United States v. Holy Land Foundation for Relief & Development

Case: 11-10535 Document: 00512286517 Page: 1 Date Filed: 06/25/2013
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
June 25, 2013
No. 11-10535 Lyle W. Cayce
Clerk
UNITED STATES OF AMERICA,
Plaintiff - Appellant
v.
HOLY LAND FOUNDATION FOR RELIEF AND DEVELOPMENT, also
known as HLF; SHUKRI ABU BAKER; GHASSAN ELASHI; MUFID
ABDULQADER; ABDULRAHMAN ODEH,
Defendants - Appellees
JENNY RUBIN; DEBORAH RUBIN; DANIEL MILLER; ABRAHAM
MENDELSON; STUART E. HERSCH; RENAY FRYM; NOAM ROZENMAN;
ELENA ROZENMAN; TZVI ROZENMAN,
Appellees
Appeal from the United States District Court
for the Northern District of Texas
Before WIENER, CLEMENT, and PRADO, Circuit Judges.
EDITH BROWN CLEMENT, Circuit Judge:
Appellees (“the Rubins”) are victims of a terrorist attack perpetrated by
the terrorist group Hamas in 1997 at an outdoor pedestrian mall in Jerusalem.
Appellee the Holy Land Foundation (“HLF”) is a designated terrorist
organization that the Department of the Treasury has found to act for or on
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behalf of Hamas by serving as its fundraising arm in the United States. After
obtaining a judgment against Hamas in the district court for damages resulting
from the attack, the Rubins requested that the court issue a Writ of
Garnishment against the assets of Hamas and HLF. Although the court issued
the writ, the Rubins could not execute against HLF’s assets because those assets
previously had been restrained under 21 U.S.C. § 853 to preserve their
availability for criminal forfeiture proceedings. The Rubins filed a third-party
petition under § 853(n) to assert their interests in the restrained assets and, in
response, the government filed a motion to dismiss. The district court denied the
government’s motion to dismiss the Rubins’ petition and vacated the preliminary
order of forfeiture, holding that the Terrorism Risk Insurance Act of 2002
(“TRIA”) allows the Rubins to execute against HLF’s assets notwithstanding the
government’s forfeiture proceedings. The government appealed and we
REVERSE, holding that the Rubins cannot recover under either 21 U.S.C. § 853
or the TRIA.
I. FACTUAL BACKGROUND
A. The Rubins’ proceedings against Hamas
The Rubins are nine American citizens who suffered severe harm as a
result of a triple suicide bombing carried out by the terrorist group Hamas on
September 4, 1997 at an outdoor pedestrian mall in Jerusalem, Israel. In May
2002, the Rubins brought a lawsuit against Hamas under the civil remedies
provisions of the Anti-Terrorism Act of 2001, 18 U.S.C. § 2333, and in 2004 they
won a judgment in their favor for $214.5 million. Rubin v. Hamas-Islamic
Resistance Movement, No. Civ. A. 02–0975(RMU), 2004 WL 2216489, at *3–4
(D.D.C. Sept. 27, 2004). Subsequently, the Rubins registered their judgment in
the Southern District of New York, Western District of Washington, District of
New Jersey, District of South Carolina, and Northern District of Illinois. The
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Rubins then requested that the Western District of Washington issue a Writ of
Garnishment against Saturna Capital, which was holding funds belonging to
HLF.
B. Federal proceedings against HLF
On December 4, 2001, shortly before the Rubins’ trial, the Secretary of the
Treasury determined that HLF “acts for or on behalf of” Hamas and designated
HLF a “Specially Designated Terrorist” under Executive Order 12947 and a
“Specially Designated Global Terrorist” under Executive Order 13224.1 See Holy
Land Found. for Relief & Dev. v. Ashcroft, 219 F. Supp. 2d 57, 64 (D.D.C. 2002).
More specifically, the Treasury Secretary found that HLF functions as the
fundraising arm of Hamas in the United States, and, pursuant to the authority
granted to him by the Executive Orders, instructed the Office of Foreign Assets
Control (“OFAC”) to “block” all of HLF’s funds, accounts, and other property. Id.
