United States v. $95 000.00 In U.s. Currency

1991 | Cited 0 times | First Circuit | August 2, 1991

Claimant appeals from a default judgment forfeiting to the government one 1984 Lincoln Continental along with the following amounts of money: $95,900, $23,000, $6,000, $3,000, and $4,000. We review the background.


The government filed a forfeiture action in January 1990 seeking the forfeiture of the Lincoln Continental and money on the ground that the money had been used and/or had been intended to be used by claimant Lazaro Bolivar to purchase cocaine, and the automobile had been used to transport the currency. See 21 U.S.C. § 881(a)(4) (subjecting to forfeiture "vehicles . . . used . . . or intended for use . . . to facilitate the transportation, sale, receipt, possession, or concealment of [controlled substances]"; 21 U.S.C. § 881(a)(6) (subjecting to forfeiture money "furnished or intended to be furnished . . . in exchange for a controlled substance"). Attached to the government's verified forfeiture complaint were exhibits and an affidavit from special Agent John G. Trahon. Agent Trahon's affidavit stated that on March 18, 1988, a confidential informant (C.I.), who had previously delivered multi-kilograms of cocaine to claimant, met with claimant. The meeting was recorded. Referred to during the meeting were the recent lack of supply of cocaine, claimant's need to bring three kilograms of cocaine to a party that night, claimant's customers and helpers, and claimant's expectation of receiving a further cocaine shipment around March 26, 1988. During the meeting, claimant delivered to the C.I. $23,000 and a $4,000 check payable to claimant's wife in partial payment for six kilograms of cocaine the C.I. was to deliver the next week. (The $23,000 and the check in this action are both defendants because they were ordered forfeited). On April 4, 1988, FBI surveillance was conducted in anticipation of C.I.'s delivery of the six kilograms. FBI agents observed claimant drive past E & J Auto Parts (a location to which the C.I. had delivered cocaine for claimant in the past) and park in front. While claimant was outside, the C.I. telephoned E & J and spoke to Ramon Suarez. Suarez, according to information the C.I. said he had received from claimant, was a cocaine dealer. Suarez denied claimant was at E & J's, but stated that one Albertito had arrived. Meanwhile, claimant had the trunk of the defendant Lincoln open and was going back and forth between his car and E & J's. Claimant was then arrested. In the trunk of the defendant Lincoln was a partially zippered black vinyl bag containing packages wrapped in silver duct tape.

According to Agent Trahon, claimant was given Miranda warnings, and the recording of the March 18, 1988 meeting between claimant and the C.I. was played. Claimant then admitted having given C.I. $23,000 in cash and a $4,000 check as a down payment for six kilograms of cocaine. Claimant conferred with his attorney, Frank Kelleher, and then agreed to cooperate. Claimant consented in writing to the search of his briefcase, which was found to contain $6,000, another defendant ordered forfeited in this action. Claimant stated that the black vinyl bag found in the trunk was not his. A warrant was obtained for the bag and the bag was searched. Found therein were a $3,000 check and cash totalling $95,900, the remaining monetary defendants ordered forfeited in this case.

Registry of motor vehicle records indicated that the defendant Lincoln in which the black vinyl bag was found was owned by claimant.

Subsequently, claimant pled guilty to conspiracy to possess with intent to distribute cocaine.

The forfeiture complaint was served on claimant in prison on February 9, 1990 and on his attorney on February 6, 1990. Under supplemental Rule C(6), claimant had ten days after process was executed in which to file a claim and twenty days from the filing of the claim to file an answer. Petitioner did not comply.

On March 27, 1990, the government, noting the lack of any claim or answer to the forfeiture complaint, moved for entry of default.

On April 10, 1990, Attorney Kelleher filed a "Motion to Oppose Entry of Default and to Set Aside the Default" on behalf of both 1) claimant personally and 2) claimant as "agent for 'Lasera, C. Por A,' a Dominican stock corporation," which allegedly had an interest in $50,000 of the $95,900 seized from the black vinyl bag. Counsel admitted he had received the forfeiture complaint on February 6, 1990, but claimed that because of his busy trial schedule, he had failed to prepare a claim and answer. He asked for an extension until April 25, 1990 to file a claim and answer.

