United States v. Mark Phillips

FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA , No. 11-30195
Plaintiff-Appellee,
D.C. No.
v. 2:10-cr-00269-JCC-1

MARK E. PHILLIPS,
Defendant-Appellant.

UNITED STATES OF AMERICA , No. 11-30234
Plaintiff-Appellant,
D.C. No.
v. 2:10-cr-00269-JCC-1

MARK E. PHILLIPS,
Defendant-Appellee. OPINION

Appeal from the United States District Court
for the Western District of Washington
John C. Coughenour, Senior District Judge, Presiding

Argued and Submitted
August 27, 2012—Seattle, Washington

Filed December 26, 2012
2 UNITED STATES V . PHILLIPS

Before: Mary M. Schroeder and Ronald M. Gould,
Circuit Judges, and Jed S. Rakoff, Senior District Judge.*

Opinion by Judge Rakoff

SUMMARY**

Criminal Law

The panel reversed a mail fraud conviction and the district
court’s decision to deny the government’s forfeiture
application, but affirmed the district court in all other respects
in a case arising from the defendant’s fraudulent scheme to
obtain, for personal use, funds from a high-tech startup
company of which he was CEO.

The panel reversed the mail fraud conviction because the
success of the fraudulent scheme did not depend in any way
on the use of the mails. The panel affirmed the defendant’s
money laundering convictions because they do not raise a
Santos merger problem, and “proceeds” should thus be
defined as “gross receipts” rather than “profits” in the context
of this case. The panel held that the prosecutor’s references
during closing argument to the defendant’s lies during the

*
The Honorable Jed S. Rakoff, Senior District Judge for the U.S.
District Court for the Southern District of New York, sitting by
designation.

**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
 UNITED STATES V . PHILLIPS 3

course of the fraudulent scheme and on the stand did not
constitute misconduct.

Reviewing for plain error, the panel rejected the
defendant’s vagueness/overbreadth challenge to a supervised
release condition prohibiting the defendant from
“frequent[ing] places where controlled substances are
illegally sold, used, distributed, or administered.” The panel
held that a reasonable person would understand that the
condition prohibits the defendants from knowingly going to
a specific place where drugs are illegally used or sold, but
that it does not prohibit him from living in Seattle or going to
a given neighborhood simply because a person is selling
drugs somewhere within that neighborhood.

On the government’s cross-appeal, the panel held that the
district court erred by refusing to enter an in personam
forfeiture judgment. The panel wrote that the rule in Libretti
v. United States, 516 U.S. 29 (1995) – that there is no
constitutional right to a jury verdict on forfeitability” in a
criminal forfeiture proceeding – has not been abrogated by
subsequent Supreme Court decisions; and that there is no
statutory requirement for a jury determination where the
government seeks only a money forfeiture.

COUNSEL

Lila Silverstein, Washington Appellate Project, Seattle,
Washington, for Defendant-Appellant–Cross-Appellee.
4 UNITED STATES V . PHILLIPS

Jenny Durkan, United States Attorney, Matthew Diggs
(argued) and Aravind Swaminathan, Assistant United States
Attorneys, Seattle, Washington, for Plaintiff-Appellee–Cross-
Appellant.

OPINION

RAKOFF, District Judge:

Mark Phillips, the former CEO of MOD Systems, Inc.
(“MOD”), appeals from his conviction on four counts of wire
fraud, one count of mail fraud, and two counts of money
laundering.1 These seven counts related to the same basic
scheme: Phillips’s successful plan to fraudulently obtain
funds from MOD and use those funds for his personal benefit.
After a jury trial, the district court sentenced Phillips to 48
months in prison and three years of supervised release. In his
appeal, Phillips argues that his mail fraud and money
laundering convictions should be reversed, that he should be
granted a new trial because of Government misconduct
during closing arguments, and that a condition of his
supervised release should be stricken. The Government also
cross-appeals and argues that the district court erred in
rejecting the Government’s application to enter a $100,000 in
personam forfeiture judgment against Phillips. We reverse the
mail fraud conviction and the district court’s decision to deny
the Government’s forfeiture application, but we affirm the
district court in all other respects.

1
Phillips was acquitted of one count of attempted bank fraud.
 UNITED STATES V . PHILLIPS 5

In evaluating the sufficiency of the evidence for the mail
fraud and money laundering convictions, we must view the
facts in the light most favorable to the Government.
McDaniel v. Brown, 130 S. Ct. 665, 673 (2010). The pertinent
facts, viewed in that light, are as follows:

In May 2005, Phillips and Anthony Bay co-founded
MOD, a high-tech start-up that was developing a platform to
enable retailers to sell and distribute digital content to
consumers. Phillips was MOD’s majority shareholder, and
from 2005 until he resigned in March 2009, Phillips was also
MOD’s CEO and a member of MOD’s Board of Directors
(“the Board”). Bay was Chairman of the Board during most
of the relevant time period.

In January 2008, Phillips began using false invoices to
steal money from MOD. He used that money to buy
expensive watches, to invest in a private company, and to
partially pay for a $2.3 million penthouse condo in Seattle.
Many of the steps of the fraud were laid out in clear and
painstaking detail in emails between Phillips and his
girlfriend, Jan Wallace, as well as in numerous other emails
with other parties.

In December 2007, Wallace introduced Phillips to Feel
Good Watches, a fine watch retailer based in Arizona with
which she had an arrangement. On December 10, 2007,
Phillips wrote to Wallace that he would need MOD to do very
well financially before he could purchase a certain Breguet
watch. Eventually, however, Phillips decided to purchase two
$30,000 Breguet watches from Feel Good Watches. Phillips
agreed to pay for the first watch upon delivery and for the
second watch in three installments of $10,000.
6 UNITED STATES V . PHILLIPS

On January 15, 2008, Feel Good Watches mailed Phillips
the first Breguet watch via Federal Express, and it was
delivered to Phillips the following day. On the day that he
received the watch, Phillips wrote to Wallace, “I received the
watch, it’s beautiful . . . If possible could I pay you for this so
I can pay out of a company for consulting work.” The next
day, Phillips contacted Larry Garrett, his personal lawyer, and
told him that Phillips wanted to pay a company called
Wallace Black LLC (“Wallace Black”) for consulting
services that Wallace Black had purportedly provided to
Phillips in his personal capacity. Phillips e-mailed Garrett,
“Sorry, hate to use you as a merchant service, but the [sic]
part of the attorney client privilege is nice too.” Garrett
agreed to route money to Wallace Black through Garrett’s
trust account. Garrett did not know that Phillips’s girlfriend
was the owner of Wallace Black.

