for value of the
defendant’s interest in the subject property. Finding that Mrs. Kennedy is a bona fide
purchaser for value of her own interest in the tenancy by the entireties is not relevant.
The question is, did she ever purchase Kennedy’s interest in the property.
Once the question is properly framed, it becomes clear that Mrs. Kennedy
cannot prevail under the bona fide purchaser exception. Mrs. Kennedy argues that she
did indeed purchase Kennedy’s interest in the property because she repaid the funds
Kennedy contributed as an earnest money deposit and at closing with her separate
inheritance money. She characterizes Kennedy’s initial contributions as a loan,
whereby neither she nor her former husband ever intended that any part of the Sunset
Way property be owned by him; and she reminds the court that it was she, and not
Kennedy, who wanted to buy the beach residence in the first place, and that Kennedy
11
In One Single Family Residence, 849 F.2d at 1514, this court explained,
[t]o hold property by the entireties, Florida common law requires five
‘unites’ to be present: marriage–the joint owners must be married to each
other; title–the owners must both have title to the property; time–they
both must have received title from the same conveyance; interest–they
must have an equal interest in the whole of the property; and control or
possession–they both must have the right to use the entire property.
15
would never have consented to the purchase while they were married had she not
promised to repay him all the monies he initially invested. But this argument is belied
by the plain fact that the couple took title to the property jointly, as tenants by the
entireties. A tenancy by the entireties is an ownership arrangement peculiar to
marriage, the most significant aspect of which is its distribution of property between
two people who form, in the eyes of the law, a unity. Under the Florida law,
[a]s long as all the unities remain intact . . . each spouse’s interest
comprises the whole or entirety of the property and not a divisible part;
the estate is inseverable. Neither spouse can sell, forfeit or encumber
any part of the estate without the consent of the other, nor can one
spouse alone lease it or contract for its disposition. Creditors cannot levy
on entireties property to satisfy the debt of an individual spouse. The
state cannot deem entireties property forfeit because of the unlawful
conduct of one spouse acting alone.
One Single Family Residence, 894 F.2d at 1514-15 (internal citations and quotation
marks omitted). To argue that both spouses always intended Mrs. Kennedy to be the
sole owner of the property seems strained at best, given that she and Kennedy entered
into a form of ownership most notable for its joint encumberments.12 The argument
12
The couple might have assumed joint ownership of the property as a way of
giving Kennedy collateral for his “loan” to Mrs. Kennedy for the earnest money
deposit and the cash payment made at closing. If this were the case, however, one
would expect that Kennedy would have transferred all his interest in the property by
quitclaim deed sometime immediately after March 7, 1991, when Mrs. Kennedy paid
him the last of the $180,000 that was owed him. But Kennedy did not execute a
quitclaim deed on the property in favor of Mrs. Kennedy until the two were divorced
in 1995. Until that time, they continued to own the beach residence as tenants by the
16
is also undermined by Mrs. Kennedy’s own testimony during the third party ancillary
proceeding in which she told the court that it was her understanding that she and
Kennedy both owned the Sunset Way residence during the marriage. There is simply
no evidence that Mrs. Kennedy ever became a bona fide purchaser for value of
Kennedy’s interest in the beach house through a genuine arms-length transaction, and
therefore Mrs. Kennedy cannot prevail under section 853(n)(6)(B).
B.
i.
The district court also found that Mrs. Kennedy could escape forfeiture of her
former husband’s interest in the property under the superior title provisions of section
853(n)(6)(A). The court reasoned that because the divorce court had granted Mrs.
Kennedy a special equity in the home upon dissolution of the marriage, and directed
Kennedy to transfer to her all his right, title, and interest in the home, Mrs. Kennedy
had an interest in the whole property that was superior to his. Florida law does
recognize a special equity upon divorce when one spouse can demonstrate that (1) he
or she paid for certain property from a source unconnected with the marriage, and (2)
a gift to the other spouse was not intended. See Robertson v. Robertson, 593 So.2d
entireties.
17
491, 494 (Fla. 1991). The special equity “only comes into actual identifiable form,”
however, “upon the termination of the marriage status.” Bosch v. United States, 590
F.2d 165, 167 (5th Cir. 1979).13 The former fifth circuit held, in Bosch, that the equity
actually “exist[s] prior to the divorce.” Id. The award upon dissolution of the
marriage is merely a judicial recognition of an already-existing interest that came into
being when the spouse holding the equity made a significant nonmarital investment
in the property. There is no question, however, that the earliest point at which the
interest can vest is “at a point in time when [the spouse] makes a contribution of
funds, property, or services toward acquisition or betterment of property from a source
unconnected with the marriage.” Starcher v. Starcher, 391 So. 2d 340, 341 (Fla. 4th
DCA 1980). The earliest point at which Mrs. Kennedy’s special equity could have
vested was December 1989, when she first began using her inheritance money to pay
back her husband for his initial contributions.
Section 853(n)(6)(A) requires a third party petitioner to establish that he or she
had an interest in the subject property that “was vested in the petitioner rather than the
defendant or was superior to any right, title, or interest of the defendant at the time of
the commission of the acts which gave rise to the forfeiture of the property under this
13
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en
banc), this court adopted as binding precedent all of the decisions of the former Fifth
Circuit handed down on or before September 30, 1981.
18
section.” 21 U.S.C. § 853(n)(6)(A) (emphasis added). The acts which gave rise to the
forfeiture took place in June 1989, when Kennedy used $50,000 of money stolen from
CGI as an earnest money deposit for the property, and September 1989, when
Kennedy used $134,445.05 in stolen funds as a cash payment at closing. This was
months before the earliest time at which Mrs. Kennedy’s special equity could have
vested. At the time of the acts giving rise to the forfeiture, Mr. and Mrs. Kennedy
took title to the property as tenants by the entireties. The state court’s grant of a
special equity, even with its recognition of an interest in Mrs. Kennedy that was
vested prior to dissolution, does not alter that conclusion. Because we have explicitly
held in Jimerson, 5 F.3d at 1455, that “[t]he very nature of the tenancy by the
entireties prevents [a petitioner] from claiming that her title is superior to her
husband’s,” we conclude that Mrs. Kennedy cannot prevail under section
853(n)(6)(A) because even if she had an interest that was superior to her former
husband’s, no such interest was vested at the time of the act giving rise to the
forfeiture.
ii.
Mrs. Kennedy contends that the Sixth Circuit’s decision in United States v.
