Alli-Balogun v. U.S.
| Decision Date | 22 February 2002 |
| Docket Number | Docket No. 00-6321. |
| Citation | 281 F.3d 362 |
| Parties | Hakeem O. ALLI-BALOGUN, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Second Circuit |
Michael J. Goldberger, Assistant United States Attorney, Brooklyn, New York (Varuni Nelson, Arthur P. Hui, Assistant United States Attorneys, on the brief), for Defendant-Appellee.
Jeffrey G. Pittell, New York, New York, for Plaintiff-Appellant.
Before: MINER, JACOBS, CALABRESI, Circuit Judges.
Plaintiff-appellant Hakeem O. Alli-Balogun appeals from the judgment of the United States District Court for the Eastern District of New York (Weinstein, J.), dismissing his complaint demanding return of a Range Rover seized by the United States.
The vehicle was seized when Alli-Balogun was arrested in 1992. Although the government served notice of forfeiture within the five-year statute of limitations afforded to the government for commencing forfeiture proceedings, see 19 U.S.C. § 1621, the notice was misdirected. The district court ruled that because Alli-Balogun had acknowledged through counsel at sentencing that he learned of the forfeiture within the limitations period and signaled that he would not seek to reclaim his seized property, the statute of limitations was tolled.
We affirm on other grounds.
Alli-Balogun was arrested on drug charges on October 8, 1992, and convicted of conspiracy to import heroin and importing heroin in April 1994. On March 16, 1995, Alli-Balogun was sentenced to 360 months imprisonment. Property seized from Alli-Balogun at the time of his arrest included jewelry, money, a BMW, and a 1991 Range Rover.
The civil forfeiture of funds or property that are the proceeds of drug transactions is authorized by 21 U.S.C. § 881:
(a) Subject Property
The following shall be subject to forfeiture to the United States and no property right shall exist in them:
* * * * * *
(6) All moneys ... furnished or intended to be furnished by any person in exchange for a controlled substance..., all proceeds traceable to such an exchange, and all moneys ... used or intended to be used to facilitate any violation of this subchapter....
(b) Any property subject to civil forfeiture to the United States under this subchapter may be seized by the Attorney General upon process issued pursuant to the Supplemental Rules for Certain Admiralty and Maritime Claims by any district court of the United States having jurisdiction over the property....
21 U.S.C. § 881 (emphases added). For property worth no more than $500,000, the Drug Enforcement Agency ("DEA") follows the administrative forfeiture procedure set out in the customs laws. 19 U.S.C. § 1607(a)(1)(1999); 21 U.S.C. 881(d); Torres v. $36,256.80 U.S. Currency, 25 F.3d 1154, 1156 (2d Cir.1994). See United States v. Idowu, 74 F.3d 387, 394 (2d Cir.), cert. denied, 517 U.S. 1239, 116 S.Ct. 1888, 135 L.Ed.2d 182 (1996). The DEA accordingly commences administrative forfeiture by publication and notice to each person having an interest in the property. 19 U.S.C. § 1607(a). A claimant in receipt of such notice can challenge forfeiture in a "judicial" proceeding by filing a timely claim with the DEA. 19 U.S.C. § 1608; 28 C.F.R. §§ 9.1-9.5 (2002); 21 C.F.R. §§ 1316.75-76 (2002). Generally, if no claim is filed, an administrative forfeiture occurs by default. 19 U.S.C. § 1609(a); 21 C.F.R. § 1316.77 (2002). The filing of a timely claim stops the administrative forfeiture process and the United States Attorney is required to institute judicial forfeiture proceedings. 19 U.S.C. §§ 1603(b), 1608; 21 C.F.R. §§ 1316.76(b), 1316.78 (2002). Subject to exceptions such as tolling, such forfeiture proceedings must be commenced by the government within five years. 19 U.S.C. § 1621 (1).
On November 9, 1992, the DEA commenced an administrative proceeding pursuant to 21 U.S.C. § 881, by issuing a "Notice of Seizure" ("Notice") to forfeit the Range Rover, which had been valued at $36,500. The DEA sent the Notice (setting forth how to contest forfeiture) to (i) Alli-Balogun's home address, (ii) Manhattan's Metropolitan Correctional Center ("MCC"), where Alli-Balogun was believed to be held, and [iii] lien-holder General Motors Acceptance Corporation ("GMAC"). Less than two weeks before the Notice was sent, however, Alli-Balogun was transferred from MCC to the Federal Correctional Institute in Otisville, New York ("FCI Otisville"). Apparently, the Notice that arrived at MCC on November 17, 1992 was not forwarded to FCI Otisville, so Alli-Balogun was without notice of the forfeiture proceedings regarding the Range Rover. On December 24, 1992, having received no claim from Alli-Balogun contesting forfeiture, the DEA declared the Range Rover administratively forfeited pursuant to 19 U.S.C. § 1609. It was sold at an auction for $20,900 in early 1993. GMAC's lien was paid out of the proceeds, and the balance of $2,600.18 was forfeited to the United States.
