Eleventh Circuit Court of Appeals Restricts Innocent Owner Defense in Post-Illegal Act Transfers
The Eleventh Circuit U.S. Court of Appeals ruled Jan. 6, 1995 that an attorney who received a piece of property from a client as payment for services knowing that the property was involved in the offense is still subject to forfeiture action (U.S. v. One Parcel of Real Estate located at 6640 S.W. 48th Street, Miami, FL (Larraz), No. 93-5139, 41 F.3d 1448 (11th Cir. 1995); 1995 WL 358; 56 CrL 1365, Jan. 25, 1995).
Reinaldo Luis was arrested for importation of cocaine and retained Jose Larraz as his lawyer. Luis arranged the transfer of a piece of property that he had owned with another person to Larraz in payment for his services. Luis was convicted of conspiracy to import cocaine, and the government brought forfeiture action against the property.
Larraz argued that the innocent owner provision in the forfeiture statute (21 USC section 881 (a)(7)) should apply in his case. The statute says that a defendant can claim to be an innocent owner if the illegal actions in question are committed "without the knowledge or consent of the owner." Larraz argued that he knew that the property was involved in illegal activity at the time of the transfer of the property (he was Luis' lawyer), but he did not consent to Luis using the property in the commission of the crime.
The Eleventh Circuit noted the ambiguity in the language "knowledge or consent." Some courts have ruled that the "or" should mean both knowledge and consent are necessary to defeat the innocent owner defense. Other courts have taken that language to be exclusive -- the owner may have knowledge of the offense, but need not have also consented to the activity to be found ineligible for the innocent owner defense. In fact, the Third Circuit ruled on Dec. 7, 1994 that an owner who knew of the criminal offense at the time of the transfer of the property but not at the time of the criminal action cannot be subject to forfeiture action (see Jan. 1995 NewsBriefs, "Third Circuit Court of Appeals Upholds Innocent Owner Defense"; U.S. v. One 1973 Rolls Royce, No. 93-1417, 63 USLW 2354 (3rd Cir. 1994); BNA Criminal Practice Manual, Dec. 7, 1994, p. 600).
The Eleventh Circuit said in its ruling that the decision from the Third Circuit "creates a sweeping loophole in an intentionally comprehensive forfeiture policy." Because Larraz knew of Luis' illegal activity when he came into possession of the property, he is not an innocent owner.