United States v. $184,505.01 in U.S. Currency

Opinions of the United
1995 Decisions States Court of Appeals
for the Third Circuit
12-29-1995
United States of America v. McGlory
Precedential or Non-Precedential:
Docket 94-3528
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
No. 94-3528
____________
UNITED STATES OF AMERICA
v.
$184,505.01 IN U.S. CURRENCY
Reginald D. McGlory,
Claimant-Appellant
____________
No. 94-3674
____________
UNITED STATES OF AMERICA
v.
$14,548.50 IN U.S. CURRENCY
Reginald D. McGlory,
Claimant-Appellant
____________
No. 94-3675
____________
UNITED STATES OF AMERICA
v.
ONE MARBLE INDIAN STATUE,
ONE REPLICA REMINGTON
RATTLESNAKE STATUE
Reginald D. McGlory,
Claimant-Appellant
____________________
ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
1
____________________
(D.C. Nos. 89-Civ-2323, 90-Civ-236, and 90-Civ-369)
Argued September 13, 1995
Before: SLOVITER, Chief Judge, ALITO, Circuit Judge, and RENDELL,
District Judge0
(Opinion Filed: December 29, 1995)
____________________
Michael A. Young (Argued)
165 Christopher Street
New York, New York 10014
Attorney for Claimant-Appellant
Frederick W. Thieman, United States Attorney
Bonnie R. Schlueter, Assistant United States Attorney
Mary M. Houghton, Assistant United States Attorney (Argued)
633 U.S. Post Office and Courthouse
Pittsburgh, Pennsylvania 15219
Attorneys for Appellee
____________________
OPINION OF THE COURT
____________________
ALITO, Circuit Judge:
In these appeals, Reginald D. McGlory challenges the
district court's refusal to set aside default judgments in three
separate civil in rem forfeiture proceedings brought under 21
U.S.C. § 881(a)(6).0 McGlory raises five separate issues -- lack
0
The Honorable Marjorie O. Rendell, District Judge for the
Eastern District of Pennsylvania, sitting by designation.
0
The provision states in relevant part:
The following shall be subject to forfeiture to the United
States and no property right shall exist in them:
2
of notice, double jeopardy, wrong standard in refusing to set
aside default judgments, insufficient reasons for refusing to set
aside default judgment, and misstatement or fraud on the part of
the government. Because we find that the government violated
McGlory's due process rights by failing to provide him with
adequate notice of two of the proceedings, we reverse the
district court's judgments in those proceedingsi and remand those
cases for further proceedings. However, we reject McGlory's
double jeopardy argument and therefore affirm the district
court's judgment in the remaining proceeding. We also reject
McGlory's remaining arguments.
I.
On September 8, 1989, as part of a criminal investigation of
McGlory, federal Drug Enforcement Administration ("DEA") and
Internal Revenue Service ("IRS") agents executed a search warrant
at 4265-67 Bryn Mawr Road in Pittsburgh. Among other things, the
agents seized the items that are the subject of the three
* * *
(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, except that no property shall
be forfeited under this paragraph, to the extent of the
interest of an owner, by reason of any act or omission
established by that owner to have been committed or omitted
without the knowledge or consent of that owner.
21 U.S.C. § 881(a)(6) (emphases added).
3
proceedings on appeal: $14,584.50 in cash ("$14K")0; three
statues0; and an apparently separate collection of $184,505.01 in
cash ("$184K").0 The agents also arrested McGlory. He was
eventually convicted of conspiracy to distribute heroin and to
possess heroin with the intent to distribute it, in violation of
21 U.S.C. § 846; possession of heroin with intent to distribute,
in violation of 21 U.S.C. §§ 841(a)(1), (b)(1)(C); possession of
a firearm by a convicted felon, in violation of 18 U.S.C.
§922(g)(1); using a firearm in a drug trafficking operation, in
violation of 18 U.S.C. § 924(c)(1); and laundering drug proceeds,
in violation of 18 U.S.C. § 1956(a)(1)(A)(i) and 18 U.S.C. § 2.
See United States v. McGlory, 968 F.2d 309, 314-15 (3d Cir.
1992), cert. denied, 113 S. Ct. 1388 (1993).
