August 13, 2020

Eleventh Circuit rules that forfeiture is mandatory in money laundering cases

On August 11, 2020, the US Court of Appeals for the Eleventh Circuit ruled that the payment of forfeiture is mandatory for money laundering offenses, even where a convicted money launderer returned the laundered funds, reversing a district court’s decision not to impose the payment of forfeiture.

In 2017, the defendant Nidal Ahmed Waked Hatum, pleaded guilty to conspiracy to commit money laundering in the US District Court for the Southern District of Florida, for transactions made from 2000 to 2009 among three electronics merchandise companies that he owned.  The alleged “mirror-image” scheme involved Waked issuing phony invoices to Vida Panama, a company based in Panama, from one of two Miami-based corporations, Star Textile Manufacturing and Global World Import & Export, allowing him to draw from Vida Panama’s accounts in Panama to pay Star Textile or Global World in the US.  According to the opinion, after the Vida Panama’s checks cleared in the US, a check was deposited back into Vida Panama’s bank account for the same amount of the original transfer.  

The government recommended that Waked receive the maximum sentence of 51 months in prison and pay forfeiture of $20.8 million, to represent the amounts illegally transferred from Vida Panama, and deposited to Vida Panama as “mirror-image” repayments.  The district court instead sentenced Waked to 27 months in prison and ordered him to pay a substitute amount of $520,000 ($10,000 for each of the 52 transactions), holding that anything over $520,000 was constitutionally excessive.  The district court did not impose forfeiture but reasoned that special exception applied because Waked returned all of the laundered funds to the bank plus interest.

The government appealed the decision arguing that the payment of forfeiture was mandatory and could not be alleviated due to special circumstances, and the Eleventh Circuit agreed.  The court determined that the forfeiture statute’s use of the words “shall order” clearly indicated that Congress intended for forfeiture to be mandatory for all money laundering offenses.  The Eleventh Circuit also vacated the district court’s holding that a forfeiture order above $520,000 was unconstitutionally excessive, holding instead that any amount that does not exceed the statutory maximum (twice the amount of money “involved in” the laundering scheme) was presumptively constitutional.  The court stated that while the statutory maximum appeared to be $20.8 million, the court chose not to set a forfeiture amount, and instead instructed the district court to make additional findings of fact to determine the proper amount of forfeiture.  

Eleventh Circuit Opinion