PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff-Appellant,
and
CENTRA BANK, INCORPORATED;
BB&T CORPORATION, No. 08-5172
Parties-in-Interest,
v.
JALARAM, INCORPORATED,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of West Virginia, at Martinsburg.
John Preston Bailey, Chief District Judge.
(3:05-cr-00006-JPB-4)
Argued: December 2, 2009
Decided: April 2, 2010
Before MICHAEL, MOTZ, and KING, Circuit Judges.
Reversed and remanded by published opinion. Judge Motz
wrote the opinion, in which Judge Michael joined. Judge King
wrote an opinion concurring in the judgment.
2 UNITED STATES v. CENTRA BANK
COUNSEL
ARGUED: Michael Stein, OFFICE OF THE UNITED
STATES ATTORNEY, Wheeling, West Virginia, for Appel-
lant. Dale P. Kelberman, MILES & STOCKBRIDGE, PC,
Baltimore, Maryland, for Appellee. ON BRIEF: Sharon L.
Potter, United States Attorney, for Appellant. Derek P. Rous-
sillon, MILES & STOCKBRIDGE, PC, Baltimore, Maryland,
for Appellee.
OPINION
DIANA GRIBBON MOTZ, Circuit Judge:
The Government appeals the district court’s denial of its
request for the forfeiture of $358,390.22 in criminal proceeds.
The Government sought the proceeds forfeiture from Jalaram,
Inc., the owner of a motel and participant in a conspiracy to
violate the anti-prostitution provisions of the Mann Act. The
district court held that the requested forfeiture would violate
the Eighth Amendment’s Excessive Fines Clause. For the rea-
sons that follow, we reverse and remand.
I.
This case arises from the prosecution of the conspirators in
a prostitution ring known as the Gold Club. In an earlier
appeal, we related in some detail the facts underlying this
conspiracy. See United States v. Singh, 518 F.3d 236, 241-43
(4th Cir. 2008). We set forth here only the facts relevant to the
instant case.
The Gold Club ferried prostitutes from several states to
Martinsburg, West Virginia, where they served clients at two
motels, the Economy Inn and the Scottish Inn. The Gold Club
conspiracy operated from 2000 to 2003, employed approxi-
UNITED STATES v. CENTRA BANK 3
mately fifty prostitutes, and generated over $670,000 in pro-
ceeds. Id. at 241.
The Scottish Inn, owned by Jalaram, which in turn is
owned by Suresh Patel and his wife, played host to the Gold
Club for a period of approximately six months from late 2001
through early 2002. During that period, Suresh Patel’s
brother, Dilipkumar "Dan" Patel, ran the Scottish Inn on a
day-to-day basis. Dan Patel lived at the motel and was present
there except when he took deposits to the bank, during which
time his brother would typically cover for him. Id. at 242-43.
Jalaram joined the conspiracy after Susan Powell, the man-
ager/madam of the Gold Club, met with Suresh Patel to dis-
cuss using the Scottish Inn, rather than the Economy Inn
(which she had been using and which Jalaram does not own),
as a site for her "adult entertainment company." Suresh Patel
asked Powell to meet with Dan Patel the following day, and
the two reached an agreement. Id. at 242.
Under the terms of that agreement, Dan Patel provided a
room at the Scottish Inn to each prostitute working on a given
day, often forgoing the Scottish Inn’s usual requirement that
guests fill out registration cards. The prostitutes waited in the
motel room for clients. Powell coordinated appointments and
checked on her employees by using the motel switchboard.
On days when the prostitutes saw at least one customer, they
paid a room rental fee of $40 to Dan Patel. On days when the
prostitutes did not serve any clients, Dan Patel waived the fee.
At night, the prostitutes relinquished their rooms to the motel,
which re-rented the accommodations to travelers. Id. at 241-
42.
After the Gold Club had operated at the Scottish Inn for
approximately six months, some of the prostitutes reported
dissatisfaction and expressed a desire to return to the Econ-
omy Inn. For this reason, during a short period, the Gold Club
operated at both motels concurrently. While the Scottish Inn
4 UNITED STATES v. CENTRA BANK
hosted the prostitutes, their activities generated approximately
$385,000 in proceeds.1 Subsequently, Powell moved the entire
Gold Club back to the Economy Inn and operated there until
the police arrested her in 2003. Id. at 243. Powell pled guilty
to a tax offense and cooperated with the Government’s inves-
tigation. Id. at 241.
A federal grand jury returned a fourteen-count indictment
charging Suresh Patel, Dan Patel, Jalaram, and other Gold
Club conspirators with violations of the Mann Act and money
laundering. One count also sought from the conspirators for-
feiture of the Economy Inn and the Scottish Inn, plus more
than $670,000 in gross proceeds from the conspiracy. Id. at
243-44.
After a six-day trial, the jury acquitted Suresh Patel but
returned a guilty verdict against Dan Patel, Jalaram, and the
other conspirators. The jury found Jalaram guilty of one count
of conspiracy to commit an offense against the United States
by violation of the Mann Act, five counts of conspiracy to
induce an individual to travel in interstate commerce to
engage in prostitution, one count of conspiracy to commit
money laundering, and one count of money laundering. More-
over, in a special interrogatory the jury found both motels, as
well as the Gold Club’s total proceeds ($670,072.36), subject
to forfeiture. Id. at 240, 244.