Certain Real Property Located at 2525 Leroy Lane (Leroy Lane II), 972 F.2d 136 (6th
19
Cir. 1992), is both on point and persuasive. We agree that the decision is on point;
after consideration, however, we cannot agree that it is persuasive. In Leroy Lane II,
the government sought both civil and criminal forfeiture of the defendant’s residence,
held prior to divorce by him and his wife as tenants by the entireties. Upon
dissolution of the marriage, the divorce court awarded the whole property to the wife
“free and clear of any and all claims or interest of the Defendant.” Id. at 137. Citing
this court’s decision in One Single Family Residence, the Sixth Circuit concluded in
United States v. Certain Real Property Located at 2525 Leroy Lane (Leroy Lane I),
910 F.2d 343, 351-52 (6th Cir. 1990), that the government could not execute on a
defendant’s interest in a tenancy by the entireties while the interest was still intact,
even if such interest was subject to forfeiture. To do so would burden the interests of
“innocent owners” in the civil forfeiture context, see 21 U.S.C. § 881(a)(7) (1994),
and of third party owners in the criminal forfeiture context. See 910 F.2d at 350-51.14
14
The civil forfeiture provisions explicitly protect the interests of “innocent
owners.” See 21 U.S.C. § 881(a)(7) (“no property shall be forfeited under this
paragraph, to the extent of an interest of an owner, by reason of any act or omission
established by that owner to have been committed or omitted without the knowledge
or consent of that owner”). The criminal forfeiture provisions of 21 U.S.C. § 853
contain no such innocent owner exception. See Jimerson, 5 F.3d at 1455 n.4. The
Sixth Circuit reasoned, however, that Congress meant to protect the interests of third
party owners (those who either had a superior interest in the subject property at the
time of the acts giving rise to the forfeiture, or who were bona fide purchasers for
value) in the criminal forfeiture context to the same degree as Congress protected
innocent owners in the civil forfeiture context (thus extending our reasoning in One
20
In Leroy Lane II, the court found that upon dissolution of the marriage the
government could execute on its interest in the residence because dissolution
terminates the entireties estate under Michigan law;15 but, invoking what we shall call
the “timeline theory,” the court also found that the government only “gets whatever
[the defendant] possesses after the entireties estate is destroyed. In this case, by virtue
Single Family Residence). See Leroy Lane I, 910 F.2d at 350; see also Lester, 85 F.3d
at 1414 n.8 (“it is clear that because a criminal forfeiture is an action against the
convicted defendant, who by definition is not ‘innocent,’ there simply was no need to
have an innocent-owner exception”).
15
In Leroy Lane I, the court determined that even though the government could
not execute on its interest in a defendant spouse’s share of a tenancy by the entireties
while the interest was still intact, the government’s interest was not extinguished.
Instead, the government occupied a position during the tenancy “most analogous to
the position occupied by a judgment creditor of one spouse . . . .” 910 F.2d at 351.
In other words, the government would have a lien on the defendant spouse’s interest
in the property, which could be executed upon should the tenancy ever terminate.
This is consistent with this court’s decision in One Single Family Residence, holding
that the government cannot execute on its interest in a defendant spouse’s share of a
tenancy by the entireties in the civil forfeiture context, but noting that,
[n]othing would prevent the government from attempting to execute or
levy on its interest should the entireties estate be altered by changes in
circumstances or by court order. That is, we do not rule out the
possibility that if the United States filed a lis pendens against the
property, the government might acquire in a later forfeiture proceeding
[the defendant’s] interest in the property should he divorce his spouse,
should [the defendant’s spouse] predecease him, or should their interests
be transmuted into some divisible form by their actions or by law. In
such case, their interests would become distinct and separable so that
forfeiture of his interest in the property would not affect her rights.
894 F.2d at 1516 n.6.
21
of the divorce court’s distribution of the property, [the defendant] was left with no part
of the property.” Id. at 138.
Mrs. Kennedy finds further support for the Sixth Circuit’s timeline theory from
Florida case law holding that a state divorce court’s award of property to one spouse
takes effect at the moment the entireties interest is destroyed. Under Florida law,
during the life of an entireties estate, “creditors cannot levy on entireties property to
satisfy the debt of an individual spouse.” One Single Family Residence, 894 F.2d at
1515. Upon dissolution of the marriage, however, a tenancy by the entireties
automatically becomes a tenancy in common if no other disposition is made by the
divorce court. Prior to the Florida Supreme Court’s decision in Sharp v. Hamilton,
520 So. 2d 9 (Fla. 1988), some single spouse creditors argued that even when a divorce
court awarded certain property in fee to the non-debtor spouse, at the conclusion of
the entireties estate the creditor’s interest could attach to the property because before
the divorce court’s order could take effect, the property was held in a tenancy in
common for “the twinkling of a legal eye.” The Florida Supreme Court responded:
Even though . . . a tenancy by the entirety becomes a tenancy in common
by operation of law upon dissolution of marriage, we reject the
“twinkling of a legal eye” analysis . . . . Entireties property is not subject
to a lien against only one tenant. We are not persuaded by the fiction
fashioned by [the lower court] that there is a moment in time in which a
judgment lien or a mortgage lien held against one of the tenants attaches
to the entireties property upon dissolution when sole title to the property
is awarded to one spouse in settlement of divorce by a final decree of
22
dissolution. . . . [T]he judgment of dissolution in this case, the same
document that operates to make tenants by the entirety into tenants in
common, also ordered sole title to the property be vested in Mrs.
Hamilton. . . . [T]he judgment of dissolution is controlling and the
transfer of the husband’s interest to the wife pursuant to the judgment of
dissolution was equivalent to the defeasance of the husband’s interest in
the property which would have occurred had he predeceased his wife
while the parties were still married.
Id. at 10. Mrs. Kennedy argues that ownership of the Sunset Way property flowed
seamlessly from her and Kennedy as tenants by the entireties, to her alone as sole
owner by virtue of the divorce court’s decree. Under the timeline theory, therefore,
because the Government was precluded from executing its interest in Kennedy’s
share of the entireties estate during the marriage, and because the divorce court
awarded Mrs. Kennedy a special equity in the whole property upon dissolution of the
marriage, there was never a moment in time when the Government’s interest could
attach. What the Government could not execute upon during the marriage has
disappeared upon divorce.
The problem with the timeline theory is that it evaluates the Government’s
interest along a linear continuum, when what the statute directs is that we look at
whether the Government can execute on its interest in forfeited property at the
moment it seeks to do so. At this moment, Mrs. Kennedy holds property that was
forfeited by final order to United States; pursuant to an indictment, a jury returned a
special verdict finding that the Sunset Way property either was involved or was
23
property traceable to property that was involved in unlawful monetary transactions,
and the district court issued an order forfeiting Kennedy’s interest. Under section
853(n), subsequent to a final order of forfeiture it became Mrs. Kennedy’s burden to
come forward and demonstrate either that she had superior title to the property at the
time of the act giving rise to the forfeiture, or that she is a bona fide purchaser for
value of Kennedy’s interest. 21 U.S.C. § 853(n)(6). As we have already concluded,
she can prevail under neither rationale.
Our decision in One Single Family Residence does not lead naturally to the
Sixth Circuit’s conclusion in Leroy Lane II. In One Single Family Residence, we
found in the context of civil forfeiture that even when a spouse’s interest in property
held by the entireties is subject to forfeiture, the government cannot execute on its
interest during the tenancy if the other spouse is an “innocent owner” under 21 U.S.C.
881(a)(7) because,
the government cannot deprive [the innocent spouse] of any interest she
has in the property. The interest she has under Florida law is an
undivided right of possession, title, and enjoyment of the whole property.
To convert this right into a tenancy in common, where she has only the
right to a portion of the property or a portion of the proceeds should the
government pursue partition–which could not occur with an entireties
estate–appears to us to be a taking without due process violating the Fifth
Amendment of the federal constitution.
