Newsgroups: alt.society.resistance
From: [k--dd--r] at [gallant.apple.com] (Ray Kiddy)
Subject: Forfeiture Info from BJA, IB
Date: Fri, 7 May 1993 02:10:02 GMT

BTW, for more info send mail to [p--l--h] at [ganymede.apple.com]

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help
send /publish/Index

i have some GAO reports (not many :-<) and am putting on this series
of 14 pamphlets on Forfeiture for police. 

ps: i am not selling anything, this is all free info.

====================================================================

Asset Forfeiture: Civil Forfeiture

- Part 2 - 

IV. Common Factors of Circumstantial Proof

''Close Proximity''
Despite recent decreased emphasis on seizures of cash and/or cars that 
occur during the arrest of drug violators, such seizures nevertheless 
continue to account for many civil forfeitures. The courts recognize 
that the location of assets in "close proximity" to narcotics is a 
relevant factor. Such evidence helps establish that the property 
constitutes drug proceeds or was intended to be exchanged in a narcotics 
transaction.(18) In each case, of course, the courts also examine the 
circumstances of the seizure for evidence of narcotics trafficking.

Cash Hordes

Courts often regard cash hordes as strongly indicative of narcotics 
trafficking. As one court has noted, "[a] large sum of cash, in and of 
itself, is evidence of its use for the purpose of an illegal drug 
transaction."(19)
In situations involving a cash horde, the government ordinarily seeks to 
forfeit the horde as money obtained directly in exchange for narcotics. 
By itself, the presence of cash will not justify forfeiture. However, 
the attendant circumstances frequently provide additional proof linking 
the horde to narcotics trafficking. For example, as stated above, the 
money may have been found in close proximity to narcotics. In addition, 
as one court recently observed: Of particular significance is the nature 
of the currency itselfQthe way it was packaged, the mixed denominations 
of the bills, and the sheer amount of currency consisting of a large 
number of small billsQ which in this court's own experience . . . 
appears to be a common thread running through cases involving controlled 
substances and the proceeds therefrom.(20)

Thus, the circumstances of each cash horde should be carefully analyzed 
for indications of drug dealing.

Concealment Efforts and Commingled Funds

Efforts to conceal the true ownership of property or to disguise the 
manner in which it was purchased constitute significant evidentiary 
factors. For example, in United States v. Parcels of Land 
(Laliberte),(21) the court noted: Laliberte attempted to shield this 
money from the attention of the government, which is a further 
indication of drug trafficking . . . Laliberte instructed [his partner] 
not to make deposits of . . . money in amounts greater than $10,000 in 
order to avoid scrutiny by the Internal Revenue Service. Laliberte also 
told his accountant not to itemize his personal investments . . . 
despite the tax benefits he could have realized from doing so.(22)

Likewise, in United States v. Haro,(23) the court based its decision to 
allow a criminal forfeiture of a defendant's property, in part, on his 
efforts to conceal the property's true ownership.(24) The defendant, an 
attorney, undertook extensive measures to conceal narcotics proceeds in 
order to buy real estate. Such proof, albeit circumstantial, obviously 
serves to link assets to narcotics activity.(25)
Commingled funds pose special difficulties for the government. Although 
commingling may be evidence of narcotics activity, the government's 
recovery is limited to the percentage of the property proven to be 
tainted.(26) Courts will carefully scrutinize allegedly commingled 
funds, however, to ensure that they are partially derived from 
legitimate sources.(27)

Extensive Cash Expenditures

Another factor often cited by the courts is the tendency of drug 
traffickers to engage in numerous large cash transactions. This pattern 
is so well recognized that the Fourth Circuit recently reversed a 
district court decision that failed to give such evidence proper weight: 
The district court found that during a nine-month stretch . . . [the 
claimant] made cash expenditures totaling $137,000.... The court failed 
to note the significance of this evidence, namely that the possession of 
unusually large amounts of cash . . . or the making of uncommonly large 
cash purchases . . . may be circumstantial evidence of drug 
trafficking.(28)

Likewise, the Second Circuit, after recounting a claimant's various cash 
expenditures, recently concluded that "[t]he district court could 
reasonably infer that it was unusual to pay for expensive property such 
as real estate and heavy construction equipment with cash it could also 
find even more unusual [the claimant's] payments for some of the 
purchases with five, ten, and twenty dollar bills."(29)

