Filed: Jun. 06, 2013
Latest Update: Feb. 12, 2020
Summary: PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 12-4442 UNITED STATES OF AMERICA, Plaintiff - Appellee, v. NAWAF M. HASAN, Defendant – Appellant. Appeal from the United States District Court for the Eastern District of Virginia, at Alexandria. T. S. Ellis, III, Senior District Judge. (1:11-cr-00503-TSE-1) Argued: March 28, 2013 Decided: June 6, 2013 Before GREGORY, DUNCAN, and AGEE, Circuit Judges. Affirmed by published opinion. Judge Agee wrote the opinion, in which Judge Gr
Summary: PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 12-4442 UNITED STATES OF AMERICA, Plaintiff - Appellee, v. NAWAF M. HASAN, Defendant – Appellant. Appeal from the United States District Court for the Eastern District of Virginia, at Alexandria. T. S. Ellis, III, Senior District Judge. (1:11-cr-00503-TSE-1) Argued: March 28, 2013 Decided: June 6, 2013 Before GREGORY, DUNCAN, and AGEE, Circuit Judges. Affirmed by published opinion. Judge Agee wrote the opinion, in which Judge Gre..
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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 12-4442
UNITED STATES OF AMERICA,
Plaintiff − Appellee,
v.
NAWAF M. HASAN,
Defendant – Appellant.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. T. S. Ellis, III, Senior
District Judge. (1:11-cr-00503-TSE-1)
Argued: March 28, 2013 Decided: June 6, 2013
Before GREGORY, DUNCAN, and AGEE, Circuit Judges.
Affirmed by published opinion. Judge Agee wrote the opinion, in
which Judge Gregory and Judge Duncan joined.
ARGUED: Marvin David Miller, Alexandria, Virginia, for
Appellant. Richard Daniel Cooke, OFFICE OF THE UNITED STATES
ATTORNEY, Richmond, Virginia, for Appellee. ON BRIEF: Neil H.
MacBride, United States Attorney, Rebeca H. Bellows, Assistant
United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY,
Alexandria, Virginia, for Appellee.
AGEE, Circuit Judge:
Nawaf Hasan was convicted of various offenses related to
the trafficking of contraband cigarettes. Hasan challenges his
convictions on the basis that the conduct of the government
agents investigating this case was so outrageous as to violate
his due process rights. Separately, Hasan argues that the
district court applied the wrong statutory rule to calculate the
amount of the civil forfeiture adjudicated against him. For the
reasons explained herein, we reject both challenges and affirm
the judgment of the district court in its entirety.
I.
Significant state-by-state disparities in the amount of
taxes levied against the sale of a pack of cigarettes has
created an interstate black market in the trafficking and
distribution of cigarettes. Typically, cigarettes are purchased
in a state with low taxes and then subsequently sold in another
state where such taxes are much higher, but without the payment
of the higher levy at point of sale. In this way, contraband
cigarette traffickers seek to evade applicable state and local
taxes on cigarettes while profiting from the tax disparity.
In response to this potential for state tax evasion,
Congress enacted a statutory scheme to ensure that cigarettes
are taxed at the applicable rate in the locality in which sold
2
to the consumer. One part of the statutory framework is the
Contraband Cigarette Trafficking Act (“CCTA”), 18 U.S.C. § 2341,
et seq., which prohibits the trafficking of tobacco products to
avoid payment of state taxes. Pursuant to 18 U.S.C. § 2342(a),
“[i]t shall be unlawful for any person knowingly to ship,
transport, receive, possess, sell, distribute, or purchase
contraband cigarettes or contraband smokeless tobacco.”
“Contraband cigarettes” are defined as
a quantity in excess of 10,000 cigarettes, which bear
no evidence of the payment of applicable State or
local cigarette taxes in the State or locality where
such cigarettes are found, if the State or local
government requires a stamp, impression, or other
indication to be placed on packages or other
containers of cigarettes to evidence payment of
cigarette taxes[.]
