U.S. v. All Assets of G.P.S. Automotive Corp.

• Decision Date: 05 December 1995
• Docket Number: D,No. 616,616
• Citation: 66 F.3d 483
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. ALL ASSETS OF G.P.S. AUTOMOTIVE CORP., Real Property and Premises known as 156 Peconic Ave., Medford, NY, District 0200, Section 773.00, Block 01.00, Lots 5.20, 6.00 and 10.00 on the Suffolk County Tax Map, Defendant-Appellant, Philip Schaffer, Sr., Grace Schaffer & Philip J. Schaffer, Claimants-Appellants. ocket 94-6115.
• Court: U.S. Court of Appeals — Second Circuit

Page 483

66 F.3d 483

UNITED STATES of America, Plaintiff-Appellee, v. ALL ASSETS OF G.P.S. AUTOMOTIVE CORP., Real Property and Premises known as 156 Peconic Ave., Medford, NY, District 0200, Section 773.00, Block 01.00, Lots 5.20, 6.00 and 10.00 on the Suffolk County Tax Map, Defendant-Appellant Philip Schaffer, Sr., Grace Schaffer & Philip J. Schaffer Claimants-Appellants.

No. 616, Docket 94-6115.

United States Court of Appeals Second Circuit.

Argued Dec. 21, 1994.

Decided Sept. 18, 1995.

Rehearing Denied Dec. 5, 1995.

Neufeld & O'Leary, New York City (David Neufeld, Denis O'Leary, of counsel) for appellants G.P.S. Automotive Corp., Philip Schaffer, Sr. and Grace Schaffer.

Gino Josh Singer, New York City, for appellant Philip J. Schaffer.

Gary Brown, Asst. U.S. Attorney, Brooklyn, NY (Zachary W. Carter, U.S. Attorney for the Eastern District of New York, Deborah Zwany, August Sellitto, Asst. U.S. Attorneys, Deborah Fanning, Special Asst. U.S. Attorney, of counsel) for appellee.

Before: ALTIMARI, LEVAL, and CALABRESI, Circuit Judges.

CALABRESI, Circuit Judge:

In rem civil forfeiture, though civil in name, is actually a cross-breed of the criminal and civil law. It is therefore not surprising that recent Supreme Court decisions have indicated that the Eighth Amendment and the Double Jeopardy Clause of the Fifth Amendment, constitutional safeguards usually associated only with criminal defendants, provide some protection for those whose property is subject to confiscation in civil forfeiture proceedings. The effect that these constitutional protections have on such proceedings is anything but obvious, however, especially since the Supreme Court has expressly left to the Courts of Appeals the task of working out the implications of its decisions in this area.

We are confronted with both Eighth Amendment and double jeopardy issues in the appeal of G.P.S. Automotive Corporation ("GPS"), Philip J. Schaffer ("Phil Schaffer"), Philip Schaffer Sr. ("Skip Schaffer"), and Grace Schaffer from a judgment entered by the United States District Court for the Eastern District of New York (Leonard D. Wexler, Judge) that ordered the forfeiture of GPS's assets and associated real property owned by the Schaffers. In addition to claiming that there was insufficient evidence to support a forfeiture, the appellants assert that the forfeitures ordered by the District Court violate the Eighth Amendment's Excessive Fines Clause, and that the forfeitures against Phil Schaffer and GPS transgress the Fifth Amendment's Double Jeopardy Clause.

We find that the evidence developed below supported the orders of forfeiture. We also find, however, that the claim based on the Double Jeopardy Clause calls for more fact-finding in the District Court before it can be resolved. We likewise find that the claim based on the Excessive Fines Clause requires further consideration after additional fact-finding. Consequently, we vacate the forfeiture orders and remand the case for further proceedings.

BACKGROUND

Since its inception, GPS, an automotive salvage and repair shop in Medford, New York, has been jointly owned by Skip Schaffer, his wife Grace Schaffer, and their son Phil Schaffer. The three Schaffers also own jointly two of the three parcels of land upon which GPS is located, and the corporation itself owns the third. Both father and son have been responsible for the overall operations of GPS, and the son served as president of the company through 1992.

In June 1990, Suffolk County police began an investigation of GPS after Brian Hoffner, a former GPS employee and convicted car thief, told authorities that he had been selling stolen car parts to GPS on a regular basis since 1980. Hoffner assisted the police investigation of GPS by telephoning Phil Schaffer Subsequently, Suffolk County police officers executed three search warrants at the GPS yard. The police seized numerous cars, trucks and parts with obliterated or removed vehicle identification numbers ("VINs"). The police also found a few preserved VINs in the GPS yard, and these identification numbers were traced back to eight vehicles that had been reported stolen. Also seized during the search were GPS's financial records. These records included a number of irregular entries--e.g., disbursements to fictitious businesses and parts' transactions without the usual notation of invoice numbers or VINs.

to set up deals for stolen cars or insurance "give-ups"--schemes in which a car's theft is arranged to enable the filing of a false insurance claim. Hoffner thereafter delivered a Corvette and additional car parts to the GPS yard, and Phil Schaffer, apparently believing the car and parts to be from insurance give-ups, paid Hoffner for his efforts.

