Arango v. U.S. Dept. of the Treasury, 95-5267

Decision Date24 June 1997
Docket NumberNo. 95-5267,95-5267
Citation115 F.3d 922
Parties11 Fla. L. Weekly Fed. C 79 William Alberto ARANGO, Plaintiff-Appellant, v. UNITED STATES DEPARTMENT OF THE TREASURY, United States Customs Service, Defendants-Appellees.
CourtU.S. Court of Appeals — Eleventh Circuit

Alan I. Karten, Miami, FL, for Appellant.

Dawn Bowen, U.S. Atty., Adalberto Jordan, Neal J. Stephens, Asst. U.S. Attys., Miami, FL, for Appellees.

Appeal from the United States District Court for the Southern District of Florida.

Before TJOFLAT and EDMONDSON, Circuit Judges, and O'NEILL *, Senior District Judge.

O'NEILL, Senior District Judge:

Appellant William Alberto Arango appeals the dismissal of his complaint challenging the administrative forfeiture of $476,590 seized from his home. Arango's complaint alleges that the Customs Service denied him due process of law by arbitrarily and capriciously rejecting his proof of indigence, thus requiring him to post bond to obtain a judicial forfeiture hearing. Because we find that Customs afforded Arango an adequate opportunity to prove his eligibility for waiver of the bond requirement and reached a decision rationally based on the facts before it, we affirm.

I.

In our plenary review of the district court's dismissal of Arango's complaint, we draw the facts from the complaint and documents incorporated therein, accepting them as true and construing them in the light most favorable to Arango. Martinez v. American Airlines, 74 F.3d 247, 248 (11th Cir.1996). 1 On July 24, 1992 United States Customs Service agents seized $476,590 in United States currency from Arango's home during an undercover money laundering investigation. By letter dated August 3, 1992 Customs informed Arango that the currency was subject to forfeiture under a money laundering statute and advised him of his right to seek remission or mitigation of the forfeiture under 19 U.S.C. § 1618. Arango, through counsel, responded on September 16, 1992 by writing "please refer for judicial forfeiture proceeding" on a form provided by Customs.

On November 5, 1992 Customs notified Arango that it intended to initiate summary forfeiture proceedings. Its letter stated that judicial forfeiture proceedings were available if Arango filed a claim for the property and posted a "bond in the sum of $5,000" in accordance with 19 U.S.C. § 1608. It explained that if Arango wanted a judicial hearing but could not afford to post the bond he could apply to proceed in forma pauperis by providing satisfactory proof of his financial inability to post bond under 19 C.F.R. § 162.47(e).

On November 11, 1992 Arango filed a claim of interest and a sworn declaration of indigency in which he stated that he: (1) was self-employed earning an average of $300 per week; (2) did not receive any additional funds from rent, interest, dividends, pensions, or inheritance; (3) did not have any funds in savings accounts; (4) owned a house valued at $80,000 with two mortgages totalling $66,000 and requiring a total monthly payment of $1042.25; (5) owned no stocks or bonds; (6) owned a 1988 Nissan Maxima worth $5,400 with an outstanding loan against it; and (7) was married with four dependent children. On November 25, 1992 Customs acknowledged receipt of Arango's bond waiver request and stated that it required "a financial statement demonstrating Mr. Arango's income and expenses and a copy of Mr. Arango's 1991 Federal Tax Returns." After publishing notice for three successive weeks as required under 19 U.S.C. § 1607, Customs declared the currency forfeited on December 7, 1992.

On December 15, 1992 Arango's attorney provided the requested tax return, which was filed jointly by Arango and his wife. It reported total income of $15,914 and three dependent children. In the accompanying letter Arango stated that he had "previously provided" the financial statement in his initial declaration. On January 6, 1993 Customs responded that it had "referred the information to the appropriate office for investigation" and instructed an agent to review Arango's file to determine "if indeed Mr. Arango cannot afford to submit the bond of $5,000 to proceed with the judicial review of his case." As the district director explained to the agent charged with assessing "whether a waiver of the bond is warranted in this case,"

[t]here are a couple of discrepancies on the financial statement submitted.... The letter states four (4) children and the tax returns reflect (3) children. The financial statement show[s] the expenses of the house and car payments exceed his monthly income. What does he support his family on? 2

The investigator requested an interview to clarify Arango's financial status. Thereafter, Arango, having been informed that Customs suspected the seized currency was part of a money laundering scheme, invoked his Fifth Amendment privilege against self-incrimination and refused to submit to the interview. 3

On May 4, 1993, Customs informed Arango's attorney that it would not waive the bond requirement and explained,

the affidavit presented indicates that Mr. Arango's income is only $300.00 per week; however his monthly mortgage payments total $1042.25. In addition, he also has a car payment. The figures indicate his expenses exceed his monthly income. In order to try to reconcile some of the inconsistencies, the Agent requested to interview your client, which you denied.

