§910 Forfeitures, Constitutional Issues
Supreme Court
First Circuit
Second Circuit
Third Circuit
Fourth Circuit
Fifth Circuit
Sixth Circuit
Seventh Circuit
Eighth Circuit
Ninth Circuit
Tenth Circuit
Eleventh Circuit
D.C. Circuit
Miscellaneous
Supreme Court finds pre-seizure notice and hearing required in civil forfeiture of real property. (910) Approximately 4 1/2 years after drugs were found in respondent’s home, the United States filed an in rem action to forfeit the house and surrounding real property. Without prior notice or an adversary hearing, the government seized the property and directed payment of future rents to the United States Marshal. The Ninth Circuit held that the seizure of the property without prior notice and a hearing violated the Due Process Clause and that failure to comply with internal reporting rules could require dismissal of the action as untimely. In a 5-4 decision authored by Justice Kennedy, the Supreme Court agreed in part with the Ninth Circuit’s finding that the Due Process Clause of the Fifth Amendment prohibits the government in a civil forfeiture case from seizing real property without first affording the owner notice and an opportunity to be heard. However, a unanimous Court overruled the Ninth Circuit on the issue of timeliness, finding that filing the action within the statute of limitations suffices to make it timely and that the cause should not be dismissed for failure to comply with certain other statutory directives for expeditious prosecution in forfeiture cases. U.S. v. James Daniel Good Property, 510 U.S. 43, 114 S.Ct 492 (1993).
Supreme Court considers First and Eighth Amendment challenges to RICO forfeiture. (910) Petitioner, the owner of more than a dozen stores and theaters dealing in sexually explicit materials, was convicted of 17 obscenity counts and 3 counts of RICO. The obscenity counts, based on four magazines and three video tapes sold at several of petitioner’s stores, served as the predicate to the RICO convictions. Petitioner received a six year prison term, a $100,000 fine and, under the RICO forfeiture provisions of 18 U.S.C. §1963, was ordered to forfeit his wholesale and retail businesses and almost $9 million acquired through racketeering activity. In a 5-4 opinion, written by Justice Rehnquist, the Supreme Court found the RICO forfeiture order was not an unconstitutional prior restraint on speech but a punishment for past criminal conduct. The threat of forfeiture has no more chilling effect on free expression than the threat of a prison term or a large fine. However, the case was remanded to determine whether the forfeiture resulted in an excessive penalty under the Eighth Amendment’s Excessive Fines Clause. Alexander v. U.S., 509 U.S. 544, 113 S.Ct. 2766 (1993).
Supreme Court says forfeitures are subject to Eighth Amendment Excessive Fines Clause. (910) Petitioner was convicted of possessing cocaine with intent to distribute and sentenced to seven years imprisonment. The government filed an in rem action under 21 U.S.C. §881(a)(4) and (a)(7) seeking forfeiture of petitioner’s mobile home and auto body shop in which small quantities of drugs, paraphernalia and cash had been found in connection with the criminal drug case. Petitioner argued that forfeiture of the properties violated the Eighth Amendment. In an opinion authored by Justice Blackmun, the Supreme Court reversed the 8th Circuit and found that statutory in rem forfeiture imposes punishment and is subject to the limitations of the Excessive Fines Clause of the Eighth Amendment. The case was remanded to the Court of Appeals to establish in the first instance the test for determining what is a constitutionally “excessive” forfeiture. Austin v. U.S., 506 U.S. 1074, 113 S.Ct. 1036 (1993) (en banc).
1st Circuit affirms that notice of forfeiture sent to address where currency was seized was adequate. (910) After currency was seized from plaintiffs’ then-residence, they filed a motion under Rule 41(e) for return of the currency. A memorandum filed by the government indicated that the currency was being held for administrative forfeiture and that notice would soon be sent to all who had an interest in it. Notice of the administrative forfeiture was subsequently sent to plaintiffs’ last known residence, where the currency was seized, but was returned to the DEA as “unclaimed.” The DEA also published notice of the forfeiture in the newspaper “USA Today.” The Rule 41(e) motion was denied, and several days later, plaintiffs’ right to file a claim with the DEA expired. The 1st Circuit affirmed that the notice sent to address where the property was seized was both statutorily and constitutionally adequate. The issue was close, because the government was involved in ongoing Rule 41(e) court action with plaintiffs and was aware that plaintiffs were represented by counsel. However, the DEA had no reason to believe that the notice would be ineffective. Sarit v. U.S. Drug Enforcement Administration, 987 F.2d 10 (1st Cir. 1993).
1st Circuit affirms that court clerk can issue arrest warrant in rem for civil forfeiture without prior determination of probable cause. (910) Relying on U.S. v. Pappas, 613 F.2d 324 (1st Cir. 1980), the district court held that the government must obtain a judicial finding of probable cause before “arresting” a property pursuant to a civil forfeiture action. The 1st Circuit reversed, holding that amended Rule C(3) of the Supplemental Rules for Certain Admiralty and Maritime Claims clearly allows a deputy court clerk to issue an arrest warrant in rem pursuant to a civil forfeiture complaint, without a prior determination of probable cause by an independent judicial officer. This procedure does not violate the 4th Amendment, since it does not involve a government “seizure” of the real property. The marshal’s posting of the arrest warrant serves as notice to the in rem defendant of the civil complaint filed against it. Claimant is not denied access to the property. The warrant merely brings the real property under the jurisdiction of the court. While the posting of an arrest warrant might hinder an owner’s ability to sell the property, it does not amount to such a deprivation of property rights so as to warrant due process protection under the 5th Amendment. U.S. v. Twp 17 R 4, Certain Real Property in Maine, 970 F.2d 984 (1st Cir. 1992).
