United States v. 3814 NW Thurman Street, Portland

dissenting:

I concur in all except Part III.C, but cannot agree that we should reverse as the majority does on the Excess Fines Clause.

As the majority (correctly) concludes, the $200,686 the district court ordered forfeited to the government are “proceeds” of the fraudulently obtained loan. Under United States v. Feldman, 853 F.2d 648 (9th Cir.1988), forfeiture of proceeds can basically never be excessive. As we put it in Feld-man, “[wjhen the district court orders that the defendant forfeit the profits gained from illegal activity, it is hard to imagine how such a forfeiture could constitute cruel and unusual punishment.” Id. at 663 . Thus, we held, forfeiture of proceeds received from an insurance policy as a result of arson “was not excessive.” Id. This makes total sense: how can forfeiture of proceeds of criminal activity ever be excessive?

Although Feldman involved cruel and unusual punishment under the Eighth Amendment, not the Excessive Fines Clause, the standard Feldman applied — that the “interest ordered forfeited is not so grossly disproportionate to the offense committed,” id., is precisely the same as the Supreme Court adopted for purposes of the Excessive Fines…

Opinion by Judge TASHIMA; Dissent by Judge RYMER.

Claimant Gloria Ladum (“Ladum”) appeais from the district court’s judgment ordering the forfeiture of $200,686.18 of equity in the defendant real property owned by Ladum, known as 3814 N.W. Thurman Street, Portland, Oregon (the “Property”). We have jurisdiction under 28 U.S.C. § 1291 , and we affirm in part and reverse in part. We first conclude that the government established probable cause to support forfeiture. We also conclude that the $200,686.18 the government seeks to forfeit constitutes “proceeds” attributable to Ladum’s probable violations of the criminal code and, therefore, is subject to forfeiture. We further conclude, however, that forfeiture of the entire amount is an excessive fine in violation of the Eighth Amendment.

I. BACKGROUND

In October, 1993, Ladum applied for a residential mortgage loan in the amount of $322,500 from Emerald Mortgage Corporation (“Emerald”). Ladum, a 70-year old widow, claims that she relied on her nephew, Clayton Ladum (“Clayton”), and her broker to prepare the necessary documents. The stated purpose of the loan was to refinance the existing mortgage on the Property and to fund…