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August 13, 1990


The opinion of the court was delivered by: Irving Ben Cooper, District Judge.


The United States of America (the "government") commenced this civil in rem forfeiture action on October 21, 1988 by filing a verified complaint against the premises and real property located at 710 Main Street, Peekskill, New York (the "property"). On that same date, the United States Marshal seized the property pursuant to a seizure warrant issued by United States District Court Judge Robert W. Sweet. Jesse James Bunch filed the only claim to the property in opposition to this forfeiture action.

The government's complaint alleges that the property was used, or was intended to be used, to facilitate narcotics transactions with Mr. Bunch's knowledge and consent, thus subjecting the property to forfeiture under 21 U.S.C. § 881(a)(7) (1988).

Mr. Bunch denies the government's allegations and claims that he did not know of or consent to any narcotics or other illegal activity that may have occurred on the premises; he also seeks to invoke the "innocent owner" defense that is statutorily created by 21 U.S.C. § 881(a)(7).

The action was tried before this Court on February 13 and 14, 1990. We base our opinion upon the findings of fact and conclusions of law hereinbelow.


Claimant, Jesse James Bunch, is the owner of the defendant property located at the address designated hereinabove. He purchased it in 1972. (Ex. 1; Tr. 9 (stipulated fact); 232)*fn1 The property consists of a three story building; the first floor houses two commercial areas: a bar, known as "Bunch's Place" (the "bar"), and a video game arcade (the "arcade"). (S.F. 3(a)(ii); Tr. 7)*fn2 The second and third floors consist of residential apartments, including the apartment that Mr. and Mrs. Bunch occupied with their daughter and grandchildren from 1972 until the property was seized on October 21, 1988. (Id.) The property is located in an area that was, and continues to be, a highly active drug trafficking center. (Tr. 112, 207, 213-214, 227-228; Ex. B, 36)*fn3

The bar was owned by Mr. Bunch; it was operated by Mr. and Mrs. Bunch and their daughter, Doreen, from 1972 until the property was seized. (S.F. 3(a)(iii); Tr. 11) The arcade was owned and operated by Stephanie Reed, who leased the area from Mr. Bunch. (S.F. 3(a)(iv); Tr. 253) The bar and the arcade were the only two establishments in the vicinity that were open late at night. (Tr. 185)

In January, 1977, a patron was arrested inside the bar on narcotics charges. (Tr. 15)

On April 26, 1977, another bartender was arrested while on duty inside the bar; two patrons were arrested at the same time. (S.F. 3(a)(vi); Tr. 15) The bartender received an adjournment in contemplation of dismissal; the other two individuals were convicted of seventh degree possession of a controlled substance. (Tr. 16) The arrest was the bartender's first; after his arrest, he was terminated from Mr. Bunch's employ. (Tr. 73, 126) The arrests of the bartender and the patrons were reported to the New York State Liquor Authority ("State Liquor Authority") by way of a police referral form. (Tr. 17-18; Ex. 23) The referral also made mention of the two previous arrests at the property. (Id.)

On January 10, 1980, a shooting occurred in a vehicle in front of the property. (Tr. 19, 74) It was one of "several" shootings to have taken place in the vicinity of the property over the past three to four years, including an incident where a Peekskill police officer was shot. (Tr. 74)

When the gun fire sounded, Mrs. Bunch locked the bar's front door for approximately ten minutes until the people who had congregated in the street dispersed. (Tr. 145) One person was killed; a second person, Charles Dabbs, who was shot during the incident, entered the bar twenty minutes after the shooting. (Tr. 143) Dabbs disposed in the bar's restroom a package containing a .38 caliber revolver and a quantity of marijuana. (S.F. 3(a)(vii); Tr. 20, 131; Ex. 27)

