United States v. Tilley ( 1994 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
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No. 93-1394
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UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
TOMMY ROSS ANDERSON, SARAH JANE ANDERSON,
JERRY WAYNE TILLEY, AND SUSAN WELLS TILLEY,
Defendants-Appellees.
_________________________________________________________________
Appeals from the United States District Court for the
Northern District of Texas
_________________________________________________________________
( March 25, 1994 )
Before JOHNSON, JOLLY, and JONES, Circuit Judges.
E. GRADY JOLLY, Circuit Judge:
In this appeal, the defendants seek dismissal of their
criminal indictment for selling illegal drugs on grounds of double
jeopardy. They argue that the prior civil forfeiture of the
proceeds from these drug sales constitutes punishment for the
crimes charged in the indictment and that the Double Jeopardy
Clause precludes a second punishment. The district court, refusing
to buy into the defendants' double jeopardy argument, denied their
motion to dismiss the indictment. The defendants then filed this
interlocutory appeal. Because we hold that the forfeiture of
unlawful proceeds of illegal drug sales does not constitute
punishment, we affirm the district court.
I
In 1990, the Drug Enforcement Agency, and other authorities,
began an investigation of large-scale activities involved in this
case, which had yielded millions of dollars in drug proceeds. On
July 25, 1991, the government filed a complaint for civil
forfeiture in rem against certain personal and real property
belonging to the defendants pursuant to 21 U.S.C. §§ 881(a)(6) and
(a)(7).1 On October 8, 1992, the government issued a criminal
1
The relevant subsections provide in part:
(a) The following shall be subject to forfeiture to the
United States and no property right shall exist in them:
(6) All moneys, negotiable instruments, securities, or
other things of value furnished or intended to be
furnished by any person in exchange for a controlled
substance in violation of this subchapter, all proceeds
traceable to such an exchange, and all moneys,
negotiable instruments, and securities used or intended
to be used to facilitate any violation of this
subchapter . . . .
(7) All real property, including any right, title, and
interest (including any leasehold interest) in the
whole of any lot or tract of land and any appurtenances
or improvements, which is used, or intended to be used,
in any manner or part, to commit, or to facilitate the
commission of, a violation of this subchapter . . . .
21 U.S.C. §§ 881(a)(6) and (a)(7) (1988).
The government alleged that the personal property forfeited was
either the cash proceeds of drug sales or traceable to those
proceeds.
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indictment charging the defendants for the various drug crimes
committed from 1986 to 1991. On February 5, 1993, the four
defendants in this case entered into a stipulated forfeiture
agreement with the United States. They agreed to forfeit
significant amounts of cash, certificates of deposit, automobiles,
and other personal property with a total value of approximately
$650,000. Based on the stipulated agreements, the district court,
on February 8, entered final judgment of forfeiture with respect to
the personal property; however, the court stayed forfeiture
proceedings with respect to defendants' two homes pending outcome
of the criminal trial.2 On April 7, the defendants filed a motion
to dismiss the indictment on grounds that they were being subjected
to multiple punishments for the same crimes in violation of the
Double Jeopardy Clause. The defendants argued that they had
already been "punished" for the same drug trafficking in the civil
forfeiture proceeding. The district court rejected the argument
2
The final order of forfeiture did not specify whether the
cash, securities, and other personal property constituted
proceeds of illegal activities or personal property used in drug
trafficking. The complaint sought forfeiture under 21 U.S.C. §
881(a)(6) of proceeds and property traceable to proceeds of
illegal drug sales, and under § 881(a)(7) of real property used
to facilitate drug trafficking. By arguing on appeal that the
personal property forfeited was the proceeds of illegal drug
trafficking or directly traceable thereto, the defendants have
waived any argument that the forfeited property was anything but
proceeds. See In the Matter of Texas Mortgage Servs. Corp., 761
F.2d 1068, 1073-74 (5th Cir. 1985).
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and denied the motion.3 The defendants then filed this
interlocutory appeal pursuant to Abney v. United States, 431 U.S.
651, 97 S.Ct. 2034, 52 L.Ed.2d 651 (1977).
