Category Archives: Forfeiture

Other People’s Money: SEC Disgorgement After Kokesh

by Daniel R. Walfish

Should individuals sued by the Securities and Exchange Commission (SEC) have to give up, or “disgorge,” corporate gains resulting from a fraud, or just their own direct gains? In an August 29 summary order, SEC v. Metter,[1] the Second Circuit avoided wrestling with this question, but it may be one of the next major battles in the wake of the Supreme Court’s June 5, 2017 decision in Kokesh v. SEC, 137 S. Ct. 1635. Kokesh held that the disgorgement remedy in SEC enforcement actions is a “penalty” for purposes of the five-year limitations period for the “enforcement of any civil fine, penalty, or forfeiture.” 28 U.S.C. § 2462. Many have assumed, on the basis of a footnote in Kokesh, that courts will soon be considering whether they have authority to order disgorgement at all in SEC enforcement actions. That issue certainly lurks, but I suspect that courts first will revisit the proper scope of the remedy, including whether a court may force a defendant to “disgorge” ill-gotten gains that the defendant did not personally receive but that went to third parties, such as individuals and entities associated with the defendant. Continue reading

U.S. Buyer Of Looted Antiquities Pays Steep Price To U.S. Government: Hobby Lobby Forfeits Thousands of Ancient Iraqi Artifacts, Pays $3M, and Admits Fault To Settle Civil Forfeiture Action

by David W. Bowker, Sharon Cohen Levin, Michael D. Gottesman, Laura M. Goodall, Kelsey M. McGregor, and Aleksandr Sverdlik

The U.S. government’s settlement with Hobby Lobby on July 5, 2017 is part of its broader effort to combat trafficking in looted antiquities from the war-torn Middle East and to reduce market demand for such objects by punishing participants in the black market.  Having scored this high-profile settlement in an early test case, the U.S. government likely will try to build on this success with additional investigations and enforcement actions. Continue reading

Supreme Court Substantially Reduces Government’s Ability to Seek Criminal Forfeitures 

by Sharon Cohen Levin, Daniel P. Kearney, Jr., Sarah Mortazavi, and Anuradha Sivaram

On June 5, 2017, the Supreme Court issued a unanimous opinion in Honeycutt v. United States (No. 16-142), holding that a criminal defendant can be held liable to forfeit only crime proceeds the defendant personally obtained, and cannot be made jointly and severally liable for proceeds acquired by a co-conspirator. The decision upends decades of nearly uniform precedent from the federal courts of appeals,1 and will likely have wide-ranging effects on the government’s ability to obtain criminal forfeiture. While Honeycutt is a narcotics case, the procedures in the forfeiture statute in question apply to all criminal forfeitures, including criminal forfeiture in cases involving securities fraud, healthcare fraud, corruption, insider trading, economic sanctions, mail fraud and wire fraud.  Continue reading