Around the same time, Phillips told Ken Gordon, MOD’s
Vice President of Finance, that he wanted to pay a “few
people” who had provided consulting services to MOD
(rather than consulting for him personally). Gordon
responded that he “need[ed] an invoice” from the consultants
before Gordon could make any payments. Phillips then asked
Garrett to send him an invoice so that Phillips could have it
for his records. Garrett gave Phillips an invoice on the
letterhead of his firm; the invoice stated that payment would
be made to “Wallace Black” for “Consultant/Contract
Services.”

Phillips knew that the Board would not want to pay
Phillips’s girlfriend for consulting and that the Board had
never authorized any payments to Wallace. Therefore,
Phillips altered the invoice he got from Garrett to change the
payee from “Wallace Black” to “W-Black” so that the Board
 UNITED STATES V . PHILLIPS 7

would not know that MOD was paying Wallace. Phillips then
e-mailed Wallace to let her know that he had altered the
invoice to change the name of her company.

Based on the false invoice, Gordon believed that Phillips
was paying a consultant named W-Black for work done for
MOD, and thus Gordon wired $30,000 of MOD funds to
Garrett’s trust account on January 18, 2008. If Gordon had
known that Phillips was planning to use those funds for his
personal benefit, he would not have wired the money. Four
days after Gordon transferred the funds to Garrett’s trust
account, Phillips instructed Garrett to wire the $30,000 of
MOD funds to Wallace Black’s bank account. Later that same
day, Wallace wired $30,000 to Feel Good Watches as
payment for the Breguet watch that Phillips had received a
week earlier.

On March 3, 2008, the owner of Feel Good Watches e-
mailed Phillips seeking payment for the second Breguet
watch that Phillips had ordered two months earlier. Phillips
replied that he would send Feel Good Watches $20,000 to
account for the two $10,000 installment payments that he had
missed. That evening, Phillips emailed Wallace to tell her that
he would send more money to her bank accounts and that she
should wire that money to Feel Good Watches. Phillips took
the first invoice that Garrett had sent him and changed the
date, amount, and “Wallace Black” to “W. Black.” Phillips
gave this fake $60,000 invoice to Gordon, and Gordon, who
still believed that the payment was for consulting services
that were provided to MOD, wired $60,000 of MOD funds to
Garrett’s trust account. Garrett wired the $60,000 to Wallace
Black, and the next day, Wallace, based on instructions from
Phillips, sent a $20,000 payment to Feel Good Watches for
8 UNITED STATES V . PHILLIPS

Phillips’s second watch. This left $40,000 of MOD funds in
Wallace Black’s account.

On April 2, 2008, Phillips directed Wallace to wire
$25,000 of those funds to pay for Phillips’s investment in a
high-tech startup called Sampa. On April 7, 2008, Paul Gross,
the CEO of Sampa, wrote to Phillips and said, “We received
a wire for $25K today but it came from Jan Wallace in
Paradise Valley AZ. Is this from you?” Phillips replied, “Yes.
This is from me.” Gross then replied, “Mysterious but
excellent.”

On April 6, 2008, Phillips e-mailed Wallace and told her
to wire the remaining $15,000 in MOD funds to his personal
bank account. The next day, Phillips received the money from
Wallace and used that money to partially fund a $50,000
earnest money deposit on the condominium he was
purchasing.

On April 29, 2008, Feel Good Watches e-mailed Phillips
to remind him that he still owed $10,000 for the second
Breguet watch. Phillips forwarded this e-mail to Wallace the
minute he received it along with the additional message, “I
think I need to wire you more money.” On Monday May 12,
2008, Phillips e-mailed Wallace, and asked her to pay Feel
Good Watches, promising to pay her back. When Wallace
said that she would need money to be sent to Wallace Black
by Wednesday, May 14th, because she was short on cash,
Phillips responded, “I’ll ask[] Kenn [Gordon] to pay this
tomorrow. Thanks.” The same day, Phillips provided another
fake invoice to Gordon, and Gordon made another $10,000
transfer to Garrett’s trust account on May 15, 2008. Again,
Garrett transferred the money to Wallace Black, and Wallace
 UNITED STATES V . PHILLIPS 9

used the money to pay the final $10,000 that Phillips owed to
Feel Good Watches for the second Breguet watch.

Around November 2007, Phillips began negotiations with
MOD to license intellectual property and technology owned
by a company he had started called AnythingBox. MOD’s
corporate counsel, Bill Bromfield, and two members of the
Board told Phillips several times that any licensing agreement
with AnythingBox required the approval of the Board
because Phillips had a conflict of interest in the transaction.2

On April 21, 2008 Phillips was told that he needed $1
million to pay for the full down payment for his
condominium. Phillips requested that Bay, the Chairman of
the Board, approve an advance payment of $1.5 million to
Phillips based on the anticipated license of the AnythingBox
technology, but Bay twice refused those requests.
Nonetheless, on April 25, 2008, Phillips told Gordon to
transfer $1.5 million of MOD funds to Phillips’s personal
bank account as payment for the AnythingBox license.
Phillips falsely told Gordon that Bay and another board
member — who together constituted a majority of the Board
— had approved the wire transfer as a prepayment for the
AnythingBox license. Based on Phillips’s representation of
Board approval, Gordon wired $1.5 million from MOD’s
bank account to Phillips’s personal bank account.

A month after Gordon wired the $1.5 million to Phillips’s
bank account, Phillips wired a $992,972.95 down payment
for the condominium. Nearly all of that down payment was

2
MOD ultimately licensed AnythingBox’s technology in the fall of 2008
because its investors, including Toshiba Corporation, insisted that MOD
do so before they would invest millions in MOD.
10 UNITED STATES V . PHILLIPS

derived from the $1.5 million MOD wire transfer. Phillips
wrote several e-mails to his financial advisor and his
accountant stating that he would use the money from MOD
to make the down payment.

In late May 2008, the Board discovered that Phillips had
ordered the transfer of $1.5 million in MOD funds without
Board permission. The Board demanded that Phillips return
the money, and Phillips did so.

In mid-December 2008, Robert Arnold, one of MOD’s
largest investors, alleged that Phillips had misappropriated
MOD’s assets and breached his fiduciary duties to MOD.
MOD set up a demand review committee, and Phillips agreed
to resign from his positions at MOD and to relinquish his
majority shareholder control over MOD.

