United States v. Roberts, CASE NO: 1:15-CR-128-1

• Decision Date: 28 March 2016
• Docket Number: CASE NO: 1:15-CR-128-1
• Parties: UNITED STATES OF AMERICA v. GROVER LEE ROBERTS, JR
• Court: U.S. District Court — Eastern District of Texas

UNITED STATES OF AMERICA v. GROVER LEE ROBERTS, JR

CASE NO: 1:15-CR-128-1

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS BEAUMONT DIVISION

March 28, 2016

REPORT AND RECOMMENDATION REGARDING FORFEITURE

On November 24, 2015, the Government filed a Motion and Brief for Issuance of a Preliminary Order of Forfeiture (Doc. No. 55) regarding personal property, real properties, and cash proceeds. Chief Judge Ron Clark granted this motion. (Doc. No. 56.) Now, before the undersigned are two Motions for Remission of Forfeited Property filed by claimant Brunetta F. Roberts ("Roberts") regarding one piece of real property. (Doc. Nos. 75, 101.) These motions were referred to the undersigned for consideration and a recommended disposition by Chief Judge Clark. (Doc. Nos. 90, 102.)

Roberts is claiming an interest in the real property located at 1412 South Hart Avenue, Orange, Texas 77630 described as: Lot Twelve (12) in Block Two (2) of the S.T. Edwards Addition to the City of Orange, Orange County, Texas, according to the Map or Plat of said Addition as recorded in Vol. 1, Page 86, of the Map Records of Orange County, Texas. (Doc. Nos. 75, 101, 56.) The undersigned conducted a hearing on February 29, 2016, regarding Roberts's third party claim to an interest in this property. (Doc. No. 120.) Because the undersigned finds that Roberts has a legal one-half interest in the property that vested prior to the commission of the acts giving rise to the forfeiture, the undersigned recommends amending the forfeiture order to order the Government to sell the property in a commercially feasible manner and divide the net proceeds equally with Roberts after satisfaction of all taxes owed and the costs of possession, maintenance repairs, marketing, and sale of the property.

I. CRIMINAL FORFEITURE LAW

Under 21 U.S.C. § 881(a)(7), " real property, including any right, title, and interest (including any leasehold interest) in the whole of any lot or tract of land and any appurtenances or improvements, which is used, or intended to be used, in any manner or part, to commit, or to facilitate the commission of, a violation of this subchapter punishable by more than one year's imprisonment" shall be subject to forfeiture to the United States and no property right shall exist in them. Also, 21 U.S.C. § 853(a) states that "any person convicted of a violation of this subchapter or subchapter II of this chapter punishable by imprisonment for more than one year shall forfeit to the United States, irrespective of any provision of State law . . . (2) any of the person's property used, or intended to be used, in any manner or part, to commit, or to facilitate the commission of, such violation." Further, in imposing a defendant's sentence, the court shall order, in addition to any other sentence imposed, that the defendant forfeit to the United States all property described in subsection (a). 21 U.S.C.A. § 853(a).

In compliance with these statutes, the Government attached a notice to seek criminal forfeiture of the real property at issue in this report to the Defendant's Indictment. (Doc No. 2, p. 3-5.) On November 24, 2015, the Defendant pled guilty to the Indictment in court before the undersigned judge, and as part of his plea agreement, he agreed to forfeit his interest in the subject property pursuant to section 853. (Doc. No. 57.) In addition, on that same date, Chief Judge Clark signed an Order granting the Government's Motion for Preliminary Forfeiture of Property, includingthe property at issue. (Doc. No. 56.)

Following an order of forfeiture, any third person asserting a legal interest in the property may petition the court to adjudicate the validity of her alleged interest in the property. 21 U.S.C.A. § 853(n). The third party petitioner must establish by a preponderance of the evidence that: "(A) the petitioner has a legal right, title, or interest in the property, and such right, title, or interest renders the order of forfeiture invalid in whole or in part because the right, title, or interest was vested in the petitioner rather than the defendant or was superior to any right, title, or interest of the defendant at the time of the commission of the acts which gave rise to the forfeiture of the property under this section; or (B) the petitioner is a bona fide purchaser for value of the right, title, or interest in the property and was at the time of purchase reasonably without cause to believe that the property was subject to forfeiture under this section." Id. The court must hold a hearing and allow the third party petitioner and the Government to present evidence and witnesses. Id. The court shall also consider the relevant portions of the record of the criminal case which resulted in the order of forfeiture. Id. If the third party petitioner is successful in meeting her burden, the court shall amend the order of forfeiture in accordance with its determination. Id. If the burden of proof is not met, the United States shall have clear title to property that is the subject of the order of forfeiture and may warrant good title to any subsequent purchaser or transferee. Id. Furthermore, following the seizure and forfeiture of the property, the Attorney General shall direct the disposition of the property by sale, "making due provision for the rights of any innocent persons." 21 U.S.C. § 853 (h). This subsection and subsection (n) regarding third party interests are the only protection for innocent owners in the criminal forfeiture statute. See United States v. Fleet, 498 F.3d 1225, 1230-31 (11th Cir. 2007).