18 U.S.C. § 2341(2). 1 Exempted from this definition, however,
are cigarettes in the possession of, inter alia, “an officer,
employee, or other agent of the United States . . . having
possession of such cigarettes in connection with the performance
of official duties.” Id. § 2341(2)(D).
In 2008, agents with the Federal Bureau of Alcohol,
Tobacco, and Firearms (“ATF”) began an investigation, in
conjunction with other state and federal authorities, into a
ring of alleged traffickers of contraband cigarettes. For more
1
Each carton of cigarettes contains 200 cigarettes. 10,000
cigarettes is fifty cartons of cigarettes.
3
than two years, ATF agents and other law enforcement officers
participated in undercover transactions involving the sale of
untaxed and unstamped cigarettes to members of the conspiracy,
including Hasan. 2 The government alleges that between June 2009
and April 2011, undercover agents sold nearly 40,000 cartons of
untaxed or unstamped cigarettes to Hasan and other members of
the conspiracy. Most of these contraband cigarettes were
purchased from ATF agents in Virginia before being transported
to New York for sale. 3
In 2011, Hasan was indicted in the United States District
Court for the Eastern District of Virginia on six counts: one
count of conspiracy to purchase, possess, transport, and
distribute contraband cigarettes, in violation of 18 U.S.C.
§ 371 (Count 1), and five substantive counts of purchasing,
2
The CCTA defines “contraband cigarettes” as those which do
not bear evidence of payment of state taxes (i.e., a stamp),
where such evidence is required. Thus, while there is a
technical difference between “untaxed” and “unstamped”
cigarettes, the terms are largely used interchangeably. There
is no allegation that any of the cigarettes purchased and resold
by Hasan in this case were properly taxed, but merely unstamped.
Consequently, we treat “untaxed” and “unstamped” cigarettes as
interchangeable terms for purposes of this opinion.
3
As the district court observed, New York imposed (as of
August 2011) a relatively high, $4.35 per pack tax rate on
cigarettes. Virginia, on the other hand, imposed a tax of only
$.30 per pack during the same period. Charging prices
comparable to properly taxed cigarettes, therefore, a criminal
enterprise trafficking cigarettes from Virginia to New York
could potentially make up to $4.05 per pack in profit.
4
possessing, and transporting contraband cigarettes, in violation
of 18 U.S.C. § 2342(a) (Counts 2-6).
Prior to trial, Hasan filed a motion to dismiss the
indictment, or in the alternative, to exclude the evidence
collected against him on the basis that the undercover sales of
untaxed cigarettes by ATF agents constituted government conduct
so outrageous as to violate his due process rights. The
district court denied the motions. Hasan and the government
then made certain factual stipulations and agreed to proceed to
a bench trial while preserving his due process challenge. The
court found that the stipulations were sufficient to prove
beyond a reasonable doubt that Hasan was guilty of the offenses
charged in the indictment, and issued a written opinion
explaining its decision to deny the motions to dismiss or
suppress.
The court explained that the ATF had congressional
authorization to possess and distribute untaxed cigarettes in
furtherance of the ATF’s law enforcement mission. The court
also saw no merit in Hasan’s argument that the undercover
operation was “outrageous” because the ATF “let the cigarettes
walk,” and allowed those items to be distributed on the black
market rather than confiscating them. The court reasoned that
the government’s failure to recover the contraband does not
render an undercover operation unlawful because often, in order
5
to gather more evidence, law enforcement is required to delay
intervention in unlawful activity. The court observed an
“important distinction” between cases involving undercover
distribution of illegal narcotics and distribution of contraband
cigarettes, “which, apart from being untaxed and/or unstamped,
are otherwise legal commodities.” (J.A. 165.)
The government then filed a motion for a preliminary order
of forfeiture in the amount of $604,220, which represented the
gross proceeds Hasan realized through the contraband trafficking
offenses charged in the indictment. The government represented
that its proposed forfeiture order was supported by the plain
language of 18 U.S.C. § 981(a)(2)(A), which provides:
In cases involving illegal goods, illegal services,
unlawful activities, and telemarketing and health care
fraud schemes, the term “proceeds” means property of
any kind obtained directly or indirectly, as the
result of the commission of the offense giving rise to
forfeiture, and any property traceable thereto, and is
not limited to the net gain or profit realized from
the offense.
