THE FEDERAL CORNER
October 2006
Forfeitures Continue to be a Hot Topic
F. R. (Buck) Files, Jr.
The government has won yet another forfeiture case. This time, it was on appeal rather than in the district court. A divided panel of the Eighth Circuit [Circuit Judges Colloton, Arnold and Lay (dissenting)] reversed the judgment of the district court which, after a bench trial, had ruled in favor of the claimants. United States v. $124,700 in U.S. Currency [Claimants: Manuel Gomez, Andres Madrigal Morgan and Emiliano Gonzalez] __ F.3d ___, 2006 WL 2381490 (8th Cir. 2006).
What caught my eye was a part of the dissenting opinion by Judge Lay:
…I note that no drugs, drug paraphernalia, or drug records were recovered in connection with the seized money. There is no evidence claimants were ever convicted of any drug-related crime, nor is there any indication the manner in which the currency was bundled was indicative of drug use or distribution. At most, the evidence presented suggests the money seized may have been involved in some illegal activity-activity that is incapable of being ascertained on the record before us.
Nebraska State Patrol Trooper Chris Bigsby had stopped Emiliano Gonzolez for exceeding the posted speed limit. At Bigby’s request, Gonzolez produced a Nevada driver’s license and a rental contract for the automobile which he was driving; however, the rental contract was not in Gonzolez’s name and he was not listed as an additional driver.
Gonzolez told Bigsby that he had been in Chicago for three days and that a man named “Luis” had rented the automobile for him; however, “Luis’s” name was not on the rental agreement. When asked by Bigsby whether he had ever been arrested or placed on probation or parole, Gonzolez stated that he had not. A computer check of Gonzolez’s license revealed that he had been arrested for driving while intoxicated. After further questioning, Gonzolez admitted this arrest. When asked whether he had any alcohol, guns, marijuana, methamphetamine, heroin or large amounts of cash in the car, Gonzolez stated that he did not.
Gonzolez eventually consented to a search of his automobile. The only item which the officers found was a large plastic bag that contained seven bundles wrapped in rubber bands inside aluminum foil packaging. These bundles contained a total of $124,700 in currency. Gonzolez was taken to the Nebraska State Patrol Office in Lincoln. A drug dog was brought in to sniff the exterior of the automobile, and the dog alerted to the rear passenger side of the vehicle. The currency taken from the vehicle was then placed on the ground and a separate stack of seven bills, borrowed from other troopers, was placed nearby. Rico the Wonder Dog alerted to the currency taken from the automobile but not to the bills borrowed from the troopers.
The government initiated civil forfeiture proceedings against the currency, alleging that the money was subject to forfeiture as the proceeds of a drug transaction or as property used to facilitate the possession, transportation, sale, concealment, receipt or distribution of a controlled substance.
At trial, the government argued that Rico’s alert, together with the large amount of cash that was seized, together with the circumstances of Gonzolez’s travel and his initial false denials that he was carrying cash or that he had a criminal history showed that the currency was substantially connected to a drug transaction. Claimants Gonzolez, Gomez and Morgan argued that the cash was acquired legitimately. Gomez testified that he had given Gonzolez $65,000 in cash (which was a combination of money that he had borrowed from his father-in-law and his own personal savings) with the expectation that Gonzolez would help him buy a refrigerated truck for the produce business. Gonzolez testified that he had $40,000 of his own money plus $20,000 from Morgan as an investment in Gomez’s truck. Morgan testified that he had contributed $20,000 (which he had received from the sale of a vehicle) to Gonzalez’s investment in the truck.
Gonzolez testified that, after he had pooled the cash from Morgan and Gomez with his own, he heard from a friend in Chicago that a “…truck might be available there from a friend of the friend…” He then flew to Chicago, taking the cash with him in a small carry-on bag. When he got to Chicago, he learned that the truck had been sold. Gonzolez also testified that this unidentified friend told him that it was “bad” to carry more than $10,000 in cash on his person. Gonzolez testified that he was afraid to carry his cash back to California by plane and decided to rent a car; however, because neither he nor his unidentified friend had a credit card, a third individual rented the car for him.
Gonzolez testified that he hid the money in a cooler because of a fear that he might be assaulted or have the money stolen if it were readily observable. He also admitted that he had lied about the money and about the names of the other parties involved because he believed that carrying large sums of cash might be illegal and he didn’t want to get his friends in trouble. He also testified that he didn’t believe that driving while intoxicated was a crime.
United States Magistrate Judge Thomas D. Thalken of the United States District Court for the District of Nebraska concluded that the government had not established, by a preponderance of the evidence, that there was a substantial connection between the money and a drug trafficking offense. Judge Thalken noted that large sums of unexplained currency can be evidence of drug trafficking and acknowledged that, in this case, the money was bundled in an unusual manner. He concluded, though, that the claimants had given a “… plausible and consistent explanation for [the money’s] origin and intended use,” and that “the bundling is consistent with an attempt to sort the currency by contributor and conceal the currency from would-be thieves” and not just to evade law enforcement. Judge Thalken also considered Rico’s alert to the currency, the circumstances and route of Gonzolez’s travel and the fact that Gonzolez had lied about the names of his friends and other details; however, he did not believe that this evidence, taken together with the other circumstances, including all of the claimants’ lack of significant criminal history, established a substantial connection to drug activity.
