USA v. 5910 South Ogden Court

Filing 56

ORDER. ORDERED that the United States Motion for Summary Judgment 33 , is GRANTED. Defendant Ogden Court is hereby forfeited to the United States. ORDERED that both the final trial preparation conference set for March 4, 2013 and the jury trial set for March 18, 2013 are VACATED by Chief Judge Wiley Y. Daniel on 12/20/12.(jjhsl, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Chief Judge Wiley Y. Daniel
Civil Action No. 10-cv-02539-WYD-MEH
UNITED STATES OF AMERICA,
Plaintiff,
v.
5910 SOUTH OGDEN COURT,
Defendant.
ANA OROZCO,
Claimant.

ORDER

I.

INTRODUCTION
THIS MATTER is before the Court on the United States’ Motion for Summary

Judgment (ECF No. 33), filed March 19, 2012. The United States seeks summary
judgment on its claim against Defendant 5910 South Ogden Court (“Defendant Ogden
Court”), alleging that Defendant Ogden Court is subject to forfeiture under 21 U.S.C.
§ 881(a)(6). On April 10, 2012, Claimant Ana Orozco (“Claimant”) filed her Response
(ECF No. 38) to the United States’ motion indicating that a genuine issue of material
fact exists as to whether Defendant Ogden Court is properly subject to forfeiture. The
United States filed a Reply (ECF No. 41) on April 23, 2012.
On April 9, 2012, Claimant’s Motion for Leave to Amend Answer Pursuant to
Fed. R. Civ. P. 15(a)(2), (ECF No. 35), was filed in order to properly assert the

Claimant’s innocent owner defense. Magistrate Judge Michael E. Hegarty
recommended that Claimant’s motion be denied. (ECF No. 42, Recommendation at 1).
Further, the parties were advised that written objections were due within fourteen (14)
days after service of a copy of the Recommendation. However, no objections were
filed. I affirmed and adopted the Recommendation and the Claimant’s motion was
denied. (ECF No. 55). For the reasons discussed below, the United States’ Motion for
Summary Judgment is granted.
II.

FACTUAL BACKGROUND
By way of background, on October 18, 2010, the United States initiated this in

rem forfeiture action against Defendant Ogden Court under 21 U.S.C. § 881(a)(6),
alleging that it was purchased with drug proceeds. The facts material to my analysis
are set forth below. I have, however, reviewed and considered all the admissible facts
and evidence.
A.

Drug Trafficking Organization

In 2007, Gregory Montgomery (“Mr. Montgomery”) and Daniel Russell Valdez
(“Mr. Valdez”) were arrested in Kansas after a Kansas Highway Patrol Officer found 24
kilograms of cocaine hidden in the gas tank of their vehicle. At the time of the arrest Mr.
Montgomery and Mr. Valdez were driving a 2003 Land Rover owned and registered to
Joseph S. Torrez, III (“Mr. Torrez”). Following their arrest, Mr. Montgomery and Mr.
Valdez stated that they were travelling from Denver, Colorado to Atlanta, Georgia, to
transport cocaine for a Drug Trafficking Organization (“DTO”) headed by Samuel
Orozco (“Mr. Orozco”). Mr. Montgomery was recruited in 2006 and transported cocaine
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approximately eight to ten times for the DTO before being arrested in Kansas. Mr.
Torrez also admitted to his involvement in the DTO. He was recruited around 2001 and
served as both a driver and purchaser of vehicles, with funds supplied by Mr. Orozco,
used to transport cocaine. On at least six occasions after transporting cocaine for the
DTO, Mr. Torrez dropped off load vehicles at Defendant Ogden Court. After further
investigation, Benerito Abel Marquez (“Mr. Marquez”) was identified as another
participant in the DTO. Mr. Marquez told the investigating agents that he was recruited
by Mr. Orozco in 2006 while conducting remodeling work on Mr. Orozco’s home,
Defendant Ogden Court. Mr. Marquez further asserted that he delivered drugs for the
DTO and provided security services for Mr. Orozco in both Atlanta, Georgia and Mexico.
In or around May of 2007, the United States opines that Mr. Orozco fled to
Mexico after learning of this criminal investigation. Shortly thereafter, Mr. Orozco was
indicted in the United States District for the District of Colorado with Conspiracy to
Import Cocaine Internationally, Conspiracy to Possess with Intent to Distribute Cocaine,
Possession with Intent to Distribute Cocaine, and Money Laundering. A warrant for
arrest was issued, however, Mr. Orozco has yet to be apprehended. Mr. Valdez and
Mr. Torrez have plead guilty to Conspiracy to Possess with Intent to Distribute 5
Kilograms or More of Cocaine and Possession with Intent to Distribute 5 Kilograms or
More of Cocaine. Mr. Marquez has plead guilty to Conspiracy to Possess with Intent to
Distribute 5 Kilograms or More of Cocaine. In sum, the United States asserts that the
DTO was responsible for distributing approximately 960 kilograms of cocaine between
April 2000 and December 2007.
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B.

