United States of America v. $27,980.00 in United States Currency
Filing
79
DECISION AND ORDER:(see order for full details). Signed by Judge Sharon L. Gleason on 06/13/2014. (AEM, CHAMBERS STAFF)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
UNITED STATES OF AMERICA,
Plaintiff,
v.
$27,980.00 IN UNITED STATES
CURRENCY,
Defendant.
Case No. 3:11-cv-00109-SLG
DECISION & ORDER
Before the Court at Docket 1 is the Verified Complaint for Forfeiture filed on May
18, 2011. James Porter filed a Claim and an Answer on June 9, 2011. 1 On September
20, 2012, a Default Judgment was entered “against all those persons and entities,
besides James Porter, who could potentially claim an interest in the defendant
property.” 2
An Evidentiary Hearing on Mr. Porter’s claim was held on May 30, 2013 and
May 31, 2013 in Ketchikan, Alaska. 3 At the conclusion of the hearing, the Court left the
record open to permit the submission of certain bank statements and urinalysis testing
results. 4
1
Thereafter, Mr. Porter filed a number of his bank statements. 5
Although
Docket 5 (Porter Claim); Docket 6 (Porter Answer).
2
Docket 19 at 2 (Default Judgment). In Kenda Kline’s Unopposed Second Motion to Intervene,
she indicates that the Government agreed that this default judgment “does not pertain to Kline’s
interest in this cause.” Docket 58 at 2 (Mot. to Intervene).
3
Dockets 76–78 (Hr’g Tr.).
4
Docket 78 at 130–32 (Hr’g Tr.).
5
Dockets 46–48 (Notices of Filing of Bank Statements).
accorded several extensions, 6 Mr. Porter did not file the results of any urinalysis testing.
By Order dated November 25, 2013, the Court ordered the record closed. 7
Meanwhile, in July 2013, Kenda Kline filed an unopposed motion to intervene,
which was granted by Order dated August 1, 2013. 8 On August 7, 2013, Ms. Kline filed
her Answer and Claim. 9
Based on the foregoing, the testimony and exhibits before the Court, and the
arguments of counsel, the Court now makes the following:
FINDINGS OF FACT
1.
The sole basis for Kenda Kline’s claim to the proceeds in this matter arises from
child support arrears due from Mr. Porter to Ms. Kline.
2.
An outstanding Judgment for Child Support Arrears was issued by the Superior
Court for the State of Alaska, First Judicial District at Ketchikan, dated October
12, 2011 in the amount of $95,391.75. Ms. Kline is the judgment creditor; Mr.
Porter is the judgment debtor. 10
3.
Ms. Kline asserts that the child support arrears totaled $95,391.75 in August
2006. 11 At that time, Mr. Porter and Ms. Kline entered into an agreement in
which Mr. Porter would receive an in-kind credit for the full amount of arrears due
6
Dockets 51, 71, 73 (Orders Granting Extensions).
7
Docket 74 (Order Closing Record).
8
Docket 61 (Order Granting Mot. to Intervene).
9
Docket 64 (Kline Answer); Docket 65 (Kline Claim).
10
Docket 65 at 1 (Kline Claim); Docket 66-1 (Judgment for Child Support Arrears).
11
Docket 58-4 at 1 (Kline Decl.).
3:11-cv-00109-SLG, United States v. $27,980
Decision & Order
Page 2 of 12
through the “transfer [of] two limited entry permits to [Ms. Kline] in lieu of paying
the child support arrears of $95,391.75.”12
4.
The Child Support Services Division (CSSD) approved the in-kind credit
agreement. Ms. Kline submitted a declaration in this proceeding in which she
stated that in light of that agreement, she believes that CSSD “released the liens
asserted against [Mr. Porter].”13
5.
Mr. Porter never transferred the limited entry permits to Ms. Kline. As of April 23,
2012, he had not made any payments on the child support judgment. 14
6.
Ms. Kline asserts that she has priority over the United States to the seized funds
because “the accrual of child support arrears [was] prior to the seizure date of
April 12, 2011.”15
7.
Ms. Kline was an unsecured creditor of Mr. Porter at the time the funds at issue
in this case were seized from Mr. Porter.
8.
The Defendant Currency was seized by the Alaska State Troopers on April 11,
2011 from James Porter, incident to Mr. Porter’s arrest in Ketchikan, Alaska for
outstanding State of Alaska arrest warrants.
9.
Most of the seized funds (over $20,000) were found in Mr. Porter’s pocket. They
were wrapped very tightly together with black electrical tape, with the letters “JP”
12
Docket 58-4 at 1 (Kline Decl.).
13
Docket 58-4 at 2 (Kline Decl.).