Following HLF’s designation as a terrorist group and the blocking of its
assets, the U.S. government initiated a criminal investigation into HLF’s
activities in the United States. On July 26, 2004, before the Rubins obtained
their civil judgment, the government filed a forty-two count indictment against
HLF in the Northern District of Texas, which informed HLF of the government’s
intent to seek forfeiture of “all property, real and personal, involved in the
[alleged] money laundering or monetary transaction offenses, and all property
traceable to such property.” In accordance with this indictment, on September
23, 2004, OFAC issued a license authorizing the government to pursue criminal
forfeiture of HLF’s assets which had been blocked by Executive Orders 12947
and 13224. OFAC issued this license four days before the district court entered
1
Hamas had already been designated a “Specially Designated Terrorist” by President Clinton
on January 23, 1995, see Executive Order 12947 (issued pursuant to the authority granted to the
President under the International Emergency Economic Powers Act (“IEEPA”), 50 U.S.C. § 1701, et seq.),
and a “Specially Designated Global Terrorist” by President Bush on September 23, 2001, see Executive
Order 13224. By virtue of these designations, Hamas’s and HLF’s assets were “blocked.”
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a civil judgment in favor of the Rubins against Hamas on September 27, 2004.
The government then filed, and the district court granted, an “Ex parte
Application for Post-Indictment Restraining Order” against HLF’s assets. See
21 U.S.C. § 853(e)(1)(A).2
Several years later, on November 24, 2008, a federal jury found HLF guilty
of various terrorism-related crimes, tax-related crimes, conspiracy to commit
money laundering, and substantive money laundering offenses. The jury also
returned a special verdict determining that $12.4 million in HLF assets was
derived from proceeds traceable to the commission of the money laundering
offenses.
On February 5, 2009, the district court entered a preliminary order of
forfeiture against HLF’s assets under 18 U.S.C. § 982(a)(1).3 Pursuant to this
order, the government was awarded a $12.4 million judgment, the funds in
HLF’s bank accounts were deemed forfeited to the government, and the
government was granted authorization to seize HLF’s assets. Third parties with
judgments against Hamas, including the Rubins, could only assert their alleged
interests in the forfeited assets by filing ancillary petitions under 21 U.S.C.
§ 853(n). The Rubins filed such a petition, conceding that they could not satisfy
the requirements for prevailing as a third-party creditor under § 853(n), but
nonetheless maintaining that they were entitled to enforce their prior civil
2
This statutory provision provides that, “[u]pon application of the United States, the court may
enter a restraining order or injunction, require the execution of a satisfactory performance bond, or take
any other action to preserve the availability of property [subject to criminal forfeiture]—(A) upon the
filing of an indictment or information charging a violation . . . for which criminal forfeiture may be
ordered under this section and alleging that the property with respect to which the order is sought
would, in the event of conviction, be subject to forfeiture under this section.” 21 U.S.C. § 853(e)(1).
3
Upon a party’s conviction for certain money laundering offenses, 18 U.S.C. § 982(a)(1) directs
the court to order the guilty party to “forfeit to the United States any property, real or personal, involved
in such offense, or any property traceable to such property.” The forfeiture of property under this section
is governed by 21 U.S.C. § 853, which provides that “[a]ll right, title, and interest in property described
in subsection (a) of this section vests in the United States upon the commission of the act giving rise to
forfeiture under this section,” id. at § 853(c).
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judgment against HLF’s assets under § 201 of the TRIA.4 The government
moved to dismiss the Rubins’ petition on the ground that they could not satisfy
the statutory requirements for prevailing in the ancillary proceeding under 21
U.S.C. § 853(n)—the only means by which the Rubins could assert their interest
in HLF’s forfeited assets.
On April 27, 2011, the district court denied the government’s motion to
dismiss the Rubins’ petition, and also vacated the preliminary order of forfeiture
that had been granted to the government after HLF’s conviction. The court
concluded that, under the TRIA, “[HLF’s] assets are subject to attachment by
plaintiffs with judgments ‘notwithstanding any other provision of law,’ such as
criminal forfeiture law.” United States v. Holy Land Found. for Relief & Dev.,
No. 3:04–CR–0240–P, 2011 WL 3703333, at *6 (N.D. Tex. Aug. 19, 2011). The
court subsequently amended its Memorandum Opinion and Order to state that
the preliminary order of forfeiture would reflect this holding. The government
timely appealed, and the district court stayed its order pending the outcome of
the appeal.
