12‐4988 (L)
United States v. Annabi
In the
United States Court of Appeals
For the Second Circuit
________
AUGUST TERM 2013
Nos. 12‐4988 (Lead), 12‐4990 (Con)
UNITED STATES OF AMERICA,
Appellee,
v.
SANDY ANNABI AND ZEHY JEREIS,
Defendants‐Appellants.
________
Appeal from the United States District Court
for the Southern District of New York.
No. 10‐cr‐7 (CM) ― Colleen McMahon, Judge.
________
ARGUED: JANUARY 29, 2014
DECIDED: MARCH 25, 2014
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2 No. 12‐4988‐cv (L)
Before: CABRANES, CARNEY and DRONEY, Circuit Judges.
________
Defendant Sandy Annabi appeals from a November 19, 2012
judgment of the United States District Court for the Southern
District of New York (Colleen McMahon, Judge) ordering forfeiture
in connection with a conviction for, inter alia, three counts of
mortgage fraud (Counts Seven, Eight, and Nine). We consider here
whether the District Court erred by ordering forfeiture on Count
Seven under a statute which, while applicable to Count Seven, was
only charged in the indictment in connection with Counts Eight and
Nine―an oversight that was not corrected by the Government or the
District Court before or during sentencing.
We hold that this was error inasmuch as the uncharged
forfeiture statute resulted in harsher forfeiture with respect to Count
Seven than that sought in the indictment. Accordingly, we AFFIRM
the forfeiture order on Counts Eight and Nine only, and REMAND
the cause to the District Court with instructions to VACATE the
forfeiture order on Count Seven, and conduct such further forfeiture
proceedings as may be appropriate in the circumstances.
________
EDWARD V. SAPONE, Edward V. Sapone, LLC,
New York, NY, for Defendant‐Appellant Sandy
Annabi.
PAULA SCHWARTZ FROME, Garden City, NY, for
Defendant‐Appellant Zehy Jereis.
3 No. 12‐4988‐cv (L)
PERRY A. CARBONE, Assistant United States
Attorney (Preet Bharara, United States Attorney
for the Southern District of New York, Jason P.W.
Halperin, Justin S. Weddle, Assistant United
States Attorneys, on the brief), New York, NY, for
Appellee United States of America.
________
JOSÉ A. CABRANES, Circuit Judge:
Defendant Sandy Annabi appeals from a November 19, 2012
judgment of the United States District Court for the Southern
District of New York (Colleen McMahon, Judge) ordering forfeiture
in connection with a conviction for, inter alia, three counts of
mortgage fraud (Counts Seven, Eight, and Nine). We consider here
whether the District Court erred by ordering forfeiture on Count
Seven under a statute which, while applicable to Count Seven, was
only charged in the indictment in connection with Counts Eight and
Nine―an oversight that was not corrected by the Government or the
District Court before or during sentencing.
We hold that this was error inasmuch as the uncharged
forfeiture statute resulted in harsher forfeiture with respect to Count
Seven than that sought in the indictment. Accordingly, we AFFIRM
the forfeiture order on Counts Eight and Nine only, and REMAND
the cause to the District Court with instructions to VACATE the
forfeiture order on Count Seven, and conduct such further forfeiture
proceedings as may be appropriate in the circumstances.1
1
In a summary order entered today in this case, we affirmed the convictions of
defendants Sandy Annabi and Zehy Jereis on all eleven counts charged against one or
4 No. 12‐4988‐cv (L)
BACKGROUND
On March 29, 2012, a jury convicted Annabi of, inter alia, three
counts of mortgage fraud in violation of 18 U.S.C. § 1014 (Counts
Seven, Eight, and Nine). The Government sought forfeiture of the
gross proceeds of the fraudulently obtained loans described in these
three counts.
The Superseding Indictment (the “Indictment”) sought, on all
three counts, forfeiture to the United States, pursuant to the civil
forfeiture provision, 18 U.S.C. § 981(a)(1)(C),2 and 28 U.S.C.