14
Docket 58-7 at 1 (Writ of Execution).
15
Docket 58 at 4 (Mot. to Intervene). The motion incorrectly notes the seizure date as April 12,
2011 instead of April 11, 2011.
3:11-cv-00109-SLG, United States v. $27,980
Decision & Order
Page 3 of 12
written in white tape on the outside of the package. The electrical tape was quite
clean and lint-free – including the white letter “P” that was visible on Exhibit 2.
This means it is likely that the funds had been recently placed into the taped
package. The remaining funds (over $3,800) were found in Mr. Porter’s wallet. 16
10. Counsel for Mr. Porter suggested the funds had been packaged in the electrical
tape because Mr. Porter was a fugitive at that time. However, there was no
testimony in the record to directly support that inference.
11. Mr. Porter’s tax returns demonstrate the following total income: 2008 -- $110,299;
2009 -- $53,446; 2010 -- $58,445 (Exhibits 10–12).
Mr. Porter’s primary
employment with Dawson Construction ended sometime in approximately
November 2010, and he had not worked after that time up to the date of the
seizure. 17
12. The bank records submitted by Mr. Porter after the evidentiary hearing show the
following transactions over $1,000 beginning in November 2010 through April
2011 (transactions for smaller amounts are not listed)18:
Tongass Federal Credit Union
Date
November 2, 2010
December 7, 2010
December 17, 2010
December 21, 2010
Account Balance Deposits
$21,026.73
Withdrawals
$5,000
$1,450
16
Docket 78 at 94 (Hr’g Tr.).
17
$3,500
Docket 78 at 32 (Hr’g Tr.) (discussing 4/11/11 interview).
18
Dockets 46–48 (Notices of Filing of Bank Statements). The Government was accorded the
option to request a supplemental evidentiary hearing with respect to those records, but did not
do so. See Docket 78 at 132 (Hr’g Tr.).
3:11-cv-00109-SLG, United States v. $27,980
Decision & Order
Page 4 of 12
January 7, 2011
January 13, 2011
March 28, 2011
April 30, 2011
$5,002
$5,000
$1,000
$5,098.04
First Bank Checking Account
Date
November 16, 2010
November 17, 2010
December 7, 2010
December 13, 2010
January 3, 2011
January 5, 2011
February 28, 2011
March 4, 2011
March 8, 2011
March 22, 2011
March 28, 2011
March 28, 2011
March 30, 2011
April 15, 2011
Account Balance Deposits
$797.02
$9,400
$2,295.56
Withdrawals
$2,021.63
$1,639.55
$3,436.35
$2,000
$1,250
$2,000
$1,000
$1,200
$2,000
$1,188.80
$3,393.61
First Bank Savings Account
Date
November 16, 2010
February 2, 2011
April 19, 2011
May 15, 2011
Account Balance Deposits
$3,537.42
Withdrawals
$1,000
$500
$2,040.41
First Bank Joint Account with Mary Schmidt
Date
November 16, 2010
November 17, 2010
December 7, 2010
December 8, 2010
December 9, 2010
December 29, 2010
January 18, 2011
Account Balance Deposits
$153.82
$12,659.64
$1,000
3:11-cv-00109-SLG, United States v. $27,980
Decision & Order
Page 5 of 12
Withdrawals
$6,400.07
$1,107.04
$1,000
$2,042.92
February 1, 2011
March 8, 2011
April 19, 2011
May 15, 2011
$1,405.30
$1,000
$1,960
$2.47
13. These bank records demonstrate that a considerable amount of funds were
deposited into Mr. Porter’s accounts during the time that he was unemployed
from December 2010 through April 2011. At the evidentiary hearing, Mr. Porter
testified that the seized funds “was money I had in my pocket for quite some
time.” He added, “I could show large cash withdrawals from my bank accounts
from First Bank and the credit union.” 19
14. The withdrawals that were taken from Mr. Porter’s accounts in December 2010
and January 2011 could, standing alone, support Mr. Porter’s position that the
seized funds came from his bank accounts and were perhaps from his former
employment or other legal activities. But the subsequent deposits, each $2,000
or less, but together totaling over $10,000 between February 28 and March 28,
2011, are persuasive evidence that Mr. Porter, who was then unemployed, was
then generating significant income from an unspecified source. 20
19
Docket 78 at 26 (Hr’g Tr.).
20
Although Mr. Porter indicated he had sold copper to generate income on occasion, the Court
was persuaded by his statements at his interview with Investigator Brown on April 11, 2011 that
he was driving around with the copper in his truck at that time and had not yet sold it. And while
there was various testimony regarding vehicle sales at various times, those sales primarily
occurred in the summer of 2010. No persuasive evidence of vehicle sales in early 2011 was
presented to explain the substantial cash deposits at that time.
