U.S. v. Four Million, Two Hundred Fifty-Five Thousand

• Decision Date: 11 June 1985
• Docket Number: No. 83-5026,EIGHTY-SIX,FIFTY-FIVE,83-5026
• Citation: 762 F.2d 895
• Parties: 41 UCC Rep.Serv. 859 UNITED STATES of America, Plaintiff-Appellee, v. FOUR MILLION, TWO HUNDREDTHOUSAND, etc., et al., Defendants-Appellants, UNITED STATES of America, Plaintiff-Appellee, v. THREE MILLION, SIX HUNDREDTHOUSAND, etc., et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 895

762 F.2d 895

41 UCC Rep.Serv. 859

UNITED STATES of America, Plaintiff-Appellee, v. FOUR MILLION, TWO HUNDRED FIFTY-FIVE THOUSAND, etc., et al., Defendants-Appellants, UNITED STATES of America, Plaintiff-Appellee, v. THREE MILLION, SIX HUNDRED EIGHTY-SIX THOUSAND, etc., et

al., Defendants-Appellants.

No. 83-5026.

United States Court of Appeals, Eleventh Circuit.

June 11, 1985.

Greene & Cooper, P.A., Marc Cooper, Miami, Fla., for Thomas J. Flood & Abel Holtz.

Stanley Marcus, Joseph A. Florio, Gregory A. Baldwin, U.S. Attys., Miami, Fla., for plaintiff-appellee.

Appeal from the United States District Court for the Southern District of Florida.

Before HILL, KRAVITCH and SMITH ^*, Circuit Judges:

KRAVITCH, Circuit Judge:

This appeal involves two civil forfeiture cases, consolidated in the court below, arising under 21 U.S.C. Sec. 881(a)(6), ¹ which applies to the proceeds of narcotics transactions, and 31 U.S.C. Sec. 5317, ² which applies to currency transported across the borders of the United States without the filing of a required report. Acting pursuant to these two statutes, the district court ordered the forfeiture to the United States of $4,255,625.39 in currency and $3,686,639 in funds on deposit in a bank account. 551 F.Supp. 314 (S.D.Fla.1982). Claimant Beno Ghitis, whose company, Viajes Atlas, owned both the currency and the bank account, appeals from the district court's judgment, asserting that 21 U.S.C. Sec. 881(a)(6) is inapplicable because (1) the government failed to prove a "substantial connection" between the forfeited money and narcotics transactions, (2) the money did not constitute the "proceeds" of such transactions, and (3) Ghitis had no knowledge of such transactions. Ghitis also claims that 31 U.S.C. Sec. 5317 does not apply because (1) the forfeited money did not cross the United States border, (2) the money was not "in the process of transportation" when it was seized, (3) the funds on deposit in the bank account did not constitute a "monetary instrument," and (4) there was no evidence that whoever may have transported the money knowingly failed to file the required reports. Numerous additional claimants holding checks written on the forfeited bank account appeal from the district court's entry of summary judgment against them.

We hold that both the currency and the funds in the bank account were forfeitable under 21 U.S.C. Sec. 881(a)(6). The government demonstrated a "substantial connection" between the forfeited money and narcotics transactions, the money constituted the "proceeds" of such transactions, and Ghitis failed to prove that he lacked knowledge of such transactions. In view of these conclusions, we need not address Ghitis' arguments concerning the applicability of 31 U.S.C. Sec. 5317. Finally, we hold that the district court did not err in entering summary judgment against those persons holding checks written on the forfeited bank account. We thus affirm the judgment of the court below ordering forfeiture of both the currency and the funds in the bank account to the United States.

I. FACTS

Claimant Beno Ghitis, a citizen of Cali, Colombia, operated a travel agency and money exchange house known as Viajes Atlas. In connection with its money exchange business, Viajes Atlas held bank accounts in the United States under the name of SONAL. One such bank account was a checking account, opened in March, 1980, at the Capital Bank in Miami, Florida. The signatories on this checking account were Beno Ghitis and his parents, Altar and Sonia Ghitis. Capital Bank initially charged a service fee for the SONAL account in the amount of one-eighth of one percent of the total deposits made to the account each month.

The alleged purpose of the SONAL account was to receive deposits of United States dollars from persons who wished to "sell" the dollars to Viajes Atlas, in return for checks drawn on the SONAL account or pesos to be delivered by Viajes Atlas in Colombia. About one week after the account was opened, the bank began receiving large cash deposits to the account. The deposits ranged from $500,000 to $1,000,000, mostly in small denomination bills, and were delivered to Capital Bank's downtown Miami branch by two men identified only as "Guillermo" and "Jaime." Such deposits initially were made once a week, but soon increased in frequency to two or three times a week.

