U.S. v. Kalish

08-3374-cr
U.S. v. Kalish
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
August Term 2010
Heard: October 19, 2010 Decided: November 24, 2010
Docket Nos. 08-3374-cr (Lead) 09-4978-cr (Con)
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UNITED STATES OF AMERICA,
Appellee,
v.
LEONARD KALISH,
Defendant-Appellant.
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Before: NEWMAN, WINTER and LYNCH, Circuit Judges.
Appeal from the November 24, 2009, final order of forfeiture of
the United States District Court for the Southern District of New York
(Robert P. Patterson, District Judge). Appellant primarily challenges
the entry of a personal money judgment for the forfeiture amount and
the imposition of unadjusted amounts for both forfeiture and
restitution.
Affirmed.
Herald Price Fahringer, New York, N.Y.
(Erica T. Dubno, Fahringer & Dubno, New
York, N.Y.; Martin B. Adelman, New
York, N.Y., on the brief), for
Defendant-Appellant.
Michael A. Levy, Asst. U.S. Atty., New
York, N.Y. (Preet Bharara, U.S. Atty.,
New York, N.Y., on the brief), for
Appellee.

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JON O. NEWMAN, Circuit Judge.
This opinion concerns issues relating to remedies of forfeiture
and restitution in a criminal case. The principal issues are whether
a money judgment may enter with respect to a forfeiture order, and the
relationship, if any, between forfeiture and restitution amounts.
These matters arise on an appeal by Leonard Kalish from the November
24, 2009, final order of forfeiture of the United States District
Court for the Southern District of New York, (Robert P. Patterson,
District Judge). Kalish was convicted of mail and wire fraud offenses
arising out of a scheme to defraud victims of money paid as up-front
fees to obtain commercial loans. The convictions are affirmed in a
summary order filed this date. With respect to the forfeiture and
restitution remedies, we conclude that a money judgment was properly
entered for the amount of the forfeiture, that both the forfeiture and
the restitution remedies were properly imposed, and that, while there
may arise a subsequent claim to have the forfeiture amount reduced by
any amounts of restitution actually paid, any such reduction is not
available at this time. We therefore affirm the final order of
forfeiture.
Background
The fraudulent scheme for which Kalish was convicted involved the
making of false and misleading statements to applicants for commercial
loans. Kalish’s firm, The Funding Solutions, Inc. (“TFS”) collected

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an advance fee from loan applicants and promised that the fee would be
refundable if TFS did not obtain a loan commitment for the customer
from one of the several private investors with whom TFS claimed to
work. In fact, the fee became nonrefundable upon TFS’s procurement of
merely a loan proposal. During the conspiracy period from 2000 to
2006, TFS collected millions of dollars in advance fees and was
successful in obtaining loans for only five of its numerous customers.
After a jury found Kalish guilty of wire and mail fraud offenses,
the District Court imposed a sentence that included three years’
imprisonment and restitution in the amount of $1,199,239. The
District Court also entered a preliminary order of forfeiture calling
for entry of a forfeiture money judgment against Kalish in the amount
of $8.4 million as part of his criminal sentence. The order allowed
Kalish 30 days to dispute the amount. The $8.4 million represented
the total of all advance fees collected by TFS, less the fees paid by
the five customers for whom TFS obtained loans. The preliminary order
also provided that all of Kalish’s interests in three identified items
of property were forfeited to the United States. These properties
were a Lehman Brothers account, a 2003 Mercedes, and a 2004 Land
Rover.
After considering Kalish’s dispute about the amount of the
forfeiture, the propriety of a money judgment, and the absence of an
offset of the forfeiture amount against the restitution amount, the

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District Court reduced the forfeiture amount by $4,449,920,
representing the amount of commissions TFS paid its employees (not
counting the commissions paid with respect to the five customers who
obtained loans). The Court rejected the challenge to entry of a money
judgment and the claim to have the forfeiture amount offset against
the restitution amount. The final forfeiture amount was $3,950,080.
Discussion
Kalish challenges the final order of forfeiture on three grounds:
the amount was improperly determined, a money judgment should not have
been entered, and the forfeiture amount should have been offset
against the restitution amount.
I. The Forfeiture Amount
(a) Inclusion of fees collected from all victims. Kalish first
challenges the forfeiture amount because it is based on the amount of
advance fees collected from all customers of TFS, except only the five
for whom loans were obtained. He points out that only a few customers
testified that false promises had been made to them and that TFS made
considerable efforts to obtain loans for many customers, even though
these efforts were unsuccessful.
A District Court must find by a preponderance of the evidence
that the amount of money or property to be forfeited was derived from
proceeds traceable to the fraud. See United States v. Fruchter, 411
F.3d 377, 383 (2d Cir. 2005). We apply the clearly erroneous standard

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when reviewing that finding. See United States v. Sabhnani, 599 F.3d
215, 261 (2d Cir. 2010).
In view of the abundant evidence that false promises were
routinely made to TFS customers to induce them to pay the up-front
fees, the District Court’s decision to base the forfeiture amount on
all of the unsuccessful customers will not be disturbed. There was
also ample evidence to support the District Court’s decision that the
funds used to obtain the specific forfeited properties were traceable
to the funds obtained from the fraudulent scheme.
(b) Inclusion of fees collected before August 23, 2000. Kalish
next contends that the forfeiture order violates the Ex Post Facto
Clause to the extent that it is based on fees collected before August
23, 2000, the date the forfeiture statute, 28 U.S.C. § 2461(c), became
effective. See 8 U.S.C.A. § 1324 note, Effective and Applicability
Provisions (making section 2461 applicable to any forfeiture
proceeding commenced 120 days after April 25, 2000, effective date of
section 1324).
However, criminal punishments may be applied to conduct occurring
before enactment of a statutory provision as long as the conduct
continued after enactment. See United States v. Baresh, 790 F.2d 392,
404 (5th Cir. 1986); United States v. Borelli, 336 F.2d 376, 386 n.5
(2d Cir. 1964); see also United States v. Minicone, 960 F.2d 1099,
1111 (2d Cir. 1992) (applying same principle to Sentencing

