United States District Court, D. Rhode Island
REPORT AND RECOMMENDATION
Lincoln D. Almond, United States Magistrate Judge.
before me for a report and recommended disposition (28 U.S.C.
§ 636(b)(1)(B)) is the Petition of Third-Party Claimant
David Vogel (the "Claimant") filed pursuant to 21
U.S.C. § 853(n) and Rule 32.2(c), Fed. R. Crim. P.
(Document No. 20). The Government has moved to dismiss the
Petition pursuant to Rule 32.2(c)(1)(A), Fed. R. Crim. P.
(Document No. 24). A hearing was held on December 19, 2016.
For the following reasons, I recommend that the
Claimant's Petition be DISMISSED.
parties agree that the operative facts are undisputed and the
matter presents only questions of law. On July 6, 2016,
federal agents executed a search warrant at the residence of
Defendant Juan Catala. Mr. Catala was arrested and the agents
seized, inter alia, a sum of United States currency
totaling $14, 792.00. On October 14, 2016, Mr. Catala pled
guilty to four counts of unlawful distribution of Oxycodone
and one count of unlawful possession with intent to
distribute marij uana. The Criminal Information to which
Defendant pled guilty also provided for the forfeiture of the
$14, 792.00 in United States currency pursuant to 21 U.S.C.
§ 853. On October 18, 2016, the Court entered a
Preliminary Order of Forfeiture as to such currency.
(Document No. 18). In the Order, the Court found that the
currency "was involved in or used in violation of
[federal criminal law]" and is subject to forfeiture
pursuant to 21 U.S.C. § 853.
October 28, 2016, the Claimant filed a timely Petition
claiming a "superior" legal interest in such
currency and asserting an entitlement to the entirety of the
forfeited currency. The Claimant's argument arises out of
a state court final judgment in his favor and against Mr.
Catala in the principal amount of $8, 500.00 plus
April 9, 2007, the Claimant wired $8, 500.00 as a loan to Mr.
Catala c/o the Bellagio Hotel in Las Vegas. Mr. Catala never
repaid the money. The matter was the subject of a bench trial
in Superior Court. Mr. Catala argued that the loan was an
unenforceable gambling contract which was "utterly
void" as a matter of law pursuant to R.I. Gen. Laws
§ 11-19-17. The Superior Court Justice disagreed and
concluded that the oral loan agreement was enforceable
because the Claimant did not "knowingly" advance
the money to Mr. Catala "for the purpose of gambling or
Catala appealed. On appeal, the Supreme Court rejected Mr.
Catala's appeal primarily because of his failure to
obtain a transcript of the bench trial in issue. Vogel v.
Catala, 63 A.3d 519 (R.I. 2013). A majority of the
Supreme Court held that this defect precluded meaningful
appellate review of the trial justice's factual
determination that the Claimant did not "knowingly"
lend the money at issue for purposes of
gambling. Id. at 522. Thus, on April 20,
2013, it affirmed the judgment of the Superior Court.
Vogel's post-appeal attempts to collect on his judgment
have been unsuccessful. His writ of execution was returned
fully unsatisfied and unpaid. Mr. Catala failed to appear for
a judgment debtor examination noticed pursuant to Rule 69(b),
R.I. Super. Ct. R. Civ. P. The Claimant also recorded an
attachment on Mr. Catala's personal residence but there
is apparently insufficient equity in the property to satisfy
case involves the cash proceeds of drug trafficking activity
which are undisputably subject to mandatory criminal
forfeiture pursuant to 21 U.S.C. § 853(a). The Claimant
here asserts a third-party claim to such proceeds pursuant to
21 U.S.C. § 853(n)(6)(A). In order to prevail, the
Claimant must prove by a preponderance of the evidence that
his "right, title or interest was vested in [him] rather
than [Mr. Catala] or was superior to any right, title or
interest of [Mr. Catala]" at the time of commission of
the crime. Id. "Subsection 853(n)(6)(A) works
hand in hand with the relation-back doctrine embodied in
§ 853(c), which provides that all property subject to
forfeiture based on a criminal offense 'vests in the
United States upon the commission of the
[offense].'" United States v. Watts. 786
F.3d 152, 166 (2d Cir. 2015)(quoting 21 U.S.C.
