Government View

Stefan Cassella, then deputy chief for legal policy of the asset-forfeiture and money-laundering section of the Department of Justice, said in a 2004 law review article that as long as at least $10,000 of the commingled funds were tainted in a money-laundering transaction, the government could lay claim to a larger pool of mostly “clean” money.

One thing that might help the government in making such an argument is how large SAC has grown since it allegedly began a decade of insider trading in 1999, said Thomas Ajamie, who specializes in securities litigation. SAC was formed in 1992.

“What’s been lost so far is the significance of going back to 1999,” Ajamie said. “How large was SAC in 1999, and how much growth was there over the subsequent 14 years? And was the genesis of the fund’s growth since then funded by illegal activity?”

Cohen, 57, who controls $9 billion of SAC’s assets, hasn’t been charged with a crime or sued in relation to Bharara’s allegations. According to marketing documents prepared for investors by Cohen’s hedge fund, SAC managed $1.4 billion in 1999, meaning it grew tenfold in the ensuing 13 years. All told, Ajamie said, “You could take this through to some fairly large numbers.”

Flawed View

John Coffee, a securities-law professor at Columbia Law School, said Bharara’s view that the government is entitled not only to ill-gotten gains but also to a share of any funds with which those gains have been commingled is flawed.

“They are pushing the commingling theory to the limits of its logic and beyond” he said. “The government is stretching the envelope further than it is entitled to. It’s like taking an eyedropper full of tainted chemicals, dropping it into Lake Superior and saying you have to forfeit everything in the lake.”

Michael Zeldin, former director of the U.S. government’s offices of asset forfeiture and money laundering, said just because the government can try to seize all of a defendant’s property doesn’t mean it should.

“You’ve got to charge what you can prove,” said Zeldin, who retired last month as head of Deloitte & Touche LLP’s money- laundering practice. “You don’t want to overreach. If one guy at Goldman Sachs got caught in insider trading, you’re not going to go after all of Goldman Sachs in forfeiture.”