Included in or attached to counsel's motion in opposition to entry of default were vague hints at what claimant's defenses or claims might be. Counsel stated that promises (apparently from the government) had been made to claimant that "as much assistance as could be given him would be given him to enable him to obtain" the currency and car.

Over a month later (May 15, 1990), no claim or answer having been tendered, and counsel's requested extension date having passed, the district court granted the government's motion for entry of default stating that sufficient time had passed for a claim to be filed. At the same time, a standing order as to motions for default judgment issued. It indicated that any opposition to a motion for default judgment should be "substantiated."

The next month (June 12, 1990), the government moved for entry of default judgment. Claimant responded (on June 15, 1990) with a pro se letter which the court treated as a motion to extend the time for filing a claim. Two weeks later (June 28, 1990), an answer was finally filed by Attorney Kelleher. The answer denied that any of the seized money had been used or had been intended to be used to purchase narcotics and asserted that the money and car should be returned to claimant "for his efforts in assisting the FBI in various endeavors." Claimant claimed an interest both in his own right and as agent for Lasera, C. Por A. somewhat contradictorily, at the same time, claimant's answer said that "some of the defendant property is subject to forfeiture and some is not," and claimant requested an accounting.

Attached to the answer were several exhibits which, apparently, were intended to sketch out a defense. First was a letter from claimant to Attorney Kelleher supposedly explaining the origins of some of the money seized by the government. The gist of this letter seems to be that the Dominican Republic corporation with which claimant was involved needed dollars to purchase equipment. According to the letter, various persons associated with the corporation would bring dollars to Miami and leave them there with claimant's mother.

Claimant never opened a bank account for the corporation because, he explained, he did not have all the necessary paperwork and did not feel it was necessary as the corporation's business would be transacted mainly in the Dominican Republic. At one point, claimant put a $1,000 down payment on $125,850 worth of equipment for the Dominican corporation. (Claimant submitted a copy of a January 4, 1988 invoice from a Miami Equipment Co. for cement mixers and other items addressed to him.) The mother died in March 1988, and claimant picked up whatever dollars had accumulated by then. Claimant and his associates expected the full purchase price for the equipment to be available by the end of April 1988. In preparation for the purchase of the equipment from the Miami company, claimant's cousin was going to bring the money from Boston to Miami. Claimant was just about to transfer the money in the black vinyl bag from his car to the cousin's car when, according to his unsworn letter, claimant was arrested. The $95,900 in the black vinyl bag, therefore, claimant claimed, belonged to him and his associates in the corporation and was intended to be used not for drugs, but rather for equipment.

Also accompanying the answer were an unsigned affidavit from one Luis Martinez, who represented that he had loaned claimant $20,000 on April 1, 1988 (three days before claimant's arrest) for a real estate transaction; "Stock Company Statutes" for Lasera, C. Por A stating, among other things, that the principal object of the company was to rent, buy, and sell heavy equipment; and an affidavit from claimant stating that the seized vehicle contained no contraband or fruits of contraband.

Two months after claimant's answer was filed, the district court denied claimant's pro se letter/motion for hearing/extension without explanation and entered the default judgment from which claimant has now appealed.


Rule 55(c) provides that "for good cause shown the court may set aside an entry of default and, if a judgment by default has been entered, may likewise set it aside in accordance with Rule 60(b)." Fed. R. Civ. p. 55(c). Claimant argues that the more lenient good cause standard for setting aside entry of default, rather than the stricter standard pertaining to motions to vacate default judgments, should govern his appeal. Even though claimant failed to file a motion for relief from default after the entry of default (claimant did file an opposition to default prior to entry of default in which claimant asked for further time to file a claim and answer), we will assume that the more lenient good cause standard applies. See United States v. One Urban Lot, 885 F.2d 994, 997 (1st Cir. 1989) (applying Rule 55(c) good cause standard where an answer was filed prior to final judgment); United States v. One Urban Lot, 865 F.2d 427, 429 (1st Cir. 1989) (similar).

This court has said that the good cause standard is "a liberal one." Relevant factors to consider are "'whether the default was willful, whether setting it aside would prejudice the adversary, . . . whether a meritorious defense is presented' . . . the proffered explanation for the default, the good faith of the parties, the amount of money involved, and the timing of the motion." Coon v. Grenier, 867 F.2d 73, 76 (1st Cir. 1989).

