United States v. Luis Sanchez

• Court: Court of Appeals for the Eleventh Circuit
• Decided: September 11, 2023
• Docket: 22-11923
• Status: Unpublished

Opinion

USCA11 Case: 22-11923 Document: 36-1 Date Filed: 09/11/2023 Page: 1 of 13

[DO NOT PUBLISH] In the United States Court of Appeals For the Eleventh Circuit

____________________

No. 22-11923 Non-Argument Calendar ____________________

UNITED STATES OF AMERICA, Plaintiff-Appellee, versus LUIS SANCHEZ, JAQUELINE YUPANQUI PALACIOS, EXCENTRIC IMPORT & EXPORT CORPORATION,

Petitioners-Appellants,

CARLOS QUISPE CANCARI, USCA11 Case: 22-11923 Document: 36-1 Date Filed: 09/11/2023 Page: 2 of 13

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Defendant.

Appeal from the United States District Court for the Southern District of Florida D.C. Docket No. 1:21-cr-20134-CMA-1 ____________________

Before WILSON, LUCK, and ANDERSON, Circuit Judges. PER CURIAM: This case is about third parties who claim an interest in prop- erty subject to criminal forfeiture. Luis Sanchez, Excentric Import and Export Corporation, and Jaqueline Yupanqui Palacios appeal the preliminary and final orders of forfeiture in Carlos Quispe Can- cari’s criminal case, as well as the district court’s orders dismissing their third-party petition and refusing to grant relief from that dis- missal. Their appeal falls short. We dismiss the petitioners’ chal- lenge to the preliminary forfeiture order for lack of jurisdiction and affirm the district court’s other orders. USCA11 Case: 22-11923 Document: 36-1 Date Filed: 09/11/2023 Page: 3 of 13

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I. 1 Cancari was arrested at the Miami airport when he arrived on a cargo plane from Bolivia on February 4, 2021. Law enforce- ment seized narcotics and $9,000 in cash during his arrest. Cancari told the officers that the money belonged to Mr. Sanchez. Cancari was later charged with drug offenses, and his indictment included forfeiture allegations pursuant to 21 U.S.C. section 853. Cancari pleaded guilty, admitting that the “$9,000 in United States cur- rency” that the government had seized was “subject to forfeiture.” The district court entered a preliminary order of forfeiture. The order stated that it was “final” as to Cancari and that, “upon adjudication of all third-party interests,” the district court would enter a final order of forfeiture “in which all interests w[ould] be addressed.” The government posted notice of the pending final order of forfeiture on an official website from September 25 through Octo- ber 24. The government also sent notice to Mr. Sanchez’s counsel, delivered on October 29, outlining Mr. Sanchez’s right to partici- pate in the forfeiture proceedings. On November 23, Mr. Sanchez, Excentric, and Ms. Palacios jointly petitioned the district court under 21 U.S.C. section 853(n) for release of the $9,000. They attached to the petition signed affi- davits from Mr. Sanchez and Ms. Palacios. The district court

1 We accept the factual allegations in the petition as true. Fed. R. Crim. P. 32.2(c)(1)(A). USCA11 Case: 22-11923 Document: 36-1 Date Filed: 09/11/2023 Page: 4 of 13

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denied their petition without prejudice for not including a memo- randum as required by the local rules, and, in light of the govern- ment’s non-opposition, granted the petitioners an extension of time to revise their petition. On December 17, the petitioners filed a revised petition (which included a memorandum), alongside the signed affidavit from Mr. Sanchez and a new signed affidavit from Ms. Palacios. However, the revised petition, like the original peti- tion, was only signed by the petitioners’ counsel—not the petition- ers. The revised petition alleged that Mr. Sanchez was a part owner of Excentric, a Florida company that sold electronics to Latin American clients including Ms. Palacios, a Bolivian resident operating a Bolivian electronics company. The petition explained that Ms. Palacios owed Excentric “for merchandise previously pur- chased,” so she’d “sent payment of the $9,000.00 U.S. dollars to Ex- centric with [d]efendant Quispe Cancari who was traveling from Bolivia to Miami.” The money came from “earnings and working capital from [Ms. Palacios’s] electronics business,” and had “no re- lationship” to Cancari’s drug offenses. None of the petitioners had any idea Cancari was transporting narcotics. The district court granted the government’s motion to dis- miss the petition because Mr. Sanchez and Excentric lacked Article III standing and the three petitioners lacked statutory standing. The district court also dismissed the petition because the petition- ers hadn’t signed the petition, as required by section 853(n)(3), and the attached signed affidavits that they had attached to the petition USCA11 Case: 22-11923 Document: 36-1 Date Filed: 09/11/2023 Page: 5 of 13

