U.S. v. $293,316 in U.S. Currency, 03-CV-0278.

• Decision Date: 23 December 2004
• Docket Number: No. 03-CV-0278.,03-CV-0278.
• Citation: 349 F.Supp.2d 638
• Parties: UNITED STATES of America, Plaintiff, v. $293,316 IN UNITED STATES CURRENCY, More or Less, and All Proceeds Traceable thereto Seized from Ali Sher Khan, $187,155 in United States Currency, More or Less, and All Proceeds Traceable thereto Seized from Akbar Ali Khan, and $35,112 in United States Currency, More or Less, and All Proceeds Traceable thereto Seized from Fazal Subhan, Defendants in Rem.
• Court: U.S. District Court — Eastern District of New York

349 F.Supp.2d 638

UNITED STATES of America, Plaintiff, v. $293,316 IN UNITED STATES CURRENCY, More or Less, and All Proceeds Traceable thereto Seized from Ali Sher Khan, $187,155 in United States Currency, More or Less, and All Proceeds Traceable thereto Seized from Akbar Ali Khan, and $35,112 in United States Currency, More or Less, and All Proceeds Traceable thereto Seized from Fazal Subhan, Defendants in Rem.

No. 03-CV-0278.

United States District Court, E.D. New York.

December 23, 2004.

Roslynn R. Mauskopf, United States Attorney, Eastern District of New York by Laura D. Mantell, Assistant United States Attorney, Brooklyn, NY, for Plaintiff.

Donohue and Donohue by John Patrick Donohue, Esq., Philadelphia, PA, English & Smith by David Smith, Esq., Philadelphia, PA, for Defendants in Rem $293,316 in United States Currency, more or less, and all proceeds traceable thereto seized from Ali Sher Khan; $187,155 in United States Currency, more or less, and all proceeds traceable thereto seized from Akbar Ali Khan; and for Ali Sher Khan and Akbar Ali Khan.

Bernard H. Udell, Esq. by Bernard H. Udell, Esq., Brooklyn, NY, for Defendant in Rem $35,112 in United States Currency, more or less, and all proceeds traceable thereto seized from Fazal Subhan; and for Fazal Subhan.

MEMORANDUM, ORDER & JUDGMENT

WEINSTEIN, Senior District Judge.

I. Introduction

Ali Sher Khan, Akbar Ali Khan and Fazal Subhan (the "claimants") were convicted of concealing more than $10,000 in currency and attempting to transfer that currency out of the United States in violation of section 5332(a) of title 31 of the United States Code. See United States v. Khan, 325 F.Supp.2d 218 (E.D.N.Y.2004). The government commenced civil forfeiture proceedings in rem for the entire amount of currency it seized that claimants allege is their own. It seeks summary judgment against the claimants who cross-move for return of all the currency they allege they own. The government also argues that forfeiture of the entire amount of seized currency of Fazal Subhan is required under section 5317 of title 31 of the United States Code. The remainder of the seized currency is attributed to innocent owners. It is not at issue.

Questions of first impression posed are whether: (1) forfeiture of the entire amount of seized currency is required under the civil forfeiture provision in section 5332(c) of title 31 of the United States Code, and (2) such forfeiture is subject to review under the Excessive Fines Clause of the Eighth Amendment or under section 983(g) of title 18 of the United States Code.

For the reasons stated below, the court holds that forfeiture under section 5332(c) is subject to review under the Excessive Fines Clause of the Eighth Amendment and under section 983(g) of title 18 of the United States Code. In this case, forfeiture of the entire amount of claimants' currency would be grossly disproportionate to the gravity of claimants' offenses. The court orders forfeiture of fifty percent of each claimant's currency.

II. Facts

Customs inspectors at John F. Kennedy Airport stopped Ali Sher Khan and Akbar Ali Khan on the jet-way as they were about to board a plane to Pakistan. An inspector explained to each of them the currency reporting requirements. He asked each to declare the amount of currency he was transporting, regardless of whether the currency belonged to him or to others for whom he was carrying it. On customs forms, Ali Sher Khan declared that he was carrying $12,800 and Akbar Ali Khan declared that he was carrying $9,800. Seized was approximately $293,316 from Ali Sher Khan and approximately $187,155 from Akbar Ali Khan. They were arrested by law enforcement officers.

Fazal Subhan had already boarded the flight. Inspectors explained to him the currency reporting requirements, including his obligation to declare amounts being carried on behalf of other persons. Subhan declared on a customs form that he was carrying $9,412. Approximately $35,112 was seized from him. He was arrested.

Each claimant was indicted on the following counts: (1) conspiracy to conceal more than $10,000 in currency in violation of 18 U.S.C. § 371 and 31 U.S.C. § 5332(a); (2) concealing more than $10,000 in currency in violation of 31 U.S.C. § 5332(a); and (3) making false statements to a government agent in violation of 18 U.S.C. § 1001(a)(2). Akbar Ali Khan and Fazal Subhan were each indicted on an additional count of failing to file a report when knowingly transporting and being about to transport more than $10,000 in currency out of the United States in violation of 31 U.S.C. §§ 5316(a)(1)(A), 5316(b) and 5322(a).

