In re: US Currency v. ( 1998 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 97-2210
___________
In re: US Currency, $844,520.00, *
-------------------------------- *
*
Dennis Cole, *
* Appeal from the United
States
Appellant, * District Court for the
*
Eastern District of Arkansas.
v. *
*
TO BE PUBLISHED
United States of America, *
*
Appellee. *
___________
Submitted: November 7,
1997
Filed: February
19, 1998
___________
Before WOLLMAN, LOKEN, and HANSEN, Circuit Judges.
___________
PER CURIAM.
Dennis Cole appeals district court orders denying his
motion for return of property pursuant to Federal Rule of
Criminal Procedure 41(e). Cole seeks to recover $844,520
that was administratively forfeited by the Drug
Enforcement Administration (DEA) in June 1994. See 19
U.S.C. §§ 1607(a)(4), 1609; 21 U.S.C. § 881(a)(6). The
money was seized after Cole was stopped for speeding on
an interstate highway in western Missouri. Although Cole
received timely notice of the DEA forfeiture action, he
did not contest the forfeiture by filing a claim and
bond, as 19 U.S.C. § 1608
-2-
requires. In these circumstances, the district court
properly rejected Cole’s attempt to collaterally attack
the administrative forfeiture. See Muhammed v. Drug
Enforcement Agency, 92 F.3d 648, 651-52 (8th Cir. 1996).
Accordingly, we affirm.
Loken, Circuit Judge, concurring.
I agree that Dennis Cole is not entitled to relief
because he waived his right to contest the merits of this
forfeiture by not filing a timely claim and bond form
after receiving timely and proper notice of the
administrative forfeiture. See United States v. Woodall,
12 F.3d 791, 795 (8th Cir. 1993). But the underlying
facts of this case should prompt Congress and the
Department of Justice to investigate whether federal law
enforcement officials are using their extensive
forfeiture powers to frustrate the fiscal policy of
States such as Missouri.
A bit of state law background is needed to frame this
issue. Article IX, § 7, of the Missouri Constitution
provides that “proceeds of all penalties, forfeitures and
fines collected hereafter for any breach of the penal
laws of the state” must be distributed to the public
schools. In 1986, the Missouri Legislature enacted the
Criminal Activity Forfeiture Act, MO. REV. STAT. §§ 513.600
et seq., which authorizes civil forfeiture of property
used in criminal activities. The statute initially made
forfeiture proceeds available to law enforcement
agencies. When a school district challenged this portion
of the law, the Missouri Supreme Court held that it
violated Article IX, § 7, of the state Constitution. See
-3-
Reorganized Sch. Dist. No. 7 v. Douthit, 799 S.W.2d 591
(Mo. banc 1990). This decision triggered a fierce
political debate. Some law enforcement officials
reportedly threatened to stop pursuing forfeitures if the
proceeds did not go to law enforcement; others reportedly
cut deals in which seized property was returned without
forfeiture in return for payments to police or
prosecutors.1 Concerned by law
1
See Dillon & Lynn, Kansas City Police Have Kept Money Due Schools, THE
KANSAS CITY STAR, October 19, 1996, at A1; Connolly, Reardon Often Avoids
Forfeiture Statutes, THE KANSAS CITY STAR, October 3, 1993, at A10; Stracke, The
Criminal Activity Forfeiture Act: Replete with Constitutional Violations, 57 MO. L.
REV. 909, 917 (1992); Rose & Poor, Seizure After Loud Party Took Man's Computer,
Stereo, TV, ST. LOUIS POST-DISPATCH, May 3, 1991, at 1A; Young, Schools Hail
Ruling on Drug Assets, ST. LOUIS POST-DISPATCH, November 28, 1990, at 1A.
-4-
enforcers’ reactions, some school districts considered
agreeing to give up their state constitutional
entitlement in exchange for 30% of criminal activity
forfeiture proceeds.2
With state law stacked against them after Douthit,
Missouri law enforcers found a potent ally in the
Department of Justice’s equitable sharing programs, under
which cooperating state and local law enforcement
agencies may receive up to 85% of the proceeds from a
federal forfeiture proceeding. See 21 U.S.C.