In April or May, 1980, Victor Eisenstein, an employee of Beno Ghitis, introduced himself to Capital Bank branch manager Armondo Pozo as the person who would henceforth make all deposits to the SONAL account. About two weeks later, Pozo notified Eisenstein that the bank no longer would be able to accept cash deposits to the SONAL account because the bank's bonding company refused to insure any cash amounts in the bank in excess of $1,000,000. Eisenstein informed Ghitis of the bank's decision, and Ghitis met with Pozo. Ghitis told Pozo that he was not in the drug business, but that perhaps he was dealing with people who were, unbeknownst to him, involved in the drug business. Pozo explained that he could not change the bank's policy concerning the large cash deposits, and suggested that Ghitis discuss the matter with bank president Abel Holtz.

After meeting with Ghitis, Holtz agreed, on behalf of the bank, to continue accepting the cash deposits, on the condition that the service fee for the SONAL account be increased to one-half of one percent of the total amount deposited in the account each month. Ghitis also consented to purchase a money-counting machine for use by the bank in counting the SONAL deposits. Eisenstein thereupon resumed making deposits to the account, delivering between $1,000,000 and $2,000,000 to the bank two or three times a week.

These large amounts of cash were handled in a manner that was unusual, to say the least. The cash was delivered to Eisenstein's office ³ by Colombian couriers, some of whom were unknown to Eisenstein. The couriers did not request, and on at least several occasions refused to accept, receipts for the cash, which consisted mostly of small and medium denomination bills. The cash was delivered to Eisenstein, and subsequently was transferred to the bank, in suitcases, cardboard boxes, duffel bags, and flight bags. Eisenstein's office was not guarded, had no security devices or special locks, and was not equipped with a safe or vault, despite the fact that large sums of cash were left in the office, sometimes overnight.

In early 1981, Eisenstein became concerned about the source of the cash he was receiving for deposit in the SONAL account. In an effort to assuage Eisenstein's concerns, Ghitis sent Eisenstein a letter, dated March 7, 1981, from Cali, Colombia. In the letter, Ghitis stated: "The monies received by us in the U.S. are in connection with exchange transactions from (as far as we know) the exporting and importing of agricultural products, raw materials, etc., sales commissions and other categories, received abroad by private individuals who are primarily from our country." SONAL's records, however, show that the dollars deposited in the SONAL account were "sold" to Viajes Atlas by Colombian citizens, none of whom maintained offices in Florida, none of whom were licensed, incorporated, or registered to do business in Florida, and none of whom were noted in records maintained by the United States Customs Service as having imported or exported materials into or out of the United States. Ghitis also wrote to Eisenstein: "Even though some of these transactions involved the handling of cash, they do not give rise to mistaken associations with illegal operations which are so fashionable these days in Florida." After receiving Ghitis' letter, Eisenstein, in an apparent effort to "protect" himself, drafted and mailed to himself a letter of resignation.

Meanwhile, in February, 1981, Ghitis again met with Pozo, who by then had become vice-president of the bank. Ghitis asked Pozo if the government could come in and seize the money in the SONAL account. When Pozo said that such a seizure was possible, Ghitis asked whether the bank would be willing to make SONAL a loan to cover the funds on deposit in the account and thereby prevent a forfeiture. ⁴ Pozo replied that such a loan was out of the question. Ghitis' request for a loan was referred to Abel Holtz, who found the request "unusual for banking" and denied it. Ghitis also asked Holtz to set up a meeting between Ghitis and government agents, but did not contact or attempt to contact any government agents himself.

By August, 1981, the United States Customs Service had begun to investigate the source of the cash deposits being made to the SONAL account. Eisenstein agreed to cooperate with the Customs Service investigation, allowing Customs agents to have access to his office and to monitor telephone conversations between him and Ghitis, and providing the agents with the identities of those couriers who were known to Eisenstein. Eisenstein also turned over to a Customs agent his still-sealed letter of resignation.

Sometime in August, Ghitis and Abel Holtz discussed the large amounts of cash regularly being deposited in the SONAL account. Holtz expressed concern over the bank's "exposure" under such circumstances. Ghitis denied any drug connections, but again voiced his suspicion that the money he was receiving might have some involvement with drug transactions. ⁵ Ghitis subsequently advised Eisenstein, and Eisenstein notified Customs agents, that Ghitis would come to the United States to discuss the SONAL account if he received assurances that he would not be arrested. The Customs agents replied, however, that they could not give such assurances.

On August 19, Customs agents set up surveillance at Eisenstein's office. Eisenstein consented to the placement of a tape recorder in his leather pouch, and allowed Agent Fernandez to be present in the office to observe the deliveries of cash for deposit in the...