3:11-cv-00109-SLG, United States v. $27,980
Decision & Order
Page 6 of 12
15. Special Agent Rambo persuasively testified that drug traffickers try to avoid
conspicuous large cash deposits with banks or other financial institutions. 21 Mr.
Porter’s smaller but frequent deposits in March 2011 are consistent with this
pattern.
16. Included within the money inside the electrical tape were two deposit slips dated
March 28, 2011 that correspond to two of the deposits that were made into Mr.
Porter’s accounts on that day (Exhibits 5 & 6). This evidence supports a finding
that the funds in the electrical tape package were earnings from that same time
frame.
17. Special Agent Rambo also persuasively testified that the way the currency was
tightly packaged inside the electrical tape was consistent with proceeds of drug
trafficking. 22
18. John Brown, the investigator with the Alaska State Troopers who spoke to Mr.
Porter on April 11, 2011 when the funds were seized, persuasively testified that
he told Mr. Porter he could return with paperwork to support his claims that the
funds were legitimately earned, but that Mr. Porter never did. 23
19. The Government called Howard Falkner as a witness at the evidentiary hearing.
Mr. Falkner testified that he knew Mr. Porter from dealing drugs in Ketchikan.
Mr. Falkner testified from prison and indicated that he was incarcerated for
dealing methamphetamine.
21
Docket 78 at 47 (Hr’g Tr.).
22
Docket 78 at 49–50 (Hr’g Tr.).
23
Although Mr. Falkner’s testimony has been viewed
Docket 78 at 108–09 (Hr’g Tr.).
3:11-cv-00109-SLG, United States v. $27,980
Decision & Order
Page 7 of 12
by the Court with suspicion, given his criminal history and cooperation
arrangements with prosecuting authorities, the Court accorded some weight to
his testimony that he purchased methamphetamine from Mr. Porter on at least
two occasions in early to middle 2011, particularly as he specified a location of
the transactions that was consistent with other evidence in the record. 24
20. Stevie Lea Hyke, the spouse of Mr. Falkner, also testified. She persuasively
testified about observing methamphetamine sales by Mr. Porter in December
2010, including observing Mr. Porter acquiring large amounts of cash ($6,000)
from those drug sales.
21. Rayme Vinson, a drug investigator and drug canine handler, testified at the
evidentiary hearing. He persuasively testified as to how the canine, Justice, from
Juneau, was trained to detect the smell of certain illegal drugs, and alerted to the
presence of such drugs at the piles of money that had been seized from Mr.
Porter on April 11, 2011. 25
22. K.C. testified under seal. This witness was understandably quite emotionally
distraught. Perhaps because of that high level emotion, the dates this witness
provided were inconsistent with the dates provided by other witnesses for certain
actions. Accordingly, this Court did not accord weight to K.C.’s testimony.
24
Docket 76 at 14–21 (Hr’g Tr.).
25
There was also evidence that another drug dog from Ketchikan had first sniffed at the money
and did not alert. This Court accorded no weight to this fact, as it was persuaded by the
testimony that this dog was inexperienced and money can be challenging to smell, since it often
has been handled so much.
3:11-cv-00109-SLG, United States v. $27,980
Decision & Order
Page 8 of 12
23. Mr. Porter called several witness to testify at the evidentiary hearing. 26 However,
their testimony was based on their interactions with Mr. Porter when he was at
Metlakatla. Since the Court finds that Mr. Porter left Metlakatla in approximately
November 2010, these witnesses were not able to provide helpful evidence as to
Mr. Porter’s activities after that time.
CONCLUSIONS OF LAW
1.
This is a civil forfeiture action brought pursuant to 21 U.S.C. § 881(a)(6).
2.
The Court has jurisdiction over this action pursuant to 28 U.S.C. §§ 1345 and
1355.
3.
An unsecured creditor of a claimant lacks standing to challenge the forfeiture of
funds seized pursuant to 18 U.S.C. § 881(a)(6). See United States v. $38,852.00
in U.S. Currency, 328 F. Supp. 2d 768, 769 (N.D. Ohio 2004).
4.
In a civil forfeiture action, the claimant to the property must have standing in
order to challenge the forfeiture. Untied States v. Carrell, 252 F.3d 1193, 1196
n.2 (11th Cir. 2001) (creditor with child support judgment against claimant could
not enforce judgment against seized proceeds in forfeiture proceeding because
as non-owner of property, she lacked standing).
5.