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didn’t cure that mistake. The district court refused to grant the petitioners’ request for leave to amend their petition because the statute authorizing third-party petitions in criminal forfeiture pro- ceedings only allowed petitions to be filed during a thirty-day win- dow, which had long passed by. The district court issued a final order of forfeiture, declaring that “all right, title, and interest in the [c]urrency is hereby finally forfeited.” The petitioners then filed a motion under Federal Rule of Civil Procedure 60, seeking relief from the dismissal of their pe- tition and from the final forfeiture order. The district court denied the motion, and the petitioners timely appealed. II. The petitioners appeal the preliminary order of forfeiture, the dismissal of their petition, the final order of forfeiture, and the denial of their rule 60 motion. Their appeal focuses on two issues: (1) whether the district court erred in issuing the preliminary order of forfeiture; and (2) whether the district court erred in dismissing 2 their section 853(n) petition. We discuss each in turn.

2 The petitioners raise a third issue—the constitutionality of section 853—but we don’t address it because it wasn’t properly raised in the district court. The petitioners’ only mention of this constitutional issue in the district court was in their reply brief supporting their rule 60 motion. The district court declined to address the belatedly raised issue, and so do we. See United States v. Lewis, 115 F.3d 1531, 1539 (11th Cir. 1997) (“This [c]ourt will generally not address an issue not decided by the district court” and “therefore do not reach the merits of the defendant’s constitutional challenge.” (cleaned up)). USCA11 Case: 22-11923 Document: 36-1 Date Filed: 09/11/2023 Page: 6 of 13

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The Preliminary Order of Forfeiture The petitioners argue that the district court erred in issuing the preliminary forfeiture order because the government never es- tablished a nexus between the seized cash and Cancari’s crime. The government responds that the petitioners lack Article III standing to challenge the preliminary order of forfeiture. “We review de novo questions about our subject matter jurisdiction, including standing.” United States v. Davenport, 668 F.3d 1316, 1319 (11th Cir. 2012) (cleaned up). We begin by summarizing the relevant legal framework. Under section 853 and “Federal Rule of Criminal Procedure 32.2, criminal forfeiture is split into two phases: the first phase concerns the defendant’s ownership of the property to be forfeited, and the second phase concerns any third party’s ownership of that prop- erty.” United States v. Amodeo, 916 F.3d 967, 972 (11th Cir. 2019). When “a criminal defendant pleads guilty and agrees to the forfei- ture, the district court must promptly enter a preliminary forfeiture order.” Id. (citing Fed. R. Crim. P. 32.2(b)(1)–(2)). At that point, “the preliminary forfeiture order becomes final as to the defendant” but “remains preliminary as to third parties until the [section 853(n)] ancillary proceeding is concluded.” Id. (quoting Fed. R. Crim. P. 32.2(b)(4)(A)). “The ancillary proceeding exists to determine whether a third party has an interest in the property that the defendant has already forfeited—not to relitigate the preliminary order’s finding of forfeitability.” Id. “Nowhere do the provisions [of section 853(n) USCA11 Case: 22-11923 Document: 36-1 Date Filed: 09/11/2023 Page: 7 of 13

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or rule 32.2] grant petitioners a private cause of action or right to appeal a court’s ruling outside of an ancillary forfeiture proceed- ing.” United States v. Cone, 627 F.3d 1356, 1358 (11th Cir. 2010). In fact, “[s]ection 853 affirmatively bars interference by non-party pe- titioners outside of the ancillary proceeding.” Id. (citing 21 U.S.C. § 853(k)). Because “[a]n ancillary proceeding constitutes the sole means by which a third-party claimant can establish entitlement to return of forfeited property,” third-party claimants “lack[] standing to challenge the validity of [a preliminary order of forfeiture’s] de- termination of forfeitability,” and so we must dismiss third-party challenges to preliminary orders of forfeiture for lack of jurisdic- tion. See Davenport, 668 F.3d at 1320–21; see also, e.g., Cone, 627 F.3d at 1359 (dismissing appeal because third-party petitioner lacked standing to challenge district court’s preliminary order of forfei- ture). That’s what we must do here. Because the petitioners’ sole means to establish their entitlement to the $9,000 is the ancillary proceeding, they lack standing to challenge the preliminary forfei- ture order. We dismiss their appeal of the preliminary order of forfeiture for lack of jurisdiction. The District Court’s Dismissal of the Petition Rule 32.2 allows district courts to grant motions to dismiss section 853(n) petitions “for lack of standing, for failure to state a claim, or for any other lawful reason.” Fed. R. Crim. P. 32.2(c)(1)(A). When a rule 32.2 “motion to dismiss is filed before discovery or a hearing, it should be treated like a motion to dismiss USCA11 Case: 22-11923 Document: 36-1 Date Filed: 09/11/2023 Page: 8 of 13