....
To forfeit some interest in the property to the government would
penalize [the innocent owner] for the wrongdoing of her husband, in
24
which she neither participated nor had any knowledge, and would take
her property without due process or just compensation.
894 F.2d at 1516. We have never held that One Single Family Residence applies in
the criminal forfeiture context, and we do not do so today.16 Even if we were to hold
that One Single Family Residence applies in the instant case, however, it would not
shield Mrs. Kennedy from forfeiture now. One Single Family Residence would
protect Mrs. Kennedy’s interest in a tenancy by the entireties so that the Government
would not have been able to execute on its interest while her marriage to Kennedy was
still intact. It is undisputed, however, that the marriage is now dissolved and that the
entireties interest has been destroyed. We therefore have an answer to the question
presented by the Sixth Circuit’s timeline theory: At what moment in time could the
Government’s interest attach to the forfeited property? The answer is now. It is true
that Mrs. Kennedy has been awarded the whole Sunset Way property by the divorce
court; but the portion of the property represented by Kennedy’s former interest in the
entireties estate has been forfeited. It is therefore Mrs. Kennedy’s burden to come
16
Indeed, the court in One Single Family Residence was careful to note that its
decision was heavily dependent on state law, and that “Congress expressly preempted
state law in the language of 21 U.S.C. section 853(a) (Supp. 1984), created in the
same act as section 881(a)(7), by providing for criminal forfeiture of property,
‘irrespective of any provision of State law,’ if that property was [subject to
forfeiture].” 894 F.2d at 1518.
25
forward and demonstrate why the subject property should not be taken by the order
of forfeiture. She has failed to do so, and so the property remains forfeited.
We can also assume that even though federal law decides what interests are
subject to forfeiture under section 853, state property law defines what those interests
are in the first instance. See Lester, 85 F.3d at 1412; United States v. Ben-Hur, 20
F.3d 313, 317 (7th Cir. 1994); Leroy Lane I, 910 F.2d at 348. No preemption is
necessary because our decision today does not conflict with Florida law. We have
taken due notice of the state divorce court’s award of a special equity in the whole
Sunset Way property to Mrs. Kennedy pursuant to state family law. That award does
not affect our conclusion that Kennedy’s former interest in the property was forfeited
under federal law, and that Mrs. Kennedy is not entitled to that interest under either
section 853(n)(6)(A) or (B). Our holding today is a natural consequence of the fact
that federal law provides only two avenues of relief for third parties seeking to
establish their interest in criminally forfeited property, and the fact that federal law
decides what interests are subject to forfeiture. Third parties can argue that they held
superior title at the time of the act giving rise to the forfeiture, or that they are bona
fide purchasers for value. They cannot argue, however, that a state divorce court
awarded them a special equity in the forfeited property; there is no “special equity
provision” in section 853(n)(6).
26
The Sixth Circuit’s timeline theory threatens completely to subordinate federal
law not to state property law, but to state judges who are given carte blanche to decide
what interests the United States – not even a party to the divorce proceeding – will be
able to execute upon after the dissolution of the marriage, and to defendants who may
collude with their spouses to avoid forfeiture. Under Leroy Lane II, for example, it
is unclear why the defendant spouse would not be able to avoid forfeiture by simply
giving his interest in the property to his spouse. The gift would destroy the tenancy,
thereby removing the barrier to the government’s execution of its lien, but there would
be nothing left for the government to take. The gift would effectively defease not only
the interest of the guilty spouse, but the interest of the government as well. See also
Sharp, 520 So. 2d at 10 (finding, for purposes of creditor rights, that an award of
special equity has the same effect as if one spouse transferred his or her interest in the
property to the other by quit-claim deed either before or at dissolution of the
marriage).17 This result was clearly not intended by Congress. The criminal forfeiture
17
In the instant case, the district court found that the divorce court’s award of
a special equity to Mrs. Kennedy was justified under state law. What actually
occurred, of course, is that the divorce court merely adopted the parties’ agreement
that Mrs. Kennedy should be granted all right, title, and interest in the Sunset Way
property. We do not question the propriety of a state court’s incorporation of a
property settlement in a divorce decree; but it seems absurd to argue, as does Mrs.
Kennedy, that divorcing spouses can act by agreement to defease the government of
its lawful interest in forfeited property in a proceeding in which the government is not
even a party.
27
provisions provide only two ways for third parties to establish their interest in
forfeited property; and one of them is emphatically not that the criminal defendant
gave the third party a gift. The relation back provision contained in 21 U.S.C. §
853(c), vesting all right, title, and interest in the forfeited property in the United States
upon the commission of the acts giving rise to the forfeiture, was specifically included
in section 853 as a way of avoiding such transfers. See Ben-Hur, 20 F.3d at 319;
Reckmeyer, 836 F.3d at 203.
IV.
For the foregoing reasons, we REVERSE the district court’s order granting
Mrs. Kennedy’s petition to establish her interest in the forfeited property, and
REMAND with instructions that the district court reinstate the order of forfeiture.
REVERSED and REMANDED.
28
TJOFLAT, Circuit Judge:
The ultimate question in this case is whether a state divorce court can defease
the United States of its interest in property forfeited under the criminal forfeiture
provisions of 18 U.S.C. § 982 (1994) and 21 U.S.C. § 853 (1994). We answer this
question in the negative.
I.
A.
On January 27, 1995, a federal grand jury in the Middle District of Florida
indicted Byron Kennedy (“Kennedy”) on twelve counts of mail fraud in violation of
18 U.S.C. § 1341 (1994),18 and two counts of unlawful monetary transactions in
18
18 U.S.C. § 1341 provides, in pertinent part:
Whoever, having devised or intending to devise any scheme or artifice
to defraud, or for obtaining money or property by means of false or
fraudulent pretenses, representations, or promises . . . places in any post
office or authorized depository for mail matter, any matter or thing
whatever to be sent or delivered by the Postal Service, or deposits or
causes to be deposited any matter or thing whatever to be sent or
delivered by any private or commercial interstate carrier, or takes or
receives therefrom, any such matter or thing, or knowingly causes to be
delivered by mail or such carrier according to the direction thereon, or
at the place at which it is directed to be delivered by the person to whom
it is addressed, any such matter or thing, shall be fined under this title or
imprisoned not more than five years, or both. If the violation affects a
29
violation of 18 U.S.C. § 1957 (1994).19 The indictment included a forfeiture count
financial institution, such person shall be fined not more than $1,000,000
or imprisoned not more than 30 years, or both.
19
18 U.S.C. § 1957 provides, in pertinent part:
(a) Whoever, in any of the circumstances set forth in subsection (d),
knowingly engages or attempts to engage in a monetary transaction in
criminally derived property that is of a value greater than $10,000 and
is derived from specified unlawful activity, shall be punished as provided
in subsection (b).
(b)(1) Except as provided in paragraph (2), the punishment for an offense
under this section is a fine under title 18, United States Code, or
imprisonment for not more than ten years or both.
(2) The court may impose an alternate fine to that imposable under
paragraph (1) of not more than twice the amount of the criminally
derived property involved in the transaction.