II
The Double Jeopardy Clause prohibits more than one
"punishment" for the same offense.4 North Carolina v. Pearce, 395
U.S. 711, 717, 89 S.Ct. 2072, 2076, 23 L.Ed.2d 656 (1969). The
pending criminal trial in this case, if it results in a conviction,
would, of course, subject the defendants to punishment. Thus, if
the prior civil forfeiture proceeding, which was predicated on the
same drug trafficking offenses as charged in the indictment,
constituted a "punishment," the Double Jeopardy Clause will bar the
pending criminal trial.5
The Supreme Court has classified a civil sanction for wrongful
conduct as a "punishment" under the Double Jeopardy Clause when the
sanction served a traditional goal of punishment, that is,
deterrence or retribution, instead of the remedial goal of
3
The district court ruled without the benefit of the Supreme
Court's subsequent decision in Austin v. United States, ___ U.S.
___, 113 S.Ct. 2801, 122 L.Ed.2d 347 (1993).
4
U.S. Const. amend V ("[N]or shall any person be subject for
the same offense to be twice put in jeopardy of life or
limb . . .").
5
Regardless of the order of the civil and criminal
proceedings, the Double Jeopardy Clause will bar the second
sanction if both the first and second sanctions are deemed
punishment. United States v. Sanchez-Escareno, 950 F.2d 193, 200
(5th Cir. 1991), cert. denied, ___ U.S. ___, 113 S.Ct. 123, 121
L.Ed.2d 78 (1992).
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reimbursing the government and society for the costs that result
from that wrongful conduct. United States v. Halper, 490 U.S. 435,
448-49, 109 S.Ct. 1892, 1902, 104 L.Ed.2d 487 (1989). In Halper,
the Supreme Court established the analytical methodology that will
guide our determination of whether the civil forfeiture of the
proceeds from illegal drug sales in this case served a punitive
purpose, or a wholly remedial purpose. As explained below, this
methodology focuses on the relationship between the amount of the
civil sanction and the amount required to serve the remedial
purpose of reimbursing the costs incurred by the government and
society as a result of the wrongful conduct. We should make clear,
however, that the sanction in Halper did not involve the proceeds
from the crimes charged and the fact that the property forfeited in
today's case constitutes unlawful proceeds is crucial to our
analysis.
In Halper, 490 U.S. at 437-39, 109 S.Ct. at 1896-97, the
government secured the conviction of a defendant on sixty-five
counts of violating the False Claims Act by submitting fraudulent
medicare claims. His crimes, however, had only netted him $585 in
excess payments from the government, and the district court
estimated the government's costs at $16,000. Nevertheless, the
government, in a separate civil action, sought to impose an
additional penalty of $130,000. Halper argued that the civil
penalty constituted a second punishment on him for the same
wrongful acts for which he had been criminally convicted and thus
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violated the Double Jeopardy Clause. Id. at 440, 109 S.Ct. at
1897. The Supreme Court reasoned that a government-imposed
sanction, whether labelled as "criminal" or "civil," constituted
punishment under the Double Jeopardy Clause if--and only if--the
sanction, "as applied in the individual case serve[d] the goals of
punishment," that is, retribution and deterrence, instead of only
the traditional remedial purpose of reimbursing the government for
the costs incurred because of the defendant's wrongful conduct.
Id. at 448, 109 S.Ct. at 1899-1902 (emphasis added). The Court
declined to determine whether a sanction is punitive by focusing on
whether a defendant subjectively feels the "sting of punishment."
Id. at 447, 109 S.Ct. 1901 n.7. Instead, the Halper Court examined
the civil sanction in that case with a focus on whether it was so
excessive that it was punitive. See id., 490 U.S. at 447, 109
S.Ct. 1902. The Court stated that a civil sanction constitutes
criminal punishment only in the "rare case" in which the amount of
the sanction is "overwhelmingly disproportionate" to the damages
caused by the wrongful conduct and thus "bears no rational relation
to the goal of compensating the government for its loss, but rather
appears to qualify as `punishment' within the plain meaning of the
word." Id. at 449, 109 S.Ct. at 1902 (emphasis added). The Court
then remanded to the district court for a determination of the
government's actual costs and an application of its rational
relation test. Id. at 452, 109 S.Ct. at 1904.
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In United States v. Ward, 448 U.S. 242, 254, 100 S.Ct. 2636,
2644, 65 L.Ed.2d 742 (1980), the Supreme Court made clear that the
compensation of both the government and society are remedial goals
that a civil sanction may serve. The Court stated that a sanction
that bore "absolutely no correlation to any damages sustained by
society or the cost of enforcing the law" would be criminal. Id.Thus, under Halper, we must classify the civil forfeiture of
the unlawful proceeds of illegal drug sales under § 881(a)(6) as a
punishment under the Double Jeopardy Clause if, in this particular
case, the amount of the proceeds forfeited was so great that it
bore no rational relation to the costs incurred by the government
and society resulting from the defendant's criminal conduct.