The DEA began separate administrative forfeiture proceedings
against the $14K and the statues.0 McGlory, who was
incarcerated, received notice of both proceedings in prison,
Supplemental Appendix ("Supp. App.")0 at 60, 23, but filed no
administrative claims in either proceeding. Id. Upon the filing
of administrative claims by Sandra McGlory (McGlory's wife) and
Ola Mae McGlory (his mother) to the $14K and the statues,
0
United States v. $14,548.50 in U.S. Currency (No. 94-3674).
0
United States v. One Marble Indian Statue, One Replica Remington
Rattlesnake Statue (No. 94-3675).
0
United States v. $184,505.01 in U.S. Currency (No. 94-3528).
0
The DEA referred the forfeiture of the $184K to the United
States Attorney for judicial forfeiture, because its value
exceeded $100,000, the maximum allowable amount for the less
cumbersome administrative forfeiture process. App. 77.
0
As used in this opinion, Appendix ("App.") and Supplemental
Appendix ("Supp. App.") refer to the appendices submitted by
McGlory and the government, respectively.
4
respectively, Supp. App. 52, 55, 60, 23, the DEA referred the
forfeitures to the United States Attorney, who filed complaints
for civil forfeiture on February 7, 1990 (for the $14K) and
February 28, 1990 (for the statues).
The government served McGlory with the complaints via first
class and certified mail at the Bryn Mawr Road address, where his
mother signed both certified mail receipts. Supp. App. 43, 213-
16, 4. In her affidavit, McGlory's mother claimed not to
remember receiving the notices but stated that she would have
turned any such notices over to the attorney who was representing
McGlory on the criminal charges, Thomas Ceraso, Esq. Appendix
("App.") at 117. The government did not serve McGlory in prison,
and made no attempt to do so.
McGlory did not file any claim or answer in either
proceeding, App. 1-6, 27, 31, and the district court entered
default judgments against him on May 29, 1990, and July 23, 1990,
forfeiting the $14K and the statues, respectively. App. 21-22.
McGlory filed motions to set aside the default judgments on April
21, 1994. App. 34. 43. After referring the matter to a
magistrate judge, who recommended that the default judgments not
be reopened, the district court denied McGlory's motions. App.
3, 9.
The government filed a complaint for civil forfeiture of the
$184K on November 21, 1989. App. 7, 17. The government served
the complaint on McGlory via first class and certified mail at
the Bryn Mawr Road address, as well as on Mr. Ceraso. Supp. App.
19. When McGlory again failed to file any claim or answer, the
5
government obtained a default judgment. Supp. App. 99, 111. On
McGlory's behalf, Mr. Ceraso then filed a claim of ownership and
a motion to set aside the entry of default, which the government
did not oppose, and the court set aside the judgment. Supp. App.
102-10, 112. McGlory again failed to file an answer within the
time allotted by the court, and the court entered another default
judgment against him on April 12, 1991. Supp. App. 129; App. 23.
On July 15, 1994, McGlory filed a motion to set aside this second
default judgment, which the district court denied.
II.
McGlory first argues that his due process rights were
violated in that the government failed to provide him with
adequate notice of the civil forfeiture proceedings against the
$14K and the statues. Relying primarily on the Supreme Court's
decision in Robinson v. Hanrahan, 409 U.S. 38 (1972), McGlory
argues that the Due Process Clause required that the government
serve him with notice of the forfeiture proceedings in prison.0
By virtue of 28 U.S.C. § 2451, civil in rem forfeiture
proceedings are governed by Rule C of the Supplemental Rules for
Certain Admiralty and Maritime Claims. As the government notes,
Rule C(4) requires only publication, not personal service of
0
McGlory also denies that he resided at the Bryn Mawr Road
address prior to his arrest, claiming that the house at that
address was his mother's home. McGlory Br. at 6, 9-11. The
government points to extensive evidence that McGlory did in fact
reside at 4265-67 Bryn Mawr Road. Gov't Br. at 7 n.1. Because
we conclude that the government should have served (or at least
attempted to serve) McGlory in prison, we need not resolve this
dispute concerning McGlory's pre-arrest address.
6
process. However, for due process purposes, publication alone is
not sufficient when the government can reasonably ascertain the
names and addresses of interested parties. Mennonite Board of
Missions v. Adams, 462 U.S. 791 (1983).
