The opinion of the court was delivered by: THOMAS C. PLATT
Defendants Hilda Amiel, Kathryn Amiel, Joanne Amiel, and Serina Amiel ("the Amiel defendants") move this Court for an order dismissing the superseding indictment in this case on the ground that any conviction thereunder would constitute a second criminal punishment in violation of the Double Jeopardy Clause of the Fifth Amendment. For the reasons set forth below, this Court deems the motion premature and therefore must deny it without prejudice to renew at the conclusion of the Government's case or of the entire case at trial.
In a superseding indictment dated March 3, 1992, the Amiel defendants are charged with twenty counts of mail and wire fraud arising out of the operation of a fine arts business. Defendants are alleged to have engaged in a scheme to defraud by selling what appeared to be limited edition, signed prints by well-known contemporary artists, but what were actually counterfeit copies. The criminal action is presently in the pretrial stage with the attendant pretrial motions and discovery proceeding apace. The trial is scheduled to begin on March 8, 1993.
On July 8, 1991, pursuant to a request by the Civil Division of the United States Attorney's Office, this Court issued a warrant for the arrest of the Amiel defendants' property in rem. An amended complaint for civil forfeiture was then served on the Amiel defendants, alleging conduct similar to that alleged in the criminal indictment. Pursuant to the order of arrest and a supplemental order of arrest, the Government seized certain monies, artwork, motor vehicles, and real property, valued at more than $ 4 million. The decree of civil forfeiture was awarded on default on October 30, 1991, after this Court granted the Government's motion to strike defendants' claims on the ground that they had defaulted by failing to file a timely answer. Defendants' subsequent motion to vacate the default was denied. Defendants filed a notice of appeal on October 29, 1992.
The Amiel defendants move to dismiss the superseding indictment on double jeopardy grounds, arguing that the civil forfeiture of $ 4 million in assets constitutes punishment and that any subsequent criminal penalty would be impermissibly duplicative. In so arguing, however, defendants are placing the cart before the horse. Until it is known whether or not the Amiel defendants are guilty of the criminal conduct with which they are charged, the $ 4 million forfeiture, however disproportionate it may now-appear in relation to the specific amount involved ($ 226,645) in the conduct charged in the superseding indictment, simply does not constitute duplicative punishment in violation of the Fifth Amendment's Double Jeopardy Clause.
In Halper, the defendant was convicted on sixty-five counts of criminal false claims and sixteen counts of mail fraud. He was sentenced to two years' imprisonment and fined $ 5,000. The Government then brought an action against the defendant under the civil False Claims Act, 31 U.S.C. §§ 3729-3731. Based on facts established during the defendant's criminal prosecution, the District Court granted summary judgment in favor of the Government on the issue of liability. In determining the remedy for the defendant's multiple violations, however, the District Court exacted a penalty of only $ 16,000, on the ground that the statutory penalty of $ 130,000 bore no rational relation to the Government's actual loss of $ 585. The Court reasoned that, in light of the defendant's previous criminal conviction, a civil remedy disproportionate to the actual damages suffered would constitute duplicative punishment in violation of the Double Jeopardy Clause.
A unanimous Supreme Court agreed, ruling that although civil and criminal sanctions for the same conduct are typically appropriate, double jeopardy may be implicated in "the rare case, . . . where a fixed-penalty provision subjects a prolific but small-gauge offender to a sanction overwhelmingly disproportionate to the damages he has caused." Id. at 449. The Court began its inquiry by examining the nature of the penalty imposed in the civil proceeding. Id. at 448. A civil penalty may constitute punishment where, in addition to the traditional remedial function, it also serves the punitive goals of retribution and deterrence. Id. In Halper, the Supreme Court found that the civil penalty assessed under the False Claims Act was so disproportionate to the Government's losses as to create a rebuttable presumption that the penalty was a second punishment in violation of the Double Jeopardy Clause. Id. at 452. It remanded the case to the District Court to give the Government the opportunity to demonstrate that the District Court's assessment of its losses was erroneous. Id.
In United States v. Certain Real Property and Premises Known as 38 Whalers Cove Drive, 954 F.2d 29 (2d Cir.) [hereinafter "Whalers Cove"], cert. denied sub nom, Levin v. United States, 121 L. Ed. 2d 24, 113 S. Ct. 55 (1992), the Court of Appeals for the Second Circuit had the opportunity to consider the applicability of the Halper ruling to civil forfeiture proceedings. In Whalers Cove, the defendant pled guilty in State court to attempted criminal sale of a controlled substance based upon two separate sales of cocaine amounting to $ 250 that took place in the defendant's condominium. Id. at 32. Subsequent to the criminal proceeding, the United States instituted an in rem forfeiture proceeding against the defendant's condominium pursuant to 21 U.S.C. § 881(a)(7). Id. The defendant moved to dismiss the in rem complaint, arguing, inter alia, that the application of the forfeiture provision violated the Double Jeopardy Clause. Id.
The District Court denied the defendant's motion to dismiss and, instead, granted the Government's cross-motion for summary judgment of forfeiture. Id. at 32-33. The Second Circuit affirmed, ruling that, although Halper does apply to civil forfeitures, it does not apply to forfeitures of property used substantially to accomplish illegal purposes. Id. at 36. If further illicit use is to be prevented, the "instrumentality of crime" must be removed from general circulation regardless whether its value is overwhelmingly disproportionate to the damage wrought by the defendant's wrongful conduct. Id.
The Halper Court invalidated a civil penalty imposed subsequent to a criminal prosecution for the same underlying conduct. Similarly, Whalers Cove addressed the double jeopardy concerns of a defendant who had already been convicted of criminal conduct in State court. In the instant case, the Amiel defendants urge this Court to extend Halper to justify ...