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U.S. v. UNITED STATES CURRENCY

United States District Court, E.D. New York


April 14, 2004.

UNITED STATES OF AMERICA, Plaintiff,
v.
UNITED STATES CURRENCY IN THE AMOUNT OF TWO HUNDRED FORTY-EIGHT THOUSAND FOUR HUNDRED THIRTY DOLLARS ($248,430), MORE OR LESS, AND ALL PROCEEDS TRACEABLE THERETO, Defendants.

The opinion of the court was delivered by: SANDRA J. FEUERSTEIN, District Judge

OPINION & ORDER

I. Introduction

The United States brought this action pursuant to 31 U.S.C. § 5317, 21 U.S.C. § 881, and 18 U.S.C. § 981 seeking the forfeiture of $248,430 in United States currency seized by United States Customs Service ("Customs") inspectors from claimant Jean Joseph Dufort ("claimant" or "Dufort") on February 3, 1999 at John F. Kennedy International Airport ("JFK Airport"). Dufort, who was boarding a flight to Haiti, failed to declare the funds as he attempted to transport them out of the United States in violation of 31 U.S.C. § 5316. Presently before this Court is plaintiff's motion for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. For the reasons set forth below, the motion is GRANTED. II. Background

  On May 23, 1996, law enforcement agents found carry-on luggage containing fifty kilograms of cocaine on a plane on which Dufort was a passenger. (Pl.'s Local Civ. R. 56.1 Statement at 9). Dufort was indicted on March 3, 1999 in the United States District Court for the Southern District of Florida for knowingly and intentionally conspiring with others to import cocaine into the United States in violation of 21 U.S.C. § 952(a) and 963. (Id.).

  On January 12, 2000, Dufort was arrested for the narcotics trafficking offenses. (Id. at 9). He pleaded guilty to those charges before Judge Donald L. Graham of the United States District Court for the Southern District of Florida on June 20, 2000. (Id. at 10). Prior to sentencing, Judge Graham denied Dufort's motion to withdraw his guilty plea. (Id. at 11). On August 31, 2000, Judge Graham sentenced Dufort to two-hundred and twelve (212) months imprisonment. (Id.).

  On February 3, 1999, Customs inspectors at JFK Airport selected American Airlines flight 657, destined for Port-au-Prince, Haiti, for an examination of checked luggage. (Id. at 4). Upon examination of two suitcases checked in Dufort's name, Customs inspectors found $245,495 in U.S. currency wrapped in aluminum foil and newspaper and covered with clothing. (Id. at 4-5). As he was boarding the plane, Dufort was approached by Customs inspectors and informed of the currency reporting requirements. (Id. at 5). Dufort declared $3,000 in U.S. currency and produced $2,935 for verification. (Id.). Although a search of Dufort failed to reveal any additional currency, claim tickets for the two suitcases containing currency were found in his possession. (Id. at 5-6). The inspectors arrested Dufort for failing to file an accurate currency and monetary instrument report, in violation of 31 U.S.C. § 5316, (id. at 7), and seized the suitcases and the currency taken from Dufort's person. (Miller Decl., exh. D).

  On July 26, 1999, before Judge A. Simon Chrein of this Court, Dufort pleaded guilty to failing to file an accurate report when knowingly transporting monetary instruments of more than $10,000 at one time out of the United States, in violation of 31 U.S.C. § 5316(a)(1)(A). (Pl.'s Local Civ. R. 56.1 Statement at 7).

  For his violation of 31 U.S.C. § 5316, Dufort was sentenced on December 15, 2000 by Judge Frederic Block to a prison term of eighteen (18) months plus two years supervised release to run concurrently with the sentence imposed in the Southern District of Florida. (Id. at 7). The government has moved for summary judgment. (Pl.'s Notice of Mot. for Summ. J.). Defendant has opposed the government's motion only as to the two thousand nine hundred and thirty-five dollars ($2,935.00) seized from his person. (Dufort's Mot. to Challenge at 1-3).

  III. Analysis

  A. Appointment of Counsel

  In his petition challenging the government's motion, Dufort requests the appointment of counsel. Cooper v. A. Sargenti Co., 877 F.2d 170 (2d Cir. 1989), articulates the factors the Court must consider before appointing counsel for an indigent litigant: (1) whether the indigent's position seems likely to be of substance, (2) the indigent's ability to investigate the crucial facts, (3) whether conflicting evidence implicating the need for cross-examination will be the major proof presented to the fact finder, (4) the indigent's ability to present the case or obtain private counsel, (5) the complexity of the legal issues, (6) the availability of counsel, and (7) special reasons why appointment of counsel would be likely to lead to a more just determination. Id. at 172.