§ 2461(c).3 On Counts Eight and Nine only, the Indictment sought
forfeiture pursuant to the criminal forfeiture provision, 18 U.S.C.
§ 982(a)(2)(A).4 Significantly, § 981(a)(2)(C) of the civil forfeiture
provision requires a deduction from forfeiture of any portion of the
both of them, and affirmed the District Court’s order of forfeiture with respect to Counts
One through Six.
2 18 U.S.C. § 981(a)(1)(C) provides for forfeiture to the United States of “[a]ny
property, real or personal, which constitutes or is derived from proceeds traceable to a
violation of section [1014] of this title . . . .” In such cases, proceeds must include “a
deduction from the forfeiture to the extent that the loan was repaid . . . without any
financial loss to the victim.” Id. § 981(a)(2)(C).
3 28 U.S.C. § 2461(c) provides: “If a person is charged in a criminal case with a
violation of an Act of Congress for which the civil or criminal forfeiture of property is
authorized, the Government may include notice of the forfeiture in the indictment or
information pursuant to the Federal Rules of Criminal Procedure.”
4 18 U.S.C. § 982(a)(2)(A) provides, in relevant part: “The court, in imposing
sentence on a person convicted of a violation of . . .section [1014] of this title, affecting a
financial institution . . . shall order that the person forfeit to the United States any
property constituting, or derived from, proceeds the person obtained directly or indirectly, as
the result of such violation.”
5 No. 12‐4988‐cv (L)
fraudulent loan that was repaid at no loss to the victim, whereas the
criminal forfeiture provision, § 982(a)(2)(A), requires forfeiture of the
entire amount of the fraudulent loan, regardless of whether it was
repaid. United States v. Peters, 732 F.3d 93, 100‐01 & n.2 (2d Cir. 2013).
At sentencing, the District Court ordered Annabi to forfeit
$1,060,800 in connection with the three mortgage fraud counts based
on the full amount of the loans fraudulently obtained, without
regard to any portions of the loans that had been repaid: $480,700 for
the Patton Drive house (Count Seven); $522,500 for the Bacon Place
house (Count Eight); and $57,600 for the Rumsey Road apartment
(Count Nine). The District Court did not specify whether it was
ordering forfeiture under the civil or criminal forfeiture provision
for each of the various counts.
DISCUSSION
Annabi argues on appeal that the forfeiture order was
excessive inasmuch as she had already satisfied her obligations in
their entirety for the Patton Drive house (Count Seven) and the
Rumsey Road apartment (Count Nine), resulting in no loss to the
banks, and inasmuch as the anticipated loss to the banks on the
Bacon Place house (Count Eight) was only $164,460.68.
On appeal from a forfeiture order, we review the district
court’s legal conclusions de novo and its factual findings for clear
error. United States v. Treacy, 639 F.3d 32, 47 (2d Cir. 2011).
6 No. 12‐4988‐cv (L)
A. Counts Eight and Nine
We recently confirmed that § 982(a) of the criminal forfeiture
statute does not permit a defendant to offset loan proceeds that have
been repaid. See Peters, 732 F.3d at 102 (gross receipts, rather than
profits, are the proper measure of criminal forfeiture); see also United
States v. Newman, 659 F.3d 1235, 1244 (9th Cir. 2011) (“For purposes
of criminal forfeiture, the ‘proceeds’ of a fraudulently obtained loan
equal the amount of the loan.”). The District Court did not,
therefore, err by ordering forfeiture of the full amount of the loans
fraudulently obtained in connection with Counts Eight and Nine,
totaling $580,100, without regard to whether Annabi repaid any
portion of those loans.
B. Count Seven
Although § 982(a)(2)(A) also could have applied to Count
Seven, the Indictment sought forfeiture on this Count only pursuant
to civil forfeiture provision 18 U.S.C. § 981(a)(1)(C), which permits
“a deduction from the forfeiture to the extent that the loan was
repaid, or the debt was satisfied, without any financial loss to the
victim.” Id. § 981(a)(2)(C).
