U.S. v. $94,000.00 in U.S. Currency, Along With Any Int erest Earned Thereon in First Financial Sav. Ass'n Account No. 79-70063411

• Decision Date: 09 December 1992
• Docket Number: No. 92-1610,92-1610
• Citation: 2 F.3d 778
• Parties: 39 Fed. R. Evid. Serv. 490 UNITED STATES of America, Plaintiff-Appellee, v. $94,000.00 IN UNITED STATES CURRENCY, ALONG WITH ANY INTEREST EARNED THEREON IN FIRST FINANCIAL SAVINGS ASSOCIATION ACCOUNT # 79-70063411, and $40,000.00 in United States Currency, Along With Any Interest Earned Thereon in Lincoln State Bank Account # 10-002-205-15, Defendants-Appellants, and Zaki Musa Baki YUSUF, Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 778

2 F.3d 778

39 Fed. R. Evid. Serv. 490

UNITED STATES of America, Plaintiff-Appellee, v. $94,000.00 IN UNITED STATES CURRENCY, ALONG WITH ANY

INTEREST EARNED THEREON IN FIRST FINANCIAL SAVINGS

ASSOCIATION ACCOUNT # 79-70063411, and $40,000.00 in United

States Currency, Along With Any Interest Earned Thereon in

Lincoln State Bank Account # 10-002-205-15, Defendants-Appellants,

and

Zaki Musa Baki YUSUF, Appellant.

No. 92-1610.

United States Court of Appeals, Seventh Circuit.

Submitted Dec. 9, 1992. ^*

Decided Aug. 26, 1993.

William J. Lipscomb, Office of the United States Attorney, Milwaukee, WI, for plaintiff-appellee.

Aaron Starobin, Donald Roy Fraker, Starobin & Associates, Thiensville, WI, for defendants-appellants.

Before BAUER, Chief Judge, RIPPLE, Circuit Judge, and GRANT, Senior District Judge. ^**

RIPPLE, Circuit Judge.

This is an appeal from a judgment of forfeiture entered by the district court on the government's 1990 Complaint for Forfeiture of funds deposited in two Milwaukee bank accounts, pursuant to the Currency and Foreign Transactions Reporting Act, 31 U.S.C. Sec. 5317(c) (1988). ¹ Section 5317 makes the failure to report large sums of money, not the importing or exporting of the money, an illegal act. The accounts were in the name of appellant Zaki Musa Baki Yusuf, a Brazilian businessman. Mr. Yusuf filed a claim for the return of the monies, and the matter was tried before a jury. Final judgment was entered in favor of the United States, and on March 10, 1992, Mr. Yusuf filed this appeal. For the reasons that follow, we affirm the judgment of the district court.

I BACKGROUND

Mr. Yusuf had occasion to travel from Brazil to the United States twice prior to his May 12, 1989 visit, which forms the basis for this action. In both 1984 and 1987, he entered the United States and filled out two customs forms, Form 6059B and Form 4790. Form 6059B is the standard Customs Declaration Form required of all people entering the United States. The form requires international travellers to declare cash or monetary instruments in excess of $10,000.00. In addition, the form advises the traveller that, if he is carrying more than $10,000.00, a Form 4790, Report of International Transportation of Currency or Monetary Instruments, must also be filled out. The form warns that failure to file may result in civil penalties and/or criminal prosecution. In the case of flights coming in from Brazil, these forms are typically distributed before the flight lands and are available in English, Spanish, and Portuguese.

In 1984, Mr. Yusuf's Form 4790 indicated that he was carrying $20,400.00; in 1987 the completed Form 4790 indicated that he was carrying $25,000.00. In 1989, however, when he arrived in the United States at the Miami International Airport, he did not fill out a Form 4790. He admitted in his answer to the Amended Complaint that, when he entered the country, he was carrying $134,000.00. R. at 23. One week after his arrival On March 14, 1990, the government filed this forfeiture action, and amended it two weeks later to include a claim for the accrued interest on the bank accounts. The Notice of Complaint for Civil Forfeiture of Property states:

Mr. Yusuf, accompanied by Ibrahim Issa, deposited $94,000.00 in one Milwaukee bank and $40,000.00 in another. When he made these deposits, the bank personnel told him that they would file Form 4789's, which reported the large deposits to the government. Mr. Yusuf claims that the Customs Service had never asked him to fill out a Form 4790, and that he did not know of the requirement to declare the money that he was transporting into the United States.

4. The Complaint for Civil Forfeiture In Rem seeks the forfeiture of the defendant properties pursuant to Title 31 United States Code, Section 5317(c). The defendant property is subject to forfeiture because there is probable cause to believe that the defendant properties were brought into the United States without filing Customs Form 4790 as required by Customs laws. Zaki Musa Baki Yusuf has knowledge of the requirements of filing Customs Form 4790 as he has filed them in the past.

R.9 at 2.

