U.S. v . $10,648.00 11-CV-362-LM Forfeiture

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

United States of America

v. Civil N o . 11-cv-362-LM Opinion N o .

P Ten Thousand Six Hundred Forty-Eight ($10,648.00) dollars in United States Currency, more or less, seized from Karla Schulz

O R D E R

This is a forfeiture action in rem, brought by the United

States of America, under Rule G of the Supplemental Rules for

Certain Admiralty and Maritime Claims and Asset Forfeiture

Actions. Specifically, the United States seeks the forfeiture

of $10,648 in United States currency that was seized from the

residence of Karla Schulz by police officers executing a search

warrant. Schulz has filed a claim for the currency. Before the

court is the government’s motion for summary judgment. Schulz

has neither objected to the government’s motion nor moved for

summary judgment. For the reasons that follow, the government’s

motion for summary judgment is denied.

Summary Judgment Standard

“Summary judgment is warranted where ‘there is no genuine

dispute as to any material fact and the movant is entitled to judgment as a matter of law.’” McGair v . Am. Bankers Ins. C o .

of Fla.,

4 , 99 (1st Cir. 2012) (quoting Fed. R. Civ.

P. 56(a); citing Rosciti v . Ins. C o . of Penn.,

2 , 96

(1st Cir. 2011)). “The object of summary judgment is to ‘pierce

the boilerplate of the pleadings and assay the parties’ proof in

order to determine whether trial is actually required.’” Dávila

v . Corporación de P.R. para la Diffusión Pública,

(1st Cir. 2007) (quoting Acosta v . Ames Dep’t Stores, Inc.,

, 7 (1st Cir. 2004)). “[T]he court’s task is not to weigh

the evidence and determine the truth of the matter but to

determine whether there is a genuine issue for trial.” Noonan

v . Staples, Inc.,

0 , 25 (1st Cir. 2009) (citations and

internal quotation marks omitted).

Background

The following facts are undisputed because each of them is

either admitted in Schulz’s verified answer, see Fed. R. Civ. P.

56(c)(1)(A), or deemed admitted because it is properly supported

in plaintiff’s unopposed motion for summary judgment, see LR

7.2(b)(2).

In May of 2009, Schulz was convicted of possession of

heroin with intent to sell. In October of 2010, an officer of

the Haverhill Police Department (“HPD”) went to the residence

Schulz shared with her son Logan to serve her with a Notice Against Trespass and a Notice Against Harassment. While serving

the notices, the officer noticed several firearms.

Two days later, HPD officers returned to Schulz’s home with

a warrant to seize the firearms. While executing the warrant,

the officers noticed a lockbox that, in their view, was large

enough to hold a handgun. When the officers asked Schulz and

her son to open the lockbox, they said it could not be opened

because it was broken. Schulz told them that the lockbox did

not contain a handgun, but did contain cocaine and money. The

officers stopped their search and obtained a second search

warrant, this one for drugs and drug paraphernalia. As a result

of their second search, the officers seized:

One plastic bag containing 1.22 grams of cocaine, one plastic bag containing 6.63 grams of cocaine, one plastic bag containing 21.52 grams of cocaine, one plastic bag containing 27.70 grams of cocaine, all of which were located in a lockbox in Logan Schulz’s bedroom; two digital scales; a multi colored glass pipe; a green pipe; a metal spoon with burnt residue; two white paring knives with residue; a paper clip, metal rod, glass cylinder, glass pipe, empty ziplock baggies, and scissors, all with residue; a box of zip lock bags; $1,190.00 in U.S. Currency, seized from Karla Schulz’s bedroom; $1,015.00 in U.S. Currency, seized from Logan Schulz’s bedroom; and $8,443.00 in U.S. Currency, seized from the lockbox in Logan Schulz’s bedroom.

Am. Verfied Compl. (doc. n o . 4 ) ¶ 5 .

Based upon the evidence seized during the second search,

Schulz was charged with, and convicted o f , violating New

3 Hampshire Revised Statutes Annotated (“RSA”) § 318-B:2 by: (1)

possessing cocaine, see Pl.’s Mem. of Law, Ex. A (doc. n o . 20-

2 ) , at 1 , 2 ; and (2) possessing cocaine with the intent to

distribute i t , see id., at 5 , 6.

The United States filed the instant action against all of

the currency seized by HPD officers during the second search of

Schulz’s home. Specifically, the government seeks the

forfeiture of

[t]he defendant in rem, Ten Thousand Six Hundred Forty-Three ($10,648.00) [sic] dollars in United States Currency, more or less, seized from Karla Schulz, was furnished or intended to be furnished in exchange for a controlled substance, in violation of the Controlled Substances Act,

0 1 , et seq., or represents proceeds traceable to such exchanges, or money used or intended to be used to facilitate violations of the Act.

Am. Verified Compl. (doc. n o . 4 ) ¶ 9. Neither in its complaint

nor in its memorandum of law does the government distinguish

between the currency that was found in the lockbox along with

bags of cocaine and the currency that was found elsewhere in

Schulz’s home.

