Reader v. USA

Filing 17

MEMORANDUM ADOPTING REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE, for 1 Motion for Return of Property filed by Johnny Lee Reader, 12 Report and Recommendation. ORDERED that Petitioner's Motion Pursuant to Federal Rules of Criminal Procedure, Rule 41(g) Requesting Return of Property (Dkt. #1) be GRANTED IN PART AND DENIED IN PART. It is further ORDERED that Petitioner is not entitled to the return of and has forfeited any right, title, and interest in the follow ing: (1) $27,700 in United States currency seized at the time of Petitioner's arrest, (2) $2,691.56 in United States currency seized from account x8231, (3) $830.30 in United States currency seized from account x9419, or (4) & #036;1,165.97 in United States currency seized from account x3678. Petitioner is entitled to the return of the 308 rifle, but only to an appropriate designee of his choosing and only upon filing a petition with the Court for such relief. All relief not previously granted is DENIED. The Clerk is directed to CLOSE this civil action. Signed by Judge Amos L. Mazzant, III on 9/29/2016. (kls, )

United States District Court
EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION

JOHNNY LEE READER,

v.
UNITED STATES OF AMERICA

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Civil Action No. 4:16-CV-37
(Judge Mazzant/Judge Nowak)

MEMORANDUM ADOPTING REPORT AND
RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
Came on for consideration the report of the United States Magistrate Judge in this action,
this matter having been heretofore referred to the Magistrate Judge pursuant to 28 U.S.C. § 636.
On September 8, 2016, the report of the Magistrate Judge (Dkt. #12) was entered containing
proposed findings of fact and recommendations that Johnny Lee Reader’s (“Petitioner”) pro se
Motion Pursuant to Federal Rules of Criminal Procedure, Rule 41(g) Requesting Return of
Property (“Motion for Return of Property”) (Dkt. #1) be granted in part and denied in part.
Having received the report and recommendation of the Magistrate Judge (Dkt. #12), having
considered each of Petitioner’s objections (Dkt. #15) and the Government’s Response to
Petitioner’s timely filed objections (Dkt. #16), and having conducted a de novo review, the Court
is of the opinion that the findings and conclusions of the Magistrate Judge are correct, and the
Court hereby adopts the Magistrate Judge’s report (Dkt. #12) as the findings and conclusions of
the Court.
BACKGROUND
Petitioner was indicted and arrested for a violation of 21 U.S.C. § 846, Conspiracy to
Possess with Intent to Distribute Cocaine in mid-2010 (Dkt. #3 at 1; Dkt. #1, Exhibit 2 at 1).

During Petitioner’s arrest on August 3, 2010, the Government seized $26,000 in United States
currency1 from Petitioner’s home and another $1,700 from Petitioner’s person; in total, the
Government seized $27,700 at the time of Petitioner’s arrest (Dkt. #3 at 1). The Mesquite,
Texas, Police Department also seized a rifle from Petitioner’s home during the arrest
(Dkt. #3 at 4). Subsequent to Petitioner’s arrest, the Government further seized $2,691.56 from
Bank of America account number 488078658231 (“Account x8231”), $830.30 from Bank of
America account number 488008309419 (“Account x9419”), and $1,165.97 from a bank account
ending in x3678 (“Account x3678”) (Dkt. #3 at 2-3).
Following Petitioner’s arrest, from August 6, 2010 to October 27, 2010, Petitioner was on
pre-trial release (Dkt. #3 at 2). During Petitioner’s pre-trial release, the United States Drug
Enforcement Administration (“DEA”)—an agency of the United States Department of Justice—
initiated civil administrative (nonjudicial) forfeiture proceedings against Petitioner and notified
Petitioner of its intent to seize and forfeit the aforementioned funds (Dkt. #3 at 2-4). The
Magistrate Judge summarizes the DEA’s timeline regarding these notices specifically as follows:
On September 20, 2010, the Drug Enforcement Administration (“DEA”) sent
written notice of the seizure and intent to administratively forfeit $27,700 in
United States currency to Petitioner (at two known addresses), Petitioner’s
attorney, and Ms. Lopez (at two known addresses). . . . Return receipts were
received from the addresses related to Petitioner, Ms. Lopez, and Petitioner’s
attorney. . . . Notice was also published in the Wall Street Journal. . . . The
Government contends that no claims were filed regarding the $27,700 in United
States currency, resulting in an administrative forfeiture to the DEA.
On September 27, 2010, the DEA sent a separate written notice of the seizure and
intent to forfeit funds in bank account x9419 ($830.30) to Petitioner (at two
known addresses), and his attorney. . . . Return receipts were received from
addresses related to both Petitioner and his attorney. . . . Notice was also
published in the Wall Street Journal. . . . The Government contends no claims
were filed regarding the $830.30 seized from account x9419, and, thus, the funds
were administratively forfeited.
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All references to dollar amounts hereinafter refer to dollars in United States currency.