Hasan objected to the proposed forfeiture order and argued that
the forfeiture amount should only be $130,000—the profits he
realized from the cigarette smuggling scheme. He relied upon 18
U.S.C. § 981(A)(2)(B), which provides that “[i]n cases involving
lawful goods or lawful services that are sold or provided in an
illegal manner, the term “proceeds” means the amount of money
acquired through the illegal transactions resulting in the
6
forfeiture, less the direct costs incurred in providing the
goods or services.” Hasan claimed that the contraband
cigarettes were merely lawful goods sold or provided in an
illegal manner, thus entitling him to the benefit of the lower
forfeiture amount.
The district court overruled Hasan’s objection and
concluded that “[t]his is a case involving illegal goods,
illegal services, unlawful activities. Undercover sales of
cigarettes were, as soon as they were . . . taken to New York,
contraband.” (J.A. 223.) The court adjudicated Hasan as guilty
of the charges against him, adopted the government’s proposed
forfeiture order, and imposed a twenty-four month sentence of
incarceration. Hasan has timely appealed and we have
jurisdiction pursuant to 28 U.S.C. § 1291.
II.
Hasan raises two assignments of error on appeal. He first
argues that the district court erred in denying his motion to
dismiss the indictment or suppress the evidence against him
based on the conduct of the government agents investigating this
case. Hasan’s second claim of error is that the court
miscalculated the amount of forfeiture imposed in the civil
forfeiture order. We address each issue in turn.
7
A.
Hasan first contends that the district court erred in
denying his motion to suppress the evidence against him on the
basis that his due process rights were violated. The facts of
this case are uncontested, and we review the legal issues
underlying the denial of a motion to suppress de novo. See
United States v. Cain, 524 F.3d 477, 481 (4th Cir. 2008). 4
Hasan is essentially raising a generalized due process
claim that the law enforcement conduct at issue here was either
unlawful or so outrageous as to violate fundamental notions of
fairness. He seeks to invoke what the district court aptly
described as a “seldom-addressed category of constitutional
violations,” J.A. 158, first articulated in United States v.
Russell, 411 U.S. 423 (1973). In Russell, a criminal defendant
argued outrageous government conduct where an undercover agent
supplied narcotics manufacturers with a legal, but difficult to
obtain, chemical that was essential to the methamphetamine
manufacturing process.
Id. at 431. After flatly rejecting the
4
In its response brief on appeal, the government suggests
that this is an appeal of the denial of a motion to dismiss the
indictment. The difference, for purposes of our standard of
review, is not a material one. The parties do not dispute any
material facts, and under either paradigm our review of the
legal issues involved would be de novo. Compare, Cain, 524 F.3d
at 481 (reviewing denial of motion to suppress de novo), with
United States v. Hatcher,
560 F.3d 222, 224 (4th Cir. 2009)
(reviewing denial of motion to dismiss indictment de novo).
8
defendant’s claim to an entrapment defense, the Supreme Court
also denied a due process claim and observed that
[w]hile we may some day be presented with a situation
in which the conduct of law enforcement agents is so
outrageous that due process principles would
absolutely bar the government from invoking judicial
processes to obtain a conviction, . . . the instant
case is distinctly not of that breed.
Id. at 431-32 (internal citation omitted).
A plurality of the Supreme Court expounded upon (and
greatly limited) the application of an “outrageous conduct” due
process violation in Hampton v. United States, 425 U.S. 484
(1976). In Hampton, a government informant allegedly sold
heroin to the defendant, who later sold it to government agents.
Although the Court acknowledged that “the Government . . .
played a more significant role in enabling petitioner to sell
contraband in this case than it did in Russell,”
id. at 489, the
Court nevertheless rejected the defendant’s claim that his due
process rights were violated,
id. at 490.
