United States of America, Plaintiff-appellee, v. Andre Pease, A.k.a Magic, Defendant-appellant,beverly Reedy, Latoya Pease, Interested Parties, Appellants, 331 F.3d 809 (11th Cir. 2003)

Title 21 of the United States Code provides that a person convicted of a federal drug felony forfeits to the United States "(1) any property constituting, or derived from, any proceeds the person obtained... as the result of such [crime]," and "(2) any of the person's property used ... to commit, or to facilitate the commission of, such [crime]." 21 U.S.C. § 853(a) (1)-(2). The forfeiture may be obtained in a civil in rem proceeding or in a criminal in personam proceeding. See United States v. Gilbert, 244 F.3d 888, 918-20 (11th Cir. 2001) (discussing the differences between civil and criminal forfeiture). In a criminal proceeding, the United States acquires the defendant's interest in the property, which is described in the indictment, if the Government establishes that such interest constitutes § 853(a) property, and the district court thereafter enters a final judgment adjudicating the defendant's guilt, imposing the defendant's sentence, and ordering forfeiture of the defendant's interest. 21 U.S.C. § 853(a); 18 U.S.C. § 3554; Fed. R. Crim. P. 32.2.¹ 

Once the defendant's interest in the subject property is forfeited by the entry of a final judgment, any person (other than the convicted defendant) claiming an interest in the property may commence an ancillary proceeding in the district court by petitioning the court pursuant to 21 U.S.C. § 853(n) (2) to enter an order declaring that his or her interest is superior to the defendant's interest (which the final judgment forfeited to the United States).²  To prevail, the petitioner must establish by a preponderance of the evidence that his or her interest in the subject property was superior to any right, title, or interest the defendant may have possessed at the time he or she committed the offense giving rise to the forfeiture, or that he or she was a bona fide purchaser for value. 21 U.S.C. § 853(n) (6).³ 

In the scenario before us, Andrew Pease ("the defendant") pled guilty on September 11, 1998, to conspiracy to possess with intent to distribute cocaine.⁴  He pled pursuant to a plea agreement in which he agreed to forfeit to the United States his interest in certain real and personal property. After the plea was entered, but before sentencing, the court entered a preliminary order of forfeiture on January 4, 1999 pursuant to Rule 32 of the Federal Rules of Criminal Procedure.⁵  At sentencing, however, which took place on January 29, 1999, the court failed to make the preliminary order of forfeiture a part of its judgment. The judgment the court entered recited that the defendant had been sentenced to prison for 360 months and five years' supervised release, but was entirely silent as to forfeiture. The defendant thereafter appealed his conviction and sentence. The Government could have cross-appealed the defendant's sentence under 18 U.S.C. § 3742(b) — specifically, the district court's failure to include an order of forfeiture in its final judgment — but did not do so. We affirmed the defendant's conviction and sentence on March 1, 2001. United States v. Pease, 240 F.3d 938 (11th Cir. 2001). Our mandate issued on April 25, 2001.

In September 1999, while the defendant's appeal was pending in this court, the Government, drawing on the preliminary order of forfeiture for its authority, published a notice informing third parties that the property described in the preliminary order had been forfeited to the United States and of their right to petition the district court pursuant to 21 U.S.C. § 853(n) (2), (6) for a declaration that they held an interest in such property and that their interest was superior to the defendant's (forfeited) interest. On September 27, 1999, Latoya Pease ("Pease") and Beverly Reedy ("Reedy"), the defendant's sister and mother, respectively, filed § 853(n) (2) petitions with the district court,⁶  claiming an interest in some of the property described in the preliminary order of forfeiture.⁷  The same day, the defendant, claiming an interest in three items listed in the preliminary order, also filed a § 853(n) (2) petition.⁸  Shortly thereafter, the Government moved to strike the defendant's petition on the ground that § 853(n) (2) prohibits a convicted defendant from claiming an interest in property that had been forfeited.

