United States v. George

United States Court of Appeals
For the First Circuit
No. 17-1371
UNITED STATES OF AMERICA,
Appellee,
v.
JOHN GEORGE, JR.,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Denise J. Casper, U.S. District Judge]
Before
Thompson, Circuit Judge,
Souter, Associate Justice,
and Selya, Circuit Judge.
William J. Cintolo, with whom Thomas R. Kiley and Cosgrove
Eisenberg & Kiley, PC were on brief, for appellant.
Randall E. Kromm, Assistant United States Attorney, with whom
William D. Weinreb, Acting United States Attorney, was on brief,
for appellee.
March 23, 2018

Hon. David H. Souter, Associate Justice (Ret.) of the
Supreme Court of the United States, sitting by designation.
SELYA, Circuit Judge. In United States v. George (George
I), 841 F.3d 55 (1st Cir. 2016), we affirmed the conviction and
sentence of a corrupt politician, defendant-appellant John George,
Jr. At the same time, we vacated the district court's forfeiture
order because the court lacked jurisdiction when it purposed to
enter that order. See id. at 72. On remand, the district court
— its jurisdiction having reattached — revisited the matter of
forfeiture and ordered the defendant to forfeit proceeds of his
criminal activity in the amount of $1,382,214.
The defendant again appeals. This time around, he mounts
both procedural and substantive challenges to the forfeiture
order. After careful consideration, we hold that the district
court did not abridge the defendant's procedural rights. We
further hold, as a matter of first impression in this circuit,
that the district court applied an appropriate yardstick in
measuring the "proceeds" to be forfeited. Accordingly, we affirm
the forfeiture order.
I. BACKGROUND
We sketch the relevant facts and travel of the case.
The reader who hungers for more exegetic detail is free to consult
our earlier opinion.
This case revolves around the Southeast Regional Transit
Authority (SRTA), a public authority funded jointly by the
Commonwealth of Massachusetts and the federal government. The
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defendant, described in our earlier opinion as a local "political
satrap," id. at 58, served on the SRTA advisory board until 1988,
when he arranged for his friend and political ally, Joseph
Cosentino, to replace him. Some three years later, the defendant
purchased Union Street Bus Company (Union Street) through an alter
ego, Trans-Ag Management, Inc. (Trans-Ag). The defendant was the
sole shareholder of Trans-Ag and was its only employee.
After the defendant took control of Union Street, the
SRTA granted the company an exclusive franchise for certain bus
routes, and the contract between the SRTA and Union Street was
periodically renewed (the last time in 2006). In order to secure
the 2006 renewal, the defendant colluded with Cosentino to
discredit Union Street's main competitor. What is more, he brought
in a stalking horse — an artificially high bidder — to make Union
Street's bid appear more attractive. The defendant's machinations
succeeded, and Union Street's contract was renewed.
The renewed contract was lucrative. Throughout its
term, the SRTA reimbursed Union Street for the amounts by which
Union Street's operating expenses exceeded its operating income.
Over and above this stipend, the SRTA paid Union Street a hefty
management fee to oversee the operation of the designated routes.1
The operating expenses included the salaries of two individuals,
1
The management fee "gradually rose from $199,714 for 2006
to $266,711 for 2010." George I, 841 F.3d at 59.
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nominally employees of Union Street, who spent most of their work-
hours (during which they were compensated directly by Union Street
and, thus, indirectly by the SRTA) toiling at the defendant's farm
and otherwise ministering to the defendant's personal projects.
This was the tip of a rather large iceberg; the trial transcript
is replete with other instances of the defendant appropriating
SRTA-funded resources for personal use. See, e.g., id. at 60-61.
The defendant's success at bilking the SRTA was not a
mere fortuity. During the renewal term, he was able to limit
oversight of Union Street's contract. Moreover, the defendant was
able to arrange for Cosentino (his political ally) to be appointed,
mid-way through the contract term, as the SRTA Administrator.
Toward the end of the renewal term, Cosentino turned
over a new leaf and began challenging the defendant's diversion of
SRTA-funded resources. He also took steps to ensure a fair bidding
process for the next renewal of the contract. Displeased by this
about-face, the defendant used his influence to have Cosentino
removed as Administrator. Nevertheless, the 2010 renewal of the
contract was awarded to another bidder.