Federal Rule of Criminal Procedure 32.2(a) states: “A court
must not enter a judgment of forfeiture in a criminal proceeding
unless the indictment . . . contains notice to the defendant that the
government will seek the forfeiture of property as part of any
sentence in accordance with the applicable statute.” (emphasis
supplied). Pursuant to this Rule, a criminal defendant has the right
7 No. 12‐4988‐cv (L)
to know not only that forfeiture is being sought, but also the
statutory basis for forfeiture.
With respect to Count Seven, the Government failed to state
the criminal forfeiture provision in the Indictment, and did not
correct this oversight prior to or during sentencing. At sentencing,
the District Court did not specify that it was ordering forfeiture
pursuant to the criminal forfeiture provision, but it nonetheless
required Annabi to forfeit the full amount of the loan fraudulently
obtained on the Patton Drive house, despite the fact that the loan
had been repaid in full. Such forfeiture is permissible only under
§ 982(a)(2)(A), see note 4 ante, as “a form of punishment, separate
and apart from any restitutive measures imposed during
sentencing,” Peters, 732 F.3d at 98.5
We hold that where the Government fails to invoke an
applicable forfeiture provision in the indictment, and fails to correct
that error prior to entry of a final judgment, forfeiture must be
limited to that authorized by the statute cited as the basis for
5 The Government relies on United States v. Silvious, 512 F.3d 364 (7th Cir. 2008),
for the proposition that failure to state the correct forfeiture provision in an indictment is
harmless where the defendant has notice that forfeiture is sought. The circumstances of
that case are readily distinguishable. The defendant in Silvious had objected to a
preliminary forfeiture order that relied on statutes not listed in the indictment, where the
statute listed in the indictment was inapplicable to the circumstances presented. Id. at
369. Prior to the forfeiture hearing, the Government conceded that the statute charged
was inapplicable, but argued that forfeiture was still appropriate under a different
statute. Id. The Seventh Circuit affirmed the order of forfeiture, holding that the
defendant had adequate notice of the corrected forfeiture statute, and that the forfeiture
“was not broadened in any way by the substitution of the proper statute.” Id. In the
instant case, by contrast, Annabi did not receive notice until appellate proceedings that
the Government intended to rely upon the harsher criminal forfeiture provision.
8 No. 12‐4988‐cv (L)
forfeiture, and of which the defendant had notice.6 Accordingly,
Annabi’s forfeiture on Count Seven is limited to that authorized by
§ 981(a)(1)(c), which, by its express terms, entitles her to offset the
amount of the loan on the Patton Drive house that she repaid at no
loss to the bank.
CONCLUSION
To summarize:
(1) Forfeiture is limited to that authorized by the statute
listed in the indictment, even if greater forfeiture
would have been authorized by a different statute,
where the Government fails to invoke the harsher
forfeiture provision prior to or during sentencing.
(2) 28 U.S.C. § 982(a) authorizes forfeiture of the full
amount of the loans fraudulently obtained in Counts
Eight and Nine, without an offset for any portion of
the loan that has been repaid.
(3) 28 U.S.C. § 981(a)(1)(c), the only forfeiture provision
charged on Count Seven, permits an offset for that
portion of the loan that was repaid with no loss to
the victim.
Accordingly, we AFFIRM the forfeiture order on Counts
Eight and Nine, and REMAND the cause to the District Court with
instructions to VACATE the forfeiture order on Count Seven, and
6 We do not address whether, prior to entry of the final forfeiture order, the
Government could have substituted the criminal forfeiture provision as the basis for
forfeiture on Count Seven. Nor do we opine on the fact pattern set forth in Silvious, note 5
ante, where the scope of forfeiture under the substituted provision was no greater than
the provision mistakenly cited in the Indictment. Those are not the facts before us.
9 No. 12‐4988‐cv (L)
conduct such further forfeiture proceedings as may be appropriate
in the circumstances.7
In the interest of judicial economy, any appeal from a subsequent District Court
7
Order, on remand or otherwise, shall be assigned to this panel upon the filing of a letter
request with the Clerk of the Court of Appeals within 21 days of the entry of the District
Court Order being appealed.