II. STANDARD OF REVIEW
We review de novo a district court’s legal conclusions regarding
jurisdiction. Filer v. Donley, 690 F.3d 643, 646 (5th Cir. 2012). In evaluating a
4
The relevant provision of the TRIA states that:
Notwithstanding any other provision of law . . . any property with respect to
which financial transactions are prohibited or regulated pursuant to section 5(b)
of the Trading with the Enemy Act (50 U.S.C. App. 5(b)), section 620(a) of the
Foreign Assistance Act of 1961 (22 U.S.C. 2370(a)), sections 202 and 203 of the
International Emergency Economic Powers Act (50 U.S.C. 1701-1702), or any
other proclamation, order, regulation, or license issued pursuant thereto, shall
be subject to execution or attachment in aid of execution of any judgment
relating to a claim for which a foreign state (including any agency or
instrumentality or such state) claiming such property is not immune[.]
Pub. L. No. 107–297, 116 Stat. 2322.
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district court’s disposition of a petition filed under 21 U.S.C. § 853(n), we review
factual findings for clear error and legal conclusions de novo. United States v.
Ramunno, 599 F.3d 1269, 1273 (11th Cir. 2010); United States v. Nava, 404 F.3d
1119, 1127 n.3 (9th Cir. 2005). Additionally, we review de novo a district court’s
interpretation and application of TRIA § 201 and 21 U.S.C. § 853. See United
States v. Gore, 636 F.3d 728, 730 (5th Cir. 2011) (reviewing “de novo the district
court’s interpretation and application of a statute”).
III. ANALYSIS
A. Jurisdiction to hear the appeal
On April 27, 2011, the district court issued a Memorandum Opinion and
Order denying the government’s motion to dismiss the Rubins’ third-party
ancillary petition under 21 U.S.C. § 853(n). In that Order, the court also vacated
the preliminary order of forfeiture that it had previously entered after HLF’s
criminal conviction. The government, recognizing that § 853(n)(6) requires a
court to amend a preliminary order rather than vacate it, moved for an
amendment of the Memorandum Opinion and Order to show that the
preliminary order was amended rather than vacated. On May 26, 2011, prior to
the district court’s ruling on the motion to amend, the government filed a notice
of appeal from the original Memorandum Opinion and Order. On August 19,
2011, the district court granted the government’s motion to amend and stated
that the preliminary order of forfeiture would be amended rather than vacated.
The resulting Amended Memorandum Opinion and Order is identical to the
original order except for the final sentence, which states that “the court will
amend its Preliminary Order of Forfeiture” rather than “[t]he court hereby
VACATES the Preliminary Order of Forfeiture.”
The Rubins argue that we lack jurisdiction over the instant appeal since
the government failed to file a new or amended notice of appeal after the district
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court granted its Rule 59(b) motion to amend the Memorandum Opinion and
Order. The Rubins base their argument on Federal Rule of Appellate Procedure
4(a)(4)(B)(ii), which requires a party “intending to challenge an order disposing
of [a motion to amend under Federal Rule of Civil Procedure 59(b)] or a
judgment’s alteration or amendment upon such a motion [to] file a notice of
appeal, or an amended notice of appeal.” FED. R. APP. P. 4(a)(4)(B)(ii). The
Rubins’ argument fails because the government never sought to: (1) challenge
the court’s ruling on its Rule 59(b) motion to amend, which in fact was decided
in the government’s favor, or (2) challenge the court’s alteration of its
Memorandum Opinion and Order, which merely resulted in the court’s
substitution of the word “vacate” for “amend.” The government’s appeal was
instead directed at the substance of the district court’s original Memorandum
Opinion and Order denying the government’s motion to dismiss. Since the
government did not seek to challenge the disposition of its Rule 59(b) motion to
alter or amend the Memorandum Opinion and Order, Rule 4(a)(4)(B)(ii) is
inapplicable and imposes no jurisdictional bar to our hearing the government’s
appeal. The applicable Federal Rule of Appellate Procedure is 4(a)(4)(B)(i), not
4(a)(4)(B)(ii).
Under Rule 4(a)(4)(B)(i), the government’s notice of appeal was rendered
“dormant” at the time that the government filed its Rule 59(b) motion to amend.
See Ross v. Marshall, 426 F.3d 745, 751–52 (5th Cir. 2005) (“Our court has found
that the timely filing of a [Rule 59(b) motion] suspends or renders dormant a
notice of appeal until all such motions are disposed of by the trial court. This
holds true regardless of whether the motion was filed before or after the notice
of appeal.”). Once the court ruled on the motion to amend, the government’s
notice of appeal became effective to appeal the original Memorandum Order and
Opinion. See FED. R. APP. P. 4(a)(4)(B)(i) (“If a party files a notice of appeal after
the court announces or enters a judgment—but before it disposes of [a Rule 59(b)
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motion to amend]—the notice becomes effective to appeal a judgment or order,
in whole or in part, when the order disposing of the last such remaining motion
is entered.”). Thus, the government’s notice of appeal was proper and timely,
and we may exercise jurisdiction over the appeal.
