U.S. v. $506,231 in U.S. Currency, s. 96-3308

• Citation: 125 F.3d 442
• Decision Date: 03 September 1997
• Docket Number: Nos. 96-3308,96-3309 and 97-2282,s. 96-3308
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. $506,231 IN UNITED STATES CURRENCY, Defendant.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 442

125 F.3d 442

UNITED STATES of America, Plaintiff-Appellee, v. $506,231 IN UNITED STATES CURRENCY, Defendant.

Nos. 96-3308, 96-3309 and 97-2282.

United States Court of Appeals, Seventh Circuit.

Argued June 4, 1997.

Decided Sept. 3, 1997.

Jonathan C. Haile, Matthew D. Tanner (argued), Office of the United States Attorney, Civil Division, Chicago, IL, for Plaintiff-Appellee in Nos. 96-3308 and 96-3309.

Michele S. Schroeder (submitted), Office of the United States Attorney, Rockford, IL, for Plaintiff-Appellee in No. 97-2282.

Stephen M. Komie (argued), Brian E. King, Komie & Associates, Chicago, IL, Douglas W. Godfrey (argued), Chicago, IL, for Claimant-Appellant.

Before BAUER, HARLINGTON WOOD, JR., and MANION, Circuit Judges.

BAUER, Circuit Judge.

The United States Marshals Service currently possesses over half a million dollars which is claimed by Anthony Lombardo and Stephen M. Komie. The government filed a complaint for forfeiture of this currency pursuant to 21 U.S.C. § 881(a)(6). The district court granted summary judgment in favor of the United States, finding that there was probable cause to believe the money was subject to forfeiture. However, because the district court never properly obtained jurisdiction over the money, and neither the government nor the district court has sufficiently explained the requisite nexus between the money and drug or other criminal activity, we cannot affirm the district court's ruling. We therefore vacate and remand this case to the district court with directions to dismiss for lack of jurisdiction over the res.

Background

On February 11, 1993, Sergeant Michael J. Thomas of the Chicago Police Department filed a complaint for search warrant in the Circuit Court of Cook County. The warrant issued based on information given by one Josue Torres, who had been arrested for burglary. Torres told Sergeant Thomas that he regularly sold stolen property at various places in Chicago in order to feed his crack habit. One of the places where he said he fenced property was the Congress Pizzeria, located at 2033 N. Milwaukee Avenue in Chicago, Illinois, which is owned and operated by Claimant Anthony Lombardo. Torres said that he would bring the stolen property to the back door of the pizzeria where he would meet Sam or Frank Lombardo, Anthony's sons, haggle with them over the price, and eventually make the sale.

On February 11, 1993, Chicago Police conducted a search pursuant to the warrant at the pizzeria. The warrant authorized the police to search the pizzeria and Sam and Frank Lombardo, and to seize a camera, a snowblower, a television, and three VCRs. The police did not find these items during the course of their search; however, they did find and seize three unregistered guns and $506,076 in United States currency. ¹ The money was found inside a forty-four-gallon barrel which was located inside either a boarded-up elevator or a dumbwaiter shaft, although the record is slightly unclear. It was wrapped in plastic bags and consisted of mostly small bills.

Frank Lombardo was present at the pizzeria at the time of the search. He was arrested and charged in the Circuit Court of Cook County with illegally possessing unregistered firearms. In the state court, Judge Patrick Morse suppressed the guns as evidence because he found that "it was not immediately apparent that the guns were contraband per se" and that "the guns were seized prior to the establishment of probable cause to seize them." Judge Morse reserved the question of whether there was probable cause to seize the currency because the question was not before him. No other state or federal criminal case was ever investigated or charged in connection with this alleged fencing operation or the Congress Pizzeria.

Pursuant to Illinois law, the Chicago Police, as an agent of the Clerk of the Circuit Court of Cook County, held the money until further order from that court. The currency was deposited in a commercial bank account. Anthony Lombardo filed a Motion for Return of Seized Property in the state court on March 10, 1993. On March 12, 1993, Anthony Lombardo assigned 15% of his interest in the res ($75,911.40) to his attorney, Claimant Stephen Komie. On March 16, 1993, the state court granted Lombardo's motion in part and denied it in part, and continued the matter of the disposition of the property to March 19, 1993. On March 19, the state court ordered the currency returned to Anthony Lombardo, and ordered the property custodian "not to transfer the property to any other persons or the United States." A check was then issued to Anthony Lombardo.