Eventually, the United States Attorney for the Western
District of Washington brought criminal charges against
Phillips. Phillips was charged with four counts of wire fraud
(Counts 1–4) and one count of mail fraud (Count 5). Counts
1–3 involved the three wire transfers between Garrett’s trust
account and Wallace Black that totaled $100,000 in MOD
funds. Count 4 concerned the April 28, 2008, wire transfer of
$1.5 million from MOD’s bank account to Phillips’s personal
bank account. Count 5 involved the mailing of the first
Breguet watch on January 15, 2008. The Superseding
Indictment also charged Phillips with two counts of money
laundering. Count 6 related to the $15,000 of MOD funds that
Phillips used as part of the payment for his condominium.
Count 7 was based on the $992,972.75 of MOD funds that
Phillips used to finance the down payment for the
condominium.
 UNITED STATES V . PHILLIPS 11

At his trial, Phillips testified in his own defense. He
testified that the $100,000 in payments to Wallace was for
consulting work.3 He also testified that Wallace purchased the
watches from Feel Good Watches as unrelated gifts to
Phillips.4 As to the $25,000 Sampa investment, Phillips
testified that Wallace purchased the stock for Phillips, but
that Phillips was planning to reimburse Wallace for it.
Therefore, Phillips stated that “[t]his would be a gift that I
would repay her for.” Finally, Phillips testified that the
$15,000 wired from Wallace Black to his bank account,
which he then used as part of the payment for his
condominium, was simply Wallace repaying him for patent
and legal expenses that Phillips had incurred on Wallace’s
behalf. Asked about one remarkable chain of events, where 1)
Feel Good Watches emailed Phillips to tell him that he owed
$10,000 for the second Breguet watch, 2) Phillips emailed
Wallace within a minute to tell her that he was going to wire
her money, 3) Phillips later asked Wallace to pay Feel Good
Watches and said that he would pay her back, 4) five hours
later Phillips ordered Gordon to pay $10,000 to Wallace-

3
W allace had testified on direct examination in the Government’s case
in chief that she had done work on at least two occasions for MOD,
although she primarily worked for M etaW allet, another of Phillips’s
companies. And although Phillips testified that the MOD Board knew of
W allace’s work for MOD in 2007, he wrote an email in March 2008
introducing W allace to the Board. Moreover, at least two Board members
responded to Phillips’s email and objected to retaining W allace to provide
services to MOD.

4
W allace testified on direct examination in the Government’s case in
chief that she had previously purchased expensive watches, including a
Breguet watch, as gifts for Phillips. But she testified that she had not
purchased the two watches in question as gifts for Phillips, and the chain
of emails and money transfers described above fully supported W allace’s
story.
12 UNITED STATES V . PHILLIPS

Black, and 5) Wallace then paid $10,000 to Feel Good
Watches, Phillips called the $10,000 transfer and $10,000
payment a “convenient coincidence.”

Phillips also testified that Bay had approved the $1.5
million transfer of MOD funds around April 7, 2008, despite
an email that Phillips wrote to Bay two weeks later asking for
permission for the transfer and stating that “approval and
movement would greatly help my state right now.” Phillips
also testified that he told David Douglass, MOD’s CFO, that
the $100,000 in payments was for Wallace’s consulting work.
Phillips admitted to doctoring the invoices, but he testified
that he showed Douglass the fake invoices and requested that
Douglass book the $100,000 to him personally “as a bonus,”
in order to be “very clean.” Phillips also testified that he told
Douglass that he had altered these invoices.

In its rebuttal case, the Government called Douglass, and
he testified that he had never seen the fake invoices prior to
his work on MOD’s demand review committee in January
2009. Douglass also testified that Phillips never told him that
the funds should be booked to Phillips personally, and that
Phillips never told Douglass that he had altered the invoices.

At the close of the Government’s case, Phillips moved for
a judgment of acquittal. The district court denied Phillips’s
motion, and Phillips did not renew his motion at the close of
trial. In closing argument, Government counsel referred to
Phillips’s statements – both in executing the scheme and in
his testimony – and repeatedly stated that Phillips had “lied.”
At the start of his closing, for example, Government counsel
stated that Phillips’s conduct was “tied together by a couple
of themes. When the defendant saw something he wanted, he
lied to get it.” Phillips did not object to these statements when
 UNITED STATES V . PHILLIPS 13

they were made. After less than one full day of deliberations,
on March 3, 2011, the jury returned its verdict convicting
Phillips of Counts 1–7, and acquitting him of Count 8 (the
attempted bank fraud charge).

The Superseding Indictment also contained a forfeiture
notice stating that the Government would seek an in
personam forfeiture judgment of $100,000. This $100,000
figure was based on the total amount obtained by the wire
frauds described in Counts 1–3.5 After the jury was
discharged, the Government reminded the district court that
“there was a forfeiture allegation in the indictment,” and that
“[t]he government intends to seek a money judgment, which
. . . can be dealt with at the time of sentencing.” The parties
disputed whether a jury instruction had been necessary on
forfeiture, and the court deferred a ruling on this dispute until
sentencing. In its sentencing memorandum, the Government
argued that an in personam forfeiture judgment against
Phillips was appropriate. Phillips opposed the forfeiture by
arguing that “[t]he government submitted no jury instruction
as required by Rule 32.2(b(5) [sic],” and that because “no
inquiry was made prior to jury deliberations beginning
whether either party requested a jury determination of
forfeiture,” the government could not obtain a forfeiture
judgment against Phillips. At sentencing, the district court
“declin[ed] to enter the order of forfeiture,” explaining, “I just
think there are too many procedural problems with it, and I
just think it’s not necessary in this case.”

The district court then proceeded to sentencing. The court
found that Phillips had willfully obstructed justice by

5
The forfeiture notice also stated that the Government intended to seek
forfeiture of the two Breguet watches.
14 UNITED STATES V . PHILLIPS

intentionally providing false trial testimony about at least one
material matter.6 As a result of this finding, the district court
increased Phillips’s guidelines range by two levels.

The district court sentenced Phillips to 48 months of
imprisonment. In addition to the term of incarceration, the
court imposed a three-year term of supervised release with
standard and special conditions. One of the standard
conditions of supervised release was that Phillips “shall not
frequent places where controlled substances are illegally sold,
used, distributed or administered.” Phillips did not object to
any of the conditions of supervised release.

