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Table of Contents

900 – Forfeitures, Generally

900 – Forfeitures, Generally
  • 905 Jurisdictional Issues
  • 910 Constitutional Issues
  • 920 Procedural Issues, Generally
  • 950 Probable Cause
  • 960 Innocent Owner Defense
  • 970 Property Forfeited

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§905 Forfeitures, Jurisdictional Issues

Supreme Court
First Circuit
Second Circuit
Third Circuit
Fifth Circuit
Sixth Circuit
Seventh Circuit
Eighth Circuit
Ninth Circuit
Tenth Circuit
Eleventh Circuit

Supreme Court holds that depositing res into U.S. treasury did not defeat appellate jurisdiction. (905) Rejecting the bank’s in­nocent owner defense, the district court or­dered the proceeds from the sale of the resi­dence to be forfeited to the United States.  U.S. v. One Single Family Residence, 731 F.Supp. 1563 (S.D. Fla. 1990).  The bank filed a timely notice of appeal, but did not de­posit a supersedeas bond or seek to stay exe­cution of the judgment, so the U.S. Marshal transferred the proceeds of the sale into the Asset Forfeiture Fund of the U.S. Treasury.  The gov­ernment then moved to dismiss the appeal for lack of jurisdiction over the res.  The Supreme Court re­jected the govern­ment’s argument, holding that the rule on which the government relied — that jurisdic­tion depends upon continued control of the res — “does not exist.”  A majority of the Court also found it unnecessary to decide whether the “appropriations clause” made recovery of the res dependent on an act of Congress, ruling that 31 U.S.C. section 1304 and 28 U.S.C. section 2465 would authorize the re­turn of funds in this case in any event.  Republic National Bank of Miami v. U.S., 506 U.S. 80, 113 S.Ct. 554 (1992).

 

1st Circuit holds that because forfeiture notice was adequate, there was no waiver of sovereign immunity. (905) Currency seized from plaintiffs’ residence was adminis­tratively forfeited by the DEA.  Plaintiffs’ filed a civil rights action against the DEA under 28 U.S.C. section 1331, alleging insufficient no­tice of the administrative proceeding, and that the currency was seized in violation of the 4th Amend­ment.  The 1st Circuit held that be­cause the notice was adequate, plaintiffs lost the waiver of sovereign immunity that had allowed the court to entertain the action, and thus the district court had no jurisdiction to consider plaintiff’s 4th Amendment claim.  Sarit v. U.S. Drug Enforcement Administra­tion, 987 F.2d 10 (1st Cir. 1993).

 

2nd Circuit says mere diminishment of business is insufficient to justify inter­locutory appeal. (905) The 2nd Circuit held that it had no jurisdiction over an interlocu­tory order denying an application to vacate an in rem arrest warrant.  Interlocutory orders are generally non-appealable unless they ful­fill the requirements of 28 U.S.C. §1292.  However, in U.S. v. Statewide Auto Parts, 971 F.2d 896 (2nd Cir. 1992), the court held that where a pre-trial seizure pursuant to an ex parte warrant effectively shuts down an ongoing business, an order denying vacatur of the seizure is appealable since it has all the earmarks of an injunction.  Mere diminish­ment of business activity, as shown here, is insufficient to justify an exception to the rule.  A writ of mandamus pursuant to 28 U.S.C. section 1651 was not justified since this was not an extraordinary case.  U.S. v. Victoria-21, 3 F.3d 571 (2nd Cir. 1993).

 

2nd Circuit affirms criminal court’s juris­diction over motion for return of forfeited property. (905) In 1988, defendant’s cash was forfeited after inadequate notice was given.  In 1989, defendant was convicted and sentenced for a RICO violation.  In 1992, de­fendant filed a rule 41(e) motion seeking re­turn of the forfeited property.  The govern­ment argued that only the court in the district in which the property was seized had juris­diction over the motion.  The 2nd Circuit dis­agreed, holding that the court that considered the criminal case had ancillary jurisdiction over the post-trial 41(e) motion.  Because criminal proceedings were no longer pending against defendant, the motion was treated as a complaint for civil equitable relief.  U.S. v. Giovanelli, 998 F.2d 116 (2nd Cir. 1993).

