U.S. v. $482,627.00 in U.S. Currency

Full title: UNITED STATES OF AMERICA, Plaintiff, v. $482,627.00 IN U.S. CURRENCY, MORE…

Court: United States District Court, W.D. Texas, San Antonio Division

Date published: May 16, 2005

Civil No. SA: 04-CA-712-XR (W.D. Tex. May. 16, 2005)

Opinion

Civil No. SA: 04-CA-712-XR.

May 16, 2005

ORDER

XAVIER RODRIGUEZ, District Judge

On this date, the Court considered Claimant Oneyra Diaz's Motion for Summary Judgment (docket no. 14), Claimant Oneyra Diaz's Motion for Protective Order (docket no. 15), and the United States' Motion for Leave of Court to Amend Verified Complaint for Forfeiture (docket no. 18).

Facts Background

On February 5, 2004, near Pearsall, Texas, DPS Trooper Hogue initiated a traffic stop of a vehicle driven by Oneyra Diaz. Her sister, Ana Diaz, was a passenger in the vehicle. During this traffic stop, Officer Hogue discovered and seized $481,000 from the gas tank. Oneyra and Ana Diaz were arrested and indicted in criminal case no. SA-04-CR-0079-XR for money laundering and bulk cash smuggling. On June 2, 2004, this Court granted Defendants' motion to suppress the $481,000 and various statements made by the Defendants after concluding that the search violated the Fourth Amendment.

The Government filed a Verified Complaint for Forfeiture on August 8, 2004. As noted, the respondent property was seized from Claimant Oneyra Diaz in Pearsall, Frio County on or about February 5, 2004 during the traffic stop and subsequent search. $481,000 of the money was found in and taken from the gas tank of Diaz's car, and the remaining $1,627 was found in and taken from Diaz's purse. According to the Verified Complaint, the seized respondent property was referred to the Internal Revenue Service-Criminal Investigation and the High Intensity Drug Trafficking Area Interdiction Task Force and has remained in the custody of the IRS-CI. This forfeiture action was initially brought to enforce the provisions of 31 U.S.C. § 5331(c)(1) (2) and 18 U.S.C. § 981(a)(1)(A) for a violation of 31 U.S.C. § 5332 and 18 U.S.C. § 1956(a)(2)(A). The United States moves to add additional bases for the forfeiture in its motion to amend the verified complaint, as discussed below.

After withdrawing its appeal of the suppression order, the United States dismissed the indictment against Oneyra and Ana Diaz on September 30, 2004. Oneyra Diaz filed a claim to the money in this forfeiture action on September 20, 2004, and now moves for summary judgment on her claim based on the exclusionary rule made the basis of her motion to suppress.

Motion for Summary Judgment

Diaz contends that, because the United States cannot use the suppressed evidence to prove its forfeiture case, she is entitled to summary judgment. She argues that, had it not been for the illegal search, there would have been no seizure of the respondent property, no forfeiture case, and no evidence that could subject the respondent property to forfeiture. Further, any evidence developed through civil discovery will constitute fruit of the poisonous tree and is subject to being suppressed. Diaz contends that, although the United States "attempts to breathe life into its case by reciting facts in the verified complaint for forfeiture pertaining to investigations conducted years ago with respect to friends and relatives of Oneyra Diaz, said evidence falls far short of satisfying the government's burden of proof. Furthermore, that evidence likewise constitutes `fruit of the poisonous tree.'"

Diaz argues that, to prove its case, the United States must prove either (1) the respondent property was concealed inside the gas tank of Diaz's vehicle in an attempt to transfer said currency from a place within the United States to a place outside the United States or from a place outside the United States to a place inside the United States in violation of 31 U.S.C. § 5332 or (2) the respondent property represents the proceeds from some unlawful activity that was being transported from a place in the United States or through a place outside the United States to a place inside the United States from or through a place outside the United States with the intent to promote the carrying on of such specified unlawful activity in violation of 18 U.S.C. § 1956(a)(2)(A). Diaz argues that it is impossible for the United States to prove a case of money laundering or bulk cash smuggling without introducing the respondent property as evidence in its case in chief, which it cannot do. Furthermore, evidence developed subsequent to the search can have no independent basis from the illegal search and must be excluded as fruit of the poisonous tree. Accordingly, the government has no evidence to support the forfeiture of the respondent property and the Court should grant Diaz summary judgment.

The United States responds that, because no discovery has yet taken place, the only pleadings before the Court to consider for summary judgment are the Petitioner's Verified Complaint, the Claimant's Answer (and notice of claim), and the motion for summary judgment. However, 18 U.S.C. § 983(a)(3)(D) states that "no complaint may be dismissed on the ground that the Government did not have adequate evidence at the time the complaint was filed to establish the forfeitability of the property." The United States asserts that Diaz's motion for summary judgment is tantamount to a motion for dismissal of this case for inadequate evidence at the time Petitioner filed the Verified Complaint.