Informal Net-Worth Analysis

The tendency of drug traffickers to engage in large cash transactions is 
frequently accompanied by the absence of legitimate means of employment 
capable of supporting such large expenditures. Accordingly, courts often 
consider an apparent discrepancy between an individual's lifestyle and 
his or her employment income as indicative of narcotics trafficking and 
its proceeds.
In most cases, courts note this conflict without conducting the type of 
formal "net worth" analysis typical of tax prosecutions. For example, 
one leading commentator has observed: In the typical proceeds case, the 
government shows that a drug trafficker has acquired substantial assets, 
often purchased with cash, but has no legitimate or declared source of 
income that could account for more than a fraction of his wealth. 
Frequently, he has filed no tax returns for several years, and, of 
course, there is always the strong evidence of a "likely source from 
which [the trier of fact] could reasonably find that the net worth 
increases sprang." Such evidence is usually enough to show probable 
cause to believe that all of the trafficker's more valuable property is 
subject to forfeiture....(30)

Thus, after quoting the above excerpt, one district court stated:
Under a net worth theory, the government could survive a motion to 
dismiss by alleging, with sufficient particularity, that [the claimant] 
is a drug trafficker, that he has no other known source of income, and 
that he has accumulated substantial assets during the period in which he 
had no known source of income.(31)

Accordingly, even an informal net worth analysis provides a strong 
evidentiary basis for finding that targeted assets constitute narcotics 
proceeds.

Formal Net-Worth Analysis

On occasion, the government has resorted to a more formal presentation 
of "net worth" proof. This process involves establishing an individual 
target's income during a designated period and comparing this figure 
with his expenditures or increased net worth during the same period. 
Given proof of substantial narcotics trafficking, the difference between 
these amounts suggests that the proceeds are illicit.

Before 1988, the government rarely relied on this method of proof in 
forfeiture cases. Since then, however, law enforcement has learned that 
this highly effective method of tracing proceeds can be accomplished 
relatively easily and without the complexities of a tax prosecution. As 
a result, net-worth proof has become more common in civil forfeiture 
cases. More important, numerous appellate courts have relied on this 
mode of proof to sustain forfeitures.
For example, in United States v. Parcels of Land (Laliberte)(32) the 
First Circuit initially noted that the claimant's average annual 
adjusted gross income was $27,690, and then set forth his numerous 
expenditures during this period. Based on a comparison of these figures, 
the court stated: The sheer magnitude of Laliberte's expenditures 
supports an inference that his property acquisitions were funded with 
the proceeds of drug trafficking. Laliberte's millions of dollars in 
purchases far exceeded his reported average annual income, . . . and 
there was no other apparent legitimate source of money to account for 
the magnitude of the expenditures.(33)

Similarly, in United States v. Thomas,(34) the Fourth Circuit observed:
Here the undisputed cash expenditures vastly exceeded Thomas' legitimate 
income. During this period, Thomas' only source of income was his 
business .... Records ... show that Thomas reported only $13,964 in 
gross income on his business license applications for the years 1983 
through 1986 .... Thomas' tax returns ... report an income of 
approximately $11,000 in 1985 and $1,300 in 1986. According to testimony 
of his wife, Thomas also had significant obligations during this period: 
two separate households with a woman and five children in each. Evidence 
that cash expenditures by ThomasQa suspected drug traffickerQhugely 
exceeded any verifiable income suggest that the money was derived 
illegally.(35)

Given the persuasive effect of net-worth analysis, this methodology has 
been repeatedly endorsed by federal appellate courts.(36) For this 
reason, although forfeiture can generally be achieved without such 
proof, net-worth analysis should be considered in major civil forfeiture 
actions aimed at narcotics proceeds.