McGlory argues, in our view persuasively, that Robinson and
Adams together required that the government at least make an
attempt to serve him with notice of the forfeiture proceedings in
prison. In most important respects, Robinson appears
indistinguishable from the present case. In Robinson,
the State knew that appellant was not at the
address to which the notice was mailed and,
moreover, knew also that appellant could not get
to that address since he was at that very time
confined in . . . jail. Under these
circumstances, it cannot be said that the State
made any effort to provide notice which was
"reasonably calculated" to apprise appellant of
the pendency of the forfeiture proceedings.
Robinson, 409 U.S. at 40 (quoting Mullane v. Central Hanover Bank
& Trust Co., 339 U.S. 306, 314 (1950)); see also United States v.
Woodall, 12 F.3d 791, 794 (8th Cir. 1993) (when government knows
of party's actual whereabouts, due process requires sending of
notice to that address, especially where party is incarcerated);
accord United States v. Giraldo, 45 F.3d 509, 511 (1st Cir.
1995).
The government's counterarguments are unavailing. The
government cites Rule C(4) to show that it had no statutory duty
to inform McGlory, but this argument is not dispositive for due
process purposes. Equally unpersuasive is the actual notice of
the administrative forfeiture proceedings that McGlory received
7
while he was in prison, since the judicial forfeiture proceedings
were separate proceedings from the administrative actions.
The government also claims that its actions satisfied the
Mullane standard, and attempts to distinguish Robinson by noting
that the defendant in Robinson did not receive notice of the
proceeding until after it had concluded, whereas McGlory had
actual notice of the proceedings from two sources: the notice of
the administrative proceedings and the notice of the civil
proceedings received by his attorney from McGlory's mother. As
noted above, we do not find the notice of the administrative
proceedings that McGlory received while in prison to be
significant for purposes of the subsequent judicial proceedings.
Furthermore, the government's arguments concerning the notice
received by McGlory's attorney are flawed.0
The government, citing United States v. Indoor Cultivation
Equipment, 55 F.3d 1311 (7th Cir. 1995), argues that the receipt
of notice by McGlory's attorney constituted actual notice to
McGlory. However, Indoor Cultivation Equipment and the case it
cited, United States v. Di Mucci, 879 F.2d 1488, 1495 (7th Cir.
1989), involved situations where the litigation had already begun
and the party's attorney had received notice of an important fact
or deadline but had failed to act on it. The important Supreme
0
The parties dispute whether there is sufficient evidence to
support a finding that McGlory's attorney in the criminal case,
Thomas Ceraso, Esq., received the notices of the civil forfeiture
proceedings from McGlory's mother. There seems to be strong
evidence that he did receive the notices, including Mrs.
McGlory's affidavit, App. 123. For purposes of this analysis, we
assume that Mr. Ceraso received actual notice of the proceedings.
8
Court cases in this area, Link v. Wabash R. Co., 370 U.S. 626
(1962), and Smith v. Ayer, 101 U.S. 320 (1879), also involved
such situations, as opposed to initial service of process on a
defendant.
The situation presented here -- where the proceedings had
not yet begun, McGlory was therefore not yet a party,0 and Mr.
Ceraso was not yet his attorney in these proceedings -- is easily
distinguishable from that in Indoor Cultivation and the other
cases cited above. Plainly stated, for purposes of the civil
forfeiture proceedings against the $14K and the statues, McGlory
did not have an attorney at the time process was received by Mr.
Ceraso; hence, service on Mr. Ceraso was not service on McGlory's
attorney, and thus could not constitute actual notice to
McGlory.0
III.
0
Indeed, with regard to McGlory's double jeopardy argument, see
Part IV infra, the government claims that McGlory was never a
party to the first forfeiture proceeding.
0
Cases construing Rule 4 of the Federal Rules of Civil Procedure
highlight the distinctiveness of service of process. Rule 4(d)(3)
permits service upon an individual "by delivery of a copy of the
summons and of the complaint to an agent authorized by
appointment or by law to receive service of process." Fed. R.
