U.S. v. A Single Family Residence and Real Property Located at 900 Rio Vista Blvd., Fort Lauderdale

• Decision Date: 03 November 1986
• Docket Number: No. 85-5958,85-5958
• Citation: 803 F.2d 625
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. A SINGLE FAMILY RESIDENCE AND REAL PROPERTY LOCATED AT 900 RIO VISTA BLVD., FT. LAUDERDALE, Defendant, Heidi of South Florida, Inc., Claimant-Appellant, Broward County, Intervenor. IC
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 625

803 F.2d 625

UNITED STATES of America, Plaintiff-Appellee, v. A SINGLE FAMILY RESIDENCE AND REAL PROPERTY LOCATED AT 900

RIO VISTA BLVD., FT. LAUDERDALE, Defendant,

Heidi of South Florida, Inc., Claimant-Appellant,

Broward County, Intervenor.

IC No. 85-5958.

United States Court of Appeals, Eleventh Circuit.

Nov. 3, 1986.

George E. Becker, Chicago, Ill., for claimant-appellant.

Alexander Cocalis, Broward County Gen. Counsel's Office, Fort Lauderdale, Fla., for intervenor Broward County.

Leon B. Kellner, U.S. Atty., Alan I. Mishael, Asst. U.S. Atty., Miami, Fla., for plaintiff-appellee.

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

Before FAY and JOHNSON, Circuit Judges, and HOFFMAN ^*, Senior District Judge.

JOHNSON, Circuit Judge:

Appellant, Heidi of South Florida, Inc. ("Heidi"), appeals the denial of its claim to a certain residence and real property located at 900 Rio Vista Blvd., Ft. Lauderdale, Florida ("Property"), and the district court's judgment finding that the Property was forfeited pursuant to 21 U.S.C.A. Sec. 881(a) (1981). We affirm. Because we find this appeal patently frivolous, we also impose sanctions against Heidi in the amount of double costs and reasonable attorney's fees incurred by appellee in connection with this appeal, and remand for a determination of whether sanctions should be imposed against Heidi's counsel as well.

I. BACKGROUND

Heidi was organized under the laws of Florida on August 27, 1979, with Heidi Hartline listed of record as president, director and sole subscriber for shares. Hartline at that time was the girlfriend of suspected drug trafficker Jonathan Scot Baldwin. The day after its incorporation Heidi purchased the Property. Hartline signed the closing documents on behalf of Heidi. Participation in this closing apparently is the only act Hartline ever performed on behalf of Heidi.

On November 29, 1982, Baldwin was arrested for drug trafficking. He subsequently pleaded guilty to the conspiracy count of the indictment against him. One of the overt acts listed in that count was the delivery of $75,000.00 to Southport Realty Inc. for the purchase of the Property. Baldwin's conviction was affirmed by this Court on appeal. United States v. Stitzer, 785 F.2d 1506 (11th Cir.1986).

On September 18, 1984, a warrant for seizure of the Property was issued pursuant to 21 U.S.C.A. Sec. 881(a)(6) and (b), which provides for seizure and forfeiture of property that constitutes "proceeds traceable to" an illegal drug exchange upon process issued in accordance with the Supplemental Rules for Certain Admiralty and Maritime Claims. The Government filed its forfeiture complaint October 10, 1984, and Heidi filed a verified claim and motion for return of the Property on October 18, 1984. The claim was signed by Baldwin as agent for Heidi.

On May 16, 1985, the district court held a probable cause hearing at which it found that the Government had established probable cause to believe that the Property was proceeds traceable to Baldwin's drug sales. Based on this holding, the district court denied Heidi's motion for return of the Property. On September 23, 1985, the district court held a further hearing at which Heidi was given the opportunity to establish the affirmative defense of innocent ownership. See id. Sec. 881(a)(6). On September 30, 1985, the district court entered final judgment for the United States, finding that Heidi had failed to establish the defense of innocent ownership and ordering that the Property be sold. Heidi's motion for a new trial was denied and this appeal followed.

II. DISCUSSION

Heidi challenges both the district court's finding of probable cause for issuance of the warrant and its finding that Heidi failed to establish the affirmative defense of innocent ownership. It also challenges the constitutionality of 21 U.S.C.A. Sec. 881(a)(6) on vagueness and procedural due process grounds. All of these arguments are patently without merit.

A. Probable Cause

Under Section 881(a)(6), the United States must establish probable cause to believe that a substantial connection exists between the property to be forfeited and an illegal exchange of a controlled substance. United States v. $4,255,625.39, 762 F.2d 895, 903 (11th Cir.1985), cert. denied, --- U.S. ----, 106 S.Ct. 795, 88 L.Ed.2d 772 (1986). ¹ "Probable cause" is defined as "reasonable ground for belief of guilt, supported by less than prima facie proof, but more than mere suspicion." United States v. $364,960.00, 661 F.2d 319, 323 (5th Cir. Unit B 1981) (quoting United States v. One 1978 Chevrolet Impala, 614 F.2d 983, 984 (5th Cir.1980)). The existence of probable cause is judged "not with clinical detachment, but with a common sense view to the realities of normal life." $4,255,625.39, 762 F.2d at 904, (quoting Wilson v. Attaway, 757 F.2d 1227, reh'g denied, 764 F.2d 1411 (11th Cir.1985)).

