Published on:

Fine and forfeiture of Atlanta jewelry store’s entire inventory following money laundering and reporting conviction was not unconstitutional in U.S. v. Chaplin

The defendant business in U.S. v. Chaplin’s was a jewelry store in Atlanta from which the defendant, an employee, sold jewelry on a cash basis to persons he knew to be drug dealers. In one instance an undercover IRS agent posing as a narcotics trafficker purchased expensive jewelry in cash from the defendant at his store without completing a Form 8300. The undercover cash sales were structured to avoid individual payments in excess of $10,000, a transaction which required the defendant to file a report with the federal government (Form 8300) containing information about the such as buyer’s name and address. Chaplin’s, Inc., was indicted on money laundering counts and a count of failure to report, all arising out the undercover sale and the failure to file the Form 8300. Because the defendant committed the violations during the course of his employment at Chaplin’s, Chaplin’s Inc. was vicariously liable for his actions and charged by indictment.

The both counts of the indictment sought forfeiture of “any and all property involved in” the offenses including the jewelry store’s entire inventory. Following trial Chaplin’s was found guilty and the government moved to forfeit the inventory on the grounds that the inventory was “involved in” the money laundering and reporting offenses because it provided the defendant owner and employees and vicariously Chaplin’s with an “air of legitimacy.” The inventory totaled $1,877,262. The district court ordered forfeiture of the inventory, plus it imposed a $100,000 fines for two counts.

On appeal Chaplin’s challenged the monetary punishment as a violation of the 8th Amendment as the forfeiture was unconstitutionally excessive and grossly disproportional to the gravity of the offense.

In deciding gross-proportionality, the appellate court looked at three factors:

  • Whether the defendant falls into the class of persons against whom the criminal statute was principally directed;
  • Other penalties authorized by the legislature or the Sentencing Commission; and
  • The harm caused by the defendant.

Applying these factors, the Court of Appeals found that Chaplin’s was among the principal targets of the forfeiture authorizing statutes – money laundering and reporting violations. It found the statutory and guidelines penalties were harsh and the maximum fine was $1.5 million and the guidelines range was $650,000 to $1,300,000. The Court also found the harm caused by the defendant supports the forfeiture order because hiding drug money was harmful and Congress contemplated punishing this type of conduct.

Because the combined forfeiture and fine exceeded the statutory maximum fine and the high end of the sentencing guidelines, the punishment did not have the presumption of constitutionality. However the Court found that the total monetary punishment of $1,999,262 (inventory 1,877,262, fine $100,000 and a $22,000 money judgment for the undercover funds never returned by the defendant) was not disproportionate to the “gravity of Chaplin’s crime.” The Court of Appeals found that Congress has authorized both fine and forfeiture as part of the punishment for the money laundering and reporting statutes, and Congress did not consider a punishment somewhat above the statutory fine range to be excessive. It considered the 33.3 % increase over and above the statutory maximum fine was not excessive when compared to other cases involving forfeiture and fine recommended by the Sentencing Guideline

Contact Information