513 F.3d 991 (9th Cir. 2008), 05-16614, United States v. Approximately $1.67 Million (US) in Cash, Stock and Other Valuable Assets Held by or at 1) Total Aviation Ldt.

Docket Nº:05-16614.
Citation:513 F.3d 991
Party Name:UNITED STATES of America, Plaintiff-Appellee, Daniel Hartog, Claimant-Appellant, and Victor A. Carbonneau; Total Financial Company Limited; Total Aviation Consultants Ltd., Claimants, v. APPROXIMATELY $1.67 MILLION (US) IN CASH, STOCK, AND OTHER VALUABLE ASSETS HELD BY OR AT: 1) TOTAL AVIATION LDT., Account No. 7092686, Located at Barclays Bank PLC
Case Date:January 22, 2008
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
FREE EXCERPT

Page 991

513 F.3d 991 (9th Cir. 2008)

UNITED STATES of America, Plaintiff-Appellee,

Daniel Hartog, Claimant-Appellant,

and

Victor A. Carbonneau; Total Financial Company Limited; Total Aviation Consultants Ltd., Claimants,

v.

APPROXIMATELY $1.67 MILLION (US) IN CASH, STOCK, AND OTHER VALUABLE ASSETS HELD BY OR AT: 1) TOTAL AVIATION LDT., Account No. 7092686, Located at Barclays Bank PLC, Grand Cayman, Cayman Islands, British West Indies; 2) Deacon Barclays De Zoete Wedd Limited, Account No. 13603A-2 aka Barclays Private Bank & Trust CM1633, Located at Barclays Private Bank & Trust (Cayman) Limited, Grand Cayman, Cayman Islands, British West Indies; 3) Total Financial Consultants Ltd., Account Reference 310205-633500, Located at the Barclays Private Bank & Trust (Cayman) Limited, Grand Cayman, Cayman Islands, British West Indies; 4) Cashiers Check 11405244-152 in the Amount of $85,000 (US), Drawn at the Royal Bank of Canada, Georgetown, Grand Cayman, Cayman Islands, British West Indies, on or about March 20, 1995; and 5) Cashiers Check 11405244-141 in the Amount of $21,250 (US) Drawn at the Royal Bank of Canada, Georgetown, Grand Cayman, Cayman Islands, British West Indies, on or about March 17, 1995, Defendants.

No. 05-16614.

United States Court of Appeals, Ninth Circuit.

Jan. 22, 2008

Argued and Submitted Aug. 15, 2007.

Page 992

[Copyrighted Material Omitted]

Page 993

COUNSEL

David A. Nickerson, San Rafael, CA, for the claimant-appellant.

Kevin V. Ryan, United States Attorney, Barbara J. Valliere, Assistant United States Attorney, and Stephanie M. Hinds, Assistant United States Attorney, San Francisco, CA, for the plaintiff-appellee.

Appeal from the United States District Court for the Northern District of California; James Larson, Magistrate Judge, Presiding. D.C. No. CV-98-02360-JL.

Page 994

Before: DIARMUID F. O'SCANNLAIN, HAWKINS, and KIM McLANE WARDLAW, Circuit Judges.

OPINION

WARDLAW, Circuit Judge

Daniel Den Hartog, a twice-convicted drug smuggler and trafficker who had on deposit in certain Cayman Island bank accounts $1.67 million in alleged drug trafficking proceeds, appeals the grant of summary judgment in favor of the United States in its civil forfeiture action filed in the United States District Court for the Northern District of California. We must decide whether (1) the district court applied the correct jurisdictional standard and properly found that it had in rem jurisdiction over the forfeited funds; (2) the government met its burden of demonstrating probable cause to seize the funds, so as to warrant summary judgment; and (3) the five-year delay between the government's seizure of the funds in August 1993 and the filing of this action in June 1998 violated Hartog's due process rights. Because we conclude that jurisdiction properly lies in the Northern District of California, that Hartog failed to adduce a genuine issue of material fact that the funds derived from legitimate sources, and that Hartog suffered no prejudice due to the government's delay, we affirm the district court.