In view of the above, if you wish to pursue this case, you must post the cost bond within fourteen (14) days from the date of this letter.

Arango did not post bond and did not obtain a judicial forfeiture hearing.

On December 15, 1994 Arango filed the present action challenging Customs' refusal to waive the bond requirement and commence judicial proceedings. Customs moved to dismiss on the grounds that its denial of Arango's bond waiver petition was reasonable in light of his failure to provide satisfactory proof of his indigency. The district court, adopting the report and recommendation of a United States Magistrate Judge, agreed and dismissed the complaint. Arango filed this appeal.

II.

Under the customs laws, 19 U.S.C. § 1602 et seq., property valued at less than $500,000 is subject to summary administrative forfeiture. §§ 1607-09. 4 To prevent summary forfeiture and obtain a judicial forfeiture hearing a claimant must file a claim to the seized property and post a bond. § 1608; Mayfield v. City of Virginia Beach, 780 F.Supp. 1082, 1084-85 (E.D.Va.1992). The bond is designed "to cover the costs and expenses of the proceedings.... If the outcome of the judicial proceeding is in the claimant's favor, the bond is returned." Faldraga v. Carnes, 674 F.Supp. 845, 847 (S.D.Fla.1987). The bond provision serves to "deter those claimants with frivolous claims" from demanding costly judicial proceedings "without hesitation." Id. at 851. 5 Because the bond requirement would otherwise deny indigent claimants the opportunity to contest forfeiture, Customs regulations provide that "upon satisfactory proof of financial inability to post bond, [Customs] shall waive the bond requirement for any person who claims an interest in the seized property." 19 C.F.R. § 162.47(e). Arango contends that Customs' application of this provision was arbitrary and capricious and denied him due process.

III.

At the outset we note that we lack jurisdiction to review the merits of administrative forfeiture decisions. United States v. One Jeep Wrangler, 972 F.2d 472, 480 (2d Cir.1992); In re $67,470.00, 901 F.2d 1540 (11th Cir.1990). 6 We do, however, have jurisdiction over claims that "do[ ] not challenge the [forfeiture] determination on its merits" but rather seek review of "the adjudicatory process itself." In re $67,470.00, 901 F.2d at 1545. Because Arango's claim that he was improperly denied a judicial forum challenges the procedural safeguards attending the forfeiture, his claim arises under Fifth Amendment's Due Process Clause and the Administrative Procedure Act, 5 U.S.C. § 702 et seq., and comes within our federal question jurisdiction under 28 U.S.C. § 1331. Scarabin v. Drug Enforcement Admin., 919 F.2d 337, 338 (5th Cir.1990); In re $67,470.00, 901 F.2d at 1545. 7

IV.

Due process requires an "opportunity to be heard at a meaningful time and in a meaningful manner." Mathews v. Eldridge, 424 U.S. 319, 333, 96 S.Ct. 893, 902, 47 L.Ed.2d 18 (1976) (citations omitted). Accepting Arango's factual allegations as true, see Martinez, 74 F.3d at 248, we find that Customs afforded Arango ample opportunity to prove his eligibility for bond waiver. It permitted Arango to submit documents in support of his application. Upon finding his affidavit inconclusive it did not summarily reject his application, but requested tax returns and a financial statement, then referred the file to an investigator. Finally, it offered Arango an interview to resolve identified discrepancies. Arango declined the interview and did not submit additional materials to address Customs' concerns. 8 This process afforded Arango a meaningful opportunity to prove his "financial inability to post bond" under § 162.47(e) and thus to obtain a judicial hearing. By permitting Arango to submit affidavits and documents to support his petition and by offering him an interview to explain unsatisfactory portions thereof Customs afforded Arango all the process he was due. 9

Arango asserts that the offer of an interview did not afford him an adequate opportunity to cure deficiencies in his application because Customs' ongoing money laundering investigation posed a risk of self-incrimination that required him to refuse the interview on Fifth Amendment grounds. However, the Fifth Amendment does not forbid adverse inferences against civil litigants, including claimants in civil forfeiture proceedings, who assert the privilege against self-incrimination. See United States v. Two Parcels of Real Property, 92 F.3d 1123, 1129 (11th Cir.1996); United States v. Certain Real Property &...

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