To sustain petitioner's contention here would run
directly contrary to our statement in Russell that the
defense of entrapment is not intended to give the
federal judiciary a ‘chancellor's foot’ veto over law
enforcement practices of which it did not approve.
. . .
The limitations of the Due Process Clause of the
Fifth Amendment come into play only when the
Government activity in question violates some
protected right of the defendant. Here, as we have
noted, the police, the Government informant, and the
defendant acted in concert with one another. If the
result of the governmental activity is to implant in
9
the mind of an innocent person the disposition to
commit the alleged offense and induce its commission,
the defendant is protected by the defense of
entrapment. If the police engage in illegal activity
in concert with a defendant beyond the scope of their
duties the remedy lies, not in freeing the equally
culpable defendant, but in prosecuting the police
under the applicable provisions of state or federal
law.
Id. at 490 (internal citation and quotation marks omitted). 5
After Hampton, the “outrageous conduct” doctrine survives
in theory, but is highly circumscribed. As we explained in
United States v. Goodwin, 854 F.2d 33 (4th Cir. 1988), a due
process violation may only be found when the conduct at issue
“is outrageous, not merely offensive.”
Id. at 37. And as the
district court observed, this Court has never held in a specific
case that the government has violated the defendant’s due
process rights through outrageous conduct. In United States v.
Osborne,
935 F.2d 32 (4th Cir. 1991), this Court opined on the
“high shock threshold” of the appellate courts in the context of
5
Justice Powell wrote a concurring opinion in Hampton,
expressing doubts as to the plurality’s conclusion that the
entrapment defense is the only remedy available to an accused
defendant who claims he was the victim of fundamentally unfair
government conduct: “[t]here is certainly a [constitutional]
limit to allowing governmental involvement in crime. It would
be unthinkable, for example, to permit government agents to
instigate robberies and beatings merely to gather evidence to
convict other members of a gang of hoodlums.” Hampton, 425 U.S.
at 493 n.4 (Powell, J., concurring) (quoting United States v.
Archer,
486 F.2d 670, 676-77 (2d Cir. 1973)) (alterations in
Hampton).
10
the “outrageous conduct” due process violation, and the Court’s
reluctance to vacate a conviction based on outrageous government
conduct that does not otherwise violate a defendant’s rights.
Id. at 36. The Osborne court cited with approval several cases,
including United States v. Simpson,
813 F.2d 1462 (9th Cir.
1987), wherein the Ninth Circuit upheld the conviction of a
defendant who had provided heroin in exchange for sexual favors
from a woman who had been manipulated into doing so by the
FBI.
935 F.2d at 36. Thus, the Osborne court articulated what has
become the test in this circuit for whether government conduct
is so outrageous as to offend due process: the conduct must be
“shocking,” or “offensive to traditional notions of fundamental
fairness.” 935 F.2d at 37. In refining the standard for an
“outrageous conduct” due process claim, however, the court again
concluded that the government conduct at issue failed to satisfy
that threshold. With these general standards in mind, we turn
now to Hasan’s specific arguments.
Hasan first contends that the district court erred in
concluding that Congress authorized the ATF to undertake the
investigation that lead to his apprehension. He implies that
the multiple sales of cigarettes to him by the ATF, anticipating
the cigarettes would later be resold without payment of state
taxes are outrageous acts, per se, because the ATF effectively
distributed “contraband cigarettes.” We disagree.
11
As noted earlier, the CCTA specifically exempts from the
definition of “contraband cigarettes” unstamped cigarettes that
are in the possession of an “officer, employee, or other agent
of the United States . . . having possession of such cigarettes
in connection with the performance of official duties.” See 18
U.S.C. § 2341(2)(D). Hasan acknowledges that ATF agents may
possess untaxed cigarettes, but argues that by failing to grant
explicit authorization for government agents to also distribute
untaxed cigarettes, Congress has impliedly prohibited the
practice.
