RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206 File Name: 09a0308p.06 UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT _________________ UNITED STATES OF AMERICA, X Plaintiff-Appellee, - - - No. 07-4487 v. - > , MAHMOUD F. SALTI, - Defendant, - - - MOHAMMED F. SALTI, aka Mike Salti, Sr., - nka Mohammed Al Ammouri; USRAH MARY - SALTI, - - Claimants-Appellants. N Appeal from the United States District Court for the Northern District of Ohio at Cleveland. No. 96-00153-001—Peter C. Economus, District Judge. Argued: December 2, 2008 Decided and Filed: August 25, 2009 * Before: MOORE and WHITE, Circuit Judges; TARNOW, District Judge. _________________ COUNSEL ARGUED: Richard Stoper, Jr., ROTATORI BENDER, L.P.A., Cleveland, Ohio, for Appellants. James L. Morford, ASSISTANT UNITED STATES ATTORNEY, Cleveland, Ohio, for Appellee. ON BRIEF: Richard Stoper, Jr., ROTATORI BENDER, Cleveland, Ohio, for Appellants. James L. Morford, ASSISTANT UNITED STATES ATTORNEY, Cleveland, Ohio, for Appellee. * The Honorable Arthur J. Tarnow, United States District Judge for the Eastern District of Michigan, sitting by designation. 1 No. 07-4487 United States v. Salti, et al. Page 2 _________________ OPINION _________________ WHITE, Circuit Judge. Mohammed F. Salti, also known as Mike Salti, Sr., and now known as Mohammed Al Ammouri (Al Ammouri), and his wife Usrah Mary Salti (Mary Salti) appeal the district court’s dismissal of their petition asserting an interest in a Swiss bank account the court had ordered forfeited as a result of the Government’s plea agreement with Al Ammouri’s nephew, Mahmoud F. Salti, also known as Mike Salti, Jr. (Mahmoud). On the Government’s motion, the court dismissed Al Ammouri’s claim pursuant to the fugitive disentitlement statute, 28 U.S.C. § 2466, and dismissed Mary Salti’s claim finding she lacked standing. We REVERSE and REMAND. I. BACKGROUND On May 8, 1996, a grand jury in the Northern District of Ohio returned a nine- count indictment against Al Ammouri and his nephew Mahmoud (collectively, defendants). Counts 1 and 2 charged conspiracy to commit food stamp fraud, and counts 3 and 4 charged conspiracy to commit domestic and international money laundering in violation of 18 U.S.C. §§ 1956(a)(1)(B)(i) and 1956(a)(2)(B)(i) by concealing the nature, source, ownership, and control of the proceeds of the fraud. Among the money laundering allegations was that certain food-stamp redemption funds were “co-mingled with other SALTI monies in order to render them untraceable.” The indictment further alleged that “[f]or extended periods of time,” Al Ammouri “resided” in Jordan, that defendants used official bank checks to “transport [Al Ammouri]’s food stamp trafficking profits to him in Jordan,” including “co-mingled” proceeds, and that multiple checks were cashed in the Jordan Gulf Bank in Amman, Jordan. Mahmoud initially pleaded not guilty to Counts 1-5, 8, and 9, but subsequently changed his plea on those counts to guilty. Mahmoud admitted that he and Al Ammouri operated a conspiracy from at least April 24, 1985 until April 8, 1994 that generated illegal profits by purchasing approximately $7,000,000 of food stamps and Women, No. 07-4487 United States v. Salti, et al. Page 3 Infants, and Children coupons for less than face value. Mahmoud further admitted that he and Al Ammouri laundered the proceeds of their food-stamp trafficking, including by transporting cash and official bank checks to Al Ammouri in Jordan, where the checks were cashed at the Jordan Gulf Bank. On April 20, 2006, the district court approved an addendum to Mahmoud’s plea agreement, pursuant to which Mahmoud agreed to forfeit all property, real and personal, involved in the money laundering counts of the indictment (Counts 3 and 4) and all property traceable to such property. Mahmoud stated that “from at least as early as 1985 and continu[ing] until in or about 1995,” he was “jointly engaged” with Al Ammouri in the commission of the money laundering offenses, and the checks, cash, and money orders they laundered “constituted proceeds of joint criminal activity.” The court entered an Order of Forfeiture pursuant to 18 U.S.C. § 982(a)(1), which included a provision stating that “[s]hould the United States identify and locate any of this property, the Court will enter an Amended Order of Forfeiture under 21 U.S.C. § 853 [as incorporated by 18 U.S.C. § 982(b)(1)(A)], authorizing the seizure of such property and its disposition in accordance with law.” In November 2006, Mahmoud and the Government entered into an