B. Recovery under 21 U.S.C. § 853 or the TRIA
The district court denied the government’s motion to dismiss on the
ground that the TRIA relieved the Rubins of having to satisfy their burden for
recovery under 21 U.S.C. § 853(n). However, as the Rubins cannot prevail under
either § 853 or the TRIA, we reverse the district court’s judgment.
i. 21 U.S.C. § 853(n) does not provide the Rubins with a basis to
prevail in the ancillary proceeding.
The criminal forfeiture statute bars a third party claiming an interest in
forfeitable property from intervening in the criminal trial or appeal, and also
prohibits a third party from commencing a separate action against the United
States on the basis of that party’s interest in the property. 21 U.S.C. § 853(k),
(n). Under the statute, the only way in which a third party may assert an
interest in the forfeited property is through an ancillary proceeding. See id.;
Libretti v. United States, 516 U.S. 29, 44 (1995) (“Once the Government has
secured a stipulation as to forfeitability, third-party claimants can establish
their entitlement to return of the assets only by means of the hearing afforded
under 21 U.S.C. § 853(n).”).
A third party can prevail in the ancillary proceeding in one of two ways:
(1) it can establish priority over the interest of the United States by showing that
it had an interest in the property superior to the defendant’s interest at the time
the defendant committed the crime, 21 U.S.C. § 853(n)(6)(A); or (2) it can
establish that it was a bona fide purchaser for value of the property, and, at the
time of purchase, had no reason to believe that the property was subject to
forfeiture, id. at § 853(n)(6)(B). If a third party is unable to satisfy either
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§ 853(n)(6)(A) or (B), it cannot prevail in the ancillary proceeding. See United
States v. Huntington Nat’l Bank, 574 F.3d 329, 334 (6th Cir. 2009) (“[T]he
questions potentially at issue in a § 853(n) proceeding are limited . . . [as]
§ 853(n)(6) offers just two grounds for relief.”). If the ancillary proceedings
reveal that a third party has a superior interest in the property or is a bona fide
purchaser for value, the district court will amend the forfeiture order. 21 U.S.C.
§ 853(n)(6). In the absence of this showing, the United States acquires clear title
to the property. Id. at § 853(n)(7).
The Rubins conceded in district court and in their appellate brief that they
neither had an interest in HLF’s assets at the time the crimes were committed
nor were bona fide purchasers for value of HLF’s assets after the crimes were
committed. There is no basis under 21 U.S.C. § 853(n) for the Rubins to
establish their interest in the forfeited property.
ii. The TRIA does not provide the Rubins a basis to assert their interest
in the forfeited property.
The Rubins maintain that § 201 of the TRIA permits execution against
HLF’s funds notwithstanding their inability to satisfy 21 U.S.C. § 853(n). Under
§ 201(a), assets are made available for attachment and execution if they are
“blocked assets of th[e] terrorist party.” The term “blocked asset” means: “any
asset seized or frozen by the United States under section 5(b) of the Trading
With the Enemy Act . . . or under sections 202 and 203 of the International
Emergency Economic Powers Act.” TERRORISM RISK INSURANCE ACT OF 2002,
Pub. L. No. 107-297, title II, § 201(d)(2)(A), 116 Stat. 2337. By its terms, § 201
does not provide for execution against assets that are not blocked.
The ambit of the TRIA is clear: It operates to reach those funds which
have been blocked by the government pursuant to one of two statutes. See
Estate of Heiser v. Islamic Republic of Iran, 807 F. Supp. 2d 9, 18 (D.D.C. 2011)
(“TRIA . . . applies only to ‘blocked assets,’ which it defines as ‘any asset seized
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or frozen by the United States.’”). The TRIA specifically limits the definition of
“blocked” assets to those that are seized or frozen under § 5(b) of the Trading
with the Enemy Act or § 202 or § 203 of the IEEPA—“a limitation that this
Court cannot ignore.” Weinstein v. Islamic Republic of Iran, 299 F. Supp. 2d 63,
75 (E.D.N.Y. 2004); see also Stansell v. Revolutionary Armed Forces of Colom.,
704 F.3d 910, 915 (11th Cir. 2013) (“[The TRIA] defines what a ‘blocked asset’
‘means,’ not what the term merely could ‘include.’ When a statutory definition
declares what a term ‘means’ rather than ‘includes,’ any meaning not stated is
excluded.”). Moreover, the TRIA “imposes no obligation on the President to
maintain [blocked] funds for future attachment [by judgment creditors].” Smith
v. Fed. Reserve Bank of N.Y., 346 F.3d 264, 271 (2d Cir. 2003). Nor does it reach
those funds which the government has been given authorization to control
through another means.
