United States v. $16,072.00 in U.S. Currency
Decision Date | 15 March 2019 |
Docket Number | 1:17-cv-308 (GLS/DJS) |
Citation | 374 F.Supp.3d 205 |
Parties | UNITED STATES of America, Plaintiff, v. $16,072.00 IN U.S. CURRENCY et al., Defendants. |
Court | U.S. District Court — Northern District of New York |
Adam J. Katz, U.S. Department of Justice—Albany Office, Albany, NY, Tamara Thomson, Office of United States Attorney—Syracuse Office, Syracuse, NY, for Plaintiff.
Joshua G. Stegemann, Berlin, NH, pro se.
SUMMARY ORDER 1
On May 2, 2013, after a lengthy investigation into a large narcotics trafficking operation in the Berkshires, the Rensselaer County Drug Task Force seized $ 296,172.00 and a 2008 Ford Expedition (hereinafter "SUV") from claimant Joshua G. Stegemann's premises pursuant to a New York search warrant.2 A few days later, the Berkshire County Drug Task Force seized $ 160,020.00 inside a safe at Stegemann's sister's residence pursuant to a Massachusetts search warrant. Thereafter, the government obtained ex parte turnover orders4 from the respective state courts, which authorized a transfer of the seized property identified above (hereinafter "the defendant property") to the Drug Enforcement Administration (DEA) for the commencement of administrative forfeiture proceedings, "upon probable cause to believe that it was used to facilitate a violation of a drug offense or represents drug proceeds." Following execution of the turnover orders, the DEA served administrative forfeiture notice upon Stegemann; in turn, Stegemann filed claims for the defendant property.5 (Am. Compl. ¶¶ 35-36.)
On September 18, 2013, a grand jury indicted Stegemann, charging him with violations of 21 U.S.C. § 841(a)(1) ( ), 18 U.S.C. § 924(c)(1)(A) ( ), and 18 U.S.C. § 922(g)(1) ( ). (Dkt. No. 10, 1:13-cr-357 at 1-2.) The indictment also included a forfeiture allegation naming the defendant property, pursuant to 21 U.S.C. § 853(a), as proceeds from and property used or intended to be used to commit or facilitate violations of 21 U.S.C. § 841(a)(1). (Id. at 3-6.) After lengthy motion practice6 and a trial, a jury convicted Stegemann on all counts, (Dkt. No. 150, 1:13-cr-357), and determined that the defendant property was subject to forfeiture, (Dkt. No. 151, 1:13-cr-357). Thereafter, the court ordered forfeiture of the defendant property. (Dkt. No. 208, 1:13-cr-357.)
However, on appeal to the Second Circuit, the government conceded that it failed to demonstrate the requisite nexus between the defendant property and the criminal activity outlined in 21 U.S.C. § 841(a)(1) because, in its opinion, "the evidence at trial proved only that the cash was likely the proceeds of prior drug transactions and that the [SUV] was the instrumentality of prior drug transactions." (United States of America v. Stegemann , Case No. 16-2596, Dkt. No. 75 at 60-62.) On the same day as the government's concession, it filed this civil forfeiture proceeding alleging that the defendant property is subject to forfeiture pursuant to 21 U.S.C. § 881(a)(4) and (6). (Compl. ¶¶ 9-10, Dkt. No. 1.) Eventually, the Second Circuit reversed the order of forfeiture as to the defendant property, based on the government's lack of opposition. (Dkt. No. 223, 1:13-cr-357.)
Stegemann then sought dismissal of the government's complaint in rem as well as various other forms of relief, (Dkt. No. 10), which the court denied, (Dkt. No. 31). At the time, the court noted that "the government has thus far failed to convince the court that it took the proper steps to maintain custody of the [defendant] property or that [ 18 U.S.C.] § 983(a)(3)(B)(ii)(II) is not implicated," but it stopped short of fully addressing the argument because it was improperly raised in Stegemann's reply papers. (Id. at 4 n.2.) Thereafter, the government filed an amended complaint, (Am. Compl., Dkt. No. 32), which was followed by Stegemann's pending motion to dismiss pursuant to Rule G(5)(b) of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions and Fed. R. Civ. P. 12(b)(6), (Dkt. No. 33).7 Stegemann argues that, like the initial complaint in rem , the amended complaint in rem must be dismissed because the government failed to satisfy the requirements of 18 U.S.C. § 983(a)(3)(B)(ii)(II).8 (Id. , Attach. 1 at 9-13.) For the following reasons, Stegemann's motion is denied with leave to renew in part.
The general rules regarding civil forfeiture proceedings are outlined by Section 2 of the Civil Asset Forfeiture Reform Act of 2000 (CAFRA), P.L.106-185, 114 Stat. 202 (2000), which is codified at 18 U.S.C. § 983(a)(3) and states, in pertinent part:
(internal marks altered and emphases added). Given that the government retained the defendant property and did not file a civil forfeiture complaint within ninety days of Stegemann's claims, it was required to satisfy the mandates of 18 U.S.C. § 983(a)(3)(B) in order to preserve its ability to later seek civil forfeiture of the same. See 18 U.S.C. § 983(a)(3)(A),(B). The court has already decided that the government satisfied § 983(a)(3)(B)(ii)(I) by indicting Stegemann and naming the defendant property in the indictment. (Dkt. No. 31 at 4.)
The only issue now before the court is whether the government "t[ook] the steps necessary to preserve its right to maintain custody of the [defendant] property as provided in [ 21 U.S.C. § 853 ],"9 as required by § 983(a)(3)(B)(ii)(II). If not, CAFRA mandates the prompt release of the defendant property and bars the government from taking any further action to effect its civil forfeiture in connection with the underlying offense. See § 983(a)(3)(B)(ii)(II) ; see also Stefan D. Cassella, The Civil Asset Forfeiture Reform Act of 2000: Expanded Government Forfeiture Authority and Strict Deadlines Imposed on All Parties, 27 J. Legis. 97, 146 (2001) () (internal footnote omitted).
Although case law addressing this niche area of CAFRA is not well developed, courts have indicated that, generally, the government can comply with 18 U.S.C. § 983(a)(3)(B)(ii)(II) by obtaining a protective order under 21 U.S.C. § 853(e) or—if the government demonstrates that a protective order is insufficient to assure the property's availability for forfeiture—a criminal seizure warrant under 21 U.S.C. § 853(f). See, e.g. , United States v. Kramer , No. 1:06-cr-200, 2006 WL 3545026, at *2-4 (E.D.N.Y. Dec. 8, 2006) ( ); United States v. Martin , 460 F.Supp.2d 669, 675-76 (D. Md. 2006) ( ); see also United States v. Dupree , 781 F.Supp.2d 115, 131 n.9, 132 (E.D.N.Y. 2011) ( ).
Cassella, 27 J. Legis. at 146-47 (internal footnote omitted). Thus, courts have found that where the government already has custody of property, as here, the government can discharge its obligation under § 983(a)(3)(B)(ii)(II) and preserve the...
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United States v. $71,220.00 in U.S. Currency
...helpful authority from the Northern District of New York, where similar facts played out. Id. at 3 (quoting United States v. $16,072.00, 374 F. Supp. 3d 205, 211 (N.D.N.Y. 2019)). In sum, the United States identifies a "strong public policy behind this preference for a judicial finding of p......