 

2nd Circuit says state ruling that U.S. had no ju­risdiction did not bar new forfeiture action. (905) Local police ini­tially im­pounded claimant’s Jeep after he was ar­rested on drug charges.  Claimant filed a mo­tion in state court under Vermont Rule 41(e) for return of the Jeep.  Before the motion was de­cided, the federal government com­menced an administrative forfeiture proceeding.  The state court then granted claimant’s motion for the return of the Jeep, con­cluding that nei­ther the state nor the federal govern­ment had an interest in the vehicle.  Although the Jeep was returned to claimant, several days later DEA agents seized it again.  The 2nd Circuit rejected claimant’s ar­gument that the Ver­mont state court’s determination that the fed­eral govern­ment had not established jurisdic­tion over the Jeep barred this second forfei­ture action.  The state court merely ad­judicated claimant’s rights in the vehicle as they were implicated by the state criminal proceeding.  The state court did not, and could not, adjudicate the fed­eral govern­ment’s interest in the Jeep as that interest arose un­der the federal forfeiture statutes. U.S. v. One 1987 Jeep Wrangler Au­to­mobile, 972 F.2d 472 (2nd Cir. 1992).

 

2nd Circuit affirms its jurisdiction to re­view inter­locutory seizure and clo­sure of business. (905) In a civil forfei­ture action brought under 18 U.S.C. sec­tion 981(a)(1)(A), the government seized claimant’s business and hung an “Out of Business” sign outside its building.  The district court subsequently denied claimant’s motion to reopen the busi­ness.  The 2nd Circuit upheld its juris­diction to review the district court’s in­terlocutory or­der, which required the busi­ness to remain closed.  The order had the effect of an injunc­tion and thus was appealable under 28 U.S.C. section 1292(a)(1).  The ex parte seizure war­rant, combined with the district court’s sub­sequent refusal to vacate the seizure, had the same effect as if the dis­trict court had en­joined claimants from op­erating their busi­nesses.  The conse­quences of the order were even more dire than if the district court had ap­pointed a receiver to run the business pending final disposition of the case.  Since section 1292(a)(2) grants appellate courts ju­risdiction over appeals from in­terlocutory or­ders appointing receivers, an order such as this one must also be appealable.  Judge Van Graafeiland dis­sented.  U.S. v. All Assets of Statewide Auto Parts, 971 F.2d 896 (2nd Cir. 1992).

 

2nd Circuit upholds its jurisdiction to re­view in­terlocutory order permitting gov­ernment to sell claimants’ home. (905) In a civil forfeiture action against claimants’ home, the district court granted the government’s motion for an order permitting the interlocu­tory sale of the property, with the proceeds of the sale to be held in escrow pending reso­lution of the forfeiture issues.  The 2nd Cir­cuit affirmed its ju­risdiction to review the or­der under the collateral or­der doc­trine.  This doctrine allows an appellate court to review immediately a district court order affecting rights that will be irretrievably lost in the ab­sence of an immediate appeal.  Given the unique na­ture of real property and the unique re­lationship between a person and his or her home, the order qualified as an ap­pealable order:  it conclusively deter­mined an impor­tant issue, one that is separate from the mer­its of the action and one that would be effec­tively unre­viewable on appeal from a final judg­ment.  U.S. v. Esposito, 970 F.2d 1156 (2nd Cir. 1992).

 

3rd Circuit affirms that civil forfeiture may be brought in the district of the criminal prose­cution. (905) Claimant was indicted as a co-defen­dant in a money laundering prose­cution in the District of New Jersey.  The government brought a civil forfeiture ac­tion in the same district against claimant’s accounts located in another district.  Venue was autho­rized by 18 U.S.C. section 981(h), which permits a forfeiture proceeding against the property of a defendant to be brought in the district of the criminal pros­ecution.  Relying upon cases which up­held a similar provision for drug cases in 21 U.S.C. section 881(j), the 3rd Circuit rejected a due process chal­lenge to section 981(h).  By limiting venue in civil forfeiture proceed­ings to those districts that have venue over a related criminal prosecu­tion, section 981(h) prevents the government from seeking civil forfeiture in a court so in­convenient for the defendant that he is de­prived of the fundamental fairness that is at the core of due process.  U.S. v. Contents of Accounts Nos. 3034504504 and 144-07143 at Merrill, Lynch, Pierce, Fenner and Smith, Inc., 971 F.2d 974 (3rd Cir. 1992).