....
(d) The circumstances referred to in subsection (a) are –
(1) that the offense under this section takes place in the United
States . . . .
....
(f) As used in this section –
(1) the term “monetary transaction” means the deposit,
withdrawal, transfer, or exchange, in or affecting interstate or foreign
commerce, of funds or a monetary instrument (as defined in section
1956(c)(5) of this title) by, through, or to a financial institution (as
defined in section 1956 of this title), including any transaction that
would be a financial transaction under section 1956(c)(4)(B) of this title
....
(2) the term “criminally derived property” means any property
constituting, or derived from, proceeds obtained from a criminal offense;
and
(3) the term “specified unlawful activity” has the meaning given
that term in section 1956 of this title.
Section 1956(c)(7)(A) defines “specified unlawful activity” as “any act or activity
constituting an offense listed in section 1961(1) of [title 18] except an act which is
30
which alleged that Kennedy’s interest, to the extent of $177,445.05, in a beach house
located at 2910 Sunset Way, St. Petersburg Beach, Florida, was forfeitable to the
United States pursuant to 18 U.S.C. § 982 because it was acquired with proceeds of
criminal activity.20
Continental Graphics, Inc. (“CGI”)21 was engaged in the business of selling
yearbooks to high school students, and Kennedy was its sales representative for
several Florida schools. The indictment alleged that between April 1984 and
December 1990, Kennedy engaged in a scheme to defraud CGI of over $800,000 by
stealing monies paid by students (to their schools) for yearbooks. The scheme was not
complicated. On April 4, 1984, Kennedy convinced CGI to cease billing the schools
directly, and instead to allow him (through his company, Byron Kennedy & Co.) to
bill them. Kennedy told CGI that he would instruct the schools to mail their payments
indictable under subchapter II of chapter 53 of title 31.” A violation of section 1341
(relating to mail fraud) is listed as an offense in section 1961(1).
20
18 U.S.C. § 982(a)(1) provides, in pertinent part:
The court, in imposing sentence on a person convicted of an offense in
violation of section . . . 1957 . . . of this title, shall order that the person
forfeit to the United States any property, real or personal, involved in
such offense, or any property traceable to such property.
Section 982(b)(1) provides that “[t]he forfeiture of property under this section . . .
shall be governed by . . . [21 U.S.C. § 853].” We discuss section 853, which is at the
heart of this appeal, in part III.
21
CGI was originally named Delmar Printing Company, Inc.; the indictment
reads accordingly.
31
to a post office box in St. Petersburg, Florida, which would be under the control of the
Bank of Florida. The bank was to act as an agent of CGI, and to deposit in a CGI
account all the monies received. All remittances to the account were to be the sole
property of CGI, and Kennedy would not have the right to withdraw or receive any
of the account funds, or to collect any of the payments directly from the schools. The
April 4 agreement provided that Kennedy would instruct the schools to send their
payments to Post Office Box 10933.
Kennedy altered the invoices, however, so as to instruct schools to send their
payments to P.O. Box 10937. Only Kennedy had access to Box 10937. When CGI
became concerned that the new arrangement had led to an alarming rate of past due
invoices, Kennedy told the company that he had no idea why payments were not being
received. In the meantime, Kennedy was pocketing thousands of dollars that schools
had mistakenly sent to his personal post office box, in violation of 18 U.S.C. § 1341.
The indictment also alleged that Kennedy had converted $177,445.05 of the stolen
money by purchasing a beach house at 2910 Sunset Way in St. Petersburg, in violation
of 18 U.S.C. § 1957. On the same day the indictment was returned, the Government
recorded its notice of lis pendens on the property.
On July 28, a jury found Kennedy guilty on all counts and also returned a
special verdict finding that the Sunset Way property “was involved in the unlawful
32
monetary transaction [prohibited by 18 U.S.C. § 1957] . . . , or is property traceable
to property which was involved in the unlawful monetary transaction . . . .” On
November 30, the district court issued an order forfeiting all Kennedy’s right, title,
and interest in the Sunset Way property to the United States, pursuant to 18 U.S.C. §
982.22 The court also sentenced Kennedy to fifty-seven months imprisonment, three
years of supervised release, and ordered restitution in the amount of $832,011 to be
paid to CGI.
B.
22
The court styled its order a “Preliminary Order of Forfeiture,” but we treat it
as a final order because courts are not at liberty to enter preliminary forfeiture orders
at the sentencing phase of a criminal proceeding. Under Federal Rule of Criminal
Procedure 32(d)(2), “[i]f a verdict contains a finding that property is subject to a
criminal forfeiture . . . the court may enter a preliminary order of forfeiture after
providing notice to the defendant and a reasonable opportunity to be heard on the
timing and form of the order.” Preliminary forfeiture orders, however, are primarily
used to enable the Government to marshal the defendant’s assets subject to forfeiture.
The [preliminary] order of forfeiture shall authorize the Attorney General
to seize the property subject to forfeiture, to conduct any discovery that
the court considers proper to help identify, locate, or dispose of the
property, and to begin proceedings consistent with any statutory
requirements pertaining to ancillary hearings and the rights of third
parties.
Fed. R. Crim. P. 32(d)(2). The rule makes clear that “[a]t sentencing, a final order of
forfeiture shall be made part of the sentence and included in the judgment.” Id.
Because the district court entered its order at the time it sentenced Kennedy, the order
was properly a final order of forfeiture.
33
After the court entered its order of forfeiture, three parties filed petitions in the
district court seeking to adjudicate their interests in the Sunset Way property in
accordance with 21 U.S.C. § 853(n)(2):23 (1) CGI; (2) Verness Kennedy (“Mrs.
Kennedy”), Kennedy’s former spouse; and (3) the Pinellas County Teachers Credit
Union (the “Credit Union”), which held a mortgage on the Sunset Way property. The
district court assigned the case to a magistrate judge who held a hearing and made
appropriate findings of fact. Following, we summarize the findings of fact adopted
by the district court pertaining to the interests of CGI, Mrs. Kennedy, and the Credit
Union.
In June 1989, the Kennedys entered into a real estate contract to purchase the
Sunset Way beach house for $542,500. By then they had been married for almost
23
As noted, supra, section 982(b)(1) provides that forfeiture of property under
that section is governed by the criminal forfeiture provisions of 21 U.S.C. § 853.
Under section 853(k), third parties are barred from attempting to establish their
interest in property subject to forfeiture until a final order of forfeiture has been
entered. They may not intervene in the criminal action against the defendant in which
the Government establishes its right to forfeiture, nor may they initiate a civil action
to adjudicate the validity of their interest once an indictment or information has been
filed. See 21 U.S.C. § 853(k). Section 853(n)(2) provides that following the entry of
an order of forfeiture,
[a]ny person, other than the defendant, asserting a legal interest in
property which has been ordered forfeited to the United states pursuant
to this section may, within thirty days of the final publication of notice
or his receipt of notice . . . , whichever is earlier, petition the court for a
hearing to adjudicate the validity of his alleged interest in the property.
34
thirty-one years. Their four sons were grown. Mrs. Kennedy considered their old
house too large and costly to upkeep, and she no longer liked their old neighborhood.