Eventually, the chickens came home to roost. After
conducting an investigation of the SRTA's finances, the government
charged the defendant with conspiracy to commit an offense against
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the United States and embezzlement.2 See 18 U.S.C. §§ 371,
666(a)(1)(A) & (a)(2).
Following a lengthy jury trial that resulted in the
defendant's conviction, the district court held a sentencing
hearing on July 29, 2015. In the course of that hearing, the
court, inter alia, entertained arguments on the government's
motion for an order of forfeiture. When the sentencing hearing
had concluded, the court (wanting additional time to consider
forfeiture) suggested that it delay the actual imposition of
sentence. Defense counsel resisted this suggestion and instead
sought the immediate imposition of sentence. He told the court
that "[t]o require [the defendant], who is obviously taking this
very badly, . . . to have to wait more time to know what his fate
is going to be, I think would be devastating . . . let's get a
sentence today, your Honor." Defense counsel prefaced this request
with an acknowledgment that he had "absolutely no problem" with
the court resolving the issue of forfeiture at a later date and
entering an amended judgment. The government did not object, and
the court acquiesced. It sentenced the defendant to a 70-month
term of immurement on the substantive offense count and a
2
Here, as in George I, "[w]e use the term 'embezzlement' as
a shorthand. The statute of conviction, 18 U.S.C. § 666(a)(1)(A),
criminalizes a range of nefarious activities, including
embezzlement, theft, fraudulent obtaining, knowing conversion, and
intentional misapplication of covered funds." 841 F.3d at 58 n.1.
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concurrent 60-month term of immurement on the conspiracy count;
ordered restitution in the amount of $688,772;3 and reserved
judgment on the forfeiture issue.
The court embodied these sentencing determinations in a
written judgment, and the defendant appealed. While his appeal
was pending, the district court accepted additional briefing and
heard further argument with respect to forfeiture. On September
21, 2015 — with the defendant's appeal still pending — the district
court entered an amended judgment, which included a forfeiture
award in the amount of $1,382,214 (the total amount of the
management fees paid under the 2006 contract renewal).
In due course, we upheld the defendant's conviction and
the sentencing determinations made at the July 29, 2015 sentencing
hearing. See George I, 841 F.3d at 72. Withal, we did not reach
the merits of the September 21 forfeiture order because the
district court had entered that order at a time when it lacked
subject-matter jurisdiction. See id. at 70-72. To tie up this
loose end, we authorized the district court, "once its jurisdiction
has reattached, [to] consider the issue of forfeiture anew." Id.
at 72. The case was remanded for that purpose.
3
The restitution amount was calculated to reflect the
aggregate value of misappropriated services and diverted employee
work-hours. None of these sums forms any part of the ensuing
forfeiture award.
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On December 7, 2016, the district court — its
jurisdiction having been refreshed — notified the parties that it
was "inclined" to consider the matter of forfeiture on the papers
previously filed. In an abundance of caution, the court
nonetheless allowed additional briefing. After receiving the
parties' supplemental briefs, the court ordered forfeiture in the
amount of $1,382,214, holding that this amount, which it derived
by aggregating the management fees paid under the 2006 renewal
contract, constituted proceeds of the charged crimes. This timely
appeal followed.
II. ANALYSIS
In this forum, the defendant advances both procedural
and substantive claims. First, he contends that the district court
denied him the right to allocute and the right to be present when
the forfeiture order was entered. Second, he contends that the
management fees that formed the basis for the forfeiture award did
not constitute "proceeds" of the offenses of conviction. We
discuss these contentions sequentially.
A. Sentencing Rights.
The defendant claims that he had a right to allocute
before the district court upon remand and a right to be present
when the district court reentered the forfeiture order. We deem
it useful to start our analysis of this two-pronged claim by
rehearsing a baseline principle discussed in United States v.