Moreover, the United States argues, the "facts pertinent to violations" contained in Petitioner's Verified Complaint show that the United States did not allege facts based on evidence that had been suppressed in the related criminal case. It is well established that suppression of evidence does not require dismissal of a civil forfeiture case when the United States develops evidence independent of the illegal seizure. See United States v. One 1978 Mercedes Benz, 711 F.2d 1297 (5^th Cir. 1983) (improper seizure does not jeopardize the government's right to secure the forfeiture if probable cause to seize the vehicle could be supported with untainted evidence); United States v. One Lot of U.S. Currency ($36,634.00), 103 F.3d 1048 (1^st Cir. 1997); see also INS v. Lopez-Mendoza, 468 U.S. 1032, 1039-40 (1984) (noting that forfeiture proceedings against forfeitable property are not precluded by an unlawful seizure). The United States asserts that it has developed evidence independent of that suppressed in the related criminal case to form the basis for filing the Verified Complaint for Forfeiture and that 18 U.S.C. § 983(a)(3)(D) allows the government to gather evidence after the verified complaint has been filed. Further, Petitioner's Verified Complaint counters Diaz's allegation that the government cannot prove its case without the suppressed evidence. The government asserts that material fact issues remain such that summary judgment is inappropriate.

Analysis

The Supreme Court has held that an object illegally seized cannot in any way be used either as evidence or as a basis for jurisdiction and, accordingly, evidence derived because of a violation of the Fourth Amendment cannot be used in a forfeiture proceeding. One 1958 Plymouth Sedan v. Pennsylvania, 380 U.S. 693 (1965).¹ In pre-CAFRA cases, courts routinely held that an improper

1 The Fifth Circuit has followed Plymouth Sedan and expressly held that forfeiture cannot rest upon tainted evidence. Vance v. United States, 676 F.2d 183, 188 (5^th Cir. 1982) (cited in Wren v. Towe, 130 F.3d 1154, 1158 (5^th Cir. 1997)). Other circuits have also held that the exclusionary rule bars the admission of evidence illegally obtained. See, e.g., United States v. $7,850.00, 7 F.3d 1355, 1356 (8^th Cir. 1993) ("Because forfeiture proceedings are quasi-criminal in character, the exclusionary rule applies barring evidence obtained in violation of the Fourth Amendment.").
However, there appears to be some confusion and/or disagreement among the Circuit Courts of Appeals regarding the extent of the required suppression. This confusion appears to have stemmed, at least in part, from the Supreme Court's statements in INS v. Lopez-Mendoza, 468 U.S. 1032 (1984). In that case, the Court stated: "The `body' or identity of a defendant or respondent in a criminal or civil proceeding is never itself suppressible as a fruit of an unlawful arrest, even if it is conceded that an unlawful arrest, search, or interrogation occurred. A similar rule applies in forfeiture proceedings directed against contraband or forfeitable property." Id. at 1039-40. Based on this language, the Eighth Circuit has stated in dicta that the respondent property itself need not be suppressed. In United States v. $12,390, 956 F.2d 801, 806 (8^th Cir. 1992), it held: "In the first place, the things themselves, the forfeitable items, would not be inadmissible even if they had been seized in violation of the Fourth Amendment. INS v. Lopez-Mendoza, 468 U.S. 1032, 1039-40 (1984). In the second place, as to other evidence resulting from the search that may have been introduced in this case, the Fourth Amendment exclusionary rule would apply. . . ."
The Second Circuit has noted that its exposition of Plymouth Sedan "remains unclear." In United States v. $37,780 in U.S. Currency, 920 F.2d 159 (2d Cir. 1990), the Second Circuit stated that "an illegal seizure of property does not immunize that property from forfeiture, that the property itself cannot be excluded from the forfeiture action, and that evidence obtained independent of the illegal seizure may be used in the forfeiture action." Id. at 63 (emphasis added). In a later case, United States v. $557,933.89, 287 F.3d 66 (2d Cir. 2002), the court noted that "the meaning of the italicized portion of this statement is somewhat unclear. Other courts of appeals and commentators have understood it to mean that the defendant property must also be admitted for its evidentiary value in forfeiture proceedings regardless of the propriety of its initial seizure — and, so interpreted, these courts and commentators have generally been critical of that principle." Id. at 80 (citing United States v. $191,910.00 in U.S. Currency, 16 F.3d 1051, 1064 n. 27 (9^th Cir. 1994) (disagreeing with $37,780 and noting that the "majority" of circuits do likewise) and 1 Wayne R. LaFave, Search and Seizure § 1.7(a) n. 10 (3d ed. 1996) ("Despite some authority to the contrary [ i.e., $37,780], it does not follow that the res in a forfeiture proceeding, if itself illegally seized, can also be admitted for its evidentiary value."). The Second Circuit then noted that it "has not expounded further on the meaning of that statement, so its precise meaning — indeed, even its status as a holding — and its application . . . is unclear." $557,933.89, 287 F.3d at 80. However, because the court found no Fourth Amendment violation upon which to base any exclusion of evidence, it concluded that it "need not further examine this rather murky area." Id.
The D.C. Circuit has not squarely considered this issue, but did discuss the Second Circuit's holding in $37,780 in its decision in United States v. $639,558, 955 F.2d 712, 715 n. 5 (D.C. Cir. 1992):