After a jury trial, Ali Sher Khan was convicted of all counts for which he was indicted; Akbar Ali Khan was convicted of all counts except making false statements to a government agent; and Fazal Subhan was convicted on all counts for which he was indicted. At sentencing leniency was exercised in light of the fact that the cash was intended to help families in Pakistan with money earned legally in the United States, not to fund terrorist activity or for any other illegal purpose. See United States v. Khan, 325 F.Supp.2d 218, 220 (E.D.N.Y.2004). Much of the money was carried for friends and co-workers — innocent owners — to their Pakistani relatives.

The government filed this civil action in rem against the currency seized from the claimants, seeking forfeiture of all $515,583 seized pursuant to 31 U.S.C. § 5316 (requiring currency reporting of the transport of more than $10,000 in monetary instruments), § 5317 (providing for forfeiture of funds associated with a violation of the currency reporting law) and § 5332 (criminalizing the smuggling of non-reported currency in excess of $10,000 and providing for forfeiture of funds associated with such a violation). A summons and warrant for arrest of the articles in rem was issued pursuant to Rule C(3) of the Supplemental Rules for Certain Admiralty and Maritime Claims of the Federal Rules of Civil Procedure.

Notice of the action was published. Individually served were approximately eighty putative claimants. Some ninety claims were filed. Ali Sher Khan filed a claim for $87,000 that was amended to $67,000. Akbar Ali Khan filed a claim for $19,300. Fazal Subhan filed a claim that was amended to $10,000.

III. Law

A. Summary Judgment Standard

To prevail on a motion for summary judgment, the moving party must show that there is "no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Evidence is evaluated in favor of the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

B. Excessive Fines Clause

The Excessive Fines Clause of the Eighth Amendment provides that "excessive fines [shall not be] imposed." U.S. CONST. amend. VIII. "Fine," at the time the Constitution was adopted, was understood to mean "`a payment to a sovereign as punishment for some offense.'" United States v. Bajakajian, 524 U.S. 321, 327, 118 S.Ct. 2028, 141 L.Ed.2d 314 (1998) (quoting Browning-Ferris Indus. of Vt., Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 265, 109 S.Ct. 2909, 106 L.Ed.2d 219 (1989)). "The Excessive Fines Clause thus limits the government's power to extract payments, whether in cash or in kind, as punishment for some offense." Austin v. United States, 509 U.S. 602, 609-10, 113 S.Ct. 2801, 125 L.Ed.2d 488 (1993) (emphasis added) (internal quotation marks omitted). The forfeitures now sought are "fines" under the Excessive Fines Clause. See Bajakajian, 524 U.S. at 328, 118 S.Ct. 2028. They may not be "excessive." See id. at 334, 118 S.Ct. 2028.

In Bajakajian, the government sought criminal forfeiture of the entire $357,144 that Bajakajian had failed to declare in violation of the currency reporting requirements of section 5316 of title 31 of the United States Code. Id. at 324-25, 118 S.Ct. 2028. The Court held that full forfeiture of the currency would violate the Excessive Fines Clause because "it would be grossly disproportional to the gravity of his offense." Id. at 324, 118 S.Ct. 2028.

The Court first considered whether the forfeiture of the currency was punishment. It concluded that the forfeiture, pursuant to section 982(a)(1) of title 18 of the United States Code, constitutes punishment because it can only be imposed on a person who has been convicted of a reporting violation, not upon an innocent owner. Id. at 328, 118 S.Ct. 2028. It rejected the government's argument that the forfeiture also served remedial purposes, including deterrence, because deterrence "has traditionally been viewed as a goal of punishment" and forfeiture of the currency at issue did "not serve the remedial purpose of compensating the [g]overnment for a loss" of information regarding the amount of currency leaving the United States. Id. at 329, 118 S.Ct. 2028. It rejected the government's argument that the forfeiture fell within a class of historic forfeitures of property tainted by crime because it was based on inapposite cases involving traditional civil in rem forfeitures that were historically considered nonpunitive, whereas section 982(a)(1) descended from the historical tradition of in personam criminal forfeitures. Id. at 329-32, 118 S.Ct. 2028.

Since "some recent federal forfeiture laws have blurred the traditional distinction between civil in rem and criminal in personam forfeiture," the Supreme Court has held that "a modern statutory forfeiture is a `fine' for Eighth Amendment purposes if it constitutes punishment even in part, regardless of whether the proceeding is styled in rem or in personam." Id. at 331 n. 6, 118 S.Ct. 2028 (citing Austin, 509 U.S. at 621-22, 113 S.Ct. 2801). The Court rejected the government's argument that the forfeiture was constitutional because it involved an "instrumental...