United States v. Currency, U.S., $147,900.00 , 450 F. App'x 261 ( 2011 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 09-1496
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
TONY LYNN BAILEY,
Claimant - Appellant,
v.
CURRENCY, U.S., $147,900.00,
Defendant.
Appeal from the United States District Court for the Middle
District of North Carolina, at Greensboro. James A. Beaty, Jr.,
Chief District Judge. (1:06-cv-00197-JAB-PTS)
Argued: September 22, 2011 Decided: October 14, 2011
Before MOTZ, GREGORY, and SHEDD, Circuit Judges.
Affirmed in part, reversed in part, and remanded by unpublished
per curiam opinion.
ARGUED: John Carl Vermitsky, MORROW PORTER VERMITSKY & FOWLER,
PLLC, Winston-Salem, North Carolina, for Appellant. Lynne P.
Klauer, OFFICE OF THE UNITED STATES ATTORNEY, Greensboro, North
Carolina, for Appellee. ON BRIEF: Benjamin D. Porter, MORROW
ALEXANDER PORTER & WHITLEY, PLLC, Winston-Salem, North Carolina,
for Appellant. Anna Mills Wagoner, United States Attorney,
Greensboro, North Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
2
PER CURIAM:
In this civil asset forfeiture action, police officers
seized $147,900.00 in United States Currency from Tony Lynn
Bailey’s property while executing a search for controlled
substances. The district court granted the Government’s motion
for summary judgment, awarding it all of the seized currency.
We affirm in part, vacate in part, and remand for further
proceedings consistent with this opinion.
I.
On December 12, 2005, officers with the Davidson
County Sheriff’s Office, following up on tips from the
community, executed a controlled buy of prescription drugs from
Bailey at his home. Under the supervision of two detectives, a
confidential informant, who stated that he had previously
obtained prescription drugs from Bailey, went to Bailey’s home
and returned with hydrocodone pills from Bailey.
Detective Jeff Jones then applied for, received, and
executed a search warrant for Bailey’s home. Under the sink in
the bathroom, the officers found approximately fifteen pills
that were not in a prescription bottle, several items matching
the description of the stolen property that the informant
purportedly had given Bailey in exchange for prescription pills,
and eight firearms. In a dresser drawer, the officers found
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$9,000. Finally, in an outbuilding, the officers found seven
more firearms and fourteen rubber-banded stacks of $100 bills in
a large green safe.
Following the search, Detective Jones interviewed
Bailey after he waived his Miranda rights. Bailey signed a
statement attesting that he sold prescription pills to pay for
his bills and medication, but that he had sold “less than 500
pain/nerve pills.” Further, he stated that, although
unemployed, he performed odd jobs to make money. Bailey
maintained that he had inherited the $100 bills found in the
green safe in the outbuilding from his father in “1993 or 1994.”
Detective Jones observed that some of those $100 bills were
dated from the late 1990s and 2000 and, therefore, the Detective
suspected Bailey had lied about the source of the currency found
in the safe. As a result, Detective Jones confiscated all of
the currency, i.e., that found in the safe and the $9,000 found
in Bailey’s dresser drawer.
A count of the seized currency yielded a total of
$147,900. An official at the Federal Reserve Bank of New York
subsequently reviewed the currency and concluded that the age of
the bills varied widely, with some of the bills dating from as
early as the 1950s. More than half of the bills, however, were
released into general circulation after the death of Bailey’s
father on May 2, 1994.
4
The 2005 search was not Bailey’s first run-in with law
enforcement. In 2001, officers with the Davidson County
Sheriff’s Office executed a controlled buy of prescription drugs
from Bailey at the same home. In a subsequent search of his
home and outbuildings, the officers seized ten firearms, twenty-
five units of Alprazolam, 2,128 grams of marijuana, boxes of
plastic bags, a set of digital scales, and $33,100. Bailey was
arrested and charged with various state narcotics offenses, but
he was not convicted of any crime. 1
On February 28, 2006, the Government filed this civil
forfeiture action pursuant to 21 U.S.C. § 881(a)(6) and 18
U.S.C. § 981(a)(1)(C) and sought an in rem arrest warrant for
all of the currency found during the December 12, 2005 search of
Bailey’s home and outbuildings. After the district court
initially denied the warrant, the Government filed an amended
complaint and arrest warrant, which the court granted on
November 16, 2006. Bailey filed a claim to the currency. After
discovery, Bailey and the Government each moved for summary
judgment. On March 31, 2009, the district court granted the
1
The Government filed a forfeiture action with respect to
the $33,100 seized and settled the action on terms favorable to
Bailey: $20,051.50 to Baptist Hospital for Bailey’s outstanding
medical bills; $5,694.00 to Bailey’s girlfriend who claimed that
those funds represented her tax refunds; $395.00 to the United
States in costs related to the action; and $6,959.50 back to
Bailey.
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Government’s motion and denied Bailey’s. Most relevant to this
appeal, the court held that, as a matter of law, the Government
had met its burden of showing by a preponderance of the evidence
that all of the currency in question was subject to forfeiture.
Bailey timely noted this appeal.
II.