The district court vacated all of the money laundering con-
victions for insufficiency of evidence. Id. at 244. Then, con-
cluding that it had erred in its jury instructions concerning
corporate liability, the district court set aside Jalaram’s other
convictions and ordered a new trial on those charges. Id. at
1
Jalaram received from the Gold Club operations a minimum of $700,
the amount paid by prostitutes on days when they completed registration
cards. As Jalaram concedes, however, registration was uncommon, and
Jalaram therefore almost certainly received more than $700. See Singh,
518 F.3d at 243 n.5.
UNITED STATES v. CENTRA BANK 5
245. The Government appealed and we reversed, holding that
the district court improperly vacated the money laundering
convictions and incorrectly found its jury instructions inade-
quate. Id. at 248-51. Thus, we reinstated the jury verdict
against Jalaram on all counts and remanded for sentencing. Id.
at 255-56.
On remand, the Government sought to enforce the jury
finding and obtain from Jalaram forfeiture of the Scottish Inn
as a facilitating property in the conspiracy. In lieu of this for-
feiture, Jalaram agreed to pay the United States $350,000. The
Government also sought to enforce the jury finding that the
conspirators, including Jalaram, were jointly and severally lia-
ble for the forfeiture of $670,072.36 in gross proceeds of the
conspiracy. From Jalaram, the Government sought only the
proceeds generated during the six months that the Scottish Inn
participated in the conspiracy, which Jalaram conceded
totaled $385,390.22.
The district subjected the requested proceeds forfeiture to
an Eighth Amendment Excessive Fines Clause analysis, found
that it would be grossly disproportional to Jalaram’s crime,
and denied the Government’s request. The Government
timely noted this appeal.
II.
The forfeiture provision at issue states that any person con-
victed of violating or conspiring to violate the Mann Act
shall forfeit to the United States such person’s inter-
est in . . .
(2) any property, real or personal, constituting or
traceable to gross profits or other proceeds obtained
from such offense; and
6 UNITED STATES v. CENTRA BANK
(3) any property, real or personal, used or intended
to be used to commit or to promote the commission
of such offense.
18 U.S.C. § 2253(a) (2000) (amended 2006) (emphases added).2
In this case, in addition to now-satisfied forfeiture of the Scot-
tish Inn as a facilitating property pursuant to § 2253(a)(3), the
Government also sought from Jalaram forfeiture of
$385,390.22 in proceeds of the conspiracy pursuant to
§ 2253(a)(2).
The Government sought the forfeiture of these proceeds as
part of Jalaram’s criminal sentence. Conspirators "are respon-
sible at sentencing for co-conspirators’ reasonably foreseeable
acts and omissions . . . in furtherance of the jointly undertaken
criminal activity." United States v. McHan, 101 F.3d 1027,
1043 (4th Cir. 1996) (alteration in original) (internal quotation
marks omitted). We have therefore held conspirators jointly
and severally liable for the forfeiture of proceeds from a con-
spiracy. See id.
The Gold Club conspiracy received $670,072.36 in pro-
ceeds from 2000 to 2003. The conspiracy generated
$385,390.22 during the period of Jalaram’s participation. Dan
Patel personally forfeited $27,000 of the $385,390.22, and so
the Government now seeks from Jalaram a forfeiture of
$358,390.22 in proceeds. Jalaram contends, as it did before
the district court, that such a forfeiture violates the Eighth
Amendment prohibition on "excessive fines."3
2
Congress subsequently amended the Mann Act so that a different for-
feiture provision applies to violations today. See 18 U.S.C. § 2428 (2006).
That amendment has no effect on this appeal. See Singh, 518 F.3d at 244
n.11.
3
Relying on Rita v. United States, 551 U.S. 338 (2007), and its progeny,
Jalaram also suggests that, in any event, we must uphold as "reasonable"
the district court’s refusal to order the forfeiture. These cases do not assist
Jalaram because a sentencing court does not have discretion to ignore a
UNITED STATES v. CENTRA BANK 7
The Eighth Amendment dictates that "[e]xcessive bail shall
not be required, nor excessive fines imposed, nor cruel and
unusual punishments inflicted." U.S. Const. amend. VIII
(emphasis added). Application of the Excessive Fines Clause
presents a question of law that we review de novo. United
States v. Bajakajian, 524 U.S. 321, 336 & n.10 (1998).
The Supreme Court has held "that a punitive forfeiture vio-
lates the Excessive Fines Clause if it is grossly dispropor-
tional to the gravity of a defendant’s offense." Id. at 334.
Thus, a forfeiture violates the Excessive Fines Clause only if
it is (1) punitive, and (2) grossly disproportional to the gravity
of the defendant’s offense.