When illegally seized property is itself the `defendant' in the forfeiture proceeding, it may not be `relied upon to sustain a forfeiture,' Plymouth Sedan, 380 U.S. at 698, but it is not `excluded' from the proceeding entirely. Such property may be offered into evidence for the limited purpose of establishing its existence, and the court's in rem jurisdiction over it. This, we think, is the import of the Second Circuit's recent statement that with respect to unlawfully obtained property that is the subject of the forfeiture suit, `the property itself cannot be excluded from the forfeiture action,' United States v. $37,780 in U.S. Currency, 920 F.2d 159, 163 (2d Cir. 1990). In other words, as the Supreme Court suggested in INS v. Lopez-Mendoza, the fact that the defendant property had been seized after an illegal search does not `immunize' it from forfeiture, any more than a defendant illegally arrested is immunized from prosecution. United States v. Crews, 445 U.S. 463, 474 (1980). See, e.g., United States v. One (1) 1987 Mercury Marquis, 909 F.2d 167, 169 (6th Cir. 1990); United States v. U.S. Currency $31,828, 760 F.2d 228, 230-31 (8th Cir. 1985). Thus, other evidence, legally obtained, may be introduced to establish that the property should be forfeited to the government. United States v. One (1) 1971 Harley-Davidson Motorcycle, 508 F.2d 351 (9th Cir. 1974). In this case the government apparently had no such other evidence and, for that reason, the district court dismissed the action after ordering the cash (and the keys and ledgers) suppressed.

In United States v. One Lot of Currency ($36,634), 103 F.3d 104 (1^st Cir. 1997), the government sought forfeiture of money seized from an alleged drug courier at an airport. The First Circuit held that the seizure did not violate the Fourth Amendment, but in a footnote stated "While evidence seized or gathered in violation of the Fourth Amendment may not be relied on to sustain a forfeiture, it is not the case that Mele's money itself is immune from forfeiture if it was unconstitutionally seized. However, evidence obtained from the money — such as the precise amount Mele was carrying or the dog reaction — could be suppressed if the seizure was unconstitutional." Id. at 1052 n. 3. The First Circuit cited the Eighth Circuit's opinion in $7,850.00, in which the court held "[t]he fact that the monies may have been illegally seized does not immunize them from forfeiture" and cited INS v. Lopez-Mendoza, 468 U.S. 1032, 1039-40 (1984) with the parenthetical "the `identity' of defendant is not itself suppressible as fruit of unlawful arrest." The court continued, "However, the government must show with untainted evidence that probable cause to forfeit exists." $7,850.00, 7 F.3d at 1357.
The Ninth Circuit has consistently held that the fruits of an unlawful seizure, including the forfeitable item, may not be used as evidence during a forfeiture trial. United States v. $191,910.00 in U.S. Currency, 16 F.3d 1051, 1063 (9^th Cir. 1994); United States v. $277,700.00 in U.S. Currency, 941 F.2d 898 (9^th Cir. 1991). The court rejected the government's argument that the money is the nominal defendant and could not be suppressed even if it was obtained as a result of an unlawful seizure, stating that precedent, logic, and common sense precluded the arguments. The court also rejected the government's assertion that INS v. Lopez-Mendoza supported its position, stating that "an examination of the facts" indicated that the Court was not stating that an illegally seized res is admissible for its evidentiary value in a forfeiture proceeding, but merely restating the settled principle that the government can maintain an action against a defendant even if that defendant's presence was unlawfully procured. $191,910.00, 16 F.3d at 1063. The Ninth Circuit expressly disagreed with the dictum and holding of the Eighth and Second Circuits in $12,390.00 and $37,780.00, and noted in a footnote that "the majority of circuits to consider the issue have agreed with the rule . . . adopted in $277,700.00, which requires the suppression of an illegally obtained res." The court then cited earlier dicta by the Eighth Circuit that "[h]ad the money in this case been seized in violation of the fourth amendment, it would have been excluded as evidence at trial but remained subject to forfeiture if the Government could establish probable cause through untainted evidence" in United States v. $91,960.00, 897 F.2d 1457, 1462 n. 5 (8^th Cir. 1990), the D.C. Circuit's decision in United States v. $639,558.00, supra, and some ambiguous language in a Tenth Circuit decision that "[A]ny defects in process used to secure the possession of defendant property may defeat the government's right to possession, inasmuch as the government will be barred from introducing evidence illegally seized in violation of the fourth amendment to prove a claim of forfeiture." United States v. $149,442.43, 965 F.2d 868, 872 (10^th Cir. 1992).
It is not clear what approach the Fifth Circuit would take. In United States v. Monkey, 725 F.2d 1007 (5^th Cir. 1984), the government sought forfeiture of a vessel allegedly used for transporting marijuana. The court stated that it "may assume for this purpose that the seizure of the MONKEY was illegal and that the marijuana sweepings found as a result of the seizure must be excluded. Nevertheless, probable cause to sustain the seizure is provided by the admissions and the collateral estoppel effect of the criminal conviction. Thus, the impropriety of the seizure does not prevent the forfeiture of the vessel to the Government in this case." Though in Monkey the court spoke only of suppressing marijuana sweepings and not the ship itself, the ship was not incriminating and would not be used as evidence in the forfeiture, whereas in this case the money itself is incriminating. See United States v. $9,041,598.68, 163 F.3d 238, 251 (5^th Cir. 1998) (indicating that the respondent money itself would be a proper subject of motion to suppress). The Court need not decide this issue at this time, however, given its conclusion infra that the Government may attempt to develop sufficient untainted evidence. The parties should provide further briefing on this issue if additional motions for summary judgment are filed.

