/ 1 min read / New York Law Journal

When Does the Government Have a Claim to Forfeit Untainted Assets

It’s a question that almost every veteran white-collar defense lawyer has been asked at some point by the spouse of a client facing conviction: “When this is over, if the government wins and he/she goes off to prison, what if anything will be left for me and our children?”

Authors

Evan T. Barr

Most clients and their loved ones intuitively grasp that the government is likely to take away any ill-gotten gains resulting from the crime. But few appreciate that even indisputably legitimate assets are at risk.

When the government seeks to forfeit the proceeds of illegal activity, under the relation back doctrine, its claim to the tainted property arises from the moment at which the alleged offense giving rise to forfeiture began. The doctrine posits, in effect, that a defendant cannot legally possess that which he was never entitled to have in the first place.

In many cases, by the time an indictment is filed, the criminal proceeds have long since been dissipated. Under those circumstances, the government may seize and forfeit so-called substitute assets. These are otherwise clean properties belonging to the defendant that may well have been acquired long before any criminal scheme. Not surprisingly, there are often other individuals, such as spouses or children, who have a valid and pre-existing ownership interest in such properties.

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