Defendant Ogden Court Mortgage

On November 9, 2000, the Claimant and her husband, Mr. Orozco,
purchased Defendant Ogden Court for $850,000. A down payment of approximately
$230,000 was made and the remaining balance was financed. An additional earnest
payment of $25,000 was applied and the mortgage payments amounted to
approximately $3000 per month. The Claimant, however, is uncertain as to the origin of
funds used to make these initial payments. She has also been unaware of the details of
the Defendant Ogden Court mortgage until reviewing the United States’ motion
regarding its status.
On April 1, 2004, Defendant Ogden Court was refinanced and the property was
placed in Mr. Orozco’s name only. Approximately two years later, in the course of
marriage dissolution negotiations, Mr. Orozco quit-claimed his ownership interest in
Defendant Ogden Court to the Claimant, leaving only the mortgage loan in his name.
Between 2004 and 2011, approximately $522,039.93 was applied to the Defendant
Ogden Court mortgage through Wells Fargo account #9402 and JP Morgan
Chase/Washington Mutual bank account #6938. Starting in April 2008, bank records
reveal that Defendant Ogden Court mortgage payments were made with funds
originating outside the United States. These funds were electronically routed from
various banks in Mexico, to include HHBC and BBVA Bancomer, and were ultimately
applied to the Defendant Ogden Court mortgage through Mr. Orozco’s account #6938.
The Claimant states that her involvement in the mortgage payment extended
from the time Defendant Ogden Court was purchased, in November 2000, until 2006.
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From January 2006 through September 2011, during which the Claimant had no
involvement in the mortgage payment, a total of $427,039.93 was applied to the
Defendant Ogden Court mortgage.
C.

Orozcos’ Finances & Tax Reporting

Between 2000 and 2007, the Claimant was a fulltime mother and did not receive
any W-2 wages between 2003 and 2007. In 2004 and in 2006, subpoenaed purchase
agreements show that the Claimant purchased vehicles for $62,188.09 and $68,314.50
respectively. Initially, both vehicles were partially financed, but were paid off in full
shortly after the purchase dates. The credit applications on both subpoenaed purchase
agreements also reveal that the Claimant was employed by Colorado Lending Group 1
LLC with an annual salary of $72,000. However, though the Claimant acknowledges
that Mr. Orozco, at some point, had a business called Colorado Lending Group, she
asserts that she was never involved in Mr. Orozco’s businesses.
Moreover, the claimant identified her employment history in her interrogatory
answers. From 1988 to 2000, the Claimant made $36,000 per year as a hotel Assistant
Manager. In 2007, she made between $2000 and $3000 as a caterer and free-lance
pastry chef. From January to November of 2008, she was a General Manager at Panda
Express salaried at $42,000 per year. From February through July of 2009, she worked
as an Office Administrator for Las Huertas and made $2000 per month. Finally, from
November of 2010 to present, she has worked as an Office Administrator for Carova
Plastics and is salaried at $45,000 per year.
From 2000 to 2002, the Orozco’s reported combined federal taxable income
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losses of $297,226. In 2003, they reported a combined taxable income of $3785. They
did not file in 2004, and in 2005 they reported a combined federal taxable income of
$48,547.
III.

STANDARD OF REVIEW
A.

Summary Judgment

Pursuant to Rule 56(a) of the Federal Rules of Civil Procedure, “[t]he court shall
grant summary judgment if the movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a). “When applying this standard, the court must view the evidence and draw all
reasonable inferences therefrom in the light most favorable to the party opposing
summary judgment.” Atlantic Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d
1138, 1148 (10th Cir. 2000) (quotation omitted). All doubts must be resolved in favor of
the existence of triable issues of fact. Boren v. Southwestern Bell Tel. Co., 933 F.2d
891, 892 (10th Cir. 1991).
B.