Mr. Yusuf filed a claim for return of the monies and requested production of documents from the government in October 1990. The government has never been able to produce the Form 6059B that Mr. Yusuf allegedly filled out incorrectly when he entered the country in 1989. At trial, it became clear that the government had instituted an unsuccessful search for the form on one occasion and had requested another search (which apparently did not take place) on another occasion. Tr. at 14-16, 18. However, the court denied Mr. Yusuf's motion to dismiss on the basis of the missing document.

Mr. Yusuf was granted two trial continuances because of illness, but the court denied his third request, saying that the Brazilian doctor's conclusory statements about Mr. Yusuf's diabetic condition, without supporting medical records, provided insufficient support for his motion. The trial proceeded in Mr. Yusuf's absence, and the jury returned the three special verdicts. The special verdict questions and answers were as follows:

[1.] Did the claimant, when he entered the United States on May 12, 1989, own the currency in question? The answer is No.

[2.] Did the claimant, when he entered the United States on May 12, 1989, have notice that he was required to complete Form 6059-B? Answer: Yes.

[3.] Did claimant, when he entered the United States on May 12, 1989, correctly fill out Form 6059-B? Answer: No.

Tr. at 263-64.

Mr. Yusuf appeals various issues. Some deal with the standards that govern civil forfeitures of this nature. Some deal with the conduct of the litigation. We shall address each issue in the following discussion.

II BURDEN OF PROOF ON PROBABLE CAUSE

A. Court's Allocation of Burden of Proof

Mr. Yusuf questions whether the allocation of the burden of proof regularly employed in other forfeiture situations ought to be employed in the context of currency reporting violations. As a general rule, in a civil forfeiture case, the government's initial burden is to establish probable cause to believe that the property is subject to forfeiture. United States v. On Leong Chinese Merchants Ass'n Bldg., 918 F.2d 1289, 1292 (7th Cir.1990), cert. denied, --- U.S. ----, 112 S.Ct. 52, 116 L.Ed.2d 29 (1991). "Probable cause" has been defined in this context as a "reasonable ground for the belief of guilt supported by less than prima facie proof but more than mere suspicion." United States v. Three Hundred Sixty Four Thousand Nine Hundred Sixty Dollars ($364,960.00) in United States Currency, 661 F.2d 319, 322-23 (5th Cir.1981). After probable cause has been demonstrated, "the ultimate burden shifts to the claimant to prove by a preponderance of the evidence that the property is In all suits or actions ... brought for the forfeiture of any vessel, vehicle, aircraft, merchandise, or baggage seized under the provisions of any law relating to the collection of duties on imports or tonnage, where the property is claimed by any person, the burden of proof shall lie upon such claimant; and in all suits or actions brought for the recovery of the value of [any such property] because of violation of any such law, the burden of proof shall be upon the defendant: Provided, That probable cause shall be first shown for the institution of such suit or action....

                not subject to forfeiture."  On Leong, 918 F.2d at 1292. 2  This procedure is mandated in civil forfeiture proceedings pursuant to 19 U.S.C. Sec. 1615 (1988).  This section provides in pertinent part
                

In addition, 19 U.S.C. Sec. 1600, enacted in 1984, explicitly makes this provision applicable to the matter before us:

The procedures set forth in sections 1602 through 1619 of this title shall apply to seizures of any property effected by customs officers under any law enforced or administered by the Customs Service unless such law specifies different procedures.

We also note that the Eighth Circuit, although not explicitly relying on the terms of 19 U.S.C. Sec. 1600, has adopted expressly the scheme of 19 U.S.C. Sec. 1615 for forfeitures under the currency reporting statute. United States v. Twenty Thousand Seven Hundred Fifty-Seven Dollars and Eighty-Three Cents ($20,757.83) Canadian Currency, 769 F.2d 479, 481 (8th Cir.1985).

Despite this congressional mandate, Mr. Yusuf argues that the punitive nature of civil forfeiture renders it more akin to a criminal than a civil proceeding. He submits that the burden should remain with the government because of the fundamental due process concern implicated by the forfeiture of such a large sum of money when the violation is the failure to fill out a form in order to perform an entirely legal act (i.e., import a sum over $10,000.00).

There can be little question that civil forfeiture is a harsh procedure, although it also must be acknowledged that it does serve an important function. As Judge Weinstein of the Eastern District of New York has written:

Money forfeited for violation of the currency reporting statute becomes an instrumentality of crime at the moment the traveler fails to declare it.

Forfeiture for violations of the Currency and Foreign Transactions Reporting Act is supportable as a reasonable method of ensuring enforcement of currency declaration requirements. Those requirements are, in turn, rational in light of the pervasive underground economy that avoids taxes. In addition to supporting inducements to pay taxes, the cash reporting requirements inhibit money-laundering and provide leads to criminal sources of cash. It cannot be said that the cash reporting-forfeiture statutes do not have well defined and sensibly effectuated ends.

United States v. United States Currency in the Amount of One Hundred Forty-Five Thousand, One Hundred Thirty-Nine Dollars ($145,139), 803 F.Supp. 592, 597 (E.D.N.Y.1992) (citation omitted); see also H.R...