For the following reasons, this Court reviews all of
Phillips’s challenges for plain error. Since Phillips did not
renew his motion for a judgment of acquittal following the
submission of all of the evidence, we review the sufficiency
of the evidence questions for plain error. United States v.
Cruz, 554 F.3d 840, 844 (9th Cir. 2009). We review any
unpreserved legal errors in the jury instruction for plain error.
United States v. Moreland, 622 F.3d 1147, 1166–67 (9th Cir.
2010). We also review an unpreserved challenge to the
prosecution’s conduct in closing argument for plain error.
United States v. Washington, 462 F.3d 1124, 1136 (9th Cir.
2006). Finally, we review for plain error a condition of
supervised release not challenged in the district court. United
States v. Vega, 545 F.3d 743, 747 (9th Cir. 2008). Under the

6
In particular, the district court concluded that Phillips had testified
falsely about 1) his alleged disclosure of the W allace Black invoices to
David Douglass; 2) his purported statements to Douglass about the
reasons for altering those invoices; 3) his assertion that the $100,000 was
for Jan W allace’s services, as opposed to Phillips’s personal benefit; 4) the
purported permission that Phillips received to make the $1.5 million
transfer.
 UNITED STATES V . PHILLIPS 15

plain error standard, relief is not warranted unless there has
been: (1) “error,” (2) that was “plain,” (3) that affected
“substantial rights,” and (4) that “seriously affect[ed] the
fairness, integrity, or public reputation of the judicial
proceedings.” United States v. Recio, 371 F.3d 1093, 1100
(9th Cir. 2004) (internal quotation marks omitted).

As to the cross-appeal, we review de novo the district
court’s decision not to impose an in personam forfeiture
judgment. See United States v. Newman, 659 F.3d 1235, 1239
n.2 (9th Cir. 2011).

MAIL FRAUD

We turn first to Phillips’s challenge to the sufficiency of
the evidence on his conviction for mail fraud on Count 5 of
the Superseding Indictment.7 To secure a conviction on this
count, the Government must prove that Phillips: (1) “devised
or intend[ed] to devise a scheme to defraud (or to perform

7
The mail fraud statute, 18 U.S.C. § 1341, makes it unlawful for any
person:

[H]aving devised or intending to devise any scheme or
artifice to defraud, or for obtaining money or property
by means of false or fraudulent pretenses,
representations, or promises . . . for the purpose of
executing such scheme or artifice or attempting so to do
. . . [to] deposit[] or cause[] to be deposited any matter
or thing whatever to be sent or delivered by any private
or commercial interstate carrier, or take[] or receive[]
therefrom, any such matter or thing, or knowingly
cause[] to be delivered by mail or such carrier
according to the direction thereon, or at the place at
which it is directed to be delivered by the person to
whom it is addressed, any such matter or thing[.]
16 UNITED STATES V . PHILLIPS

specified fraudulent acts);” and (2) that he “use[d] . . . the
mail for the purpose of executing, or attempting to execute,
the scheme (or specified fraudulent acts).” Carter v. United
States, 530 U.S. 255, 261 (2000).

The scheme charged in Count 5 was that Phillips
“devise[d] and intend[ed] to devise a material scheme to
defraud MOD and to obtain money from MOD by means of
material false and fraudulent pretenses, representations and
promises and the concealment of material facts.” Therefore,
the scheme was to defraud MOD and to obtain money from
MOD. The only asserted use of the mails was Feel Good
Watches’s mailing of the first Breguet watch to Phillips.
Phillips, citing to United States v. Maze, 414 U.S. 395 (1974),
argues that the mailing was not in furtherance of the
fraudulent scheme to defraud MOD, and that Phillips “simply
used the money he obtained from MOD to purchase a watch.”

In Maze, the defendant used a stolen bank card to obtain
food and lodging at motels, and those motels, with Maze’s
knowledge, mailed invoices for the goods and services that
the defendant had received. The Maze Court assumed that the
evidence supported a finding that Maze had caused the mails
to be used, but found that the “more difficult question is
whether these mailings were sufficiently closely related to
[Maze’s] scheme to bring his conduct within the statute.”
414 U.S. at 399. Finding that the success of the defendant’s
scheme did not depend in any way on the mailings at issue,
the Supreme Court reversed the conviction. Id. at 402.

Here, as in Maze, the success of Phillips’s fraudulent
scheme did not depend in any way on the use of the mails.
The fact that Phillips purchased a watch with $30,000 of
fraudulently obtained MOD funds, instead of using the funds
 UNITED STATES V . PHILLIPS 17

for his personal benefit in some other fashion, did not in any
way affect the scheme “to defraud MOD and to obtain money
from MOD,” as charged in Count 5. The fact that payment
eventually was made to a watch dealer and that watch dealer
mailed a watch in return was not a part of the scheme to
defraud MOD and to obtain money from MOD – it was
simply the byproduct of that scheme. Put another way, as a
result of Phillips’s successful execution of his scheme to
defraud, he had sufficient funds to pay for the watch.

Therefore, even under the demanding plain error standard,
Phillips’s mail fraud conviction must be reversed.

MONEY LAUNDERING

We turn next to Phillips’s challenge to the sufficiency of
the evidence for his money laundering convictions. As with
the mail fraud conviction, we review the money laundering
conviction for plain error to determine whether “any rational
trier of fact could have found the essential elements of the
crime beyond a reasonable doubt.” Jackson, 443 U.S. at 319.

Counts 6 and 7 of the Superseding Indictment charged
Phillips with money laundering in violation of 18 U.S.C.
§ 1957. That provision makes it unlawful to “knowingly
engage[] or attempt[] to engage in a monetary transaction in
criminally derived property of a value greater than $10,000,”
if that property “is derived from specified unlawful activity.”
18 U.S.C. § 1957(a). Phillips’s wire and mail frauds were the
specified unlawful activity in this case. See 18 U.S.C.
§ 1957(f)(3); 18 U.S.C. §§ 1956(c)(7)(A), 1961(1)(B). The
two “monetary transactions” charged in Counts 6 and 7 were
1) the $15,000 portion of the earnest money down payment
(Count 6), and 2) the nearly $1 million down payment (Count
18 UNITED STATES V . PHILLIPS

7) that Phillips made in connection with his condominium
purchase.

Phillips does not contest that there was sufficient evidence
for a rational juror to conclude that Phillips committed the
$60,000 wire fraud charged in Count 2 and that the $15,000
at issue in Count 6 came from that $60,000 wire fraud.
Phillips also does not contest that there was sufficient
evidence for a rational juror to conclude that he committed
the $1.5 million wire fraud charged in Count 4 and that
Phillips used money from that wire fraud to make the million
dollar down payment on his condominium. Instead, Phillips
argues that the Government failed to adduce sufficient
evidence that the alleged money laundering transactions were
funded with the “profits” of his crimes, rather than the “gross
receipts” of those crimes. He further argues that the jury
instructions on these counts were erroneous because they did
not define the “proceeds” of the unlawful activity as “profits”
rather than “gross receipts.” These two challenges turn on the
same legal question: whether “proceeds” of the unlawful
activity, a term which is undefined in the money laundering
statutes in place at the time of the instant events,8 should be
defined as “gross receipts” or “profits” in the context of this
case.