The judges of the Eighth Circuit disagreed. Judge Colloton’s opinion reads, in part, as follows:
The district court's opinion includes no finding as to the credibility of Gonzolez and the other two claimants. The court did observe that the explanations of the claimants were ‘plausible and consistent,’ but this is different from a finding that the court actually believed the testimony. ‘Plausible’ means ‘apparently acceptable or trustworthy (sometimes with the implication of mere appearance),’ see Shorter Oxford English Dictionary 2238 (5th ed.2002), and we thus read the district court's opinion to hold that given a ‘plausible and consistent’ explanation from the claimants on one side of the balance, the government's countervailing proof was not strong enough to meet its burden of showing a substantial connection by a preponderance of the evidence.
On de novo review, we respectfully disagree and reach a different conclusion. We believe that the evidence as a whole demonstrates by a preponderance of the evidence that there was a substantial connection between the currency and a drug trafficking offense. Possession of a large sum of cash is ‘strong evidence’ of a connection to drug activity, $84,615 in U.S. Currency, 379 F.3d at 501-02, and Gonzolez was carrying the very large sum of $124,700. The currency was concealed in aluminum foil inside a cooler, and while an innocent traveler might theoretically carry more than $100,000 in cash across country and seek to conceal funds from would-be thieves on the highway, we have adopted the common-sense view that bundling and concealment of large amounts of currency, combined with other suspicious circumstances, supports a connection between money and drug trafficking. $117,920.00 in U.S. Currency, 413 F.3d at 829. The canine alert also supports the connection. Id.
The route and circumstances of Gonzolez's travel were highly suspicious. Gonzolez had flown on a one-way ticket, which we have previously acknowledged is evidence in favor of forfeiture, see United States v. U.S. Currency in the Amount of $150,660.00, 980 F.2d 1200, 1206 (8th Cir.1992), and he gave a vague explanation, attributed to advice from an unidentified third person, about why he elected to return by car. Gonzolez purportedly carried $125,000 in cash with him on his flight, for the purpose of buying a truck that he had never seen, from a third party whom he had never met, with the help of a friend whose name he could not recall at trial. This testimony does not inspire confidence in the innocence of the conduct. When he was stopped by the Nebraska State Patrol, Gonzolez was driving a rental car that was leased in the name of another person who was not present, another circumstance that gives rise to suspicion. Then, when Gonzolez was questioned by officers, he lied about having money in the car and about the names of his friends, thus giving further reason to question the legitimacy of the currency's presence. See $117,920.00 in U.S. Currency, 413 F.3d at 829. The totality of these circumstances-the large amount of concealed currency, the strange travel pattern, the inability to identify a key party in the purported innocent transaction, the unusual rental car papers, the canine alert, and the false statements to law enforcement officers-leads most naturally to the inference that Gonzolez was involved in illegal drug activity, and that the currency was substantially connected to it.
While the claimants' explanation for these circumstances may be ‘plausible,’ we think it is unlikely. We therefore conclude that the government proved by a preponderance of the evidence that the defendant currency was substantially connected to a narcotics offense. Accordingly, we reverse the judgment of the district court and remand for further proceedings.
Should this case come as a surprise to us? Of course not. This past year, the United States Court of Appeals for the Fifth Circuit affirmed the judgment of the trial court in two forfeiture cases which are worth reading
- United States v. Juluke, 426 F.3d 323 (5th Cir. 2005) – The government was successful in forfeiting the defendant’s residence where there was evidence that drugs had been kept in the defendant’s car which was parked in his driveway. There was no evidence that the defendant had kept these or any other drugs in his residence.
- United States v. Betancourt, 422 F.3d 240 (5th Cir. 2005) – The government was successful in forfeiting the defendant’s portion of his Texas Lottery winnings: $5,481,462.91. The only evidence connecting this money to drug activities was testimony that he retrieved the $10.00 used to purchase the winning ticket from the same black bag in which he kept the proceeds from his drug transactions. [The Court also noted that Appellant’s argument that the district court violated his Eighth Amendment right against excessive fines when it entered its order of forfeiture confuses forfeitures with fines and has no merit.]
In some cases, United States attorneys are no longer satisfied with plea agreements containing paragraphs which stipulate the amount of restitution which should be ordered by the district court at sentencing. Recently, I had to agree to forfeiture provisions in plea agreements in order to get a cap on sentencing for one client and a § 5K1.1 downward departure recommendation for another. It is my understanding that assistant United States attorneys are now required to indicate -- on whatever form they use when opening a case -- whether they are recommending pursuing a forfeiture action.
If you are regularly representing defendants in criminal matters in the United States district courts and have not yet had a significant forfeiture issue, be patient. One will probably be on your horizon soon.
