United States v. $307,970.00 in U.S. Currency

124 F.Supp.3d 687

UNITED STATES of America, Plaintiff,

v.$307,970.00 IN UNITED STATES CURRENCY, Defendant.

No. 4:12–CV–136–FL.

United States District Court, E.D. North Carolina, Eastern Division.

Signed Aug. 26, 2015.

Stephen A. West, United States Attorney's Office, Raleigh, NC, for Plaintiff.

ORDER

LOUISE W. FLANAGAN, District Judge.

This matter comes before the court on motion of claimants Cirilia Garcia, Lucia Covarrubias and Apolinar Garcia–Ancelmo for summary judgment, pursuant to Federal Rule of Civil Procedure 56, (DE 90), for the return of seized property. As discuss below, the court segregated parts of the instant motion, promoting focus at this juncture only to the extent claimants rest argument on any pre-suit probable cause requirement. In this respect, issues raised have been briefed fully. For reasons that follow, claimants' motion in this part is denied, the parties have until October 20, 2015, within which to conduct discovery, and an allotted period thereafter within which to supplement their arguments before the court takes up and decides remaining part of claimants' motion resting on the merits of the case.

BACKGROUND

The government initiated this civil forfeiture action on July 12, 2012, by filing a complaint for forfeiture in rem against $307,970.00 in U.S. currency to enforce 21 U.S.C. § 881(a)(6), asserting that the defendant property was used or intended to be used in exchange for controlled substances, represented proceeds of trafficking in controlled substances, or was used or intended to be used to facilitate a violation of Title II of the Controlled Substances Act, 21 U.S.C. §§ 801 et seq.

On July 31, 2012, the government filed an amended complaint, (DE 4), correcting an allegation as to where the defendant funds were seized. On August 20, 2012, claimants Cirila Garcia and Lucia Covarrubias filed claims alleging ownership and possessory interest in defendant funds. (DE 7, 8). On August 29, 2012, claimant Apolinar Garcia–Ancelmo filed his claim, (DE 11), also alleging an ownership and possessory interest in the funds. A lengthy period of discovery, interspersed with various stays of the case followed.

On January 30, 2015, before the close of discovery, claimants filed the instant motion for summary judgment. (DE 90). In their motion, claimants raise two arguments. First, claimants contend the government improperly filed suit without probable cause to believe the defendant funds were related to a criminal undertaking. Claimants contend this portion of the motion can be resolved without further discovery because in defense of claimants' motion the government only may rely on evidence known to it at the time it filed suit. Second, claimants argue, assuming probable cause existed, the government cannot prevail on the merits.

On February 18, 2015, one week prior to the close of discovery, claimants filed a motion to stay discovery pending resolution of their motion for summary judgment. (DE 93). On February 20, 2015, the government filed a competing motion to stay, pursuant to 18 U.S.C. § 981(g).

On July 7, 2015, the court entered order granting in part claimants' motion to stay pending partial resolution of the instant motion. In its order, the court directed the government to respond to claimants' motion only to the extent claimants argue the government lacked probable cause to initiate the suit. The court denied the government's competing motion to stay as moot. On July 13, 2015, the government responded.

Concurrent with its response, the government moved the court to unseal in support of its motion the declaration of United States Drug Enforcement Administration ("DEA") agent Lance Anthony, (Anthony Decl., DE 64), already of record. This request was allowed by order entered July 14, 2015. In addition to Anthony's now unsealed declaration, the government relies on the declarations of two other DEA special agents in opposition to defendant's motion. (See Jordan Decl., DE 4–1; Trillo Decl., DE 23–2).

On July 27, 2015, claimants filed a reply in heated opposition to the government's response. (DE 116). Therein, in pertinent part, claimants oppose, at length, the government's use of the Anthony declaration. Claimants argue that the government should be precluded from relying on that declaration because during the conduct of discovery it was undisclosed, and its disclosure was not objected to, despite being responsive to claimants' discovery requests. In any case, claimants also argue that the Anthony declaration cannot support the government's attempt to establish probable cause as a matter of law because the declaration is replete with unreliable hearsay statements, made by a criminal defendant who, for purposes of sentencing, has an interest in the outcome of this case and other related cases.

STATEMENT OF FACTS¹

Beginning in November 2011, the DEA began a wire-tap investigation of Raul Sanchez–Correa, a non-party, believed to be involved in the sale of narcotics. (Anthony Decl. at 3). During the course of the DEA's investigation into Sanchez–Correa, numerous conversations were intercepted between him and claimant Garcia–Ancelmo, wherein the two frequently discussed multi-kilogram shipments of cocaine into North Carolina, the price required to purchase the shipments, and the potential profit to be had from reselling the cocaine. (See id. at 3–4).

