United States of America v. $16,000.00 U. S. Currency
Filing
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ORDER denying 12 Motion for Default Judgment. The Clerk of Court is DIRECTED to vacate the entry of default as to Mr. Robert Eric Rameriz. Signed by Senior Judge James C. Fox on 10/27/2015. Counsel is reminded to read the order in its entirety for further directives from the court. (Grady, B.)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
No. 5:14-CV-656-F
UNITED STATES OF AMERICA,
Plaintiff,
v.
$16,000.00 IN U.S. CURRENCY,
Defendant.
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ORDER
This matter is before the court upon the Government's Motion for Default Judgment.
[DE-12]. For the reasons stated below, the motion is DENIED.
I.
PROCEDURAL AND FACTUAL HISTORY
This civil action in rem was brought pursuant to 21 U.S.C.
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88l(a)(6). The Government
initiated this action by filing a Complaint for Forfeiture In Rem [DE-l] in this court on October
17, 2014, alleging that the defendant, $16,000.00 in United States currency, was "used or
intended to be used in exchange for controlled substances or represents proceeds of trafficking in
controlled substances or was used or intended to be used to facilitate a violation of Title II of the
Controlled Substances Act, 21 U.S.C. § 801 et seq." Compl. Forfeiture In Rem
[DE-l]~
1.
In accordance with Supplemental Rule G(3)(b)(i) ofthe Supplemental Rules for
Admiralty or Maritime Claims and Asset Forfeiture Actions, the Clerk of Court issued a Warrant
of Arrest and Notice In Rem [DE-4] on October 21, 2014. Beginning on November 26, 2014, a
Notice of Civil Forfeiture was posted on an official government internet site,
www.forfeiture.gov, for at least 30 consecutive days, and a proof of publication was filed with
this court on AprilS, 2015. See Advertisement Certification Report [DE-6-1] at 1-2.
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On November 25, 2014, the Government completed service on the defendant currency
while it was in the possession of the United States Marshals Service. See Process Receipt and
Return [DE-5]. On April 8, 2015, personal service was made on potential claimant Isaiah Jerome
Edwin. See Process Receipt and Return [DE-8]. Likewise, personal service was made on
potential claimant Robert Eric Ramirez, Jr. See Process Receipt and Return [DE-9] at 2. Service
was made on potential claimant Maurice A. Newkirk via personal delivery to Yolanda Baxter,
mother of two ofNewkirk's children, at Newkirk's residence. See id. at 1. However, service of
process on potential claimant Robert Eric Ramirez was apparently made by serving the
Complaint and Warrant of Arrest In Rem on his attorney. See Aff. Failure Plead Otherwise
Defend [DE-10]
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3; see also Certified Mail Receipt [DE-6-2]. No answer or claim has been
filed by any person in this action.
On June 16, 2015, the Government filed an Affidavit of Failure to Plead or Otherwise
Defend [DE-l 0], a Motion for Entry of Default [DE-ll], and a Motion for Default Judgment
[DE-12]. The Clerk of Court entered Default [DE-13] against the defendant currency on August
18, 2015, and submitted the Government's Motion for Default Judgment to the undersigned.
The facts of the complaint and the accompanying declaration show the following: This
forfeiture action arises out of a March 12, 2014 search ofthe vehicle of Robert Eric Ramirez. On
that date, officers stopped Ramirez's vehicle for following a truck too closely. During the stop,
the officers detected the odor of marijuana and called for a K-9 unit to conduct a sniff of the
vehicle. The drug alerted on a cooler bag previously held by one of the vehicle's occupants.
The police asked Ramirez, the driver of the vehicle, if there were any weapons, narcotics,
or large amounts of cash in the vehicle. Ramirez said that there were no drugs or weapons, but
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that there was $16,000.00 in cash. The officers began a search of the vehicle and found
$16,000.00 in United States currency in the cooler bag.
