USA v. $114,700.00 in United States Currency

Filing 52

ORDER Affirming and Adopting the 45 , 46 Recommendations of United States Magistrate Judge Gordon P. Gallagher. The Motion to Dismiss (Doc. # 23 ) is DENIED. Claimant's Twelfth Affirmative Defense (Doc. # 15 at 89) is STRICKEN. By Judge Christine M. Arguello on 02/01/2018. (athom, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Christine M. Arguello
Civil Action No. 17-cv-00452-CMA-GPG
UNITED STATES OF AMERICA,
Plaintiff,
v.
$114,700.00 in United States Currency,
Defendant.
ORDER AFFIRMING AND ADOPTING THE RECOMMENDATIONS OF UNITED
STATES MAGISTRATE JUDGE GORDON P. GALLAGHER
This matter is before the Court on two Recommendations by United States
Magistrate Judge Gordon P. Gallagher (Doc. ## 45, 46), wherein he recommends that
the Court deny the Claimant’s Motion to Dismiss (Doc. # 23) and strike the Claimant’s
Twelfth Affirmative Defense (Doc. # 15 at 8–9.) The Recommendations are incorporated
herein by reference. See 28 U.S.C. § 636(b)(1)(B); Fed. R. Civ. P. 72(b).
I.

STANDARD OF REVIEW

The Recommendations advised the parties that specific written objections were
due within fourteen (14) days after being served with a copy of the Recommendation.
(Doc. # 45 at 1, n.2.) The Claimant timely filed his objection within fourteen days,
challenging both Recommendations entirely. (Doc. # 47.) The Court is thus required to
determine the disputed issues de novo. Fed. R. Civ. P. 72(b)(3). In so doing, the Court
“may accept, reject, or modify the recommended disposition[.]” Id.

II.

BACKGROUND

The Government filed its Complaint for forfeiture in rem alleging that Claimant’s
$114,700.00 in currency constitutes proceeds traceable to narcotics trafficking in
violation of 21 U.S.C. § 881(a)(6). (Doc. # 1.) To prevail at trial, the Government must
prove by a preponderance of the evidence that the property is subject to forfeiture.
18 U.S.C. § 983(c). In other words, the Government must prove that it is more likely
than not that the proceeds are traceable to an exchange of controlled substances. In re
Winship, 397 U.S. 358, 371-72 (1970) (Harlan, J., concurring) (explaining the
preponderance of the evidence standard).
Claimant filed a Motion to Dismiss the Complaint pursuant to Federal Rule of
Civil Procedure 12, alleging that both 21 U.S.C. § 881(a)(6) and 18 U.S.C. § 983(c)
violate the United States Constitution under the Due Process Clause. (Doc. # 23.)
Claimant raises the same constitutional argument as an affirmative defense in his
Answer. (Doc. # 15 at 8–9.) In both instances, Claimant argues that the forfeiture statute
is unenforceable, requiring either complete dismissal of this case or, at the very least,
the application of a heightened burden. (Doc. ## 15 at 8–9; 47 at 1.)
Magistrate Judge Gallagher disagreed with Claimaint’s arguments,
recommending instead that Claimant’s Motion to Dismiss be denied and his affirmative
defense be stricken. (Doc. # 45.) Having reviewed the issues de novo, the Court agrees
with Magistrate Judge Gallagher with respect to both Recommendations.

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III.

CONSTITUTIONALITY OF 18 U.S.C. § 983(c)

The Court considers three factors when determining whether the standard of
proof in a particular proceeding comports with due process: (1) the individual interest
affected by the proceeding; (2) the risk of error created by the procedure; and (3) the
countervailing governmental interest supporting the challenged procedure. Santosky v.
Kramer, 455 U.S. 745, 754 (1982). The Court finds that all three factors weigh in favor
of upholding the constitutionality of 18 U.S.C. § 983(c).
A.

THE INDIVIDUAL INTEREST
Pursuant to U.S. Const. amend. V, no person can be deprived of life, liberty, or

property without due process of law. However, neither life nor liberty interests are at
stake in this case. Rather, the deprivation at issue is property—specifically, currency
allegedly stemming from illegal drug activity.
Claimant argues, however, that this action involves more than the mere loss of
money because it is significantly punitive and criminal in nature, thereby necessitating
the application of a heightened beyond a reasonable doubt standard. (Doc ## 23 at 2, 5;
47 at 16.) Indeed, whether “forfeiture is characterized as civil or criminal carries
important implications for a variety of procedural protections” which include proper
standards of proof. Leonard v. Texas, 137 S. Ct. 847, 849-50 (2017) (denying petition
for a writ of certiorari).
This Court, however, rejects Claimant’s arguments because the Supreme Court
has already spoken on this issue. In United States v. Ursery, 518 U.S. 267, 292 (1996),
citing to numerous cases supporting its conclusion, the Supreme Court held that
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forfeiture proceedings under 21 U.S.C. § 881 “are neither punishment nor criminal for
purposes of the Double Jeopardy Clause.” United States v. Ursery, 518 U.S. 267, 278292 (1996). It added that “there is little doubt that Congress intended proceedings under
§§ 881 and 981 to be civil[.]” Id. at 288. The Court further explained, “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.” Id. This
Court sees no reason to depart from the Supreme Court’s thoughtful analysis and
concludes that it equally applies to the circumstances of this case.
Nonetheless, the Court recognizes that the deprivation of property, even in a civil
proceeding, sometimes “involves substantial due process interests.” Krimstock v. Kelly,
306 F.3d 40, 61 (2d Cir. 2002). Whether those interests have been significantly
infringed, however, depends on “the nature of the interest” and whether it “is one within
the contemplation of the . . . ‘property’ language” of the Due Process Clause. Morrisey
v. Brewer, 408 U.S. 471, 481 (1972) (citation omitted).
As mentioned, the property interest here is currency allegedly involved in drug
trafficking. Individuals do not have a right to property related to drug trafficking under
21 U.S.C. § 881(a). Such property, therefore, is not “within the contemplation of the . . .
‘property’ language” of the Due Process Clause. Morrisey, 408 U.S. at 481. Accordingly,
Claimant’s individual interest in this case does not weigh in favor of raising the
Government’s burden of proof.