Civ. P. 4(d)(3). When the agent is the individual's attorney,
numerous courts have held that the validity of service of process
upon the attorney depends upon actual authority on the part of
the attorney to receive process on behalf of the individual. See,
e.g., Schultz v. Schultz, 436 F.2d 635, 639 (7th Cir. 1971)
(service upon attorney was ineffective where attorney had not
been appointed for that precise task); Schwarz v. Thomas, 222
F.2d 305 (D.C. Cir. 1955) (attorney representing defendant in
another litigation has no authority to accept service of process
in a separate suit); Select Creations, Inc. v. Paliafito America,
Inc., 830 F. Supp. 1223, 1234 (E.D. Wis. 1993) and cases cited.
9
McGlory next argues that the forfeitures in Nos. 94-3675
(statues) and 94-3528 ($184K) should be set aside as multiple
punishments imposed on him for the same offense in violation of
the Double Jeopardy Clause of the Fifth Amendment because they
came after the forfeiture of the $14K in No. 94-3674 and (in the
case of the $184K) after McGlory's criminal conviction.0
According to McGlory, this result is compelled by the Supreme
Court's decisions in United States v. Halper, 490 U.S. 435
(1989), Austin v. United States, 113 S. Ct. 2801 (1993), and
Department of Revenue of Montana v. Kurth Ranch, 114 S. Ct. 1937
(1994).0
0
The following chronology is relevant to this discussion:
(1) No. 94-3674 ($14K)
Complaint filed: February 7, 1990
Jeopardy attached: Never (see Part III.B infra)
Default judgment entered: May 30, 1990
(2) No. 94-3675 (statues)
Complaint filed: February 28, 1990
Jeopardy attached: Never (see Part III.B infra)
Default judgment entered: July 24, 1990
(3) Criminal conviction
Superseding indictment filed: December 13, 1989
Jeopardy attached: April 25, 1990
Judgment of conviction and sentence: February 12, 1991
(4) No. 94-3528 ($184K)
Complaint filed: November 21, 1989
Jeopardy attached: No earlier than May 4, 1990, when
McGlory was made a party (see footnote 14 infra).
Default judgment entered: April 12, 1991
0
McGlory did not raise his double jeopardy argument in the
district court. Hence, the alleged constitutional violation is
reviewable only for plain error. United States v. Olano, 113 S.
Ct. 1770 (1993).
10
McGlory's double jeopardy argument fails on several grounds.
First, because he never filed a claim in the proceeding against
the $14K or the proceeding against the statues, he was never "in
jeopardy" in those proceedings. Second, none of the forfeitures
constituted "punishment" within the meaning of the Double
Jeopardy Clause. Finally, none of the proceedings were based on
the "same offense."
A.
The Double Jeopardy Clause of the Fifth Amendment provides
that no person may "be subject for the same offense to be twice
put in jeopardy of life or limb." U.S. Const. amend. V. This
clause also applies to imprisonment and monetary penalties, Ex
parte Lange, 85 U.S. (18 Wall.) 163 (1874), and it has been held
to protect against "three distinct abuses: a second prosecution
for the same offense after acquittal; a second prosecution for
the same offense after conviction; and multiple punishments for
the same offense." Halper, 490 U.S. at 440.
In three decisions issued in the last seven years, the
Supreme Court has held that, in certain circumstances,
constitutional limitations that had previously been thought to
apply only to criminal sanctions also serve to limit the
imposition of civil sanctions. In United States v. Halper, 490
U.S. 435 (1989), the Court extended double jeopardy limitations
to civil penalties that are not solely remedial in purpose,
holding that "under the Double Jeopardy Clause a defendant who
has already been punished in a criminal prosecution may not be
subjected to an additional civil sanction to the extent that the
11
second sanction may not be fairly characterized as remedial, but
only as a deterrent or retribution." Id. at 448-49. The
defendant in Halper had previously been convicted for 65 counts
of violating the criminal false claims statute, 18 U.S.C. § 287,
by filing false Medicare claims totalling less than $600. He was
then sued by the government under the civil False Claims Act, 31
U.S.C. §§ 3729-3731, which prescribed a $2,000 civil penalty per
violation. Based on the record of the prior criminal
prosecution, the district court granted summary judgment for the
government on the issue of liability, but the court held that the
imposition of the full civil penalties prescribed by the statute
would violate the prohibition against double jeopardy. On direct
appeal, the Supreme Court agreed that the statutory penalty as
applied to Halper violated double jeopardy. The Court held that
the civil penalty constituted punishment because in this "rare
case" the civil penalty bore "no rational relationship to the
goal of compensating the Government for its loss, but rather
appear[ed] to qualify as 'punishment' in the plain sense of the
word." 490 U.S. at 449. The Court remanded the case to the
district court to determine the size of the civil sanction that
the government could receive without crossing the line between
remedy and punishment. Id. at 450.