Hasan’s argument, however, is based on a misreading of the
exemption language of the CCTA. The CCTA does not, as such,
“authorize” federal agents to possess contraband cigarettes.
Rather, under the plain language of the statute, when unstamped
cigarettes are in the possession of federal agents (in the
course of their official duties) the cigarettes are not
“contraband” as a matter of law. This distinction is a
significant one. Since the untaxed cigarettes are not
contraband in the possession of federal agents, the subsequent
distribution through undercover sales to cigarette traffickers
is not a distribution of contraband cigarettes by the agents.
The untaxed cigarettes only become contraband when they are then
possessed by someone, like Hasan, not exempted from the
12
statutory definition. See § 2341(2). 6 The ATF-distributed
cigarettes were not “contraband cigarettes” under the clear
terms of the statute.
Moreover, Congress has explicitly authorized federal law
enforcement to conduct commercial endeavors in the context of
undercover investigations, and to use the proceeds from these
transactions to offset the costs of the undercover operation.
See Departments of State, Justice, and Commerce, the Judiciary
and Related Agencies Appropriations Act of 1992, Pub. L. No.
102-395, § 102(b)(1)(B), (D) (authorizing the Federal Bureau of
Investigation and Drug Enforcement Administration to use
appropriated funds to establish, inter alia, “business entities
as part of an undercover investigative operation,” and
authorizing “proceeds from such undercover operation [to] be
used to offset necessary and reasonable expenses incurred in
such operation”). This statutory authorization has also been
specifically extended to the ATF. See Consolidated and Further
Continuing Appropriations Act of 2012, Pub. L. No. 112-55 § 207
6
Hasan further undermines his own argument by explicitly
conceding that the ATF is authorized to purchase contraband
cigarettes from cigarette traffickers. See Appellant’s Opening
Br. at 8 (“[ATF] may only possess, such as when an undercover
agent buys from dealers.”). Thus, under Hasan’s theory, if
“possession” can be read to include “purchase” or “receipt,”
there is no logical reason that term would not also be read to
include “distribution.”
13
(“Public Law 102-395 section 102(b) shall extend to the [ATF] in
the conduct of undercover investigative operations[.]”).
With this statutory foundation, it simply cannot be said
that the actions undertaken by the ATF in this case were
unlawful.
There is also no merit to Hasan’s claim that ATF agents in
this case otherwise engaged in behavior that is “offensive to
traditional notions of fundamental fairness.” Osborne, 935 F.2d
at 37. As we observed in Goodwin, “[o]utrageous is not a label
properly applied to conduct because it is a sting or reverse
sting operation involving
contraband.” 854 F.2d at 37. We
further reasoned in United States v. Milam,
817 F.2d 1113, 1116
(4th Cir. 1987), that “Justice Powell's concurrence in Hampton
recognized that the practicalities of law enforcement sometimes
compel officers to provide supplies to drug manufacturing
operations, or even to supply ‘contraband itself,’ and suggested
that due process does not necessarily prohibit use of these and
similar investigative techniques.” Thus, the mere fact that ATF
sold untaxed cigarettes does not render their investigation
outrageous.
In sum, we see no merit to Hasan’s argument that the
conduct of ATF agents in this case was unlawful, or otherwise
14
“shocking,” or “offensive to traditional notions of fundamental
fairness.” We therefore affirm his conviction. 7
B.
Hasan also contends on appeal that the district court
miscalculated the forfeiture amount by calculating the sum based
on the gross proceeds, rather than profits, realized by the
contraband cigarette distribution scheme. We find that his
claim lacks merit and the district court did not err.
This Court reviews the district court’s interpretation of
statutory provisions de novo, Scott v. United States, 328 F.3d
132, 137 (4th Cir. 2003), but will reverse its findings of fact
only if we find them clearly erroneous. See, e.g., HSBC Bank
USA v. F & M Bank N. Va.,
246 F.3d 335, 338 (4th Cir. 2001); see
also United States v. Funds Held in the Name or for the Benefit
of Wetterer,
210 F.3d 96, 106 (2d Cir. 2000) (reviewing legal
determination de novo and factual findings for clear error in
applying civil forfeiture statute).