The police reported the incident to the State Liquor Authority; in the report, the police indicated that no employees of the bar provided any information regarding the investigation of the incident. (Ex. 27; Tr. 19-22) Mrs. Bunch testified before us that the police entered the bar twice that night, once before Dabbs entered and left the package in the restroom, and once after Dabbs left. (Tr. 131, 146) When the police entered the first time, the police asked Mrs. Bunch if anything had happened. (Id.) She responded that beyond hearing someone say that there was a shooting outside, she did not know anything because she did not go outside. (Id.) When the police entered after Dabbs left the package, they asked Mrs. Bunch if she had seen Charlie Dabbs. She told them that Dabbs came into the bar and went to the restroom; the police then went to the restroom and found the package. (Id.) Mrs. Bunch testified that the police made no statements to her when they retrieved the package from the restroom. (Tr. 147)

The property was free of incident from January, 1980, until January 5, 1987 (Tr. 19, 29-34) when Peekskill police, while executing a search warrant, arrested Jose Encarnacion, James Houston and Spencer Smythe in a third-story apartment at the property for possession of more than 200 vials of crack cocaine with intent to sell. (S.F. 3(a)(viii); Tr. 29-34; Ex. 2, 3, 4) Mr. Bunch was present when the arrests were made; he indicated to the police that had he been notified, he would have supplied the key so the police would not have had to knock down the apartment door. (Tr. 30-31)

Encarnacion was related to Mr. Bunch: the father of one of Bunch's grandchildren; Bunch's daughter Doreen is the child's mother. (Tr. 35, 137-38) Encarnacion, however, was not living with Doreen Bunch or the Bunch family; Doreen and the child lived with Mr. and Mrs. Bunch in one second floor apartment and Encarnacion lived in a separate third floor apartment. (Tr. 139; Ex. 2)

Encarnacion's arrest was his first; following the arrests, Mr. Bunch evicted Encarnacion and Smythe from their third floor apartments. (Tr. 32-34)*fn4 Additionally, Mr. Bunch voluntarily closed off the third floor and declined to rent the three apartments contained therein from February, 1987 until September, 1988, at a loss of $550 to $750 in monthly rental income. (Tr. 127-128, 240-241)

On January 6, 1987, an undercover Peekskill Police officer purchased a quantity of crack cocaine from an individual outside the property. (Tr. 37; Ex. 5) The individual met the officer on the street; she then entered the arcade and returned to the officer's car and completed the transaction. (Tr. 37-38)

On June 6, 1987 a patron was arrested in the bar's restroom for possession of cocaine. (S.F. 3(a)(ix); Tr. 40, 75; Ex. 6) Peekskill Police Detective McIntyre testified that the arresting officers observed numerous crack vials on the floor in the bar, and they advised Doreen Bunch, the bartender on duty, to take "corrective action" with regard to the open possession of crack cocaine in the bar by trying to screen the patrons as they came in the bar and by calling the police if she saw anyone possessing narcotics. (Tr. 44-45, 76; S.F. 3(a)(ix)) The officers did not speak with Mr. Bunch. (Tr. 45, 76) The police reported the incident to the State Liquor Authority, advising of "known trafficking in narcotics" at the bar. (S.F. 3(a)(ix); Ex. 24)

In the spring, 1987, Mr. Bunch became aware of drug activity in the vicinity of the property, and after July, 1987 he noted the appearance of increased drug activity within the property. (Tr. 240, 244, 256) Mr. and Mrs. Bunch testified that at that time they began to take measures to keep the drug activity out of the property. (Tr. 236, 121)

Mrs. Bunch testified that in 1987, when she began to smell "bad odors" coming from the restrooms, she would open the restroom door and spray ammonia on the floor to drive the smokers out. (Tr. 120-21, 149) If the people did not leave the restroom, Mrs. Bunch would call Mr. Bunch who would be at "the window upstairs, overlooking the streets" and tell him to call the police; she did not call the police from the bar because she feared that her safety would be threatened if the people in the restroom found out that she was reporting them. (Tr. 122, 133) Mr. Bunch would call the person to the phone to ask him to stop whatever he was doing, and if that did not succeed, Bunch would personally go down and ask the person to leave. (Tr. 243) Mr. Bunch testified that he never had to call the police when those individuals did not leave, but he might have to call regarding drug "runners." (Tr. 243-44)