1st Circuit holds that civil forfeitures are not subject to proportionality analysis under 8th Amendment. (910) Claimant’s one-third interest in property appraised at $1.8 million was forfeited as a result of cultivation of marijuana on the property. The 1st Circuit rejected his claim that the forfeiture was so disproportionate as to violate the 8th Amendment. Circuit precedent established that proportionality analysis is inappropriate in civil forfeiture cases brought under 21 U.S.C. 881(a)(7). Moreover, even if proportionality analysis were applied, the claimant would still lose. Although the claimant’s interest was valuable, its forfeiture was not disproportionate when compared to the nature of his crime and the extent of his unlawful activities. U.S. v. One Parcel of Real Property with Buildings, Appurtenances, and Improvements, Known as Plat 20, 960 F.2d 200 (1st Cir. 1992).
2nd Circuit says seizure of personal property does not violate 5th Amendment where exigent circumstances were present. (910) In 1990, the government seized numerous electronic fund transfers (EFTs) alleged to have involved the proceeds of illicit drug trafficking. Several of the intended recipients of the funds sued two governmental agencies and two private banks charging them with statutory and constitutional violations arising from the seizures of the EFTs. The 2nd Circuit affirmed the dismissal of the claim that the seizures violated the 5th Amendment. Under United States v. James Daniel Good Real Property, 114 S.Ct. 492 (1993), seizures of real property involving exigent circumstances are exempted from pre-deprivation notice and hearing requirements. It was not necessary to address whether personal property is similarly protected by the 5th Amendment, because the seizures in this case plainly involved exigent circumstances. Organizacion Jd Ltda v. U.S. Dept. of Justice, 18 F.3d 91 (2nd Cir. 1994).
2nd Circuit finds forfeiture of unreported funds was civil and therefore no double jeopardy. (910) Claimant was convicted of attempting to take more than $10,000 out of the U.S. without filing a currency report. He argued that the forfeiture of the money 31 U.S.C. § 5317(c) violated double jeopardy. The 2nd Circuit disagreed, finding the forfeiture was civil rather than criminal in nature. There was insufficient proof that the purpose and effect of the forfeiture was punitive. The forfeiture was not to punish claimant, but because the money was an instrument of the crime. U.S. v. Halper, 490 U.S. 435 (1989) has no application to the forfeiture of instrumentalities of a crime. The court also rejected the argument that the forfeiture constituted an excessive fine under the 8th Amendment. Judge Kearse dissented, finding no civil purpose in the forfeiture. U.S. v. U.S. Currency ($145,139.00), 18 F.3d 73 (2nd Cir. 1994).
2nd Circuit notes that forfeiture can occur even when initial seizure is illegal. (910) While analyzing the validity of a seizure, the 2nd Circuit noted that even when the initial seizure is found to be illegal, the seized property can still be forfeited. Seizure and forfeiture are two distinct events. While both require the government to have probable cause, the consequences of a lack of probable cause may differ depending on the event. Absence of probable cause at the time of the seizure may result in the suppression of evidence in later proceedings, but the defendant property itself cannot be suppressed from the forfeiture action. In contrast, a failure to establish probable cause on the forfeiture issue will preclude forfeiture of the property altogether. U.S. v. Daccarett, 6 F.3d 37 (2nd Cir. 1993).
2nd Circuit upholds DEA subpoena of financial records at intermediary banks transferring funds. (910) The government seized funds being electronically transferred by a Colombian drug cartel from United States banks to Colombian and Panamanian banks. The seizures all occurred through New York intermediary banks that had correspondent banking relationships with the foreign banks. The DEA also subpoenaed from the intermediate banks financial records of any accounts related to the entities named in the government’s forfeiture complaint. The 2nd Circuit held that this did not violate the 4th Amendment. Claimants did not have any protectable Fourth Amendment interest in the bank records at issue, because they were not customers of the intermediary banks. Moreover, even if claimants had accounts with these banks, information regarding those accounts would not be protected by the 4th Amendment. Because the DEA was authorized to demand information regarding the funds from the intermediary banks and the materials requested were relevant to their investigation, no 4th Amendment violation occurred. U.S. v. Daccarett, 6 F.3d 37 (2nd Cir. 1993).
2nd Circuit holds that exigent circumstances justified warrantless seizures of funds being electronically transferred. (910) The government seized funds being electronically transferred by a Colombian drug cartel from United States banks to Colombian and Panamanian banks. The 2nd Circuit held that the warrantless seizures were justified by the exigent circumstances exception to the warrant requirement in the 4th Amendment. Circuit caselaw requires seizures made pursuant to 21 U.S.C. section 881(b)(4) to comport with the 4th Amendment. Thus, a warrantless seizure is valid only if it falls within one the recognized exceptions to the 4th Amendment. The court agreed that exigent circumstances were present: electronic transfers can be completed in a matter of minutes or hours, and the property at issue was fungible. The court also upheld those seizures made pursuant to an in rem warrant issued by a clerk of the court, pursuant to Supp. Rule C(3). Although the 4th Amendment requires probable cause at the time of seizure, the government need not obtain a judicial determination of probable cause before seizure. U.S. v. Daccarett, 6 F.3d 37 (2nd Cir. 1993).
2nd Circuit says settlement of civil forfeiture did not require dismissal of criminal case for double jeopardy. (910) Pursuant to a stipulation, the government relinquished its claim to certain money, in return for certain cash and property seized from the defendant. In accord with the stipulation, an in rem civil forfeiture suit was dismissed. The 2nd Circuit rejected defendants’ claim that the double jeopardy clause barred continued prosecution of the criminal action arising out of the same facts, because the two cases were essentially one. Warrants for the civil seizures and criminal arrest were issued on the same day, by the same judge, based on the same affidavit. The stipulation involved not only properties in the civil suit, but also properties named in the criminal indictment. The civil complaint incorporated the criminal indictment. Finally, defendants were aware of the criminal charges against them when they entered into the stipulation. The fact that the civil and criminal actions had their own docket numbers was not dispositive, since civil and criminal actions must be docketed separately. U.S. v. Millan, 2 F.3d 17 (2nd Cir. 1993).