  The Court emphasized that the apparent merits of the indigent's claim should be scrutinized to determine if it is likely to be of substance. Id. Only if the claim meets this "threshold requirement" should the other criteria be considered. Id. (quoting Hodge v. Police Officers, 802 F.2d 58 (2d Cir. 1986)). Since I find Dufort's claim to lack substance, his application for the appointment of counsel is denied.

  B. Summary Judgment Standard of Review

  Summary judgment should not be granted unless "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). A fact is material "if it might affect the outcome of the suit under the governing law." Holtz v. Rockefeller & Co., 258 F.3d 62, 69 (2d Cir. 2001). An issue of fact is genuine only if a jury could reasonably find in favor of the nonmoving party based on that fact. Id. The moving party bears the initial burden of establishing the absence of any genuine issue of material fact, after which the burden shifts to the nonmoving party to establish the existence of a factual question that must be resolved at trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 91 L.Ed.2d 202, 106 S.Ct. 2505 (1986).

  The trial court is required to construe the evidence in the light most favorable to the nonmoving party, and draw all reasonable inferences in its favor. Id. at 252; Cifarelli v. Vill. of Babylon, 93 F.3d 47, 51 (2d Cir. 1996). However, the nonmoving party may not rely on conclusory allegations, but must set forth "concrete particulars" showing that a trial is needed. Cameron v. Cmty. Aid for Retarded Children, Inc., 335 F.3d 60, 63 (2d Cir. 2003). Merely asserting a conclusion without providing supporting arguments or facts is insufficient to defeat summary judgement. BellSouth Telecomms., Inc. v. W.R. Grace & Co., 77 F.3d 603, 615 (2d Cir. 1996).

  A court must "read the pleadings of a pro se plaintiff liberally and interpret them `to raise the strongest arguments that they suggest.'" McPherson v. Coombe, 174 F.3d 276, 280 (2d Cir. 1999) (quoting Burgos v. Hopkins, 14 F.3d 787, 790 (2d Cir. 1994)). Nonetheless, a pro se plaintiff is not exempt from compliance with relevant rules of procedural and substantive law. Traguth v. Zuck, 710 F.2d 90, 92 (2d Cir. 1983).

  C. Statutory Basis for Forfeiture

  United States Code Title 31 § 5316 provides, in pertinent part, that "a person . . . shall file a report under subsection (b) of this section when the person . . . knowingly transports, is about to transport, or has transported monetary instruments of more than $10,000 at one time from a place in the United States to or through a place outside the United States. . . ." 31 U.S.C. § 5316(a). Pursuant to 31 U.S.C. § 5317:

Any property involved in a violation of section . . . 5316 . . . of this title, or any conspiracy to commit any such violation, and any property traceable to any such violation or conspiracy, may be seized and forfeited to the United States in accordance with the procedures governing civil forfeitures in money laundering cases pursuant to section 981(a)(1)(A) of title 18, United States Code.
31 U.S.C. § 5317(c)(2). United States currency is a type of monetary instrument for purposes of 31 U.S.C. § 5316 and 5317. 31 U.S.C. § 5312(a)(3)(A).

  D. Civil Asset Forfeiture Reform Act of 2000

  On April 25, 2000, Congress enacted the Civil Asset Forfeiture Reform Act of 2000 ("CAFRA"), Pub.L. No. 106-185, 114 Stat. 202, 18 U.S.C. § 983 (2000), which amended the procedures for civil forfeiture proceedings. Pursuant to CAFRA, the government must prove its right to asset forfeiture by a preponderance of the evidence. 18 § U.S.C. § 983(c)(1); see also United States v. $557,933.89, 287 F.3d 66, 76 n. 5 (2d Cir. 2002); United States v. $49,766.29 U.S. Currency, No. 01-191, 2003 WL 21383277, at *3 (W.D.N.Y. Jan. 22, 2003); cf. United States v. 4492 S. Livonia Rd., 889 F.2d 1258, 1267 (2d Cir. 1989) (outlining the previously used burden-shifting framework under which the government first had to establish probable cause that an asset was subject to forfeiture and the claimant then bore the burden of rebutting this showing). Whereas CAFRA applies to "any forfeiture proceeding commenced on or after [August 23, 2000]," this action, filed July 27, 2001, is governed by that statute. Pub.L. No. 106-185, § 21, 114 Stat. 202, 225; see also Fed.R.Civ.P. 3 ("A civil action is commenced by filing a complaint with the court.").

