Ingram v. Internal Revenue Services (IRS)

Filing 17

OPINION AND ORDER: For the reasons stated in this Order, Ingram's motion to vacate 1 is DENIED. Signed by Judge Karen K. Caldwell on 10/31/2016. (LC)cc: COR

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION -- LEXINGTON
MICHAEL INGRAM,

CIVIL ACTION NO. 5:16-270-KKC

Plaintiff,
V.

OPINION & ORDER

INTERNAL REVENUE SERVICE,
Defendant.

This matter is before the Court on Plaintiff Michael Ingram’s motion to vacate
administrative forfeiture for lack of notice pursuant to 18 U.S.C. § 983(e). (DE 1). For the
following reasons, Plaintiff’s motion is DENIED.
I. BACKGROUND
In September 2015, Ingram was indicted on various charges arising out of his operation
of a pharmacy. (5:15-cr-78-KKC, DE 1). The original indictment also contained forfeiture
allegations of certain real and personal property, including an airplane, a Jeep, and a
motorcycle. (5:15-cr-78-KKC, DE 1, Original Indictment at 8–10). That property was seized
pursuant to criminal seizure warrants issued by Magistrate Judge Wier. In October 2016, a
superseding indictment added new charges. (5:15-cr-78-KKC, DE 89).
In November 2015, the Internal Revenue Service, the defendant in this matter, served a
Notice of Forfeiture upon Ingram and his wife at his mother’s address. (DE 1-3). A copy of
the notice was not sent to Ingram’s attorney who appeared at his arraignment on his criminal
charges in September 2015. The IRS’s notice listed the airplane, Jeep, and motorcycle, as
well as the contents of a checking account in Ingram’s name totaling $140.648.39. (DE 1-3).
The IRS also published notice of the seizures in local newspapers for three consecutive weeks.

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The notice instructed Ingram that if he “disagree[d] with the IRS’s claim that the property
is subject to forfeiture and desire[d] a judicial determination of the matter” he was required
to file a claim of ownership by December 10, 2015. (DE 1-3, Notice of Forfeiture at 2). The
IRS’s notice included a claim of ownership form and “cautioned that the timely filing of a
claim of ownership is a necessary condition for obtaining a judicial determination.” (DE 1-3,
Notice of Forfeiture at 2). The notice also described the process by which Ingram could
request his property be returned and how he could seek administrative review.
Ingram did not comply with IRS procedures for contesting the administrative forfeiture,
so the IRS issued declarations of forfeiture regarding Ingram’s property upon expiration of
the notice’s deadlines. The IRS represents that all of Ingram’s property that was seized and
noticed for forfeiture in the administrative proceeding has been sold, and the funds seized
from the bank account have also been forfeited. (DE 14, Response at 4; DE 14-3).
Instead, in February 2016, in the criminal matter against him in this Court, Ingram filed
a motion for pre-trial restraint of property pursuant to Federal Rule of Criminal Procedure
41(g). (5:15-cr-78-KKC, DE 45). In that motion, he argued that “administrative forfeiture of
property already subject to criminal forfeiture is improper” and that he “received inadequate
notice of forfeiture.” (5:15-cr-78-KKC, DE 45, Motion at 2).
The Court denied Ingram’s motion, explaining that “the statute governing administrative
forfeiture proceedings clearly envisions the prospect of contemporaneous criminal and
administrative forfeitures.” (5:15-cr-78-KKC, DE 52, Opinion at 2). Further, the Court found
that the seizure warrants issued by Magistrate Judge Wier did not seek to limit the means
by which Ingram might forfeit the property seized. (5:15-cr-78-KKC, DE 52, Opinion at 4).
Ingram’s instant motion seeks to vacate the administrative forfeiture for lack of notice
pursuant to 18 U.S.C. § 983(e). (DE 1).

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II. ANALYSIS
Under the Civil Asset Forfeiture Reform Act, a motion filed under 18 U.S.C. § 983(e) is
“the exclusive remedy for seeking to set aside a declaration of forfeiture under a civil
forfeiture statute.” 18 U.S.C. § 983(e)(5). However, this remedy is only available to
individuals who are “entitled to written notice in any nonjudicial civil forfeiture proceeding
under a civil forfeiture statute who [do] not receive such notice.” 18 U.S.C. § 983(e)(1); see
Matthews v. Drug Enf’t Admin., 629 F. App’x 723, 724, 726 (6th Cir. 2015).
Ingram does not dispute that he received notice of the administrative forfeiture. Rather,
he argues that the notice was deficient and did not comport with the constitutional notice
standard. (DE 1, Motion at 2) (citing Mullane v. Cent. Hanover Bank & Tr. Co., 339 U.S. 306,
314 (1950)). However, the civil asset forfeiture statute provides relief only to individuals who
did “not receive such notice.” See 18 U.S.C. § 983(e)(1). Because Ingram received notice, he
has “no right to relief under the relevant statute.” See Matthews, 629 F. App’x at 724.
Ingram should have followed the procedures outlined in the notice he received from the
IRS, which explained that “[a]bsent the filing of a claim of ownership by you or any other
person transferring this matter to U.S. District Court, the property will be administratively
forfeited by the IRS Nashville Field Office on December 22, 2015.” (DE 1-3, Notice of
Forfeiture at 1–2).
Finally, Ingram cites Muhammed v. Drug Enforcement Agency, Asset Forfeiture Unit in
support of his argument that the notice he received was inadequate because it did not address
the fact that he was already contesting the administrative forfeiture in this Court. Ingram
cites to support his position. See 92 F.3d 648, 650, 652 (8th Cir. 1996). Although the Court
need not reach the issue, it finds that Ingram’s reliance on Muhammed is misplaced. In that
case, the Eight Circuit found the DEA’s notice to two individuals deficient because the
individuals had already filed an action in federal district court for the return of their property.
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See id. (“While the notice of seizure and intent to forfeit instructs parties what they must do
to contest the impending forfeiture in district court, it in no way indicates that parties who
are already in district court need to start over[.]”) (emphasis in original).
However, Muhammed was decided prior to the Civil Asset Forfeiture Reform Act, and
further, the Court is not persuaded by the majority’s reasoning. Instead, the Court agrees
with the dissent in that case, which took issue with the argument that the notice provided
was constitutionally infirm. Id. at 655 (Arnold, J., dissenting in part and concurring in part).
The dissent described the notice as “about as plain as it could have been” and observed that
the individuals “simply failed to follow it.” Id.
Here, too, the notice Ingram received from the IRS provided clear directions on how to
contest the administrative forfeiture, and he simply failed to follow those instructions.
Ingram argues that the notice was vague and that, as a result, he was confused as to whether
he needed to file a claim to challenge the administrative forfeiture. However, filing a claim
of ownership is exactly what the notice directed him to do. Thus, Ingram’s arguments that
the notice was insufficient fall flat.
In sum, since Ingram received notice and did not challenge the administrative forfeiture
as he was directed in the IRS’s notice, his motion to vacate that forfeiture must be denied.
III. CONCLUSION
For the foregoing reasons, Ingram’s motion to vacate administrative forfeiture for lack of
notice (DE 1) is DENIED.
Dated October 31, 2016.

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