 

3rd Circuit holds that statute which gives venue outside district where res is located did not give court jurisdic­tion over the res. (905) In a civil for­feiture proceeding, 18 U.S.C. section 981(h) gives venue to a district court that does not have the res within its boundaries.  The 3rd Circuit rejected the government’s claim that this pro­vision autho­rizes ex­tra-territorial juris­diction as well as venue over a res out­side a district’s bound­aries.  The court refused to imply a provision for nation­wide service of process in section 981(h).  Section 981(h)’s grant of venue still permits that court to adjudi­cate any rights criminal defendants may have in a res located elsewhere, without regard to service of pro­cess.  Nonetheless, the government must still file a second civil forfeiture action in the dis­trict court where the res is found if it wishes to af­fect the rights of persons who are not subject to the territorial jurisdiction of the first dis­trict court.  Thus, the default judg­ment in favor of the government on the forfei­ture complaint was va­cated.  U.S. v. Contents of Accounts Nos. 3034504504 and 144-07143 at Merrill, Lynch, Pierce, Fenner and Smith, Inc., 971 F.2d 974 (3rd Cir. 1992).

 

5th Circuit permits pretrial restraint of as­sets to be appealed as injunction. (905) The district court partially granted the gov­ernment’s pretrial motion for an order re­straining certain substitute assets of de­fendant.  Both the government and defendant ap­pealed.  The 5th Circuit ruled that it had jurisdiction under 28 U.S.C. § 1292(a)(1) to consider the appeals.  Pretrial asset re­straining orders are appealable as “injunctions.”  The court rejected defendant’s claim that jurisdiction extended to his claim that count 10 of the indictment failed to state an offense.  The suffi­ciency of the indictment could be examined ade­quately in any appeal from a final judgment.  U.S. v. Floyd, 992 F.2d 498 (5th Cir. 1993).

 

6th Circuit upholds federal jurisdiction where state forfeiture proceedings were never instituted. (905) The 6th Circuit up­held the district court’s ju­risdiction to con­sider a civil forfeiture action, reject­ing claimant’s argument that state court had ac­quired exclusive jurisdiction over the defen­dant property. The State of Michigan never instituted a forfeiture ac­tion against the prop­erty.  Although claimant re­ceived notice that his property had been seized by lo­cal police, this did not constitute the commencement of a state forfeiture action.  No claim or cost bond was ever filed by claimant with the state and no peti­tion for forfeiture was ever filed in state court.  The defining act for exercise of state jurisdiction is the filing of a forfeiture complaint in state court.  The fact that the res was seized by state authorities pursuant to a state search warrant did not give state courts ex­clusive jurisdiction.  U.S. v. Certain Real Property 566 Hendrickson Boulevard, 986 F.2d 990 (6th Cir. 1993).

 

7th Circuit finds no jurisdiction over car where federal agents failed to obtain turnover order from the state. (905) The 7th Circuit held that under U.S. v. One 1979 Chevrolet C-20 Van, 924 F.2d 120 (7th Cir. 1991), the district court lacked in rem juris­diction over a seized Mercedes because fed­eral authorities failed to obtain a turnover or­der from the circuit court of the county in which the car was seized. The fact that state forfeiture proceedings were never instituted was not relevant;  the holding of C-20 Van did not depend on the existence of the competing state forfeiture proceeding.  An amendment to the Illinois forfeiture statute was not rele­vant since the amendments occurred after the unauthorized transfer of the car from local police to federal authorities.  Finally, C-20 Van is not inconsistent with Supreme Court caselaw.  None of the cases cited by the gov­ernment involved a federal forfeiture action in competition with state court authority over the disposition of a res.  U.S. v. One 1987 Mercedes Benz Roadster 560 SEC, 2 F.3d 241 (7th Cir. 1993).

 

7th Circuit says court lacked jurisdiction to consider forfeiture while administrative proceeding was pending. (905) After re­ceiving notice of the administrative forfeiture proceedings, claimant did not follow the ad­ministrative procedures for challenging the seizure and forfeiture.  Instead, he filed a complaint in the district court challenging the seizure and forfeiture on constitutional grounds.  The 7th Circuit ruled that the dis­trict court lacked subject matter jurisdiction because it was divested of jurisdiction over the forfeiture of claimant’s currency when the DEA instituted administrative forfeiture pro­ceedings.  Additionally, there was no basis for equitable jurisdiction over claimant’s claim that the seizure of his currency violated the 4th Amendment, that the delay between the seizure and the forfeiture violated his 6th Amendment right to a speedy trial, or that the DEA’s notice of seizure was deficient, because he could have raised these claims in the ad­ministrative proceeding.  Linarez v. U.S. De­partment of Justice, 2 F.3d 208 (7th Cir. 1993).

