U.S. v. Parcels of Land

• Decision Date: 06 February 1990
• Docket Number: No. 89-1812,89-1812
• Parties: UNITED STATES, Plaintiff, Appellee, v. PARCELS OF LAND, etc., et al., Defendants, Appellees, Appeal of Lionel LALIBERTE, Claimant. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 36

903 F.2d 36

UNITED STATES, Plaintiff, Appellee, v. PARCELS OF LAND, etc., et al., Defendants, Appellees, Appeal of Lionel LALIBERTE, Claimant.

No. 89-1812.

United States Court of Appeals, First Circuit.

Heard Feb. 6, 1990.

Decided April 30, 1990.

Rehearing Denied May 30, 1990.

John C. McBride, with whom Thomas Kerner and McBride, Wheeler & Widegren, Boston, Mass., were on brief, for claimant, appellant.

Jeffrey S. Robbins, Asst. U.S. Atty., with whom Wayne A. Budd, U.S. Atty., Boston, Mass., was on brief, for defendants, appellees.

Before CAMPBELL, Chief Judge, BOWNES, Senior Circuit Judge, and TORRUELLA, Circuit Judge.

BOWNES, Senior Circuit Judge.

This is an appeal from a judgment of the district court that orders the forfeiture to the United States of several parcels of real estate owned by appellant Lionel Laliberte. The United States sought forfeiture of the property under 21 U.S.C. Sec. 881(a)(6), alleging that the property constituted proceeds traceable to the unlawful sale of controlled substances by Laliberte. After a series of discovery skirmishes, the district court granted the government's motion for summary judgment, and ordered the forfeiture of the property. Laliberte now appeals from this judgment, contending that the government failed to introduce sufficient undisputed evidence of probable cause to warrant a grant of summary judgment. Laliberte also raises a number of constitutional challenges to the forfeiture. For the reasons that follow, we affirm the order of forfeiture.

I. PROBABLE CAUSE

21 U.S.C. Sec. 881(a)(6) provides that property constituting proceeds traceable to the illegal exchange of controlled substances is subject to forfeiture to the United States. ¹ 21 U.S.C. Sec. 881(d) instructs that the burden of proof in such forfeiture actions is governed by the customs laws, 19 U.S.C. Sec. 1615. ² Under 19 U.S.C. Sec. 1615, the government first must establish probable cause to believe that the defendant property constitutes the proceeds of drug trafficking. Once probable cause is shown, the burden then shifts to the claimant to prove by a preponderance of the evidence that the property is not the proceeds of narcotics sales. See United States v. $250,000 in United States Currency, 808 F.2d 895, 897 (1st Cir.1987).

To establish probable cause, the government must only show a " 'reasonable ground for belief of guilt; supported by less than prima facie proof but more than mere suspicion.' " Id. (quoting United States v. $364,960.00 in United States Currency, 661 F.2d 319, 323 (5th Cir. Unit B Nov. 1981)); see also United States v. $4,255,000, 762 F.2d 895, 903 (11th Cir.1985), cert. denied, 474 U.S. 1056, 106 S.Ct. 795, 88 L.Ed.2d 772 (1986); United States v. One 1974 Porsche 911-S, 682 F.2d 283, 285 (1st Cir.1982). This showing can be made with circumstantial evidence or evidence that would be inadmissible at trial, so long as the evidence is reliable. See United States v. $250,000, 808 F.2d at 899. Furthermore, the government need not trace the property to specific drug transactions. Rather, all that is required is that a court be able to look at the "aggregate" of the facts and find reasonable grounds to believe that the property probably was derived from drug transactions. See id. at 899-900; United States v. $41,305.00 in Currency and Traveler's Checks, 802 F.2d 1339, 1343 (11th Cir.1986); United States v. $4,255,000, 762 F.2d at 904.

In support of its motion for summary judgment below, the government assembled a considerable amount of evidence to establish its claim that the defendant properties constituted the proceeds of drug trafficking activity conducted by Laliberte. ³ Most of this evidence was presented in the affidavit of Joseph Coons, Special Agent of the Drug Enforcement Administration. Additional affidavits were submitted from Albert Brackett, Chief of the Hudson, New Hampshire Police Department; Frank Waterman, Detective-Sergeant of the Lowell Police Department; Kathleen Bennett, Special Agent of the Drug Enforcement Administration; and David Nicholson, Special Agent of the Internal Revenue Service. The affidavits essentially stated the following:

(1) From 1979 through 1988, the average annual adjusted gross income reported by Laliberte and his wife, Joanne Laliberte, was $27,690.

(2) Despite this modest income, Laliberte's purchases totaled in the millions of dollars during this time period.

