In re Funds on Deposit

• Decision Date: 24 September 2012
• Docket Number: Case No. 12–mj–3041A–KPN.,Case No. 12–mj–3041G–KPN.,Case No. 12–mj–3041H–KPN.,Case No. 12–mj–3041P–KPN.,Case No. 12–mj–3041I–KPN.,Case No. 12–mj–3041F–KPN.
• Citation: 919 F.Supp.2d 169
• Parties: In re FUNDS ON DEPOSIT.
• Court: U.S. District Court — District of Massachusetts

919 F.Supp.2d 169

In re FUNDS ON DEPOSIT.

Case Nos. 12–mj–3041A–KPN, 12–mj–3041F–KPN, 12–mj–3041G–KPN, 12–mj–3041H–KPN, 12–mj–3041I–KPN, 12–mj–3041P–KPN.

United States District Court, D. Massachusetts.

Sept. 24, 2012.

MEMORANDUM AND ORDER REGARDING MOVANTS' MOTION TO AMEND AND SUPPLEMENT EMERGENCY MOTION FOR RETURN OF PROPERTY (Document No. 98) and MOVANTS' MOTION TO AMEND THEIR MOTION TO AMEND AND SUPPLEMENT EMERGENCY MOTION FOR RETURN OF PROPERTY (Document No. 99)¹

NEIMAN, United States Magistrate Judge.

Presently before the court are Movants' Motion to Amend and Supplement Emergency Motion for Return of Property (No. 98) and Movants' Motion to Amend their Motion to Amend and Supplement Emergency Motion for Return of Property (No. 99). Movants and the Government have stipulated that Movants' Emergency Motion for Return of Property (No. 66) no longer represents an emergency. The parties have also agreed to wait until the Government's forthcoming forfeiture action to address the underlying challenges to the seizures, subject, however, to the court's resolution of whether the Government violated the requirement in 18 U.S.C. § 983(a)(1)(A)(i) that notice be provided within sixty days of the seizures (“the 60–day requirement”). The court is now poised to answer that question in the negative.

I. Factual and Procedural Background

On May 31, 2012, the Government obtained warrants from this court to seize funds in various bank accounts and property in connection with an investigation regarding alleged evasion of taxes and money laundering by Movants and related individuals. On June 5, 2012, the Government executed the warrants and seized the funds and property identified therein. Shortly thereafter, the Government agreed to return a portion of the seized funds so that Movants' principal could pay certain payroll obligations. On June 18, 2012, Movants filed an Emergency Motion for Return of Property pursuant to Fed.R.Crim.Pro. 41. Movants argued, in particular, that the seizures were illegal, that the seizures jeopardized certain of Movants' business operations, that the administrativeprocess under 18 U.S.C. § 983 provided an inadequate remedy and, therefore, that an emergency hearing regarding the legality of the seizures was necessary.

On July 2, 2012, the Government filed its Opposition to Movants' Emergency Motion. It argued that the seizures were lawful in that they complied with the Fourth Amendment, that 18 U.S.C. 983(f) provided an adequate remedy at law and, accordingly, that a hearing pursuant to Rule 41 was not appropriate, and that Movants had not demonstrated hardship under 18 U.S.C. § 983(f) which would entitle them to a return of the property. The court held a hearing on July 30, 2012, during which the parties discussed the possibility of returning some additional funds to Movants' principal, in exchange for security in real property, so as to enable him to operate the certain businesses.

On August 7, 2012, Movants filed a Motion to Amend their Emergency Motion for Return of Property (Document No. 98) seeking the return of additional funds and property. Movants also argued therein that the Government violated 18 U.S.C. § 983(a)(1)(A)(i) by failing to provide notice of the seizures within sixty days and, accordingly, that the Government was required to return all of the seized property. On August 9, 2012, Movants filed another Motion to Amend (Document No. 99) which sought to include requests for the return of yet other seized funds. The Government filed an Opposition on August 21, 2012, in which it argued that the 60–day requirement does not apply in this case. Subsequently, Movants filed a Reply and the Government filed a Sur–Reply.

On August 30, 2012, Movants filed a Status Report informing the court that the parties had reached an agreement under which the Government would return another $115,000 of the seized funds for the operation of certain of Movants' businesses in exchange for security in real property. The Status Report also requested that the court hold all motions—except the Motion to Amend and Supplement Emergency Motion for Return of Property and the Motion to Amend their Motion to Amend and Supplement Emergency Motion for Return of Property (Document Nos. 98 and 99)—“in abeyance pending the anticipated filing of judicial forfeiture actions on or before October 1, 2012.” The Status Report stated, however, that Movants still wanted the court to rule on the 60–day requirement issue.²

On August 31, 2012, the court entered an electronic order granting Movants' Motion to Amend their Emergency Motion and Movants' Motion to Amend their Motion to Amend (Document Nos. 98 and 99) to the extent they sought to amend their prior emergency motions for the return of property (Document Nos. 66 and 69); further, as discussed in a subsequent telephone conference with counsel, the court took under advisement the 60–day requirement issue. The court also entered an electronic order acknowledging the parties' agreement, as set forth in the Stipulation, that Movants' Emergency Motion for Returnof Property no longer represented an emergency.