We will assume that the government would not have been unduly prejudiced had the entry of default and default judgment been set aside and that claimant's various papers adequately (if barely so) asserted an interest in at least some of the property and a defense to the forfeiture action. Nevertheless, claimant falls short on several other fronts.

First, and fundamentally, claimant never filed a valid claim to the property as required by supplemental Rule C(6). Claimant seems to contend that his April 10, 1990 motions to oppose entry of default and for an extension of time sufficed as a claim as they asserted ownership interests on behalf of claimant individually and as agent for the corporation. Claimant is wrong. The motions did not in the least purport to be a claim. Rather, they specifically asked for permission to file a claim and answer at a later date. Furthermore, they did not satisfy the requirement of supplemental Rule C(6) which states that the "claim shall be verified on oath or solemn affirmation . . . and shall state the interest in the property by virtue of which the claimant demands its restitution and the right to defend the action" (emphasis added), for the motions were not verified.

Claimant's late tendered answer similarly did not constitute a claim meeting Rule C(6)'s verification requirement. The answer was verified not by claimant, but by Attorney Kelleher, who asserted that he had discussed the answer with claimant and that "the facts related in said Answer are true to the best of my [Kelleher's] knowledge, information and belief." As other courts have concluded, a "conclusory, hearsay, on-information-and-belief statement of [claimant's] lawyer" does not satisfy Rule C(6)'s verification requirement. Mercado v. United States Customs service, 873 F.2d 641, 645 (2d Cir. 1989). Rather, to reduce the danger of false claims in forfeiture proceedings, the claimant, if available, should verify his own claim. Mercado, 873 F.2d at 645; United States v. $38,300, 555 F.Supp. 280, 283 (E.D.N.Y. 1983) (attorney affidavit stating that money seized from claimant's premises belonged to claimant was insufficient where claimant indicated he would refuse to testify how he acquired any interest in the funds), aff'd without opinion, 742 F.2d 1444 (2d Cir. 1983). But cf. United States v. $103,387.27, 863 F.2d 555, 558-61 (7th Cir. 1988) (assuming that had attorney complied with state law verification requirements, he could have verified client's forfeiture complaint on client's behalf). To be sure, claimant was in jail, but claimant had been afforded more than adequate time to file his own verification. Where, as here, the government has supplied a detailed affidavit and exhibits in support of its forfeiture complaint forcefully presenting its case for forfeiture, it is not too much to require a claimant to provide his own oath attesting to an interest in the property and a right to its return.

In this case, the only affidavit claimant filed was a one paragraph statement indicating that claimant had earlier purchased the seized Lincoln Continental and that "there was no contraband in the car or fruits of any contraband." The affidavit was one of the exhibits to claimant's answer. Had it been timely filed, perhaps it might have sufficed as a verified claim to the defendant car. (It was somewhat ambiguous, however, in that it did not expressly assert an ownership interest at the time of seizure.) It failed, however, adequately to assert any interest in the defendant money, for the only mention of the money was that defendant had personally counted the $95,000. "Counting" did not confer an interest in the money.

Apart from the deficiencies in claimant's claim, a second reason supporting the district court's entry of default and default judgment is that the circumstances here do not point to innocent or good faith failings, but instead to a rather blatant disregard for timely and orderly proceedings. Claimant's attorney admittedly received the forfeiture complaint on February 6, 1990. He did not, however, exert the minimal effort to request an extension of time in which to file a claim. Rather, only after the claim was already late and the government had moved for entry of default did the attorney ask for even more time -- another month -- until April 25, 1990, asserting press of business. The requested date came and went with no claim or answer having been filed and no extension having been requested. Nor did the actual entry of default (on May 15, 1990) prompt any response from the attorney. Only after the government had moved for entry of default judgment and more than two months after the requested April 25, 1990 extension date did an answer appear, unaccompanied by any explanation for the added delay. Claimant and his counsel had been sufficiently indulged by the court and afforded an opportunity for a late filing. The court was not required to accept the late answer, unaccompanied by any sufficient claim to the defendant money or explanation for failure to meet the last requested extension date, and set aside the default. See United States v. One 1978 Piper Navajo PA-31 Aircraft, 748 F.2d 316, 319 (5th Cir. 1984) (counsel's workload was not an adequate excuse for failure timely to file a claim and answer in forfeiture proceeding).


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