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Bryant, 643 F.3d 28 (1st Cir. 2011). Bryant was a case in which
we considered a defendant's rights upon remand after we had vacated
his original sentence. We explained that "whether the defendant's
presence and an opportunity to allocute are required has in
practice turned on whether requiring these safeguards made sense
in the context of the proceedings." Bryant, 643 F.3d at 32. On
one end of the continuum are remanded cases involving the full
range of sentencing issues in proceedings that are as "open-ended
as an initial sentencing." Id. On the other end are remanded
cases in which the remand order is "so focused and limited that it
involves merely a technical revision of the sentence dictated by
the appeals court and calls for no formal proceeding." Id. Bryant
fell near the "full range" end of the continuum; the case at hand
falls near the "limited" end of the continuum.
1. Allocution. Against this backdrop, we turn first to
the defendant's claim that he was denied the right to allocute.
With respect to this claim, his argument relies principally on
Federal Rule of Criminal Procedure 32. Specifically, he says that
the entry of the order of forfeiture comprised a part of his
sentence; that the prescriptions of Rule 32(i)(4) therefore
applied; and that those prescriptions conferred a right to
allocute, which he did not receive.
Pertinently, Rule 32(i)(4)(A)(ii) obliges a sentencing
court, before imposing a sentence, to "address the defendant
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personally in order to permit the defendant to speak or present
any information to mitigate the sentence." The claim that this
prescription was transgressed is belied by the record, which shows
beyond hope of contradiction that the defendant was afforded the
right of allocution. The court's deferred ruling on forfeiture
did not require it to repastinate that well-plowed ground.
Exploring the pertinent events requires us to take a
trip down memory lane. On July 29, 2015, the district court held
a sentencing hearing at which the defendant was present. At that
time, the court considered all aspects of the defendant's sentence
(including forfeiture). The court offered the defendant the
opportunity to allocute, but the defendant's counsel replied that
he had discussed this possibility with the defendant and the
defendant did not wish to make any statement. The court accepted
this demurral, stating that it would "take the words of [the
defendant's] counsel on [the defendant's] behalf."
Later in the July 29 proceeding, the court suggested
delaying the imposition of the sentence so that it could give
further consideration to the forfeiture issue. Defense counsel
pleaded with the court to impose the main components of the
sentence immediately and resolve the matter of forfeiture at a
future date. The court acquiesced and imposed the majority of the
sentence, reserving the forfeiture component as the defendant had
requested.
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While the case was pending on appeal, the district court
entertained supplemental arguments on the forfeiture issue (for
which the defendant was once again present). On September 21, 2015,
the court granted the forfeiture motion, fixed the forfeiture
amount in the sum of $1,382,214, and entered an electronic order
to that effect. That order was memorialized in an amended
judgment, later vacated, but eventually re-entered after the
district court regained jurisdiction.
The bottom line is that the defendant was given a full
opportunity to allocute at the July 29 sentencing hearing. While
the defendant protests that he deserved a second opportunity to
allocute on remand, his protest rings hollow. We explain briefly.
We have held that Rule 32 does not obligate a sentencing
court to afford a defendant a second right to allocute "where the
court merely reimposes a sentence identical to one imposed before,
as long as the rationale for the sentence is the same." United
States v. DiPina, 230 F.3d 477, 485 (1st Cir. 2000); see United
States v. Garafano, 61 F.3d 113, 116-17 (1st Cir. 1995) (holding
that when defendant had been given the opportunity to allocute in
full at first hearing, he did not have a right to a second
opportunity to allocute on remand where his circumstances had not
undergone any material change). So it is here: the district court,
on remand, essentially re-entered the same forfeiture order that
it had purposed to enter in September of 2015; the court's
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rationale was the same; and the defendant's circumstances had not
materially changed.
In an effort to change the trajectory of the debate, the
defendant argues that he should have been allowed to allocute anew
since the district court should have revisited both the
sophisticated means enhancement, see USSG § 2B1.1(b)(10)(C), that
it had earlier integrated into the sentencing calculus and the
sentencing factors made relevant by 18 U.S.C. § 3553(a). This
argument is hopeless. The scope of remand proceedings before a
district court is governed by the appellate court's mandate. See
United States v. Ticchiarelli, 171 F.3d 24, 31 (1st Cir. 1999);
United States v. Bell, 988 F.2d 247, 250 (1st Cir. 1993). Here,
our remand order was narrowly cabined and confined to the
forfeiture issue, see George I, 841 F.3d at 72, and the defendant
makes no effort to explain how either the sophisticated means
enhancement or the section 3553(a) factors bear any relationship
to that issue. It follows that, given our mandate, neither of
these points was a subject cognizable on remand.
