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United States v. $114

United States District Court, D. Colorado

December 8, 2017

UNITED STATES OF AMERICA, Plaintiff,
v.
$114, 700.00 IN UNITED STATES CURRENCY, Defendant.

          RECOMMENDATION REGARDING CLAIMANT'S MOTION TO DISMISS

          Gordon P. Gallagher, United States Magistrate Judge

         This matter comes before the Court on Claimant's motion to dismiss (ECF #23)[1] (which was referred to this Magistrate Judge (ECF #24))[2], the United States' response (ECF # 31), and Claimant's reply (ECF #38). Further, Claimant raises the same issue by way of an affirmative defense (ECF #15, p. 8, 12th affirmative defense) and this Court originally chose not to issue a recommendation as to the issue in that context (ECF #40, p. 4), preferring to address the matter here where it is more fully briefed.[3] The Court has carefully reviewed each of the aforementioned documents and any attachments. The Court has also considered the entire case file, the applicable law, and is sufficiently advised in the premises. Oral argument was not requested and is not necessary to resolve this issue. For the following reasons, I respectfully recommend that Claimant's motion be DENIED.

         The United States seeks to forfeit Defendant $114, 700.00 in United States currency based on an alleged violation of 21 U.S.C. § 801 et. seq. (ECF #1, p. 1). Claimant moves to dismiss pursuant to Fed.R.Civ.P. 12 “on the basis that the forfeiture statute invoked by [the United States] violates his Due Process rights.” ECF #23, p. 1. Specifically, Claimant urges the Court to find 21 U.S.C. § 881(a)(6) and 18 U.S.C. § 983(c)(1) unconstitutional. Claimant's theory is that Justice Thomas, in Leonard v. Texas, 137 S.Ct. 847 (2017), “in effect succinctly outlined why” the aforementioned statutes are unconstitutional (ECF #23, p. 2) (Justice Thomas, concurring in the denial of certiorari due to failure to raise the issue in the Texas Court of Appeals, in a matter proceeding under the Texas Code, which does not afford a jury trial, and essentially urging “consideration [of the topic] in greater detail.” Leonard, 137 S.Ct. at 850). Claimant goes on to argue that the forfeiture of proceeds of a crime “punishes for that crime, so it should require the government to prove its case beyond a reasonable doubt to comply with the Constitution.” ECF #23, p. 3. Claimant moves the Court to “strike” the offending statutes due to the preponderance standard therein. Id. at 5. Claimant's twelfth affirmative defense (ECF #15, pp. 8-9) and, to some slight extent, Claimant's reply, see ECF #38, pp. 23-24, seek the imposition of a higher burden (Claimant's affirmative defense (4/24/17) urges a “clear and convincing” standard while Claimant's reply (9/18/17) states that a “blanket standard is inappropriate” and requests a beyond a reasonable doubt standard if the statutes are not struck).

         In relevant part, 21 U.S.C. § 881(a)(6) allows for the forfeiture of monies related to drug crimes as defined by the subsection. The general method of proceeding and burden of proof are set forth at 18 U.S.C. § 983. In 2003, Congress enacted the Civil Asset Forfeiture Reform Act (CAFRA) Pub.L. No. 106-185, 114 Stat. 202 (2000) (codified principally at 18 U.S.C. § 983) (reforms include representation (in some circumstances)), § 983(b); codifying the burden of proof at a preponderance standard (rather than the former probable cause standard), [4] § 983(c); and adding an innocent owner defense, § 983(d)). Additionally, a claimant has a jury trial right upon demand. See Rule G(9), Forfeiture Actions in Rem and Fed.R.Civ.P. 38.

         Claimant, who demanded a jury trial in the instant action (ECF #15), challenges the burden of proof arguing that the forfeiture is “punish[ment] for [] crime” thus requiring proof beyond a reasonable doubt in order to comply with the United States Constitution. ECF #23, p. 5. The issue is whether the existing forfeiture rules and regulations, which include a preponderance standard, when looked at as a whole, provide the “fairness and reliability” necessary to comport with due process. See Matthews v. Eldridge, 424 U.S. 319, 343 (1976).