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On October 1, 2010, the DEA sent a written notice of the seizure and intent to
forfeit funds in bank account x8231 ($2,691.56) to Petitioner (at two known
addresses), his attorney, and Ms. Lopez (at two known addresses). . . . Return
receipts were received from addresses related to Petitioner, Ms. Lopez, and
Petitioner’s attorney. . . . Notice was also published in the Wall Street
Journal. . . . The Government contends that no claims were filed regarding the
$2,691.56 seized from account x8231, resulting again in an administrative
forfeiture.
Also on October 1, 2010, DEA sent written notice of the seizure and intent to
forfeit funds in bank account x3678 ($1,165.97) to Petitioner (at two addresses),
his attorney, and Ms. Lopez (at two known addresses). . . . Return receipts were
received from addresses related to Petitioner, his attorney, and Ms.
Lopez. . . . Notice was also published in the Wall Street Journal. . . . The
Government contends no claims were filed regarding the $1,165.97 seized from
account x3678, and the funds were administratively forfeited by the DEA.
(Dkt. #12 at 3-4). Petitioner’s pre-trial release terminated when Petitioner was arrested on
October 28, 2010 for violation of his pre-trial release terms (Dkt. #3 at 4). Petitioner thereafter
entered a guilty plea in his underlying criminal proceedings and, as part of his plea agreement,
agreed to forfeit “[a]ny and all funds located within [Account x3678] in the name of Wendy
Lopez” (Dkt. #1, Exhibit 2 at 1, 4).
On November 14, 2014, Petitioner filed his Motion for Return of Property in the
underlying criminal proceedings (Dkt. #206 in Cause No. 4:10-CR-139-2). The Government
filed its Response to Motion for Return of Property Pursuant to Fed. R. Crim. P. 41(g)
(Dkt. #210 in Cause No. 4:10-CR-139-2) on January 7, 2015, and Petitioner filed his Reply to
the Government’s Response on January 27, 2015 (Dkt. #211 in Cause No. 4:10-CR-139-2). On
January 11, 2016, the Court construed Petitioner’s Motion for Return of Property as a civil
action, directing the Clerk of Court to open the present matter (Dkt. #220 in Cause No. 4:10-CR139-2). The Court thereafter ordered that Petitioner’s Motion for Return of Property be treated
as a civil suit invoking the Court’s 28 U.S.C. § 1331 equity jurisdiction (Dkt. #2).

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Petitioner seeks through his Motion for Return of Property return of (1) $27,000 in
United States currency seized from Bank of America account numbers 488018658231 and
48800839419, (2) $1,800 in United States currency seized from Petitioner at the time of his
arrest, and (3) a 308 rifle seized from Petitioner’s residence (Dkt. #1 at 2). As the Magistrate
Judge observed, Petitioner misidentifies in his Motion for Return of Property the pre-arrest
location (and amount) of the United States currency seized:
The forfeiture receipts reflect the Government seized $27,700.00 from
Petitioner’s home and person upon Petitioner’s arrest on August 3, 2010 . . . .
$26,000 of that amount was seized from the home, and $1,700—not $1,800—was
seized from Petitioner’s person. . . . Subsequently, the Government seized
additional funds from bank accounts 488018658231 ($2,691.56) and
488008309419 ($830.30), as well as $1,165.97 from a bank account ending in
x3678.
(Dkt. #12 at 2 n.1). In any case, Petitioner argues that all of the identified property should be
returned to him under Federal Rule of Criminal Procedure 41(g) because, as he claims, he never
was informed during his criminal proceedings of the forfeiture of his property and never
agreed—pursuant to his plea agreement—to such forfeiture (Dkt. #1 at 1).