Pursuant to 18 U.S.C. § 981(a), a defendant’s property is
subject to forfeiture if, inter alia, it is “derived from
proceeds traceable to . . . any offense constituting ‘specified
unlawful activity[.]’” See id. § 981(a)(1)(C). Section
7
Hasan does not raise a separate challenge to the term of
imprisonment imposed against him.
15
981(a)(1)(C) defines “specified unlawful activity” in part by
cross-reference to 18 U.S.C. § 1956(c)(7)(A), which in turn
cross-references 18 U.S.C. § 1961(1). That subsection
encompasses offenses related to trafficking in contraband
cigarettes. Thus, the “proceeds” of the cigarette trafficking
are clearly subject to forfeiture. However, the definition of
what constitutes “proceeds” differs depending on the nature of
the offense. See id. § 981(a)(2) (“For purposes of paragraph
(1), the term ‘proceeds’ is defined as follows” and then
providing different categories).
The district court applied § 981(a)(2)(A), which provides:
In cases involving illegal goods, illegal services,
unlawful activities, and telemarketing and health care
fraud schemes, the term “proceeds” means property of
any kind obtained directly or indirectly, as the
result of the commission of the offense giving rise to
forfeiture, and any property traceable thereto, and is
not limited to the net gain or profit realized from
the offense.
Hasan contends using subsection A was error and the district
court should have instead applied subsection B, which states
In cases involving lawful goods or lawful services
that are sold or provided in an illegal manner, the
term “proceeds” means the amount of money acquired
through the illegal transactions resulting in the
forfeiture, less the direct costs incurred in
providing the goods or services. The claimant shall
have the burden of proof with respect to the issue of
direct costs. The direct costs shall not include any
part of the overhead expenses of the entity providing
the goods or services, or any part of the income taxes
paid by the entity.
16
Id. § 981(a)(2)(B). In support, Hasan argues that contraband
cigarettes are merely lawful goods that are sold or provided in
an illegal manner and cites the district court’s order denying
his motion to dismiss or suppr0ess, in which the court concluded
that “contraband cigarettes, which, apart from being untaxed
and/or unstamped, are otherwise legal commodities.” (J.A. 165.)
We must determine, therefore, whether “contraband
cigarettes” are “illegal goods” (§ 981(a)(2)(A)) or “lawful
goods . . . that are sold or provided in an illegal manner”
(§ 981(a)(2)(B)). We have identified no published opinion from
a court of appeals that has addressed this specific question.
The sole unpublished court of appeals decision, as well as the
district court decisions to have confronted the issue, are in
agreement, however, that distribution of contraband cigarettes
is a “case involving illegal goods” thus triggering
§ 981(a)(2)(A). United States v. Noorani, 188 F. App’x 833, 838
(11th Cir. 2006) (per curiam) (“[W]e conclude that the district
court did not err in calculating the order of forfeiture based
upon the wholesale value of the cigarettes because the statute
authorized that amount.”); United States v. Funds from First
Reg’l Bank Acct. No. XXXXX1859, 639 F. Supp. 2d 1203, 1216 (W.D.
Wash. 2009) (“Global's conduct in selling and transporting
contraband cigarettes in violation of the CCTA therefore falls
into the category of ‘cases involving . . . unlawful activities’
17
in which gross receipts are subject to forfeiture as ‘proceeds.’
. . . This case also involves the sale and transport of
‘illegal goods’ because the cigarettes or ‘goods’ that Global
sold and transported to Washington were unlawful under state
law.”); United States v. Patel, No. 05:11cr031, 2013 WL 149672,
at *7 (W.D. Va. Jan. 11, 2013) (unpublished) (“[B]ecause the
possession and trafficking of contraband cigarettes is
inherently illegal, they are illegal goods for the purposes of
§ 981(a)(2), requiring forfeiture of gross proceeds[.]”); United
States v. Diallo, No. 09 CR 858 (MEA),
2011 WL 135005, at *2
(S.D.N.Y. Jan. 13, 2011) (unpublished) (citing § 981(a)(2)(A)).