§ 881(e)(1)(A). When drug proceeds, for example, have
been seized by state or local authorities, a federal
agency may “adopt” the seizure and commence federal
forfeiture. See 21 C.F.R. § 1316.91(1) (1998). So long
as the federal agency has acted within its authority,
this court and others have upheld the validity of adopted
forfeitures even if the transferring state or local
agency improperly seized or transferred the forfeited
property. See Madewell v. Downs, 68 F.3d 1030, 1037-38
(8th Cir. 1995). Only when a state court has first
acquired jurisdiction over the forfeiture res will
federal agency adoption and forfeiture be preempted. See
Madewell, 68 F.3d at 1041 n.13; United States v.
$12,390.00, 956 F.2d 801, 805 (8th Cir. 1992). Thus,
after Douthit, Missouri law enforcers could seize drug
proceeds, present them to the DEA for adoption, and
collect up to 85% of proceeds that would have gone to
public schools under state law.
2
See McGuire, Seizures from Drug War Could Go to Schools, Police Under New
Plan, THE KANSAS CITY STAR, July 10, 1991, at C2.
-5-
In July 1993, the Missouri Legislature took strong
action to assert state judicial control over this
process. See Von Kaenel, Missouri Ups the Ante in the
Drug Forfeiture "Race to the Res," 72 WASH. U.L.Q. 1469
(Fall 1994). Among many
-6-
amendments to the Criminal Activity Forfeiture Act, the
Legislature enacted § 513.647, which provides in relevant
part:
1. No state or local law enforcement agency
may transfer any property seized by the state or
local agency to any federal agency for
forfeiture under federal law until the
prosecuting attorney and the circuit judge of
the county in which the property was seized
first review the seizure and approve the
transfer to a federal agency. . . .
2. Prior to transfer, in an ex parte
proceeding, the prosecuting attorney shall file
with the court a statement setting forth the
facts and circumstances of the event or
occurrence which led to the seizure of the
property and the parties involved, if known.
The court shall certify the filing, and notify
by mailing to the last known address of the
property owner that his property is subject to
being transferred to the federal government and
further notify the property owner of his right
to file a petition stating legitimate grounds
for challenging the transfer. . . .
With that background, let us examine what apparently
happened in this case. Cole’s car was stopped by a state
patrol officer for speeding. He consented to a search of
the car, and a concealed compartment was found. The
officer arrested Cole, took him to the Highway
Department, and called a member of the Highway Patrol
Drug and Crime Control Unit, who in turn called a DEA
Special Agent. They found the currency in question when
the secret compartment was opened. Federal forfeiture
proceedings were begun without an adoption, no doubt on
-7-
the theory that the DEA agent had seized the currency.
But that is pure fallacy. Cole, his vehicle, and
everything in it were seized by the Missouri Highway
Patrol when its officer made the initial traffic stop.
By summoning a DEA agent and then pretending DEA made the
seizure, the DEA and Highway Patrol officers successfully
conspired to violate the Missouri Constitution, § 513.647
of the Missouri Revised Code, and a Missouri Supreme
Court decision. Such action by federal law enforcers is
contrary to the spirit, if not the letter, of the
Department of Justice January 15, 1993, Adoption Policy
and Procedure, issued by the
-8-
Executive Office for Asset Forfeiture as Directive No.
93-1. See 1 David B. Smith, PROSECUTION AND DEFENSE OF
FORFEITURE CASES, App. 7C (1997). This Directive urges
deference to the kind of state court proceedings that
§ 513.647 requires state and local law enforcers in
Missouri to commence.
In my view, when potentially forfeitable property has
been seized entirely by the efforts of state or local law
enforcement officials, it is bad policy for federal law
enforcers to use their broad forfeiture powers to
frustrate state forfeiture law. More narrowly, it is
beyond DEA’s jurisdiction to administratively forfeit
property that, by reason of MO. REV. STAT. § 513.647, is
within the jurisdiction of a state court, unless the
state court has yielded its jurisdiction over the res to
federal authority. While I agree that Cole may not
collaterally attack the forfeiture in this case, I would
void any such federal forfeiture that is timely presented
for direct judicial review.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
-9-