In 2001, the government deemed HLF to be an arm of Hamas and blocked
its funds pursuant to the IEEPA. When the government initiated its criminal
investigation into HLF’s activities in 2004, HLF’s assets were still blocked. We
must determine whether the government essentially unblocked HLF’s assets
when it obtained a restraining order under 21 U.S.C. § 853(e)(1)(A) to pursue the
criminal forfeiture of those assets.
Under § 853(e)(1)(A), the government can request the restraint of assets
subject to forfeiture under § 853(a) to preserve those assets’ availability for
criminal forfeiture proceedings. See United States v. Parrett, 530 F.3d 422, 429
(6th Cir. 2008) (“[The] pre-trial retention of assets believed to be tainted and,
therefore, forfeitable, is permissible.” (quoting United States v. Ford, 64 F. App’x
976, 982 (6th Cir. 2003)). A judicial order authorizing the restraint of those
assets initiates the forfeiture proceedings and secures the government’s interest
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so that, upon conviction, the relation-back doctrine can operate as was intended.5
See United States v. Jarvis, 499 F.3d 1196, 1203 (10th Cir. 2007) (“The
government . . . has the ability to seek a protective order to restrain tainted
assets prior to trial in order to ensure the availability of the tainted property in
the event of the defendant’s conviction.”). Here, the government filed its
indictment and received a judicial order authorizing the restraint of HLF’s
assets in September 2004, several days before the Rubins received their civil
judgment against HLF.
The Rubins argue that the filing of the indictment and forfeiture demand
did not have any legal effect on HLF’s assets because the executive blocking
orders and accompanying regulations prohibit essentially all transactions
involving blocked property. See Executive Orders 12947, 13224; 31 C.F.R.
§ 594.201. This argument is directly belied by the text of the applicable
5
Title 21 U.S.C. § 853(c)’s relation-back provision requires that “[a]ll right, title, and
interest in property described in subsection (a) of this section vests in the United States upon
the commission of the act giving rise to forfeiture.” The Supreme Court has observed that this
section “reflects the application of the long-recognized and lawful practice of vesting title to
any forfeitable assets, in the United States, at the time of the criminal act giving rise to
forfeiture.” Caplin & Drysdale, Chartered v. United States, 491 U.S. 617, 627 (1989). “It is
a doctrine of retroactive vesting of title that operates only upon entry of the judicial order of
forfeiture or condemnation.” United States v. 92 Buena Vista Ave., 507 U.S. 111, 131 (1993)
(Scalia, J., concurring).
Both parties spend a great deal of time discussing the application of the relation-back
doctrine under the criminal forfeiture statute. The government argues that, because the
relation-back doctrine operates to vest title to HLF’s money-laundering proceeds as of the time
Hamas began to engage in those activities, those funds never became blocked property under
the IEEPA. The Rubins counter that the relation-back provision is merely a “legal fiction” that
should not be applied in situations where, as here, a statute clearly prioritizes the interests
of terrorist victims over those of the government in allocating a terrorist organization’s assets.
We need not discuss the merits of these arguments in great detail. Supreme Court precedent
indicates that § 853(c)’s relation-back provision takes effect “only upon entry of the judicial
order of forfeiture or condemnation.” 92 Buena Vista Ave., 507 U.S. at 131. At the time the
Rubins sought to execute against HLF’s assets, the relation-back provision had not yet
operated to transfer ownership of those assets to the government. For our purposes, it is
sufficient to show that, regardless of the exact point in time at which the relation-back
doctrine became effective, the government’s restraint of HLF’s assets took those assets out of
the reach of the TRIA.
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regulations, which provide an exception to the prohibition on transferring
blocked property when that transfer is authorized by license. See 31 C.F.R.
§§ 594.201, 594.202, 595.202; see also Estate of Heiser, 807 F. Supp. 2d at 18 n.6
(recognizing that, in certain situations, an OFAC-issued license authorizing a
transaction involving blocked funds has the effect of removing the prohibition on
dealing in those funds). One such provision reads:
[A]n appropriate license . . . issued by or pursuant to
the direction or authorization of the Director of the
Office of Foreign Assets Control before, during, or after
a transfer [of blocked property] shall validate such
transfer or make it enforceable to the same extent that
it would be valid or enforceable but for the provisions of
the International Emergency Economic Powers Act.