The short of it is that the defendant's right to allocute
was satisfied at the initial sentencing hearing. In the
circumstances of this case, he was not entitled to a second bite
at the cherry. In other words, he was not entitled to a further
opportunity to allocute on remand. The fact that the court
deferred the entry of the forfeiture order at the defendant's
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request did not by some mysterious witchcraft revivify an
allocution right already fully exercised.
2. Presence. The defendant's claim that he was denied
his right to be present when the district court re-entered the
forfeiture order need not detain us. As framed, this claim draws
its essence from Federal Rule of Criminal Procedure 43, which
provides that the defendant's presence is required at every
material stage of the proceedings (from the initial appearance
through sentencing).4 But even if we assume that the defendant
had a right to be present when the district court re-entered the
forfeiture order — itself a dubious proposition5 — the present
claim cannot succeed.
A defendant's Rule 43 right to be present is not
absolute. For example, we have "refused to entertain . . . Rule
4 Although the right to be present at sentencing may have a
constitutional dimension as well, see United States v. Gagnon, 470
U.S. at 522, 526 (1985) (per curiam), the defendant has not framed
his argument in those terms. Accordingly, we deem any
constitutional claim abandoned. See United States v. Zannino, 895
F.2d 1, 17 (1st Cir. 1990) (per curiam) (explaining that "issues
adverted to in a perfunctory manner, unaccompanied by some effort
at developed argumentation, are deemed waived").
5 See, e.g., United States v. Parrish, 427 F.3d 1345, 1348
(11th Cir. 2005) (finding no error under Rule 43 when district
court resentenced absent defendant to same sentence that had
previously been imposed); United States v. Saccoccia, 58 F.3d 754,
784-85 (1st Cir. 1995) (refusing to vacate forfeiture order despite
defendant's absence at forfeiture-related proceedings); cf. United
States v. Ferrario-Pozzi, 368 F.3d 5, 9-10 (1st Cir. 2004)
(rejecting claim of constitutional violation arising out of
defendant's absence at time of entry of forfeiture order).
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43 arguments . . . where trial counsel had a clear opportunity to
object, but did not." United States v. Flores-Rivera, 787 F.3d 1,
30 (1st Cir. 2015). Moreover, in appropriate circumstances,
"[d]efendants need not be expressly warned of their rights under
Rule 43." United States v. Fernández-Hernández, 652 F.3d 56, 65
(1st Cir. 2011). A failure to assert the right, without more, may
effect a waiver. See id.
This reasoning applies with full force to the case at
hand. At the defendant's sentencing hearing, his counsel
represented that the defendant would have "absolutely no problem
with [the district court] submitting an amended judgment"
regarding forfeiture at a future date. When the district court
later convened a hearing at which the defendant was present to
hear additional arguments about forfeiture, the district court
told the parties that, if it decided forfeiture was appropriate,
it planned to "enter an [electronic] order in that regard and amend
the judgment." The defendant did not object to this plan, nor did
he ask to be present at the time such an order might be entered.
And when the case was remanded, the defendant made no request to
be present after the district court told the parties that it was
"inclined to consider" forfeiture "on papers previously filed."
Here, as in United States v. Gagnon, 470 U.S. 522 (1985)
(per curiam), "[t]imely invocation of a Rule 43 right could at
least have apprised the District Court of the claim, and very
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likely enabled it to accommodate a meritorious claim in whole or
in part." Id. at 529. Applying reasoning that is reminiscent of
Gagnon, we have found waiver when a defendant eschews an argument
and, by so doing, "lulls both the prosecution and the sentencing
court into what will prove to be a false sense of security if he
is later allowed to do an about-face." United States v. Turbides-
Leonardo, 468 F.3d 34, 38 (1st Cir. 2006). A similar finding is
justified here. Cf. Gagnon, 470 U.S. at 529 (explaining that, at
least with respect to "relatively minor" matters, defendant's
knowledge of a plan and failure to object to it may constitute a
waiver).