Federal law provides that currency traceable to the
exchange of controlled substances is subject to forfeiture. 18
U.S.C. § 981(a)(1)(C); 21 U.S.C. § 881(a)(6). In 2000, Congress
passed the Civil Asset Forfeiture Reform Act of 2000, Pub. L.
No. 106-185, 114 Stat. 202 (“CAFRA”), which modified the burdens
of proof in civil forfeiture proceedings. Prior to CAFRA, the
Government had the initial burden of demonstrating probable
cause that property was subject to forfeiture. See United
States v. Thomas, 913 F.2d 1111, 1114 (4th Cir. 1990). The
burden then shifted to the claimant to establish, by a
preponderance of the evidence, that the property at issue was
not acquired in violation of the law or linked to unlawful
activity. Id. CAFRA eliminated this burden-shifting framework;
it put the burden solely on the Government and raised the
quantum of proof to a preponderance of the evidence. 18 U.S.C.
§ 983(c)(1) (“[T]he burden of proof is on the Government to
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establish, by a preponderance of the evidence, that the property
is subject to forfeiture.”).
In a forfeiture proceeding, we review the district
court’s factual findings for clear error, but review de novo the
legal determination of whether those facts render the property
at issue subject to forfeiture. See United States v. $84,615 in
U.S. Currency, 379 F.3d 496, 501 (8th Cir. 2004). In
determining whether the Government has met its burden, courts
should not view each piece of evidence in isolation, but rather
“consider the totality of the evidence as a whole and in the
appropriate context.” United States v. Funds in the Amount of
$30,670.00, 403 F.3d 448, 469 (7th Cir. 2005).
A district court may grant summary judgment only “if
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). A court should not grant
summary judgment “if the evidence is such that a reasonable jury
could return a verdict for the nonmoving party.” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). In making this
determination, the court “must view the evidence presented
through the prism of the substantive evidentiary standard.” Id.
at 254.
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III.
Bailey initially challenges the Government’s evidence
as insufficient to connect the seized currency with his alleged
drug activities. The district court disagreed, and so do we.
First, Bailey has a history of involvement with
illegal drugs. 2 The Government presented uncontroverted evidence
that drugs were found on Bailey’s property in both 2001 and
2005, providing a sound basis for the district court’s finding
that the Government had presented “significant evidence of
[Bailey’s] substantial involvement in the sale of controlled
substances for several years.” United States v. $147,900.00 in
U.S. Currency, 2009 WL 903356, Civ. No. 06-197 (M.D.N.C. Mar.
31, 2009).
2
To demonstrate Bailey’s involvement with drugs, the
Government presented hearsay evidence, primarily regarding his
involvement prior to 2005. Bailey did not object to the hearsay
in the district court. Indeed, he does not clearly object to
the admissibility of that evidence before us. Instead, he
argues generally that the Government offers “little more than
rank hearsay . . . to support [its] allegation that the Claimant
engaged in drug trafficking for a long period of time;” thus,
his argument appears to dispute the sufficiency, rather than the
admissibility, of the Government’s evidence. Accordingly, we
assess the admissibility of the hearsay evidence only for plain
error. Fed. R. Evid. 103(a), (d). Given that courts routinely
permitted the Government to rely on hearsay evidence in
forfeiture proceedings prior to CAFRA, and only one appellate
court has explicitly recognized that hearsay evidence is no
longer admissible following CAFRA, see United States v.
$92,203.00 in U.S. Currency, 537 F.3d 504, 510 (5th Cir. 2008);
but see United States v. $291,828.00 in U.S. Currency, 536 F.3d
1234, 1237 (11th Cir. 2008), we cannot hold admission of the
evidence to be plain error.
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Furthermore, Bailey’s possession of large sums of cash
at the same time as his engagement in drug activity provides
“strong evidence that the cash is connected with drug activity.”
$84,615 in U.S. Currency, 379 F.3d at 501-02; see also United
States v. $252,300.00 in U.S. Currency, 484 F.3d 1271, 1275
(10th Cir. 2007) (“A large amount of currency, while not alone
sufficient to establish a connection to a drug transaction, is
‘strong evidence’ of such a connection.” (quoting United States
v. $149,442.43 in U.S. Currency, 965 F.2d 868, 877 (10th Cir.
1992)).
Finally, Bailey has no reported income or work history
that could explain the large amount of currency in his
possession. See United States v. $174,206.00, 320 F.3d 658, 662
(6th Cir. 2003) (holding that “evidence of legitimate income
that is insufficient to explain the large amount of property
seized” satisfies the preponderance of the evidence standard).
Taken together, this is sufficient, albeit not
overwhelming, evidence that some of the currency seized from
Bailey’s property is connected to his drug activities.
IV.
The district court erred, however, in viewing the
above evidence as sufficient to grant summary judgment to the
Government as to all of the currency found on Bailey’s property.
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A.
Police seized the vast majority of the currency here -
- $138,900 in $100 bills -- from a green safe in Bailey’s
outbuilding. In deposition, Bailey swore that he inherited all
of this currency from his father and had buried it in his
backyard in glass jars. He stated that he dug up the jars only
occasionally and had never exchanged the currency for more
recently issued currency. Under most circumstances, such
testimony of a legitimate source would suffice to create a
genuine dispute of material fact as to the entire sum.