31 C.F.R. § 594.202; see also id. at § 594.201 (“Unless otherwise authorized . . .
by a specific license expressly referring to this section, any dealing in any
security . . . held within the possession or control of a U.S. person . . . whose
property or interests in property are blocked pursuant to § 594.201(a) is
prohibited.” (emphasis added)).
The government obtained such a license (the “forfeiture license”) from
OFAC on September 23, 2004, which authorized the government “to pursue
criminal forfeiture of the assets of the Holy Land Foundation for Relief and
Development (‘HLF’) blocked pursuant to” Executive Orders 12947 and 13224.
The license further authorized the government to pursue “restraining orders” in
order to preserve the assets for criminal forfeiture. Notwithstanding the status
of HLF’s assets as blocked, the government’s receipt of a license from OFAC
restrained those assets and permitted the government to proceed with the
criminal forfeiture process.
By the time that the Rubins obtained their judgment against HLF on
September 27, 2004, the government had restrained HLF’s assets to preserve
them for potential criminal forfeiture. As the Rubins concede in their brief, the
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government’s restraining order became legally effective before the Rubins
received a judgment in their favor giving them the right under the TRIA to
execute against HLF’s assets. Once an indictment had been filed and the assets
restrained, victims of terrorism could no longer execute against those assets
under the TRIA. See Estate of Heiser, 807 F. Supp. 2d at 18 n.6 (“Thus, because
transactions . . . are undertaken under an OFAC licensing scheme, they are
unblocked and not subject to attachment.”); Bank of N.Y. v. Rubin, 484 F.3d 149,
150 (2d Cir. 2007) (determining that assets blocked pursuant to an Executive
Order, but also subject to an OFAC general licensing scheme, were not blocked
and therefore were not subject to attachment under the TRIA). Consequently,
the TRIA could not be applied to those funds since they no longer qualified as
blocked under that statute.
iii. The TRIA does not trump the criminal forfeiture statute.
The Rubins argue that, even if HLF’s assets do not qualify as blocked, they
should still prevail because the provisions of the TRIA trump the criminal
forfeiture provisions of 21 U.S.C. § 853. The Rubins’ argument is premised on
the language in § 201 of the TRIA, which requires its application
“notwithstanding any other provision of law.” See supra note 5. This phrase, the
Rubins argue, operates to override all other statutory limitations on attachment
and execution of blocked assets by judgment creditors. Under this reading, the
Rubins would be able to execute against HLF’s restrained assets even though
the assets were no longer blocked under any of the sections explicitly delineated
by the TRIA. The government responds that the “notwithstanding” clause does
not have the sweeping effect ascribed to it by the Rubins and can operate only
to override conflicting statutes. As § 853 does not conflict with § 201 of the
TRIA, the government contends, the “notwithstanding” clause does not preclude
the application of § 853’s criminal forfeiture provisions. We agree.
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In accordance with the holdings of other courts of appeals, we previously
have noted that the “notwithstanding” clause only applies when another
provision of law conflicts with the TRIA. See, e.g., Hegna v. Islamic Republic of
Iran, 376 F.3d 485, 494 n.34 (5th Cir. 2004) (observing that the
“notwithstanding” clause did not compel the application of the TRIA because the
other statute at issue did not conflict with the TRIA); Smith, 346 F.3d at 271
(“[T]he notwithstanding clause applies only when some other provision of law
conflicts with TRIA.” (citation and internal quotation marks omitted)); United
States v. All Funds on Deposit with R.J. O’Brien & Assocs., 892 F. Supp. 2d 1038,
1051 (N.D. Ill. 2012) (“[The TRIA] effectively supersedes all laws with which it
actually conflicts.” (emphasis added)).
According to the Rubins, 21 U.S.C. § 853 conflicts with the TRIA because
the application of § 853 and the corresponding grant to the government of a
license to restrain HLF’s assets prevented the Rubins from executing against
those assets. Since HLF’s assets were blocked under the IEEPA before the
government exercised its forfeiture power, the Rubins contend that the assets
remained effectively blocked and thus were subject to execution under the TRIA.
The district court agreed, finding that once HLF’s property was blocked, the
“Government [and the] defendants . . . treated and considered the property
‘blocked’ until the time HLF was convicted. For these reasons, the Court
considers the [property] ‘blocked’ at the time the court entered judgment for the
Rubins, in September 2004.” Holy Land Found., 2011 WL 3703333, at *6
(emphasis added). The Rubins’ argument and the district court’s judgment,
however, find conflict between two statutes where there is none and grant undue
power to the “notwithstanding” clause.
