Reported / Citable
Background
The federal government indicted Canadian citizen Younes Nasri on racketeering and drug-conspiracy charges tied to Phantom Secure, a company accused of selling encrypted phones to criminal organizations. It then sought civil forfeiture of more than $1.2 million held in Liechtenstein accounts belonging to Nasri and a company.
Nasri claimed innocent ownership. The district court exercised jurisdiction over the foreign assets and struck his claim under the fugitive-disentitlement statute, without deciding whether the United States had actual or constructive control of the money.
The Court’s Holding
A divided Ninth Circuit vacated the order. The majority held that due process requires actual or constructive control over property before a federal court may exercise in rem jurisdiction—a court’s authority directed at the property itself—in a forfeiture action. The foreign-property venue statute did not eliminate that constitutional requirement.
Because the district court expressly declined to decide control, the panel remanded for that inquiry. Judge Bybee agreed and also viewed the action as premature and nonjusticiable without possession. Judge Bennett dissented, arguing that precedent allowed jurisdiction under the statute and that the new rule interfered with Congress’s approach to overseas criminal proceeds.
Key Takeaways
- Statutory authorization to file a foreign-asset forfeiture case does not itself establish constitutional in rem jurisdiction.
- The government must show actual control or a reliable form of constructive control over the targeted property.
- Jurisdiction should be resolved before fugitive disentitlement is used to strike an ownership claim.
- Parties should develop evidence about foreign restraint orders, cooperation, and practical enforceability early.
Why It Matters
The decision imposes a significant threshold in cross-border forfeiture matters arising in California federal courts. It may prevent judgments directed at overseas assets when foreign institutions or governments have not placed the property within effective U.S. control. The sharp dissent makes further review plausible, but district courts must apply the control requirement unless the ruling changes.