To cinch the matter, this is a situation in which
requiring the defendant's presence at the time the forfeiture order
was re-entered would serve no useful purpose and, thus, would not
have "made sense." Bryant, 643 F.3d at 32. The remand order in
this case was "so focused and limited," id., that it called for a
bare minimum of formal proceedings.
To say more about the claim of denied presence would be
to paint the lily. Since the defendant waived any Rule 43 right
to be present that may have existed when the district court re-
entered the forfeiture order, his claim of error fails.
B. Proceeds.
This brings us to the defendant's substantive
contentions: that the district court erred in finding the
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management fees to be "proceeds" of the offenses of conviction.
Where, as here, a claim of error directed at a forfeiture order
has been duly preserved, we review challenges to the ordering
court's legal conclusions de novo and challenges to its factual
findings for clear error. See United States v. Ponzo, 853 F.3d
558, 589 (1st Cir. 2017), cert. denied, 2018 WL 942454 (2018); see
also U.S. Bank Nat'l Ass'n ex rel. CWCapital Asset Mgmt. LLC v.
Vill. at Lakeridge, LLC, 2018 WL 1143822, at *5-7 (U.S. Mar. 5,
2018). We are at liberty to affirm a district court's judgment on
any ground made manifest by the record, whether or not that
particular ground was raised below. See United States v. Zorrilla-
Echevarría, 723 F.3d 298, 300 (1st Cir. 2013); Doe v. Anrig, 728
F.2d 30, 32 (1st Cir. 1984).
In cases like this one, the provisions of 18 U.S.C.
§ 981 are made applicable by 28 U.S.C. § 2461(c). See United
States v. Cox, 851 F.3d 113, 128 n.14 (1st Cir. 2017). The scope
of forfeitable property is delineated in section 981(a)(1)(C): as
relevant here, property is forfeitable to the United States if it
"constitutes or is derived from proceeds traceable to . . .
'specified unlawful activit[ies]'" or "conspirac[ies] to commit
such offense[s]." A violation of section 666 is an offense
constituting such a specified unlawful activity. See 18 U.S.C.
§ 1956(c)(7)(D). Thus, both the substantive crime and the offense
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of conspiracy to commit the substantive crime are offenses to which
section 981(a)(1)(C) applies.
We have said before that "words are like chameleons;
they frequently have different shades of meaning depending upon
the circumstances.” United States v. Romain, 393 F.3d 63, 74 (1st
Cir. 2004). As foreshadowed by this zoomorphic simile, the word
"proceeds," when used in section 981(a)(1)(C), has a multiplicity
of possible meanings depending on the nature of the offense of
conviction. For "cases involving illegal goods, illegal services,
[or] unlawful activities," the word is defined to mean "property
of any kind obtained directly or indirectly, as the result of the
commission of the offense giving rise to the forfeiture, and any
property traceable thereto." 18 U.S.C. § 981(a)(2)(A). For "cases
involving lawful goods or lawful services that are sold or provided
in an illegal manner," the word "proceeds" has a different meaning.
Id. § 981(a)(2)(B). There, the word means the "amount of money
acquired through the illegal transactions resulting in the
forfeiture, less the direct costs incurred in providing the goods
or services." Id.
Given these varying definitions, it is readily apparent
that the classification of an offense of conviction can have a
profound effect on the amount that may be subject to forfeiture in
a particular case. Section 981(a)(2)(A) captures proceeds
directly or indirectly obtained through the offenses of conviction
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and authorizes the recoupment of the gross amount of those
proceeds. In that context, proceeds are "not limited to the net
gain or profit realized from the offense." Id. § 981(a)(2)(A).
By contrast, section 981(a)(2)(B) does not explicitly render
property forfeitable if that property is an indirect fruit of the
crime. At any rate, section 981(a)(2)(B) captures only net
proceeds (allowing a deduction for direct costs). There is
relatively sparse case law fleshing out this distinction, and the
matter is one of first impression in this circuit.
