US v. Eighty-Eight (88) Designated Accounts

• Decision Date: 15 June 1990
• Docket Number: No. 90-1203-CIV-NESBITT.,90-1203-CIV-NESBITT.
• Citation: 740 F. Supp. 842
• Parties: UNITED STATES of America, Plaintiff, v. EIGHTY-EIGHT (88) DESIGNATED ACCOUNTS CONTAINING MONIES TRACEABLE TO EXCHANGES FOR CONTROLLED SUBSTANCES, Defendants.
• Court: U.S. District Court — Southern District of Florida

740 F. Supp. 842

UNITED STATES of America, Plaintiff, v. EIGHTY-EIGHT (88) DESIGNATED ACCOUNTS CONTAINING MONIES TRACEABLE TO EXCHANGES FOR CONTROLLED SUBSTANCES, Defendants.

No. 90-1203-CIV-NESBITT.

United States District Court, S.D. Florida.

June 15, 1990.

B.B. Allen, Asst. U.S. Atty., Miami, Fla., for plaintiff.

Mark Schnapp, Holly Skolnick, Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A., Jack Geckler, Hughes, Hubbard & Reed, Miami, Fla., Thomas K. Equels, Holtzman, Krinzman & Equels, G. Frank Quesada, Quesada & Martinez, Coral Gables, Fla., Clemente Vazquez-Bello, Wilfredo Rodriguez and Jose E. Sirven, Valdes-Fauli, Cobb, Petrey & Bischoff, Richard Brodsky, Paul, Landy, Beiley & Harper, Robert Martinez, Sharon Kegerreis, Zuckerman, Spaeder, Taylor & Evans, Miami, Fla., Carlos F. Concepcion, Concepcion DeGrandy & Sexton, Coral Gables, Fla., George Volsky, George Volsky, Miami, Fla., Armando Gutierrez, Gutierrez & Gutierrez, James McGuirk, James McGuirk, P.A., Coral Gables, Fla., Henry H. Bolz, Kelley Drye & Warren, Alan S. Fine, Kirk Munroe, Richey, Munroe, Fine & Goodman, Miami, Fla., Fred A. Schwartz, Amber Donner, Adorno & Zeder, Coconut Grove, Fla., Benedict P. Kuehne, Sonnett Sale & Kuehne, P.A., Joseph A. DeMaria, Greer, Homer & Bonner, Miami, Fla., Daniel J. Beller, Paul, Weiss, Rifkind, New York City, Roger Besu, Besu & Velez, P.A., Rebekah J. Poston, Fine, Jacobson, Schwartz, Nash, Block & England, Miami, Fla., Robert Targ, Robert Targ, P.A., South Miami, Fla., Sara Soto, Bailey & Hunt, Martin Raskin, Raskin & Graham, P.A., Sky Smith, Smith & Gellman, P.A., Miami, Fla., for defendants.

OMNIBUS MEMORANDUM ORDER

NESBITT, District Judge.

This cause comes before the Court upon several Claimants' Motions to Dismiss, supported by an omnibus memorandum of law filed on May 30, 1990. A hearing on the issues raised in the omnibus memorandum was held on Friday, June 8, 1990, at which the United States, lead counsel for various Claimants, and other counsel were present and were heard thereon. For the reasons stated below, the Motions to Dismiss supported by the omnibus memorandum are DENIED.¹

PROCEDURAL HISTORY

This unprecedented case began in the Northern District of Georgia, where on March 6, 1989, the government indicted a Panamanian financial institution and various alleged members of what is commonly known as the "Medellin Cartel." See United States v. Pablo Emilio Escobar-Gaviria, et al., No. 89-086-A-WCO. The indictment included a count seeking the criminal forfeiture of hundreds of bank accounts allegedly owned or controlled by the named defendants.

Pursuant to 21 U.S.C. § 853(e), the government, on April 10, 1990, sought from the United States District Court for the Northern District of Georgia an order freezing hundreds of accounts, including 690 "targeted" accounts.² The government also sought an order requiring the banks maintaining the accounts to provide the United States Attorney's Office with all records pertaining to the frozen accounts. In support of the request for seizure and for information, the government filed both the 279-page affidavit of DEA Special Agent David C. Panek, and, as an exhibit to the first affidavit, a second affidavit also executed by Special Agent Panek.³ On April 16, 1990, the Honorable William C. O'Kelley issued a restraining order freezing Group 1 accounts and ordering discovery as to those in Group 2. In the next ten days the court first modified and then partially extended the seizure and discovery portions of its original restraining order. On May 2, 1990, however, the court dissolved the restraining order as it pertained to the Group 2 accounts because the court decided that the government was improperly using the order solely for the purposes of obtaining discovery. See United States v. Pablo Emilio Escobar-Gaviria, No. 89-086 (N.D.Ga. May 2, 1990) (order partially dissolving restraining order).

On May 3, 1990, the United States filed with this Court an Application for Seizure Warrant which sought the seizure of seventy-two (72) accounts. In support of its application the government refiled Agent Panek's two previously described affidavits. The next day, United States Magistrate William C. Turnoff issued a seizure warrant for the seventy-two accounts.