On November 29, 2000, while the petitioners' claims and the Government's motion to strike were pending, the defendant moved the district court to dismiss the ancillary proceeding. He contended that because the judgment in his criminal case did not include a final order of forfeiture, the court lacked the authority to entertain a § 853(n) ancillary proceeding. Pease and Reedy subsequently moved the court to dismiss the ancillary proceeding on the same ground. Realizing that the petitioners' motions might have merit — that the court's authority to hold an ancillary hearing depended on the inclusion of a final order of forfeiture as part of the judgment entered in the defendant's criminal case — the Government attempted to avoid the problem the petitioners posed. Citing Rule 36 of the Federal Rules of Criminal Procedure, which authorizes a district court to correct " [c]lerical mistakes in judgments," the Government moved the district court to amend the judgment in the defendant's case to include a final order of forfeiture mirroring the preliminary order of forfeiture the court entered on January 4, 1999.

The district court referred the § 853(n) (2) petitions and the Government's Rule 36 motion to a magistrate judge, who held an evidentiary hearing on the merits of the petitions and considered whether the relief the Government was seeking constituted the correction of a "clerical mistake" within the intendment of Rule 36. At the conclusion of the hearing, the magistrate judge issued a report and recommendation which recommended that the district court grant the Government's motion and deny the § 853(n) (2) petitions. The magistrate judge concluded that Pease and Reedy had failed to satisfy the burden of proof prescribed by § 853(n) (6), and that the statute barred the defendant from claiming his interest in the forfeited property.⁹  On June 6, 2000, the district court adopted the magistrate judge's recommendations, substantively amended the judgment in the defendant's case, and denied the petitioners' claims.¹⁰  All three petitioners now appeal.¹¹ 

This appeal presents two legal questions. First, does the law require that a criminal forfeiture be made part of the judgment entered in the case in which the court adjudicates the defendant's guilt and imposes sentence? Second, if the answer to that question is yes, does the district court's failure to include in its judgment a forfeiture order (which the parties' plea agreement called for) amount to a "clerical mistake" within the meaning of Rule 36 of the Federal Rules of Criminal Procedure?¹²  We address these questions in order.

The answer to the first question is clear. The United States cannot acquire a convicted defendant's interest in property forfeited under 21 U.S.C. § 853(a) unless and until the district court orders the interest forfeited as part of its judgment in the defendant's case. Section 853 is part of the Comprehensive Drug Abuse Prevention and Control Act of 1970, 21 U.S.C. § 801 et seq., and states that " [t]he court, in imposing sentence ... shall order, in addition to any other sentence imposed pursuant to [Subchapter I] of [Chapter 13, Drug Abuse Prevention and Control,] that the person forfeit to the United States all property described in [§ 853(a) (1)-(2)]."¹³  United States v. Gilbert, 244 F.3d 888, 924 (11th Cir. 2001) (" [C]riminal forfeiture is part of a defendant's sentence."); see also United States v. L'Hoste, 609 F.2d 796, 812-13 (5th Cir. 1980) (holding that forfeiture should be ordered as part of a defendant's sentence).¹⁴  In 1972, Rule 32 of the Federal Rules of Criminal Procedure was amended to provide a procedure for including an order of forfeiture as part of the defendant's sentence. See Fed. R. Crim. P. 32(d) (2) advisory committee's notes. In 1996, the Rule was amended as follows to authorize the district court to enter a preliminary order of forfeiture after the return of a jury verdict of forfeiture or a plea of guilty providing for forfeiture:¹⁵ 

If a verdict contains a finding that property is subject to a criminal forfeiture, or if a defendant enters a guilty plea subjecting property to such forfeiture, the court may enter a preliminary order of forfeiture after providing notice to the defendant and a reasonable opportunity to be heard on the timing and form of the order. The order of forfeiture shall authorize the Attorney General to seize the property subject to forfeiture, to conduct any discovery that the court considers proper to help identify, locate, or dispose of the property, and to begin proceedings consistent with any statutory requirements pertaining to ancillary hearings and the rights of third parties. At sentencing, a final order of forfeiture shall be made part of the sentence and included in the judgment....