In United States v. Santos, 553 U.S. 507 (2008), the
Supreme Court considered a habeas petition brought by a
petitioner convicted of operating an illegal lottery in bars and

8
In 2009, Congress amended the money laundering statutes to define
proceeds to include “gross receipts” of unlawful activity. Pub. Law 11-21
§(2)(f), 123 Stat. 1617, 1618 (May 20, 2009) (codified at 18 U.S.C.
§ 1956(a)(9), 18 U.S.C. § 1957(f)(3)). This amendment does not apply
retroactively, and is thus inapplicable in this case.
 UNITED STATES V . PHILLIPS 19

restaurants in Indiana. Id. at 509. Santos employed “runners”
and “collectors” to help him conduct this lottery; the runners
would gather bets from gamblers and deliver the funds to the
collectors. The collectors in turn delivered the money to
Santos; Santos would then use some of that money to pay the
runners’ commissions, the collectors’ salaries, and the lottery
winners’ winnings. Id. at 509. These payments to the runners,
collectors, and winners were the basis for the money
laundering charges brought against Santos. Santos argued that
his money laundering convictions could not stand because his
purported money laundering transactions were simply the
distribution of gross receipts from gamblers to his employees
and winners of the lottery, and were not profits of the illegal
lottery. Santos, 553 U.S. at 510. A plurality of the Court, in
an opinion written by Justice Scalia, found that the term
“proceeds” in 18 U.S.C. § 1956 could mean either profits or
gross receipts according to both dictionary definitions and
other usages of the term in the U.S. Code. Id. at 511–12.
Moreover, the plurality concluded that defining proceeds as
either profits or gross receipts would make sense in the
context of the statute. Id. at 512–14. The plurality then
determined that the rule of lenity weighed in favor of defining
proceeds as “profits” rather than gross receipts, and therefore
that in the context of 18 U.S.C. § 1956, proceeds should
always be defined as “profits.” Id. at 514.

Justice Stevens provided the fifth vote for affirming the
Seventh Circuit and granting the habeas petition, but he did
not join in Justice Scalia’s opinion. Thus, as the plurality
recognized, the Court’s holding was limited by his
concurrence. See id. at 523. Justice Stevens rejected the
plurality’s uniform definition of proceeds as profits and
concluded that “proceeds” could mean “profits” with respect
to one predicate crime and “gross receipts” with respect to
20 UNITED STATES V . PHILLIPS

another. Santos, 553 U.S. at 528 n.7 (Stevens, J., concurring).
Justice Stevens concluded that with respect to the predicate
crime of operating a gambling business, “proceeds” meant
“profits.” Id. at 528.

In the last three years, we have had several opportunities
to analyze the proper application of Santos to money
laundering cases that involve predicate crimes other than the
predicate crime that was at issue in Santos. See United States
v. Bush, 626 F.3d 527, 536 (9th Cir. 2010); Moreland,
622 F.3d 1147; United States v. Van Alstyne, 584 F.3d 803
(9th Cir. 2009). Those opinions preclude Phillips’s argument
in this case. As an initial matter, it is important to note that
although Santos addressed only the money laundering statute
codified at 18 U.S.C. § 1956, we have already held that
Santos applies “with equal force” to 18 U.S.C. § 1957, the
statute at issue in this case. Bush, 626 F.3d at 536.

In United States v. Van Alstyne, we applied Santos for the
first time and held that “‘proceeds’ means ‘profits’ where
viewing ‘proceeds’ as ‘receipts’ would present a ‘merger’
problem of the kind that troubled the plurality and
concurrence in Santos.” 584 F.3d at 814. Applying that
merger analysis, we overturned two money laundering
convictions committed in furtherance of a Ponzi scheme
because the evidence at trial showed that the transactions
involved putative dividends that the defendant paid in order
to encourage investors to make further principal
contributions. Id. at 809–10, 815. We upheld a third money-
laundering conviction, however, where the transaction at
issue involved the refund of an investor’s principal outlay and
thus left fewer funds “available to lull other investors into
maintaining their investment.” Id. at 816.
 UNITED STATES V . PHILLIPS 21

As we stated in Van Alstyne, the question we must ask to
determine if proceeds means profits or gross receipts is
whether the money laundering “was a central component” of
the defendant’s criminal scheme. Id. at 815. As Justice
Stevens stated in his concurring opinion in Santos, a
defendant should not be punished twice for “transactions that
normally occur during the course of running” an illegal
scheme. 553 U.S. at 517. In fact, “[f]or Santos to have run
his lottery, he had to pay his employees and the lottery
winners — indeed, without such payments his crime was
nothing but simple theft.” Bush, 626 F.3d at 537.

Therefore, in Moreland, we reversed money laundering
convictions that were “central to carrying out [a pyramid]
scheme’s objective of encouraging further investment.”
622 F.3d at 1166. But, in Bush, we upheld money laundering
convictions even though they were part of a Ponzi scheme,
because the predicate crimes “were all distinct from the
money laundering, thus alleviating any merger concerns.”
626 F.3d at 537.9

9
Phillips implicitly concedes the merger question by making only one
argument in response to the Government’s lengthy discussion of the
Santos merger analysis. Phillips argues that the Government cannot have
it both ways with respect to the mail fraud and money laundering counts,
and that if the money laundering purchases were not central to the scheme
such that there is no merger problem, then the mail fraud conviction must
be overturned because the watch purchase was also not part of the scheme
to defraud. Therefore, Phillips implicitly concedes the merger question by
arguing that either the money-laundering or the mail fraud must be
reversed. Since we have now reversed his mail fraud conviction, supra,
Phillips’s sole argument for reversal of the money laundering counts on
the merger issue is now rendered moot.
22 UNITED STATES V . PHILLIPS

We affirm the convictions on Count 6 and 7 because
Phillips’s money laundering convictions do not raise a Santos
merger problem, and thus proceeds should be defined as
“gross receipts” for the purposes of Phillips’s crime. The
alleged money laundering transactions at issue here, the
$15,000 payment of a portion of the earnest money payment
and the nearly $1 million down payment were far from a
central component of the fraudulent scheme. These
transactions did not occur in the normal course of running the
scheme. Instead, they were classic money laundering
transactions, and they did not further the scheme to steal
money from MOD in any way. There is no evidence that
MOD was more likely to fall victim to Phillips’s fraud
because he used this money to make a payment on his
condominium, much less that this payment was “central” to
his fraudulent scheme. Instead, the money laundering
transactions were made to further Phillips’s “personal interest
in veiling the sources of his income from public authorities.”
See Bush, 626 F.3d at 538.