Schulz responded by filing a claim for the currency. In

i t , she asserts that “the money that was taken for evidence was

not from the distribution of cocaine.” Cl.’s Mot. for Claim

Hr’g (doc. n o . 9 ) 1 . As proof of her claim, she attached

photocopies of two checks she received as proceeds from a

4 foreclosure sale. Those checks totaled $15,773.57. In support

of its motion for summary judgment, the government has produced

bank records that tend to discredit Schulz’s claim that the

currency at issue came from the foreclosure sale. 1

Discussion

Federal law provides for the forfeiture of “[a]ll moneys

. . . furnished or intended to be furnished by any person in

exchange for a controlled substance . . . , all proceeds

traceable to such an exchange, and all moneys . . . used or

intended to be used to facilitate any violation of this

subchapter [i.e., Title II of the federal Controlled Substances

Act].”

(a)(6). In a forfeiture action such as

this one, “the burden of proof is on the Government to

establish, by a preponderance of the evidence, that the property

is subject to forfeiture,”

(c)(1). Moreover, “if

the Government’s theory of forfeiture is that the property was

used to . . . facilitate the commission of a criminal offense

. . . the Government shall establish that there was a

substantial connection between the property and the offense,”

§ 983(c)(3).

1 Specifically, those records show that Schulz: (1) deposited the proceeds from the foreclosure sale into a checking account; (2) made relatively few other deposits into that account; and (3) very nearly depleted that account by writing checks for rent and other utilities.

5 Without specifying which of the three theories described in

(a)(6) it is relying o n , the government supports

its motion for summary judgment by reciting the following

purportedly undisputed facts:

M s . Schulz had a prior felony drug distribution conviction in 2009; 2 on the day that her home was searched, she told officers that they would find drugs and money in a safe in her son’s room, which they did; she admitted that the cocaine in the safe was hers; other drug distribution evidence,3 such as digital scales, and packaging materials, as well as drug paraphernalia, were found in the residence; she was convicted and received a prison sentence for the offense that is the predicate for forfeiture, i.e., possession with intent to distribute; she had a minimal income from selling Avon products; she did not file tax returns for 2010, the year the currency was seized; the $10,648.00 in cash was a significant sum of money for someone without regular employment and in financial difficulty (she had recently lost her home to foreclosure); finally, there is the inexplicable fact of M s . Schulz keeping bulk currency in her home, rather than on deposit in her bank account.

Pl.’s Mem. of Law (doc. n o . 20-1) 10-11. Given the government’s

failure to specify which of the § 881(a)(6) theories underlies

this action, the court is left with no choice but to consider

all three.

2 The government has produced no evidence concerning Schulz’s 2009 conviction; the statement in its memorandum of law is based exclusively upon Schulz’s admission that she was convicted of “possession of heroin with intent to sell.” 3 The government asserts, without evidentiary support (such as affidavits from witnesses), that digital scales and ziplock bags are “drug distribution evidence.”

6 A . Money Used to Facilitate a Drug Crime

Money is subject to forfeiture if the government can prove,

by a preponderance of the evidence, that it was “used or

intended to be used to facilitate any violation of [the federal

Controlled Substances Act],”

(a)(6); see also

(c)(1). In the context of forfeitures under

8 1 , “[t]o facilitate the commission of a crime, the

property must make the prohibited conduct less difficult or more

or less free from obstruction or hindrance.” United States v .

434 Main St., Tewksbury, Mass., ___ F. Supp. 2d ___, ___,

(D. Mass. Jan. 2 4 , 2013) (quoting United

States v . Schifferli,

8 7 , 990 (4th Cir. 1990); citing

United States v . 3639–2nd S t . N.E.,

(8th

Cir. 1989); United States v . 3234 Wash. Ave. N.,

(8th Cir. 2007)) (internal quotation marks omitted).

Schulz’s only drug-related convictions are for possession

and possession with intent to distribute. Those are the only

drug-related offenses for which the government has produced any

evidence. Nowhere in its memorandum of law does the government

identify any particular drug crime the currency seized by the

police had facilitated, or was intended to facilitate.

Similarly, it does not explain how that currency made the

unspecified crime less difficult and/or free from obstruction or

7 hindrance, see 434 Main St.,

, at * 1 8 .

Accordingly, as to a facilitation theory of forfeiture, the

government is not entitled to summary judgment.

B . Money for Drugs

Money is subject to forfeiture if the government can prove,

by a preponderance of the evidence, that it was “furnished or

intended to be furnished by any person in exchange for a

controlled substance,”

(a)(6); see also

(c)(1). Under the circumstances of this case, that statute

would permit the forfeiture o f : (1) money that Schulz intended

to furnish in exchange for drugs; or (2) money that had been

furnished to Schulz in exchange for drugs.