Failure to Account for Income; Inherently Incredible Testimony and 
Affirmative Misrepresentations

Another circumstantial factor applied by the courts focuses on an 
individual's inability to account for the targeted asset and/or an 
individual's tendency to misrepresent how the property was obtained. The 
special nature of civil forfeiture proceedings provides the government 
with unique opportunities to develop this line of evidence.
Because forfeiture actions under $881 are civil proceedings, 
individual's cannot take complete refuge under the privilege against 
self incrimination. The privilege does apply to civil proceedings, of 
course, but within that context judges may draw an adverse inference 
about individuals asserting the privilege.(37) As a result, owners of 
seized property are potentially exposed to scrutiny either through 
pretrial discovery or by cross-examination at trial. This exposure 
places pressure on those owners to explain how they obtained their money 
or other property.
Accordingly, when property owners have failed to provide a satisfactory 
explanation, courts have cited this failure as indicative of a 
connection between narcotics trafficking and the asset(s) in question. 
For example, in United States v. 228 Acres of Land,(38) the Second 
Circuit based its probable cause finding, in part, on the following 
analysis: [The Claimant] failed to account adequately for his possession 
of such large sums of cash. He made no claim of prior gifts or of 
earlier investments. Instead, he claimed that the funds were after-tax 
profits from his jewelry business, but he failed to offer any bills, 
receipts or other records to prove that his . . . businesses were 
actually capable of generating such large sums of cash.(39)

Most claimants resort to asserting that the money in question 
constitutes gambling winnings or cash that had been stored at home. This 
position has been almost universally rejected. For example: In trying to 
prove that the large sum of money in question is not subject to 
forfeiture, claimant asserts that he won the majority of the money 
gambling . . . He is unclear, however, as to the amounts he won and when 
he won the money. Also, for the years he claimed he won the money, his 
tax returns do not show any gambling winnings.... Claimant testified 
that he kept the money in a large wooden box in the utility room 
attached to his house; however, his wife testified . . . that she never 
recalled seeing a large wooden box .... The court also finds it highly 
unlikely that a person would keep such a large sum . . . in a box in a 
utility room accessible only from the outside . . . of the house.(40)

Similarly, in other cases, courts have found the testimony of the owner 
in question to be contradictory, non-credible, or outright false. Such 
evidence, therefore, is considered indicative of a connection between an 
asset and narcotics trafficking.(41)

Proof of Narcotics Trafficking

A threshold requirement in this general context is proof of narcotics 
trafficking during a specified time period. Absent such proof, none of 
the factors set forth above would warrant forfeiture. In addition, 
however, courts are more likely to find that assets constitute narcotics 
proceeds when the government proves extensive narcotics activity. In 
other words, the more evidence of drug dealing, the more likely the 
assets will be deemed narcotics proceeds.
Proof of trafficking is regarded indicative of illicit proceeds because 
judges recognize that the drug trade typically generates large profits. 
Thus, extensive proof of trafficking increases the likelihood of tainted 
assets. Such proof may consist of prior convictions and arrests for drug 
dealing as well as evidence that did not result in prosecution.(42) In 
addition, courts may consider the purity of the drugs in question as 
suggestive of both the claimant's role in the distribution chain and of 
the length of time he has been in the trade.(43) Thus, when the purity 
of the drugs is high, the violator is probably both high up in the 
distribution chain and likely to have been dealing drugs for a 
substantial period.(44)

Statements by Informants

In federal prosecutions, courts also have recognized the potential value 
of informant statements set forth in affidavits. Though generally not a 
major part of the government's case, such evidence is viewed as 
suggestive. For example, such evidence recently was used to help 
establish an individual's involvement in drug trafficking and to 
identify his illicit proceeds.(45) Therefore, its potential value ought 
to be kept in mind.

Expert Opinions

The significance of circumstantial evidence presented by the 
government's case may be explained to the court by an expert witness. 
For example, in United States v. 228 Acres of Land,(46) the court 
allowed a DEA agent to give an expert opinion on several matters, 
including the proposition that the purity of the claimant's heroin was 
indicative of both his role in the narcotics enterprise and his 
connection to the supply source.(47) Because an expert witness can 
explain the importance of facts that otherwise may appear innocuous or 
insignificant, such testimony can make a crucial difference in close 
cases. Moreover, because expert opinion affords the government a key 
opportunity to explain and summarize its case, expert testimony should 
be used whenever a forfeiture case is based on circumstantial evidence.

