This month, we discuss United States v. Watts,1 in which the U.S. Court of Appeals for the Second Circuit, in an opinion by Judge Gerard Lynch, joined by Judge Amalya Kearse and Judge Guido Calabresi, reversed the district court’s dismissal of a petition by the lawyers for a criminal defendant who asserted a third-party interest in forfeited property, based on a pre-trial assignment of the property in exchange for legal services.
This opinion resurrects the possibility that criminal defense lawyers can recover fees from property forfeited as proceeds of crime as bona fide purchasers for value. Prior to this decision, there was precedent suggesting that defense lawyers could not meet the statutory requirement that bona fide purchasers be “reasonably without cause to believe”2 that the property was subject to forfeiture at the time of purchase. As long as the indictment contained a forfeiture allegation, the only way a defense lawyer could escape notice that the funds were subject to forfeiture, would be to “fail to read the indictment of his client.”3
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