United States v. $62,972 in United States Currency, Civ. LV 81-615 RDF

• Decision Date: 24 May 1982
• Docket Number: Civ. LV 81-617 RDF.,No. Civ. LV 81-615 RDF,Civ. LV 81-615 RDF
• Citation: 539 F. Supp. 586
• Parties: UNITED STATES of America, Plaintiff, v. $62,972 IN UNITED STATES CURRENCY, Defendant. UNITED STATES of America, Plaintiff, v. $25,000 IN UNITED STATES CURRENCY, Defendant.
• Court: U.S. District Court — District of Nevada

539 F. Supp. 586

UNITED STATES of America, Plaintiff, v. $62,972 IN UNITED STATES CURRENCY, Defendant.

UNITED STATES of America, Plaintiff, v. $25,000 IN UNITED STATES CURRENCY, Defendant.

Nos. Civ. LV 81-615 RDF, Civ. LV 81-617 RDF.

United States District Court, D. Nevada.

May 24, 1982.

Lamond R. Mills, U. S. Atty. by William C. Turner, Asst. U. S. Atty., Las Vegas, Nev., for plaintiff.

Heaton & Wright by Richard A. Wright, Las Vegas, Nev., for defendant.

ORDER GRANTING MOTION FOR RETURN OF SEIZED $62,972 AND MOTION FOR RETURN OF SEIZED $25,000 AND FOR DISMISSAL OF FORFEITURE COMPLAINT, FILED FEBRUARY 5, 1982, ON BEHALF OF CLAIMANT FRED FERRIS

ROGER D. FOLEY, District Judge.

I. Facts

The above motions for return of seized property deal with two separate seizures of property admittedly owned by the claimant Fred Ferris. These seizures, made by special agents of the Criminal Investigation Division of the Internal Revenue Service (IRS), took place on November 30, 1980, and December 18, 1980.

The owner of the property allegedly subject to forfeiture in this case is also the subject of a criminal investigation into the alleged illegal wagering activities upon which the forfeitures are based. Recommendations have been made that a criminal prosecution be instituted against the claimant, Fred Ferris. But to date no complaint has been filed nor indictment returned.

On November 30, 1980, pursuant to a federal search warrant, IRS agents searched the residence of claimant Ferris at 1612 South Sixth Street, Las Vegas, Nevada. The agents were searching for wagering paraphernalia and United States currency as alleged evidence of illegal bookmaking in violation of Title 26, United States Code, §§ 7302, 4401, 4411 and 4412. The agents seized documentary evidence and $62,972 in United States currency.

On December 18, 1980, pursuant to a federal search warrant, IRS agents searched the claimant's safe deposit box, No. 1506, at the Dunes Hotel and Country Club in Las Vegas, Nevada. The search was again directed toward wagering paraphernalia and United States currency as alleged evidence of illegal bookmaking in violation of T. 26 U.S.C. §§ 7302, 4401, 4411 and 4412. The agents seized $25,000 in United States currency from the claimant's safe deposit box.

On September 30, 1981, ten months after the seizure of the $62,972 from the residence of the claimant and approximately nine and one-half months after the seizure of the $25,000 from the claimant's safe deposit box, the Government filed a forfeiture complaint regarding the currency. The Government alleges that the currency seized on November 30, 1980, and December 18, 1980, was either being used, or was intended to be used, in violation of the Internal Revenue laws of the United States in that the currency seized was the fruit and instrument of a wagering operation in which neither the claimant nor anyone on his behalf had paid the wagering excise tax imposed by T. 26 U.S.C. § 4401, the professional occupation tax of $500 per year imposed by T. 26 U.S.C. § 4411, nor had given the IRS the information required by T. 26 U.S.C. § 4412. Hence, the Government alleges that the claimant has no property rights in the currency and it becomes forfeited to the United States under the provisions of T. 26 U.S.C. § 7302.

Jurisdiction of this Court is invoked under the provisions of T. 28 U.S.C. §§ 1345 and 1355.

Also on September 30, 1981, the Government in both forfeiture cases filed a Motion to Hold Judicial Forfeiture Proceeding in Abeyance Pending Outcome of Ongoing Criminal Investigation.¹

On February 5, 1982, counsel for the claimant filed the motions, both for return of the seized monies, $62,972 and $25,000, respectively, and for dismissal of the forfeiture complaint, which are now before this Court.

II. Discussion

Claimant charges that the delays between seizure of the property and initiation of forfeiture proceedings, ten months in the case of the $62,972, and nine and one-half months in the case of the $25,000, were unreasonable and deprived the claimant of his property without the due process of law guaranteed him under the Fifth Amendment to the United States Constitution.

Forfeiture actions must be brought promptly. United States v. Eight Thousand Eight Hundred Fifty Dollars, 645 F.2d 836 (9th Cir. 1981), reh. and reh. en banc denied Aug. 21, 1981. See also Ivers v. United States, 581 F.2d 1362, 1368 (9th Cir. 1978); United States v. One 1970 Ford Pickup Truck, 564 F.2d 864 (9th Cir. 1977).