2nd Circuit suggests default judgment in civil forfeiture avoids double jeopardy problems. (910) In a civil forfeiture proceeding, defendants had filed claims to the subject property, but then had failed to answer the government’s complaint, resulting in a default judgment. Defendants were subsequently indicted for the offenses that gave rise to the forfeiture proceeding, but they sought to avoid prosecution on the grounds that the civil forfeiture had been sufficiently punitive as to constitute criminal punishment for double jeopardy purposes. The 2nd Circuit found the record inadequate to permit resolution of the claim, noting that the appeal of the forfeiture judgment had been stayed pending resolution of the double jeopardy motion in the criminal matter. The court suggested, however, that defendants would be unable to prevail on their double jeopardy argument if the default judgment is affirmed on appeal, for the defendants would then have failed to establish their interest in the property, and hence that the forfeiture proceeding could have constituted punishment as to them. The court declined to address the government’s argument that the double jeopardy clause is not implicated when the forfeiture proceeding precedes a criminal action. U.S. v. Amiel, 995 F.2d 367 (2nd Cir. 1993).
2nd Circuit rules that failure to publish notice of seizure did not violate due process where claimant had actual notice. (910) The 2nd Circuit rejected defendant’s claim that the DEA’s failure to publish a notice of seizure denied him of notice of the seizure of his Jeep. Claimant admitted that he had received actual notice of the seizure. Constructive notice is not further required. U.S. v. One 1987 Jeep Wrangler Automobile, 972 F.2d 472 (2nd Cir. 1992).
2nd Circuit rules that treating Notice of Claim as relating to prior forfeiture proceeding violated due process. (910) In April, local police impounded claimant’s Jeep. Claimant filed a motion in state court for its return. In May, after claimant filed this motion but before it was decided, the federal government commenced an administrative forfeiture proceeding. The DEA served a Notice of Seizure on claimant in late May. On June 16, the state court granted claimant’s motion, and the Jeep was returned to claimant. On July 9, DEA agents seized the Jeep and allegedly advised claimant that a Notice of Seizure would issue within 30 days. Sometime in August, claimant filed a Notice of Claim. The DEA treated this Notice of Claim as in response to the first seizure notice served in May, and rejected it as untimely. Claimant then filed a motion for return of property under Fed. R. Crim. P. 41(e). On October 17, during the pendency of this motion, a new Notice of Seizure was served. Claimant never filed a new Notice of Claim, and the DEA deemed the Jeep summarily forfeited. The 2nd Circuit held that the DEA’s determination that the Notice of Claim filed in August related to the first Notice of Seizure denied claimant the procedural safeguards of the forfeiture statutes. The case was remanded for further administrative proceedings. U.S. v. One 1987 Jeep Wrangler Automobile, 972 F.2d 472 (2nd Cir. 1992).
2nd Circuit refuses to vacate improper pre-hearing seizure and closure of business. (910) In a civil forfeiture action brought under 18 U.S.C. section 981(a)(1)(A), the government seized claimant’s business and closed it. The district court subsequently denied claimant’s motion to reopen the business. Claimant argued that the seizure of the company’s assets, without a prior hearing or prompt post-seizure hearing, violated due process. The 2nd Circuit agreed that the district court’s order was improper, but refused to vacate it because claimant failed to refute the government’s case in any way. The lack of exigent circumstances combined with the drastic measures taken by the government led the court to conclude that the district court’s approval of the ex parte, pre-notice seizure was erroneous. However, the court refused to vacate the order. Due process requires notice and an opportunity to be heard at a meaningful time. Claimant had that opportunity after the seizure, yet failed to present any evidence that would require a contrary result. Claimant, who would bear the burden of proof at the forfeiture trial, showed no likelihood of success on the merits. Judge Van Graafeiland dissented, believing the district court’s order was proper. U.S. v. All Assets of Statewide Auto Parts, 971 F.2d 896 (2nd Cir. 1992).
2nd Circuit rejects substantive due process challenge to forfeiture even though informant suggested drug sales take place at claimant’s condominium. (910) Claimant’s condominium was seized after he made two small sales of cocaine to a government informant inside of the condominium. No drugs, weapons, large amounts of cash, drug paraphernalia or drug records were discovered in the condominium. The confidential informant had requested that the first sale take place in the condominium, and it was unclear who specified the location of the second sale. The 2nd Circuit rejected a substantive due process challenge to the forfeiture. A forfeiture of property may be unduly oppressive only when the owner of the forfeited property is innocent of the wrongful activity and has done all that reasonably could be expected to prevent the proscribed conduct. Here, defendant committed a crime inside the condominium. Even if the informant was responsible for suggesting the condo as the site of the drug transaction, defendant could hardly be said to have done everything possible to prevent the property’s use for illegal purposes. U.S. v. Certain Real Property and Premises Known as 38 Whalers Cove Drive, 954 F.2d 29 (2nd Cir. 1992).
2nd Circuit says that disproportionately large civil forfeiture may violate double jeopardy. (910) Defendant’s $68,000 equity interest in his condominium was forfeited after he sold $250 worth of cocaine from the condominium. He argued that the forfeiture constituted criminal punishment and violated the double jeopardy clause and was cruel and unusual punishment. Relying on U.S. v. Halper, 490 U.S. 435 (1989), the 2nd Circuit held that a civil forfeiture will not be presumed punitive if the property was an instrumentality of crime. However, where the property is not an instrumentality and its value is overwhelmingly disproportionate to the value of the drugs, there is a rebuttable presumption that the forfeiture is punitive in nature. Here, the government conceded that the condominium was not an instrumentality of crime, and the court found that the forfeiture was overwhelmingly disproportionate. Nevertheless, the court found that since the drug offense had been prosecuted by the state rather than the federal government, the double jeopardy clause did not apply. As for cruel and unusual punishment, the equivalent of a $68,000 fine, while large, did not violate the 8th Amendment. U.S. v. Certain Real Property and Premises Known as 38 Whalers Cove Drive, 954 F.2d 29 (2nd Cir. 1992).