         Crime and Punishment

         Claimant argues that the sought forfeiture essentially acts as a punishment. See Claimant's motion (ECF #23, p. 2). Case law has long recognized that “in rem civil forfeiture is a remedial civil sanction, distinct from potentially punitive in personam civil penalties such as fines, and does not constitute a punishment for double jeopardy purposes.” U.S. v. Ursery, 518 U.S. 267, 268 (1996) (citation removed). The Supreme Court, applying the two-part 89 Firearms test, definitively proclaimed that Congress intended the civil forfeiture statutes in question (or their CAFRA descendants) to be civil in nature. See United States v. One Assortment of 89 Firearms, 465 U.S. 354, 362-62 (1984). “There is little doubt that Congress intended these forfeitures to be civil proceedings.” U.S. v. Gilcrease Lane, Quincy, Fla., 656 F.Supp.2d 87, 89 (D.C. 2009) (quoting from Usery, 518 U.S. at 268). This is crucial, as the Supreme Court has clearly determined that beyond a reasonable doubt is a standard reserved for criminal cases. Addington v. Texas, 441 U.S. 418, 428 (1979). “To the extent that § 881(a)(6) applies to “proceeds” of illegal drug activity, it serves the additional nonpunitive goal of ensuring that persons do not profit from their illegal acts.” Usery, 518 U.S. at 291; see also Austin v. United States, 113 S.Ct. 2801, 2812 (1993) (which is inapposite to the current matter because, in determining that the forfeiture was penal, it was not addressing the forfeiture of property under 881(a)(6) which was acquired by illegal conduct).

         Leonard v. Texas

         Claimant, in support of his argument that there exists a due process violation, relies heavily upon Justice Thomas' pronouncements in the Leonard matter. While in no way discounting the Justice's writing, I must keep context firmly in mind. As noted supra, Justice Thomas was commenting on Texas' forfeiture statute as opposed to CAFRA, which differ in terms of their afforded rights and procedures. And while Justice Thomas' comments can also be read as a more general questioning, perhaps even condemnation “of the broad modern forfeiture practice[s] . . .” Leonard, 137 S.Ct. at 850, they are neither a holding or dicta. Thus, I must look to those cases which have relevant holdings when appraising the fairness of CAFRA. While civil forfeitures have a long history in this country, see e.g., Act of March 2, 1807, ch. 22 §§ 4, 6, 2 Stat. 426; Act of Mar. 22, 1794, ch. 11, § 1, 1 Stat. 347; and Act of Aug. 4, 1790, long usage or historical precedence does not act as a shield from a due process challenge. See Pacific Mutual Life Ins. v. Haslip, 111 S.Ct. 1032, 1054-55 (1991).

         The Matthews Test

         In Matthews v. Eldridge, 424 U.S. 319 (1976), the Supreme Court set forth the following three factors to analyze in determining whether a particular standard of proof satisfies due process: 1) the governmental interest served by the procedure; 2) the individual interest affected by the official action; and 3) the risk of erroneous deprivation and the probable value of additional safeguards. See Santosky v. Kramer, 455 U.S. 745, 758 (1982) (applying the Matthews test in the context of termination of parental rights). This is in keeping with the need to “instruct the factfinder concerning the degree of confidence our society thinks he should have in the correctness of factual conclusions due a particular type of adjudication.” Addington, 441 U.S. at 423.

         1. The Governmental Interest

         As properly noted in the Government's response (ECF #31, p. 3) “the government has a legitimate interest in removing the profits obtained through crime.” See United States v. All Assets and Equip. of W. Side Building Corp., 58 F.3d 1187 (7th Cir. 1995). Common sense dictates that, in a business where human life and freedom seemingly have little worth to the higher-ups, perhaps stripping away some of the profits associated with the noxious and deadly trade will have a chilling effect. “Forfeiture of property prevents illegal uses ... by imposing an economic penalty, thereby rendering illegal behavior unprofitable.” 89 Firearms, 465 U.S. at 364. The Government has a significant interest in deterring the drug trade by forfeiting illegal proceeds, in making such behavior unprofitable, dismantling criminal organizations, and hopefully deterring others who may see that criminal conduct is not always lucrative.

         Admiralty law was an early area of use for in rem civil forfeiture in the United States. See The Palmyra, 25 U.S. 3 (1827) (Justice Story affirmed the forfeiture of the Spanish pirate ship). Pirates were notoriously difficult to prosecute as they were often far outside the Court's jurisdiction, yet the loss of property, the ship, had obvious detrimental effects on the pirates' ability to ply their deadly trade. When piracy morphed into bootlegging as the crime de jour, forfeiture of property used to facilitate that trade became liable for in rem forfeiture. See U.S. v. Two Bay Mules, 36 F. 84, 85 (W.D. N.C. 1888) (however, the forfeiture regime of the time did not have the innocent owner defense enshrined in CAFRA as the court determined that the innocent owner could either try and recoup from the malfeasor or seek government remittance). While not the only modern use of in rem forfeiture, the war on drugs has been a significant driver of forfeitures, ultimately taking shape legislatively ...


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