To her, the beach house she had spotted for sale offered more. Her husband, however,
did not share her enthusiasm. Because of his reluctance and her desire for change,
Mrs. Kennedy committed much of her personal wealth to convince him to join her in
purchasing the residence.
Mrs. Kennedy had worked throughout most of the marriage. She taught in the
public school system, modeled, refinished furniture, and owned (and continues to
own) Patti and Friends Antique Mall, a business that rents booths to about eighty
vendors. She had inherited securities after her mother’s death in 1968, and knew by
June 1989 that she could expect to receive a significant inheritance due to her father’s
recent death. Consequently, Mrs. Kennedy thought she would have the financial
means to contribute toward the purchase of the new home.
Unfortunately, at the time she wanted to execute a contract on the Sunset Way
property, Mrs. Kennedy did not have the means in hand. Her inheritance had not
come through, and the Kennedys had not yet sold their old residence. Therefore, in
June 1989, Mrs. Kennedy promised to repay her husband if he would make the
$50,000 earnest money deposit. Kennedy agreed, telling his wife that he would
borrow the money from his business.
35
The couple acquired the property in September 1989. At the closing, they paid
the sellers $134,445.05 in cash and assumed an existing $356,000 mortgage held by
the Credit Union. As with the earnest money deposit, Kennedy advanced the cash
payment (again telling his wife that he was borrowing the money from his business)
with the understanding that Mrs. Kennedy would repay him either when she received
her inheritance or when their old house sold. Though Mrs. Kennedy was unaware of
her husband’s improprieties, it is undisputed that the $184,445.05.24 contributed by
Kennedy toward the purchase of the beach house was money stolen from CGI.
The district court found that when the Kennedys closed on the beach house in
September 1989, they owned the property as tenants by the entireties, meaning that
each spouse had “an indivisible right to own and occupy the entire property.” United
States v. One Single Family Residence With Out Bldgs., 894 F.2d 1511, 1515 (11th
Cir. 1990). Despite their joint ownership, Mrs. Kennedy kept her promise to repay her
husband almost the full amount of the funds that he had contributed toward the
purchase of the residence. After her inheritance came through, and the couple’s old
house sold, Mrs. Kennedy wrote her husband three checks totaling $180,000.25
24
The $184,445.05 figure comprises the sum of the $50,000 earnest money
deposit and the $134,445.05 cash payment made to the sellers at closing.
25
The dates of the three checks written by Mrs. Kennedy to her husband were
December 17, 1989 ($100,000), February 15, 1991 ($40,000), and March 7, 1991
36
Mrs. Kennedy first learned of her husband’s fraud in May 1991. As noted
above, Kennedy was indicted on charges of mail fraud and unlawful monetary
transactions a little less than four years later, on January 27, 1995; this was the same
day that the Government recorded its notice of lis pendens on the Sunset Way
residence. Two months later, Mrs. Kennedy filed for a divorce. At a domestic
mediation conference held to establish the financial terms of the divorce, the parties
agreed that Mrs. Kennedy had a “special equity” in the beach house; this was largely
because, including the funds Mrs. Kennedy had used to repay her husband for his
contributions at the time of purchase, Mrs. Kennedy produced checks totaling more
than $392,412 that she had invested in the property.26 Accordingly, Kennedy agreed
to transfer any rights he possessed in the property to her. On September 19, 1995, the
state court entered a divorce decree which adopted the mediation agreement, awarded
the Sunset Way property to Mrs. Kennedy because of her agreed upon special equity
in the residence, and dissolved the marriage.27 More than a month later on November
($40,000). Her last check to her husband was actually written for $119,000, but it
included his share of the proceeds from the sale of their former residence ($79,000).
26
In addition to repaying her husband, the district court found that Mrs.
Kennedy made 87% of the mortgage payments, paid the taxes on the property, and
took care of most of the maintenance costs.
27
Through an oversight, the final divorce decree entered on September 19, 1995
did not address the disposition of the Sunset Way property. The Kennedys brought
37
30, 1995, the United States District Court for the Middle District of Florida entered
its order forfeiting to the United States all Kennedy’s right, title, and interest in the
Sunset Way property.
C.
Under 21 U.S.C. § 853(n)(6), third party petitioners can establish their interest
in forfeited property in only two ways. See United States v. Reckmeyer, 836 F.2d
200, 203 (4th Cir. 1987) (“Subsection (n) provides the only means for third parties to
establish their interest in forfeited property.”). The statute provides:
If, after the hearing, the court determines that the petitioner has
established by a preponderance of the evidence that–
(A) the petitioner has a legal right, title, or interest in the property,
and such right, title, or interest renders the order of forfeiture invalid in
whole or in part because the right, title, or interest was vested in the
petitioner rather than the defendant or was superior to any right, title, or
interest of the defendant at the time of the commission of the acts which
gave rise to the forfeiture of the property under this section; or
(B) the petitioner is a bona fide purchaser for value of the right,
title, or interest in the property and was at the time of purchase
reasonably without cause to believe that the property was subject to
forfeiture under this section;
this omission to the attention of the divorce court which, on January 2, 1996, corrected
its error; the court entered an order, awarding Mrs. Kennedy a special equity in the
house, nunc pro tunc to September 19, 1995. In its findings, the district court
characterized the divorce court’s omission as “scrivener’s error.”
38
the court shall amend the order of forfeiture in accordance with its
determination.
21 U.S.C. § 853(n)(6).
Thus subsection (n)(6) protects only two classes of petitioners, those
whose legal interests in the property were superior to the defendant[] at
the time the interest of the United States vested through the commission
of an act giving rise to forfeiture and “bona fide purchasers for value”
without knowledge of the forfeitability of the defendant’s assets.
Reckmeyer, 836 F.2d at 204; see also United States v. Jimerson, 5 F.3d 1453, 1455
(11th Cir. 1993).
The district court concluded that Mrs. Kennedy prevails under either section.
The court found that
Mrs. Kennedy is a bona fide purchaser for value and that she has a legal
interest in the Sunset Way property resulting in a superior right to the
defendant’s former interest in the property pursuant to 21 U.S.C. §§
853(n)(6)(A) & (B). Therefore, under the applicable law, forfeiture of
[ Kennedy’s interest in] the residence is inappropriate.
The court thus modified its November 30, 1995 order of forfeiture, and granted both
Mrs. Kennedy’s and the Credit Union’s petitions to establish their interests in the
forfeited property, with the Credit Union having priority as a mortgagee. The court
also denied CGI’s petition to establish its interest in the forfeited property. The
Government and CGI now appeal. All parties agree that the government’s interest,
if any, is limited to Kennedy’s one-half interest in the property. Mrs. Kennedy’s one-
39
half interest was never subject to forfeiture, and it remains unaffected by our decision
today.
II.
We review the district court’s findings of fact for clear error. We independently
review the court’s conclusions of law de novo. See One Single Family Residence,
894 F.2d at 1513. Though CGI challenges some of the district court’s factual
findings, our review of the record convinces us at the outset that the court’s findings
of fact are not clearly erroneous. Our review is therefore limited to questions of law.
III.