There is no dispute that if “proceeds” are defined as
“gross receipts” in this case, there was sufficient evidence to
convict Phillips on the money laundering counts.10 Moreover,
for the same reasons, Phillips’s asserted error in the jury
instructions – that the jury was not instructed that proceeds
meant profits – fails because proceeds did not mean profits in
this case. See Bush, 626 F.3d at 537 (jury instructions that did

10
In light of our analysis above, we need not reach the Government’s
alternative argument that even if proceeds were defined as profits in this
case, the Government introduced sufficient evidence for the jury to
convict on the money laundering counts.
 UNITED STATES V . PHILLIPS 23

not define proceeds as profits are only erroneous if a Santos
merger problem exists).11

STATEMENTS IN CLOSING ARGUMENT

We turn next to the statements by the prosecutor during
closing argument. During his closing argument, the
prosecutor argued that Phillips had told numerous lies, both
to MOD employees during the course of his fraudulent
scheme and also to the jury when he took the stand in his own
defense. “[A] prosecutor may not express his opinion of the
defendant’s guilt or his belief in the credibility of
[government] witnesses,” Moreland, 622 F.3d at 1161
(emphasis added) (quoting United States v. McKoy, 771 F.2d
1207, 1211 (9th Cir. 1985)); but, on the other hand, “the
prosecution must have reasonable latitude to fashion closing
arguments.” Id. (quoting United States v. Molina, 934 F.2d
1440, 1445 (9th Cir. 1991)). Therefore, it is “neither unusual
nor improper for a prosecutor to voice doubt about the
veracity of a defendant who has taken the stand.” United
States v. Birges, 723 F.2d 666, 672 (9th Cir. 1984). In
particular, it is proper for the prosecutor to refer to a

11
In Santos, the plurality and Justice Stevens also found that the
application of the rule of lenity was particularly appropriate because
Santos’s illegal lottery counts carried a five-year statutory maximum,
while the money laundering convictions had a statutory maximum of
twenty years. 553 U.S. at 516, 527. In Bush, this Court found that those
considerations did not apply when the mail and wire-fraud convictions had
a thirty year maximum, and the money laundering conviction had a ten-
year maximum sentence. 626 F.3d at 538. Here, similar to Bush, the wire
fraud and mail fraud carried maximum sentences of twenty years, while
the money laundering carried a maximum sentence of ten years. Phillips’s
guideline range was 97 to 121 months, but, as noted above, he was
sentenced to 48 months.
24 UNITED STATES V . PHILLIPS

defendant’s lies if he is “commenting on the evidence and
asking the jury to draw reasonable inferences.” Garcia-
Guizar, 160 F.3d at 520. Applying this rule, we have allowed
even repeated references to the defendant’s alleged lies. See,
e.g., United States v. Rude, 88 F.3d 1538, 1548 (9th Cir.
1996) (concluding that a prosecutor’s use of the words “lie,”
“lies,” or “lied” over 90 times in closing argument in
reference to the defendant was “within the boundaries of
proper . . . summations.”).

As noted above, the prosecutor’s references to Phillips’s
alleged lies can be separated into two categories. The first
category includes Phillips’s lies during the course of the
fraudulent scheme. A fraud case will almost always be built
on assertions that the defendant deceived or lied to the
victims and others, and it was clearly appropriate to point out
those alleged lies here. The second category includes
assertions that Phillips lied on the stand. Under our case law,
it is clear that this is a proper line of attack for a closing
statement, as long as the prosecutor is commenting on the
evidence and asking the jury to draw reasonable inferences.
The prosecutor here did not give his own opinion of the
defendant’s guilt, and the comments were made in the context
of explaining why the evidence contradicted Phillips’s
testimony.

Moreover, it is important to note that Government counsel
said that the defendant “lied” rather than calling the defendant
a “liar.” It is clear that stating that the defendant lied by
making a particular statement is less problematic than calling
him a liar in general, since, in certain circumstances, the latter
could have the tendency to overtake the role of the jury as the
 UNITED STATES V . PHILLIPS 25

arbiter of credibility. But no such tendency was remotely
present here.12

SUPERVISED RELEASE

Phillips’s last challenge is to one of his conditions of
supervised release. The district court sentenced Phillips to
three years of supervised release to commence after his term
of imprisonment. The district court also imposed a number of
standard conditions of supervised release, including a
condition prohibiting Phillips from “frequent[ing] places
where controlled substances are illegally sold, used,
distributed, or administered.” Phillips now asserts that this
condition is “vague and overbroad.” But Phillips did not
object to the imposition of this condition at the time of
sentencing, and thus Phillips must show that the district court
plainly erred in imposing the condition.

Phillips argues that the term “frequenting places” in the
standard condition is so vague and overbroad that it would
prohibit him from visiting many neighborhoods in Seattle
where he lived before he was imprisoned, and perhaps that it
would actually prohibit him from living and working in
Seattle altogether. Using news articles, Phillips points out that
there are several Seattle neighborhoods identified by the
police as “high drug” neighborhoods. Phillips argues that the
term “places” in the standard condition can be interpreted as

12
Moreover, the judge had specifically instructed the jury that the
statements by either attorney in closing argument were not to be
considered as evidence, and that the only evidence properly considered
was the testimony of the witnesses, the exhibits, and any stipulations. This
instruction also helped to ensure that any error did not affect the outcome
of Phillips’s trial. See Moreland, 622 F.3d at 1162.
26 UNITED STATES V . PHILLIPS

“neighborhoods” and therefore the condition either prevents
Phillips from frequenting “entire neighborhoods” in Seattle
– including the neighborhoods where he used to live and
work and the neighborhood where his current attorney has her
offices, or it leaves Phillips so confused about what he can
and cannot do that it restricts his freedom of movement.
Phillips then goes on to argue that since, in a city like Seattle,
“every neighborhood is a place where at least one person is
illegally using or distributing drugs,” this condition of
supervision “literally . . . prohibits [him] from going
anywhere” in Seattle.