3rd Circuit remands to decide whether forfeiture violated prohibition on excessive fines. (910) The district court rejected claimant’s argument that the forfeiture of his property violated the 8th Amendment’s prohibition against excessive fines, finding that the 8th Amendment did not apply to civil forfeiture actions. The 3rd Circuit remanded in light of Austin v. U.S., 113 S.Ct. 2801 (1993), which held that forfeiture under 21 U.S.C. § 881(a)(7) was punishment subject to the excessive fines clause. The court did not establish a test, but discussed several different approaches, including whether the relationship of the property to the offense was close enough to render the property “guilty.” Finally, although the Supreme Court did not address whether a judge or jury decides whether a civil forfeiture is excessive, the appellate court suggested that in the interest of judicial economy, the district court might want to submit the question to a jury on a special interrogatory. U.S. v. Premises Known as RR #1, Box 224, Dalton, 14 F.3d 864 (3rd Cir. 1994).
3rd Circuit holds that 8th Amendment requires a criminal RICO forfeiture to be proportioned to the charged offense. (910) Based upon defendants’ RICO convictions, the district court ordered a forfeiture of 100 percent of defendants’ interest in a business which was primarily legitimate. The jury had found that one defendant’s interest in the corporation was tainted to the extent of 10 percent while the other defendant’s interest was tainted to the extent of five percent. The 3rd Circuit held that the 8th Amendment requires that a criminal RICO forfeiture order be justly proportioned to the charged offense. Some proportionality analysis is required when the defendant makes a prima facie showing that the forfeiture is grossly disproportionate, or bears no close relation to the seriousness of the crime. Here, defendants raised a prima facie claim of gross disproportionality, and thus the district court should have given the issue careful scrutiny. U.S. v. Sarbello, 985 F.2d 716 (3rd Cir. 1993).
3rd Circuit affirms that corporate “straw man” for fugitive had no standing to contest forfeiture. (910) A corporation had legal title to certain accounts which were the subject of a civil forfeiture action brought by the government. The 3rd Circuit affirmed the district court’s determination that the corporation lacked standing to contest the forfeiture because it was a mere “straw man” for its owner, a fugitive from justice. Courts have uniformly rejected standing claims by nominal or straw owners. Once the government made out a prima facie case that the corporation was a straw man, the corporation had the burden of establishing its independent power to control the accounts. The government showed that the corporation’s directors were all members of the fugitive’s family and that it was the fugitive himself who authorized the corporation to file its claim while he remained in Colombia. The corporation failed to show that it conducted any trade or business beyond holding legal title to various accounts. 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).
4th Circuit holds ban on excessive fines applies to forfeitures under gambling statute. (910) Claimants argued that the forfeiture of their residence under 18 U.S.C. §§ 981 and 1955(d) in connection with illegal gambling, was barred by the 8th Amendment’s ban on excessive fines. The 4th Circuit held that the ban applied to in rem forfeitures and that the district court erred in failing to decide whether the forfeiture of the residence was excessive. In Austin v. U.S., 113 S.Ct. 2801 (1993), the Supreme Court held that the ban on excessive fines applied to in rem forfeiture of drug-related property under 21 U.S.C. § 881. The Court found that Congress intended an 881 forfeiture to serve a punitive purpose by tying forfeiture directly to the commission of drug offenses. Likewise, Congress intended forfeiture under §§ 981 and 1955 to serve punitive purposes. Thus, the reasoning of Austin applied here. U.S. v. Taylor, 13 F.3d 786 (4th Cir. 1994).
4th Circuit says evidentiary hearing should have decided whether evidence was lawfully seized. (910) The government brought an in rem forfeiture action under 18 U.S.C. § 981 against money and real estate seized during a warrantless search, contending that the property was used in illegal gambling. Claimants contended that the seizure violated the Fourth Amendment. The 4th Circuit held that the district court erred in failing to conduct an evidentiary hearing to resolve factual disputes. Evidence obtained in violation of the Fourth Amendment must be excluded from a civil forfeiture proceeding. Although the government contended that exigent circumstances justified the warrantless entry into claimants’ home, claimants’ affidavit contradicted this. When material facts that affect the resolution of a motion to suppress evidence seized during a warrantless search are in conflict, the appropriate way to resolve the conflict is to hold an evidentiary hearing. U.S. v. Taylor, 13 F.3d 786 (4th Cir. 1994).
4th Circuit remands for proportionality inquiry in light of Austin. (910) In U.S. v. Borromeo, 995 F.2d 23 (4th Cir. 1993), a 4th Circuit panel refused to require the district court to perform an inquiry into the proportionality of a building defendant used to facilitate his drug activity. On rehearing, the 4th Circuit vacated this portion of the opinion and remanded in light of Austin v. U.S., 113 S.Ct. 2801 (1993). On remand, the district court should conduct an inquiry into the proportionality between the value of the instrumentality sought to be forfeited and the amount needed to effectuate the legitimate remedial purpose of the forfeiture. It was less clear whether a similar inquiry into the proportionality of the forfeiture of the proceeds of illegal activity was necessary. However, the proportional relationship between the value of the proceeds to the harm caused by a defendant’s conduct might, in a given case, be relevant under the approach in Austin. Thus, on remand, the district court should also make a proportionality determination with regard to each and all items of property which the government seeks to forfeit. U.S. v. Borromeo, 1 F.3d 219 (4th Cir. 1993), reaffirming in part, vacating in part, 955 F.2d 23 (4th Cir. 1993).