The criminal forfeiture provisions of section 853 authorize the government to
seek forfeiture of a defendant’s interest in subject property. See United States v.
Lester, 85 F.3d 1409, 1413 (9th Cir. 1996). This is in contrast to the civil forfeiture
scheme embodied in 21 U.S.C. § 881, involving an in rem proceeding, wherein the
whole property (as opposed to a particular defendant’s interest in the property) is
treated as being itself guilty of wrongdoing. See United States v. One 1976 Mercedes
Benz 280S, 618 F.2d 453, 454 (7th Cir. 1980). Thus, we must decide whether
40
Kennedy’s interest in the Sunset Way property is properly forfeitable to the United
States, or whether Mrs. Kennedy has established either (a) that she is a bona fide
purchaser for value of Kennedy’s interest in the real estate, or (b) that she had an
interest in the property that was superior to Kennedy’s interest at the time he
committed the acts giving rise to the forfeiture.
A.
The district court concluded that Mrs. Kennedy became a bona fide purchaser
for value as of the date that she and her husband closed on the Sunset Way property.
The court found,
Mrs. Kennedy, along with her husband, purchased the Sunset Way
residence from the sellers on September 1, 1989. She was unaware that
the money her husband used toward the down payments was criminally
obtained. Thus, pursuant to § 853(n)(6)(B), Mrs. Kennedy purchased the
residence as a “bona fide purchaser for value” who was both
“reasonable” and “without cause to believe that the property was subject
to forfeiture” at the time of purchase.
This analysis does not address the real question, which is, did Mrs. Kennedy ever
purchase her former husband’s interest in the subject property. Of course Mrs.
Kennedy became a “bona fide purchaser for value” of some part of the Sunset Way
property on September 1, 1989, because along with her then-husband she assumed a
$356,000 mortgage on the property. Specifically, she purchased a spousal interest in
41
a tenancy by the entireties under Florida law, “an indivisible right to own and occupy
the entire property.” One Single Family Residence, 894 F.2d at 1515.28 But this bona
fide purchase for value is irrelevant under section 853(n)(6)(B). The statute asks
whether a third party petitioner ever became a bona fide purchaser for value of the
defendant’s interest in the subject property. Finding that Mrs. Kennedy is a bona fide
purchaser for value of her own interest in the tenancy by the entireties is not relevant.
The question is, did she ever purchase Kennedy’s interest in the property.
Once the question is properly framed, it becomes clear that Mrs. Kennedy
cannot prevail under the bona fide purchaser exception. Mrs. Kennedy argues that she
did indeed purchase Kennedy’s interest in the property because she repaid the funds
Kennedy contributed as an earnest money deposit and at closing with her separate
inheritance money. She characterizes Kennedy’s initial contributions as a loan,
whereby neither she nor her former husband ever intended that any part of the Sunset
Way property be owned by him; and she reminds the court that it was she, and not
Kennedy, who wanted to buy the beach residence in the first place, and that Kennedy
28
In One Single Family Residence, 849 F.2d at 1514, this court explained,
[t]o hold property by the entireties, Florida common law requires five
‘unites’ to be present: marriage–the joint owners must be married to each
other; title–the owners must both have title to the property; time–they
both must have received title from the same conveyance; interest–they
must have an equal interest in the whole of the property; and control or
possession–they both must have the right to use the entire property.
42
would never have consented to the purchase while they were married had she not
promised to repay him all the monies he initially invested. But this argument is belied
by the plain fact that the couple took title to the property jointly, as tenants by the
entireties. A tenancy by the entireties is an ownership arrangement peculiar to
marriage, the most significant aspect of which is its distribution of property between
two people who form, in the eyes of the law, a unity. Under the Florida law,
[a]s long as all the unities remain intact . . . each spouse’s interest
comprises the whole or entirety of the property and not a divisible part;
the estate is inseverable. Neither spouse can sell, forfeit or encumber
any part of the estate without the consent of the other, nor can one
spouse alone lease it or contract for its disposition. Creditors cannot levy
on entireties property to satisfy the debt of an individual spouse. The
state cannot deem entireties property forfeit because of the unlawful
conduct of one spouse acting alone.
One Single Family Residence, 894 F.2d at 1514-15 (internal citations and quotation
marks omitted). To argue that both spouses always intended Mrs. Kennedy to be the
sole owner of the property seems strained at best, given that she and Kennedy entered
into a form of ownership most notable for its joint encumberments.29 The argument
29
The couple might have assumed joint ownership of the property as a way of
giving Kennedy collateral for his “loan” to Mrs. Kennedy for the earnest money
deposit and the cash payment made at closing. If this were the case, however, one
would expect that Kennedy would have transferred all his interest in the property by
quitclaim deed sometime immediately after March 7, 1991, when Mrs. Kennedy paid
him the last of the $180,000 that was owed him. But Kennedy did not execute a
quitclaim deed on the property in favor of Mrs. Kennedy until the two were divorced
in 1995. Until that time, they continued to own the beach residence as tenants by the
43
is also undermined by Mrs. Kennedy’s own testimony during the third party ancillary
proceeding in which she told the court that it was her understanding that she and
Kennedy both owned the Sunset Way residence during the marriage. There is simply
no evidence that Mrs. Kennedy ever became a bona fide purchaser for value of
Kennedy’s interest in the beach house through a genuine arms-length transaction, and
therefore Mrs. Kennedy cannot prevail under section 853(n)(6)(B).
B.
i.
The district court also found that Mrs. Kennedy could escape forfeiture of her
former husband’s interest in the property under the superior title provisions of section
853(n)(6)(A). The court reasoned that because the divorce court had granted Mrs.
Kennedy a special equity in the home upon dissolution of the marriage, and directed
Kennedy to transfer to her all his right, title, and interest in the home, Mrs. Kennedy
had an interest in the whole property that was superior to his. Florida law does
recognize a special equity upon divorce when one spouse can demonstrate that (1) he
or she paid for certain property from a source unconnected with the marriage, and (2)
a gift to the other spouse was not intended. See Robertson v. Robertson, 593 So.2d
entireties.
44
491, 494 (Fla. 1991). The special equity “only comes into actual identifiable form,”
however, “upon the termination of the marriage status.” Bosch v. United States, 590
F.2d 165, 167 (5th Cir. 1979).30 The former fifth circuit held, in Bosch, that the equity
actually “exist[s] prior to the divorce.” Id. The award upon dissolution of the
marriage is merely a judicial recognition of an already-existing interest that came into
being when the spouse holding the equity made a significant nonmarital investment
in the property. There is no question, however, that the earliest point at which the
interest can vest is “at a point in time when [the spouse] makes a contribution of
funds, property, or services toward acquisition or betterment of property from a source
unconnected with the marriage.” Starcher v. Starcher, 391 So. 2d 340, 341 (Fla. 4th
DCA 1980). The earliest point at which Mrs. Kennedy’s special equity could have
vested was December 1989, when she first began using her inheritance money to pay
back her husband for his initial contributions.
Section 853(n)(6)(A) requires a third party petitioner to establish that he or she
had an interest in the subject property that “was vested in the petitioner rather than the
defendant or was superior to any right, title, or interest of the defendant at the time of
the commission of the acts which gave rise to the forfeiture of the property under this
30
In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en
banc), this court adopted as binding precedent all of the decisions of the former Fifth
Circuit handed down on or before September 30, 1981.