Fed. R. Crim. P. 32(d) (2) (emphasis added).

The issuance of a preliminary order of forfeiture under Rule 32(d) (2) does not relieve the district court of the obligation to include an order of forfeiture in its judgment if forfeiture to the United States is to come to fruition — that is, the Government actually acquires the defendant's interest in the subject property. This becomes clear when we note that a third party's right to petition the district court for an order declaring that its interest in the subject property is superior to the defendant's interest (if any) does not come into being until the Government, " [f]ollowing the entry of an order of forfeiture under this section [, i.e., § 853(a),] publish [es] notice of the order and its intent to dispose of the property in such a manner as the Attorney General may direct." 21 U.S.C. § 853(n) (1). " [W]ithin thirty days of the final publication or his receipt of notice ... whichever is earlier, [the third party may] petition the court for a hearing to adjudicate the validity of his alleged interest." Id. § 853(n) (2). If the third party fails to file a petition within thirty days of such notice, "the United States shall have clear title to property that is the subject of the order of forfeiture and may warrant good title to any subsequent purchaser or transferee." Id. § 853(n) (7). If, as the Government contends in this case, a third party's right to petition the court comes into existence when, as in this case, it publishes notice pursuant to a preliminary order of forfeiture, then § 853(n) (1)'s reference to the "entry of an order of forfeiture under this section," i.e., § 853(a), is effectively rewritten to provide that the Attorney General may issue a § 853(n) (1) notice pursuant to either a preliminary order of forfeiture or an order of forfeiture issued at sentencing, as part of the court's judgment.

Under the scenario the Government advances here — where the Attorney General may proceed pursuant to either order — suppose that prior to the defendant's sentencing and the entry of judgment, (1) the district court enters a preliminary order of forfeiture, (2) the Attorney General publishes a § 853(n) (1) notice, (3) third parties file § 853(n) (2) petitions, (4) the court hears the petitions and, in accordance with § 853(n) (6), rejects the parties' petitions, and (5), in accordance with § 853(n) (7), the court grants the United States "clear title to the property that is the subject of the order of forfeiture." Suppose further that, as is the case here, the court does not include in its judgment, as part of the defendant's sentencing package, an order of forfeiture. In that case, the § 853(n) proceedings would have gone for naught. Or suppose that subsequent to the entry of the preliminary order of forfeiture, the district court, invoking its authority under Rule 29(b) of the Federal Rules of Criminal Procedure, grants the defendant's motion for judgment of acquittal on the count(s) of the indictment which provided the predicate for forfeiture, or the court, invoking Rule 33 of the Federal Rules of Criminal Procedure, grants the defendant a new trial on the same counts. The result would be the same as it is in the instant scenario — the § 853(n) ancillary proceedings would have gone for naught. What's more, the court would have wasted its judicial and parajudicial resources and put the parties to an expense they should not have been required to incur.

Rule 32(d) (2), as noted above, provides that if the court issues a preliminary order of forfeiture, the Attorney General may, among other things, "begin proceedings consistent with any statutory requirements pertaining to ancillary hearings and the rights of third parties." The untoward scenarios we have portrayed — where the district court issues a preliminary order of forfeiture but for one reason or another does not include an order of forfeiture as part of the defendant's sentencing package and its judgment—would, in our view, be inconsistent with the "statutory requirements" of 18 U.S.C. § 3554, 21 U.S.C. § 853, and Rule 32(d) (2)'s requirement that, if forfeiture is to be granted to the United States, the defendant's judgment must contain an order of forfeiture, and our teachings in United States v. Gilbert. In sum, our answer to the first question — must criminal forfeiture be made a part of the judgment in the defendant's case — is yes.