4th Circuit upholds civil forfeiture despite Halper double jeopardy argument. (910) Defendant, a doctor, was convicted of distributing controlled substances outside the scope of legitimate medical practice. Relying on U.S. v. Halper, 490 U.S. 435 (1989), he argued that the double jeopardy clause barred forfeiture of the building which housed his clinic and a pharmacy he and his wife operated. The 4th Circuit rejected this argument, concluding that double jeopardy does not apply to civil forfeiture of property used as an instrument of criminal activity. Forfeiture of such property serves a remedial, rather than a punitive purpose, by removing an instrument through which a criminal plies his unlawful trade. Halper did not require a remand here, because that case involved a civil penalty intended to substitute for damages suffered by the government for the fraudulent acts committed upon it. U.S. v. Cullen, 979 F.2d 992 (4th Cir. 1992).
5th Circuit holds civil forfeiture of drug proceeds is not punishment for double jeopardy purposes. (910) Defendants moved for dismissal of their criminal indictment for selling drugs on double jeopardy grounds, contending that the prior civil forfeiture of the proceeds from these drug sales constituted punishment for the crimes charged. The 5th Circuit rejected the claim, holding that the civil forfeiture of drug proceeds is not punishment for double jeopardy purposes. The forfeiture of drug proceeds is not so excessive as to render the relationship between the amount of the forfeiture and the resulting costs to the government and society irrational. It serves the remedial purposes of reimbursing the government for the costs of detection, investigation and prosecution of drug traffickers, and reimbursing society for the costs of combating illegal drugs, caring for the victims of drugs, and lost productivity. Austin v. U.S, 113 S.Ct. 2801 (1993) did not mandate a different result, since it involved forfeitures under §§ 881(a)(4) (conveyances) and 881(a)(7) (real estate). U.S. v. Tilley, 18 F.3d 295 (5th Cir. 1994).
5th Circuit upholds restraining order permitting operation of business but directing certain proceeds to be delivered to government until trial. (910) Defendant and others were indicted on racketeering charges. The government obtained an ex parte restraining order pursuant to 18 U.S.C. section 1963(d), which prohibited all the defendants and their unindicted corporations from transferring any assets owned by them. The order directed that weekly payments to defendant from the 1989 sale of four businesses be turned over to the government and held until forfeitable upon conviction. The order expressly permitted the remaining businesses to stay in operation. The 5th Circuit rejected several constitutional challenges to the validity of the restraining order. Since the order permitted the businesses to operate in a normal business manner, including the selling of obscene materials, the order did not constitute an impermissible prior restraint of 1st Amendment activity. Defendant was not denied procedural due process. Finally, the fact that the restraining order bound unindicted corporations did not render it impermissibly overbroad. U.S. v. Jenkins, 974 F.2d 32 (5th Cir. 1992).
5th Circuit finds no double jeopardy violation in seizure of cash and later prosecution for underlying conduct. (910) Customs officials seized $48,000 in cash from defendant as he attempted to board a plane to South Korea. He was convicted of failing to declare the currency as required by law. Defendant contended that the civil seizure and retention of the $48,000 was severe enough to constitute criminal punishment so that his subsequent criminal prosecution for the same underlying conduct violated the double jeopardy clause. Although the 5th Circuit found that defendant raised an important question as to whether a prior civil forfeiture could be considered punishment for double jeopardy purposes, it rejected defendant’s claim because the customs service never imposed a civil penalty on defendant. Defendant elected to delay civil forfeiture proceedings pending the outcome of his criminal prosecution. Because no final administrative action or other adjudication of civil liability occurred prior to defendant’s criminal conviction, defendant was not twice put in jeopardy. U.S. v. Park, 947 F.2d 130 (5th Cir. 1991), vacated in part, U.S. v. Park, 951 F.2d 634 (5th Cir. 1992).
6th Circuit rules defendant may not avoid burden of production merely by asserting 5th Amendment privilege. (910) The government presented probable cause to believe that claimant’s home was forfeitable. Claimant presented no evidence to rebut this showing, but argued that in light of a pending criminal proceeding, any attempt to depose his wife or other witnesses, or to obtain their affidavits, would have waived his right against self incrimination. The 6th Circuit upheld summary judgment in favor of the government, ruling that claimant did not sufficiently show an inability to present facts. No explanation was made as to what the depositions or affidavits would have shown, or how they would have prejudiced the criminal proceedings. Claimant could not avoid his burden of production by merely asserting a 5th Amendment privilege. Claimant’s contention that the district court should have stayed the federal forfeiture proceedings was meritless, in light of claimant’s own act of seeking summary judgment and his failure to request a stay. U.S. v. Certain Real Property 566 Hendrickson Boulevard, 986 F.2d 990 (6th Cir. 1993).
6th Circuit finds forfeiture of $65,000 home where attic used to grow marijuana not disproportionate. (910) Claimant argued that the forfeiture of his $65,000 home because he grew marijuana in the attic was disproportionate to his actions and constituted cruel and unusual punishment. The 6th Circuit declined to determine whether the 8th Amendment applied to such forfeitures, since even if it did, this was clearly not a case where the forfeiture was disproportionate. Claimant turned his entire attic area into a growing room for marijuana. He carried away at least 40 marijuana plants from the house only hours before the execution of a search warrant which uncovered two remaining pots of marijuana and a plethora of marijuana cultivating equipment and supplies. U.S. v. Certain Real Property 566 Hendrickson Boulevard, 986 F.2d 990 (6th Cir. 1993).
6th Circuit permits forfeiture of property valued at $1 million for growing just over 100 marijuana plants. (910) Defendant contended that forfeiture of his property, combined with his prison sentence of five years, constituted cruel and unusual punishment for the crime of manufacturing just over 100 marijuana plants. Assuming that criminal forfeitures under 21 U.S.C. section 853 were subject to the Eighth Amendment prohibition, the 6th Circuit found that the forfeiture was not “grossly disproportionate” to defendant’s crime. The court noted that Congress had authorized a maximum fine of $2 million, in addition to a maximum 40-year prison term, for defendant’s crime. U.S. v. Smith, 966 F.2d 1045 (6th Cir. 1992).
