U.S. v. $41,305.00 in Currency and Travelers Checks
| Decision Date | 21 October 1986 |
| Docket Number | 85-7376,Nos. 85-7237,s. 85-7237 |
| Citation | 802 F.2d 1339 |
| Parties | , 3 UCC Rep.Serv.2d 1545 UNITED STATES of America, Plaintiff-Appellee, v. $41,305.00 IN CURRENCY AND TRAVELER'S CHECKS seized from the house of Pamela and Jack Hoback, Defendants-Appellants. UNITED STATES of America, Plaintiff-Appellee, v. $41,305.00 IN CURRENCY AND TRAVELER'S CHECKS seized from the house of Pamela and Jack Hoback, Defendants-Appellants. Cessna Finance Corporation, Intervenor-Appellant. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
Marvin L. Stewart, Jr., Lee R. Benton, Birmingham, Ala., for Cessna finance.
John E. Medaris, Alabaster, Ala., Ann Robertson, Birmingham, Ala., for Pamela & Jack Hoback.
Frank W. Donaldson, U.S. Atty., Caryl P. Privett, Asst. U.S. Atty., Birmingham, Ala., for plaintiff-appellee.
Appeals from the United States District Court for the Northern District of Alabama.
Before RONEY, Chief Judge, CLARK, Circuit Judge, and DOYLE *, Senior District Judge.
Appellants-claimants Pamela Thompson Hoback and Cessna Finance Company bring this appeal from the district court's judgment for the United States in this action. The government sought forfeiture of $41,305 in currency and traveler's checks seized from the residence of Pamela Hoback and her husband Jack. Appellant Pamela Hoback filed a claim to the money as her personal property. Subsequently, appellant Cessna Finance filed a motion to intervene and assert its claim to the money under a lien obtained against Jack Hoback. The district court, on recommendation of a magistrate, determined that Pamela Hoback had not met her burden in proving innocent ownership of the money. The money was declared forfeited to the government, and Cessna's motion to intervene was denied as moot. Cessna moved for reconsideration of the court's decision but that motion was denied. Cessna and Pamela Hoback appeal the district court's decisions on various grounds. We reverse with respect to Cessna and affirm with respect to Hoback.
This forfeiture proceeding 2 resulted from the arrest of Jack Hoback on October 13, 1983. Hoback was arrested by state and federal officers in West Memphis, Arkansas while attempting to sell one kilo of cocaine. On October 19, the FBI obtained a warrant to search the Hobacks' house in Shelby County, Alabama for "cocaine, and documents and records reflecting financial transactions regarding illegal drugs." The Shelby County residence was owned jointly by Jack Hoback and his wife, appellant Pamela Thompson Hoback. The warrant was based upon information from confidential and named informants and corroborated in part by DEA surveillance.
FBI and DEA agents executed the warrant immediately but found no drugs at the residence. In the course of the search, however, agents found various documents, including tax returns, and $41,305. The bulk of the money, $37,949 in cash and $1,000 in traveler's checks, was found in a West Memphis bank bag on the sofa of an upstairs sitting room. Approximately $2,156 was found in a "secret room" 3 in the garage and about $200 was found in Jack Hoback's home office. Pamela Hoback was questioned by FBI agents in the course of the search, but she denied keeping large sums of cash at home. When told that $40,000 had been found, she appeared visibly surprised.
Several days later, the FBI obtained a search warrant for Hoback's space at a nearby "mini-warehouse." There, agents found a legal pad containing records of various marijuana transactions. On November 8, 1983, the government filed a complaint for forfeiture of the cash and checks seized in the search of the Hobacks' residence. On December 15, Pamela Hoback filed a claim to the money as her personal property derived from repayment of loans and the recent sale of certain real property owned by her prior to her marriage to Jack Hoback.
Discovery and evidentiary proceedings were held, and on October 18, 1984, the district court ruled that the government had established probable cause to forfeit the money. The court, adopting the magistrate's report, relied upon the following facts: that Jack Hoback had been convicted in state court on drug charges, that he had pled guilty in federal court to drug charges, and that three kilos of cocaine were found on Hoback's property in May, 1984. 4
The court then ordered further evidentiary proceedings regarding Pamela Hoback's claim of innocent ownership of the money. Several hearings were held, and on December 21, Cessna Finance filed its motion to intervene in the proceedings. Cessna claimed that the money belonged to Jack rather than Pamela Hoback, and that it had a non-forfeitable interest in the money by virtue of its personal judgment and lien against all of Jack Hoback's property in Alabama.