Here, the defendant was convicted of embezzlement from
an organization receiving federal funds, see id. § 666(a)(1)(A) &
(a)(2), and conspiracy to commit an offense against the United
States (through a violation of section 666), see id. § 371. He
argues vociferously that embezzlement is a crime that should be
characterized as constituting a lawful service provided in an
illegal manner. We do not agree.
To qualify under section 981(a)(2)(B), a crime must
“involv[e] lawful goods or lawful services that are sold or
provided in an illegal manner.” By definition, the crime must
involve a good or service that could, hypothetically, be provided
in a lawful manner. See United States v. Bodouva, 853 F.3d 76,
79-80 (2d. Cir. 2017) (per curiam); United States v. Contorinis,
692 F.3d 136, 145 n.3 (2d Cir. 2012). Activities that are
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inherently unlawful fall under section 981(a)(2)(A). See
Contorinis, 692 F.3d at 145 n.3.
There is no need for us to reinvent the wheel. In a
thoughtful opinion, the Second Circuit has determined that
embezzlement “cannot be done lawfully, and therefore is properly
considered an ‘unlawful activity’" within the meaning of section
981(a)(2)(A). Bodouva, 853 F.3d at 80 (quoting Contorinis, 692
F.3d at 145 n.3). We share this view.
The defendant's attempt to place embezzlement under the
carapace of section 981(a)(2)(B) rests on a mis-identification of
his criminal conduct. His crime was not the provision of bus
services in an illegal manner but, rather, the misappropriation of
government resources to his own behoof. See Moore v. United
States, 160 U.S. 268, 269 (1895) ("Embezzlement is the fraudulent
appropriation of property by a person to whom such property has
been intrusted, or into whose hands it has lawfully come.").
That ends this aspect of our inquiry. Because we
conclude that embezzlement is an unlawful activity within the ambit
of section 981(a)(2)(A), conspiracy to commit that offense
necessarily falls within the same taxonomy.
The inquiry thus reduces to whether the management fees
paid to Union Street under its contract with the SRTA constitute
proceeds obtained, directly or indirectly, as a result of one or
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more of the offenses of conviction.6 Because the management fees
were part of the proceeds of the conspiracy offense (at least
indirectly), we need not dwell on whether those fees should
independently be considered proceeds of the embezzlement offense.
In determining what constitutes the "proceeds" of a
conspiracy or other common enterprise, several courts of appeals
have recognized that the scope of forfeitable property may extend
to all the ill-gotten gains of that conspiracy or enterprise, not
just those ill-gotten gains that flow from the underlying
substantive offense. See, e.g., United States v. Capoccia, 503
F.3d 103, 117-18 (2d Cir. 2007); United States v. Hasson, 333 F.3d
1264, 1279 (11th Cir. 2003); United States v. Edwards, 303 F.3d
606, 643 (5th Cir. 2002); cf. Cox, 851 F.3d at 128-29 (holding
that forfeitable funds obtained through a "scheme to defraud" may
include "additional executions of the scheme that were not
specifically charged or on which the defendant was acquitted”).
We align ourselves with these courts and hold that, for forfeiture
purposes under section 981(a)(2)(A), the proceeds of a conspiracy
should be computed independently of the underlying substantive
crime. After all, a conspiracy is an offense in its own right.
6
Of course, the forfeiture order could also be sustained if
the government could show that the property forfeited was
"traceable to" such proceeds. 18 U.S.C. § 981(a)(2)(A). Because
we conclude that the management fees are themselves proceeds (at
least indirectly) of the conspiracy offense, see text infra, we
need not explore this alternative.
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As such, "a conspiracy poses distinct dangers quite apart from
those of the [underlying] substantive offense." Iannelli v. United
States, 420 U.S. 770, 778 (1975).
Not surprisingly, "[i]t has been long and consistently
recognized . . . that the commission of [a] substantive offense
and a conspiracy to commit it are separate and distinct offenses."
Pinkerton v. United States, 328 U.S. 640, 643 (1946). The
rationale for treating the two separately is powerful: among other
things, "[g]roup association for criminal purposes often, if not
normally, makes possible the attainment of ends more complex than
those which one criminal could accomplish." Iannelli, 420 U.S. at
778 (quoting Callanan v. United States, 364 U.S. 587, 593 (1961)).