7th Circuit holds defendant has a statutory right to jury ruling on which assets are forfeitable. (910) Defendant argued that the forfeiture order was invalid because the record did not show that he waived his right to a jury trial with regard to forfeiture issues. The 7th Circuit held that a defendant has a statutory right to have the jury determine which assets are subject to forfeiture. A waiver of this right is valid only if knowingly and voluntarily made. The absence of a written waiver form is not dispositive. Here, the district court’s failure to interrogate defendant on the record to ensure that he understood the right he was waiving was not harmless error because there was nothing else in the record which satisfactorily demonstrated that defendant personally gave a knowing and voluntary waiver of his right to have a jury decide which assets were subject to forfeiture. U.S. v. Robinson, 8 F.3d 418 (7th Cir. 1993).
7th Circuit rejects statutory and constitutional challenges to forfeiture of entire parcel of land. (910) Claimant contended that the forfeiture of his entire five-acre parcel was not valid under the civil forfeiture statute because only a portion of the property was “substantially connected” to the drug activity. He also contended that the forfeiture violated the 8th Amendment. The 7th Circuit upheld the forfeiture of the entire five acres. First, a substantial connection is not required between the property and the related drug offense for a civil forfeiture of real estate under 21 U.S.C. section 881(a)(7). The court agreed with other courts that have held that section 881(a)(7) contemplates the forfeiture of an entire tract of land based on drug-related activities on a portion of a tract. Claimant’s 8th Amendment challenge also failed. The court believed that the 8th Amendment does not apply to civil in rem actions, but acknowledged that the opposing view has some support. However, even if the 8th Amendment did apply, claimant failed to show how the forfeiture was disproportional. He mentioned, but did not discuss, any of the factors which are typically considered in determining proportionality. U.S. v. Certain Real Property, Commonly Known as 6250 Ledge Road, Egg Harbor, WI, 943 F.2d 721 (7th Cir. 1991).
7th Circuit upholds refusal to stay civil forfeiture pending resolution of criminal charges. (910) The 7th Circuit found no error in the district court’s denial of claimant’s motion for a stay in his civil forfeiture action pending resolution of the state criminal charges. Claimant waived this issue by agreeing to try the forfeiture action on stipulated facts. Moreover, even if claimant’s failure to object did not constitute a waiver, he would not be entitled to a stay. Although the 5th Amendment privilege against self-incrimination is applicable in civil forfeiture actions, a blanket assertion of the privilege is no defense to a forfeiture proceeding and would not provide a sufficient basis for the issuance of a stay. “The very fact of a parallel criminal proceeding . . . does not alone undercut [claimant’s] privilege against self-incrimination, even though the pendency of the criminal action ‘forces him to choose between preserving his privilege against self-incrimination and losing the civil suit.’“ U.S. v. Certain Real Property, Commonly Known as 6250 Ledge Road, Egg Harbor, WI, 943 F.2d 721 (7th Cir. 1991).
8th Circuit remands for court to conduct proportionality analysis. (910) Defendants argued that forfeiture of their property amounted to an excessive fine and cruel and unusual punishment in violation of the 8th Amendment. The 8th Circuit remanded for the district court to conduct a proportionality analysis to determine whether the forfeiture was excessive. The 8th Amendment’s prohibition against cruel and unusual punishment does not apply in the context of a criminal forfeiture. However, the prohibition against excessive fines does apply because a criminal forfeiture is a “fine” for purposes of the 8th Amendment. Courts must consider the proportionality of the forfeiture. Because the court failed to conduct such an analysis, remand was required. U.S. v. Bieri, 21 F.3d 811 (8th Cir. 1994).
8th Circuit says forfeiture of $367,000 farm not excessive where property was extensively involved in marijuana growing. (910) Defendant argued that forfeiture of his entire farm, including the parcel where no criminal activity took place, was an excessive fine in violation of the 8th Amendment. The 8th Circuit upheld the forfeiture. A government appraisal valued the property at $367,000. Because over $400,000 was owed on the property, neither defendant nor the government would have any equity in the property. The property was extensively involved in facilitating defendant’s marijuana growing operation by providing an ideal concealment of the operation. Defendant held himself out as a legitimate farmer, trucker and salvage operator, and successfully convinced others of the legitimacy of his business. The entire property was also forfeitable under 18 U.S.C. § 982(a)(1) due to defendant’s money laundering activities. Defendant paid for equipment and made substantial payments on the real estate contract and improvements on the property with laundered money. U.S. v. Myers, 21 F.3d 826 (8th Cir. 1994).
8th Circuit finds that claimant did not voluntarily consent to seizure of cash at airport. (910) In a forfeiture proceeding against cash seized from claimant at the airport, the district court granted summary judgment in favor of the government. In granting summary judgment, the district court found that claimant voluntarily gave the currency to the police officer. The 8th Circuit reversed. Contrary to the district court’s findings, there was no admission by claimant that he voluntarily gave the officers the initial $2900 or the subsequent $4950 contained in the envelope. In fact, the record established the contrary. In the absence of a valid consent, the government must show probable cause to justify the seizure of the currency. Here there was none. Besides claimant’s somewhat suspicious behavior, the only evidence linking claimant to drugs was a report that he had a heroin supplier in Omaha. U.S. v. $7,850.00 in U.S. Currency, 7 F.3d 1355 (8th Cir. 1993).