Roberts argues that she is entitled to the "innocent owner defense" pursuant to 18 U.S.C. § 983(d). However, that section is only for civil forfeitures. See 18 U.S.C. § 983 (i) ("In this section, the term 'civil forfeiture statute' means any provision of Federal law providing for the forfeiture of property other than as a sentence imposed upon conviction of a criminal offense"). The criminal forfeiture statute, 21 U.S.C. § 853, is an in personam proceeding that authorizes the government to seek forfeiture of a defendant's interest in subject property as a punishment for committing criminal acts. Fleet, 498 F.3d at 1230-31; United States v. Kennedy, 201 F.3d 1324, 1329 (11th Cir. 2000) (citing United States v. Lester, 85 F.3d 1409, 1413 (9th Cir. 1996)). This is in contrast to the civil forfeiture scheme, which involves an in rem proceeding, in which the whole property (as opposed to a particular defendant's interest in the property) is treated as being itself guilty of wrongdoing. Id. (citing United States v. One, 1976 Mercedes Benz 280S, 618 F.2d 453, 454 (7th Cir. 1980)). In a criminal forfeiture, only the property belonging to the criminal defendant is subject to forfeiture. Fleet, 498 F.3d at 1232.

In Fleet, the Eleventh Circuit held that 21 U.S.C. § 853 requires a partial forfeiture when the defendant owns real property with innocent parties. Id. at 1230-31 (holding that the United States can forfeit a defendant's interest in residence he owns with his wife). The court noted that the criminal forfeiture statute does not contain an innocent owner exception like the civil forfeiture statute, which can prevent the Government from forfeiting any part of the property. Id. So, the fact that an innocent spouse, even though she retains her property interest and may be adversely affected by the forfeiture of her guilty spouse's interest, it is no bar to forfeiture of the Defendant's interest. Id.; see also United States v. Morales, No. 6:12CR121, 2014 WL 3974557, at *1-3 (M.D. Fla. Aug. 14, 2014) (finding that the wife's one-half interest in the property posed no barrier to the forfeitureof the Defendant's interest in the Property, and the government shall sell the Property in a commercially feasible manner and divide the net proceeds equally with the Defendant's wife after satisfaction of all taxes owed and the costs of possession, maintenance, repair, marketing, and sale of the property). However, the Government must share the net proceeds from the sale of the property with an innocent owner according to their percentage owned. Id.; United States v. Dorman, 38 F. Supp. 3d 1328, 1330 (M.D. Fla. 2014), aff'd, 603 F. App'x 844 (11th Cir. 2015) (proceeds to be divided equally between the government and the Defendant's wife after selling the property); see also United States v. Lot 6 Block 4 Lakewood Oak Estates, 260 F. App'x 699, 700 (5th Cir. 2007) (approving of district court's ruling that partial payment for property with legitimate funds entitled spouse to community property interest equal to one-half of the legitimate payment).

Consequently, the undersigned must decide whether Roberts has established that: (a) she has an interest in the property vested in her rather than the Defendant at the time he committed the acts giving rise to the forfeiture; or (b) that she is a bona fide purchaser for value of the Defendant's interest in the property and was at the time of purchase reasonably without cause to believe that the property was subject to forfeiture. 21 U.S.C. § 853 (n).

II. DISCUSSION

A. Procedural History

On October 7, 2015, the Defendant, Grover Lee Roberts Jr., was indicted for violation of 21 U.S.C. § 846, conspiracy with intent to distribute a controlled substance. (Doc. No. 2.) A notice of intention to seek criminal forfeiture pursuant to 21 U.S.C. §§ 853, 881 was included in the Indictment and referenced the property at issue. (Id.) On October 13, 2015, the Government filed a Notice of Lis Pendens with the Orange County Clerk giving notice to the public that the propertyis subject to forfeiture pursuant to the indictment against the Defendant. (Govt. Ex. 1.) On October 15, 2015, the Defendant signed a Quitclaim Deed giving the subject property wholly to Roberts, but no value was exchanged between the two of them. (Roberts Ex. 1.) The Quitclaim Deed stated that the Defendant was giving his 50% ownership to Roberts...