D.C. Circuit Poised To Consider Major About-Face On Constructive Trust Precedent

For 20 years, the District of Columbia has been the sole Circuit that fails to recognize the imposition of a constructive trust to benefit victims of fraud. See United States v. BCCI Holdings (Luxemborg), S.A., 46 F.3d 1185, 1190 (D.C. Cir. 1995).

Under a constructive trust theory, "whenever a party has obtained property which does not belong to him, and which he cannot in good conscience withhold from another who is beneficially entitled to it," either through theft, embezzlement, larceny, trickery, etc., that property is held in a constructive trust for the true owner, and that constructive trust preserves the true owner's legal entitlement to the property. Blake Constr. Co. v. American Vocational Assoc., 419 F.2d 308, 311 (D.C. Cir. 1969). The legal entitlement preserved through a constructive trust is the mechanism by which the true owner can seek return of his property from the Government after it has been seized by law enforcement as the proceeds of criminal