In this case, however, undisputed record evidence
requires rejection of Bailey’s testimony as to a legitimate
source for a portion of the currency. See Scott v. Harris, 550
U.S. 372, 380 (2007). More than half of the seized currency was
not in circulation at the time of the death of Bailey’s father
on May 2, 1994. Thus, because this “new” currency plainly
cannot be part of an inheritance from his father, Bailey’s
testimony about his inheritance cannot create a genuine dispute
as to the source of this “new” currency. And, given that in
deposition, Bailey swore that the currency in the safe consisted
exclusively of an inheritance from his father, he cannot now
contend that this “new” currency came from any other legitimate
source. Cf. Barwick v. Celotex Corp., 736 F.2d 946, 960 (4th
Cir. 1984). Moreover, that Bailey plainly lied about the source
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of this “new” currency constitutes additional probative evidence
that the currency is connected to criminal behavior. See United
States v. $67,220.00 in U.S. Currency, 957 F.2d 280, 286 (6th
Cir. 1992). Accordingly, with respect to this “new” currency,
we affirm the district court’s grant of summary judgment to the
Government.
B.
The currency found in the safe that was released into
general circulation before the death of Bailey’s father on May
2, 1994 presents a different question. No record evidence
requires rejection of the possibility that Bailey inherited this
“old” currency from his father. 3
To the contrary, the record lends some support to
Bailey’s inheritance claim. First, Bailey’s former girlfriend,
Sherry Richie, testified under oath that she accompanied Bailey
when he retrieved the inheritance money from his father’s
property and that Bailey then kept the money buried in glass
jars in his backyard. Second, the age of the “old” currency
3
At oral argument and in his brief, counsel for Bailey
stated that $54,600 of the seized currency consisted of bills
that pre-dated 1994. The Government has not disputed this
figure. But the record contains no factual finding on this
point. On remand, we leave it to the district court to
determine the precise amount of the “old” currency, i.e,
currency seized from Bailey’s safe that was released into
circulation prior to May 2, 1994.
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suggests it could be an inheritance. According to the
Government’s own expert from the Federal Reserve Bank, the
average lifespan of a $100 bill is eighty-nine months (or seven
years and five months). Of course, we recognize the difficulty
in deriving significance from a mathematical average without
further information as to context, but a fact-finder could find
this testimony relevant and persuasive. With an average
lifespan of eighty-nine months, bills released into circulation
prior to May 2, 1994 would not normally be in circulation at the
time of the Government’s seizure of the currency in 2005. And
yet, some of the seized bills are several decades old. Bailey’s
purported practice of keeping his inheritance buried underground
in jars and out of the bank could explain the age of this “old”
currency.
Of course, a fact-finder could determine that Bailey
and his ex-girlfriend lied and the age of the “old” currency is
immaterial. But these are questions to be determined by a fact-
finder. Accordingly, we reverse the district court’s grant of
summary judgment to the Government with respect to the
forfeiture of the “old” currency found in the safe.
C.
Bailey has also established a genuine dispute of
material fact as to the source of the $9,000 that the police
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officers found in his dresser drawer. In deposition, Bailey
testified that this money derived from a 1966 Mustang, which he
bought at an auction, fixed up, and then sold to a man named
Tony.
The district court rejected this testimony as
uncorroborated. But corroboration is not necessary to establish
a genuine dispute of material fact. Cf. Berry v. Chicago
Transit Auth., 618 F.3d 688, 691 (7th Cir. 2010) (holding that
uncorroborated testimony from a non-movant at summary judgment
can be evidence of disputed material facts if the testimony is
based on personal knowledge or firsthand experience); see also
Liberty Lobby, 477 U.S. at 255 (noting that juries, not judges,
must weigh evidence and determine the credibility of testimony).
Bailey’s testimony about this transaction was specific
and consistent with his other statements that he occasionally
purchased and sold cars to make money. Moreover, the $9,000,
which was kept separate and apart from the currency in the safe
in the outbuilding, is not an amount that on its own would
suggest linkage to drug activity. See United States v.
$191,910.00 in U.S. Currency, 16 F.3d 1051, 1072 (9th Cir.
1994). Therefore, the district court erred in granting summary
judgment to the Government as to this $9,000.
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V.
For the foregoing reasons, we affirm the judgment of
the district court with respect to the “new” currency found in
the safe, but reverse the judgment of the district court and
remand for further proceedings to determine whether the
following currency is subject to forfeiture: (1) the “old”
currency found in the safe, i.e., currency that was released
into general circulation prior to May 2, 1994; and (2) the
$9,000 found in Bailey’s dresser drawer. 4
AFFIRMED IN PART,
REVERSED IN PART,
AND REMANDED
4
The district court noted that the Government co-mingled
the bills found in the dresser drawer with the bills found in
the safe. If the Government is unable now to determine which
bills were found in the safe, on remand, the district court
should assume that all of the “old” bills were found in the safe
and the $9,000 in the dresser drawer consisted of “new” bills.
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