Opinion
NO. 3:02-CR-369-P.
February 23, 2005
MEMORANDUM OPINION AND ORDER
Now before the Court is the United States of America's ("Government") Motion to Dismiss the Amended Petition of Francine and Bruce Haight. After careful consideration of the arguments and applicable law, the Court hereby GRANTS the Government's motion.
BACKGROUND
Petitioners Francine and Bruce Haight ("Petitioners") were the parents of Ryan Haight, who died at age eighteen in 2001 from an overdose of hydrocodone he obtained over the internet from a prescription issued unlawfully by Defendant Ogle. On December 10, 2003, Petitioners were awarded $2,008,792.38 against Defendant Ogle in a civil action in California state court. The judgment was amended on May 18, 2004 to include Defendant Fuchs (Fuchs and Ogle are referred to collectively herein as "Defendants").
On October 1, 2003, Defendant Ogle pled guilty in this Court to money laundering and conspiracy to distribute a controlled substance. On October 23, 2003, a jury returned guilty verdicts against Defendant Fuchs on several similar counts. Subsequently, preliminary orders of forfeiture concerning personal and real property of Fuchs and Ogle were entered in this case.
Petitioners are asserting a third-party interest in Defendants' forfeited property pursuant to 21 U.S.C. § 853(n) and seek a hearing to adjudicate their interest and amend the forfeiture order to mandate payment of their state court judgment from the forfeiture proceeds. The Government argues that Petitioners may not assert an interest in the property because they lack standing and fail to meet the statutory requirements.
DISCUSSION
21 U.S.C. § 853(n)(2) allows a third party claiming an interest in forfeited property to petition the Court for a hearing to adjudicate the validity of his alleged interest. The order of forfeiture may be amended to include the petitioner's claim if the petitioner has established by a preponderance of the evidence that
Subsection (n)(2) reads as follows:
Any person, other than the defendant, asserting a legal interest in property which has been ordered forfeited to the United States pursuant to this section may, within thirty days of the final publication of notice or his receipt of notice under paragraph (1), whichever is earlier, petition the court for a hearing to adjudicate the validity of his alleged interest in the property. The hearing shall be held before the court alone, without a jury.
A) the petitioner has a legal right, title, or interest in the property, and such right, title, or interest renders the order of forfeiture invalid in whole or in part because the right, title, or interest was vested in the petitioner rather than the defendant or was superior to any right, title, or interest of the defendant at the time of the commission of the acts which gave rise to the forfeiture of the property under this section; or (B) the petitioner is a bona fide purchaser for value of the right, title, or interest in the property and was at the time of purchase reasonably without cause to believe that the property was subject to forfeiture under this section.21 U.S.C. § 853(n)(6).
The Government notes that Petitioners have not claimed to have perfected a judgment lien against any specific item included in the forfeited property. Thus, the Government concludes, Petitioners are general creditors that do not hold a security interest in any of the property forfeited by Defendants. Relying on United States v. McCorkle, 143 F. Supp. 2d 1311, 1319 (M.D. Fla. 2001), the Government concludes that Petitioners, as unsecured creditors, have no standing to assert an interest in Defendants' forfeited assets. The Government also argues that Petitioners cannot demonstrate that their interest in any of the forfeited property is superior to that of the United States, pursuant to § 853(n)(6)(A). Finally, the Government contends that Petitioners cannot show that they are bona fide purchasers for value of any of the forfeited property, pursuant to § 853(n)(6)(B).
Section 853 requires two separate showings. First, the petitioner must demonstrate a legal interest in the debtor's property to establish that he has standing to assert claims against the forfeited property. There is a split among the circuits on the issue of whether an unsecured creditor can demonstrate the requisite "legal interest in the debtor's property" to establish standing. Compare United States v. Campos, 859 F.2d 1233, 1238-39 (6th Cir. 1988) (general creditor may have standing) and United States v. Reckmeyer, 836 F.2d 200, 205 (4th Cir. 1987) (same) with United States v. Ribadeneira, 105 F.3d 833, 834-37 (2d Cir. 1997) (unsecured creditors have no legal interest) and United States v. McCorkle, 143 F. Supp. 2d 1311, 1319 (M.D. Fla. 2001) (same).
However, courts have widely recognized that more is required to satisfy the elements of § 853. Courts analyzing § 853 interpret the language in Subsections (2) and (6) as requiring the petitioner to show a legal interest in the property subject to forfeiture. See Ribadeneira, 105 F.3d at 836; United States v. BBCI Holdings, 46 F.3d 1185, 1192 (D.C. Cir. 1995); Campos, 859 F.2d at 1239; Reckmeyer, 836 F.2d at 205-06. In other words, the petitioners must link their interest to a specific asset. See id. Thus, the courts conclude, general creditors have no interest in defendants' specific property and can therefore have no interest in the particular assets forfeited "unless they have already secured a judgment against the debtor and perfected a lien against a particular item." Ribadeneira, 105 F.3d at 836.
Petitioners have not claimed to have perfected a judgment lien against any specific item included in the forfeited property. Thus, Petitioners remain general creditors that do not hold a security interest in any of the property forfeited by Defendants.
Petitioners argue they are not mere general creditors; rather they are the victims of the very act for which Defendants pled/were found guilty, thereby entitling Petitioners to priority over the Government's claim. However, there is nothing in § 853(n) indicating that such a special status exists for such victims. Rather, Congress addresses this issue specifically in § 853(i), which allows the Attorney General to "restore forfeited property to victims." 21 U.S.C. § 853(i)(1).
For these reasons, the Government's motion is hereby GRANTED.
It is SO ORDERED.