"Our Constitution provides that property shall not be taken without due process of law. The right to some kind of prompt judicial determination upon deprivation of property is well established." Eight Thousand Eight Hundred Fifty Dollars, supra at 839.

In fact, promptness and immediacy are required in all steps between the seizure and the institution of district court proceedings. United States v. Eight (8) Rhodesian Stone Statues, 449 F.Supp. 193, 204 (C.D. Cal.1978).

However, speed for the sake of speed alone is not an essential of due process. United States v. One 1973 Ford LTD, Ser. No. 3J66S132017, 409 F.Supp. 741 (D.Nev.1976). And, there is no requirement that forfeiture proceedings be commenced within a specific time limit. United States v. One 1971 BMW 4-Door Sedan, 652 F.2d 817 (9th Cir. 1981). See also United States v. One 1972 Mercedes-Benz 250, 545 F.2d 1233 (9th Cir. 1976).

A forfeiture action is a serious procedure:

"We must not lose sight of the fact that this is a seizure of property, a very drastic, direct, and immediate remedy. Such a seizure is justified on apparently ancient doctrines that the sovereign may seize the instrumentality of a crime in addition to punishing its perpetrator. The instrumentality of a crime is something quite different from what we call contraband, such as goods smuggled across a border, or narcotics. Yet, the instrumentality of a crime is treated the same in terms of the sovereign's right to employ summary seizure proceedings." United States v. One 1971 Opel G. T. Engine No. 77228077, Etc., 360 F.Supp. 638, 642 (C.D.Cal.1973).

When there is a delay between the seizure and the institution of court proceedings, that delay must be reasonable:

"There is now a chorus of decisions holding that if the delay between the seizure and commencement of district court proceedings is substantial, unexcused and unreasonable, such delay will, on due process grounds, itself bar the government from proceeding further." Eight Rhodesian Statues, supra at 204.

Whether or not a claimant's due process rights have been infringed depends upon the circumstances of the particular case. One 1973 Ford LTD, supra at 742.

In the instant case, while testifying at the March 29, 1982, evidentiary hearing on the question of delay, IRS Special Agent Leon Halper said on cross-examination that part of the reason he saw no need to recommend or expedite forfeiture proceedings was because Halper assumed that because Ferris owed the IRS money for taxes at that time, the IRS was going to have the money seized anyway. Halper also said he wanted to have the documentary material analyzed that had been seized because he was not satisfied an adequate foundation or basis was present to ask for a forfeiture. Halper testified he was "somewhat" knowledgeable regarding the burden of proof to establish forfeiture.

However, the claimant argues that the same probable cause which justified the issuance of the search warrant also would have justified the immediate filing of a forfeiture complaint, which means that a forfeiture complaint could have been filed in the instant case in December 1980.

Cases have held that, "There is no need for the Government's elaborate system of review and re-review as presently practiced, since the same standard employed to test searches and seizures generally may be utilized to test probable cause for the seizure leading up to the initiation of a forfeiture proceeding." May v. United States, 519 F.Supp. 649, 653 (S.D.Ohio, W.D.1981). See also United States v. One 1975 Mercedes 280S, 590 F.2d 196 (6th Cir. 1978).

In an earlier opinion in the same case, the May Court held that the necessity for investigation is more likely to be required in a seizure made under the customs laws, which allow property to be seized without the prior authorization of a search warrant.

"Even in those circumstances (customs seizures with no prior investigation), courts have held delays of as little as six months to be unreasonable." May v. United States, 515 F.Supp. 600, 608 (S.D.Ohio, W.D.1981).

"As a matter of course, it seems likely that a significant amount of investigation will precede application for a search warrant....

"Thus, as there is a substantial likelihood of investigation where a search warrant is required before seizure, the argument can be made that less time should be allotted for investigative delay in this situation than where seizures are made under the customs laws." 515 F.Supp. at 608. (Emphasis provided)

Halper testified that he waited two months, from November 30, 1980, until early February 1981, before he submitted the documentary material to the FBI. During that time, the material was stored in an IRS safe, Halper said. The material was submitted to the FBI for analysis in early February 1981 by Halper, who had gone to Washington, D. C., on another case. Halper carried the material himself to avoid chain-of-custody problems, he said. The IRS received an FBI report analyzing the materials, dated April 15, 1981. Approximately one month later, in mid-May 1981, Halper submitted a report to IRS Regional Counsel in San Francisco requesting forfeiture of the money. Halper testified it took him about one day to prepare the report.

At the same hearing, IRS Revenue Officer John A. Magliere, Jr., testified that all money owed the IRS by Ferris for unpaid taxes was paid by Ferris on April 29, 1981. Magliere also testified that a notice of federal tax...