In particular,

Petitioner asserts that his plea agreement described neither the $27,000 he claims the
Government seized from Accounts x8231 and x9419 nor the rifle seized from Petitioner’s
residence (Dkt. #1 at 2, Exhibit 2 at 4). Petitioner further argues that he would have been unable
to agree to forfeiture of the funds located in Account x3678, for that account was “in the name of
Wendy Lopez” and not of Petitioner (Dkt. #1, Exhibit 2 at 4).
The Magistrate Judge entered a report and recommendation on September 8, 2016,
recommending Petitioner’s Motion for Return of Property be granted in part and denied in part
(Dkt. #12). Specifically, the Magistrate Judge recommended that the Court find as follows:
Petitioner is not entitled to the return of and has forfeited any right, title, and
interest in the following: (1) $27,700 in United States currency seized at the time

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of Petitioner’s arrest, (2) $2,691.56 in United States currency seized from account
x8231, (3) $830.30 in United States currency seized from account x9419, or
(4) $1,165.97 in United States currency seized from account x3678. Petitioner is
entitled to the return of the 308 rifle, but only to an appropriate designee of his
choosing and only upon filing a petition with the Court for such relief.
(Dkt. #12 at 11). Subsequently, on September 26, 2016, Petitioner filed his objections to the
Magistrate Judge’s report and recommendation (Dkt. #15), and on September 27, 2016, the
Government filed its Response to Petitioner’s objections (Dkt. #16).
ANALYSIS
A party who files timely written objections to a magistrate judge’s report and
recommendation is entitled to a de novo review of those findings or recommendations to which
the party specifically objects.

28 U.S.C. § 636(b)(1)(C); Fed. R. Civ. P. 72(b)(2)-(3).

Petitioner’s objections assert that the Magistrate Judge erred in denying his request for “return of
the $27,000 as well as the other funds taken from hi[m] when he was arrested” (Dkt. #15 at 6).
Petitioner essentially reurges in his objections the arguments he made in his Reply to the
Government’s Response, namely that the Government should have been unable to pursue both
criminal and civil forfeiture proceedings against either him and/or any of the funds seized from
his home, his person, or Accounts x8231, x9419, or x3678 (compare Dkt. #11, with Dkt. #15).
Petitioner raises no objection to the Magistrate Judge’s recommendation regarding Petitioner’s
rifle (Dkt. #15). Accordingly, the Court holds this finding is correct and adopts that portion of
the Magistrate Judge’s report and recommendation as the finding of the Court, before turning to
address Petitioner’s objections.
Construing pro se Petitioner’s objections liberally, Haines v. Kerner, 404 U.S. 519, 520
(1972) (per curiam), the Court finds that Petitioner objects specifically to the Magistrate Judge’s
finding that the Government (through the DEA) could seek forfeiture of the funds seized from

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Petitioner’s home, person, and Accounts x8231, x9419, and x3678 under the civil administrative
forfeiture provisions in 21 U.S.C. § 881 and 19 U.S.C. § 1607 rather than under the criminal
forfeiture provisions of 21 U.S.C. § 853, given that Petitioner’s underlying criminal proceedings
were ongoing (see Dkt. #15; see also Dkt. #16 at 2-3 (The Petitioner’s objections “appear[] to be
borne out of . . . Petitioner’s belief that the Government could not pursue forfeiture of the
property contained in his motion through a nonjudicial forfeiture while the Petitioner was
indicted.”)). The Government argues in response that, “[h]ad [it] chosen to specifically list the
seized property in its forfeiture allegation contained in the indictment,” it would have had the
options “of continuing with a parallel nonjudicial administrative forfeiture proceeding or
pursuing a judicial forfeiture in the criminal process” (Dkt. #16 at 3).

In any case, the

Government continues, “[it] simply initiated a nonjudicial forfeiture proceeding within the
required notice deadlines without listing the specific items in the forfeiture allegation in the
indictment” and then “sent the required notice of the nonjudicial forfeiture proceedings to the
proper parties, including Petitioner” (Dkt. #16 at 3). Because “no claim was ever filed[,]” the
Government concludes, “the funds in question had already been properly forfeited through the
nonjudicial process” when Petitioner later entered his plea agreement (Dkt. #16 at 3). The Court
considers each of Petitioner’s objections and the Government’s responses herein.
Objection:

Magistrate Judge’s Finding that the DEA’s Forfeiture Was Permissible

The government may seize and seek forfeiture of property used or acquired as a result of
violation of the Controlled Substances Act, 21 U.S.C. §§ 801 et seq., under 21 U.S.C. § 881.
See, e.g., United States v. Robinson, 434 F.3d 357, 362 (5th Cir. 2005); JPMorgan Chase Bank,
N.A. v. United States, No. 4:09-cv-150, 2010 WL 890230, at *3 (E.D. Tex. Mar. 9, 2010); cf.
Rankin v. United States, 556 F. App’x 305, 309 (5th Cir. 2014) (per curiam) (recognizing that,
although property may be subject to criminal forfeiture under 21 U.S.C. § 853, the government
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may choose to seek forfeiture under 21 U.S.C. § 881 in certain circumstances). Where the
property seized pursuant to section 881 has a value of less than $500,000, the government may
initiate civil administrative forfeiture proceedings to forfeit the property. Robinson, 434 F.3d at
362. Additionally, where “the [g]overnment does not file a civil judicial forfeiture action, but
does obtain a criminal indictment containing an allegation that the property is subject to
forfeiture, [it] shall either” (1) rest on its notice “and continue the nonjudicial civil forfeiture
proceeding” or (2) “terminate the nonjudicial civil forfeiture proceeding, and take the steps
necessary to preserve its right to maintain custody of the property as provided in the applicable
criminal forfeiture statute.” 18 U.S.C. § 983(a)(1)(A)(iii) (emphasis added).
To initiate nonjudicial civil forfeiture proceedings, the government must (1) publish
notice of the seizure “for at least three successive weeks in such manner as the Secretary of the
Treasury may direct” and (2) send “[w]ritten notice of seizure together with information on the
applicable procedures . . . to each party who appears to have an interest in the seized article[s].”
19 U.S.C. § 1607(a); 18 U.S.C. § 983(a). The government must send the notice “in a manner to
achieve proper notice as soon as practicable, and in no case more than 60 days after the date of
seizure.” 18 U.S.C. § 983(a). Once the government sends this notice, any party who wishes to
claim an interest in the seized property may file the claim with the relevant government entity on
or before the deadline indicated in the notice. 18 U.S.C. § 983(a)(2)(b). If the government
receives a timely claim to the seized property, it must cease the administrative proceedings and
initiate judicial forfeiture proceedings. Id. § 983(a)(3)(A); see also Robinson, 434 F.3d at 362.
If the government receives no claims, however, it may summarily declare the property forfeited.
19 U.S.C. § 1609. This declaration has “the same force and effect as a final decree and order of

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forfeiture in a judicial forfeiture proceeding in a district court of the United States.”
Id. § 1609(b).
Only the question of “whether the forfeiture comported with constitutional due process
guarantees” remains open after the government completes an administrative forfeiture. See
Taylor v. United States, 483 F.3d 385, 388 (5th Cir. 2007). The forfeiture will be “void and must
be vacated” where a party “with an interest in forfeited funds [did not] receive constitutionally
adequate notice[.]” Robinson, 434 F.3d at 362. Constitutionally adequate notice is that which is
“reasonably calculated, under all circumstances, to apprise interested parties of the pendency of
the action and afford them an opportunity to present their objections.’” Taylor, 483 F.3d at 388
(quoting Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950)). Even if not
received, notice is constitutionally adequate if it meets the requirements of Mullane. Dusenberry
v. United States, 534 U.S. 161, 170 (2002).
In the present case, the funds seized from Petitioner’s home, Petitioner’s person, and
Accounts x8231, x9419, and x3678 have an aggregate value of $32,387.83 (Dkt. #3 at 2-3). This
amount falls below the $500,000 limit for civil, administrative forfeiture. See Robinson, 434
F.3d at 362. Further, the Government alleged that it seized these funds “because [the funds
were] used or acquired as a result of a violation of the Controlled Substances Act”
(Dkt. #3, Exhibits 1-4). The Government seized $26,000 from Petitioner’s home and $1,700
from Petitioner’s person on August 3, 2010 (Dkt. #3 at 1). The Government sent written notice
to Petitioner and other parties of its intent to seek forfeiture of those funds—a total amount of
$27,700—on September 20, 2010, or forty-eight (48) days later (Dkt. #3, Exhibit 1).

On

August 5, 2010, the Government seized $2,691.56 from Account x8231, $830.30 from Account
x9419, and $1,165.97 from Account x3678 (Dkt. #3 at 2-3). On September 27, 2010, or fifty-

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three (53) days later, the Government sent written notice to Petitioner and other parties of its
intent to seek forfeiture of the $830.30 from Account x9419 (Dkt. #3, Exhibit 3). On October 1,
2010, or fifty-seven (57) days later, the Government sent written notice to Petitioner and other
parties of its intent to seek forfeiture of the $1,165.97 from Account x9419 as well as the
$2,691.56 from Account x8231 (Dkt. #3, Exhibits 2, 4). The Government also published notice
of the seizure of all of these funds and intent to seek their forfeiture in the Wall Street Journal
(Dkt. #3 at 2-3).