  Transportation of more than $10,000 outside the United States requires the filing of a currency and monetary instrument report ("CMIR") in a manner prescribed by the Secretary of the Treasury. 31 U.S.C. § 5316(a)(1)(A). Duford's failure to file a CMIR constituted a violation of § 5316, a charge to which he pleaded guilty. "A violation of 31 U.S.C. § 5316 automatically triggers forfeiture under 31 U.S.C. § 5317." United States v. $83,132 in U.S. Currency, No. 95-2844, 1996 WL 599725, at *4 (E.D.N.Y. Oct. 11, 1996); see also United States v. $49,766.29 U.S. Currency, 2003 WL 21383277, at *3; United States v. $170,000, 903 F. Supp. 373, 375 (E.D.N.Y. 1995). As a result of Dufort's guilty plea to violating § 5316, the principle of collateral estoppel prohibits him from challenging the facts underlying his conviction. See Adames v. United States, 171 F.3d 728, 732 (2d Cir. 1999) (holding that claimant's "own statements at his plea allocution conclusively demonstrate that he had forfeited any interest in . . . the currency"); United States v. U.S. Currency in Sum of $97,253, No. 95-3982, 2000 WL 194683, at *6 n. 1 (E.D.N.Y. Feb. 15, 2000); United States v. U.S. Currency in the Amount of $145,139, 803 F. Supp. 592, 597 (E.D.N.Y. 1992); United States v. U.S. Currency in the Amount of $41,807, 795 F. Supp. 540, 544 (E.D.N.Y. 1992). In light of the undisputed record that Dufort attempted to transport more than $10,000 out of the United States, but failed to report the same to Customs, the government has proved by a preponderance of the evidence that the funds are subject to forfeiture.

  Where, as here, the government's basis for forfeiture is that the funds were involved in the commission of a criminal offense, it must establish by a preponderance of the evidence that there was a substantial connection between the funds and the offense. 18 U.S.C. § 983(c)(3). The government is not required to link the funds to a particular drug transaction, but instead may rely on circumstantial evidence to establish a substantial connection between the funds and illegal conduct. United States v. Daccerett, 6 F.3d 37, 57 (2d Cir. 1993); United States v. All Right, Title and Interest, 983 F.2d 396, 405 (2d Cir. 1993); United States v. $94,010.00 U.S. Currency, No. 98-0171E(F), 1998 WL 567837, at *2 (W.D.N.Y. Aug. 21, 1998). Upon a such a showing, the burden of proof shifts to the claimant to show that he is an "innocent owner." 18 U.S.C. § 983(d)(1). The "innocent owner" defense allows the claimant to present, by a preponderance of the evidence, that he "did not know of the conduct giving rise to forfeiture" or "upon learning of the conduct giving rise to the forfeiture, did all that reasonably could be expected under the circumstances to terminate such use of the property." Id. § 983(d)(2)(A)(i)-(ii). Dufort has not claimed that he is an innocent owner but only that the money taken from his person was not secured through illegal activity and that it should be segregated from the currency in the suitcases and returned to him. (Dufort's Mot. to Challenge at 1-3).

  1. History of Narcotics Trafficking

  The government may rely upon a claimant's narcotics conviction, as one factor, to meet its burden of establishing the requisite connection between funds and drug activity. United States v. $557,933.89, More or Less, in U.S. Funds, 287 F.3d 66, 88 (2d Cir. 2002). In June 2000, in the United States District Court for the Southern District of Florida, Dufort pleaded guilty to violating 21 U.S.C. § 952(a) and 963, knowingly and intentionally conspiring with others to import cocaine into the United States, from April 1995 through February 1997. (S.D.Fla. Plea Colloquy in United States v. Dufort, 99-CR-151 (DLG), at 17-18, 21).

  2. Claimant's Financial Situation

  Dufort failed to offer any bills, receipts, or other records regarding an alleged ten-year-old legitimate import-export enterprise. (Dufort Dep. at 90-92). Dufort testified at deposition that he had business receipts at his house in Haiti, yet upon further questioning, he recanted and stated that these records were missing. (Id.). Dufort's inability to corroborate his claim that the funds were obtained from his alleged legal business with documentary proof is a factor that may be considered to establish a connection between the funds and illegal activity. See United States v. 228 Acres of Land and Dwelling Located on White Hills Rd. in Chester, Vt., 916 F.2d 808, 813 (2d Cir. 1990) (holding that district court correctly inferred that forfeited properties were traceable to drug activity where, when combined with other factors, claimant failed to offer any bills, receipts, or other records to prove the named businesses were capable of generating large sums of cash).

  In light of Dufort's conflicting and evasive deposition answers regarding his financial situation, it is questionable whether his import-export business ever existed at all. Since Dufort accumulated minimal earnings from his places of employment that can be verified, (Dufort Dep. at 22-23, 28-31), and has failed to offer any proof that his import-export business existed, let alone was lucrative, (id. at 90-92), I find that all of the funds with which he was traveling must have derived from an alternative source. See Alli-Balogun v. United States, 281 F.3d 362, 372 (2d Cir. 2002) (affirming the district court's refusal to credit claimant's testimony that he paid for a Range Rover out of his life savings from years of low-paying employment).