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B.

THE RISK OF ERROR
The second factor—the risk of error—also weighs against finding a due process

violation. Because this case involves an adversarial dispute between the Government
and the Claimant, the “relevant question is whether a preponderance standard fairly
allocates the risk of an erroneous factfinding between [the] two parties.” Santosky v.
Kramer, 455 U.S. 745, 761 (1982). To determine whether the standard fairly allocates
the risk of error, the Court considers the nature of the inquiry and the adequacy of
existing procedures to protect against error. Matthews v. Eldridge, 424 U.S. 319, 343,
348 (1976).
The nature of the forfeiture inquiry in this case involves tracing proceeds to
narcotics trafficking. 21 U.S.C. § 881(a)(6). Because of the secretive nature of the illegal
drug-trafficking business, proving that proceeds are traceable to drug-trafficking is a
difficult task, especially with respect to cash proceeds. United States v. $242,484.00,
389 F.3d 1149, 1161 (11th Cir. 2004). Establishing the evidentiary trail to prove that
certain proceeds are directly tied to specific illegal activity is already a challenging task
under the current burden of proof. (Doc. # 31 at 7.) Raising the burden of proof to a
beyond a reasonable doubt standard would make the Government’s task even more
difficult and would disproportionately shift the risk of error in favor of the Claimant who
already has the advantage of personal knowledge to refute, by a preponderance of the
evidence standard, the Government’s evidence. As Magistrate Judge Gallagher stated,
“most of us have some records to justify the money we possess[.]” (Doc. # 45 at 9.)

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Thus, considering the nature of the inquiry here—forfeiture of drug proceeds—
the preponderance standard fairly allocates the risk of error between the parties,
providing the Government a sufficient opportunity to prove its case while allowing the
Claimant to adequately refute it.
Furthermore, any risk of error from a preponderance standard is alleviated by the
numerous statutory safeguards that protect claimants from an erroneous deprivation of
their property. See generally 18 U.S.C. § 983. For example, a claimant has a right to
counsel if counsel was appointed for a related criminal case. Id. at § 983(b)(1)(A). The
statute also provides an innocent owner defense. Id. at § 983(d). Moreover, in enacting
the forfeiture statute, Congress actually shifted the burden of proof from the claimant to
the government and raised that burden of proof from probable cause to preponderance
of the evidence. United States v. $80,180.00 in U.S. Currency, 303 F.3d 1182, 1184
(9th Cir. 2002). As such, Congress has already contemplated the issue and concluded
that the existing safeguards adequately ensure that innocent claimants are not
erroneously deprived of their property.
Concern about a potential risk of error, therefore, does not weigh in favor of
heightening the government’s burden.
C.

GOVERNMENT INTEREST
Finally, the Government’s interest also weighs against changing the evidentiary

burden or striking down the statute. There is a “strong governmental interest in
obtaining full recovery of all forfeitable assets[.]” Caplin & Drysdale, Chartered v. United
States, 491 U.S. 617, 631 (1989). In other words, the Government has a legitimate
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interest in removing profits obtained through crime. United States v. Ursery, 518 U.S.
267, 291 (1996). Forfeiture laws further this interest by punishing wrongdoing; deterring
future conduct; lessening the economic power of criminal enterprises; and
recompensing victims of crime, improving conditions in crime-damaged communities,
and supporting law enforcement activities. Caplin 491 U.S. at 629-30. These interests
would be significantly undermined if the standard of proof were heightened.
Accordingly, weighing the competing interests and considering any risk of error
posed by a preponderance of the evidence standard, the Court finds that the burden of
proof set forth in 18 U.S.C. § 983(c) is constitutional.
IV.

MOTION TO STRIKE

In his Twelfth Affirmative Defense, the Claimant raises the same due process
contentions set forth in his Motion to Dismiss. (Doc. ## 15 at 8-9; 23.) Although a
challenge to the constitutionality of a statute “may be raised by answer,” the Court has
discretion to consider a constitutional argument at any time. Kewanee Oil & Gas Co. v.
Mosshamer, 58 F.2d, 711, 712 (10th Cir. 1932). Having already determined that the
challenged statute is constitutional, the Court likewise strikes the Claimant’s Twelfth
Affirmative Defense.
V.

CONCLUSION

For the foregoing reasons, the Court ORDERS as follows:
1. The Recommendations of United States Magistrate Judge Gallagher
(Doc. ## 45, 46) are AFFIRMED and ADOPTED.
2. The Motion to Dismiss (Doc. # 23) is DENIED.
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3. Claimant’s Twelfth Affirmative Defense (Doc. # 15 at 8–9) is
STRICKEN.
DATED: February 1, 2018

BY THE COURT:

CHRISTINE M. ARGUELLO
United States District Judge

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