cellar at 16 Clinton Street and received permission from David Shuchat to install a back door and a dummy wall in the south store in order to facilitate escape from the police. D. 32-33. In July of 1988, David Shuchat had a further discussion with the owners of the East Village Deli and Grocery about whether the beams at the property would support the construction of an extra flight of stairs leading to the basement from the store. D. 40-42.
25. David Shuchat accepted a kickback in the form of additional unreported rent for permitting the illegal sale of marijuana on the premises of the south store and demanded additional money when he discovered that the store was also selling heroin and cocaine. T. 49, D. 54.
26. A tenant complained to David Shuchat about the smells of ether and marijuana emanating from the north store. T. 170.
27. Nathan Shuchat observed the search of the south store from across the street. T. 168.
28. The Shuchats' testimony that they made no effort to find the lessees of the closed stores after the search warrants were executed and that they never made any inquiries of the tenants in the building as to why the stores were no longer open for business or paying rent is not credible. T. 125.
29. The Shuchats' assertion that they were never told by any of the property's other tenants that there had been considerable police activity in the building is also not believable. T. 142.
The court has subject matter jurisdiction over this case pursuant to 28 U.S.C. § 1355, 1395(b), Rule C, Supplemental Rules for Certain Admiralty and Maritime Claims.
B. The Government's Burden of Proof
Section 881(d) of Title 21 provides that the burden of proof for forfeitures effected under the customs laws shall be applied to forfeitures effected under Section 881(a)(7). The customs laws apportion the relative burdens of the parties as follows: "the burden of proof shall be upon [the] claimant . . . Provided, That probable cause shall be first shown for the institution of such suit of action, to be judged of by the court . . . ." 19 U.S.C. § 1615 (emphasis in original). Thus, to establish a prima facie case for forfeiture under 21 U.S.C. § 881(a)(7), the Government must demonstrate "probable cause to connect the property with narcotics activity." United States v. 4492 South Livonia Road, 889 F.2d 1258 (2d Cir. 1989) (quoting United States v. Banco Cafetero Panama, 797 F.2d 1154, 1160 (2d Cir. 1986)). To meet the probable cause requirement, the government need only have reasonable grounds, rising above the level of mere suspicion, to believe that the property is subject to forfeiture. United States v. 303 W. 116th St., 901 F.2d 288, 290-91 (2d Cir. 1990); United States v. 15 Black Ledge Drive, 897 F.2d 97, 101 (2d Cir. 1990); Livonia Road, 889 F.2d at 1267; Banco Cafetero, 797 F.2d at 1160.
The Second Circuit has held that Section 881(a)(7) requires a showing of only a "nexus" between the drug activity and the property. United States v. 38 Whalers Cove Drive, 954 F.2d 29 (2d Cir. 1992); Livonia Road, 889 F.2d at 1269 (citing United States v. One 1974 Cadillac Eldorado, 575 F.2d 344, 345 (2d Cir. 1978) (per curiam) and United States v. One 1974 Cadillac Eldorado Sedan, 548 F.2d 421, 423 (2d Cir. 1977)). In addition, the government may establish probable cause by either direct or circumstantial evidence. Livonia Road, 889 F.2d at 1269; United States v. $ 2,500 in United States Currency, 689 F.2d 10, 16 (2d Cir. 1982), cert. denied, 465 U.S. 1099, 104 S. Ct. 1591, 80 L. Ed. 2d 123 (1984).
The court finds that the government introduced ample evidence to establish a "nexus" between the property and the illegal activity and has, therefore, met its burden of establishing a prima facie case for the forfeiture. See Findings of Fact 6-7, 9-12, 15-18, 24-26.