Through the DEA's investigation, claimant Garcia–Ancelmo came into contact with DEA special agent Gilbert Trillo, who was working undercover as a money laundering contact, specifically targeting individuals dealing in narcotics. (Id. at 5–6). Trillo arranged to meet claimant Garcia– Ancelmo in Wilson, North Carolina, on February 15, 2012, where claimant Garcia–Ancelmo was to deliver $308,000.00 in U.S. currency for Trillo to launder. (Trillo Decl. ¶ 3). However, on that date the two were unable to work out a suitable location to exchange the funds. (See id. ¶¶ 4–5). The next day, February 16, 2012, claimant Garcia–Ancelmo contacted Trillo and again expressed interest in exchanging the funds. (Id. ¶ 6). The two men arranged a meeting for approximately 5:30 PM the same day. (Id. ¶¶ 6–8).

The defendant funds were seized in Goldsboro, Wayne County, North Carolina, on February 16, 2012, while claimant Garcia–Ancelmo was en route to meet Trillo. (Jordan Decl., at 2; see also Trillo Decl. ¶¶ 9–13; Anthony Decl., at 9–10). Sergeant Matt Miller of the Wayne County Sheriff's Office observed claimant Garcia–Ancelmo swerving erratically and initiated a traffic stop. (Jordan Decl., at 2).² During the stop, Sergeant Miller commented to claimant Garcia–Ancelmo that he recognized him from a previous consent search of claimant Garcia–Ancelmo's residence and inquired as to whether claimant Garcia–Ancelmo had anything illegal in the vehicle. (Id. ).³ Claimant Garcia–Ancelmo responded in the negative and told Sergeant Miller that he could "check if [he] want[ed] to." (Id. ). Taking claimant Garcia–Ancelmo's comments as consent, Sergeant Miller performed a search of the vehicle and discovered a trash bag filled with bundled U.S. Currency in the cargo area. (Id. ). Claimant Garcia–Ancelmo denied ownership of the money, but stated that he had been paid $1,000.00 to "deliver it" to an unnamed individual. (Id. at 3). Later, claimant Garcia–Ancelmo attempted to bribe Sergeant Miller, telling him to "take the money and spend it." (Id. ). Sergeant Miller declined and ultimately seized the currency, on belief that it was derived from the sale of controlled substances. (Id. at 3).

Immediately after the stop, claimant Garcia–Ancelmo met with Trillo at Wayne County Memorial Hospital, in Goldsboro, North Carolina. (Anthony Decl. at 9–10). There, claimant Garcia–Ancelmo told Trillo that he had been stopped and the defendant funds seized. (Id. ).

COURT'S DISCUSSION

A. Standard of Review

Claimants' motions rests on Rule 56 of the Federal Rules of Civil Procedure.⁴ Summary judgment is appropriate where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). This standard is met when "a reasonable jury can reach only one conclusion based on the evidence," or when "the verdict in favor of the non-moving party would necessarily be based on speculation." Myrick v. Prime Ins. Syndicate, Inc., 395 F.3d 485, 489 (4th Cir.2005). On the other hand, when "the evidence as a whole is susceptible of more than one reasonable inference, a jury issue is created," and summary judgment should be denied. Id. at 489–90.

Summary judgment is not a vehicle for the court to weigh the evidence and determine the truth of the matter, but rather contemplates whether a genuine issue exists for trial. Anderson v. Liberty Lobby, 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In making this determination, the court must view the inferences drawn from the underlying facts in the light most favorable to the nonmoving party. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962). Nevertheless, such inferences "must still be within the range of reasonable probability" and the court should issue summary judgment "when the necessary inference is so tenuous that it rests merely upon speculation and conjecture." Lovelace v. Sherwin–Williams Co., 681 F.2d 230, 241 (4th Cir.1982) (quoting Ford Motor Co. v. McDavid, 259 F.2d 261, 266 (4th Cir.1958) ). Only disputes between the parties over facts that might affect the outcome of the case properly preclude the entry of summary judgment. Anderson, 477 U.S. at 247–48, 106 S.Ct. 2505. Accordingly, the court must examine the materiality and the genuineness of the alleged fact issues in ruling on this motion. Id. at 248–49, 106 S.Ct. 2505.

The party seeking summary judgment bears the initial burden of demonstrating the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the...