White Collar Crime Alert - Barnes & Thornburg Helps Client Recover More Than $1 Million From U.S. Government In Civil Forfeiture Case

Author:Mr Larry Mackey, Jason Barclay and William Leeder
Profession:Barnes & Thornburg

National pharmaceutical wholesaler H.D. Smith Wholesale Drug Co., Inc. recently recovered more than $1 million, including costs and fees, from the U.S. government after successfully defending allegations that some of a customer's accounts were traceable to criminal conduct and subject to civil forfeiture.

Barnes & Thornburg LLP attorneys Larry Mackey, Jason Barclay and William Leeder assisted H.D. Smith with the recovery, which is one of the only reported cases in the country where a claimant has secured costs and fees from the federal government under a provision in the Civil Asset Forfeiture Reform Act of 2000 (CAFRA).

CAFRA altered virtually all aspects of civil judicial forfeiture procedures initiated by the federal government. CAFRA provides that a claimant may recover seized assets from the government if they are an "innocent owner. . . who did not know of the conduct giving rise to the forfeiture," or "upon learning of the conduct giving rise to the forfeiture, did all that reasonably could be expected under the circumstances to terminate such use of the property." 18 U.S.C. §983(d)(2)(A).

The government argued that while H.D. Smith did not have actual knowledge of any criminal conduct, it should have been aware of that conduct based on the volume of pharmaceuticals sold to the pharmacy. However, H.D. Smith was in full compliance with all obligations imposed on it by the Controlled Substances Act, 21 U.S.C. §801 et. seq. and all regulations promulgated thereunder related to the monitoring of controlled substance purchases by the pharmacy at all relevant times. In furtherance of those obligations, H.D. Smith had even notified the DEA of suspicious orders placed by the pharmacy before the DEA had even initiated the investigation resulting in the seizure of the accounts. Remarkably, the Government's own witnesses conceded that the volume of controlled substances ordered by the...

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