Lobzun v. U.S.

• Citation: 422 F.3d 503
• Decision Date: 02 September 2005
• Docket Number: No. 04-3894.,04-3894.
• Parties: Kym LOBZUN, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 503

422 F.3d 503

Kym LOBZUN, Plaintiff-Appellant, v. UNITED STATES of America, Defendant-Appellee.

No. 04-3894.

United States Court of Appeals, Seventh Circuit.

Argued June 10, 2005.

Decided September 2, 2005.

David M. Michael (argued), San Francisco, CA, for Plaintiff-Appellant.

Carole J. Ryczek (argued), Office of the United States Attorney, Chicago, IL, for Defendant-Appellee.

Before FLAUM, Chief Judge, and POSNER and KANNE, Circuit Judges.

FLAUM, Chief Judge.

The Drug Enforcement Administration ("DEA") seized a large sum of currency from plaintiff-appellant Kym Lobzun, and after sending Lobzun notice of intention to forfeit the money, declared the property forfeited. Lobzun then filed a motion seeking the return of the property on the ground that the notice provided by the government prior to the forfeiture was constitutionally inadequate. The district court denied the motion, finding that the notice satisfied due process. Lobzun appeals, and for the reasons stated herein, we affirm.

I. Background

On September 3, 2003, DEA agents seized $379,931 in United States currency from Lobzun in Chicago, Illinois. At the time of the seizure, the currency was in twelve clear plastic heat-sealed packages. The agents gave Lobzun a DEA form entitled "Address Acknowledgment/Receipt for Seized Property." Among other things, the form listed the date, amount of money seized, DEA case number, and the address of the DEA's chief counsel in Arlington, Virginia. The form stated that if the DEA sought to forfeit the seized currency, it would provide Lobzun with written notice. The form also stated that if Lobzun had any questions about her notice, she should send them to the office of the DEA's chief counsel at the address provided. The form indicates that Lobzun advised the agents that her address was: 257 W. King Edward, Vancouver, BC, V54 2J1.

No charges were ever filed against Lobzun in connection with the seizure of funds. Lobzun nevertheless retained an attorney in Canada, John Conroy, to represent her interest in the funds. Conroy advised Lobzun to notify him immediately and provide him with a copy of any notice or correspondence she received from the DEA.

On October 2, 2003, Lobzun told Conroy that she had received a telephone message from Ken Pavlina, a DEA agent in the Chicago office. On October 3, 2003, Lobzun received another message from Pavlina in which he left his telephone number. On October 6, 2003, Conroy contacted Pavlina by telephone. During this conversation, Conroy advised Pavlina that he was representing Lobzun in connection with the September 3, 2003 seizure of funds and provided Pavlina with his contact information. Pavlina told Conroy that Lobzun would receive notice of the seizure.

The DEA sent Lobzun a "Notice of Seizure" dated October 7, 2003. The notice was addressed to "Kym Louise Lobzun aka Kim Louise Lobzun" and was sent by certified mail to the address Lobzun had provided at the time of the seizure: 257 W. King Edward, Vancouver, BC V542J1 Canada. The notice identified the property in question as $379,931.00 in U.S. Currency seized in Chicago, Illinois on September 3, 2003. The form advised:

Pursuant to Title 18, U.S.C. Section 983 and Title 19 U.S.C. Sections 1602-1619, procedures to administratively forfeit this property are underway. You may petition the DEA for return of the property or your interest in the property (remission or mitigation), and/or you may contest the seizure and forfeiture of the property in Federal court. You should review the following procedures very carefully.

The form further explained the procedures for requesting remission or mitigation of forfeiture and for contesting the forfeiture. To request remission or mitigation, Lobzun would have to file a petition with the Forfeiture Counsel of the DEA within thirty days of her receipt of the notice. In order to contest the forfeiture in district court pursuant to 18 U.S.C. § 983, Lobzun had to "file a claim with the Forfeiture Counsel of the DEA by November 11, 2003."

The return receipt for that notice indicates that it was received at the correct address on November 3, 2003. The signature in the space designated for "signature of the addressee," however, is illegible.

Lobzun and her attorney had no further contact with the DEA until December 22, 2003. On that date, Conroy left Pavlina a message stating that Lobzun had not yet received notice of the seizure. Pavlina returned the call on December 29, 2003, and left Conroy a message stating that the DEA's records showed that Lobzun had received written notice of the seizure on November 3, 2003.