On March 7, 1985, the district court held that the money should forfeit to the government since Pamela Hoback had not proven innocent ownership. The court again adopted the magistrate's report, which stated that Mrs. Hoback had offered only "possible" innocent sources for the money rather than actual proof. The district court then ordered forfeiture and denied as moot Cessna's motion to intervene. Cessna moved for reconsideration but that motion was denied on May 8. Both Hoback and Cessna then filed timely notices of appeal.
Pamela Hoback contends that the district court erred on several grounds in ordering forfeiture of the money. First, she argues that federal agents had no authority to seize the money from the house, therefore, the money and its amount were inadmissible evidence. Second, she claims that the finding of probable cause to forfeit the money was based wholly on other inadmissible evidence. Third, she claims that even if probable cause was established, her evidence of innocent, independent sources for the money was sufficient to rebut the government's case and avoid forfeiture.
Cessna Finance for its part contends that the district court erred in declaring its motion for intervention moot. Cessna interprets the lower court's brief statement on mootness as saying that the government's right to forfeiture is superior to that of a judgment lienor. Cessna disputes this assertion and asks that this court recognize its equitable right to the money.
In addressing the merits of both appellants' contentions, we find that Mrs. Hoback's first claim of error merits only brief consideration. As Mrs. Hoback notes, the magistrate did find that the federal agents had no "authority" to remove the money from the house. Putting the remark in context, however, reveals that the magistrate only meant that the search warrant on its face did not embrace money as an object of the search. The magistrate's report of September 18, 1984, implies quite correctly that the agents' seizure was nonetheless proper because the money was found in plain view incident to a lawful search. The money and its amount were therefore admissible evidence for forfeiture purposes. Hoback's contentions that the money was "illegally seized" and that One 1958 Plymouth Sedan v. Pennsylvania, 380 U.S. 693, 85 S.Ct. 1246, 14 L.Ed.2d 170 (1965), governs this case are meritless.
Furthermore, Mrs. Hoback cannot reasonably claim the agents lacked probable cause to believe the money was evidence of illegal activity. At the time the agents seized the money, they knew Jack Hoback had been arrested in the course of a cocaine transaction, they had confidential information about the large scale of Hoback's dealing, and they recognized that the amount of money found corresponded roughly to the price of one kilo of cocaine. The other possible owner of the cash, Mrs. Hoback, had denied any knowledge of large sums of money in the house. The agents reasonably believed the money was drug-related.
Mrs. Hoback argues nonetheless that two other facts upset the reasonableness of the agents' conclusions. First, no drugs were found during the search, and second, the agents had no information of a recent transaction in which Hoback actually received cash. 5 We find, however, that neither of these facts is inconsistent with the agents' probable cause determination. One may expect a drug dealer to have drugs or money or both on hand; here, agents found the cash equivalent of one kilo of cocaine. It is of little importance that this cash could not be tied to a specific known transaction. The agents seizing the money had information that Hoback had had access to 50 kilos of cocaine for at least two months previous to the search. Hoback could have received the cash by selling some of those kilos in transactions unknown to them. For these reasons, we find that the money was properly seized from the Hobacks' house and is admissible as evidence in this forfeiture proceeding.
As a second ground of error, Mrs. Hoback contends that the government failed to establish probable cause to forfeit the money. 6 She argues that the government failed to show any nexus between the money seized and a particular drug deal. Appellant misunderstands the government's burden. The government need not trace the cash to specific transactions, or actually prove by a preponderance of evidence a substantial connection to drug dealing. The government must merely furnish probable cause, i.e., reasonable grounds to believe that a substantial connection exists between the money seized and Hoback's drug dealing. See United States v. $364,960.00 in U.S. Currency, 661 F.2d 319, 323 (5th Cir. Unit B 1981). Furthermore, probable cause may be based wholly on circumstantial evidence, see id., and that evidence may include facts learned after the actual seizure of the money. See United States v. $4,255,000, 762 F.2d 895, 902 n. 12 (11th Cir.1985).
Mrs. Hoback argues in the alternative that even if the government is not required to prove a connection between the...
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