45
section.” 21 U.S.C. § 853(n)(6)(A) (emphasis added). The acts which gave rise to the
forfeiture took place in June 1989, when Kennedy used $50,000 of money stolen from
CGI as an earnest money deposit for the property, and September 1989, when
Kennedy used $134,445.05 in stolen funds as a cash payment at closing. This was
months before the earliest time at which Mrs. Kennedy’s special equity could have
vested. At the time of the acts giving rise to the forfeiture, Mr. and Mrs. Kennedy
took title to the property as tenants by the entireties. The state court’s grant of a
special equity, even with its recognition of an interest in Mrs. Kennedy that was
vested prior to dissolution, does not alter that conclusion. Because we have explicitly
held in Jimerson, 5 F.3d at 1455, that “[t]he very nature of the tenancy by the
entireties prevents [a petitioner] from claiming that her title is superior to her
husband’s,” we conclude that Mrs. Kennedy cannot prevail under section
853(n)(6)(A) because even if she had an interest that was superior to her former
husband’s, no such interest was vested at the time of the act giving rise to the
forfeiture.
ii.
Mrs. Kennedy contends that the Sixth Circuit’s decision in United States v.
Certain Real Property Located at 2525 Leroy Lane (Leroy Lane II), 972 F.2d 136 (6th
46
Cir. 1992), is both on point and persuasive. We agree that the decision is on point;
after consideration, however, we cannot agree that it is persuasive. In Leroy Lane II,
the government sought both civil and criminal forfeiture of the defendant’s residence,
held prior to divorce by him and his wife as tenants by the entireties. Upon
dissolution of the marriage, the divorce court awarded the whole property to the wife
“free and clear of any and all claims or interest of the Defendant.” Id. at 137. Citing
this court’s decision in One Single Family Residence, the Sixth Circuit concluded in
United States v. Certain Real Property Located at 2525 Leroy Lane (Leroy Lane I),
910 F.2d 343, 351-52 (6th Cir. 1990), that the government could not execute on a
defendant’s interest in a tenancy by the entireties while the interest was still intact,
even if such interest was subject to forfeiture. To do so would burden the interests of
“innocent owners” in the civil forfeiture context, see 21 U.S.C. § 881(a)(7) (1994),
and of third party owners in the criminal forfeiture context. See 910 F.2d at 350-51.31
31
The civil forfeiture provisions explicitly protect the interests of “innocent
owners.” See 21 U.S.C. § 881(a)(7) (“no property shall be forfeited under this
paragraph, to the extent of an interest of an owner, by reason of any act or omission
established by that owner to have been committed or omitted without the knowledge
or consent of that owner”). The criminal forfeiture provisions of 21 U.S.C. § 853
contain no such innocent owner exception. See Jimerson, 5 F.3d at 1455 n.4. The
Sixth Circuit reasoned, however, that Congress meant to protect the interests of third
party owners (those who either had a superior interest in the subject property at the
time of the acts giving rise to the forfeiture, or who were bona fide purchasers for
value) in the criminal forfeiture context to the same degree as Congress protected
innocent owners in the civil forfeiture context (thus extending our reasoning in One
47
In Leroy Lane II, the court found that upon dissolution of the marriage the
government could execute on its interest in the residence because dissolution
terminates the entireties estate under Michigan law;32 but, invoking what we shall call
the “timeline theory,” the court also found that the government only “gets whatever
[the defendant] possesses after the entireties estate is destroyed. In this case, by virtue
Single Family Residence). See Leroy Lane I, 910 F.2d at 350; see also Lester, 85 F.3d
at 1414 n.8 (“it is clear that because a criminal forfeiture is an action against the
convicted defendant, who by definition is not ‘innocent,’ there simply was no need to
have an innocent-owner exception”).
32
In Leroy Lane I, the court determined that even though the government could
not execute on its interest in a defendant spouse’s share of a tenancy by the entireties
while the interest was still intact, the government’s interest was not extinguished.
Instead, the government occupied a position during the tenancy “most analogous to
the position occupied by a judgment creditor of one spouse . . . .” 910 F.2d at 351.
In other words, the government would have a lien on the defendant spouse’s interest
in the property, which could be executed upon should the tenancy ever terminate.
This is consistent with this court’s decision in One Single Family Residence, holding
that the government cannot execute on its interest in a defendant spouse’s share of a
tenancy by the entireties in the civil forfeiture context, but noting that,
[n]othing would prevent the government from attempting to execute or
levy on its interest should the entireties estate be altered by changes in
circumstances or by court order. That is, we do not rule out the
possibility that if the United States filed a lis pendens against the
property, the government might acquire in a later forfeiture proceeding
[the defendant’s] interest in the property should he divorce his spouse,
should [the defendant’s spouse] predecease him, or should their interests
be transmuted into some divisible form by their actions or by law. In
such case, their interests would become distinct and separable so that
forfeiture of his interest in the property would not affect her rights.
894 F.2d at 1516 n.6.
48
of the divorce court’s distribution of the property, [the defendant] was left with no part
of the property.” Id. at 138.
Mrs. Kennedy finds further support for the Sixth Circuit’s timeline theory from
Florida case law holding that a state divorce court’s award of property to one spouse
takes effect at the moment the entireties interest is destroyed. Under Florida law,
during the life of an entireties estate, “creditors cannot levy on entireties property to
satisfy the debt of an individual spouse.” One Single Family Residence, 894 F.2d at
1515. Upon dissolution of the marriage, however, a tenancy by the entireties
automatically becomes a tenancy in common if no other disposition is made by the
divorce court. Prior to the Florida Supreme Court’s decision in Sharp v. Hamilton,
520 So. 2d 9 (Fla. 1988), some single spouse creditors argued that even when a divorce
court awarded certain property in fee to the non-debtor spouse, at the conclusion of
the entireties estate the creditor’s interest could attach to the property because before
the divorce court’s order could take effect, the property was held in a tenancy in
common for “the twinkling of a legal eye.” The Florida Supreme Court responded:
Even though . . . a tenancy by the entirety becomes a tenancy in common
by operation of law upon dissolution of marriage, we reject the
“twinkling of a legal eye” analysis . . . . Entireties property is not subject
to a lien against only one tenant. We are not persuaded by the fiction
fashioned by [the lower court] that there is a moment in time in which a
judgment lien or a mortgage lien held against one of the tenants attaches
to the entireties property upon dissolution when sole title to the property
is awarded to one spouse in settlement of divorce by a final decree of
49
dissolution. . . . [T]he judgment of dissolution in this case, the same
document that operates to make tenants by the entirety into tenants in
common, also ordered sole title to the property be vested in Mrs.
Hamilton. . . . [T]he judgment of dissolution is controlling and the
transfer of the husband’s interest to the wife pursuant to the judgment of
dissolution was equivalent to the defeasance of the husband’s interest in
the property which would have occurred had he predeceased his wife
while the parties were still married.