Forfeiture

An in rem forfeiture proceeding is brought under the “legal fiction” that property
itself is criminally at fault or is the progeny of criminal works. United States v. One
Hundred Forty-Nine Thousand Four Hundred Forty-Two & 43/100 Dollars ($149,442.43)
in U.S. Currency, 965 F.2d 868, 876 (10th Cir. 1992). A criminal conviction is not a
precondition to a forfeiture proceeding, however, forfeiture proceedings generally
involve property that has been subject to, or associated with criminal activity. United
States v. $13,000.00 in U.S. Currency, 2007 Black Dodge Ram SRT Pickup, VIN
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1D7HA18257S120375, 858 F. Supp. 2d 1194, 1198 (D. Colo. 2012). The standard for
forfeiture is that the government has the initial burden of demonstrating probable cause
that a substantial connection exists between the property and the underlying criminal
activity. One Hundred Forty-Nine Thousand Four Hundred Forty-Two & 43/100 Dollars
($149,442.43) in U.S. Currency, 965 F.2d 868, 876 (10th Cir. 1992). The burden then
shifts to the claimant to establish by a preponderance of the evidence that the property
did not derive from illegal drug activity or that she did not know about or consent to the
illegal drug activity. Id. A dispute concerning facts that are material in nature “must be
‘genuine.’” Clifton v. Craig, 924 F.2d 182, 183 (10th Cir. 1991). Specifically, the nonmoving party must show sufficient evidence that is specific and factual, for a reasonable
jury to find in its favor. Id. To rely on assertions or “denials in the pleadings” is not
sufficient. Id.
If, upon rebuttal, the claimant is unable to demonstrate that the property was not
involved in drug activity, a showing of probable cause alone will support a judgment for
forfeiture. Id. (citing United States v. One Red Ferrari, 875 F.2d 186, 188 (8th Cir.
1989)); see also United States v. The Premises and Real Property at 4492 South
Livonia Road, 889 F.2d 1258, 1267 (8th Cir. 1989) (where a claimant introduces no
such rebuttal evidence, summary judgment may be granted for the government solely
upon a showing of probable cause).
IV.

ANALYSIS
The United States contends that in rem forfeiture against Defendant Ogden Court

is proper under 21 U.S.C. § 881(a)(6), alleging that it was purchased with drug
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proceeds. For the reasons discussed below, I agree.
A.