8th Circuit holds that court can refuse forfeiture under section 1955 if it is disproportionate. (910) Under 18 U.S.C. section 1955(d), any property used in an illegal gambling operation “may be seized and forfeited.” The 8th Circuit held that unlike mandatory provisions found in other forfeiture statutes, this language does not require an automatic forfeiture where an illegal gambling operation is shown. Courts have some discretion, and can refuse a forfeiture if it seems to work a disproportionate penalty in a particular case. However, this does not grant courts the authority to subdivide property in order to create a proportional forfeiture. Here, the forfeiture of the entire property was proportional, even though claimants only used the second floor of the building for their gambling operation. Claimant was part of a national organization which facilitated gambling in its member chapters. The national organization received a percentage of the profits realized from the illegal gambling operations of its member chapters. U.S. v. Premises Known as 318 South Third Street, 988 F.2d 822 (8th Cir. 1993).
8th Circuit holds that federal forfeiture law supersedes Iowa homestead exemption. (910) The 8th Circuit rejected defendant’s claim that the Iowa homestead exemption exempted her home from criminal forfeiture under 21 U.S.C. section 853(a). Under the Supremacy Clause of Article VI of the Constitution, federal law supersedes states law where there is an outright conflict between such laws. Thus the federal forfeiture law clearly superseded the homestead exemption. To hold differently would destroy the uniformity of application of section 853(a) and would interfere with the intent of Congress. U.S. v. Curtis, 965 F.2d 610 (8th Cir. 1992).
8th Circuit rules claimants waived contention that civil forfeiture statute is a Bill of Attainer. (910) Claimants contended for the first time on appeal that 21 U.S.C. section 881(a)(7), a civil forfeiture statute, was an unconstitutional Bill of Attainder. The 8th Circuit refused to consider this argument, ruling that claimants’ failure to raise this issue below constituted a waiver. U.S. v. One Parcel of Property Located at RR 2, Independence, Buchanan County, Iowa, 959 F.2d 101 (8th Cir. 1992).
9th Circuit does not decide whether forfeiture claimant has right to effective counsel. (910) The government seized $30,440.00 from the claimant’s house after claimant was shot and called paramedics and the police. Forfeiture proceedings were instituted. Although the trial court raised the question of the legitimacy of the search of the house, claimant’s counsel did not litigate the search issue but instead tried the forfeiture case on an innocent owner defense. The trial court found for the government and ordered the money forfeited. On appeal, claimant challenged the effectiveness of his counsel. Without determining whether the Sixth Amendment right to effective assistance of counsel applies to civil forfeiture proceedings, the Ninth Circuit found that the performance of counsel in this case did not fall below the required standards. The court noted that the question of whether the Sixth Amendment right applies is a complex and unsettled question. U.S. v. $30,440 in U.S. Currency, 2 F.3d 328 (9th Cir. 1993).
9th Circuit holds order freezing bank fraud defendant’s assets cannot be modified in criminal case. (910) Defendant was the CEO of a savings and loan that collapsed. The Office of Thrift Supervision filed an administrative proceeding under 12 U.S.C. 1818, claiming defendant’s assets belonged to the bank. The OTS issued restraining orders requiring approval of all expenses greater than $5,000. When defendant was later indicted, his lawyers applied to the judge in the criminal proceeding for an order authorizing defendant to use his own assets to pay attorneys fees. The district judge refused, and on appeal the 9th Circuit affirmed, holding that the judge in the criminal case had no power to modify the OTS’s restraining order. Under section 1818, defendant could seek judicial review of the restraining order in a separate action in which the OTS would be a party. But the district court’s authority was limited to taking such steps as appointing counsel under the Criminal Justice Act. U.S. v. Spiegel, 995 F.2d 138 (9th Cir. 1993).
9th Circuit reverses corporation’s conviction where asset seizure left it unable to obtain counsel. (910) Unimex, a corporation, was engaged in buying and selling foreign currency and operating a travel agency. An undercover investigation revealed it was also being used to launder money. All of its assets were seized, and it was convicted of money laundering, along with one of its officers. It was not represented by counsel at trial because a corporation is not entitled to appointed counsel. On appeal, the 9th Circuit reversed, holding that the court should have conducted a pre-seizure hearing to determine whether some of the assets of the corporation were legitimate. See U.S. v. Crozier, 777 F.2d 1376 (9th Cir. 1985). The court distinguished the Supreme Court’s opinion in Caplin & Drysdale v. U.S., 491 U.S. 617 (1989), on the ground that the defendants in that case had a right to appointed counsel. Here, the corporation was deprived of the ability to retain counsel without a prior hearing on whether the seizure was proper. U.S. v. Unimex, Inc., 991 F.2d 546 (9th Cir. 1993).
10th Circuit holds that forfeiture notice to criminal attorney of trust’s alter ego satisfied due process. (910) In Colorado, the government brought a forfeiture action against real property in New Mexico, alleging the property was purchased in furtherance of a money laundering scheme by Austin. Legal title to the property was held by a business trust, and Austin was the trust’s alter ego. Notice of the seizure and forfeiture was sent to the trust in California, and to Austin through his criminal defense attorney. The 10th Circuit held that the notice to Austin’s defense attorney satisfied due process requirements. There was some doubt whether the notice to the address in California was adequate, since the government was aware that the person to whom the notice was sent had ceased activities with the trust in 1989. However, based on the district court’s unchallenged finding that Austin was the alter ego of the trust, notice to Austin was notice to the trust. U.S. v. 51 Pieces of Real Property, 17 F.3d 1306 (10th Cir. 1994).
