United States v. One Check in the Amount of $47,000 Payable to Brian Deiorio
| Decision Date | 09 December 2016 |
| Docket Number | Civil Action No. 14-cv-14261-ADB |
| Parties | UNITED STATES OF AMERICA, Plaintiff, v. ONE CHECK IN THE AMOUNT OF $47,000 PAYABLE TO BRIAN DEIORIO, SEIZED ON NOVEMBER 21, 2014, TO WHICH REPRESENTS CURRENCY PREVIOUSLY SEIZED FROM 39 KEAYNE STREET, REVERE, MASSACHUSETTS ON MAY 24, 2012, Defendants. |
| Court | U.S. District Court — District of Massachusetts |
BURROUGHS, D.J.
This case was brought by the United States seeking in rem forfeiture of a $47,000 check payable to Brian D'Iorio. The United States alleges that the currency is subject to forfeiture because it is connected to illegal drug and/or gambling activity. Currently pending is claimant Brian D'Iorio's motion to dismiss. [ECF No. 11]. For the reasons stated herein, the motion to dismiss is denied. The Court also finds, however, that D'Iorio has constitutional and statutory standing and that he may intervene as a claimant in this action.
On May 24, 2012, the Massachusetts State Police seized $47,000 in cash from Brian D'Iorio's Revere, Massachusetts residence, pursuant to a state search warrant for gaming violations. The search of D'Iorio's home was part of a larger investigation into a narcotics and money laundering organization operating in and around Boston, Massachusetts. D'Iorio was not arrested or charged with a crime at the time of the seizure, or any time thereafter in connection with the investigation.
Thereafter, D'Iorio received a CAFRA Seizure Notice from U.S. Customs and Border Protection. At some point after the initial seizure, the Massachusetts authorities released the funds to the federal government. The CAFRA Seizure Notice indicated that the funds had been seized by the U.S. Department of Homeland Security, Office of Investigations (HSI) and were subject to forfeiture because they were traceable to the exchange of a controlled substance or to smuggling.
In 2012, D'Iorio filed two motions for return of property in Chelsea District Court. In the first, filed on July 18, 2012, D'Iorio argued that there was not probable cause to believe that there would be evidence of illegal gambling at his address and as a result, the seized property should be returned. On August 22, 2012, Judge Maldonado denied this motion. Though D'Iorio had still not been indicted for any crime, Judge Maldonado found that the search warrant had been reviewed and signed off by a magistrate, and that returning the property, only a few months after the search, would not be appropriate.
D'Iorio's second motion for a return of property, filed in Chelsea District Court in October 2012, contested the release of the $47,000 in cash from Massachusetts authorities to the federal government. Relying on Commonwealth v. Rufo, 708 N.E.2d 947, 948-49 (Mass. 1999), D'Iorio argued that property seized pursuant to a state search warrant remains in the custody of the court that issued the warrant and may not be turned over to federal authorities. Justice James H. Wexler of the Chelsea District Court agreed, and in a July 2013 decision, he ordered that the $47,000 be returned to D'Iorio. He found that even though the seized funds had been transferred to federal authorities, they remained under state court jurisdiction. Because he had no basis todetermine what ongoing interest the Commonwealth or the United States had in the funds, he granted the motion and ordered that the funds be returned.
Pursuant to Judge Wexler's order, the Department of Homeland Security, which had custody of the currency, requested a check from the United States Treasury payable to D'Iorio. On November 21, 2014, after considerable delay, the check was hand-delivered to D'Iorio's counsel by a federal agent, but was immediately re-seized by the agent, pursuant to a seizure warrant issued by Magistrate Judge Dein on November 17, 2014. See Case Number 14-mj-5123-JGD.
On December 10, 2014, the United States instituted this in rem action for forfeiture of the $47,000 check. It filed a Verified Complaint [ECF No. 2] and an Affidavit of Phillip J. Lavoie, Special Agent with the United States Department of Homeland Security, Immigration and Customs Enforcement, Homeland Security Investigations [ECF No. 2-3]. The United States stated that the Defendant Currency was subject to forfeiture pursuant to 21 U.S.C. § 881(a)(6) because it (a) represents money, negotiable instruments, securities, or other things of value furnished or intended to be furnished by any person in exchange for a controlled substance or listed chemical in violation of 21 U.S.C. §§ 841 and/or 846; (b) represents proceeds traceable to such an exchange; and/or (c) represents moneys, negotiable instruments, or securities used or intended to be used to facilitate such a violation. In addition, the United States stated that it had probable cause to believe that the Defendant Currency was subject to forfeiture pursuant to 18 U.S.C. § 981(a)(1)(C), as property constituting or derived from proceeds traceable to illegal gambling in violation of 18 U.S.C. § 1955, and pursuant to 18 U.S.C. § 1955(d) as property used in violation of 18 U.S.C. § 1955.