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a civil complaint under Federal Rule of Civil Procedure 12(b).” United States v. Marion, 562 F.3d 1330, 1342 (11th Cir. 2009) (quota- tion omitted). The petitioners contend that the district court erred in dis- missing their petition by wrongly: (1) finding that Mr. Sanchez and Excentric lacked Article III standing to file the petition; (2) finding that the petitioners lacked statutory standing under section 853(n); and (3) denying them leave to file an amended petition, which would’ve added their signatures. We address these arguments one by one, reviewing the district court’s Article III and statutory stand- ing rulings de novo, see Davenport, 668 F.3d at 1319, and denial of leave to amend for abuse of discretion, United States v. $125,938.62, 370 F.3d 1325, 1329 (11th Cir. 2004). 1. Article III Standing The petitioners argue that the district court erred in finding that Mr. Sanchez and Excentric lacked Article III standing to peti- tion for the $9,000. Claimants in federal court must have Article III standing, a requirement deriving from the constitutional mandate that federal courts’ jurisdiction is limited to adjudicating “[c]ases” and “[c]ontroversies.” U.S. Const. art. III, § 2. The first element of Article III standing is a “particularized injury,” which in forfeiture proceedings hinges on “whether the litigant has an interest in the property subject to the forfeiture.” See Amodeo, 916 F.3d at 971 USCA11 Case: 22-11923 Document: 36-1 Date Filed: 09/11/2023 Page: 9 of 13

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(“[A]bsent an interest in that property, there is no case or contro- versy.”). The interest must be either “an ownership or possessory in- terest in the property seized.” United States v. Five Hundred Thousand Dollars, 730 F.2d 1437, 1439 (11th Cir. 1984); see also United States v. Timley, 507 F.3d 1125, 1129 (8th Cir. 2007). Because the interest must be in the specific property seized, a criminal defendant’s general creditors don’t have standing to claim an interest in any particular asset subject to forfeiture. See United States v. Watkins, 320 F.3d 1279, 1283 (11th Cir. 2003) (explaining that because general credi- tors only “enjoy a legal interest in the entire estate of the debtor,” they aren’t entitled to repayment from the value of “any one spe- cific asset” belonging to the debtor); see also United States v. White, 675 F.3d 1073, 1080 (8th Cir. 2012) (“[A] general creditor does not have standing to claim an interest in a particular forfeited asset.”). The petition doesn’t allege that Mr. Sanchez or Excentric had either an ownership interest or a possessory interest in the seized cash. Rather, the petition (and incorporated memorandum) alleged that Ms. Palacios was the “[o]wner/[b]ailor” of the cash— which Cancari “possessed” as Ms. Palacios’s “bailee”—while Mr. Sanchez and Excentric were merely Ms. Palacios’s general “credi- tors.” So, although the petition does allege that Ms. Palacios owes Mr. Sanchez and Excentric money because they’re her “creditors,” the petition doesn’t allege that Mr. Sanchez and Excentric have a legal interest in Ms. Palacios repaying them from the specific cash she had placed in Cancari’s possession. See Watkins, 320 F.3d at 1283 USCA11 Case: 22-11923 Document: 36-1 Date Filed: 09/11/2023 Page: 10 of 13

