Saturday, October 06, 2007


United States v. Capoccia, No. 06-0669-cr (2d Cir. September 19, 2007) (Sotomayer, Katzmann, CJJ, Gertner, DJ)

In this case, the district court erred in ordering forfeiture of the proceeds of conduct that occurred prior to the date of the conduct with which the defendant was charged. The decision turned on a very narrow reading of the indictment, as well as on the nature of the statute under which the defendant was charged.

At issue was money that Capoccia, a lawyer, misappropriated from a credit counseling/debt reduction service that he founded. Capoccia was convicted of misappropriating unearned client retainer fees, failing to give complete refunds to clients who withdrew from the program, and embezzling client escrow funds that was supposed to be paid to credit card companies to settle clients’ debts.

Capoccia was charged with interstate transportation of stolen money under 18 U.S.C. § 2314. While the indictment referenced a “scheme” that existed between 1997 and 2002, the earliest actual interstate money transfers with which he was charged occurred on May 24, 2000. Despite this, the district court ordered Capoccia to forfeit the proceeds from pre-May 2000 transfers.

The court of appeals reversed. Reading the indictment very closely, it distinguished between language that “refer[ed] to the existence of” the scheme and that which “charge[d]” a scheme. [emphasis in original]. The court concluded that only the charging portion of the indictment, which listed the particular transactions that the government alleged to be violations of § 2314, determined the conduct that could be the basis of a forfeiture. Since the earliest discrete act listed occurred on May 24, 2000, the district court erred in ordering the forfeiture of the proceeds of earlier transactions.

In addition, the court relied on the nature of the particular offense with which Capoccia was charged. He was accused under the first paragraph of § 2314, which criminalizes only individual acts of transportation of stolen property, and not the second paragraph, which criminalizes, inter alia, a scheme or artifice to defraud. Accordingly, the indictment’s reference to conduct from before 2000 was treated as “background” for the specific acts alleged in the charging paragraphs, but did not itself charge a violation of the statute encompassing pre-May 2000 conduct.

Finally, the court held that, not only did the indictment did not charge Capoccia with pre-May 2000 conduct, the government failed to establish a nexus between the earlier transfers and the conduct of which he was convicted. Purely as a matter of logic, the government could not establish that the funds involved in earlier transactions were “obtained ... as the result” of the later ones.

Comment: This is a nice win for Capoccia, since the amount involved is more than $1.1 million dollars.

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