In his affidavit, Lavoie stated that he had probable cause to believe that the check was subject to forfeiture because it was linked to illegal drug or gambling activity. [ECF No. 2-3 ¶¶ 5-6]. The affidavit says notably little about D'Iorio. Instead, the majority of the affidavit is devoted to explaining a state drug and gambling investigation that led to the arrest of 12 people, but not D'Iorio. Id. ¶¶ 19-42.
The affidavit attempts to link D'Iorio to the drug and gambling activity uncovered by the investigation. Id. ¶¶ 43-52. Lavoie states that, based on his participation in the investigation, he knows that D'Iorio supplied the drug trafficking organization with marijuana and enforced the collection of its gambling debts. Id. ¶¶ 43, 45. He specifically describes a series of phone calls that took place a few days before the search, which led him to believe that D'Iorio collected $14,000 in illegal gambling debts. Id. ¶¶ 47-52. The only other specific allegation connecting D'Iorio to the larger investigation is that camera surveillance in April 2012 revealed that D'Iorio visited a residence used by the drug organization to store and distribute narcotics. Id. ¶ 43.
On May 24, 2012, investigators made a forcible entry into D'Iorio's residence. Id. ¶¶ 53-54. During the search, among the items recovered by investigators were the following: (1) marijuana; (2) two money counters; (3) a chest plate for a bullet-proof vest; (4) various prescription medications, anabolic steroids, and other performance enhancing substances; (5) prescriptions and prescription pads; (6) more than twenty cellular phones; (7) two Ziploc bags containing signature stamps; (8) one cellular telephone digital voice recorder; (9) signature stamps in the names of various businesses and individuals; and (10) $47,000 in United States currency. Id. ¶ 55. The $47,000 was found in two blue plastic bags located in a secret compartment behind the molding at the base of the kitchen island. Id. ¶ 56. In the same hiddencompartment, investigators also found passports in the names of D'Iorio and his girlfriend, and credit cards and other documents in D'Iorio's name. Id. ¶ 54, 56.
On February 18, 2015, the Court issued a Warrant and Monition against the Defendant Currency, which instructed the United States to give notice of the forfeiture action to all interested parties. [ECF No. 4]. The United States provided direct notice to D'Iorio and his counsel in mid-March and also provided public notice online from February 28, 2015, and through March 29, 2015 [ECF No. 8]. Pursuant to the Warrant and Monition, and Rule G of the Supplemental Rules for Admiralty and Maritime Claims to the Federal Rules of Civil Procedure, any claims to the Defendant Currency had to be filed with this Court and served upon Assistant U.S. Attorney Doreen Rachal within 35 days of receiving actual notice, and answers to the complaint had to be filed 21 days after the filing of the claim.
On July 21, 2015, D'Iorio filed a motion to dismiss the complaint for failure to state a claim. [ECF No. 11]. On August 5, 2015, the motion was granted as unopposed after the government failed to file an opposition within the 14 days allowed under Local Rule 7.1. [ECF No. 12]. On August 7, 2015, the United States filed an assented-to motion requesting that the Court vacate its order granting the motion to dismiss and give the United States additional time to file its opposition. [ECF No. 14]. The Court granted the motion and directed the United States to file its opposition by August 28, 2015. [ECF No. 15]. The government filed its opposition brief on August 28. [ECF No. 17]. It argued that not only should the motion to dismiss be denied, but that a default judgment should be entered because D'Iorio lacks constitutional and statutory standing. D'Iorio filed a supplemental memorandum of law in support of his motion on March 1, 2016 [ECF No. 19], and the government filed a reply, by leave of the Court, on March 21 [ECFNo. 22].1 The Court held a hearing on the motion to dismiss on November 29, 2016, at which it allowed D'Iorio an extension of time to December 5 to file a claim. [ECF No. 27]. D'Iorio timely filed a claim on December 1, 2016. [ECF No. 28].
Before reviewing the merits of the pending motion to dismiss, the Court first addresses the United States' threshold argument that a default judgment should be entered in its favor because D'Iorio lacks standing and his motion is untimely. According to the United States, D'Iorio should not be permitted to intervene in this action because he lacks constitutional and statutory standing. The Court disagrees that D'Iorio lacks constitutional standing, and as discussed at the hearing, it allowed D'Iorio an extension of time to comply...
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