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(“[G]eneral creditors cannot point to any one specific asset and claim that they are entitled to payment out of the value of that specific asset.”). Because the petition doesn’t allege that Mr. Sanchez and Ex- centric had an ownership or possessory interest in the seized cur- rency—and instead only alleges that they’re Ms. Palacios’s general creditors—they haven’t alleged facts sufficient to show Article III standing. And because Mr. Sanchez and Excentric lacked Article III standing, we needn’t examine whether they had statutory standing and should’ve been granted leave to add their signatures to the pe- tition. We address these arguments only as to Ms. Palacios, who the district court found (and the government doesn’t dispute) has Article III standing. 2. Statutory Standing Ms. Palacios argues that the district court erred in finding that she lacked statutory standing. Statutory standing differs from Article III standing in that it doesn’t ask whether there’s a redressa- ble injury, but whether a party “has a cause of action under the statute.” See Lexmark Int’l v. Static Control Components, Inc., 572 U.S. 118, 128 & 128 n.4 (2014). The statute here, 21 U.S.C. section 853(n), provides that “[a]ny person, other than the defendant, as- serting a legal interest in property which has been ordered forfeited . . . [may] petition the court for a hearing to adjudicate the validity of his alleged interest.” 21 U.S.C. § 853(n)(2) (emphasis added). Ms. Palacios has alleged a “legal interest” in the $9,000 that’s “been ordered forfeited,” id., which is all that is needed to establish USCA11 Case: 22-11923 Document: 36-1 Date Filed: 09/11/2023 Page: 11 of 13

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statutory standing at the pleading stage, see Lexmark, 572 U.S. at 140 (showing that statutory standing at the motion-to-dismiss stage is established through allegations—not evidence). The petition and incorporated memorandum alleged that Ms. Palacios had a legal interest in the money as the “[o]wner/[b]ailor”, and the allegations showed that there were two jurisdictions under which her legal in- terest was created or otherwise protected: Bolivia and Florida. The petition identified Ms. Palacios as a Bolivian resident, operating a Bolivian company, and alleged that she gave $9,000 of “earnings and working capital” from her company to Cancari, “who was traveling from Bolivia to Miami.” Cancari was supposed to deliver the cash to Mr. Sanchez (a Florida resident) and Excentric (a Florida corporation), but the government seized the funds when Cancari landed in Florida. The district court faulted Ms. Palacios for not specifically cit- ing which jurisdictions—and which laws from those jurisdictions— created her property rights. But, whatever law applied, Ms. Pala- cios did not have to allege in the petition the legal basis for her in- terest in the money. See Glynn Env’t Coal., Inc. v. Sea Island Acquisi- tion, LLC, 26 F.4th 1235, 1240 (11th Cir. 2022) (“Only factual allega- tions, and not legal conclusions, are relevant” at the motion-to-dis- miss stage.); PBT Real Est., LLC v. Town of Palm Beach, 988 F.3d 1274, 1286 (11th Cir. 2021) (explaining that, because motions to dismiss concern “factual allegations,” courts must deny a motion to dismiss that argues the claimant pleaded an “imperfect statement of the legal theory supporting the claim” (citation omitted)). It was USCA11 Case: 22-11923 Document: 36-1 Date Filed: 09/11/2023 Page: 12 of 13

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enough, at the pleading stage, that she alleged she had an interest in the money as an owner or bailor. 3. Failure to Sign Petition and Leave to Amend Although Ms. Palacios had standing to sue under section 853(n), she didn’t comply with an unambiguous pleading require- ment laid out by the statute: the requirement that she sign the pe- tition. 18 U.S.C. § 853(n)(3) (requiring petitions “be signed by the petitioner under penalty of perjury”). Ms. Palacios admits that she didn’t comply with the plain text of this pleading requirement be- cause she never signed the petition—only her lawyer did. Even so, she argues, the district court erred in denying her motion to amend the petition to add her signature. The district court refused to do so because the statutory window for filing third-party petitions had closed. Section 853(n) provides that a third party “asserting a legal interest in property which has been ordered forfeited” must file their petition within “thirty days of the final publication of notice or his receipt of notice . . . , whichever is earlier.” 18 U.S.C. § 853(n)(2). We’ve described this window as establishing a “manda- tory 30–day period for filing third-party petitions.” Davenport, 668 F.3d at 1323 (emphasis added). By the time Ms. Palacios sought leave to add her signature to the petition the mandatory thirty-day deadline had long since passed. Given the language of the statute and our case law, we can- not say that the district court abused its discretion when it enforced this congressionally prescribed, “mandatory” thirty-day window USCA11 Case: 22-11923 Document: 36-1 Date Filed: 09/11/2023 Page: 13 of 13

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and denied leave to amend. See id.; see also United States v. Snipes, 611 F.3d 855, 864 (11th Cir. 2010) (stressing that the Supreme Court has “strictly construed” clear statutory filing periods as “absolute” deadlines). III. The petitioners’ appeal of the preliminary order of forfeiture is DISMISSED for lack of jurisdiction. The other orders on appeal are AFFIRMED.