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Guidelines). Since Kalish’s criminal conduct continued well past
August 23, 2000, the forfeiture order did not violate the Ex Post
Facto Clause.
II. Entry of a Money Judgment.
Kalish next contends that the District Court lacked the authority
to enter a personal money judgment against him for the amount of the
property to be forfeited. His argument relies heavily on United
States v. Surgent, No. 04-CR-364, 2009 WL 2525137 (E.D.N.Y. Aug. 17,
2009), an opinion that–since this case was briefed–we rejected in
United States v. Awad, 598 F.3d 76, 79 n.5 (2d Cir. 2010) (“We are
aware of . . . Surgent . . . . In the end, however, we find it
unpersuasive.”).
In Awad we held that “[21 U.S.C.] § 853 permits imposition of a
money judgment on a defendant who possesses no assets at the time of
sentencing.” Id. at 78. We thereby joined in the unanimous view of
the other circuits that have considered this question. United States
v. Vampire Nation, 451 F.3d 189, 201-03 (3d Cir. 2006); United States
v. Casey, 444 F.3d 1071, 1077 (9th Cir. 2006); United States v. Hall,
434 F.3d 42, 59 (1st Cir. 2006); United States v. Baker, 227 F.3d 955,
970 (7th Cir. 2000). Here, the Government sought forfeiture under 28
U.S.C. § 2461(c), which incorporates the procedures laid out in
section 853. We discern no meaningful difference between the
propriety of an in personam money judgment arising directly under 21

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“[O]ffsetting the forfeiture amount” seems to imply using that2
sum to reduce some other amount, presumably the restitution amount.
On the other hand, “offsetting . . . by the restitution” seems to
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U.S.C. § 853, which we upheld in Awad, and the propriety of an in
personam money judgment under 21 U.S.C. § 853 by way of 28 U.S.C.
§ 2461(c), which is at issue here.
We therefore conclude that the District Court had the authority
to enter a personal money judgment against Kalish for his violation of
the mail and wire fraud statutes.
Kalish also contends that the indictment gave him inadequate
notice of the Government’s intention to seek a money judgment. We
also reject this claim because, as the District Court pointed out, the
indictment’s listing “United States currency representing the amount
of proceeds obtained as a result of the charged fraud” among the items
to be forfeited effectively provided notice that a money judgment
would be sought.
III. Rejection of an “offset” for the restitution amount.
Finally, Kalish contends that the District Court erred “by not
offsetting the forfeiture amount by the restitution” ordered by the
District Court. Br. for Appellant at 81. It is not clear whether
Kalish means that the restitution amount should have been reduced by
the forfeiture amount or that the forfeiture amount should have been
reduced by the restitution amount. The District Court understood2

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imply that the restitution amount is to be subtracted from some other
amount, presumably the forfeiture amount. In United States v.
Emerson, 128 F.3d 557 (7th Cir. 1997), the claim was “to offset the
amount of restitution against the value of the forfeited property.”
Id. at 566 (emphasis added).
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Kalish to mean reducing the restitution amount by the forfeiture
amount and rejected the claim.
The Seventh Circuit has explicitly rejected a defendant’s
entitlement to have a forfeiture amount offset against a restitution
amount. United States v. Emerson, 128 F.3d 557, 566-68 (7th Cir.
1997); but see United States v. Barnette, 902 F. Supp. 1522, 1531
(M.D. Fla. 1995). The Third Circuit has ruled that separate
restitution and forfeiture amounts do not constitute multiple
punishments that would violate the Double Jeopardy Clause, see United
States v. Various Computers & Computer Equipment, 82 F.3d 582, 585-89
(3d Cir. 1996), and the Ninth Circuit has ruled that such amounts do
not violate the Eighth Amendment, see United States v. Feldman, 853
F.2d 648, 663-64 (9th Cir. 1988).
We see no infirmity in the District Court’s imposition of both a
forfeiture remedy and a restitution remedy. These remedies are
authorized by separate statutes, and their simultaneous imposition
offends no constitutional provision. We recognize, however, that once
some payment has been made by way of restitution, a defendant would be

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At oral argument, the Government informed us that a victim may3
apply to the Department of Justice to receive restitution out of any
money that a defendant pays to the United States by way of forfeiture,
and suggested that if the Government honored such an application, a
victim could not then collect again from the defendant.
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in a position to argue that such a payment should be a credit against
any then remaining forfeiture amount. The forfeiture amount
represents “ill-gotten” gains, see Emerson, 128 F.3d at 566; Various
Computers, 82 F.3d at 588, and it is at least arguable that any money
returned to a victim has reduced the amount of “ill-gotten” gains
remaining in the defendant’s possession. In the absence of any claim
that Kalish has made any restitution payment, however, we need not
decide whether such an argument would prevail.3
Conclusion
The District Court’s final order of forfeiture is affirmed.

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