I. BACKGROUND

Hartog's entanglement in the drug trade stretches back nearly thirty years. In 1979, Hartog had been convicted of conspiracy to transport 1,066 kilograms of marijuana in the State of Arizona. That conviction, however, did not dissuade Hartog from continuing his involvement in drug trafficking. Numerous reports from the Federal Bureau of Investigation detail statements from Hartog's former associates implicating him in continued drug-smuggling efforts throughout the 1980s. Marijuana smuggled into the United States in 1987 eventually led to Hartog's 1992 arrest and sentence to fifteen years imprisonment.

The planning for the 1987 scheme, which involved two separate shipments, began as early as 1986. In December 1986, Hartog told Seth Booky, a business associate, that the two shipments consisted of a smaller load of approximately ten tons and a second "big" load.1 A month later, Hartog, Booky and three other co-conspirators met in Carmel, California, where Hartog claimed ownership over half of the shipment and granted Booky part of the distribution rights. Over the following months, Hartog held a series of meetings with associates in San Francisco and Carmel where it was decided to smuggle the first load through Hawaii and the second through Seattle. To effectuate the plan, Booky procured false identifications for Hartog and other participants. Booky mailed these false documents to Hartog in Monterey.

After traveling to Asia to orchestrate the impending delivery, Hartog informed Booky in May that both shipments were imminent. In July 1987, U.S. Customs officials seized nearly twelve tons of marijuana bound for Hawaii and made seven arrests related to the shipment. Despite the ongoing investigation, the government failed to interdict the second (and larger) planned shipment. The setback did not appear to deter Hartog. After the interception of the Hawaii shipment, Hartog asked Booky if he still planned on distributing the larger shipment. In August 1987, Hartog told Booky that he soon expected the larger shipment to arrive. Three months later, federal agents found

Page 995

$1.5 million in cash and five kilograms of marijuana inside a Del Rey Oaks, California, storage locker belonging to a co-conspirator. That same month another Hartog associate was arrested in Reno, Nevada as he attempted to launder, with several others, $7.6 million in cash through a local casino.

In February 1990, Hartog was indicted in Hawaii for his role in smuggling the nearly twelve tons of marijuana seized by customs officials three years earlier. Hartog then disappeared and remained a fugitive in Canada. In July 1992, United States Customs Officials lured Hartog back into the country and arrested him. Upon his return, Hartog pleaded guilty to the smuggling charges and was sentenced to fifteen years in prison.

After the arrest and conviction, the government then endeavored to seize the $1.67 million lodged in a Cayman Islands bank it understood to be proceeds from Hartog's drug trafficking scheme. In August 1993, the United States obtained an order from the Grand Court of the Cayman Islands freezing the funds in several bank accounts held on behalf of a Canadian lawyer named Victor Carbonneau.

The frozen funds had traveled a circuitous route to arrive in the Cayman Islands. Years prior, in the summer of 1988, Hartog, then operating under the alias "Daniel Tucker," met with Carbonneau, ostensibly seeking advice on investment methods that would minimize his Canadian tax liability. Carbonneau suggested that Hartog set up bank accounts in Switzerland. Accepting the advice, Hartog traveled to Geneva where he established several bank accounts and deposited cash and checks that as of 1998 had appreciated into approximately $1.67 million. Due to incessant conflicts between Hartog and the Swiss bank, the funds were transferred several times, first into Carbonneau's personal account in Geneva and later spread among several of Carbonneau's personal bank accounts in the Cayman Islands. During their many meetings, Hartog had told Carbonneau that he inherited the money from his recently deceased father. Once Carbonneau became aware that "Daniel Tucker" was actually "Daniel Hartog" and likely involved in drug smuggling, he barred Hartog from access to the funds.

In June 1998, the government commenced this forfeiture action against the seized funds in the District Court for the Northern District of California. After intermittent discovery, Hartog moved to dismiss the government's action for lack of jurisdiction. Denying the motion, the district court held that it had in rem jurisdiction because it exercised constructive control over the funds. Once the Cayman Islands court had frozen the funds, it subsequently enforced the orders of the United States district court, thereby acting as its agent. The district concluded that this agency relationship established its control over the funds, investing it with in rem jurisdiction.

The government then filed for summary judgment in October 2004. The government asserted there existed no disputed material facts regarding its showing of probable cause that the seized funds derived from Hartog's drug-trafficking and money-laundering...

To continue reading

FREE SIGN UP