Ramirez stated that the money was his and resulted from proceeds from car sales as part
of his business operations. He named the cars he had sold and stated that he had records for the
sales at his residence. He also stated that his wife could confirm the sales. Police called
Ramirez's wife and she did confirm Ramirez's story. The police noted that Ramirez had called
his wife sometime before the police spoke to her, but do not note the duration or content of the
call nor whether they asked Ramirez about the nature of the call.
No drugs or weapons were found in the car. Ramirez received a warning for following
too closely and was released. Ramirez had two convictions for weapons and possession of
cocaine that were twenty years old. The potential claimants for the seized currency are Robert
Eric Ramirez, Isaiah Jerome Edwin, Maurice A. Newkirk, and Robert Eric Ramirez, Jr.
II.
DISCUSSION
A motion for default judgment typically raises three issues for the deciding court.
(1) whether entry of default is appropriate under Rule 55 of the Federal Rules of Civil Procedure;
(2) whether the plaintiff has adequately stated his claims such that the court may enter default
judgment thereon; and (3) to what relief is the plaintiff entitled. In the instant case, the court
concludes that the first and second issues preclude the court from allowing the Government's
Motion for Default Judgment.
a. Default was inappropriately entered as to Robert Eric Ramirez.
The Due Process clause of the Fifth Amendment prohibits the deprivation of property
without "due process oflaw." U.S. Const., Amend. V. Individuals whose property interests are
at stake are entitled to "notice and an opportunity to be heard." United States v. James Daniel
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Good Real Prop., 510 U.S. 43, 48 (1993). The Government also must send direct notice to "any
person who reasonably appears to be a potential claimant on the facts known to the government
before the end of the time for filing a claim." Fed. R. Civ. P. Supp. R. G(4)(b)(i).
"An attorney who generally handles the legal affairs for an individual is not an agent of
that person for the service of process unless he makes an appearance in the law suit for him."
Beck v. Beck, 306 S.E.2d 580, 583 (N.C. Ct. App. 1983) (first emphasis added); see also Fed. R.
Civ. P. Supp. R. G(4)(b)(iii)(B). No appearance has been made by Mr. Ramirez's counsel, Randy
P. Davenport. Therefore, without additional evidence, the court cannot conclude that Mr.
Davenport was an agent who could receive service of process on Mr. Ramirez's behalf. Given
this record, the court finds that a copy of the Complaint in this action was not properly served
upon a known potential claimant of the defendant currency. The court, accordingly, cannot find
that the Government complied with Supplemental Rule G(4)(b)(i) or the Due Process clause of
the Fifth Amendment. Service was defective and the entry of default as to Mr. Ramirez must be
vacated. Accordingly, the Clerk of Court is DIRECTED to vacate the entry of default as to Mr.
Robert Eric Ramirez.
Because service ofMr. Ramirez was defective, default judgment cannot be entered.
Accordingly, the Government's Motion for Default Judgment [DE-12] is DENIED. The
Government is ORDERED to send, within 21 days of the filing date of this order, Notice of these
proceedings to Robert Eric Ramirez, in accordance with Supplemental Rule g(4)(b)(ii)-(ii). The
Government is ORDERED to, within 35 days, file proof of such service, or an affidavit showing
why such service is not necessary or unreasonable.
Moreover, the court recognizes that Supplemental Rule G(5)(ii)(B) provides that a person
must file a claim "no later than 30 days after final publication of newspaper notice or legal
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notice" or "no later than 60 days after the first day of publication on an official internet
government forfeiture site" if "notice was published but direct notice was not sent to the
claimant or the claimant's attorney." Given the circumstances of this case, the court finds that
good cause exists to allow Robert Eric Ramirez 45 days to file a claim from the date the required
notice is sent as provided in this order.
b. The Complaint fails to state a claim as to the defendant currency.
It is well settled that upon default, the well-pleaded facts alleged in the Complaint are
deemed admitted. Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001).