In this case, the Government argues at length that the for-
feiture at issue here—an in personam criminal forfeiture of
proceeds—by definition never meets the first criterion, i.e., is
never punitive, and therefore is never subject to examination
under the second criterion, proportionality. The Government
also briefly contends that, if punitive and so subject to propor-
tionality review, this proceeds forfeiture would survive such
an analysis.
Although we reject the Government’s principal argument,
we agree that the statutorily required forfeiture here is not
grossly disproportional to the gravity of Jalaram’s offense.
III.
The Government maintains that the Excessive Fines Clause
does not apply to forfeitures of proceeds because such forfei-
statutory forfeiture provision. See United States v. Monsanto, 491 U.S.
600, 607 (1989) (reasoning that "Congress could not have chosen stronger
words to express its intent that forfeiture be mandatory" than the phrase
"shall forfeit"). Unless the Constitution bars the forfeiture, the district
court must impose it.
8 UNITED STATES v. CENTRA BANK
tures can never be "punitive." Contrary to the Government’s
contention, we have never so held.4 Moreover, three Supreme
Court precedents, largely slighted by the Government, require
us now to conclude that the forfeiture of criminal proceeds
does indeed constitute punishment to which the Excessive
Fines Clause applies.
In Austin v. United States, 509 U.S. 602, 604-05 (1993), the
Government sought in rem civil forfeiture of "guilty property"
—a mobile home and an auto body shop—used during drug
offenses. Although in the case at hand the Government all but
ignores Austin, there, as here, the Government attempted to
categorize an entire class of forfeitures as remedial rather than
punitive, and therefore exempt from Excessive Fines scrutiny.
Specifically, the Government contended, and the lower courts
held, that civil forfeitures, unlike criminal forfeitures, do not
constitute punishment because civil forfeitures serve a "reme-
dial" purpose. See id. at 605-06, 610.
The Supreme Court flatly rejected the Government’s argu-
ment. The Court explained that even "a civil sanction," that
does not "solely" serve a remedial purpose, but also "serv[es]
either retributive or deterrent purposes, is punishment, as we
have come to understand the term." Id. at 610 (internal quota-
4
We have addressed this subject only in dicta or unpublished opinions.
And even in these nonbinding utterances, we have come to conflicting
conclusions. Compare United States v. Borromeo, 1 F.3d 219, 221 (4th
Cir. 1993) (stating in dicta that the forfeiture of proceeds "may, in a given
case" be subject to the Excessive Fines Clause), and United States v. Shif-
flett, No. 93-5693, 1995 WL 125506, at *2 (4th Cir. Mar. 23, 1995)
(unpublished) (concluding that the Excessive Fines Clause applies to the
forfeiture of proceeds), with United States v. Wild, 47 F.3d 669, 676 (4th
Cir. 1995) (stating in dicta that the forfeiture of proceeds "can never be
‘excessive’ in a constitutional sense"), and United States v. Powell, 2 F.
App’x 290, 294 (4th Cir. 2001) (unpublished) (concluding that the forfei-
ture of proceeds can never be disproportional). The Government repeat-
edly and erroneously asserts that the statement in Wild constitutes a
holding; it does not because in Wild the Government did not seek the for-
feiture of proceeds.
UNITED STATES v. CENTRA BANK 9
tion marks omitted) (emphasis added). Because the civil for-
feiture statute in Austin targeted those convicted of crimes and
sought to deter future offenses, the Court held that, at least in
part, the forfeiture "constitute[d] payment to a sovereign as
punishment for some offense, and, as such, [was] subject to
the limitations of the Eighth Amendment’s Excessive Fines
Clause." Id. at 622 (internal quotation marks and citation
omitted). Accordingly, the Supreme Court reversed and
remanded for a determination of whether the challenged civil
forfeiture was unconstitutionally excessive. Id. at 604.
On the same day that the Court decided Austin, it issued its
opinion in Alexander v. United States, 509 U.S. 544 (1993).
A jury convicted Alexander of RICO violations for trafficking
in obscenity, and the Government sought forfeiture of numer-
ous assets, including the "proceeds [he] obtained from his
racketeering offenses." Id. at 547, 548 (emphasis added).5 The
lower courts enforced the forfeiture order without much dis-
cussion of the Eighth Amendment issue. Id. at 548-49.
Before the Supreme Court, the Government suggested that
the forfeiture of criminal proceeds would always pass consti-
tutional muster because "however severe" such forfeiture may
be, "a person who has . . . acquired property with the proceeds
of illegal activity has, at the very least, a vastly reduced moral
claim to the continued use or enjoyment of such property or
its fruits." Br. of U.S. at 39-40 in Alexander v. United States,
509 U.S. 544 (1993), available at 1992 WL 511952. Reject-
ing this apparent effort to shield all proceeds forfeitures from
proportionality review, the Supreme Court concluded that the
entire forfeiture, including the forfeiture of proceeds, was
"clearly a form of monetary punishment no different, for
Eighth Amendment purposes, from a traditional ‘fine,’" and
so subject to analysis under the Excessive Fines Clause. Alex-
5
In the case at hand, the Government erroneously contends that "Alex-
ander v. U.S., 509 U.S. 544, 559 (1993) . . . [did] not involve the forfeiture
of proceeds." See Government’s Br. at 19.