B. Claimants' Burden of Proof
Once the government establishes probable cause for the forfeiture, the claimant bears "'the ultimate burden of proving that the factual predicates for forfeiture have not been met.'" 303 W. 116th St., 901 F.2d at 291 (quoting Banco Cafetero, 797 F.2d at 1160). The claimant must prove either that the property was not used unlawfully or that the illegal use was without his knowledge or consent. United States v. 141st St. Corp., 911 F.2d 870, 876 (2d Cir. 1990) 303 W. 116th St., 901 F.2d at 291; 15 Black Ledge Drive, 897 F.2d 97, 102 (2d Cir. 1990) (upholding summary judgment for government when drug activity was readily apparent despite claimant's contention that she had no knowledge of husband's drug activities because "on these facts such a bare denial [of knowledge] was insufficient to create a genuine triable issue").
Claimants do not seem to dispute that the property was used unlawfully, but deny that they had any knowledge or reason to believe that their building was being used in an unlawful manner. Because claimants contended steadfastly that they had no knowledge of the illegal activity, they did not present any specific evidence of lack of consent. Instead, they relied on the argument that they could not consent to what they did not know. For the reasons discussed below, the court rejects their "innocent owner" defense.
Claimants live in the vicinity of the property and are experienced landlords. They were cognizant of the pervasive drug trafficking in the neighborhood and had even experienced prior problems with one of their rental properties being used for illicit drug purposes. Both of the Shuchats had frequent contact with the building and its tenants. Therefore, putting aside the ample direct evidence that claimants did indeed have knowledge of the uses to which their stores were being put, the court cannot accept their blanket assertions that had they only known of the problems, they would have evicted the wrongdoers.
It is clear from the evidence adduced at trial that drug trafficking was an inescapable conclusion to anyone who observed the two locations for any period of time. Here, both brothers visited the property several times a month. David Shuchat personally collected the rent at the north store and collected the rent for the south store at 127 Stanton Street, another drug locale run by the tenants of the south store.
The Shuchats deny having any knowledge that there was police activity in the stores prior to the property being seized, yet the searches were highly visible operations and the stores were physically disrupted in such a manner that could not escape notice -- most of all by a landlord visiting the property to collect his rent. In addition, the stores were closed for several weeks following the searches, surely an event that would have signalled to the most "innocent" of landlords that something was amiss with his building.
The Shuchats contend that when they visited the building to collect the rent, none of the other tenants mentioned either the February or March police activity in the stores. The court does not find this to be plausible. The court also has trouble accepting the Shuchat's claim that, even though the stores had been ransacked and closed and the tenants had mysteriously vacated the building, they made no inquiries as to what had taken place in the preceding weeks. Only a landlord who wished to intentionally remain ignorant of the events in his buildings would engage in such disinterested behavior. Finally, there was the clear and credible testimony of Vanessa Yancy, a resident of the building, that she saw Nathan Shuchat across the street from the property actually observing one of the searches while it was in progress.
The government's evidence against the Shuchats concluded with the testimony of Susan Chang, a government informant, that David Shuchat had knowledge of and condoned the illegal activity taking place at the south store and the testimony of Vanessa Yancy that she had complained to David Shuchat about the odors of marijuana and ether emanating from the north store. Both of these witnesses directly refuted claimants' "innocent owner" defense.
C. Claimants' Constitutional Arguments
Claimants argued that forfeiture of the entire leasehold, based on the illegal activities which took place in the two stores, violates the Fifth and Eighth Amendments to the Constitution. A reading of this Circuit's opinions in United States v. 4492 South Livonia Road, 889 F.2d 1258 (2d Cir. 1989) and United States v. 38 Whalers Cove Drive, 954 F.2d 29 (2d Cir. 1992), however, convinces the court that there is no constitutional impediment to the forfeiture of claimants' property.
The above constitutes the court's Findings of Fact and Conclusions of Law, pursuant to Fed. R. Civ. P. 52(a), supporting the court's decision in favor of the government on January 8, 1992.
Dated: New York, New York
March 5, 1992
CHARLES H. TENNEY, U.S.D.J.