However, a defaulting defendant is not held to admit conclusions of law, and the well-pleaded
allegations of the Complaint must still support the plaintiffs claims and the relief sought. See id.
In context of a civil forfeiture action instituted pursuant to 21 U.S.C. § 881(a)(6), a complaint
must meet the particularity in pleading requirements set forth in the Supplemental Rules for
Certain Admiralty and Maritime Claims and Asset Forfeiture Actions. Specifically, Rule G(2)(f)
mandates that a civil forfeiture complaint "state sufficiently detailed facts to support a reasonable
beliefthat the government will be able to meet its burden of proof at trial." Fed. R. Civ. P. Supp.
R. G(2)(f).
In this case, at trial, the Government would have to prove, by a preponderance of
evidence, that the property is subject to forfeiture. See 18 U.S.C. § 983(c). In other words, the
Government would have to prove that it was more likely than not that the defendant property was
used, or intended to be used, in exchange for controlled substances, or represents proceeds of
trafficking in controlled substances or was used or intended to be used to facilitate a violation of
Title II of the Controlled Substances Act, 21 U.S.C. § 801 et seq. Morever, "if the Gqvernment's
theory of forfeiture is that the property was used to commit or facilitate the commission of a
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criminal offense, or was involved in the commission of a criminal offense, the Government shall
establish that there was a substantial connection between the property and the offense." 18
U.S.C. § 983(c)(3).
The Complaint in this case is devoid of facts showing that the currency "was used or
intended to be used in exchange for controlled substances or represents proceeds of trafficking in
controlled substances or was used or intended to be used to facilitate a violation of Title II of the
Controlled Substances Act." Compl. Forfeiture In Rem [DE-l] ,-[ 1. Indeed, the Complaint shows
no connection between the property and an offense, much less a substantial one. See 18 U.S.C. §
983(c)(3). What the facts show is that the police pulled over a vehicle for a traffic violation,
thought they smelled marijuana, and brought in a drug-sniffing drug who hit on a bag of money.
No drugs or weapons were found. The money was in a bag held by a passenger, not in a hidden
compartment. The driver had a reasonable explanation that was corroborated by the driver's
wife. The police did no further investigation of the driver's explanation, even though he offered
further proof, and none of the men were charged in connection with a drug crime. Forfeiture
cases have been dismissed on stronger evidence than the present case. See, e.g., United States v.
$10,700 in US. Currency, 258 F.3d 215,218-20 (3d Cir. 2001) (reversing decree offorfeiture);
see also United States v. Mondragon, 313 F.3d 862, 867 (4th Cir. 2002) (holding that half a
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million dollars by itself did not suggest a connection to drug trafficking, but finding that
additional factors of professionally constructed secret compartment and drug-sniffing dog hit in
other parts of the car outside of the cash provided sufficient additional evidence of drug-
trafficking activity).
A case from the Third Circuit illuminates the weaknesses of the government's case in the
present action. In the Third Circuit case, police officers stopped a vehicle for speeding. See id at
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219. The police noted that the vehicle occupants were acting suspiciously and obtained consent
to search the vehicle. See id. Inside of a bag, the police found $21,000.00 in United States
currency, which one of the vehicle passengers said was to be used to buy a car. See id. A second
bag containing $8,000.00 was also found. !d. An additional $3,380.00 was found on the vehicle
occupants' persons. See id. at 219-20.
A canine unit was used to test the currency and the vehicle. !d. at 220. The dog "'gave
positive indications on the currency' but offered 'negative indications' with respect to the
interior and exterior of the vehicle." !d. The vehicle driver was cited for speeding, and the
occupants of the vehicle were released without being charged with any illegal activity other than
the speeding citation. !d. The police later tested the money with an ION Scan Analysis, which
showed that the currency had "high levels of cocaine residue, an indication that the monies were
involved in drug trafficking." !d. A background check of the vehicle occupants showed that each
had previous drug trafficking and possession charges, the most recent having happened five
years previous to the traffic stop. See id.