10 UNITED STATES v. CENTRA BANK
ander, 509 U.S. at 558-59. Indeed, the Court noted that
"[u]nlike Austin, this case involves in personam criminal for-
feiture not in rem civil forfeiture, so there was no threshold
question concerning the applicability of the Eighth Amend-
ment." Id. at 559 n.4. Accordingly, the Court again reversed
and remanded for a determination of whether the contested
forfeiture (including the forfeiture of proceeds) was unconsti-
tutionally excessive. See id. at 559.6
Five years later, in Bajakajian, the Government once more
attempted (and failed) to convince the Supreme Court that a
forfeiture did not constitute punishment. See 524 U.S. 321.
The respondent there failed to report $357,144 that he
attempted to carry out of the country in violation of federal
law requiring any person transporting more than $10,000 to
declare the sum. Id. at 325. The forfeiture provision autho-
rized forfeiture of "any property . . . involved in such
offense." 18 U.S.C. § 982(a)(1) (1994). The Government
sought forfeiture of the entire $357,144 as part of the respon-
dent’s criminal sentence. The district court held that such a
forfeiture would violate the Excessive Fines Clause, and
instead imposed a $15,000 forfeiture; the Ninth Circuit
affirmed. Id. at 326-27.
The Government urged the Supreme Court to reverse, con-
tending that the statutory forfeiture was not subject to Exces-
sive Fines analysis because the currency in question was
"guilty property" whose forfeiture was "remedial" rather than
punitive. Id. at 329-30. The Supreme Court, however, had
"little trouble" rejecting this argument and "concluding that
6
On remand, the Eighth Circuit afforded no significance to the fact that
the Supreme Court had remanded the forfeiture of proceeds, like the other
forfeited property, for Excessive Fines analysis. Instead, the appellate
court held that "[f]orfeiture of proceeds cannot be considered punishment,
and thus, subject to the excessive fines clause, as it simply parts the owner
from the fruits of the criminal activity." United States v. Alexander, 32
F.3d 1231, 1236 (8th Cir. 1994). This does not seem to us to comply with
the Supreme Court’s remand order.
UNITED STATES v. CENTRA BANK 11
the forfeiture . . . constitute[d] punishment" because it was
"imposed at the culmination of a criminal proceeding[,] . . .
require[d] conviction of an underlying felony, and . . . [could]
be imposed . . . only upon a person who has himself been con-
victed" of the crime. Id. at 328.
Of particular note here, the Bajakajian Court rejected the
Government’s argument that the currency in question was
subject to nonpunitive forfeiture because it was an "instru-
mentality" of the crime, a class of property historically
exempt from Excessive Fines analysis. The Court recognized
that "[i]nstrumentalities historically have been treated as a
form of ‘guilty property’ that can be forfeited in civil in rem
proceedings" without triggering Excessive Fines scrutiny. Id.
at 333. The Court went on to hold, however, that when the
Government seeks "to punish [a defendant] by proceeding
against him criminally, in personam, rather than proceeding
in rem against the currency," it is "irrelevant whether [the
defendant]’s currency is an instrumentality; the forfeiture is
punitive, and the test for the excessiveness of a punitive for-
feiture involves solely a proportionality determination." Id. at
333-34.
In Austin, Alexander, and Bajakajian, every member of the
Supreme Court agreed, over the Government’s objections,
that the challenged forfeitures constituted punishment subject
to proportionality analysis under the Excessive Fines Clause.
In each case, the Government argued that forfeiture of a cer-
tain type of property—whether the civil forfeiture of guilty
property in Austin, the criminal forfeiture of racketeering pro-
ceeds in Alexander, or the criminal forfeiture of instrumentali-
ties in Bajakajian—merited a special exception from the
Excessive Fines Clause. In each case, the Court rejected the
Government’s view and reaffirmed that the type of property
at issue was irrelevant to the issue of whether the forfeiture
constituted punishment. Instead, the Court consistently
focused on whether the forfeiture stemmed, at least in part,
from the property owner’s criminal culpability. If so, the for-
12 UNITED STATES v. CENTRA BANK
feiture does constitute punishment and so is subject to propor-
tionality review under the Excessive Fines Clause.
The Supreme Court’s Excessive Fines Clause cases thus
require us to reject the Government’s argument that forfeiture
of a particular type of property—here the proceeds of a crimi-
nal conspiracy—is, by definition, nonpunitive. Instead, we
look to whether the challenged forfeiture resulted at least in
part from the criminal activity of the property owner, Jalaram.
In answering that question, we examine whether the forfeiture
was "imposed at the culmination of a criminal proceeding,"
"requires conviction of an underlying felony," and "cannot be
imposed upon an innocent [person] . . . but only upon a per-
son who has himself been convicted of a" crime. Id. at 328.