seizure did not jeopardize the government's right to secure forfeiture if the probable cause to seize the item could be supported with untainted evidence. See, e.g., United States v. One 1978 Mercedes Benz, 711 F.2d 1297, 1302-03 (5th Cir. 1983) ("Improper seizure does not jeopardize the government's right to secure forfeiture if the probable cause to seize the vehicle can be supported with untainted evidence."). With the enactment of CAFRA, the Government's burden of proof at trial has increased to a preponderance of the evidence standard rather than probable cause. 18 U.S.C. § 983(c)(1). However, an illegal search and seizure does not immunize goods from forfeiture so long as the Government satisfies its burden of proof by untainted evidence.

Claimant Diaz has filed a motion for summary judgment before the start of discovery claiming that the Government has insufficient evidence to sustain its claim for forfeiture. However, the Court agrees with the Government that section 983(a)(3)(D) disallows such a maneuver in that it prohibits the court from dismissing a case on the ground that the Government did not have adequate evidence at the time the complaint was filed to establish the forfeitability of the property. Because no discovery has yet taken place, Claimant's motion, though entitled a motion for summary judgment, is in effect a motion to dismiss. Moreover, as noted, the Government is entitled to establish forfeitability of the money through untainted evidence, and CAFRA expressly provides that "the Government may use evidence gathered after the filing of a complaint for forfeiture to establish, by a preponderance of the evidence, that property is subject to forfeiture." 18 U.S.C. § 983(c)(2). Thus, based on these provisions, the Court concludes that Claimant's motion is premature and must be denied without prejudice. Claimant may file a second motion for summary judgment after discovery is complete, and may also move to suppress any evidence proffered by the Government, if necessary, at that time.

Diaz's Motion for Protective Order

Diaz seeks a protective order from the United States' discovery requests until such time as this Court rules on the motion for summary judgment. This motion was originally opposed, but the United States has filed a notice stating it no longer opposes the motion. However, because this Court has ruled on the motion for summary judgment, the motion for protective order is dismissed as moot.

United States' Motion to Amend Verified Complaint

The United States seeks leave to amend the verified complaint to add 18 U.S.C. § 981(a)(1)(C) as a basis for forfeiture. The United States asserts that Diaz would not be prejudiced by the amendment because the facts supporting the basis for forfeiture have adequately placed Diaz on notice of the grounds relied upon and because discovery has not yet begun. Though the motion was filed April 12, Claimant has not responded. Accordingly, the Court will grant the motion to amend as unopposed.

Conclusion

For the reasons expressed above, the Court DENIES without prejudice Claimant's Motion for Summary Judgment (docket no. 14); DISMISSES AS MOOT Diaz's motion for protective order (docket no. 15); and GRANTS the United States' Motion to Amend Verified Complaint (docket no. 18).