The Third Circuit, in reversing the decree of forfeiture, found that the government had
provided no evidence of the reliability of the dog sniff test and that the reliability of dog sniff
testing had been generally called into question by other Circui~ courts. See id. at 229-230.
Additionally, the government had not provided "any evidence concerning this particular dog's
past training and its degree of accuracy in detecting narcotics on currency." !d. at 230. The Third
Circuit similarly found concerning the ION Scan Analysis, specifically that there was no
evidence regarding "how the test measures the levels of narcotics on the currency, what the test
results showed with respect to the levels and types of narcotics detected, and why those results
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were scientifically significant when compared to the results on other parts of the vehicle." See id.
at 231.
Here, the police have not conducted any tests of the bag beyond the dog drug sniff test.
No drugs were found in the car, nor did the dog hit anywhere else ih the car. The driver here was
not only forthright about ownership of the money, but also voluntarily disclosed that there was
cash in the car. Additionally, the driver here had independent corroboration of his story from his
wife. He also told the police that he had records to verify the sales. However, the police did no
further investigation of those records. The burden is on the government to prove its case. As the
Third Circuit said, in a case with stronger evidence than the present one, "[w]hile these factors
-admittedly might cause one to suspect that claimants may have been involved, or about to
engage, in drug activities with this money, are they enough, when considered with the other
suspicious circumstances, to give rise to the reasonable belief that such was the case?" !d. at 232.
They are not.
Civil forfeiture is a powerful tool for seizing assets used to further criminal enterprises.
However, like any tool, it can be abused. Because of that, the government has certain checks in
place to proscribe its seizure powers. The Seventh Circuit has adeptly summarized these
limitations as it relates to alleged drug trafficking funds:
[N]othing ties this money to any narcotics activities that ~he government knew
about or charged, or to any crime that was occurring when the government
attempted to seize the money. We reiterate that the government may not seize
money, even half a million dollars, based on its bare assumption that most people
do not have huge sums of money lying about, and if they do, they must be
involved in narcotics trafficking or some other sinister activity. Moreover, the
government may not require explanations for the existence of large quantities of
money absent its ability to establish a valid narcotics-nexus.
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United States v. $506,231 in US. Currency, 125 F.3d 442, 453-54 (7th Cir. 1997). The
Government has failed to state a claim as to the defendant currency. Accordingly, based on the
foregoing, the Government's Motion for Default Judgment [DE-12] is DENIED.
c. Additional concerns
In addition to the issues previously discussed, the court has concerns regarding whether a
claim was made for the defendant currency during administrative proceedings. To that end, and
to question the Government concerning the use of civil forfeiture in this case, the court will hold
a hearing. Because of holidays and the timing of its terms of court, the court has only November
23 or 24 available during the month ofNovember. Otherwise, ifthe Government is unavailable
on both of those dates, the court will have to consider hearing dates in December once the
November 30, 2015 term of court has concluded. The Government is DIRECTED to inform the
court whether it is available for a hearing on November 23 or 24.
III.
CONCLUSION
For the foregoing reasons, the Government's Motion for Default Judgment [DE-12] is
DENIED. The Clerk of Court is DIRECTED to vacate the entry of default as to Mr. Robert Eric
Ramirez. The Government is ORDERED to send, within 21 days of the filing date of this order,
Notice of these proceedings to Robert Eric Ramirez, in accordance with Supplemental Rule
g(4)(b)(ii)-(ii). The Government is ORDERED to, within 35 days, file proof of such service, or
an affidavit showing why such service is not necessary or unreasonable. Robert Eric Ramirez
shall have 45 days to file a claim from the date the required notice is sent as provided in this
order. Additionally, the Government is DIRECTED to inform the court whether it is available for
a hearing on November 23 or 24.
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SO ORDERED.
A
This the 1 'J day of October, 2015.
S C. FOX
JA
Senior United States District Judge
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