agreement stating that, pursuant to 18 U.S.C. § 982(a)(1), Mahmoud would forfeit “Arab Bank (Switzerland), Ltd., Zurich – Account Number 10.191146-0 in the name of Mohammed Al Ammouri . . . , and its contents (approximately $750,000.00)” (the Swiss Account), and that this property “was involved in Counts 3 and 4 of the indictment, and/or is traceable to such property.” The Government requested that the district court approve an amended order of forfeiture, stating that its request was supported by a sealed affidavit of Special Agent Kevin Ganger of the United States Department of Agriculture’s Office of Inspector General. Finding that the property was subject to forfeiture due to its involvement in Counts 3 and 4 and/or its traceability to such property, the district court entered an amended order, ordering that the Swiss Account in Al Ammouri’s name and its contents be forfeited to the United States. The court further ordered that notice be published pursuant to 21 U.S.C. § 853(n)(1), and that, “[t]o No. 07-4487 United States v. Salti, et al. Page 4 the extent practicable, the United States may also provide direct written notice” to Al Ammouri, whom the court identified as “a person potentially having an interest in the property identified.” The court stated that, “[f]ollowing completion of notice, this Court will enter a final order in accordance with 21 U.S.C. § 853(n).” On January 17, 2007, Al Ammouri and his wife Mary Salti filed a signed petition with the court pursuant to 21 U.S.C. § 853(n), in which they claimed an interest in the Swiss Account. They alleged that Al Ammouri is “the owner” of the Account and that Mary Salti has “an interest” in the Account. They “assert[ed] right, title and interest in the entirety of the Account,” alleging that they “acquired their right, title and interest . . . prior to the offenses alleged in the indictment in this case.” Alleging Al Ammouri “has suffered from heart disease and other physical conditions” for “several years,” the petition stated that Al Ammouri “maintained accounts” (including, presumably, the Swiss Account) as part of “making provisions for his wife . . . after his death.” As to the funds in the accounts at the Arab Bank, petitioners alleged that [a]t various times, the numbers and names on the accounts have changed. In the early 1990s, the funds now in the Account were in an account in the name of Mary Salti. The monies in the Account, in whatever form, have at all times been held by Mike Salti, Sr., Mary Salti or others in trust for the use and support of Mary Salti, due to the debilitating and serious health conditions of Mike Salti, Sr. The accounts were not all placed in the name of Mary Salti because at all relevant times Mary Salti had a power of attorney for Mike Salti, Sr., and therefore, had access to the accounts. Petitioners stated that no monies related to the matters alleged in the indictment were deposited in the Swiss Account “or any predecessor or related account, either directly or indirectly,” and declared that the funds currently in the Swiss Account “are not the proceeds of any criminal activity or traceable to any monies used in the course of any crime.” They requested a hearing to adjudicate their interest in the Account so that their 1 interest could be excepted from forfeiture. 1 The petition also alleged that the Government previously initiated a separate civil action seeking damages related to “identical” matters alleged in the criminal indictment against Al Ammouri and Mahmoud; that the district court at one point quashed a writ of garnishment, resulting in the Government returning seized property to Mary Salti; and that Mary Salti thereafter entered into a Consent Judgment No. 07-4487 United States v. Salti, et al. Page 5 The Government filed a motion to dismiss the petition, arguing that Al Ammouri’s claim should be dismissed pursuant to the fugitive disentitlement statute and that Mary Salti’s claim should be dismissed for lack of standing because she has no “legal interest” in the property. The Government based its fugitive disentitlement argument in part on an attached Declaration of Special Agent Ganger of the Department of Agriculture, who was one of the agents who conducted the criminal investigation of Al Ammouri and Mahmoud. As for Mary Salti’s claim, the Government argued that even assuming the funds in the Swiss Account were legitimate and not the proceeds of illegal activity, Mary Salti was not an “owner” of the Swiss Account and had no “legal interest” in it. Petitioners opposed the Government’s