A civil forfeiture claimant demonstrates Article III standing by showing she has a
“colorable interest in the property, which includes an ownership interest or a
possessory interest” in the specific seized property. United States v. $133,420 in
U.S. Currency, 672 F.3d 629, 637–38 (9th Cir.2012) (citation omitted) (internal
26
These witnesses included Trinity Carroll Jackson, Christopher Dowling, and Timothy
Kuharich.
3:11-cv-00109-SLG, United States v. $27,980
Decision & Order
Page 9 of 12
quotation marks omitted).
General unsecured creditors of the person whose
property was seized lack a sufficient property interest to have standing to
challenge the government's civil forfeiture.
See 18 U.S.C. § 983(d)(6)(B)(i)
(excluding “a person with only a general unsecured interest in, or claim against,
the property or estate of another” from the definition of “owner”); see also United
States v. One Hundred Thirty-Three (133) U.S. Postal Serv. Money Orders
Totaling $127,479.24 in U.S. Currency, 496 Fed. App’x 723, 724 (9th Cir. 2012);
United States v. $20,193.39 U.S. Currency, 16 F.3d 344, 346 (9th Cir.1994)
(“[U]nsecured creditors do not have standing to challenge the civil forfeiture of
their debtors' property.”).
6.
Based on the foregoing, Kenda Kline lacks standing to challenge the
government’s civil forfeiture of the funds seized from Mr. Porter in this action
because she was an unsecured creditor at the time the property was seized.
Accordingly, her claim will be denied.
7.
Turning to Mr. Porter’s claim, the burden of proof is on the Government to
establish, by a preponderance of the evidence, that the property is subject to
forfeiture. See 18 U.S.C. § 983(c)(1).
8.
Here, the Government’s alternative theories of forfeiture are that the seized
currency was either the proceeds of drug trafficking, or that the seized currency
was used or intended to be used to commit or facilitate the commission of illegal
drug trafficking. 27 Under the second theory, the Government must establish by a
preponderance of the evidence that there was a substantial connection between
27
Docket 78 at 137–38 (Hr’g Tr.).
3:11-cv-00109-SLG, United States v. $27,980
Decision & Order
Page 10 of 12
the seized currency and illegal drug activity. See 18 U.S.C. § 983(c); 21 U.S.C. §
881(a)(6); see also United States v. $22,474.00 in U.S. Currency, 246 F.3d 1212,
1217 (9th Cir. 2001) (“[Appellant's] inconsistent statements about the money and
his reasons for being in Phoenix tend[] to support an inference that the money
was drug-related.”); United States v. $29,959.00 U.S. Currency, 931 F.2d 549,
553 (9th Cir. 1991) (having large amount of cash is “strong evidence” of
connection to illegal drug activity); United States v. $215,300 U.S. Currency, 882
F.2d 417, 419 (9th Cir.1989) (concealing and lying about a large amount of
money supports inference that money is related to narcotics trafficking).
9.
The evidence demonstrated that over the years, Mr. Porter has earned a
considerable amount of income through legal means and has paid taxes on that
income. However, while Mr. Porter attempted to show legitimate sources for the
seized money, he failed to present a cogent and consistent explanation for its
origin. Also, there was no witness who testified that they had seen Mr. Porter
carry legitimately-earned currency in the manner in which much of this currency
was found – tightly wrapped in electrical tape with his initials on it.
10. The quantity of currency, the packaging, the lack of a clear and verifiable
explanation for the currency’s source or use, and the positive alert by the Juneau
canine together constitute persuasive evidence that the seized funds were used
or intended to be used to commit or facilitate the commission of drug trafficking
activity. See generally United States v. Currency, U.S. $42,500, 283 F.3d 977
(9th Cir. 2002).
3:11-cv-00109-SLG, United States v. $27,980
Decision & Order
Page 11 of 12
11. Based upon the findings of fact set forth above, the Court concludes that the
government has established by a preponderance of the evidence that the seized
currency was used or intended to be used to commit or facilitate the commission
of illegal drug trafficking. In this regard, the Court finds by a preponderance of
the evidence that there was a substantial connection between the seized
currency and illegal drug activity.
ORDER
Based on the foregoing, IT IS ORDERED:
1. The claim of Kenda Kline to the seized funds is DENIED.
2. The claim of James Porter to the seized funds is DENIED.
3. The United States’ Complaint for civil forfeiture is GRANTED.
4. The United States is entitled to a judgment declaring the $27,980.00 forfeited
to the United States for disposition according to the law.
5. The United States shall submit a proposed judgment consistent with this
Decision and Order within 7 days.
DATED at Anchorage, Alaska this 13th day of June, 2014.
/s/ Sharon L. Gleason
UNITED STATES DISTRICT JUDGE
3:11-cv-00109-SLG, United States v. $27,980
Decision & Order
Page 12 of 12
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?