At Alli-Balogun's sentencing on March 16, 1995, the judge asked Alli-Balogun whether any property had been taken from him and not returned. Alli-Balogun answered, "[t]wo cars and some jewelry." Joint App. at 131 (hereinafter "JA"). Counsel for Alli-Balogun, Mr. Weiss, commented that some cars and jewelry had been "forfeited," and that prior counsel had drafted but not filed papers presumably seeking their return; he added: "I don't believe there is anything I can do about it at this point." Id. The court responded: "There is no return of property that I can order, no restitution, no fine." Id.
On or about April 24, 1996, Alli-Balogun pro se filed a motion in his criminal case seeking return of the Range Rover, and stated that he had not "heard anything" about the property post-seizure until "it was mentioned at the sentencing hearing." Id. at 11. The district court ordered the government to respond, but the government did not do so and the motion was never decided.
On April 13, 1998, Alli-Balogun pro se filed a complaint seeking return of the Range Rover. Alli-Balogun alleged that the administrative forfeiture violated due process because he lacked adequate notice of the proceedings.2 Counsel was appointed for Alli-Balogun on October 26, 1999.
On June 20, 2000, Alli-Balogun moved for summary judgment, on the grounds that [i] the forfeiture was "null and void" for want of notice, and [ii] because the government's five-year limitations period for commencing forfeiture had run, the government could no longer initiate a proceeding. Alli-Balogun demanded return of the Range Rover as a matter of law. The government conceded that Alli-Balogun was not given proper notice of the forfeiture proceedings, but contended that the lack of notice could be cured by allowing Alli-Balogun to judicially challenge the administrative forfeiture. The district court found that although Alli-Balogun did not receive constitutionally adequate notice, the government could have presumed, based on the colloquy at the March 1995 sentencing hearing, that Alli-Balogun knew about the forfeiture and did not intend to contest it. The judge ruled, therefore, that the statute of limitations was equitably tolled, and therefore had not yet expired. After denying Alli-Balogun's motion for summary judgment, the district court held a hearing on the merits as to whether the United States had probable cause to seize the Range Rover.
In a judicial proceeding contesting forfeiture, the DEA has the burden of establishing probable cause for instituting the forfeiture proceeding, i.e., that there is "probable cause to believe that the properties are the fruits of illegal drug activity." United States v. Daccarett, 6 F.3d 37, 55-56 (2d Cir.1993) (quoting United States v. 228 Acres of Land and Dwelling Located on Whites Hill Road, 916 F.2d 808, 811-12 (2d Cir.1990), cert. denied, 498 U.S. 1091, 111 S.Ct. 972, 112 L.Ed.2d 1058 (1991)); 19 U.S.C. § 1615; 21 U.S.C. § 881(b)(4); see also Boero v. DEA, 111 F.3d 301, 304 (2d Cir.1997). If the government shows this, the burden of proof shifts to the claimant to demonstrate an interest in the property. 19 U.S.C. § 1615; Boero, 111 F.3d at 304. The claimant may do so by showing that the property is not the proceeds of illegal drug activities or that the claimant is an "innocent owner." 21 U.S.C. § 881(a)(6) (1999) (current version at 18 U.S.C § 983(d) (2001)).3 If the claimant fails to bear that burden, the government is entitled to a judgment of forfeiture.
At the probable cause hearing, Special Agent Patrick Ahearne introduced evidence on behalf of the government that in January 1992, Alli-Balogun paid $32,679.25 for the Range Rover, financed in part by a $15,000 GMAC loan, with the $17,679.25 balance paid by Alli-Balogun with a $9000 Citibank check and $8,679.25 cash. Ahearne opined that Alli-Balogun earned approximately $300,000 to $500,000 from the drug trafficking conspiracy that ran from April 1991 to May 1992.
Alli-Balogun testified that he paid for the car with his life savings, accumulated from his employment from 1983 through 1992. The record shows that Alli-Balogun worked for the City of New York between 1983 to 1990, worked for private architectural firms between 1983 to 1989, and owned and operated an import/export company during 1989, 1990, and 1992.4 On his tax returns between 1985 and 1989, he reported annual earnings no greater than $26,500, and for the years 1989, 1990, and 1991, he reported $25,593.57, $30,999, and $4,245, respectively. Alli-Balogun claimed at trial that part of his life savings came from earnings as a cab driver.
During this time, Alli-Balogun supported his wife and four minor children; made monthly payments of $1,025 in rent and $500 on a mortgage for a vacant building he owned in the Bronx; and incurred gasoline, insurance, and maintenance expenses on at least one vehicle.
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