Conclusion

Asset forfeiture continues to be a critical weapon in the war on 
narcotics trafficking. Fortunately for law enforcement, the case law has 
developed in a manner that both interprets the term "proceeds" broadly 
and facilitates the tracing of such proceeds to narcotics trafficking. 
Thus, law enforcement need not rely only on direct evidence, which is 
rarely available, to establish a strong forfeiture case. Circumstantial 
evidence is often sufficient. To maximize the potential afforded by 
asset forfeiture, however, prosecutors and investigators must make every 
effort to present in court the array of circumstantial proof outlined in 
this monograph.

Endnotes

1. See M. Goldsmith, Asset ForfeitureQCivil Forfeiture: Tracing the 
Proceeds of Narcotics Trafficking (BJA 1988).

2. D. Smith, The Prosecution and Defense of Forfeiture Cases, $4.03[4] 
(1990 Supp.) [hereinafter Smith, Forfeiture].

3. 675 F. Supp. 645 (D. Fla. 1987).

4. Id. at 645-46; see United States v. One 1980 Rolls Royce, 905 F.2d 
89, 91 (5th Cir. 1990).

5. See, e.g., United States v. Monkey, 725 F.2d 1007, 1012 (5th Cir. 
1984). An expansive view of proceeds was addressed in the dicta, the 
issue itself was not brought up on appeal.

6. Wood v. United States, 863 F.2d 417, 419 (5th Cir. 1989).

7. United States v. $4,250,000 in Currency, 808 F.2d 895, 897 (5th Cir. 
1987); United States v. A Single Family Residence, 803 F.2d 625, 628 
(11th Cir. 1986).

8. United States v. One 56 Foot Motor Yacht, 702 F.2d 1276, 1282 (9th 
Cir. 1987), United States v. One 1964 Beechcraft, 691 F.2d 725, 728 (5th 
Cir. 1982).

9. United States v. $4,255,625.39 in Currency, 762 F.2d 895, 904 (11th 
Cir. 1985); United States v. $13,000 in Currency, 733 F.2d 581, 585 (8th 
Cir. 1984).

10. United States v. Banco Cafetero Panama, 797 F.2d 1154, 1160 (2d Cir. 
1986); United States v. $4,265,000 in Currency, 762 F.2d 895, 904 (11th 
Cir. 1985).

11. United States v. One 1980 Red Ferrari, 875 F.2d 186, 188 (8th Cir. 
1989); see also United States v. Thomas, 913 F.2d 1111, 1114 (4th Cir. 
1990).

12. United States v. Edwards, 885 F.2d 377, 390 (7th Cir. 1989), see 
also United States v. Thomas, 913 F.2d 1111, 1114 (4th Cir. 1990).

13. 913 F.2d 1111 (4th Cir. 1990).

14. Id. at 1115.

15. Id. at 1117.

16. 903 F.2d 36 (1st Cir. 1990).

17. Id. at 38-39 (emphasis added).

18. See, e.g., United States v. Pace, 898 F.2d 1218, 1235-36 (7th Cir. 
1990); United States v. $91,960, 897 F.2d 1457, 1462 (8th Cir. 1990)

19. United States v. One Lot of $99,870, 1988 Dist. Lexis 15415 (D. 
Mass.) (noting, however, that such proof alone does not necessarily 
constitute probable cause).

20. United States v. $103,025, 741 F. Supp. 903, 905 (M.D. Ga. 1990).

21. 903 F.2d 36 (1st Cir. 1990).

22. Id. at 40.

23. 685 F. Supp. 1468 (E.D. Wisc. 1988), aff'd. sub. nom. United States 
v. Herrero, 893 F.2d 1512, 1543 (7th Cir. 1990).

24. Id. at 1470-71 & 1475.

25. See also United States v. 228 Acres of Land and Dwelling, 916 F.2d 
808, 813 (2nd Cir. 1990) (effort to conceal income a factor in probable 
cause determination), United States v. 1.678 Acres of Land, 684 F. Supp. 
426, 427 (W.D. N.C. 1988) (payments for property made in the name of 
third parties; violator deeded property to third party shortly after 
seizure of drugs and currency).

26. See, e.g., United States v. One Rolls Royce, 905 F.2d 89, 90-91 (5th 
Cir. 1990) (citing other authority); United States v. Certain Real 
Property at 2323 Charms Rd., 726 F. Supp. 164, 169 (E.D. Mich. 1989). 
Once this percentage has been determined, however, the government will 
likely benefit from a favorable accounting procedure to maximize the 
amount subject to forfeiture. United States v. Banco Cafetero Panama, 
797 F.2d 1154, 1159 (2d Cir. 1986).