Whether Defendant Ogden Court is Subject to Forfeiture

Under 21 U.S.C. § 881(a)(6), items of value are qualified for forfeiture when: “(1)
furnished or intended to be furnished in exchange for a controlled substance, (2)
traceable to a controlled substance exchange, or (3) used or intended to be used to
facilitate a violation of the Controlled Substances Act.” U.S. v. $148,840.00 in U.S.
Currency, 521 F.3d 1268, 1270 (10th Cir. 2008). When considering evidence relating to
drug transactions, “the court eschew[s] clinical detachment and endorse[s] a common
sense view to the realities of normal life applied to the totality of the circumstances.”
$13,000.00 in U.S. Currency, 2007 Black Dodge Ram SRT Pickup, VIN
1D7HA18257S120375, 858 F. Supp. 2d at 1199.
The first significant examination under the probable cause analysis is evidence of
Mr. Orozco’s involvement in the DTO. For example, the United States contends that
convicted members of the DTO, including Mr. Torrez, Mr. Montgomery, Mr. Valdez, and
Mr. Marquez, have identified Mr. Orozco as the leader of their drug trafficking business.
In particular, the United States asserts that these DTO members stated that they were
recruited by Mr. Orozco as load car drivers and/or for security purposes, and were paid
in either cash or cocaine for their services. Mr. Torrez was recruited around 2001 and
dropped off load vehicles at Defendant Ogden Court on at least six occasions after
transporting cocaine for the DTO. Mr. Montgomery was recruited in 2006 and
transported cocaine approximately eight to ten times for the DTO before being arrested
in Kansas. Mr. Valdez accompanied Mr. Montgomery when they were arrested in
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Kansas and confessed that they were transporting cocaine for the DTO. Finally, Mr.
Marquez was recruited in 2006. He served as a load car driver and as an unarmed
security guard on several occasions.
Further, financial records tend to show that the Orozcos’ could not have
purchased Defendant Ogden Court without the alleged drug proceeds. On November
9, 2000, the Claimant and her husband, Mr. Orozco, purchased Defendant Ogden Court
for $850,000. The Orozcos’ applied a down payment of approximately $230,000 and an
earnest payment of approximately $25,000, bringing their mortgage payments to
approximately $3,000 per month. When applying a common sense view to the realities
of normal life to these circumstances, the Orozcos’ would need a substantial source of
yearly income in order to afford the Defendant Ogden Court mortgage. However,
subpoenaed financial records demonstrate otherwise. For instance, while there is no
evidence attributing Mr. Orozco’s alleged wealth to anything other than the DTO, the
Claimant’s source of income alone could not have sustained the Defendant Ogden
Court mortgage. Two subpoenaed vehicle purchase agreements suggest the
Claimant’s source of income. Each agreement lists “Colorado Lending Group 1 LLC” as
the Claimant’s place of employment with an annual salary of $72,000. The Claimant,
however, asserts that Mr. Orozco had a business called Colorado Lending Group, but
that she was never involved in his businesses. (ECF No. 33-3, at p. 3, ¶ 2). Further, the
Claimant’s interrogatory answers reveal that she could not have initially purchased or
sustained the Defendant Ogden Court mortgage on her income alone.
Additionally, the Orozcos’ federal tax report figures are inconsistent with a
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common sense view of the type of income needed to afford the Defendant Ogden Court
mortgage. For example, from 2000 to 2002, the Orozco’s reported combined federal
taxable income losses of $297,226. In 2003, they reported a combined taxable income
of $3785. In 2004, they did not file and in 2005 they reported a combined federal
taxable income of $48,547. Again from a commonsensical perspective, these figures
are not in line with the realities of sustaining a $3000 monthly mortgage payment and
purchasing two vehicles valued at $62,188.09 and $68,314.50; particularly when no
evidence is offered to counter the commonsense view of the circumstances.
Based on the facts alleged, I find that the United States has shown by a
preponderance of the evidence that Defendant Ogden Court was purchased with drug
proceeds. Considering the totality of the circumstances, there is probable cause to
believe that Defendant Ogden Court was purchased with proceeds traceable to illegal
drug activity. See United States v. $242,484.00, 389 F.3d 1149, 1160 (11th Cir. 2004).
Evidence obtained during the course of the United States’ investigation corroborates its
assertion that Defendant Ogden Court was purchased with drug proceeds.
Accordingly, the burden shifts to the Claimant to produce specific and factual
evidence demonstrating that Defendant Ogden Court is not subject to forfeiture. To
rebut the United States’ claim, the Claimant states in her Answer that she “has
insufficient information at this time to admit or deny [these] allegations and therefore
denies the same” and/or invokes her 5th Amendment right against self-incrimination.
(ECF No. 15). In her Response, the Claimant asserts that no reliable evidence tends to
establish that Defendant Ogden Court was purchased with drug proceeds, or that she or
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Mr. Orozco were involved in any crime. (ECF No. 38, at 11). However, the Claimant
has not brought forth a genuine dispute. She fails to show sufficient specific and factual
evidence for a reasonable jury to find in her favor. See Clifton, 924 F.2d at 183.
Further, she merely relies on assertions and denials in the pleadings, which is
insufficient to rebut a forfeiture claim. Id.
In view of that, I find the Claimant’s response unpersuasive. She has failed to
show sufficient specific and factual evidence to rebut the United States’ assertions.
Accordingly, since the Claimant has failed to sufficiently rebut the United States’
corroborated contention that Defendant Ogden Court was purchased with drug
proceeds, I conclude that Defendant Ogden Court is subject to forfeiture.
B.