In conducting our independent analysis into the
categorization of “contraband cigarettes,” for forfeiture
purposes, we look primarily to the statutory definition of that
term. As explained supra, the CCTA defines “contraband
cigarettes” as “a quantity in excess of 10,000 cigarettes, which
bear no evidence of payment of the applicable State or local
cigarette taxes in the State or locality where such cigarettes
are found[.]” 18 U.S.C. § 2341(2). By its plain terms, the
statute does not define contraband cigarettes by reference to
the manner in which the cigarettes are sold. Rather, when the
cigarettes are possessed without evidence of payment of taxes,
18
they are contraband per se. 8 In other words, contraband
cigarettes are inherently unlawful, i.e., “unlawful goods.”
Contraband cigarettes could never be sold lawfully because it is
possession of the defined item itself that violates the CCTA.
By contrast, courts have found § 981(a)(2)(B) applies when
a good or service that is not inherently illegal is sold or
provided in an illegal manner. See, e.g., United States v.
Mahaffy, 693 F.3d 113, 138 (2d Cir. 2012) (holding that
securities fraud constituted lawful goods sold in an illegal
manner because, while “trading . . . securities, as a general
manner, is not unlawful. . . . [A]ny illegality occurred when
the defendants bought and sold securities as part of a scheme
involving illegal bribery and frontrunning.”); United States v.
St. Pierre,
809 F. Supp. 2d 538, 543 (E.D. La. 2011) (applying
§ 981(a)(2)(B) to calculate forfeiture of a contractor convicted
of bribery and fraud because “[i]nformation technology work is a
lawful service and crime cameras are lawful goods, but the
contracts for that work or those cameras were obtained through
illegal bribes and kickbacks. Thus the amounts of money
8
As explained earlier, the ATF’s possession and
distribution of cigarettes in the course of its duties is
expressly exempt from the statutory definition of contraband
cigarettes.
19
acquired through those contracts were for otherwise legal goods
and services provided ‘in an illegal manner.’”). 9
Hasan also invokes the law of the case doctrine by arguing
that the district court should have been bound by the statement
it made in denying his motion to dismiss, that “apart from being
untaxed and/or unstamped, [contraband cigarettes] are otherwise
legal commodities.” (J.A. 165). He argues that this
constitutes, in effect, a concession by the court that
contraband cigarettes are lawful goods sold in an illegal way.
Once again, however, Hasan fails to recognize that
contraband cigarettes, as defined by statute, are inherently
unlawful goods. The district court’s statement, that cigarettes
are otherwise lawful (i.e., when they are properly taxed) is
correct, but the cigarettes to which the court referred were not
contraband cigarettes.
9
Because we conclude that contraband cigarettes are illegal
goods, we do not decide whether the distribution of contraband
cigarettes is an “unlawful activity” within the meaning of
§ 981(a)(2)(A). To be sure, distribution of contraband
cigarettes is against the law, but at least one court has
recognized that “unlawful activity,” as the term is used in
§ 981(a)(2)(A), is a term of art that is not meant to encompass
every activity that is unlawful. See United States v. Nacchio,
573 F.3d 1062, 1089 (10th Cir. 2009) (“The term ‘unlawful
activities’ in section 981(a)(2)(A) was meant to cover
inherently unlawful activities such as robbery that are not
captured by the words ‘illegal goods’ and ‘illegal services.”)
(quoting 1 David Smith, Prosecution and Defense of Forfeiture
Cases, ¶ 5.03[2], at 5-62 (2008)).
20
We therefore conclude that the district court properly
calculated the order of forfeiture in this case. 10
III.
For the foregoing reasons, the judgment of the district
court is affirmed.
AFFIRMED
10
Hasan’s sole challenge to the forfeiture order is the
legal one discussed above. He does not otherwise claim an error
in the amount of proceeds attributed to him for forfeiture
purposes.
21