 

8th Circuit upholds its jurisdiction over cash trans­ferred to Asset Forfeiture Fund and local po­lice de­partment. (905) Fol­lowing the 1st, 2nd and 4th Cir­cuits, the 8th Circuit upheld its appellate ju­risdiction over cash transferred by the federal gov­ernment to its Asset Forfeiture Fund and distributed to the local police department.  By initiating the for­feiture action, the gov­ernment subjected itself the court’s in personam juris­diction.  Thus, despite the government’s distribution of the res, the court re­tained jurisdiction over the parties throughout the case.  Unlike ad­miralty cases, the prop­erty was in the pos­session of the government and was not in any danger of disappearing.  Bank of New Or­leans v. Ma­rine Credit Corp., 583 F.2d 1063 (8th Cir. 1978) was inapplicable, since the money was easily ac­cessible to the government.  The local police depart­ment which received a por­tion of the funds was not an innocent pur­chaser, since it participated in the initial seizure of the money.  Moreover, even under traditional in rem jurisdictional analysis the appellate court had jurisdiction, since the removal of the res from the ju­risdiction of the court was improper.  The govern­ment trans­ferred the money one day after entry of judg­ment, in violation of the 10-day automatic stay under Fed. F. Civ. P. 62(a).  U.S. v. Twelve Thou­sand, Three Hun­dred Ninety Dollars ($12,390.00), 956 F.2d 801 (8th Cir. 1992).

 

8th Circuit rejects claim that state court acquired jurisdiction over seized cash. (905) Local police seized cash from claimants’ residence.  Five days af­ter the seizure, the money was turned over to the DEA and federal forfeiture proceedings were begun.  The 8th Cir­cuit rejected claimants’ argument that the district court should have dismissed the action be­cause the state court had already acquired jurisdic­tion over the money.  Local authorities voluntarily trans­ferred the money to the DEA, and no state forfei­ture proceeding was ever commenced.  The federal government took possession of the money and initi­ated the requisite paper­work for an administrative forfeiture.  It was true that after the money had been delivered to the DEA the state court directed the local police to return the money to claimants.  However, the money was no longer in state custody.  The court could have ordered the police to pay to claimants an equivalent sum of money, but never took such action.  The state court denied claimants’ re­quest to hold the DEA agent who took the money in con­tempt.  Thus, the state court itself did not consider that any affront had occurred.  U.S. v. Twelve Thou­sand, Three Hun­dred Ninety Dollars ($12,390.00), 956 F.2d 801 (8th Cir. 1992).

 

9th Circuit says claimant was entitled to hearing on claim of inadequate notice of forfeiture. (905) Claimant and three others were in a residence from which the govern­ment seized $14,700.  The government be­lieved the money belonged to Steven Udell, so when it forfeited the money, it sent notice to Udell at the residence, as well as publishing a notice in a legal newspaper.  In the meantime, the claimant pled guilty to conspiracy to manufacturing methamphetamine.  Three months after the money was forfeited, the claimant filed a motion for return of the money.  The district court denied the motion as an improper collateral attack on the forfei­ture proceedings.  On appeal, the 9th Circuit reversed, holding that the claimant was enti­tled to a hearing on his due process claim of inadequate notice.  The panel rejected dicta in U.S. v. Elias,, 921 F.2d 870 (9th Cir. 1990) which directed due process forfeiture challenges to the Court of Federal Claims. The question of the claimant’s standing was left open on remand.  U.S. v. Clagett, 3 F.3d 1355 (9th Cir. 1993).

 

9th Circuit finds failure to specify order appealed from did not preclude review on appeal. (905)   The government argued the court of appeals lacked jurisdiction over this forfeiture appeal because ap­pellant failed to comply with Fed. R. App. P. 3(c) by not speci­fying in her notice of appeal the specific is­sue being appealed (an abatement issue).  The court disagreed finding the government had notice of ap­pellant’s intent to argue the abatement issue on ap­peal and the govern­ment was not prejudiced.  Ap­pellant’s entire brief addressed the abatement issue and the issue was specifically preserved in the stipu­lated judgment.  U.S. v. $84,740 Currency, 981 F.2d 1110 (9th Cir. 1992).

