A Defendant’s Assets Can Be Used to Satisfy Criminal Fines and Forfeitures Over a Wife’s Claim of Right Under New York Law

UNITED STATES V. BUTLER, NO. 12-5120-cr (2D CIR. NOV. 22, 2013) (POOLER, RAGGI, AND WESLEY) (SUMMARY ORDER), AVAILABLE HERE

The Court held that assets in the defendant’s name could be used to satisfy a $5 million fine and $250,000 forfeiture ordered in a securities and wire fraud conviction case and denied claims by the defendant’s wife that she had a legal right to the assets under several theories she presented as a Third-Party Appellant.  First, New York state’s “economic partnership” law did not apply to the assets because no dissolution of the marriage was pending. New York law does not require equitable distribution of assets pursuant to an “economic partnership” theory prior to a judgment dissolving the marriage. Second, the wife failed to demonstrate that the funds were held for her in a constructive trust because the evidence and her “economic partnership” claim contradicted any expectation that the funds would be returned to her.  Finally, the source of the funds and whether they were proceeds of non-criminal activity was unimportant because the wife failed to demonstrate a legal right to the accounts.