A condition of supervised release violates due process “if
it either forbids or requires the doing of an act in terms so
vague that men of common intelligence must necessarily
guess at its meaning and differ as to its application.” United
States v. Soltero, 510 F.3d 858, 866 (9th Cir. 2007) (per
curiam) (internal citations and quotation marks omitted). In
United States v. Vega, 545 F.3d 743 (9th Cir. 2008), building
on our Soltero decision, we rejected a challenge to a
supervised release condition that prohibited the defendant
from “associating with any member of any criminal street
gang.” Id. at 746. We found that the term “associate” was not
impermissibly vague because “men of common intelligence”
could understand its meaning. In order to uphold the
condition, we imported a mens rea element so that the
defendant was prohibited from knowingly associating with
members of a criminal street gang. Id. at 749–50.

Here, we hold that a reasonable person would understand
that the prohibition on “frequent[ing] places” where illegal
drugs are used or sold prohibits Phillips from knowingly
going to a specific place where drugs are illegally used or
sold, but that it does not prohibit him from living in Seattle or
 UNITED STATES V . PHILLIPS 27

going to a given neighborhood simply because a person is
selling drugs somewhere within that neighborhood. See
United States v. King, 608 F.3d 1122, 1128 (9th Cir. 2010)
(violations of supervision conditions “require an element of
mens rea”). Moreover, as in Soltero where “incidental
contact” did not qualify as association, 510 F.3d at 866–67,
incidental contact with such places here would not constitute
“frequenting.” Frequent in this context means to “be in . . .
often or habitually.” Merriam-Webster’s Collegiate
Dictionary, 11th Edition (2003). Under this common sense
reading of the term of supervised release, it is neither vague
nor overbroad.13

Therefore, Phillips has failed to meet the high bar
necessary to show that the district court committed plain error
in imposing this standard condition.

FORFEITURE

Finally, we turn to the Government’s cross-appeal. The
district court did not impose the in personam forfeiture
judgment because it found that there were “too many

13
There is an additional layer of protection for Phillips, because if his
supervised release is revoked, the court “will examine the findings to
[e]nsure that [his] due process right to notice of prohibited conduct has
been observed and to protect him from unknowing violations.” United
States v. Romero, 676 F.2d 406, 407 (9th Cir. 1982). The Government
argues that this extra layer of protection renders Phillips’s challenge
premature, but we disagree. See Vega, 545 F. 3d at 750. Although Phillips
will have an additional layer of protection should he be accused of
violating that term of supervised release, if his challenge had merit he
should not have to wait until after he was arrested and forced to endure
proceedings on this violation in order to have the condition declared vague
or overbroad.
28 UNITED STATES V . PHILLIPS

procedural problems with” the Government’s forfeiture
application, SER 627, and because the court found that a
forfeiture judgment was “not necessary in this case.” SER
627. The district court did not explain the rationale behind its
conclusion that there were too many procedural problems
with the request for forfeiture, but presumably this conclusion
was based on Phillips’s argument that forfeiture had not been
determined by the jury. Because we are reviewing de novo
the district court’s refusal to impose a forfeiture judgment,
however, we need not speculate as to why the district court
came to its conclusion.

The Government sought forfeiture under 18 U.S.C. § 981
and 28 U.S.C. § 2461(c). Section 981 states:

The following property is subject to forfeiture
to the United States:

....

(C) Any property, real or personal, which
constitutes or is derived from proceeds
traceable to a violation of [specified sections]
of this title or any offense constituting
“specified unlawful activity” (as defined in
section 1956(c)(7) of this title), or a
conspiracy to commit such offense.

There is no dispute that the wire fraud of which defendant
was convicted is specified unlawful activity for the purposes
of this forfeiture statute. 28 U.S.C. § 2461(c), in turn,
 UNITED STATES V . PHILLIPS 29

provides for “criminal forfeiture whenever civil forfeiture is
available and the defendant is found guilty of the offense.”
United States v. Newman, 659 F.3d 1235, 1239 (9th Cir.
2011), cert. denied, 132 S. Ct. 1817 (2012) (emphasis in
original). That statute says that when those criteria have been
met, the district court “shall order the forfeiture of the
property as part of the sentence.” 28 U.S.C. § 2461(c)
(emphasis in original); see Newman, 659 F.3d at 1239. As we
held in Newman, “the mandatory nature of that phrase is clear
. . . .” 659 F.3d at 1240. In contrast to a fine, “which the
district court retains discretion to reduce or eliminate, the
district court has no discretion to reduce or eliminate
mandatory criminal forfeiture.” Id. (emphasis added).
Therefore, “[w]hen the government has met the requirements
for criminal forfeiture, the district court must impose criminal
forfeiture, subject only to statutory and constitutional limits.”
Id.

None of those limits on forfeiture applies here. The only
constitutional issue that Phillips raises is his assertion that the
issue of forfeiture should have been decided by the jury. But
there is no constitutional “right to a jury verdict on
forfeitability” in a criminal forfeiture proceeding. Libretti v.
United States, 516 U.S. 29, 49 (1995). Phillips argues that the
Supreme Court’s clear and dispositive holding in Libretti has
been abrogated by subsequent Supreme Court cases that
increased the range of issues that must be decided by a jury.
See United States v. Booker, 543 U.S. 220 (2005); Apprendi
v. New Jersey, 530 U.S. 466 (2000). But as the Second
Circuit has recognized, “Because Libretti has direct
application in this case, we are bound by its holding even if
it might appear ‘to rest on reasons rejected in some other line
of decisions.’” United States v. Fruchter, 411 F.3d 377, 380
(2d Cir. 2005) (quoting Rodriguez de Quijas v.
30 UNITED STATES V . PHILLIPS

Shearson/American Express, Inc., 490 U.S. 477, 484 (1989)).
Phillips cannot point to any Supreme Court case that
abrogates or overturns Libretti.

Indeed, every Circuit to consider the question has found
that Libretti has not been abrogated by subsequent Supreme
Court decisions.14 Nor did the Supreme Court’s recent
decision in Southern Union Co. v. United States, 132 S. Ct.
2344 (2012) abrogate Libretti. In Southern Union, the
Supreme Court held that the Sixth Amendment right to a jury
determination of “any fact, other than the fact of a prior
conviction, that increases a criminal defendant’s maximum
potential sentence” applies to “sentences of criminal fines.”
Id. at 2348–49.15 Southern Union, however, is not on point,
because, as we have previously stated, forfeiture is not a fine.
Newman, 659 F.3d at 1240. As we explained in Newman,

14
W e have not specifically addressed the question of whether a jury
determination is necessary in order to impose a civil forfeiture judgment,
but we have concluded that Apprendi v. New Jersey, 530 U.S. 466 (2000),
did not change the rule that forfeiture need only be proven by a
preponderance of the evidence, thus implying that Apprendi did not upset
the rule of Libretti. United States v. Shyrock, 342 F.3d 948, 991 (9th Cir.
2003) (“W e therefore join all other circuit courts of appeals that have
considered the question, and conclude that Apprendi does not disturb the
rule that statutorily-prescribed forfeiture is constitutional when supported
by the preponderance of the evidence.”).