motion. They argued that Al Ammouri’s claim should not be dismissed on fugitive disentitlement grounds and that doing so would violate his due process rights, the Ex Post Facto Clause, and the Eighth Amendment. They further argued that Mary Salti has standing because she has power of attorney to act for Al Ammouri, the Swiss Account contains funds transferred from other accounts in her name, she has a marital property interest, and she should be considered the beneficiary of a constructive trust in the Swiss Account’s funds. Petitioners argued that Ganger’s declaration should be stricken and claimed they were entitled to discovery and a hearing. Along with their opposition memorandum, petitioners submitted signed declarations of Al Ammouri and Mary Salti, bank records, reports and documentation regarding Al Ammouri’s medical history, a document in which Al Ammouri gave his wife power of attorney under Ohio law, and texts of various laws. On November 30, 2007, the district court granted the Government’s motion to dismiss, ruling that Al Ammouri’s claim was barred by the fugitive disentitlement statute and Settlement Agreement with the Government requiring her to pay $75,000, “resolving all matters relating to her potential liability for the matters underlying the Civil Action,” and releasing her from all claims arising from the same conduct as that alleged in the criminal indictment and in “the papers relating to forfeiture.” The petition stated that because Mary Salti signed the agreement and has complied with it, the Government is barred from obtaining forfeiture of her interest in the Swiss Account. The district court did not address this contention when it dismissed the petition. No. 07-4487 United States v. Salti, et al. Page 6 and that Mary Salti lacked a legal interest in the Swiss Account and thus was without standing to assert her claim. The court issued its Final Order of Forfeiture on December 4, 2007. This appeal followed. II. DISCUSSION A. Statutory and Procedural Context The criminal forfeiture statute at issue provides in pertinent part that “[t]he court, in imposing sentence on a person convicted of an offense in violation of [the money laundering statute, 18 U.S.C. § 1956], shall order that the person forfeit to the United States any property, real or personal, involved in such offense, or any property traceable to such property.” 18 U.S.C. § 982(a)(1). It further provides that “[t]he forfeiture of property under this section, including any seizure and disposition of the property and any related judicial or administrative proceeding, shall be governed by” all provisions, except subsection (d), of 21 U.S.C. § 853. Id. § 982(b)(1). Under section 853, a third party “asserting a legal interest in property which has been ordered forfeited to the United States” may petition the court for a hearing to 2 adjudicate “the validity of his alleged interest in the property.” 21 U.S.C. § 853(n)(2). “The hearing on the petition shall, to the extent practicable and consistent with the interests of justice, be held within thirty days of the filing of the petition.” Id. § 853(n)(4). The petitioner and the Government may present evidence and witnesses at the hearing. Id. § 853(n)(5). The petitioner ultimately bears the burden of establishing the petitioner’s third-party claim by a preponderance of the evidence: If, after the hearing, the court determines that the petitioner has established by a preponderance of the evidence that— (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 2 “The petition shall be signed by the petitioner under penalty of perjury and shall set forth the nature and extent of the petitioner’s right, title, or interest in the property, the time and circumstances of the petitioner’s acquisition of the right, title, or interest in the property, any additional facts supporting the petitioner’s claim, and the relief sought.” 21 U.S.C. § 853(n)(3). No. 07-4487 United States v. Salti, et al. Page 7 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; the court shall amend the order of forfeiture in accordance with its determination. 