Section 201 of the TRIA “operates to empower a plaintiff with a ‘judgment’
against a ‘terrorist party’ to execute against any ‘blocked assets’ of that party.”
Smith, 356 F.3d at 271 (quoting TRIA § 201(a)). As discussed above, HLF’s
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assets were not blocked at the time the Rubins obtained their judgment. The
fact that the government and the parties “treated and considered” the assets as
blocked throughout the criminal trial, Holy Land Found., 2011 WL 3703333, at
*6, does not make them so. Since HLF’s assets already had been restrained
under 21 U.S.C. § 853(e) at the time the Rubins received their judgment, the
Rubins’ right under the TRIA to execute against those funds never became
effective and therefore did not create a conflict between the statutes. Without
such a conflict, the “notwithstanding” clause does not operate to preclude the
government’s restraint of HLF’s assets in anticipation of criminal forfeiture
proceedings.
The Rubins’ argument about the breadth of the “notwithstanding” clause
is similarly unavailing. In their brief, the Rubins advocate an interpretation of
TRIA § 201’s “notwithstanding” clause that operates to override all statutes that,
by their purpose or effect, shield assets from attachment or execution.
“Congress’[s] use of the ‘notwithstanding’ language,” the Rubins argue, “was
clearly intended to prevent the Executive branch from using any statute, both
those it had already employed and new provisions it might try to use in the
future, to block enforcement of terrorism judgments.” This sweeping assertion
assumes that the “notwithstanding” clause trumps any other law that has the
incidental effect of removing funds from the reach of judgment creditors.
Were we to adopt the Rubins’ interpretation of TRIA § 201, we would
broaden the reach of the provision by overriding the statutorily supplied
definition of “blocked” assets. See TERRORISM RISK INSURANCE ACT
§ 201(d)(2)(A). The presence of the “notwithstanding” clause does not alter our
responsibility to abide by the definitions provided by Congress in the same
statute. Our role in interpreting the TRIA is to “[g]ive effect to the text congress
enacted,” not to “rewrite the statute to reflect a meaning we deem more
desirable.” Ali v. Fed. Bureau of Prisons, 552 U.S. 214, 228 (2008). The
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definition of “blocked assets” set forth in the TRIA is narrow and does not
encompass those assets that, while not technically blocked, have been rendered
inaccessible to judgment creditors as a result of the operation of another statute.
As HLF’s assets lie outside the scope of this circumscribed definition, we could
not hold that they are “blocked” without thereby altering the meaning and effect
of the TRIA.
Moreover, contrary to the Rubins’ assertions, we need not look to the
legislative history of the TRIA to determine the meaning of the
“notwithstanding” clause. The language of TRIA § 201 is not ambiguous; it
allows a plaintiff with a judgment against a terrorist organization to execute
against that organization’s assets. See Smith, 346 F.3d at 271. The TRIA does
not nullify the prior dispensation of funds that were not blocked at the time the
terrorism victims obtained a judgment in their favor. The “notwithstanding”
clause should not be read to override the operation of other statutory provisions
that do not interfere with the TRIA’s stated purpose. See Hegna, 376 F.3d at 494
n.34 (refusing to apply the “notwithstanding” clause of the TRIA to trump
another statute that did not conflict with the TRIA). In the absence of such a
conflict, the “notwithstanding” clause does not function in the manner proposed
by the Rubins.
Since the statutory language of § 201 of the TRIA is clear, we decline to
look beyond its text for guidance. Milner v. Dep’t of the Navy, 131 S. Ct. 1259,
1266 (2011) (refusing to apply “ambiguous legislative history to muddy clear
statutory language”). The Rubins have failed to present compelling evidence in
the text of the statute or in caselaw interpreting the statute to convince us that
the “notwithstanding” clause has their desired effect. We therefore hold that
§ 201 of the TRIA does not trump the criminal forfeiture provisions of 21 U.S.C.
§ 853.
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C. Jurisdiction over HLF’s assets
Finally, the Rubins assert the in custodia legis doctrine to challenge the
district court’s jurisdiction to seize HLF’s forfeitable assets. This doctrine
dictates that, where “a court of competent jurisdiction takes possession of
property through its officers, that property is withdrawn from the jurisdiction
of all other courts which, though of concurrent jurisdiction, may not disturb that
possession.” In re Rehkopf Mattress Sales, Inc., 479 F.2d 67, 70 (5th Cir. 1973).