§ 853(c)); see also United States v. Wilson.
640 F.Supp.2d 1257, 1259 (E.D. Cal. 2009) ("The
government's interest in the property vests at the moment
the crime occurs.").
the Claimant argues that his legal interest as a judgment
creditor under Rhode Island law satisfies §
853(n)(6)(A). In particular, he contends that "upon
presentment of an Execution in a Supplemental Proceeding in
Aid of Execution, a judgment-creditor in Rhode Island has, by
operation of law, perfected at that moment the judgment as
against every kind of personal property that the debtor might
have [or obtain in the future] to satisfy the judgment."
(Document No. 26 at p. 11). He argues that he is "more
than a mere general creditor" and achieved such status
"long before [Mr. Catala] committed the acts giving rise
to forfeiture." Id.
it may well be true that the Claimant had a superior legal
interest to Mr. Catala at the relevant time, his argument
fails to appreciate the reach of the "relation back
doctrine" in the context of the forfeiture of the
proceeds of crime. Section 853(c) is crystal clear
and provides that all property subject to forfeiture based on
a criminal offense "vests in the United States upon the
commission of the [offense]." "Because forfeitable
property vests in the Government immediately upon the
commission of a criminal act, a third party may prevail under
§853(n)(6)(A) only by establishing that he 'had a
legal interest in the forfeited property before the
underlying crime was committed - that is, 'before the
government's interest vested.'" Watts,
786 F.3d at 166 (quoting United States v.Trimley.
507 F.3d 1125, 1130 (8th Cir. 2007) (emphasis in
original)). The Claimant has not made such a showing here and
cannot as a practical matter as to the cash proceeds of drug
of the reach of §853(c), "courts have recognized
that a petitioner is unlikely ever to prevail at an ancillary
hearing under §853(n)(6)(A) where the forfeited property
consists of 'proceeds' derived from or traceable to a
criminal offense." Watts, 786 F.3d at 166. For
instance, in United States v. Hooper. 229 F.3d 818,
821 (9th Cir. 2000), the Ninth Circuit considered
the community property interests of the defendants'
spouses in the proceeds of drug sales that were subject to
criminal forfeiture. The spouses in Hooper argued
that they had a community property interest in all property
acquired by their husbands during their marriage that arose
by operation of state law at the instant the property was
acquired. Id. at 819. Similarly, the Claimant here
contends that the judgment and execution gave him a
preexisting property right in any property held or acquired
by Mr. Catala. However, the Ninth Circuit rejected that
argument and held that, since the proceeds of crime cannot
precede the crime, the spouses could not have a vested state
law property interest at the time their husbands committed
their crimes. Id. at 821-822. Rather, pursuant to
§853(c), the Government had a preceding "inchoate
interest" in the criminal proceeds which vested by
statute as a matter of federal law. Id. at 822-823.
is simply only one plausible way to interpret § 853 and
such interpretation provides no relief to the Claimant.
Section 853(c) unequivocally provides that "[a]
11 right, title, and interest in [forfeitable] property
vests in the United States upon the commission of the act
giving rise to forfeiture." (Emphasis added). Since the
proceeds of a crime cannot precede the crime, and the term
all means all, Mr. Catala did not have any legal right to
such proceeds as a matter of federal law. In addition, the
Claimant could have no property right superior to Mr.
Catala's at the time he committed the unlawful acts
giving rise to forfeiture as contemplated by
§853(n)(6)(A) because "[t]he government's
interest in the [proceeds] vest[ed] at the moment the crime
occur[ed]." Wilson, 640 F.Supp.2d at 1259.
Accordingly, I recommend that the Government's Motion to