United States v. All Funds…Erick Silva Santos, Claimant, 5th Cir. 7/19/17: Asset Forfeiture, International Law, and Crime. Also, Fugitive Disenfranchisement Doctrine.

Here is another very interesting asset forfeiture case because it involves the US Government essentially seizing assets from a foreign national for crimes committed in another country which that country did not find it necessary to investigate or prosecute.  Here, Silva is being punished, really, for failing to appear in American courts to defend himself against crimes that our government alleges he committed in our jurisdiction.

Here’s what happened:

Silva was indicted in the United States for money laundering and fraud that he allegedly committed in connection with his role as mayor of Matamoros, Tamaulipas, Mexico.  He has bank accounts and a house in the United States.  After he was indicted, he fled to Mexico (which, really, was only a few miles away so it’s not so much “fleeing” as strolling down the street and crossing the border) and hasn’t returned.  The government then filed a civil forfeiture proceeding seeking to keep his assets that the government alleges were tied to his conduct “as a corrupt Mexican official.”   The district court ordered fugitive disentitlement under 28 USC §2466 and then filed a final default judgment and ordered forfeiture.

After the government filed its action to obtain Silva’s assets, his lawyers filed a 12(c) motion to dismiss under the Federal Rules of Civil Procedure, arguing that the complaint didn’t sufficiently identify the underlying violations of Mexican law that would authorize civil forfeiture under 18 USC §§981(a)(1)(A), (B), or (C).  Instead of responding to this motion, the government moved for a finding of fugitive disentitlement as to Silva and then moved to strike his claim, answer and request for relief under Rule 12(c). The court granted the request as to Silva and ordered the government to respond to his common law wife’s motion on the same basis, and to specify Silva’s violations of Mexican law.  The court then granted permission for the government to amend its complaint to allege violations of four provisions of the Tamaulipas Penal Code.  The government gave up on the claim that pertained to the common law wife (which involved forfeiture of a house in Brownsville, Texas).  So, all that is a long way of saying that the district court found that Silva is disenfranchised, and doesn’t get to contest the government’s taking his stuff.  Fugitive disenfranchisement “disallows a person from using the resources of the courts of the United States in furtherance of a claim in any related civil forfeiture action.”  28 U.S.C. §2466(a).

Silva filed a motion for reconsideration of the order granting his disenfranchisement, but the court denied it.  The government then moved for entry of default judgment of forfeiture as to all of his funds.  The court ultimately granted the government’s motion for a final default judgment and order of forfeiture pursuant to Rule 55(b).

Silva conceded that the statutory requirements for fugitive disentitlement had been met. He argued, however, that the district court abused its discretion by applying disentitlement based on the mere allegations of the complaint that the government submitted as evidence in support of forfeiture.  The district court erred, he argued, because (1) the government’s complaint was wholly predicated on his alleged violations of Mexican law, but the only evidence before the court showed that he did not violate the law, 2) disentitlement prior to the government’s submission of evidence runs counter to principles of international comity, and (3)  the act of state doctrine militates against disentitlement because the exonerative Mexican documents implicate the act of state doctrine.  He also argued the district court erred in entering a default judgment because it was not appropriate in this case.

The court began its analysis by analyzing the primary issue in the appeal which is whether the district court abused its discretion in ordering fugitive just entitlement. Even if the statutory requirements for fugitive entitlement have been met, a court may still exercise its discretion to not order it. Whether to order this entitlement rests in the sound discretion of the district court.  Collazos v. United States, 368 F.3d 190, 198 (2^nd Cir. 2004); accord, e.g., United States v. Batato, 833 F.3d 413, 428 (4^th Cir. 2016) (“Section 2466 leaves the application of disentitlement to the court’s discretion, see 2466(a) (using ‘may’ instead of ‘shall’).

The Court continued its analysis by reviewing the district court’s finding regarding the Mexican documents.   The district court found that the documents did not unambiguously allow for the inference that Silva did not violate Mexican law. The documents merely showed that he paid his taxes, had no criminal record, and was not the subject of a criminal investigation or prosecution. The district court found that that, however, did not foreclose the possibility that he engaged in conduct that would constitute such violation. In the district court’s view, these documents merely reflected the absence of criminal process against Silva for the offenses serving as the predicate for civil forfeiture in this case. This is all a long- winded way of saying that the mere fact that Mexico was not investigating him for these criminal activities did not mean that he was in fact not guilty of them.  As the Fifth Circuit found:

These documents are general in relevant substance, obviously conclusory, and open-ended with respect to answers relating to the charged conduct. They certainly fall far short of demonstrating that the charged violations of Mexican law have been investigated and decided favorably to Silva.

So, given this conclusion, the Fifth Circuit found it did not need to address Silva’s additional arguments regarding the principles of international comity and the act of state doctrine. The court affirmed the district court’s fugitive disentitlement order, and the government gets to keep the stuff they seized.

The takeaway here, in my opinion, is that if you’re not going to come back to the United States and answer the charges against you, the court is likely going to exercise its discretion to find you disenfranchised.  If that happens, it will be exceedingly difficult to challenge an asset forfeiture, even if you are completely innocent of the charges. Even significant documentary evidence is not likely to be regarded as exonerative because it just shows that maybe you didn’t actually do what you’ve been accused of.  Welcome to the world of asset forfeiture.