The forfeiture here meets all of these requirements. The
Mann Act provision mandates forfeiture at "the culmination
of a criminal proceeding"—sentencing following a six-day
trial. Moreover, like the statute in Bajakajian, the statute at
issue here requires forfeiture only after a person is "con-
victed" of the underlying felony. See 18 U.S.C. § 2253(a)
(2000) (amended 2006). Also like the statute in Bajakajian,
the provision here includes a defense that allows innocent
third parties to defeat forfeiture. See id. § 2253(b). Moreover,
and again as in Bajakajian, the challenged forfeiture does not
appear "remedial" because the "forfeiture of the currency . . .
does not serve the remedial purpose of compensating the
Government for a loss." Bajakajian, 524 U.S. at 329. For
these reasons, we hold that the Excessive Fines Clause applies
to the forfeiture of proceeds challenged in this case.
In doing so, we recognize that in most cases, courts ulti-
mately will find a forfeiture of proceeds not grossly dispro-
portional to the offense. In a case involving a single offender,
it would be very difficult, and perhaps impossible, for the
defendant to show that the forfeiture of proceeds was grossly
disproportional to the gravity of his offense. Thus, we can
understand the desire of some of our sister circuits to simplify
UNITED STATES v. CENTRA BANK 13
the analysis by holding such forfeitures exempt from constitu-
tional scrutiny in the first instance.7
However, the Government’s proposed shortcut may work a
grave injustice in cases involving joint and several liability. In
such cases, some defendants inevitably disgorge more money
than they received from the conspiracy, thus forfeiting prop-
erty that they obtained lawfully in order to satisfy the forfei-
ture judgment. In a case where a defendant played a truly
minor role in a conspiracy that generated vast proceeds, joint
and several liability for those proceeds might result in a for-
feiture order grossly disproportional to the individual defen-
dant’s offense. Yet, if we adopt the rule advanced by the
Government, those defendants would be unable to obtain
relief. Such a holding would grant the Government a license
to "abuse . . . its ‘prosecutorial’ power," and thus undermine
the "primary focus of the Eighth Amendment." Browning-
7
In an attempt to avoid the force of the Supreme Court’s forfeiture
cases, the Government asserts that "every . . . circuit that has addressed
the issue has held that the forfeiture of property constituting . . . proceeds
of an alleged illegal activity can never be excessive in a constitutional
sense." Government’s Br. at 17 (internal quotation marks omitted). This
claim is simply false. See, e.g., United States v. Browne, 505 F.3d 1229,
1281-82 (11th Cir. 2007) (holding that the forfeiture of racketeering pro-
ceeds constitutes punishment); United States v. Corrado, 227 F.3d 543,
552 (6th Cir. 2000) (recognizing that "[t]hough the [RICO] statute appears
to require total forfeiture of illegal proceeds, courts can reduce the forfei-
ture to make it proportional to the seriousness of the offense so as not to
violate the Eighth Amendment prohibition against . . . ‘excessive fines’");
United States v. 3814 NW Thurman St., 164 F.3d 1191, 1197 (9th Cir.),
amended on denial of reh’g 172 F.3d 689 (1999) (holding that the forfei-
ture of proceeds from false loan applications constitutes punishment).
Indeed, only two of the cases that the Government cites were decided after
Bajakajian. One does not attempt to distinguish or even mention Bajaka-
jian. See United States v. Real Prop. Located at 22 Santa Barbara Drive,
264 F.3d 860 (9th Cir. 2001). The other addresses Bajakajian in a foot-
note, stating only that "Bajakajian . . . did not involve drugs, contraband,
or proceeds thereof." United States v. Betancourt, 422 F.3d 240, 250 n.5
(5th Cir. 2005). The court never explains why that distinction matters, and
of course, it does not.
14 UNITED STATES v. CENTRA BANK
Ferris Indus. of Vt., Inc. v. Kelco Disposal, Inc., 492 U.S.
257, 266 (1989).8 While we recognize the appeal of a stream-
lined analysis, we cannot engage in one at the expense of con-
stitutional rights.
IV.
Having held that the Excessive Fines Clause applies, we
must determine whether the statutory forfeiture challenged
here is "grossly disproportional to the gravity of [Jalaram’s]
offense." Bajakajian, 524 U.S. at 324.
In Bajakajian, the Supreme Court weighed a number of
factors to determine whether the forfeiture was grossly dispro-
portional to the charged offense. The Court considered (1) the
amount of the forfeiture and its relationship to the authorized
penalty (a $357,144 forfeiture for a crime subject to a $5000
maximum fine); (2) the nature and extent of the criminal
activity (a single reporting offense); (3) the relationship
between the crime charged and other crimes (none); and (4)
the harm caused by the charged crime (again none). Id. at
337-39.
In the years since Bajakajian, we have looked to these
same factors to assess the proportionality of challenged forfei-
tures. In United States v. Bollin, 264 F.3d 391, 417-18 (4th
Cir. 2001), we found the forfeiture of $1.2 million not exces-
sive because the offense—a conspiracy to commit securities
fraud—carried significant criminal penalties, spanned a long
period of time, was connected to other crimes including
8
Our friend in concurrence seems to suggest that our holding in McHan,
101 F.3d at 1043, requires a court to ignore the individual role played by
a conspirator when ordering forfeiture of proceeds. True, McHan estab-
lishes, as a matter of statutory construction, that a forfeiture statute
imposed joint and several liability on all members of a given conspiracy.