Anticipating this conclusion, the Government urges us to affirm the district court's rejection of appellants' claims to the subject property, contending that our failure to do so would "subvert the intent of the plea agreement and the purpose of the forfeiture statutes to divest criminals of their ill-gotten gains." Government's Supp. Ltr. Bf. at 3. What the Government overlooks is that an affirmance would yield the same result as a reversal. If we affirm the district court, the appellants will take nothing, but neither will the Government. The reason why the Government will take nothing is that due to the absence of a forfeiture order in the judgment entered in the defendant's case, the United States did not acquire the defendant's interest in the subject property. In short, the parties would return to square one — their pre-indictment positions.¹⁶  The result will be the same if we reverse the district court's decision; the parties will be restored to their pre-indictment positions.¹⁷  This brings us to the question of whether the district court's amendment of the judgment in the defendant's case to include forfeiture as part of the defendant's sentence constituted a proper exercise of the court's authority, under Rule 36 of the Federal Rules of Criminal Procedure, to remedy clerical errors.

Rule 36 authorizes the district courts to correct " [c]lerical mistakes in judgments ... arising from oversight or omission ... at any time." In this case, the oversight or omission was the Government's, not the district court's. The prosecutor simply forgot to ask the court during the sentencing hearing to provide as part of the sentencing package a provision that the defendant forfeit to the United States his interest in certain properties.¹⁸  For purposes of this appeal, however, we will assume that the Rule embraces errors arising from counsel's, rather than the court's, oversight or omission.

The Government concedes, as it must, that the district court erred in applying Rule 36 as it did in the defendant's case. Rule 36 can be used to correct "clerical" errors; it cannot be used, as it was here, to make a substantive alteration to a criminal sentence. See United States v. Whittington, 918 F.2d 149, 151 (11th Cir. 1990); see also United States v. Werber, 51 F.3d 342, 347 (2d Cir. 1995) ("Rule 36 is not a vehicle for the vindication of the court's unexpressed sentencing expectations, or for the correction of errors made by the court itself.") (internal quotation marks omitted); United States v. Daddino, 5 F.3d 262, 264 (7th Cir. 1993) (" [R]ecent cases and commentary flesh out the parameters of Rule 36 and demonstrate that this exception does not apply to errors made by the court itself."). In short, the district court misused Rule 36 to modify the defendant's sentence in a substantive way.

In addition to misapplying Rule 36, the court acted without jurisdiction. The defendant's case was still pending on appeal when, on June 5, 2000, the district court amended the judgment to include an order of forfeiture. It is settled law that the appeal of a judgment in a criminal case deprives the district court of jurisdiction to amend the judgment (except for clerical errors pursuant to Rule 36). See, e.g., United States v. Vicaria, 963 F.2d 1412, 1415 (11th Cir. 1992).

In a final effort to obtain a forfeiture order, the Government asks that we remand this case to the district court with an instruction to correct the judgment in the defendant's case pursuant to Rule 35(a) of the Federal Rules of Criminal Procedure.¹⁹  The problem with this request is that the defendant's criminal case is not before us; we disposed of the appeal in that case nearly two years ago, when the mandate issued on April 25, 2001. The case before us is an ancillary proceeding, a civil case. See United States v. Gilbert, 244 F.3d 888, 906-07 (11th Cir. 2001). Even if we were to assume that the instant case is a criminal case, meaning that Rule 35(a) might apply, we would have no basis for remanding the case with the instruction that the district court amend the judgment to provide for forfeiture. The Rule permits a district court to correct a sentence that we have "determined on appeal under 18 U.S.C. § 3742 to have been imposed in violation of the law, to have been imposed as a result of an incorrect application of the sentencing guidelines, or to be unreasonable...." Fed. R. Crim. P. 35(a). As we have noted, the Government failed to appeal the defendant's sentence — for failure of the district court to order forfeiture as part of the sentence — thus, the purported error is not before us.

For the foregoing reasons, the district court's order is REVERSED. On receipt of our mandate, the district court shall dismiss the ancillary proceeding for lack of an order of forfeiture.²⁰ 

SO ORDERED.