On this evidence, Phil Schaffer and GPS were tried and convicted in New York state court on multiple counts of criminal possession of stolen property, illegal possession of VINs, and falsifying business records. Phil Schaffer was sentenced to 1.33 to 4 years of imprisonment and GPS was fined $10,000.

In January 1991, the Government filed the instant in rem civil forfeiture action, pursuant to 18 U.S.C. Sec. 981. The Government sought all the assets of GPS as well as the parcels of land upon which it is located. It based its forfeiture demand on alleged violations of the statutes prohibiting trafficking in vehicles or parts with tampered VINs, see 18 U.S.C. Sec. 2321, and money laundering, see 18 U.S.C. Sec. 1956. The Government maintained that GPS had conducted a large-scale trade in stolen car parts and had falsified business records to conceal such transactions.

The appellants joined the litigation by filing claims of ownership to the defendant properties. Prior to trial, Grace Schaffer and Skip Schaffer moved for summary judgment dismissal, claiming that the Government's evidence in support of forfeiture was insufficient as a matter or law. GPS and Phil Schaffer made a separate motion to dismiss on the ground that, after their convictions in state court, the Government's forfeiture action was barred by the Fifth Amendment's Double Jeopardy Clause. These claims were rejected by the District Court, and the case proceeded to trial.

In January 1994, after a five-day bench trial, the District Court issued detailed Findings of Fact and Conclusions of Law. The Court held that "GPS regularly and continuously engaged in transactions involving illegal vehicles and parts wiped clean of [VINs] to render them untraceable." Findings of Fact and Conclusion of Law, United States v. All Assets of G.P.S. Automotive Corp., No. 91-0223, at 11 (E.D.N.Y. Jan. 26, 1994). It also found that GPS made payments to "fictitious names and businesses to conceal the nature and sources of the illegal vehicles and parts" and "served as a conduit for the proceeds of the illegal transactions." Id. at 11-12. The Court concluded that these transactions were "handled primarily by Phil Schaffer," that "Skip Schaffer was fully aware of the illegal transactions," but that "Grace Schaffer had no knowledge of the commission of the illegal transactions." Id. at 10.

Based on these determinations, the District Court ruled that the assets of GPS and the real property interests of Skip Schaffer and Phil Schaffer were to be forfeited to the Government. The Court held, however, that Grace Schaffer was an "innocent owner," and hence should not have her interest in the real property forfeited. It then scheduled a hearing to determine the extent of Grace Schaffer's interest in the defendant properties. Prior to this hearing, and upon the parties' motion, the District Court certified the matter for immediate appeal, pursuant to Fed.R.Civ.P. 54(b), and entered a partial judgment.

DISCUSSION

Title 18 U.S.C. Sec. 981 provides, inter alia, that any "property, real or personal, involved in a transaction or attempted transaction in violation of ... section 1956 or 1957 of this title [the federal money-laundering statutes], or any property traceable to such property" is subject to forfeiture to the United States. 18 U.S.C. Sec. 981(a)(1)(A). The Government's

complaint claimed that the defendant property had been used to facilitate violations of 18 U.S.C. Sec. 1956, through GPS's transactions that involved motor vehicles and parts with tampered VINs, and that the latter was itself a violation of 18 U.S.C. Sec. 2321. ¹

I. Evidence Supporting Forfeiture

A. Illegal Activity

The appellants contend that the Government failed to present sufficient evidence to establish violations of the statutes prohibiting money laundering and trafficking in parts with tampered VINs. Given the allocation of burdens in civil forfeiture actions and the proof introduced at trial, however, such claims are unavailing.

To support a forfeiture under 18 U.S.C. Sec. 981, the Government initially needs only to establish "probable cause," i.e. some reasonable grounds, to believe that there is a nexus between the defendant property and illegal conduct. See Marine Midland Bank, N.A. v. United States, 11 F.3d 1119, 1126 (2d Cir.1993); see also United States v. Daccarett, 6 F.3d 37, 55-56 (2d Cir.1993) (applying the analogous forfeiture provision of 21 U.S.C. Sec. 881), cert. denied, --- U.S. ----, 114 S.Ct. 1294, 127 L.Ed.2d 648 (1994). Once the Government has made such a showing, the burden shifts to the claimant to show, by a preponderance of the evidence, that the defendant property was not in fact used unlawfully and hence is not subject to forfeiture. See Daccarett, 6 F.3d at 57; United States v. 4492 South Livonia Road, 889 F.2d 1258, 1267 (2d Cir.1989).

In view of these standards, the evidence developed at trial was more than sufficient to support the forfeiture orders. Informant Hoffner testified about his many sales of stolen vehicles and components with removed VINs to GPS. Among these were several unlawful transactions conducted with Phil Schaffer during the Suffolk County police investigation. In...