10th Circuit finds no exigent circumstances to justify lack of pre-seizure notice and hearing of real property seizure. (910) Claimant argued that the government violated its due process rights by seizing certain real property without first providing it with notice and an opportunity to be heard. The 10th Circuit agreed. Under U.S. v. James Daniel Good Real Property, 114 S.Ct. 492 (1993), in the absence of exigent circumstances, the due process clause prohibits the government in a civil forfeiture case from seizing real property without first affording the owner notice and an opportunity to be heard. The government’s interest in preventing claimant from further concealing its real property assets through subsequent transfers could be protected through less restrictive measures, i.e. a lis pendens, restraining order, or bond. The court ordered returned to claimant the rents collected on the property prior to the final forfeiture order. The forfeiture judgment could still stand, so long as impermissibly obtained evidence was not used in the forfeiture proceeding. U.S. v. 51 Pieces of Real Property, 17 F.3d 1306 (10th Cir. 1994).
11th Circuit says civil forfeiture suit seeking property used in gambling was not barred by double jeopardy. (910) Claimant was convicted of running an illegal gambling business from his home. He argued that a civil in rem forfeiture action against the home under 18 U.S.C. § 1955 was barred by the double jeopardy clause. The 11th Circuit found no double jeopardy violation. The government’s simultaneous pursuit of criminal and civil sanctions against defendant, under 18 U.S.C. § 1955, fell within the contours of a single, coordinated prosecution. U.S. v. One Single Family Residence Located at 18755 North Bay Road, Miami, 13 F.3d 1493 (11th Cir. 1994).
11th Circuit holds forfeiture of $150,000 home for running poker games was disproportionate. (910) Claimant held poker games for his friends and associates on Wednesday nights at his home whenever “enough people showed up.” The 11th Circuit held that forfeiture of the $150,000 home was a disproportionate penalty that violated the 8th Amendment. The court agreed with the 8th Circuit’s decision in U.S. v. Premises Known as 318 South Third Street, 988 F.2d 822 (8th Cir. 1993) to uphold the forfeiture of a house used for a gambling business. However, the underlying facts were materially different there. There, the gambling was run by an association that was a member of a national organization which facilitated gambling by its member chapters. Here, the poker game was held for claimant’s family and friends. U.S. v. One Single Family Residence Located at 18755 North Bay Road, Miami, 13 F.3d 1493 (11th Cir. 1994).
11th Circuit rules 40-day delay between seizure and hearing was not unreasonable in light of plaintiff’s inaction. (910) The U.S. Customs Service seized plaintiff’s car in her presence. Following the seizure, the government initiated administrative forfeiture proceedings and mailed a notice to plaintiff explaining how to challenge the administrative forfeiture. Due to an incorrect address, the notice never reached plaintiff. Forty days after the seizure, plaintiff filed a complaint in district court for return of the vehicle. The court district court ruled the seizure violated due process. The 11th Circuit reversed, ruling that the 40-day delay. The court balanced the four factors listed in U.S. v. $8,850 in U.S. Currency, 461 U.S. 555 (1983). The delay was relatively short. Plaintiff did not diligently assert her rights to a prompt post-seizure hearing, and showed no prejudice. Although she never received the written notice of the forfeiture, she and her lawyer were aware of it and chose to initiate this action rather than file a claim through the correct channel. Nnadi v. Richter, 976 F.2d 682 (11th Cir. 1992).
11th Circuit rules genuine issues existed as to whether 11-month delay between seizure and hearing violated due process. (910) The district court granted summary judgment in favor of claimants. holding that the 11-month delay after the seizure of the real property, without an adversarial hearing on probable cause, violated claimants’ rights to due process under U.S. v. $8,850, 461 U.S. 555 (1983). The 11th Circuit found that genuine issues of material facts existed, and remanded for further proceedings. Under $8,850, the factors to consider are (1) the length of the delay, (2) the reasons for the delay, (3) the claimant’s assertion of a right to a judicial hearing, and (4) whether the claimant has been prejudiced by the delay. Here, the 11-month delay was related to an ongoing criminal investigation, which is a “weighty justification” for delay. With respect to claimant’s right to a judicial hearing, the district court would have allowed claimants to remove the stay by filing a motion, but they did not. Although the district court discussed the unmarketability of the property, this does not constitute prejudice. Prejudice relates to a claimant’s ability to present his case at a probable cause hearing. U.S. v. Premises Located at Route 13, 946 F.2d 749 (11th Cir. 1991).
D.C. Circuit affirms dismissal of forfeiture action where property was seized after an illegal search. (910) The D.C. Circuit affirmed the district court’s dismissal of the government’s civil forfeiture action against cash seized from defendant’s suitcase. The district court correctly granted claimant’s motion to suppress the cash on the grounds that the officers conducting the search and seizure violated the 4th Amendment. The fact that the cash was seized after an illegal search did not immunize it from forfeiture, and other evidence, legally obtained, could be introduced to establish that the property should be forfeited to the government. In this case, however, the government had no such other evidence and for that reason, the district court dismissed the action after ordering the cash suppressed. U.S. v. Six Hundred Thirty-Nine Thousand Five Hundred and Fifty-Eight Dollars ($639,558), 955 F.2d 712 (D.C. Cir. 1992).
New York district court says forfeiture of residence for small amount of marijuana violates Eighth Amendment. (910) The claimant sold seven grams of marijuana to a confidential informant from the house, and a consent search uncovered six ounces more. The claimant pled guilty to a misdemeanor in state court. Thereafter the government filed a forfeiture action against the residence. Relying on U.S. v. Certain Real Property and Premises Known as 38 Whalers Cove Drive, 954 F.2d 29 (2nd Cir. 1992), District Judge McAvoy of the Northern District of New York held that loss of the claimant’s $69,778.01 equity in his residence exceeded any legitimate civil purpose for the forfeiture, and therefore the forfeiture constituted “punishment” within the meaning of the Eighth Amendment. Moreover, the punishment here was “clearly disproportionate” and therefore constituted cruel and unusual punishment. U.S. v. Real Property at 835 7th Street, Rensselaer, N.Y., 820 F.Supp. 688 (N.D. N.Y. 1993), reconsideration denied in part, granted in part by 832 F.Supp. 43 (N.D.N.Y. 1993).