3 Id. § 853(n)(6). The statute instructs that “[t]he provisions of this section shall be liberally construed to effectuate its remedial purposes.” Id. § 853(o). Federal Rule of Criminal Procedure 32.2, which was adopted in 2000, sets out, inter alia, the “ancillary proceeding” to be used when a third party files a petition in a 4 criminal forfeiture proceeding. Subsection (c)(1) of the rule establishes the following procedure: If, as prescribed by statute, a third party files a petition asserting an interest in the property to be forfeited, the court must conduct an ancillary proceeding, but no ancillary proceeding is required to the extent that the forfeiture consists of a money judgment. (A) In the ancillary proceeding, the court may, on motion, dismiss the petition for lack of standing, for failure to state a claim, or for any other lawful reason. For purposes of the motion, the facts set forth in the petition are assumed to be true. (B) After disposing of any motion filed under Rule 32.2(c)(1)(A) and before conducting a hearing on the petition, the court may permit the parties to conduct discovery in accordance with the Federal Rules of Civil Procedure if the court determines that discovery is necessary or desirable to resolve factual issues. When discovery ends, a party may move for summary judgment under Federal Rule of Civil Procedure 56. Fed. R. Crim. P. 32.2(c)(1). The Advisory Committee’s notes state that although “it would not be appropriate to make the Civil Rules applicable in all respects,” there are 3 Petitioners in the instant case are proceeding under subparagraph (A) of this provision. 4 This rule was adopted to supplement the statutory scheme for determining third-party claims, as “[e]xperience has shown that ancillary hearings can involve issues of enormous complexity that require years to resolve” and “[i]n such cases, procedures akin to those available under the Federal Rules of Civil Procedure should be available to the court and the parties to aid in the efficient resolution of the claims.” Fed. R. Crim. P. 32.2(c) advisory committee’s note. No. 07-4487 United States v. Salti, et al. Page 8 “several fundamental areas in which procedures analogous to those in the Civil Rules may be followed,” including “the filing of a motion to dismiss a claim” and “disposing of a claim on a motion for summary judgment.” Fed. R. Crim. P. 32.2(c) advisory committee’s note. The rule, “[w]here applicable, . . . follows the prevailing case law on the issue.” Id. B. Al Ammouri’s Claim We first consider Al Ammouri’s arguments regarding the district court’s application of the fugitive disentitlement statute, 28 U.S.C. § 2466, to dismiss his third- party claim. “[T]he ultimate decision whether to order disentitlement in a particular case rests in the sound discretion of the district court” once the statutory prerequisites of the fugitive disentitlement statute are satisfied. Collazos v. United States, 368 F.3d 190, 198 (2d Cir. 2004). “[T]he legal applicability of § 2466 to [petitioner’s] forfeiture claim” is reviewed de novo, and “to the extent we conclude that the statute is applicable . . . , we review the district court’s decision to order disentitlement for abuse of discretion.” Id. at 195; cf. March v. Levine, 249 F.3d 462, 469 (6th Cir. 2001) (reviewing a district court’s application of the fugitive disentitlement doctrine and holding that the court did not abuse its discretion when it declined to order disentitlement). “A district court abuses its discretion when it relies upon clearly erroneous factual findings, applies the law improperly, or uses an erroneous legal standard.” Wikol ex rel. Wikol v. Birmingham Pub. Sch. Bd. of Educ., 360 F.3d 604, 611 (6th Cir. 2004). The district court dismissed Al Ammouri’s claim pursuant to the fugitive disentitlement statute, 28 U.S.C. § 2466, which Congress enacted as part of the Civil Asset Forfeiture Reform Act of 2000 (CAFRA), Pub. L. No. 106-185, 114 Stat. 202. This section states: (a) A judicial officer may disallow a person from using the resources of the courts of the United States in furtherance of a claim in any related civil forfeiture action or a claim in third party proceedings in any related criminal forfeiture action upon a finding that such person-- No. 07-4487 United States v. Salti, et al. Page 9 (1) after notice or knowledge of the fact that a warrant or process has been issued for his apprehension, in order to avoid criminal prosecution-- (A) purposely leaves the jurisdiction of the United States; (B) declines to enter or reenter the United States to submit to its jurisdiction; or (C) otherwise evades the jurisdiction of the court in which a criminal case is pending against the person; and (2) is not confined or held in custody in any other jurisdiction for commission of criminal conduct in that jurisdiction. (b) Subsection (a) may be applied to a claim filed by a corporation if any majority shareholder, or individual filing the claim on behalf of the corporation is a person to whom subsection (a) applies. 