III
Unlike the fine imposed in Halper, the forfeiture of proceeds
in this particular case is not so excessive as to render the
relationship between the amount of the forfeiture and the resulting
costs to the government and society irrational. The forfeiture of
proceeds of illegal drug sales serves the wholly remedial purposes
of reimbursing the government for the costs of detection,
investigation, and prosecution of drug traffickers and reimbursing
society for the costs of combatting the allure of illegal drugs,
caring for the victims of the criminal trade when preventative
efforts prove unsuccessful, lost productivity, etc. See One Lot
Emerald Cut Stones v. United States, 409 U.S. 232, 237, 93 S.Ct.
489, 493, 34 L.Ed.2d 438 (1972) (stating that forfeiture of
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property under the customs laws serves remedial purpose by
"provid[ing] a reasonable form of liquidated damages for violation
of the inspection provisions [by] . . . reimburs[ing] the
Government for investigation and enforcement expenses"); Halper,
490 U.S. at 444, 109 S.Ct. at 1900 (stating that costs of detection
and investigation are remedial in nature); Rex Trailer Co. v.
United States, 350 U.S. 148, 153-54, 76 S.Ct. 219, 222 & n.6, 100
L.Ed. 149 (1956) (recognizing market and societal costs resulting
from wrongdoing and avoidance of unjust enrichment as remedial
purposes); Ward, 448 U.S. at 254, 100 S.Ct. at 2644 (recognizing
repayment of damages to society as remedial).
Although revenue from illegal drug sales and the cost to the
government and society are incapable of exact measurement, a
principle recognized in Halper, 490 U.S. at 449, 109 S.Ct. at 1902,
the amount of illicit drug proceeds confiscated in this case do not
appear to be excessive in comparison to the resulting governmental
and societal costs. Various sources estimate that illegal drug
sales produce approximately $80 to $100 billion per year while
exacting $60 to $120 billion per year in costs to the government
and society. See, e.g., Martin Wolf, Thinking About Drug
Legislation, THE FINANCIAL TIMES (London), Sept. 4, 1989, at I-19
(estimating drug revenues in the United States to approximate $80
billion per year); 134 CONG. REC. S15,630 (statement of Sen.
Danforth) (estimating drug revenues at $100 billion per year and
the costs to the government and society of drugs to total at least
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$110 billion); Drug Abuse Costs to U.S. May Be 125 Billion
Dollars--Study, Reuter Library Report, LEXIS, MAJPAP Library,
Sept. 5, 1991 (estimating economic costs of drug abuse to range
from $60.4 billion to $124.9 billion); see also Rex Trailer, 350
U.S. at 154, 76 S.Ct. at 222 (recognizing that intangible and
immeasurable costs to the government are appropriate considerations
in determining whether a sanction is remedial or punitive).6
Clearly, the above overlapping estimates of proceeds and resulting
costs are not "overwhelmingly disproportionate" on a national level
and, we believe, indicate a rough proportionality between the
$650,000 sanction and the resulting governmental and societal costs
in this case. Thus, if the drug dealers forfeited all the proceeds
of their drug sales, the relationship between the amount of the
proceeds and the resulting governmental and societal costs would
not exhibit the excessive quality found Halper and would not be
irrational for that reason.
Further, in this case, the defendants only forfeited a portion
of the total proceeds that their large-scale drug operation
produced over several years, i.e., the proceeds on hand at the time
of seizure. The amount of the forfeiture bears a direct relation
to the specific drug sales that generated those proceeds, but fails
6
The overlap of the ranges of estimated proceeds of illegal
drug sales and resulting governmental and societal costs
indicates a rough proportionality in this case in contrast to the
overwhelmingly disproportionate relationship between the $130,000
fine and the $16,585 approximation of governmental costs in
Halper, 490 U.S. at 437-39, 109 S.Ct. at 1896-97.
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to compensate fully for the wrongs done from all the drug sales.
Thus, instead of roughly approximating the resulting governmental
and societal costs, the instant forfeiture failed to compensate
fully for the wrongs done.