But in McHan, no party suggested, and we did not hold, that every forfei-
ture of proceeds compelled by a statute would pass constitutional muster
under the Eighth Amendment.
UNITED STATES v. CENTRA BANK 15
money laundering, and bilked investors out of substantial
sums of money. Similarly, in United States v. Ahmad, 213
F.3d 805, 817 (4th Cir. 2000), although the statute and Sen-
tencing Guidelines authorized penalties that "mirror[ed] those
in Bajakajian," we held the forfeiture of $101,587.42 not
excessive because the defendant’s "conduct . . . was not a sin-
gle, isolated untruth affecting only the government, but rather
a series of sophisticated commercial transactions over a
period of years that were related to a customs fraud scheme."
As in Bollin and Ahmad, application of the Bajakajian fac-
tors here leads us to conclude that the requested forfeiture
would not be excessive. Although the Government has not
identified any victims who suffered harm from Jalaram’s
offense, all of the other factors suggest that Jalaram’s crimes
warrant serious punishment. Like the offenses in Bollin and
Ahmad, and unlike the offense in Bajakajian, the criminal
activity here generated hundreds of thousands of dollars in
illicit revenues. Like the offenses in Bollin and Ahmad, and
unlike that in Bajakajian, the criminal activity here spanned
several months. And like the offenses in Bollin and Ahmad,
and unlike that in Bajakajian, the crimes charged against
Jalaram—prostitution and money laundering—were con-
nected with other offenses, i.e., similar crimes at the Economy
Inn and systematic tax evasion (the charge for which Susan
Powell pled guilty).
Furthermore, also unlike the offense in Bajakajian, which
carried a maximum fine of $5000, Jalaram’s offense renders
it liable for a fine of up to $350,000. See United States Sen-
tencing Guidelines Manual ("U.S.S.G.") §§ 8C2.4, 8C2.6,
8C2.7(b) (2008). Such punishment does not suggest "a mini-
mal level of culpability." Bajakajian, 524 U.S. at 339. In sum,
application of the Bajakajian factors indicates that Congress
considers crimes like Jalaram’s far more serious than the
reporting offense in Bajakajian, and that Jalaram must clear
a significantly higher hurdle to show that the requested forfei-
ture is grossly disproportional to the gravity of its offense.
16 UNITED STATES v. CENTRA BANK
Jalaram urges us to consider that it received only a small
amount of money from the conspiracy. Jalaram’s individual
role in the conspiracy is certainly relevant to the gravity of its
offense. See Bajakajian, 524 U.S. at 339 n.14. However, the
fact that Jalaram may have received only a small share of the
proceeds, in and of itself, does not demonstrate that it played
a minor role in the conspiracy. That fact establishes only that
Jalaram’s participation in the conspiracy was not lucrative; it
does not speak to Jalaram’s level of culpability.
In fact, although Jalaram may have received only a small
share of the proceeds, it played a significant role in the con-
spiracy. The Gold Club operated in the Scottish Inn—
Jalaram’s property—for six months, during which the con-
spiracy generated over $385,000 in revenues. Dan Patel—
Jalaram’s agent—actively furthered the daily activities of the
Gold Club during that entire period by collecting rental pay-
ments, assigning rooms, and waiving registration require-
ments. Susan Powell—the head of the conspiracy—used the
motel’s switchboard to supervise the prostitutes during the
day. Far from being a minor player, Jalaram stood at the heart
of the conspiracy’s day-to-day operations for a six-month
period.9
Because Jalaram’s offense was serious and its individual
culpability significant, it cannot meet its burden of showing
that the forfeiture in this case would be "grossly dispropor-
tional" to the gravity of its offense. Therefore, even though
we hold that the forfeiture of criminal proceeds is punitive
and so subject to scrutiny under the Eighth Amendment’s
Excessive Fines Clause, the district court erred in finding that
9
Jalaram’s $350,000 settlement in lieu of forfeiting the Scottish Inn
does not, as Jalaram contends, render the total forfeiture "grossly dispro-
portional." Rather, the seriousness of Jalaram’s offense and its central
involvement in the conspiracy support imposition even of this combined
fine. Cf. Bollin, 264 F.3d at 418 (upholding a $1.2 million forfeiture as
punishment for a serious offense that carried a maximum fine of
$500,000).
UNITED STATES v. CENTRA BANK 17
the required forfeiture in this case would violate the Constitu-
tion. We remand for the district court to resentence Jalaram
and determine the amount of proceeds reasonably foreseeable
to it and therefore subject to forfeiture under 18 U.S.C.
§ 2253(a)(2).
V.
For all of these reasons, we reverse the judgment of the dis-
trict court and remand for further proceedings consistent with
this opinion.