On May 21, 1990, the United States filed an Amended Complaint seeking forfeiture of the eighty-eight accounts pursuant to 21 U.S.C. § 881(a)(6).⁴ The complaint states at paragraph 5 that the accounts contain monies "directly traceable to exchanges for a controlled substance, and/or monies used or intended to be used to facilitate a narcotics violation." The complaint also sets forth the date and amount of the traceable deposits which in part form the government's basis for forfeiture.⁵ For reasons unknown to the Court, instead of clearly and fully alleging in the complaint the circumstances from which the claim arises, the United States incorporated by reference the Panek affidavits in the complaint.

On May 20, 1990, counsel filed an omnibus memorandum of law in support of the Motions to Dismiss which are the subject of this Order.

ANALYSIS

Claimants move to dismiss the complaint primarily on two grounds: 1) the case's history of prosecutorial misconduct and abuse of process; and 2) the failure of the complaint to allege with particularity sufficient facts to support the assertion that the government has probable cause to believe that the bank accounts are subject to forfeiture.⁶ The Court addresses below the Claimants' arguments in the order of their merit.

1. Probable Cause

It is well established that in forfeiture actions under 21 U.S.C. 881(a), the government must prove the existence of "probable cause for belief" that a substantial link exists connecting the defendant property to the exchange of a controlled substance. United States v. Four Million, Two Hundred Fifty-Five Thousand, 762 F.2d 895, 903 (11th Cir.1985), cert. denied, 474 U.S. 1056, 106 S.Ct. 795, 88 L.Ed.2d 772 (1986) (hereinafter "$4,255,625.39"). The Eleventh Circuit has defined probable cause as more than mere suspicion, but less than prima facie proof. $4,255,625.39, 762 F.2d at 904. Thus, the facts supporting a determination of probable cause may be entirely circumstantial, and the government need not tie the defendant property to any specific drug transaction. Id. Moreover, the facts must be judged "`not with clinical detachment, but with a common sense view to the realities of normal life.'" United States v. One Single Family Residence, 731 F.Supp. 1563, 1567 (S.D.Fla. 1990) (quoting Wilson v. Attaway, 757 F.2d 1227, 1235 (11th Cir.1985)). After the government has shown probable cause, the burden shifts to the claimant to prove that the property falls outside the strictures of the statute. United States v. A Single Family Residence and Real Property, 803 F.2d 625, 629 (11th Cir.1986).

In accordance with the government's burden of proof at trial, the complaint filed against the defendant property must allege that the government has probable cause to believe that the property is subject to forfeiture. United States v. $38,000 in U.S. Currency, 816 F.2d 1538, 1548 (11th Cir.1987). Both the Federal Rules of Civil Procedure and the Supplemental Rules for Certain Admiralty and Maritime Claims (hereinafter "Supplemental Rules") apply to civil forfeiture actions, except where the two are inconsistent, in which case the Supplemental Rules apply. $38,000, 816 F.2d at 1547 n. 20. Thus Supplemental Rule E(2), rather than Fed.R. Civ.P. 8, governs the standard of pleading in forfeiture cases. United States v. Real Property on Lake Forest Circle, 870 F.2d 586, 588 n. 3 (11th Cir.1989); United States v. Property Located at 4880 S.E. Dixie Highway, 838 F.2d 1558, 1563 (11th Cir. 1988); $38,000, 816 F.2d at 1547.

Supplemental Rule E(2) provides that "the complaint shall state the circumstances from which the claim arises with such particularity that the defendant or claimant will be able, without moving for a more definite statement, to commence an investigation of the facts and to frame a responsive pleading." In other words, the complaint must contain the "requisite factual basis for its allegation that it has probable cause for forfeiture." $38,000, 816 F.2d at 1547. Because of the drastic nature of forfeiture actions, the standard is more stringent than the "notice pleading" necessary under Rule 8 of the Federal Rules of Civil Procedure. 12 C. Wright & A. Miller, Federal Practice and Procedure § 3242 (1973).

Claimants contend that the government's complaint fails to meet this more stringent standard and therefore, this Court should dismiss the action. Before addressing Claimants' argument, however, it is necessary to outline the facts of the two civil forfeiture cases in which the Eleventh Circuit has found a complaint deficient under Supplemental Rule E(2)⁷ and to set forth the relevant allegations in the complaint. First, in United States v. $38,000 in U.S. Currency, supra, the Eleventh Circuit determined that the government's complaint was "completely devoid of factual support for the government's allegation that it has probable cause for forfeiture under section 881," and dismissed it. 816 F.2d at 1548. The only fact alleged in the complaint was that the defendant currency was seized by the Drug Enforcement Administration ("DEA") on a specific day. Id. The court stated that "the complaint contains not even a whiff of evidence" that the money in question is subject to forfeiture, and found the complaint deficient because it did "not provide claimants with notice of the basis for the government's contention that it has the requisite probable cause to believe that a substantial connection exists between the currency and the exchange of a controlled substance." Id. Second, in United States v. Property Located at 4880 S.E. Dixie Highway, 838 F.2d 1558 (11th Cir.1988), the Eleventh Circuit found that the government's ...