(3) With respect to Property # 1, the expenditures included: (a) $110,000 to purchase a one-third interest in April, 1983; (b) $400,000-$500,000, in cash, for renovations to the property between April, 1983 and December, 1984; (c) $80,000 and the assumption of an existing mortgage of $200,000 to purchase the remaining two-thirds interest in December, 1984; and (d) approximately $1.5 million to purchase electronic and computerized health equipment located on the property.

(4) With respect to Property # 2, Laliberte expended $20,000 in February, 1984.

(5) With respect to Property # 3, Laliberte made a $15,000 down payment on a purchase price of $150,000 in January, 1987.

(6) Finally, with respect to Property # 4, Laliberte made a $25,000 down payment and assumed an $85,000 mortgage on a purchase price of $110,000 in August, 1987.

In addition to these expenditures on the defendant properties, the affidavits further stated that Laliberte acquired:

(7) property in Hudson, New Hampshire in May, 1983 for $125,000, of which $75,000 was paid in cash and the remainder in bank checks;

(8) a summer home in Moultonboro, New Hampshire in May, 1984 for $220,000, owned mortgage-free;

(9) twenty-seven acres in Amherst, New Hampshire in 1981, and two acres of waterfront property on Lake Winnipesaukee in Moultonboro, New Hampshire prior to January, 1987, for unknown consideration, but with a combined value of at least $700,000;

(10) property in Westford, Massachusetts prior to January, 1987, for unknown consideration and with unknown value; and

(11) various cars, boats, snowmobiles, jet skis and other equipment valued at over $270,000.

The sheer magnitude of Laliberte's expenditures supports an inference that his property acquisitions were funded with the proceeds of drug trafficking; Laliberte's millions of dollars in purchases far exceeded his reported average annual income of $27,690, and there was no other apparent legitimate source of money to account for this magnitude of expenditures. See, e.g., United States v. $250,000, 808 F.2d at 899 (noting the absence of any apparent legitimate sources of income that could account for the property sought to be forfeited); United States v. Brock, 747 F.2d 761, 762-63 (D.C.Cir.1984) (same); United States v. $2,500 in United States Currency, 689 F.2d 10, 16 (2d Cir.1982) (same), cert. denied, 465 U.S. 1099, 104 S.Ct. 1591, 80 L.Ed.2d 123 (1984); United States v. $364,960, 661 F.2d 319, 324 (5th Cir. Unit B Nov. 1981) (stating that the "sheer quantity of currency" alone could support an inference that it was connected to drug trafficking). Moreover, the government's affidavits presented additional evidence to further strengthen this inference. First, the affidavits stated that Laliberte frequently dealt in unusually large sums of cash, which is another indication that the money was the proceeds of drug transactions. See, e.g., United States v. $215,300 United States Currency, 882 F.2d 417, 419 (9th Cir.1989); United States v. $4,255,000, 762 F.2d at 903; see also United States v. One Parcel of Real Property Known as 6 Patricia Drive, 705 F.Supp. 710, 719 n. 14 (D.R.I.1989). According to Raymond Martineau, Laliberte's former partner in the fitness center located on Property # 1, the $400,000 in renovations to Property # 1 between 1983 and 1984 was paid for in cash, brought in by Laliberte in paper bags full of $10 and $20 bills. Additionally, from mid-1984 to February, 1988, Laliberte brought in shopping bags full of loose cash whenever the fitness center was running low on funds--typically every two or three weeks--in amounts of $20,000 to $30,000. The seller of the Hudson, New Hampshire property reported that Laliberte paid him with $60,000 in cash in a briefcase, and $12,000 in cash in a grocery bag. Finally, Laliberte's mother was stopped at Logan Airport in December, 1983 attempting to board a flight to Florida, and was found to be carrying $70,000 in cash, which she said belonged to her son.

In addition to this evidence of massive cash expenditures, the government's affidavits also stated that Laliberte attempted to shield this money from the attention of the government, which is a further indication of drug trafficking. See United States v. $4,255,000, 762 F.2d at 903 (noting that depositors to a bank account that was forfeited did not request and sometimes refused to accept receipts for their cash deposits); United States v. $215,300, 882 F.2d at 419. Laliberte instructed Martineau not to make bank deposits of the renovation money in amounts greater than $10,000 in order to avoid scrutiny by the Internal Revenue Service. Laliberte also told his accountant not to itemize his personal investment in Property # 1 on his tax return despite the tax benefits he could have realized from doing so.

Apart from the inferential evidence concerning Laliberte's spending habits, more direct evidence was presented in the government's affidavits to link Laliberte with drug trafficking activities. For example, the affidavits related certain statements of Paul McCann, ⁴ who was a partner in certain drug trafficking activities with William Cloutier, who in turn had been one of Laliberte's partners. McCann stated that Cloutier and Laliberte had run a joint business, purchasing cocaine in Florida for resale in the Lowell, Massachusetts area. McCann stated that he personally had observed Cloutier and Laliberte with cocaine in their possession after returning from Florida. The affidavits also related certain statements of Charles Bernier,...