15
In Southern Union, the defendant was subject to a maximum fine of
$50,000 for each day it violated federal environmental statutes. Id. at
2349. The jury verdict form stated that the company had engaged in
violations for approximately 762 days, but the court’s instructions
permitted conviction even if the jury found a violation for a single day.
The court imposed a fine for 762 days of violations, but the defendant
argued that “the only violation the jury necessarily found was for one day,
and imposing any fine greater than the single-day penalty of $50,000
would require factfinding by the court, in contravention” of Apprendi.
 UNITED STATES V . PHILLIPS 31

“[u]nlike a fine, which the district court retains discretion to
reduce or eliminate, the district court has no discretion to
reduce or eliminate mandatory criminal forfeiture . . . .
Forfeiture is not a ‘disguised fine’ such that the rules
applicable to fines apply equally to forfeiture.” Id.

More generally, every Circuit to consider the question has
found that Apprendi and its progeny did not alter the rule in
Libretti, and Southern Union does not change that
determination. The clear basis for the Supreme Court’s
holding in Southern Union was that Supreme Court case law
“broadly prohibit[s] judicial factfinding that increases
maximum criminal ‘sentence[s],’ ‘penalties,’ or
‘punishment[s]’ — terms that each undeniably embrace
fines.” Southern Union, 132 S. Ct. at 2351 (emphasis added)
(citations omitted). The Southern Union Court explicitly
held, however, that there could be no “Apprendi violation
where no maximum is prescribed.” Id. at 2353.

Although criminal forfeiture undoubtedly constitutes an
element of punishment, see Libretti, 516 U.S. at 39, there is
no statutory (or guideline) maximum limit on forfeitures.
Rather, criminal forfeitures are indeterminate and open-
ended, and may include all property “constituting, or derived
from, any proceeds the person obtained, directly or
indirectly,” from his unlawful conduct. 21 U.S.C. § 853(a).
The Second, Fourth, and Seventh Circuits have all explicitly
distinguished Booker and denied the right to a jury
determination in the forfeiture context because forfeiture is
not a “determinate sentencing scheme” with a “statutory
maximum.” Fruchter, 411 F.3d at 383; United States v.
32 UNITED STATES V . PHILLIPS

Messino, 382 F.3d 704, 713 (7th Cir. 2004); United States v.
Alamoudi, 452 F.3d 310, 314 (4th Cir. 2006).16

As the Second Circuit explained in Fruchter:

Blakely and Booker prohibit a judicial
increase in punishment beyond a previously
specified range; in criminal forfeiture, there is
no such previously specified range. A judge
cannot exceed his constitutional authority by
imposing a punishment beyond the statutory
maximum if there is no statutory maximum.
Criminal forfeiture is, simply put, a different
animal from determinate sentencing.

411 F.3d at 383. In fact, “Booker itself expressly states that”
the section of the RICO statute that permits forfeiture
(18 U.S.C. § 3554) “is still valid.” Fruchter, 411 F.3d at 382
(quoting Booker, 543 U.S. at 258).

Turning to the statutory limits on forfeiture, Federal Rule
of Criminal Procedure 32.2(b)(5)(A) states that a special jury
verdict is available if the Government is seeking forfeiture of
specific property; in that circumstance, the district court must
determine whether either party wants the jury to determine
the forfeitability of specific property. But this subsection

16
The Third Circuit has also held that Booker did not upset the rule of
Libretti. United States v. Leahy, 438 F.3d 328, 331–32 (3d Cir. 2006)
(“even after Booker, the Sixth Amendment’s trial by jury protection does
not apply to forfeiture”).
 UNITED STATES V . PHILLIPS 33

does not apply to the monetary forfeiture17 sought by the
Government in this case. Newman, 659 F.3d at 1242. With
respect to monetary forfeitures, Federal Rule of Criminal
Procedure 32 does not permit the district court to do anything
other than “determine the amount of money that the
defendant will be ordered to pay,” in an amount determined
by statute. Id. (quoting Fed. R. Civ. P. 32.2(b)). The statute
states that a defendant must forfeit “a very specific amount –
the proceeds of his criminal activity.” United States v. Casey,
444 F.3d 1071, 1076 (9th Cir. 2006). Those proceeds need
not be in the defendant’s possession at the time of sentencing;
in fact, imposition of forfeiture is still necessary even if
defendant has no assets to forfeit. Newman, 659 F.3d at 1243.
Normally, as in Newman, the broad definition of proceeds in
this context will set the forfeiture amount as the amount that
the defendant stole. Newman, 659 F.3d at 1243. Given that
the only issue here was a monetary forfeiture, no jury
determination was necessary.

Phillips also argues that he has already paid the stolen
funds back to MOD and thus forfeiture cannot apply. But this
argument confuses forfeiture and restitution. As we have
previously explained, forfeiture and restitution serve entirely
distinct purposes:

Congress conceived of forfeiture as
punishment for the commission of various
[crimes]. The purpose of restitution . . . ,
however, is not to punish the defendant, but to
make the victim whole again by restoring to

17
Although the Government originally listed the watches for forfeiture,
it did not seek forfeiture of the watches at sentencing.
34 UNITED STATES V . PHILLIPS

him or her the value of the losses suffered as
a result of the defendant’s crime.

Id. at 1241 (emphasis and alterations in original).

Therefore, Phillips is not entitled to credit for the amount
that he repaid to MOD. Indeed, “[i]n the absence of a statute
authorizing a reduction in forfeiture, the district court may
not reduce forfeiture because of an order of restitution to a
victim or because the victim already has been made whole.”
Id. There is no applicable statute here that authorizes such a
reduction.

In sum, where the Government “disclaimed any intent to
seek forfeiture of specific property,” and sought only a money
judgment, “there was no issue for the jury.” United States v.
Gregoire, 638 F.3d 962, 972 (8th Cir. 2011). Therefore, we
remand for the district court to determine the amount of
money that Phillips derived from the wire frauds charged in
Counts 1, 2, and 3, and to enter a forfeiture judgment against
Phillips for that amount.

For all the foregoing reasons, we AFFIRM in part,
REVERSE in part, and REMAND for further proceedings
consistent with this opinion.