As of January 5, 2004, no administrative claims had been filed, and the DEA administratively forfeited the money, claiming title pursuant to 19 U.S.C. § 1609(b). Two days later, on January 7, Pavlina again called Conroy to confirm that Conroy had received his previous message. Conroy called back the same day and informed Pavlina that Lobzun still had not received the notice. He asked Pavlina to provide him with a copy of the notice that purportedly had been sent to Lobzun. The next day, January 8, 2004, Pavlina faxed Conroy a copy of a DEA notice from another case along with a note stating that he was providing a "sample of the notice that was sent to Lobzun." Pavlina explained that, because "the notice is mailed out of [the DEA's] headquarters in Virginia," he did not have access to the original notice that was sent to Lobzun. The same day, the DEA's Asset Forfeiture Section mailed Conroy copies of the notice that had been sent to Lobzun and the signed certified mail return receipt showing that the notice had been received on November 3, 2003. For reasons that are unclear from the record, Conroy did not receive these documents until January 28, 2004.

After he received the January 8, 2004 fax from Pavlina, Conroy consulted with another attorney in California, David Michael. On January 22, 2004, Michael wrote a letter to Douglas Kash, a senior attorney in the DEA's Asset Forfeiture Section, stating that Lobzun had never received notice regarding the seizure. Michael also requested all documentation pertaining to the notice and administrative forfeiture of Lobzun's property. In response, the DEA sent Michael copies of the relevant documents. On February 9, 2004, after reviewing these documents, Michael wrote another letter to Kash advising him that the signature on the return receipt was not Lobzun's. Michael asserted that the DEA should have been aware since November 3, 2003 that Lobzun had not received notice of the forfeiture. He requested that the DEA immediately set aside the forfeiture and permit Lobzun to file an administrative claim pursuant to 18 U.S.C. § 983 or any other applicable statute or regulation.

In a letter dated February 22, 2004, Kash responded that, although the notice provided by the DEA was legally adequate, as a matter of discretion, it would grant Lobzun thirty additional days to file a petition for remission of the seized currency. The letter referred Michael to the Notice of Seizure for further information. Lobzun did not file such a petition with the DEA.¹

On June 16, 2004, Lobzun filed a motion for the return of property in district court pursuant to Federal Rule of Criminal Procedure 41(g),² arguing that the government's notice to her did not satisfy the constitutional requirements of due process. The district court denied Lobzun's motion, concluding that, although it would have been appropriate for the government to begin the notice process anew once it learned that Lobzun had not received the notice that had been sent, the government had satisfied the minimum requirements of due process. Lobzun appeals.

II. Discussion

The federal government is authorized to forfeit "all moneys, negotiable instruments, securities, or other things of value furnished or intended to be furnished by any person in exchange for a controlled substance" as well as "all proceeds traceable to such an exchange." 21 U.S.C. § 881(a)(6). In order to institute a forfeiture action for property valued at $500,000 or less, the government must comply with the notice procedures set forth in 19 U.S.C. §§ 1607-1609. See 18 U.S.C. § 981(d); 21 U.S.C. § 881(b). Section 1607(a) of Title 19 requires the appropriate customs officer to send "written notice of the seizure together with information on the applicable procedures . . . to each party who appears to have an interest in the seized article." The statute and regulations also require the government to publish notice of the seizure and intent to forfeit the property for at least three weeks "in a newspaper of general circulation in the judicial district" in which the proceeding for forfeiture is brought. See id.; 21 C.F.R. § 1316.75(a).³ A person claiming an interest in such property has twenty days from the date of the first publication of the notice to file a claim and post a bond. See 19 U.S.C. § 1608. If no such claim is filed, the property will be declared forfeited and title will vest in the United States. See § 1609.

Federal courts have jurisdiction to review whether the notice provided in the administrative forfeiture proceeding afforded the claimant constitutional due process. Garcia v. Meza, 235 F.3d 287, 290 (7th Cir.2000); Krecioch v. United States, 221 F.3d 976, 980 (7th Cir.2000). If the notice fails to comport with the requirements of due process, the underlying forfeiture action is void. Garcia, 235 F.3d at 290. We review de novo the issue of whether the DEA's notice procedures complied with due process. Chairez v. United States, 355 F.3d 1099, 1101 (7th Cir.2004).

"An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections." Mullane v. Cent. Hanover Bank & Trust Co., ...