28 U.S.C. § 2466. The Second Circuit was the first to apply the fugitive disentitlement statute. Tracking the statutory language, the Second Circuit identified five prerequisites to disentitlement under § 2466: (1) a warrant or similar process must have been issued in a criminal case for the claimant’s apprehension; (2) the claimant must have had notice or knowledge of the warrant; (3) the criminal case must be related to the forfeiture action; (4) the claimant must not be confined or otherwise held in custody in another jurisdiction; and (5) the claimant must have deliberately avoided prosecution by (A) purposefully leaving the United States, (B) declining to enter or reenter the United States, or (C) otherwise evading the jurisdiction of a court in the United States in which a criminal case is pending against the claimant. Collazos, 368 F.3d at 198; see also id. (observing that “[e]ven when these requirements are satisfied . . . , § 2466 does not mandate disentitlement”). The D.C. Circuit recently adopted this five-element test, United States v. $6,976,934.65, Plus Interest Deposited into Royal Bank of Scot. Intern., Account No. 2029-5614070, Held in Name of Soulbury Ltd., 554 F.3d 123, 128 (D.C. Cir. 2009), and we do so as well. In the instant case, the district court ruled that all elements of the statute had been satisfied and disallowed Al Ammouri’s claim. Petitioners argue that the district court erred in deciding this question on a motion to dismiss prior to allowing for discovery and a hearing. They also contend that “the district court improperly found that Mr. Al Ammouri declines to enter the United States or is evading the jurisdiction of the No. 07-4487 United States v. Salti, et al. Page 10 court”—that, “[a]t a minimum, issues of fact exist regarding whether Al Ammouri is ‘deliberately’ and ‘purposely’ evading the jurisdiction of the district court,” as “there are factual issues regarding whether Mr. Al Ammouri can return to the United States” due to his allegedly poor health. We reject petitioners’ first argument. Rule 32.2 makes clear that before any discovery is taken, a motion to dismiss may be brought to dismiss a third party’s claim “for lack of standing, for failure to state a claim, or for any other lawful reason.” Fed. 5 R. Crim. P. 32.2(c)(1)(A). It also states that “[a]fter disposing of” a motion to dismiss and “before conducting a hearing on the petition,” a court may permit discovery to resolve factual issues if it would be necessary or desirable. Fed. R. Crim. P. 32.2(c)(1)(B) (emphasis added). Thus, discovery and a hearing are not required prior 6 to a ruling on a motion to dismiss. Petitioners also argue that in considering the motion to dismiss Al Ammouri’s claim, the district court did not assume that the facts set forth in the petition were true, see Fed. R. Crim. P. 32.2(c)(1)(A), and instead impermissibly resolved disputed issues of fact to determine that Al Ammouri is a “fugitive” as defined by the fugitive disentitlement statute. We agree that the district court erred when it decided as a matter of law that Al Ammouri is a “fugitive” and thus dismissed his claim. We are persuaded by the D.C. Circuit’s recent reversal of a district court’s application of the fugitive disentitlement statute, on the Government’s motion for summary judgment, where the district court had disallowed a claim in a forfeiture proceeding. $6,976,934.65, 554 F.3d 123. Discussing the fifth disentitlement element, the D.C. Circuit found that the district court erred in holding that the government need not “show ‘that avoiding prosecution 5 We agree with the district court that dismissing a claim on fugitive disentitlement grounds falls into the category of “any other lawful reason.” 6 Even before the enactment of Rule 32.2, we allowed courts to dismiss claims without first holding a hearing. See, e.g., United States v. Campos, 859 F.2d 1233, 1240 (6th Cir. 1988) (as amended) (“We conclude . . . that the district court did not err in its conclusion that the claimants failed to allege or make a prima facie showing of any legal right, title, or interest in the forfeited property and thus no hearing or trial was mandated . . . .”); see also United States v. O’Brien, 181 F.3d 105, 1999 WL 357755, at *3 (6th Cir. 1999) (unpublished disposition) (“[Third-party petitioner] did not and cannot make a prima facie showing of a legal right, title or interest in the [property]. . . . The district court therefore did not err in declining to provide her with a hearing on the matter.”).