27. United States v. One Rolls Royce, 905 F.2d 89, 91 (5th Cir. 1990).

28. United States v. Thomas, 913 F.2d 1111,1115 (4th Cir. 1990).

29. United States v. 228 Acres of Land, 916 F.2d 808, 813 (2nd Cir. 
1990); see also United States v. Parcels of Land (Laliberte), 903 F.2d 
36, 40 (1st Cir. 1990); United States v. $215,300 United States 
Currency, 882 F.2d 417, 419 (9th Cir. 1989).

30. Smith, Forfeiture, supra note 2, $4.03, at 450 (1990 Supp.). This 
observation, however, is qualified by the following appropriate 
commentary:
  A problem of proof, however, arises where the government makes the 
mistake of trying to forfeit literally everything owned by the drug 
trafficker, including a great many items of small value. If the 
trafficker can show any non-drug income, fairness dictates that he ought 
to at least be able to keep a portion of his total assets corresponding 
to the proportion his non-drug income bears to his drug derived income.
Id. at 451, cited with approval in United States v. Property at 2323 
Charms Rd., 726 F. Supp. 164, 169 (E.D. Mich 1989)

31. United States v. Property at 2323 Charms Rd., 726 F. Supp. 164, 169 
(E.D. Mich. 1989); see also United States v. Miscellaneous Property, 667 
F. Supp. 232, 239-41 (D. Md. 1987).

32. 903 F.2d 36 (2d Cir. 1990).

33. Id. at 39-40.

34. 913 F.2d 1111 (4th Cir. 1990). 

35. Id. at 1115 (citing other authority).

36. See United States v. One 1987 Mercedes 560 SEL, 919 F.2d 327, 331-32 
(5th Cir. 1990); United States v. 228 Acres of Land, 916 F.2d 808, 813 
(2nd Cir. 1990); United States v. Edwards, 885 F.2d 377, 390 (7th Cir. 
1989), United States v. Nelson, 851 F.2d 976, 980 (7th Cir. 1988).

37. See, e.g., United States v. Thomas 913 F.2d 1111, 1115 (4th Cir. 
1990) (citing Baxter v. Palmigiano, 425 U.S. 308 318 (1976)).

38. 916 F.2d 808 (2nd Cir. 1990).

39. Id. at 813.

40. United States v. $103,025 in U.S. Currency, 741 F. Supp. 903, 906 
(M.D. Ga. 1990); see also United States v. Thomas, 913 F.2d 1111, 1118 
(4th Cir. 1990).

41. United States v. 228 Parcels of Land, 916 F.2d 808, 813 (2nd Cir. 
1990) (false statements); United States v. Haro, 685 F. Supp. 1468, 
1470-71 & 1475 (E.D. Wisc. 1988) (testimony incredible and perjurious), 
aff'd. sub. nom. United States v. Herrero, 893 F.2d 1512, 1543 (7th Cir. 
1990); United States v. One Lot of $99,870 in U.S. Currency, 1988 U.S. 
Dist. Lexis 15415 (D. Mass.) (contradictory testimony); United States v. 
11348 Wyoming, 705 F. Supp. 352, 355-56 (E.D. Mich. 1989); cf. United 
States v. One 1987 Mercedes SEL, 919 F.2d 327 332 (5th Cir. 1990) 
(claimant unable to meet burden of proof); United States v. Parcels of 
Land (Laliberte), 903 F.2d 36 41-42 (1st Cir. 1990) (same).

42. See, e.g., United States v. Thomas 913 F.2d 1111, 1116 (4th Cir. 
1990); United States v. One Lot of $99,870 in U.S . Currency, 1988 U.S. 
Dist. Lexis 15415 (D. Mass.) (arrest resulting in nolle prosequi still a 
probative factor).

43. United States v. 228 Acres of Land and Dwelling, 916 F.2d 808, 812 
(2d Cir. 1990).

44. Id.

45. See id. at 41; United States v. Thomas, 913 F.2d 1111, 1117 (4th 
Cir. 1990).

46. 916 F.2d 808 (2d Cir. 1990).

47. Id. at 812 and 814 (2d Cir. 1990)