Heidi's main argument in support of its contention that the United States failed to establish probable cause for seizure of the Property is the fact Heidi holds legal title to the Property while the only evidence of drug trafficking in the record deals with Baldwin's illegal activities. This argument is totally without merit. Under Section 881(a)(6), the government is not required to show that property is owned by a drug trafficker, but rather that it has a substantial connection to a drug transaction. See $4,255,625.39, 762 F.2d at 905 (Section 881 reaches property in hands of third parties). The record in this case clearly establishes probable cause to believe that the Property was traceable to Baldwin's drug proceeds. Agent Georges, the Drug Enforcement Agency officer in charge of the Baldwin investigation, testified that Baldwin's co-conspirators stated Baldwin told them he purchased the Property with proceeds of his drug sales, and one of them, Jack Moncrief, stated that Baldwin told him he had formed fictitious corporations to hide his assets. Georges also testified that a salesman at Southport Realty told him Baldwin was the one who discussed purchase of the Property with her, indicating that title would be placed in Heidi's name, and that $75,000.00 in cash had been tendered for the Property. Finally, Georges testified that Hartline admitted Baldwin established Heidi, using Hartline as a figurehead, that the corporate kit for Heidi was found on Baldwin's bedside table during a search of the Property, and that Baldwin attempted to have Hartline sign over her interest in Heidi to him, but the documents were intercepted by the DEA. ²

Clearly, the common sense view of Georges' testimony and the other evidence in the record, including Baldwin's admission that he delivered $75,000.00 for purchase of the Property, leads inevitably to the conclusion reached by the district court: that reasonable grounds existed to believe the Property was purchased with profits from Baldwin's illegal drug sales and that, in fact, Baldwin was the beneficial owner of the Property. ³

B. Failure to Establish Innocent Ownership

Once the government demonstrates that probable cause exists, the burden of proof in a civil forfeiture proceeding shifts to the claimant to establish by a preponderance of the evidence that the property is not subject to forfeiture. $4,255,625.39, 762 F.2d at 904. Heidi could meet this burden either by rebutting the Government's evidence that the Property was proceeds of illegal drug activities or by showing that it was an innocent owner who did not know of the Property's connection with drug sales. See id. at 904, 906. Heidi clearly did neither. In fact, although Heidi bore the burden of proof at the hearing, it did not call any witnesses, contenting itself instead with cross-examination of the rebuttal witnesses presented by the Government. ⁴ When a claimant presents no evidence to contradict the government's evidence of probable cause, the scope of review on appeal is whether the government's evidence established probable cause. United States v. One 1978 Chevrolet Impala, 614 F.2d 983, 984 (5th Cir.1980). As discussed above, probable cause was established by overwhelming evidence in this case.

Further, even if Heidi's argument were properly before us, it is totally lacking in merit. Once again Heidi relies on its legal title to the Property and the lack of evidence that Heidi, as a separate entity, was involved in drug trafficking. As discussed above, legal title to property in an entity other than the drug trafficker does not of itself insulate that property from the reach of Section 881(a)(6). $4,255,625.39, 762 F.2d at 905. In fact, possession of bare legal title by one who does not exercise dominion and control over the property is insufficient even to establish standing to challenge a forfeiture. United States v. One 1945 Douglas C-54 (DC-4) Aircraft, 604 F.2d 27, 28 (8th Cir.1979), cert. denied sub nom. Stumpff v. United States, 454 U.S. 1143, 102 S.Ct. 1002, 71 L.Ed.2d 294 (1982); accord, United States v. One 1977 36 Foot Cigarette Ocean Racer, 624 F.Supp. 290, 294 (S.D.Fla.1985). As the court explained in One Racer:

The rationale for the rule that bare legal title may be insufficient [for standing] is based on a candid determination that things are often not what they appear to be, especially in the world of drug trafficking.... In brief, people engaged in illegal activities often attempt to disguise their interests in property by placing title in someone else's name.

* * *

In short, courts look behind the formal title to determine whether the record title owner is a "strawman" set up to conceal the financial affairs or illegal dealings of someone else.

624 F.Supp. at 294-95. The record clearly supports the district court's determination that Heidi was such a "strawman" in this case.

C. Constitutional Challenges

1. Vagueness Challenge

Heidi asserts that the phrase "all proceeds traceable to" as used in Section 881(a)(6) makes that Section so...