II. Discussion

Movants argue that, because sixty days have passed since the seizures and no written notice has been sent to interested parties, the Government has violated 18 U.S.C. § 983(a)(1)(A)(i) and must return the seized property. In response, the Government argues that the 60–day requirement does not apply in this case because it is not pursuing an administrative (nonjudicial) forfeiture proceeding and, as described, intends to file a civil forfeiture complaint by October 1, 2012. See18 U.S.C. § 983(a)(1)(A)(i) (“[I]n any nonjudicial civil forfeiture proceeding ....” (emphasis added)). The Government also argues that the 60–day requirement in section 983(a)(1)(A)(i) does not apply here since it cannot pursue an administrative forfeiture because the assets are worth more than $500,000 and the Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”) is not authorized to administratively forfeit such assets. In turn, Movants argue that the Government cannot simply announce its intent to pursue judicial forfeiture in the future and avoid the 60–day requirement; rather, as demonstrated by the statute as a whole, Movants assert, the Government has sixty days from the seizure to choose either administrative or civil judicial forfeiture.

A. Statutory Framework

The Civil Asset Forfeiture Reform Act of 2000 (“CAFRA”), 18 U.S.C. § 983 et seq., was enacted, in part, “to curb what Congress perceived as abuses of the existing civil forfeiture system.” United States v. Martin, 460 F.Supp.2d 669, 672 (D.Md.2006). The history and purpose of CAFRA are best set forth in a journal article written by Stefan D. Cassella, The Civil Asset Forfeiture Reform Act of 2000: Expanded Government Forfeiture Authority and Strict Deadlines Imposes on All Parties, 27 J. Legis. 97 (2001). Prior to CAFRA, the article explains, “there was no general-purpose statutory requirement that the government commence a civil forfeiture action-either administrative or judicial-within any specific period of time following the seizure of property.” Id. at 121. Most of the civil forfeiture statutes provided only vague statements that the forfeiture proceedings must be commenced “forthwith,” “without delay,” or “promptly.” Id. at 121–22. “In the absence of any statutory deadlines for the commencement of administrative or civil judicial forfeiture proceedings, the courts ruled that the only protection a property owner had against government delay was the Due Process Clause of the Fifth Amendment, as applied by the Supreme Court in United States v. $8,850 in Currency [461 U.S. 555, 564–65, 103 S.Ct. 2005, 76 L.Ed.2d 143 (1983) ]. Generally, in those cases, the courts declined to find any due process violation despite delays of as much as 2 years in the filing of a judicial complaint.” Cassella, supra, at 123. On the other hand, there were strict deadlines for those attempting to challenge administrative or judicial forfeiture actions. See id. In essence, “[t]he enactment of CAFRA was, in part, a reaction to the perception that there was some inequity in imposing strict deadlines and sanctions on property owners contesting civil forfeiture actions, while not imposing similar deadlines and sanctions on the government. The logic was that if property owners were required to file claims within a fixed period of time, and were made to suffer consequences for failing to do so, the government should face deadlines and suffer consequences as well.” Id. at 125. In short, CAFRA overrides contrary provisions of then-existing law and summarizes the three alternatives which the Government can pursue—an administrative forfeiture proceeding, a judicial forfeiture action, or a forfeiture related to a criminal indictment.³

As to administrative forfeiture proceedings, notice of such proceedings, pursuant to section 983(a)(1), “must, in general, be sent to interested persons within sixty days of the seizure of the property. Under § 983(a)(2), property owners, in turn, have thirty days from last date of publication to file a claim.... If a claim is filed, the United States Attorney has ninety days under § 983(a)(3) to file a civil judicial action (or to include the forfeiture in a related criminal indictment).” Id.

The question here is whether—in light of the phrase “in any nonjudicial forfeiture proceeding”—the 60–day requirement for written notice applies when the Government does not intend (or, as further explained below, does not have the power) to pursue an administrative forfeiture. The Government contends that the 60–day requirement does not apply in such situations. Rather, the Government argues, it need only file a civil judicial forfeiture complaint if the owner whose property has been seized files his or her own claim and then only within ninety days of that claim. See18 U.S.C. § 983(a)(3). Movants have not...