Scarabin v. Drug Enforcement Admin.
| Decision Date | 24 July 1992 |
| Docket Number | No. 91-4436,91-4436 |
| Citation | 966 F.2d 989 |
| Parties | JEFFREY M. SCARABIN, Petitioner, v. DRUG ENFORCEMENT ADMINISTRATION, Respondent. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Victor L. Roy, III, Baton Rouge, La., for petitioner.
Constantine D. Georges, Asst. U.S. Atty., New Orleans, La., DEA, Office of Chief Counsel, Asset Forfeiture Section, Arlington, Va., for respondent.
Before POLITZ, Chief Judge, REYNALDO G. GARZA, and WIENER, Circuit Judges.
Petitioner Jeffrey M. Scarabin is before us for yet a third time, still seeking to recover funds that were seized from his place of business during a narcotics search conducted pursuant to state warrant. Scarabin seeks to recover those funds from the Drug Enforcement Administration (DEA), the Respondent herein, which claims to have found them forfeit to the United States. Finding on the basis of undisputed facts that Scarabin's funds were never delivered to the DEA, we conclude that those funds remain in the exclusive possession of the Louisiana state court. But even if these funds had been in the actual possession of the DEA, we would find that the DEA lacked in rem jurisdiction to declare Scarabin's funds forfeit because the state court had exclusive legal control of the res by virtue of its search warrant and Louisiana law.
As the DEA never had control over the res--because it had neither actual physical possession of the res nor exclusive legal control over the res as required for in rem jurisdiction--the DEA had no authority to find Scarabin's funds forfeit. Therefore, as no forfeiture in fact occurred, there is no DEA forfeiture decision for this court to review. Holding that there is no basis for this court's jurisdiction under the facts of this case, we dismiss the appeal. In sum: no funds, ergo no forfeiture, ergo no jurisdiction. Q.E.D.
Most facts relevant to this case were discussed fully in our earlier decisions, 1 and we see no need to repeat them here in toto. Since our earlier decisions, however, we have received new and somewhat startling information about the relationship between the DEA and the Plaquemines Parish Sheriff's Office. This new information is therefore discussed here in full measure.
On May 31, 1990, the Twenty-Fifth Judicial District Court for Plaquemines Parish, Louisiana, issued a search warrant authorizing deputies of the Plaquemines Parish Sheriff's Office to search for evidence of drug dealing at a marina facility owned by the Parish and operated by Scarabin, a parish employee. The deputies executed this warrant on June 1, 1990, finding and seizing, among other things, negligible evidence of drugs and $12,360 in cash belonging to Scarabin. A "return on the search warrant" listing the $12,360 in cash was filed with the clerk of the state district court. Under Louisiana law, property seized pursuant to a state warrant is retained under the issuing judge's control and direction until that judge disposes of it in accordance with state law. 2
As a result of the deputies' search and seizure, Scarabin was arrested for and charged with first-offense possession of marijuana and possession of drug paraphernalia, both misdemeanors under Louisiana law. 3 Louisiana's comprehensive forfeiture statute does not allow civil forfeiture when the crimes charged concurrently are misdemeanors. 4 In any event, all charges against Scarabin were dismissed for lack of evidence on October 31, 1990.
In the meantime, however, on June 4, 1990, a mere three days after their search of the Parish marina and seizure of Scarabin's funds, the Sheriff's Office bought a cashier's check using Scarabin's $12,360. They did so without the knowledge, much less the authority, of the state court. The cashier's check was then handed over to the DEA for civil forfeiture under federal law. Ironically, this "moonlight transfer" took place on the same day--perhaps even at the same time--that the state district court ordered property seized pursuant to its May 31, 1990 warrant be held as evidence.
On July 2, 1990, purporting to act pursuant to 19 U.S.C. § 1607, the DEA sent Scarabin a Notice of Seizure outlining alternative procedures for contesting the civil forfeiture. 5 In addition, on July 11, 1990, notice of forfeiture was published in USA Today. On July 25, 1990, Scarabin filed a motion with the DEA for expedited release of his $12,360. The DEA denied this motion, explaining that expedited release is appropriate only when the property is seized in connection with possession of personal use quantities of drugs; according to the DEA, Scarabin's $12,360 had been seized as proceeds of drug sales. The DEA took the position that, technically, Scarabin had not challenged the forfeiture with the appropriate motion within the relevant time period. So, on August 16, 1990, the DEA proceeded to forfeit administratively the $12,360 from the cashier's check received from the Sheriff's Office, purporting to forfeit the funds actually seized from Scarabin.