The Government received return receipts bearing Petitioner’s name and

signature for each of the written notices (Dkt. #3, Exhibits 1-4). These facts demonstrate that the
Government complied with the statutory and constitutional notice requirements in seeking civil
administrative forfeiture of these funds. See 19 U.S.C. § 1607(a); 18 U.S.C. § 983(a). 2
Moreover, the Government had the option of seeking forfeiture of these funds through
civil administrative forfeiture and had no obligation to also or alternatively seek forfeiture in
Petitioner’s underlying criminal proceedings. 21 U.S.C. § 881; see, e.g., Robinson, 434 F.3d at
362; JPMorgan Chase Bank, 2010 WL 890230, at *3. As the Government indicates in its
Response to Petitioner’s objections, the Government retained the option to seek civil
administrative foreclosure even in the event it had begun the process of seeking forfeiture in
Petitioner’s underlying criminal proceedings. See 18 U.S.C. § 983(a)(1)(A)(iii). Petitioner’s
argument to the contrary, namely that the Government had an obligation to pursue criminal
forfeiture proceedings prior to or in lieu of civil administrative forfeiture proceedings,
misconstrues the rules governing forfeiture of property seized incident to drug prosecution.
Although 21 U.S.C. § 853 provided the Government an avenue of seeking forfeiture of such

2

It appears that Petitioner does not object to the Magistrate Judge’s finding that the Government’s written notices
were constitutionally sufficient (see Dkt. #15). Nevertheless, the Court has conducted a de novo review of the
record and, in light of the facts recited supra, agrees with the Magistrate Judge’s finding that these notices were
constitutionally sufficient.

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seized property—through the criminal proceeding itself—the Government could have sought
(and here did seek) forfeiture through civil administrative (nonjudicial) proceedings vis-à-vis 21
U.S.C. § 881 and related provisions. See Rubio v. United States, No. C.A. C-05-355, 2006 WL
1292129, at *2-3 (S.D. Tex. May 8, 2006) (explaining the difference between criminal and civil
forfeiture provisions and dismissing plaintiff’s action for wrongful forfeiture where plaintiff
argued for return of property on the basis that the “property was seized pursuant to a non-judicial
forfeiture proceeding rather than a criminal forfeiture proceeding”); cf. Rankin, 556 F. App’x at
309. Accordingly, Petitioner’s objection to the Magistrate Judge’s finding that the Government
could seek forfeiture of the funds seized from Petitioner’s home, Petitioner’s person, and
Accounts x8231, x9419, and x3678 under the civil administrative forfeiture provisions of
21 U.S.C. § 881 and 19 U.S.C. § 1607 rather than under the criminal forfeiture provisions of
21 U.S.C. § 853 lacks merit. The Court, therefore, overrules this objection.

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CONCLUSION
Having considered each of Petitioner’s timely filed objections (Dkt. #15) and the
Government’s Response (Dkt. #16), and having conducted a de novo review, the Court is of the
opinion that the findings and conclusions of the Magistrate Judge are correct and adopts the
Magistrate Judge’s report (Dkt. #12) as the findings and conclusions of the Court.
Accordingly, it is ORDERED that Petitioner’s Motion Pursuant to Federal Rules of
Criminal Procedure, Rule 41(g) Requesting Return of Property (Dkt. #1) be GRANTED IN
PART AND DENIED IN PART.
It is further ORDERED that Petitioner is not entitled to the return of and has forfeited
any right, title, and interest in the following: (1) $27,700 in United States currency seized at the
time of Petitioner’s arrest, (2) $2,691.56 in United States currency seized from account x8231,
(3) $830.30 in United States currency seized from account x9419, or (4) $1,165.97 in United
States currency seized from account x3678. Petitioner is entitled to the return of the 308 rifle,
but only to an appropriate designee of his choosing and only upon filing a petition with the Court
.

for such relief.
All relief not previously granted is DENIED.
The Clerk is directed to CLOSE this civil action
IT IS SO ORDERED.
SIGNED this 29th day of September, 2016.

___________________________________
AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE

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