“The Peck Rule” – A Tenth Circuit Blueprint for Ancillary Proceedings:
State-Law Superior Interests Defeat Federal Forfeiture Even Where “Tainted” Funds Enhanced the Property

1. Introduction

United States v. Peck concerns the collision between two powerful federal forfeiture doctrines:

• the relation-back principle of 21 U.S.C. § 853(c), which vests title in the United States to property “upon the commission of the act giving rise to forfeiture”, and
• the third-party protection mechanism of § 853(n)(6)(A), which allows an innocent claimant to prove a “superior” or “earlier” right.

The Court of Appeals for the Tenth Circuit was asked to decide which doctrine prevails when the defendant never owned the real property, but did use criminal proceeds to pay off the claimant’s mortgage. By affirming the district court, the Tenth Circuit crystallises a new precedent—the Peck Rule—that the government’s forfeiture claim fails if, under applicable state law, the defendant never had any ownership interest in the asset identified for forfeiture.

Parties

• United States of America (“Government” / appellant)
• Justin Peck (criminal defendant – pled guilty to operating an unlicensed money-transmitting business)
• Jesse Dunn (third-party claimant / appellee – title holder of the West Jordan lot)

Key Facts

• 2018: Dunn purchases a real-estate lot in West Jordan, Utah for $475,000, financing 59 % with a hard-money loan.
• Oct 2018: Peck wires ≈ $305,000 of tainted funds to retire Dunn’s loan, thereby freeing the property from its deed of trust.
• 2020: Peck pleads guilty under 18 U.S.C. § 1960; Government seeks forfeiture of only one asset—the West Jordan Lot—under 18 U.S.C. § 982(a)(1).
• Dunn files a petition under Fed. R. Crim. P. 32.2(c) / § 853(n) claiming exclusive ownership.

2. Summary of the Judgment

In a published opinion (10 June 2025) the Tenth Circuit:

1. Asserted Appellate Jurisdiction under 28 U.S.C. § 1291, classifying ancillary proceedings as civil and the district court’s order as “final”.
2. Affirmed the district court’s grant of Dunn’s third-party petition, vacating the preliminary order of forfeiture.
3. Held that:
• Under Utah property law Dunn’s title to the lot—from the original purchase forward—was superior to any interest of Peck or the Government.
• Section 853(n)(6)(A) therefore invalidates the forfeiture order “in whole”.
• The Government’s reliance on the relation-back doctrine did not override the explicit third-party protections of § 853(n).

3. Detailed Analysis

3.1 Precedents Cited and their Influence

• United States v. Andrews, 530 F.3d 1232 (10th Cir. 2008)
  – Confirmed the bifurcated two-step forfeiture process (preliminary order vs. ancillary proceeding) and the exclusively civil character of the latter.
• Bornfield, 145 F.3d 1123 (10th Cir. 1998)
  – Defined “traceable to” under § 982(a)(1); Government used this to link Peck’s funds to the lot, but the case operates only at Step 1 and thus could not overcome Dunn’s Step-2 defence.
• Holy Land Foundation, 722 F.3d 677 (5th Cir. 2013) & Furando, 40 F.4th 567 (7th Cir. 2022)
  – Both treat ancillary orders as appealable final judgments; relied on to defeat Dunn’s motion to dismiss.
• United States v. Totaro, 345 F.3d 989 (8th Cir. 2003) & Grossman, 501 F.3d 846 (7th Cir. 2007)
• Government invoked these mixed-title cases; the Tenth Circuit distinguished them because spouses/co-owners present unique equitable concerns absent here.
• United States v. Nava, 404 F.3d 1119 (9th Cir. 2005)
  – Heavily relied upon: where titled daughter defeated forfeiture despite defendant-father’s improvements, emphasising state law supremacy for ownership questions.

Precedential Take-Away

The Tenth Circuit positions itself with the Ninth Circuit in emphasising that § 853(n)(6)(A) is a state-law property test, not a free-floating federal equitable balancing, and that federal relation-back does not create a governmental property interest where the defendant never had one.

3.2 Legal Reasoning

a) Two-Step Forfeiture Framework

1. Step 1 – Criminal Phase
   - Court found “nexus” between offence and lot based solely on the plea agreement (Rule 32.2(b)(1)).
   - Preliminary order listed only the lot.
2. Step 2 – Ancillary Phase
   - Third party may challenge forfeiture only under § 853(n)(6).
   - Burden: preponderance of evidence; state law defines the interests.

b) State-Law Title Analysis

• Utah deed-of-trust practice: legal title passes to trustee; borrower retains equitable rights.
• Dunn held fee title on purchase (March 2018); trustee held legal title during mortgage; upon payoff (with tainted funds) title “instantaneously” reverted to Dunn (Stenquist).
• Peck never appeared in the chain of title; wire payoff created a debt (at most) but not an ownership stake.

c) Interaction of § 853(c) (relation-back) and § 853(n)(6)(A)

Government argued its interest vested the moment tainted funds touched the property (relation-back), relying on the broad wording “all right, title, and interest”. The Court responded:

“Section 853(n)(6)(A) is explicit: if a third party shows ‘a legal right, title, or interest’ superior to the defendant’s at the relevant time, the forfeiture order is invalid ‘in whole or in part’.”

Because Peck’s interest was zero, there was nothing for the Government to “step into”. Relation-back cannot vest a greater interest than the defendant possessed.

d) Scope of the Government’s Forfeiture Election

Court noted the Government chose to pursue only the lot and waived other remedies (money judgment, substitute assets) at sentencing. This strategic choice locked the Government into an “all‐or‐nothing” posture in the ancillary phase.

3.3 Impact Assessment

• Circuit Split Potential: The concurring-in-part/dissenting opinion (Judge Phillips) sides with the Eighth Circuit’s Totaro reasoning; the majority sides with Ninth/Fifth precedent. A petition for certiorari is foreseeable.
• Litigation Strategy: Prosecutors will think twice before limiting preliminary orders to a single asset; expect an uptick in hybrid orders (specific assets plus money judgments and/or substitute-property clauses).
• Real-Estate Transactions: Title companies may see more demands for disclosures when criminal investigations are pending; recordings of lis pendens may increase.
• State-Law Primacy: Defence counsel for third-party claimants will now focus on meticulous tracing of property interests under local law; prosecutors must be prepared with equitable or fraudulent-transfer theories outside the federal forfeiture rubric.

4. Complex Concepts Simplified

Ancillary Proceeding

A separate, post-conviction hearing (civil in nature) where third parties can challenge the Government’s forfeiture claim.

Relation-Back Doctrine

Under § 853(c) the Government’s title to forfeitable property dates back to the time of the crime, preventing defendants from shielding assets through post-crime transfers.

§ 853(n)(6)(A) vs. (B)

(A) protects owners with earlier/superior title; (B) protects bona fide purchasers for value who bought without reason to know of forfeiture risk.

Nexus

The causal link between the property and the offence (involved in or traceable to).

Hard-Money Loan

Short-term, high-interest real-estate loan, usually from private investors, with the property as collateral.

5. Conclusion

The Tenth Circuit’s decision in United States v. Peck delivers a clear message: property rights grounded in state law can defeat even the powerful relation-back mechanism of federal criminal forfeiture. Prosecutors carry the burden of aligning their forfeiture strategy with the actual ownership landscape; third-party claimants must marshal state property doctrines to assert superiority. The new “Peck Rule” thus recalibrates the balance between vigorous forfeiture enforcement and protection of innocent property holders—a balance likely to occupy appellate courts, and perhaps the Supreme Court, in the near future.