  3. Amount of Currency

  While the Second Circuit has declined to hold that a large amount of cash is evidence of drug trafficking, United States v. $31,990 in U.S. Currency, 982 F.2d 851, 854 (2d Cir. 1993), it has noted that possession of large amounts of unexplained cash supports an inference of illegal activity in general. United States v. $37,780 in U.S. Currency, 920 F.2d 159, 162 (2d Cir. 1990) ("It may be well that through the byzantine world of forfeiture law, congress and the courts have implicitly created a rebuttable presumption that the possession of large amounts of cash is per se evidence of illegal activity."); see also United States v. $175,260, 741 F. Supp. 45, 47 (E.D.N.Y. 1990) (noting that $175,000 is substantially greater than an amount the average law-abiding citizen carries to the airport).

  The large amount of cash, $248,430, seized from Dufort is inexplicable in light of his aforementioned self-proclaimed financial struggles, and therefore raises an inference of illegal conduct. See United States v. All Right, Title and Interest, 983 F.2d 396, 405 (2d Cir. 1993) ("Particularly in cases involving bank accounts, money or other fungible assets, the only proof demonstrating probable cause is likely to be circumstantial, revealing unexplained wealth in conjunction with evidence of drug trafficking."). Moreover, Dufort has failed to raise any basis for distinguishing between the currency found in the suitcases and the currency found on his person by substantiating a legitimate source of the currency taken from his person.

  4. Cash Purchase of Airline Ticket

  When viewed in combination with other supporting evidence, the purchase of an airline ticket in cash has probative significance in determining a connection between funds subject to forfeiture and illegal activity. In United States v. Sokolow, 490 U.S. 1, 109 S.Ct. 1581, 104 L.Ed.2d 1 (1989), the Supreme Court noted:

Paying $2,100 in cash for two airplane tickets is out of the ordinary, and it is even more out of the ordinary to pay that sum from a roll of $20 bills containing nearly twice that amount of cash. Most business travelers . . . purchase airline tickets by credit card or check. . . ."
Id. at 8; see also United States v. $8,880 in U.S. Currency, 945 F. Supp. 521, 526 (W.D.N.Y. 1996) (noting that the cash purchase of airline tickets is probative when viewed along with other evidence of narcotics activity). Moreover, as the Second Circuit has stated, "drug dealers commonly make large cash purchases in order to avoid triggering bank reporting requirements." United States v. 228 Acres of Land and Dwelling Located on White Hills Rd. in Chester, Vt., 916 F.2d 808, 813 (2d Cir. 1990). At his deposition, Dufort testified that he purchased his plane ticket to Haiti with $304 in cash. (Dufort Dep. at 73).

  Viewing the aforementioned factors in the aggregate, I conclude that the government has demonstrated by a preponderance of the evidence that there was a substantial connection between all of the funds to be forfeited and Dufort's narcotics trafficking. Dufort has offered no evidence to refute the government's contention that all of the funds represent the proceeds of narcotics trafficking, and does not allege that he is an innocent owner of illegitimate proceeds.

  In his response to the instant motion, Dufort contends that the $2,935 he produced when approached by Customs officials, as opposed to the $245,495 seized from his suitcases, was "personal traveling money" and should not be subject to forfeiture. (Dufort's Mot. to Challenge at 1-3) (stating that the government "stole his personal monies" that "have not ever been alleged to [have] been part of any crime [or] any illegal activity. . . ."). Nevertheless, the statutory language is unequivocal: "Any property involved in a violation of section . . . 5316 . . . of this title . . . may be seized and forfeited to the United States. . . ." 31 U.S.C. § 5317(c)(2) (emphasis added). The statute clearly permits the forfeiture of the entire amount of property if the required monetary instrument report is not filed in violation of § 5316. United States v. U.S. Currency in Sum of $97,253, No. 95-3982, 2000 WL 194683, at *6-7 (E.D.N.Y. Feb. 15, 2000). Dufort pleaded guilty to attempting to transport monetary instruments of more than $10,000 from the United States to a foreign location without filing the required Customs report. (E.D.N.Y. Crim. Pleading in United States v. Dufort, 99-CR-173 (FB), at 17, 24-25). This guilty plea encompasses all the money he was carrying and renders the entire sum subject to forfeiture. See United States v. U.S. Currency in the Amount of $41,807, More or Less, 795 F. Supp. 540, 544 (E.D.N.Y. 1992).

  There is no genuine issue as to any material fact regarding forfeiture of the funds, and thus the government is entitled to judgment as a matter of law. Dufort's conclusory allegations, unsupported by specific evidence, are insufficient to defeat summary judgment. IV. Conclusion

  For the foregoing reasons, the government's motion for summary judgment and forfeiture of the funds is GRANTED in its entirety. The Clerk of Court is directed to close this case.

  IT IS SO ORDERED.

20040414

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