The threats inherent in group criminality are on full
display in this case. Through cronyism and the wielding of
political influence, the conspiracy allowed the defendant to
obtain and keep in force Union Street's 2006 contract with the
SRTA. During its term, the conspiracy enabled him corruptly to
turn the contract into something resembling his personal piggy
bank. Contrary to the defendant's importunings, the ensuing loss
to the public substantially surpassed the value of the
misappropriated services and diverted work-hours: the conspiracy
not only produced a rigged bidding process but also deprived the
public of arm's-length oversight of a regional transportation
system. Seen in this light, the case offers a paradigmatic example
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of how the proceeds of a conspiracy can substantially exceed the
proceeds of the underlying substantive offense.
The defendant nonetheless argues that the management
fees were not supportably found to be proceeds of the charged
conspiracy.7 This argument lacks force.
To undergird its forfeiture order, the district court
ultimately had to determine by a fair preponderance of the evidence
that the management fees were either directly or indirectly
obtained as fruit of the charged conspiracy.8 See 18 U.S.C.
§ 981(a)(1)(A); United States v. Keene, 341 F.3d 78, 86 (1st Cir.
2003). The evidence here established that the defendant conspired
7
As part of his asseverational array, the defendant suggests
that the nexus requirement embodied in Federal Rule of Criminal
Procedure 32.2(b)(1) is controlling. This suggestion is jejune:
Rule 32.2(b)(1)'s nexus requirement does not apply where, as here,
the inquiry involves a money judgment. See United States v. Misla-
Aldarondo, 478 F.3d 52, 73-74 (1st Cir. 2007) (explaining that the
nexus requirement applies only to forfeiture motions in which the
government seeks forfeiture of specific property, not to
forfeiture orders taking the form of monetary awards).
8
In his reply brief, the defendant cites Honeycutt v. United
States, 137 S. Ct. 1626 (2017), a case that concerns forfeiture
actions brought under 21 U.S.C. § 853. He argues that the
Honeycutt decision somehow changed the calculus for determining
the scope and amount of forfeitable proceeds in this case. We
think not. Honeycutt held that coconspirators do not face joint
and several liability for the proceeds of a conspiracy and that
any coconspirator can only be forced to forfeit tainted property
that he — as opposed to another coconspirator — obtained through
the conspiracy. See id. at 1631-35. In this instance, the
defendant does not contest his receipt of the management fees; he
only contests whether those fees can be classified as proceeds of
his criminal conduct. Given the nature of this challenge, Honeycutt
lends the defendant no support.
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with others to ensure that Union Street received the 2006 contract.
The conspiracy then operated to minimize meaningful
superintendence of Union Street's handling of the contract, which
in turn allowed the defendant relatively free reign to plunder
Union Street's SRTA-funded resources. The district court was
warranted in concluding that the defendant, instead of managing
the contract to achieve maximum efficiency in transportation
services and to further the public good, managed the contract with
an eye toward lining his own pockets.
Finally, the management fees were only a fraction of the
contract's total value,9 and that fraction was specifically
intended to compensate the defendant's company for its stewardship
of government funds. The conspiracy perverted this stewardship
and turned it into a license to steal. On this record, it was not
clear error for the district court to determine that the management
fees were garnered by the defendant, at least indirectly, as fruit
of the charged conspiracy.
We add a coda. The Supreme Court has observed that
"[f]orfeitures help to ensure that crime does not pay: [t]hey at
once punish wrongdoing, deter future illegality, and 'lessen the
economic power' of criminal enterprises." Kaley v. United States,
9The government did not seek forfeiture of the total value
of the contract, and we do not decide whether a more sweeping
forfeiture order would have been appropriate here.
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134 S. Ct. 1090, 1094 (2014) (quoting Caplin & Drysdale, Chartered
v. United States, 491 U.S. 617, 630 (1989)). Our application of
section 981(a)(1)(A) fits hand-in-glove with this pithy
observation.
III. CONCLUSION
We need go no further. For the reasons elucidated above,
the order of forfeiture is
Affirmed.
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