At the time the government initiated forfeiture proceedings against HLF’s
assets, many of those assets were in the custody of the District Courts for the
Southern District of New York and the Western District of Washington.6 The
Rubins maintain that, applied to the facts, the doctrine prevents the District
Court for the Northern District of Texas from executing against HLF’s assets
because those assets are in the custody of courts in other jurisdictions.
The Rubins are foreclosed from raising this argument because it is an
impermissible third-party challenge to the forfeiture of HLF’s assets. See
21 U.S.C. § 853(n). Section 853(n) provides only two avenues of relief in an
ancillary proceeding, and both require a party to establish an ownership interest
in the forfeited funds. See supra Section III(B)(i). The advisory committee notes
to Federal Rule of Criminal Procedure 32.2 further counsel that § 853(n) “does
not involve relitigation of the forfeitablity of the property; its only purpose is to
determine whether any third party has a legal interest in the forfeited property.”
FED. R. CRIM. P. 32.2 advisory committee’s note. The Second, Eighth, Tenth and
Eleventh Circuits have all agreed that a third party has no standing to challenge
a preliminary order’s finding of forfeitability. United States v. Davenport, 668
6
In early 2005, federal courts in New York and Washington issued writs of execution
on the Rubins’ judgment against Hamas, thereby placing many of HLF’s assets within the
legal custody of those courts. Presently, those funds remain in the custody of federal courts
in New York and Washington.
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F.3d 1316, 1321 (11th Cir. 2012) (“The Advisory Committee Notes to the 2000
adoption of Rule 32.2 state the ancillary proceeding for third-party claimants
‘does not involve relitigation of the forfeitability of the property,’ which has
already been ordered in the criminal case.”); United States v. Porchay, 533 F.3d
704, 710 (8th Cir. 2008) (“Section 853(n) does not give a third party the right to
challenge the legality of the seizure; the plain language of the subsection
indicates that its purpose is to ensure that the property is not taken from
someone with a right to the property that is superior to the defendant.”); see also
United States v. Andrews, 530 F.3d 1232, 1236–37 (10th Cir. 2008); DSI Assocs.
LLC v. United States, 496 F.3d 175, 184–85 (2d Cir. 2007). HLF is the only
party that has standing to challenge the forfeitability of its assets. Since HLF
has not challenged the forfeitability of its assets in this appeal, the issue is not
before us.
Even if HLF had brought a challenge to the forfeitability of its assets
under the in custodia legis doctrine, that argument would be precluded by the
terms of the criminal forfeiture statute. The relevant provision, 21 U.S.C.
§ 853(l), states that “[t]he district courts of the United States shall have
jurisdiction to enter orders as provided in this section without regard to the
location of any property which may be subject to forfeiture under this section or
which has been ordered forfeited under this section.” This reasoning is in
alignment with the accepted tenet that criminal forfeitures are in personam
judgments. See United States v. Casey, 444 F.3d 1071, 1075 (9th Cir. 2006).
Thus, the district court’s power to enter orders regarding HLF’s property located
outside of its jurisdiction “derives from its personal jurisdiction over the
defendant,” United States v. Gilbert, 244 F.3d 888, 920 (11th Cir. 2001), and is
not “dependent upon seizure of a physical object,” United States v. Ursery, 518
U.S. 267, 289 (1996); see also United States v. $814,254.76, in U.S. Currency,
Contents of Valley Nat’l Bank Account No. 1500-8339, 51 F.3d 207, 211 (9th Cir.
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1995) (“Thus, the defendant in a criminal forfeiture proceeding is the person, and
the defendant in a civil forfeiture proceeding is the particular property.”). In this
in personam proceeding, the district court’s jurisdiction over HLF, and not its
jurisdiction over HLF’s assets, is the dispositive factor in assessing whether
those assets are available for criminal forfeiture to the government. As such, the
in custodia legis doctrine does not preclude the district court’s in personam
jurisdiction over HLF.
IV. CONCLUSION
The Rubins have failed to demonstrate that they are entitled to recovery
under either 21 U.S.C. § 853 or § 201 of the TRIA. Furthermore, contrary to the
Rubins’ and the district court’s arguments, the provisions of the TRIA do not
trump those of § 853, where, as here, the government had received a license to
restrain terrorist assets for criminal forfeiture proceedings prior to the victims’
civil judgment against the terrorist organization. We REVERSE and REMAND
for proceedings not inconsistent with this opinion.
19