Confiscation of real estate annulled after conviction for aggravated fraud against the State: the Court of Appeal of Reggio Calabria strengthens the protection of third parties unrelated to the crime

Criminal confiscation and protection of third parties: the Court of Appeal of Reggio Calabria reiterates the constitutional limits of the asset-based measure

Court of Appeal of Reggio Calabria, judgment January 31, 2024 – proc. no. 12-13-14-15/2023

1. The case: confiscation by equivalent and assets registered to third parties

With a highly systematic reasoning, the Court of Appeal of Reggio Calabria annulled the confiscation order for certain real estate assets issued in enforcement proceedings against a person convicted of undue receipt of public funds (Article 316-ter of the Italian Criminal Code), a crime later reclassified as aggravated fraud against the State (Article 640, paragraph 2, no. 1, of the Italian Criminal Code).

The assets subject to confiscation were formally registered to the legally separated wife and children of the convicted person and were considered, by the first-instance judicial authority, to be the reinvestment of illicit profits.

The defense filed an enforcement opposition arguing:

• the absence of proof of the actual availability of the assets by the offender;
• the illegitimate extension of confiscation by equivalent to subjects formally unrelated to the crime;
• the violation of the property rights of third parties not involved in the merits trial;
• and the retroactive application of Article 578-bis of the Italian Code of Criminal Procedure, in contrast with the constitutional principles of legality and non-retroactivity in malam partem.

2. The principles affirmed by the Court: substantive legality and guarantees for third parties

The Court of Appeal of Reggio Calabria fully upheld the opposition, enunciating legal principles of national importance regarding asset-based measures and enforcement confiscation.

In particular, it clarified that:

• Confiscation by equivalent cannot automatically extend to assets formally registered to third parties without concrete proof of actual availability by the convicted person. Such availability – the Court explains – must consist of a de facto power comparable to the right of ownership, not mere cohabitation or family ties.
• Article 578-bis of the Italian Code of Criminal Procedure, introduced by Legislative Decree no. 21/2018, is a substantive norm and therefore not retroactive: it cannot be applied to facts committed before its entry into force, as it adversely affects the defendant's financial sphere. The Court refers to the Joint Sections, judgment no. 4145/2022, which established the prohibition of retroactive application of the norm, emphasizing the need to distinguish between direct confiscation (of a restorative nature) and value confiscation (of a punitive nature).
• The right of a third party unrelated to the crime is fully protected by Articles 24 and 111 of the Constitution and cannot be sacrificed in enforcement proceedings through presumptions, nor through an automatism deriving from the conviction of a relative.

3. Legal analysis: confiscation, third party, and real availability

The Court's reasoning is in line with constitutional jurisprudence (Constitutional Court, no. 253/2017) and legitimacy jurisprudence (Cass. pen., Sez. III, no. 283275/2023), according to which asset confiscation requires a rigorous and individualized assessment.

The judge cannot presume the availability of the asset based on mere family ties or cohabitation: it is necessary to demonstrate that the defendant exercises effective de facto power over the asset, such as to be able to manage it, dispose of it, or derive economic utility from it.

In the present case, the Court valued the defensive documentation produced in court: mortgage deeds, purchase deeds, and income statements of family members, from which the independent economic capacity of the third parties and the legitimate origin of the sums used for the purchase of the properties emerged.

4. The scope of the decision: a guarantee safeguard against asset automatism

The judgment of the Court of Appeal of Reggio Calabria stands out for the balance between the repressive function of confiscation and the protection of individual guarantees.

It reaffirms that:

• criminal confiscation is not an automatism, but a punitive measure subject to the principles of culpability and personal responsibility for the penalty;
• the private property of third parties unrelated to the crime is an inviolable right, which cannot be compromised by extensive interpretations;
• the principle of substantive legality requires that every ablative measure be based on a norm in force at the time of the fact and on certain proof of its subjective referability.

This is a pronouncement that strengthens the guaranteeing function of criminal asset law, setting a limit to the distorted use of confiscation by equivalent and the tendency to extend its effects beyond the limits of the res judicata.

5. Concluding remarks

In the contemporary jurisprudential landscape, the decision of the Court of Reggio Calabria assumes a systemic significance: it reaffirms the centrality of the principle of proportionality and the need for a balance between repression and guarantee.

For corporate criminal defense and for those operating in economic criminal law, the ruling represents an essential reference for the protection of the innocent third party and for defining the limits of legitimacy of enforcement confiscation.

In a context where asset-based measures tend to play an increasingly incisive role, the Court recalls the very essence of the criminal process:

"Punishment cannot overwhelm those who did not participate in the crime, nor can confiscation become a substitute for evidentiary assessment."