REVERSED AND REMANDED
KING, Circuit Judge, concurring in the judgment:
With all due respect to my distinguished colleagues in the
panel majority, I write separately to concur — on a different
basis — in the judgment of reversal. In my view, the Govern-
ment’s request for forfeiture of the proceeds obtained by the
Mann Act conspiracy did not implicate the Excessive Fines
Clause of the Eighth Amendment. Thus, I would join the
Fifth, Seventh, Eighth, Ninth, and Tenth Circuits in ruling that
the purely remedial nature of proceeds forfeiture distinguishes
it from the punitive "fines" that are subject to the Excessive
Fines Clause, and I would not reach the merits of Jalaram’s
constitutional challenge.
As I read its decisions, the Supreme Court has never
decided whether the Excessive Fines Clause applies to the
forfeiture of criminal proceeds. See, e.g., United States v.
Bajakajian, 524 U.S. 321, 328 (1998); Austin v. United States,
509 U.S. 602, 610 (1993). According to the panel majority,
however, the Court decided this issue in Alexander v. United
States, where it remanded an order of various types of forfei-
ture, including the forfeiture of criminal proceeds, to the
Eighth Circuit. See 509 U.S. 544, 558-59 (1993). Yet, if the
Court had actually ruled on whether the forfeiture of proceeds
18 UNITED STATES v. CENTRA BANK
implicates the Excessive Fines Clause, the majority’s analysis
of this issue would be far more circumscribed. The majority
must go the long route, however, because the Supreme Court
has never answered this question. Instead, the Alexander
Court merely faulted the Eighth Circuit for lumping together
Alexander’s Eighth Amendment challenge to his sentence
(under the Cruel and Unusual Punishments Clause) and his
forfeiture challenge (under the Excessive Fines Clause). See
id. at 558. To remedy that defect, the Court remanded the for-
feiture order so that the Eighth Circuit could conduct the
Excessive Fines Clause analysis in the first instance. See id.
On remand, that court reached the simple conclusion that I
advance today: "Forfeiture of proceeds cannot be considered
punishment, and thus, subject to the excessive fines clause, as
it simply parts the owner from the fruits of criminal activity."
United States v. Alexander, 32 F.3d 1231, 1236 (8th Cir.
1994); see also Austin, 509 U.S. at 622 n.14 ("[A] fine that
serves purely remedial purposes cannot be considered ‘exces-
sive’ in any event.").
Several other of our sister courts of appeals have similarly
concluded that the forfeiture of proceeds can never be exces-
sive under the Excessive Fines Clause. See, e.g., United States
v. Betancourt, 422 F.3d 240, 250 (5th Cir. 2005) ("[T]he
Eighth Amendment does not apply."); United States v. Real
Prop. Located at 22 Santa Barbara Drive, 264 F.3d 860, 874-
75 (9th Cir. 2001) ("Because criminal proceeds represent the
paradigmatic example of ‘guilty property,’ the forfeiture of
which has been traditionally regarded as non-punitive, we fol-
low the Seventh, Eighth, and Tenth Circuits and hold that the
excessive fines clause of the Eighth Amendment does not
apply . . . ."); United States v. One Parcel of Real Prop.
Described as Lot 41, Berryhill Farm Estates, 128 F.3d 1386,
1395 (10th Cir. 1997) (holding as matter of law that criminal
proceeds forfeiture "can never be constitutionally excessive");
Smith v. United States, 76 F.3d 879, 882 (7th Cir. 1996)
UNITED STATES v. CENTRA BANK 19
(holding that forfeiture of proceeds "can hardly be termed pun-
ishment").1
The majority today departs from these authorities and rules
that the forfeiture of criminal proceeds must comply with the
Excessive Fines Clause. It justifies this departure by clinging
to two propositions that I deem incorrect. First, the majority
states that the challenged forfeiture here "does not appear
‘remedial,’" because it does not serve the remedial purpose of
compensating the Government for a loss. Ante at 12. The
majority offers no support for this conclusion, nor does any
exist. The Seventh Circuit, for example, has persuasively
described how the forfeiture of criminal proceeds is "reme-
dial":
[A]lthough in Austin the Court considered the forfei-
ture of property used to facilitate the drug trade
under [21 U.S.C.] § 881(a)(4) and (a)(7), defendants
such as Smith have claimed that the reasoning
applies as well to items forfeited under § 881(a)(6)
as proceeds of drug transactions. The claim is that
"proceeds" forfeitures constitute punishment if they
are out of proportion to the government’s or soci-
ety’s loss. Can this be so? No.
The reason the answer is "no" is that proceeds for-
feitures can never be out of proportion to the "loss"
suffered by the government or society. . . .
1
The majority criticizes the Fifth Circuit’s Betancourt decision (assert-
ing that it unfairly distinguished Bajakajian), and the Ninth Circuit’s opin-
ion in Real Property Located at 22 Santa Barbara Drive (because it never
discussed Bajakajian). See ante at 13 n.7. That criticism, in my view, is
unwarranted. The Fifth Circuit in Betancourt merely noted that Bajakajian
shed no light on whether the forfeiture of proceeds implicated the Exces-
sive Fines Clause, and followed the multiple authorities cited above in
concluding that it did not. And the Ninth Circuit’s opinion cited and dis-
cussed Bajakajian’s predecessor decision, Austin, in which the Supreme
Court laid out the same analysis conducted in Bajakajian.
