Sales of Polar Pure brings forfeiture dispute to US Supreme Court

The Supreme Court of the United States will enter the debate over civil forfeiture Wednesday when the eight justices consider whether the government can seize property from a convicted co-conspirator who did not receive any of the profits from the criminal transactions.

Terry Honeycutt was found guilty after a jury trial in federal court in Tennessee on multiple counts related to possessing and distributing products that could be used to make methamphetamine. He was sentenced to 60 month, but the U.S. District Court for the Eastern District of Tennessee at Chattanooga rejected the federal government’s request that Honeycutt forfeit nearly $70,000.

On appeal, the 6th Circuit Court of Appeals reversed. Citing its own precedent in United States v. Corrado, 227 F.3d 543 (6th Cir. 2000), the unanimous panel found Honeycutt shared responsibility and could be subject to forfeiture under the joint-and-several liability provision.

In a concurring opinion, Judge Karen Moore raised the argument the Corrado panel reached the wrong conclusion.   

Honeycutt then turned to the U.S. Supreme Court, which will hear arguments Wednesday in Terry M. Honeycutt v. United States of America, 16-142. He pointed out a split between the D.C. Circuit and the 6th Circuit along with the 2nd, 3rd, 4th and 8th circuits over how far the government can reach in civil forfeiture matters.

This case began when Honeycutt, then a manager at the Brainerd Army Store, called the Chattanooga Police Department about a number of “edgy-looking folks” coming in and buying Polar Pure.

The officers confirmed his suspicions that the iodine-based water purification product could be used in the manufacture of meth. They also encouraged him to quit selling the item, but the outdoor gear retailer, which was co-owned by Honeycutt’s father and brother, Tony, did not heed the request.

By the time authorities raided the store and seized the inventory, Polar Pure was the retailer’s highest-grossing item, bringing in roughly $400,000 in revenues and $270,000 in profit during a two-year period between 2008 and 2010, according to the U.S. Department of Justice. The 2,800-plus bottles Brainerd sold in 2008 skyrocketed to more than 13,000 bottles in 2009.

The government indicted the brothers on federal charges and sought civil forfeiture for $269,751.98. Tony Honeycutt pled guilty and turned over $200,000. Since then, authorities have tried to get the remaining $69,751.98 from Terry Honeycutt.

In his brief filed with the Supreme Court, Terry Honeycutt contends he cannot be forced to forfeit the money because he never received any of the profit from the sales of Polar Pure. Forfeiture under 21 U.S.C. 853 (a)(1) is limited to the proceeds the person obtained from the criminal act and, in this case, his brother reaped the roughly $270,000. Even the government conceded Terry Honeycutt did not personally benefit from the sales of the water purification product.

“At bottom, joint-and-several forfeiture liability is a Frankenstein doctrine held together only by the government’s desire to broaden the reach of a liability-expanding rule while throwing aside the limits the law has imposed,” Honeycutt asserts. “[T]he government invokes forfeiture’s historic power to confiscate the instrumentalities and proceeds of crime – while jettisoning forfeiture’s limit to property actually tainted by criminality (or substitute assets for property wrongfully dissipated).”  

The Justice Department counters that by being part of a drug conspiracy, Terry Honeycutt is jointly and severally liable to forfeit the proceeds gathered by the group as a whole, regardless of how the money was subsequently divided.

“Joint-and-several forfeiture liability makes sense,” the government argues. “Just as the members of a lawful partnership are held jointly and severally liable for the partnership’s debts, criminal conspirators have joint liability for the proceeds of their joint crimes. … A department from traditional principles of conspiracy liability, in contrast, would thwart Section 853’s purpose by allowing conspirators to evade forfeiture by concealing the allocation of the proceeds among themselves.”