Id. at 10. Mrs. Kennedy argues that ownership of the Sunset Way property flowed
seamlessly from her and Kennedy as tenants by the entireties, to her alone as sole
owner by virtue of the divorce court’s decree. Under the timeline theory, therefore,
because the Government was precluded from executing its interest in Kennedy’s
share of the entireties estate during the marriage, and because the divorce court
awarded Mrs. Kennedy a special equity in the whole property upon dissolution of the
marriage, there was never a moment in time when the Government’s interest could
attach. What the Government could not execute upon during the marriage has
disappeared upon divorce.
The problem with the timeline theory is that it evaluates the Government’s
interest along a linear continuum, when what the statute directs is that we look at
whether the Government can execute on its interest in forfeited property at the
moment it seeks to do so. At this moment, Mrs. Kennedy holds property that was
forfeited by final order to United States; pursuant to an indictment, a jury returned a
special verdict finding that the Sunset Way property either was involved or was
50
property traceable to property that was involved in unlawful monetary transactions,
and the district court issued an order forfeiting Kennedy’s interest. Under section
853(n), subsequent to a final order of forfeiture it became Mrs. Kennedy’s burden to
come forward and demonstrate either that she had superior title to the property at the
time of the act giving rise to the forfeiture, or that she is a bona fide purchaser for
value of Kennedy’s interest. 21 U.S.C. § 853(n)(6). As we have already concluded,
she can prevail under neither rationale.
Our decision in One Single Family Residence does not lead naturally to the
Sixth Circuit’s conclusion in Leroy Lane II. In One Single Family Residence, we
found in the context of civil forfeiture that even when a spouse’s interest in property
held by the entireties is subject to forfeiture, the government cannot execute on its
interest during the tenancy if the other spouse is an “innocent owner” under 21 U.S.C.
881(a)(7) because,
the government cannot deprive [the innocent spouse] of any interest she
has in the property. The interest she has under Florida law is an
undivided right of possession, title, and enjoyment of the whole property.
To convert this right into a tenancy in common, where she has only the
right to a portion of the property or a portion of the proceeds should the
government pursue partition–which could not occur with an entireties
estate–appears to us to be a taking without due process violating the Fifth
Amendment of the federal constitution.
....
To forfeit some interest in the property to the government would
penalize [the innocent owner] for the wrongdoing of her husband, in
51
which she neither participated nor had any knowledge, and would take
her property without due process or just compensation.
894 F.2d at 1516. We have never held that One Single Family Residence applies in
the criminal forfeiture context, and we do not do so today.33 Even if we were to hold
that One Single Family Residence applies in the instant case, however, it would not
shield Mrs. Kennedy from forfeiture now. One Single Family Residence would
protect Mrs. Kennedy’s interest in a tenancy by the entireties so that the Government
would not have been able to execute on its interest while her marriage to Kennedy was
still intact. It is undisputed, however, that the marriage is now dissolved and that the
entireties interest has been destroyed. We therefore have an answer to the question
presented by the Sixth Circuit’s timeline theory: At what moment in time could the
Government’s interest attach to the forfeited property? The answer is now. It is true
that Mrs. Kennedy has been awarded the whole Sunset Way property by the divorce
court; but the portion of the property represented by Kennedy’s former interest in the
entireties estate has been forfeited. It is therefore Mrs. Kennedy’s burden to come
33
Indeed, the court in One Single Family Residence was careful to note that its
decision was heavily dependent on state law, and that “Congress expressly preempted
state law in the language of 21 U.S.C. section 853(a) (Supp. 1984), created in the
same act as section 881(a)(7), by providing for criminal forfeiture of property,
‘irrespective of any provision of State law,’ if that property was [subject to
forfeiture].” 894 F.2d at 1518.
52
forward and demonstrate why the subject property should not be taken by the order
of forfeiture. She has failed to do so, and so the property remains forfeited.
We can also assume that even though federal law decides what interests are
subject to forfeiture under section 853, state property law defines what those interests
are in the first instance. See Lester, 85 F.3d at 1412; United States v. Ben-Hur, 20
F.3d 313, 317 (7th Cir. 1994); Leroy Lane I, 910 F.2d at 348. No preemption is
necessary because our decision today does not conflict with Florida law. We have
taken due notice of the state divorce court’s award of a special equity in the whole
Sunset Way property to Mrs. Kennedy pursuant to state family law. That award does
not affect our conclusion that Kennedy’s former interest in the property was forfeited
under federal law, and that Mrs. Kennedy is not entitled to that interest under either
section 853(n)(6)(A) or (B). Our holding today is a natural consequence of the fact
that federal law provides only two avenues of relief for third parties seeking to
establish their interest in criminally forfeited property, and the fact that federal law
decides what interests are subject to forfeiture. Third parties can argue that they held
superior title at the time of the act giving rise to the forfeiture, or that they are bona
fide purchasers for value. They cannot argue, however, that a state divorce court
awarded them a special equity in the forfeited property; there is no “special equity
provision” in section 853(n)(6).
53
The Sixth Circuit’s timeline theory threatens completely to subordinate federal
law not to state property law, but to state judges who are given carte blanche to decide
what interests the United States – not even a party to the divorce proceeding – will be
able to execute upon after the dissolution of the marriage, and to defendants who may
collude with their spouses to avoid forfeiture. Under Leroy Lane II, for example, it
is unclear why the defendant spouse would not be able to avoid forfeiture by simply
giving his interest in the property to his spouse. The gift would destroy the tenancy,
thereby removing the barrier to the government’s execution of its lien, but there would
be nothing left for the government to take. The gift would effectively defease not only
the interest of the guilty spouse, but the interest of the government as well. See also
Sharp, 520 So. 2d at 10 (finding, for purposes of creditor rights, that an award of
special equity has the same effect as if one spouse transferred his or her interest in the
property to the other by quit-claim deed either before or at dissolution of the
marriage).34 This result was clearly not intended by Congress. The criminal forfeiture
34
In the instant case, the district court found that the divorce court’s award of
a special equity to Mrs. Kennedy was justified under state law. What actually
occurred, of course, is that the divorce court merely adopted the parties’ agreement
that Mrs. Kennedy should be granted all right, title, and interest in the Sunset Way
property. We do not question the propriety of a state court’s incorporation of a
property settlement in a divorce decree; but it seems absurd to argue, as does Mrs.
Kennedy, that divorcing spouses can act by agreement to defease the government of
its lawful interest in forfeited property in a proceeding in which the government is not
even a party.
54
provisions provide only two ways for third parties to establish their interest in
forfeited property; and one of them is emphatically not that the criminal defendant
gave the third party a gift. The relation back provision contained in 21 U.S.C. §
853(c), vesting all right, title, and interest in the forfeited property in the United States
upon the commission of the acts giving rise to the forfeiture, was specifically included
in section 853 as a way of avoiding such transfers. See Ben-Hur, 20 F.3d at 319;
Reckmeyer, 836 F.3d at 203.
IV.
For the foregoing reasons, we REVERSE the district court’s order granting
Mrs. Kennedy’s petition to establish her interest in the forfeited property, and
REMAND with instructions that the district court reinstate the order of forfeiture.
REVERSED and REMANDED.
55
56