Mrs. Bunch testified that she recognized the people who had been in the restroom, but she did not know which of them had been smoking (Tr. 133, see 252); moreover, the police never asked her to identify anyone and she never volunteered the information. (Tr. 133-34) Mrs. Bunch also recognized the people in the bar to be the same people who were loitering on the street on a day-to-day basis, but she allowed them to enter the bar as long as they made a purchase and "as long as I didn't see them do [anything wrong]." (Tr. 135)

Mr. Bunch testified that in response to Mrs. Bunch's complaints that people were loitering and smoking in the restroom, he put a padlock on the restroom doors so that if anyone wanted to use the restroom, they would have to get the key from the bartender on duty. (Tr. 237) The padlock and key system failed because the key would break in the lock or get lost altogether, or people would leave the restroom door open so others could go in without having to get the key. (Tr. 238)

In the summer, 1987, the Bunches closed off the restrooms entirely by boarding up the doors so no one could gain entry to the restrooms. (Tr. 76, 123, 238) They reopened the restrooms (which were the only public restrooms in the area that people on the street could use (Tr. 242)) after the Department of Health notified them that closing up the restrooms "was against the rules and regulations." (Tr. 123; 76)

Mr. Bunch testified that during 1987 he called the police, anonymously, to give descriptions of people who were lurking around, possibly supplying drugs to runners, who in turn went to cars that waited in the street. (Tr. 236) He called anonymously because he was concerned about what might happen if he got involved. (Tr. 236)*fn5 Detective McIntyre testified that anonymous phone calls were made to the Peekskill police regarding the drug activity at and around the property. (Tr. 284-285)

In June, 1987, there was a drug-related double murder in the vicinity of but unrelated to the property. (Deposition of Peekskill Police Chief Edward Hayes, May 23, 1989, page 8, line 10; Tr. 212) After the homicide, police activity in the area increased; more patrolmen were assigned and increased lighting was installed in the area. (Tr. 89, 213) Police officers would walk into the bar more regularly, shine their flashlights into the corners, check the bathrooms, and leave. (Tr. 119) Additionally, a patrol car was parked nearby, and the police walked up and down the street and sometimes stood in front of the door to the bar or the arcade. (Tr. 129)

In the vicinity of the property there are many sources of pedestrian traffic. There is a housing project (Bohlmann Towers) directly across the street, a public park (LePore Park) a half-block east on the same street, a teen recreation center approximately twenty-five feet away, and an elementary school nearby. (Tr. 129, 196, 227, 229) At certain times there was heavy pedestrian traffic in the area, and many people congregated in the vicinity of the property. (Tr. 201, 216, 229)

As a result of the increased police activity stemming from the June, 1987 shootings, many people who were loitering in the street would enter the bar to avoid interacting with the police. (Tr. 270) When people would enter the bar but not make a purchase, Mrs. Bunch would ask them to leave. (Tr. 135) She testified that the people would then mill about on the street, and the police would use the "loud speakers" (on the police cars) to tell the people to go into the bar and get off the street. (Id.) Consequently, she would let the people back in, and she decided that if the people were doing anything illegal the police would notice and take action because "the police [would] be right there, they [would] see [the same people] too." (Id.) Chief Hayes testified that while it was not department policy to give such instructions over the loud speakers, the technique "has been used." (Tr. 222)

On July 12, 1987, police officers observed a patron openly smoking a marijuana cigarette at the bar, but made no arrest. (Tr. 45; S.F. 3(a)(x)) Doreen Bunch, the bartender on duty at the time, took no action to stop the patron from smoking marijuana; the police advised her that the incident would be reported to the State Liquor Authority. (Id.) The police filed a referral with the State Liquor Authority, advising of known narcotics trafficking at the bar. (S.F. 3(a)(x); Ex. 25) ...

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