As noted, the government has not specified which of the

three

(a)(6) theories it is proceeding under s o ,

necessarily, it has not specified which form of the “money for

drugs” theory it may be invoking. The government has produced

no evidence that Schulz intended to furnish the money seized

from her home to someone else in exchange for drugs, much less

evidence that would compel such a determination. That leaves

the theory that some other person or persons furnished Schulz

with the money at issue in exchange for drugs.

The government argues that in cases subject to the rules

set forth in

, “the [trial] Court will enter

8 summary judgment for the government on the forfeitability issue

if the undisputed facts establish the requisite nexus between

the property and the offense by a preponderance of the

evidence.” Pl.’s Mem. of Law (doc. n o . 20-1) 9. The

government, however, supports that proposition by citing two

opinions that are inapposite.

In United States v . 6 Fox Street, the court of appeals

affirmed a forfeiture of currency where the evidence against the

claimant included “drug ledgers” that “contained balances for 75

accounts related to his drug business,”

8 , 41 (1st

Cir. 2007). Here, by contrast, while Schulz was convicted of

possession with intent to distribute, the government has

produced no evidence that she sold drugs. The government has

produced evidence that Schulz: (1) had relatively little

documented income; (2) offered an explanation for possessing the

currency that does not hold water; and (3) possessed ziplock

baggies and two digital scales. But, the government has

produced no evidence that Schulz ever actually completed a drug

sale. In United States v . $13,391 in United States Currency,

the record included evidence that the claimant had sold crystal

methamphetamine to an undercover police officer, see CV. N o . 07-

00339 DAE-BMK,

, at *1 (D. Haw. Apr. 1 4 , 2010).

9 Here, there is no such evidence linking Schulz to the sale of

drugs.

In a recent opinion, the Court of Appeals for the Eleventh

Circuit set out the relevant legal principles:

As a result of the enactment of the Civil Asset Forfeiture Reform Act in 2000, the government must establish by a preponderance of the evidence that the property is subject to forfeiture.

(c)(1). We look at the “totality of the circumstances” when determining whether the government has satisfied this standard. See United States v . $121,100.00 in U.S. Currency,

(11th Cir. 1993). The government may use circumstantial evidence as well as evidence gathered after it filed the civil forfeiture complaint to meet its burden. United States v . $291,828.00 in U.S. Currency,

(11th Cir. 2008). However, the government is not required to produce evidence connecting the money to a particular narcotics transaction. United States v . $242,484.00,

(11th Cir. 2004) (en banc). It need only show that the money was “related to some illegal drug transaction.”

We evaluate the evidence presented with “‘a common sense view to the realities of normal life.’”

at 1160 (quoting United States v . Carrell,

(11th Cir. 2001)).

United States v . $183,791.00 in U.S. Currency, 391 F.App’x 7 9 1 ,

794 (11th Cir. 2010) (emphasis added).

While the government is correct in its argument that it

need not show that the currency it seeks to forfeit is linked to

any particular drug transaction, still, it must show that the

money was “related to some illegal drug transaction.”

(emphasis added). That, it seems, would require proof that at

10 some point before HPD officers seized the currency from Schulz’s

home, she had engaged in an illegal sale of drugs.

Schulz’s conviction for possession of cocaine with intent

to distribute establishes that she intended to sell drugs, but

the government has produced no evidence that Schulz was ever

able to successfully act upon her intention. That, in turn,

would appear to be the product of one of the special

circumstances of this case; rather than being the result of a

drug investigation, the seizure from Schulz’s home was the

result of a chance find. Had Schulz been under investigation as

a suspected drug dealer then, perhaps, the police might have

developed sufficient evidence to connect the currency it seized

from her home to drug sales. However, as the record stands, the

court could only grant summary judgment to the government by

drawing far too many inferences in favor of the moving party.

See Markel Am. Ins. C o . v . Díaz-Santiago,

1 , 30 (1st

Cir. 2011) (“In determining whether a genuine issue of material

fact exists, [the court] construe[s] the evidence in the light

most favorable to the non-moving party and make[s] all

reasonable inferences in that party’s favor.”) (citing Flowers

v . Fiore,

4 , 29 (1st Cir. 2004)) (emphasis added).

11 C. Proceeds

Finally, property is subject to forfeiture if the

government can prove, by a preponderance of the evidence, that

the property it seeks consists of proceeds traceable to an

exchange of a controlled substance. See

(a)(6);

see also

(c)(1). Just as the government has not

produced sufficient evidence to prevail at summary judgment on a

theory that the currency it seized from Schulz’s home was money

she received in exchange for drugs, the government has also

failed to establish its entitlement to judgment as a matter of

law on a theory that the currency it seized is proceeds

traceable to a drug exchange.

Conclusion

For the reasons detailed above, the government’s motion for

summary judgment, document no. 20, is denied.

SO ORDERED.

Landya S c ^ f f / r t y United Sta*tr&/ Magistrate Judge

October 3, 2013

cc: Robert J. Rabuck, Esq. Karla Schulz, pro se

12