 

10th Circuit holds that § 981(h) does not authorize nationwide service of process. (905) In Colorado, the government brought a forfeiture action against real property in New Mexico under 18 U.S.C. § 981, 1341, 1343, and 1956, alleging the property was purchased in furtherance of a money laundering scheme by Austin, who was indicted in Colorado.  Legal title to the property was held by a business trust, and Austin was allegedly the trust’s alter ego.  The 10th Circuit held that the Colorado federal court lacked in rem jurisdiction over the New Mexico property.  Section 981(h), which gives venue in the district where the defendant owning such property is found, did not give the Colorado court jurisdiction.  To exercise jurisdiction over the property, the court must be able to execute service of process on it.  The district court could not execute service of process outside Colorado unless some federal statute authorized the court to do so.  Section 981(h) does not provide for nationwide service of process.  The amendment of 28 U.S.C. § 1355 in 1992 did not retroactively give the district court jurisdiction.  Because the court lacked jurisdiction over the property, the court erred in entering a forfeiture judgment.  U.S. v. 51 Pieces of Real Property, 17 F.3d 1306 (10th Cir. 1994).

 

10th Circuit holds court obtained in personam jurisdiction over trust when it responded to government’s default motion. (905) The government brought a forfeiture action in Colorado against real property in New Mexico.  It alleged the property was purchased in furtherance of a money laundering scheme by Austin, who was indicted in Colorado.  Legal title was held by a business trust, and Austin was allegedly the trust’s alter ego.  After finding no in rem jurisdiction over the property, the 10th Circuit considered whether the court had personal jurisdiction over the trust, so it could adjudicate the rights of the government in the property as against the trust.  The appellate court found that the court’s exercise of jurisdiction over Austin in the criminal proceeding did not automatically confer personal jurisdiction in the related civil proceeding.  However, the trust submitted itself to the jurisdiction of the court when it responded to the government’s amended motion for default.  This was a defensive move that triggered the provisions of Rule 12(h), since the trust failed to object to the court’s jurisdiction in its response to the motion.  U.S. v. 51 Pieces of Real Property, 17 F.3d 1306 (10th Cir. 1994).

 

11th Circuit holds federal court prema­turely exercised jurisdiction before state court disposed of res. (905) On July 14, a state court entered a partial final order that dismissed a state forfeiture action against certain property.  An appeal was taken, but on August 29, a notice of voluntary dismissal was filed.  On September 1, claimant filed a motion for return of the res, and this motion was granted on September 19.  However, on August 29, state and federal law enforcement personnel had informally transferred the res from state to federal hands, and the federal government had filed a forfeiture action in federal court.  U.S. Marshals refused to com­ply with a state order to return the res to claimant.  On appeal from the federal forfei­ture of the property, the 11th Circuit re­versed, directing the federal court to return the res to the state court’s jurisdiction.  In rem jurisdiction must encompass the right of the court asserting jurisdiction to control and dispose of the property.  Here, the federal court had prematurely exercised jurisdiction before the state court ordered final disposi­tion of the res.  U.S. v. $270,000 in United States Currency, Plus Interest, 1 F.3d 1146 (11th Cir. 1993).

 

11th Circuit holds failure to request stay or post bond, combined with sale of for­feited property, de­prived it of ju­risdiction. (905) In a civil forfeiture ac­tion against prop­erty jointly owned by claimant and her hus­band, the dis­trict court en­tered a forfeiture order in favor of the gov­ernment.  Claimant filed a timely notice of appeal, but failed to seek a stay of the district court’s order.  Claimant did file a lis pen­dens against the prop­erty.  Shortly after the 10-day auto­matic stay expired, the property was sold by the U.S. Mar­shal.  The 11th Circuit held that the fail­ure to request a stay or post a super­sedeas bond, combined with the subse­quent sale of the property under court order to a third party, de­prived the ap­pellate court of in rem jurisdic­tion.  The fil­ing of a notice of lis pendens did nothing to al­ter this out­come.  Lis pendens is merely a notice of pend­ing liti­gation.  It in­formed prospec­tive purchasers that they should look to the litigation to de­termine when and if it was safe to pur­chase the property.  Here, the district court’s or­der specifically gave the government the right to dispose of the property af­ter the ex­piration of the au­tomatic stay.  U.S. v. Certain Real and Per­sonal Prop­erty Belonging to Ronald Jerome Hayes, 943 F.2d 1292 (11th Cir. 1991).

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  • 110 Guidelines Sentencing, Generally
  • 150 Application Principles, Generally
  • 200 Offense Conduct, Generally
  • 400 Adjustments, Generally
  • 500 Criminal History, Generally
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  • 850 Appeal of Sentence (18 U.S.C. §3742)
  • 880 Habeas Corpus / 28 U.S.C. 2255 Motions
  • 900 – Forfeitures, Generally

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