On November 16, 1990, the DEA gave the Sheriff's Office $11,124 (or 90% of $12,360) under a federal statute that allows the DEA to return forfeited property to state or local law enforcement agencies that have participated directly in the seizure or forfeiture of that property. Thus, with the assistance of the DEA, the Sheriff's Office was able (at least for the time being) to circumvent Louisiana law that would have required it to return Scarabin's $12,360. NFL sportscasters might call the handoff from the Sheriff's Office to the DEA, followed by the lateral back from the DEA to the Sheriff Office, a "flea-flicker" play. Scarabin calls the arrangement between the DEA and Sheriff's Office a "scam," "shell game," and "money laundering," and refers to the return of $11,124 to the Sheriff's Office as an "illegal kickback." We really cannot quarrel with those appellations. The DEA, more prosaically, refers to it as an "equitable sharing arrangement" 6--admittedly a kinder, gentler euphemism, albeit one inappropriate here.
In Scarabin I, Scarabin filed a petition with this court for release of the $12,360 and for review of the DEA's administrative forfeiture decision pursuant to 21 U.S.C. § 877 and Fed.R.App.P. 15(a). 7 We recharacterized Scarabin's petition for expedited release as a petition for remission or mitigation under 28 C.F.R. § 9.5. We then invoked a narrow exception to the general rule that federal courts do not have jurisdiction to review the merits of a forfeiture decision, and ordered the DEA at least to consider Scarabin's remission and mitigation petition. In other words, we ordered the DEA to exercise its discretion. 8
A rehearing on the jurisdiction issue was requested by the DEA. In our decision on rehearing, Scarabin II, this court reaffirmed that 21 U.S.C. § 877 provides jurisdiction for a direct appeal to the appellate courts from a denial of a petition for remission or mitigation by the DEA. In rejecting the DEA's argument that § 877 provides judicial review only for the Attorney General's decisions under the 1970 Controlled Substances Act affecting pharmaceutical and research industries, we explained that § 877 states that it "applies to all provisions 'under this subchapter' " and "Section 881, 21 U.S.C. (forfeitures) is under 'this subchapter'--Subchapter I, 'Control and Enforcement.' " 9
In the administrative hearing that followed, Scarabin submitted considerable evidence to the DEA to show that the $12,360 in cash was not proceeds of drug transactions. Nevertheless, after reviewing Scarabin's materials and arguments, as per our order in Scarabin I, which we affirmed on rehearing in Scarabin II, the DEA denied Scarabin's petition for remission or mitigation. On May 28, 1991, Scarabin once again filed a petition with this court for review of the DEA's decision.
In neither Scarabin I nor Scarabin II did the DEA ever favor this court with the critical fact that the Plaquemines Parish Sheriff's Office had used Scarabin's cash to purchase a cashier's check, and had then turned the check, not the seized cash, over to the DEA. Instead, we and Scarabin were allowed to labor under the misconception that the DEA had received the very cash seized at the Marina.
Now revealing these facts for the first time, the DEA urges a new legal theory to explain why this court lacks jurisdiction to review its denial of Scarabin's petition for remission or mitigation. The DEA now contends that we lack in rem jurisdiction because it (the DEA) "never seized this particular property nor was the property that was seized by the Plaquemines Parish Sheriff's Office, i.e., the $12,360 [in] U.S. Currency, ever turned over to the DEA." The DEA also advances the alternative argument that the cashier's check for $12,360 constitutes the res, and was transferred out of this court's territorial jurisdiction when it was deposited into the United States Treasury. Hence, the DEA again concludes, this court is without in rem jurisdiction because, under the traditional rules of in rem jurisdiction, a court loses its jurisdiction if the res is removed from its territory.
The circuits disagree as to whether an appellate court retains jurisdiction over a forfeiture action even after the res is removed from that court's territorial jurisdiction. Some circuits have found the traditional rules of in rem jurisdiction inappropriate in situations, such as this one, in which the thing seized and forfeited is money, and thus merely an incorporeal entry in the Department of Justice's account with the Department of Treasury. 10 Others have held that the government submitted to in personam jurisdiction when it brought the forfeiture suit in federal court. 11
In this circuit, there is considerable tension, if not outright conflict, in...
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