Meanwhile, on March 9, 1993, the United States had applied for a seizure warrant for the currency, pursuant to 21 U.S.C. § 881(a)(6). ² The application for seizure warrant was supported by information contained in the affidavit of Special Agent Paulin of the Criminal Investigations Division of the IRS. Agent Paulin's affidavit basically restated the information given by Torres which was contained in Sergeant Thomas' complaint for search warrant. Agent Paulin's affidavit also included one reference to the presence of cocaine in a delivery truck outside the pizzeria. The government has admitted that this reference was not contained in Sergeant Thomas' complaint for search warrant, and also has admitted that it does not possess any Chicago Police reports indicating the presence of narcotics inside or outside the pizzeria. According to Agent Paulin's affidavit, one of the police officers present during the search of the pizzeria described Frank as "extremely distraught" and "visibly shaken when he was told that the money was being seized." The affidavit also states that, "[a]ccording to the police officers present, ... [Frank] offered no explanation for the huge cash horde. Several hours later, Frank went to the police station and stated that the money belonged to his father, Anthony, who is currently in Florida." Magistrate Judge Edward A. Bobrick issued the seizure warrant on March 9, 1993, finding that probable cause existed to believe the money was subject to § 881(a)(6) forfeiture. That warrant was never executed, and it expired by its own terms on March 19, 1993.

On March 17, 1993, before the state court returned the money to Anthony Lombardo, the government filed a verified complaint for forfeiture of the currency pursuant to 21 U.S.C. § 881(a)(6). The complaint explicitly noted that the money was still in police custody. The complaint was also supported by Agent Paulin's affidavit. On March 18, 1993, the government filed an "Emergency Motion" in aid of the district court's jurisdiction. This motion indicated that Anthony Lombardo had filed a motion for the return of the currency in the Circuit Court of Cook County, and that the Assistant State's Attorney handling the case had advised the state court that a federal seizure warrant had been issued and that the state had no interest in detaining the funds. The government's emergency motion informed the district court that the state court would rule on Lombardo's motion the following morning at 11:30 a.m. It also addressed the government's concerns that "[i]f, pursuant to the state court's order, any of these funds are released and delivered to Mr. Lombardo and/or Mr. Komie, the funds could be disbursed or otherwise made unavailable for federal forfeiture, defeating this court's jurisdiction." The government asked the district court to order Anthony Lombardo and/or Stephen Komie to surrender to the United States Marshals Service any of the defendant funds they might receive from the Circuit Court of Cook County. In support of its request and its argument that the district court had inherent power to issue orders effectuating its jurisdiction, the government cited the All Writs Act, 28 U.S.C. § 1651(a).

The district court granted the emergency motion on March 18, 1993. The government filed an amended verified complaint on March 19, 1993, which reiterated that the currency was still in police custody. On March 23, 1993, the district court entered a written order granting the government's emergency motion. The order provided that, following entry of any order in the state court case regarding the funds, and

upon delivery of any portion of the seized property in the form of check(s) or any other form to Stephen Komie, Anthony Lombardo, or any other person or entity, in accordance with the state court's order, the seized property shall be delivered forthwith to the United States Marshal for execution of the warrant of seizure and monition issued in this case.

On March 29, 1993, Anthony Lombardo and Stephen Komie ("Claimants") both filed verified claims for restitution of the property with the district court. On April 5, 1993, Anthony Lombardo delivered the check he received from the state court to the United States Marshals Service.

On May 3, 1993, Claimants filed a joint motion to dismiss the complaint for lack of subject matter jurisdiction over the res. They argued that at the time the government filed its complaint for forfeiture, the district court did not possess the defendant res and, therefore, the district court had no jurisdiction over it. Rather, Claimants argued, the res was in the custody of the Circuit Court of Cook County and under the state court's jurisdiction. Claimants also argued that seizure of the res violated the Supplemental Rules for Certain Admiralty and Maritime Claims that govern seizures pursuant to 21 U.S.C. § 881. The district court denied Claimants' motion to dismiss on September 28, 1993 and found that it had not interfered with the state court's jurisdiction.

Claimants then filed a motion to suppress the currency, arguing that the seizure was unconstitutional because the Chicago police exceeded their authority under the warrant. The district court denied the motion to suppress on April 22, 1994, finding that the money was seized pursuant to the plain view doctrine and that,...