20 UNITED STATES v. CENTRA BANK
That being the case, the forfeiture of proceeds
acquired from drug dealing can hardly be termed
punishment. Forfeitures of drug proceeds have been
analogized to the seizure of proceeds from the rob-
bery of a bank. The money is not rightfully the rob-
bers’, and its seizure "merely places that party in the
lawfully protected financial status quo that he
enjoyed prior to launching his illegal scheme."
United States v. Tilley, 18 F.3d 295, 300 (5th Cir.
1994), cert. denied, 513 U.S. 1015 (1994). Or put
another way by another court:
Not only are drug proceeds inherently
proportional to the damages caused by the
illegal activity . . . but also one never
acquires a property right to proceeds, which
include not only cash but also property
secured with the proceeds of illegal activ-
ity. . . . [F]orfeiture of drug proceeds is not
punishment, but is remedial in nature.
United States v. Salinas, 65 F.3d 551, 554 (6th Cir.
1995).
Smith, 76 F.3d at 882. The majority offers no response to this
compelling analysis.
Second, the majority supports its extension of the reach of
the Excessive Fines Clause by highlighting the supposed ineq-
uities that could result when the Government seeks to forfeit
proceeds from a small player in a large and lucrative criminal
conspiracy. See ante at 12-14. But, as the majority acknowl-
edges, the law in this Circuit is that coconspirators are jointly
and severally liable for the reasonably foreseeable proceeds
obtained by the conspiracy, regardless of the individual
coconspirator’s share therein. See ante at 6 (citing United
States v. McHan, 101 F.3d 1027, 1043 (4th Cir. 1996)). This
principle is well established, for "[i]t would be absurd to treat
UNITED STATES v. CENTRA BANK 21
[the proceeds of a criminal conspiracy] more leniently than
the law treats a lawful partnership, all of whose members are
severally as well as jointly liable for the partnership’s debts."
United States v. Spano, 421 F.3d 599, 603 (7th Cir. 2005).
In outlining the inequities that could possibly result, the
majority disregards the principle of joint and several liability.
See ante at 13 ("In a case where a defendant played a truly
minor role in a conspiracy that generated vast proceeds, joint
and several liability for those proceeds might result in a for-
feiture order grossly disproportional to the individual defen-
dant’s offense." (emphasis added)). The problem is that the
"individual defendant’s offense" is not part of our forfeiture
analysis in the context of a conspiracy. See McHan, 101 F.3d
at 1043. The relevant individual defendant’s offense here is
the conspiracy itself. And the proceeds subject to forfeiture
are the proceeds obtained by the conspiracy, with every mem-
ber thereof on the hook for the reasonably foreseeable pro-
ceeds obtained by the conspiracy. Simply put, under our
precedent, a forfeiture analysis does not turn on the individual
role played by Jalaram (or any other conspirator) in a criminal
conspiracy.2
In short, I would not split from the Fifth, Seventh, Eighth,
Ninth, and Tenth Circuits on the question of whether the for-
feiture of criminal proceeds implicates the Excessive Fines
Clause of the Eighth Amendment.3 Like those courts, I
2
Contrary to the majority’s characterization, see ante at 14 n.8, I do not
see our McHan decision as having anything to do with the constitutional-
ity of holding coconspirators jointly and severally liable for the forfeiture
of criminal proceeds. Rather, McHan stands for the proposition that
Jalaram is jointly and severally liable — under the proceeds forfeiture stat-
ute at issue in this appeal — for the reasonably foreseeable proceeds of the
Mann Act conspiracy. In light of this precedent, I am unable to agree with
the focus, as part of the majority’s constitutional analysis, on the individ-
ual role played by Jalaram in the conspiracy.
3
The majority points to three appellate decisions ruling that proceeds
forfeiture is subject to the Excessive Fines Clause. See ante at 13 n.7. The
22 UNITED STATES v. CENTRA BANK
believe that the forfeiture of such proceeds is purely remedial,
and thus not a "fine" for purposes of the Excessive Fines
Clause. For that reason alone, I would reverse the district
court’s ruling that the Government’s forfeiture request contra-
vened the Eighth Amendment.
Pursuant to the foregoing, I would reach the same result as
the majority, but on a different basis. I therefore concur in the
judgment of reversal.
Eleventh Circuit and Sixth Circuit decisions contain nothing more than a
passing observation that the forfeiture sought by the Government was sub-
ject to the Excessive Fines Clause. United States v. Browne, 505 F.3d
1229, 1281-82 (11th Cir. 2007); United States v. Corrado, 227 F.3d 543,
552 (6th Cir. 2000). And the third, decided by the Ninth Circuit, offers no
refutation (or even discussion) of the contrary authorities discussed above.
United States v. 3814 NW Thurman St., 164 F.3d 1191, 1197 (9th Cir.
1999). As such, these authorities do not condone the majority’s classifica-
tion of the forfeiture of proceeds as "punitive," as opposed to "remedial,"
and they do not sanction its concern with the fairness of holding individual
conspirators liable for a conspiracy’s proceeds.