Whether Claimant would have Prevailed on an Innocent Owner Defense

I next look at the merits of an innocent owner defense, despite its inartful
omission from the Claimant’s Answer to the United States’ Complaint. As detailed in
the introduction, the Claimant’s attempt to amend her Answer to properly plead an
innocent owner defense was denied without objection from the parties. See supra Part
I. Specifically, the Claimant’s amendment was “unduly delayed and prejudicial to the
Unites States.” (ECF No. 42, at 6). Nonetheless, for the reasons discussed below, I
find that the Claimant would not have prevailed on an innocent owner defense.
The Claimant contends that she is an innocent owner because “the acts or
omissions alleged in the Complaint were committed without her knowledge.” (ECF No.
34, at ¶ 44). She further contends that she is an innocent owner as defined by 18
U.S.C. § 983(d) because “she did not know of the conduct giving rise to forfeiture.”
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(ECF No. 34, at ¶ 45).
18 U.S.C. § 983(d) provides: “[a]n innocent owner’s interest in property shall not
be forfeited under any civil forfeiture statute. The claimant shall have the burden of
proving that the claimant is an innocent owner by a preponderance of the evidence.”
Thus, the United States is not obligated to show that the owner knew of the criminal
activity, “[b]ecause the innocent owner defense is an affirmative defense.” U.S. v.
16328 S. 43rd E. Ave., Bixby, Tulsa County, Okla., 275 F.3d 1281, 1284-85 (10th Cir.
2002). Further, “we are not constrained to accept denials supported by a mere scintilla
of evidence.” Id. Such denials, when for instance the owner’s alleged unawareness is
actually “willful blindness,” are insufficient to maintain an innocent owner defense. Id.
Moreover, colorable affidavits are insufficient to preclude summary judgment. Id.
The innocent owner defense can be asserted in two ways. First, when property
interest exists contemporaneously with conduct subjecting the property to forfeiture, “the
term ‘innocent owner’ means an owner who--(i) did not know of the conduct giving rise
to forfeiture; or (ii) upon learning of the conduct giving rise to the forfeiture, did all that
reasonably could be expected under the circumstances to terminate such use of the
property.” 18 U.S.C. § 983(d)(2)(A). Likewise, when a property interest exists after
conduct subjecting the property to forfeiture, “the term ‘innocent owner’ means a person
who, at the time that person acquired the interest in the property--(i) was a bona fide
purchaser or seller for value . . . ; and (ii) did not know and was reasonably without
cause to believe that the property was subject to forfeiture.” 18 U.S.C. § 983(d)(3)(A).
“[T]he term bona fide purchaser . . . is generally understood to mean [o]ne who
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has purchased property for value without notice of any defects in the title of the seller.
U.S. v. Guerra, 216 F. App’x 906, 910 (11th Cir. 2007). “Bona fide purchasers for value
. . . having engaged in or benefitted from a transaction that the law accepts as capable
of creating property rights instead of merely transferring possession, are entitled to test
their claim of ownership under § 881(a)(6) . . . .” U.S. v. Parcel of Land, Bldgs.,
Appurtenances & Improvements, Known as 92 Buena Vista Ave., Rumson, N.J., 507
U.S. 111, 142-43, 113 S. Ct. 1126, 1144, 122 L. Ed. 2d 469 (1993).
Here, the Claimant’s property interest, based on the facts alleged, existed after
conduct occurred subjecting the property to forfeiture. The drug trafficking activity
commenced in April 2000 and Defendant Ogden Court was later purchased with those
proceeds in November 2000. See, e.g., U.S. v. Hooper, 229 F.3d 818, 822 (9th Cir.
2000) (“[p]roceeds of crime . . . do not precede crime.”); see also U.S. v. $13,000.00 in
U.S. Currency, 2007 Black Dodge Ram SRT Pickup, VIN 1D7HA18257S120375, 858 F.
Supp. 2d 1194, 1204 (D. Colo. 2012). Accordingly, focusing on § 983 (d)(3)(A) of the
innocent owner provision, the Claimant must show that she was a bona fide purchaser
of Defendant Ogden Court for value and that she “did not know and was reasonably
without cause to believe that the property was subject to forfeiture.” 18 U.S.C. §
983(d)(3)(A).
The Claimant’s financial records and admissions reveal that she is not a bona
fide purchaser for value. The Claimant most recently obtained legal title to Defendant
Ogden Court when Mr. Orozco quit-claimed his ownership interest to her in 2006, during
which time she did not receive W-2 wages. Further, she is uncertain as to the origin of
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funds used to make the initial payments and was unaware of the details of the
Defendant Ogden Court mortgage until reviewing the United States’ motion regarding its
status. Based on the foregoing, the quit-claim was merely a transfer of possession and
not a purchase for value. Accordingly, irrespective of whether the Claimant had reason
to believe that Defendant Ogden Court was subject to forfeiture, evidence reveals that
she is not a bona fide purchaser of Defendant Ogden Court. Therefore, even if she had
properly asserted the innocent owner defense, the Claimant is not an innocent owner
under 18 U.S.C. § 983(d).
V.

CONCLUSION
Based on the foregoing, it is
ORDERED that the United States’ Motion for Summary Judgment (ECF No. 33),

filed March 19, 2012, is GRANTED. Defendant Ogden Court is hereby forfeited to the
United States. Accordingly, it is
FURTHER ORDERED that both the final trial preparation conference set for
March 4, 2013 and the jury trial set for March 18, 2013 are VACATED.
Dated: December 20, 2012
BY THE COURT:

s/ Wiley Y. Daniel
WILEY Y. DANIEL,
CHIEF UNITED STATES DISTRICT JUDGE

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