The Supreme Court's recent opinion in Austin v. United States,
___ U.S. ___, 113 S.Ct. 2801, 122 L.Ed.2d 347 (1993), does not
affect our holding today. Austin, ___ U.S. at ___, 113 S.Ct. at
2803, dealt with whether forfeitures under §§ 881(a)(4)--
conveyances, or means of transporting drugs such as automobiles--
and (a)(7)--real estate used in drug transactions--constituted
punishment under the Excessive Fines Clause. In distinguishing the
civil forfeiture in One Lot Emerald Cut Stones, 409 U.S. at 237, 93
S.Ct. at 493--a double jeopardy case in which a forfeiture was held
not to constitute punishment--the Austin Court, 113 S.Ct. at 2811-
12, stated that the forfeitures of conveyances and real estate have
no correlation to, or proportionality with, the costs incurred by
the government and society because of the large and unpredictable
variances in the values of real estate and conveyances in
comparison to the harm inflicted upon government and society by the
criminal act. Unlike the real estate forfeiture statute that can
result in the confiscation of the most modest mobile home or the
stateliest mansion, the forfeiture of drug proceeds will always be
directly proportional amount of drugs sold. The more drugs sold,
the more proceeds that will be forfeited. As we have held, these
proceeds are roughly proportional to the harm inflicted upon
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government and society by the drug sale. Thus, the logic of Austin
is inapplicable to § 881(a)(6)--the forfeiture of drug proceeds.
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IV
Even absent the rational relation test of Halper, we would
nevertheless be required to hold that the forfeiture of the
proceeds from illegal drug sales does not constitute punishment
because of the implicit and underlying premise of the rational
relation test: The nature of the forfeiture proceeding may
constitute punishment because it involves the extraction of
lawfully derived property from the forfeiting party. Indeed,
under the common law, "property was a right derived from society
which one lost [through forfeiture] by violating society's laws."
*
1 WILLIAM BLACKSTONE, COMMENTARIES ON THE LAWS OF ENGLAND 299, 4 id. at
*
382.
When, however, the property taken by the government was not
derived from lawful activities, the forfeiting party loses nothing
to which the law ever entitled him. Unlike the $130,000 fine in
Halper, 490 U.S. at 438, 109 S.Ct. at 1896, the forfeiture of
approximately $650,000 of illegal proceeds does not punish the
defendant because it exacts no price in liberty or lawfully derived
property from him. The possessor of proceeds from illegal drug
sales never invested honest labor or other lawfully derived
property to obtain the subsequently forfeited proceeds.
Consequently, he has no reasonable expectation that the law will
protect, condone, or even allow, his continued possession of such
proceeds because they have their very genesis in illegal activity.
See generally, Lucas v. South Carolina Coastal Council, ___ U.S.
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___, ___, 112 S.Ct. 2886, 2894, 120 L.Ed.2d 798 (1992); Penn
Central Transp. Co. v. New York City, 438 U.S. 104, 124, 98 S.Ct.
2646, 2659, 57 L.Ed.2d 631 (1978). In short, the wrongdoer has
nothing, at least nothing to which the law entitles him, to lose
from the possible confiscation of the proceeds from his criminal
trade. Thus, we believe the forfeiture of proceeds from illegal
drug sales is more closely akin to the seizure of the proceeds from
the robbery of a federal bank than the seizure of lawfully derived
real property. See Caplin & Drysdale, Chartered v. United States,
491 U.S. 671, 626, 109 S.Ct. 2646, 2652-53, 105 L.Ed.2d 528 (1989)
(stating that "the government does not violate the Sixth Amendment
if it seizes . . . robbery proceeds, and refuses to permit the
defendant to use them to pay for his defense . . ." because, "[t]he
money, though in [the defendant's] possession, is not rightfully
his"); see also Rex Trailer, 350 U.S. at 153, 76 S.Ct. at 222 n.6
(stating that civil sanction may serve to avoid unjust enrichment).
Consequently, instead of punishing the forfeiting party, the
forfeiture of illegal proceeds, much like the confiscation of
stolen money from a bank robber, merely places that party in the
lawfully protected financial status quo that he enjoyed prior to
launching his illegal scheme. This is not punishment "within the
plain meaning of the word." Halper, 490 U.S. at 449, 109 S.Ct. at
1902.
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V
Accordingly, we AFFIRM the district court's denial of the
defendants' motion to dismiss because the Double Jeopardy Clause
does not bar the criminal prosecution of the defendants.
A F F I R M E D.
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