Let's do some math.
Two brothers working for an Army surplus store are accused of making $270,000 for selling a chemical used to cook methamphetamine. The federal government indicts both of them, convinces "Brother A" to return $200,000 of those proceeds, and sends him to prison for five months. "Brother B" decides to go to trial, loses, and is convicted of 11 drug-related conspiracy charges.
How much does "Brother B" owe?
According to his defense attorneys: Nothing.
The Chattanooga case of Terry Honeycutt, Tony Honeycutt and the Brainerd Army Store is going before the U.S. Supreme Court today to debate a long-standing issue of how much power the government has to seize proceeds from co-conspirators in drug cases.
Prosecutors believe Terry Honeycutt ("Brother B") owes the government $70,000 because of a U.S. code that says anyone convicted of a federal drug law must forfeit any proceeds they made from the activity.
But does that code require co-conspirators with different levels of involvement in a crime to forfeit anything they may have personally gained from it?
Not without evidence, Terry Honeycutt said.
Honeycutt was a salaried employee, not a co-owner, and federal prosecutors never presented hard proof of the benefits he might have received from helping sell the chemical, his attorneys argue.
"The government apparently introduced no evidence of this in the trial court," Rory Little, an attorney and professor at U.C. Hastings College of Law in San Francisco, wrote March 22 on the SCOTUS blog, which tracks Supreme Court cases. "Thus this case proceeds on the assumption that Terry did not receive, directly or otherwise, any proceeds from the illegal sales."
Ultimately, Little wrote, the big-picture question is, "Can a conspiracy defendant be ordered to forfeit proceeds he never obtained?"
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The case began in 2008 when Terry Honeycutt noticed a product called "Polar Pure" flying off of the shelves at his father's Brainerd Army Store. Because the people buying it looked "edgy," he called Chattanooga police and asked if the product could be used to make meth.
Tennessee Methamphetamine Task Force Director Tommy Farmer said it could — and was — being used for that end.relatedarticlethumb
Federal prosecutors targeted Honeycutt and his brother, Tony, because they made a lot of money continuing to sell the product. In 2007, the store sold only two bottles, prosecutors said. Between 2008 and 2010, it sold a total of 21,000 bottles and generated $270,000 in profits.
The Honeycutt brothers were "jointly and severally liable" for those proceeds, prosecutors said. When Tony Honeycutt pleaded guilty in 2012 and agreed to five months in prison, he forfeited $200,000. But after Terry Honeycutt lost at trial in 2014, he convinced U.S. District Judge Harry "Sandy" Mattice that he shouldn't be ordered to pay the remaining $70,000 because the government hadn't introduced proof that he personally benefited from the conspiracy as a salaried employee. Any money would have flowed to his brother, a co-owner, he said.
The Sixth Circuit Court of Appeals overturned Mattice's decision in 2015, telling Terry Honeycutt to pay up because of old case law. One judge, however, released an additional opinion saying it was time to re-examine "joint-and-several" liability in federal drug cases with co-conspirators because several appellate courts were beginning to split on the issue.
So, what is joint-and-several liability?
"It's a concept used in civil law all the time," said Chattanooga attorney John Cavett, who has worked on such cases. "For example, if you and I do something together that creates a negligent situation and it hurts somebody to the tune of $100,000, 'joint and several' liability means we are both responsible for the whole $100,000. Now, you can't collect more than $100,000. But if they collect 90 against you, they can only collect 10 against me."
Here, the government wants Terry Honeycutt to pay his share from the conspiracy because his brother did. But without evidence, can prosecutors compel him to?
"The government must 'prove forfeiture by a preponderance of the evidence,'" Sixth Circuit Court of Appeals Judge Judge Karen Nelson Moore wrote in her concurring 2015 opinion, "so a lack of evidence suggesting Honeycutt 'obtained' anything would seem problematic.'"
Moore went on to quote a 1996 decision that established precedent for prosecutors to order property from a defendant who benefits "indirectly" from a co-conspirator in the crime.
"Joint-and-several liability reaches further than that," she said. "It would hold a defendant responsible for property he never had, so long as a co-defendant obtained the property."
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Before 1970, the government typically took action against the property involved in a crime, not the person. That year, Congress authorized criminal forfeiture by making it a penalty under certain drug laws in the Racketeer Influenced Corrupt Organizations Act.relatedarticlethumb
It expanded those statutes in 1984 to give prosecutors more leeway to combat two of the most serious crime problems in the country at the time: "Racketeering and drug trafficking," the acting U.S. solicitor general at the time wrote in a brief in February. That's the person appointed to represent the federal government before the U.S. Supreme Court in cases.
That development also created the U.S. code Chattanooga prosecutors believe is applicable in the Honeycutt case: Any person convicted of a federal drug law must forfeit their proceeds. The code avoids the term profits so prosecutors don't have the "unreasonable burden" of proving net benefits from a drug conspiracy, the acting solicitor general wrote.
Meaning? A defendant has to surrender "all gross receipts" from the offense, according to the solicitor general's brief. "The dealer cannot escape forfeiture by using the proceeds to buy other property, such as a car or a house."
The problem is, the government cannot claim Terry Honeycutt actually "obtained" nearly $270,000 from the Brainerd Army Store, his legal team, including Georgia attorney Christopher Townley, argued in a response brief.
"The government admitted [Honeycutt] 'did not have a controlling interest in the store' and did not 'benefit personally from the illegal sales' and relies on the supposed conspiracy-law rule that each co-conspirator 'becomes responsible for the acts of his co-conspirators,' like members of a lawful partnership,'" Honeycutt's attorneys wrote.
"The difference, however, is actual ownership. Partners own partnership shares, and thereby indirectly obtain property the partnership receives," they argued.
Townley said Tuesday his client will not appear because he's serving a 60-month sentence in federal prison in Manchester, Ky., on his 2014 drug conspiracy conviction. Terry Honeycutt's expected release date is June 4, 2018, according to the Federal Bureau of Prisons.
Little, from the SCOTUS website, offered a theory though: "I generally resist trying to predict the court's inclinations before argument is even heard. Still the textual argument for Honeycutt seems strong on this record."
Arguments will begin around 10:45 a.m.
Contact staff writer Zack Peterson at firstname.lastname@example.org or 423-757-6347. Follow him on Twitter @zackpeterson918.