In Austin v. United States, 113 S. Ct. 2801 (1993), the
Court considered two other forfeiture provisions of the
Controlled Substances Act, 21 U.S.C. §§ 881(a)(4) and 881(a)(7),
which provide for the forfeiture of, respectively, conveyances
and real property used or intended for use in illegal drug-
12
related activities. 21 U.S.C. §§ 881(a)(4), (a)(7). Drawing on
"the historical understanding of forfeiture as punishment,"
Austin, 113 S. Ct. at 2810, on the language of §§ 881(a)(4) and
(a)(7), and on the legislative history of § 881, the Court found
that forfeiture under §§ 881(a)(4) and (a)(7) does not solely
serve a remedial purpose and hence must be considered
"punishment" under Halper. As such, the Court concluded,
forfeitures under §§ 881(a)(4) and (a)(7) are subject to the
limitations of the Eighth Amendment's Excessive Fines Clause. Id.
at 2812.
In so holding, the Austin Court rejected two arguments
offered by the government in an attempt to show that §§ 881(a)(4)
and (a)(7) are remedial and not punitive. First, the Court
rejected the government's characterization of the conveyances and
real property covered by the two sections as "instruments" of the
drug trade, forfeiture of which could be considered remedial. See
United States v. One Assortment of 89 Firearms, 465 U.S. 354, 364
(1984). Second, the Court rejected the government's attempt to
liken such forfeitures to those involved in customs violations,
which serve as "a reasonable form of liquidated damages," One Lot
Emerald Cut Stones v. United States, 409 U.S. 232, 237 (1972),
that compensate for the costs imposed by illegal drug activity on
the government and on society as a whole. "[T]he dramatic
variations in the value of conveyances and real property
forfeitable under §§ 881(a)(4) and (a)(7)," the Court concluded,
"undercut any similar argument with respect to those provisions."
Austin v. U.S., 409 U.S. at 2812.
13
Most recently, in Department of Revenue of Montana v. Kurth
Ranch, 114 S. Ct. 1937 (1994), the Court held that the imposition
of a tax under Montana's Dangerous Drug Tax Act after the
taxpayer had already been punished in a separate criminal
proceeding represented a second "punishment" for the same offense
in violation of the Double Jeopardy Clause. While noting the
holding of Halper that the Double Jeopardy Clause prevents a
defendant already punished in a criminal proceeding from having a
nonremedial civil sanction imposed against him in a separate
proceeding, the Court found the Halper method of determining
whether a civil sanction is punitive to be inapplicable to tax
statutes. Id. at 1944-45. Instead, focusing on a number of
specific characteristics of the tax -- its high rate, its
deterrent purpose, the fact that it is conditioned on the
commission of a crime, the limitation of its scope to taxpayers
who have already been arrested for the very conduct that gives
rise to the tax obligation, and the fact that it is levied on
goods that the taxpayer no longer owns or possesses -- the Court
concluded that the tax is fairly characterized as punishment. Id.
at 1946-48.
Resolution of McGlory's double jeopardy claim regarding the
civil forfeitures requires answers to three distinct questions:
Was McGlory "in jeopardy" in the first forfeiture proceeding? Did
the forfeitures under § 881(a)(6) constitute "punishment"? And
finally, did the offenses underlying the first forfeiture and
14
McGlory's criminal conviction represent the "same offense" as
those underlying either of the two later forfeitures?0
B.
As noted in Part I supra, McGlory did not file any claim of
ownership or answer to the complaint of forfeiture in either of
the first two civil forfeiture proceedings. He did not
participate in either proceeding until default judgments had
already been entered against him. His first appearance in either
proceedings was the filing of a motion to set aside the default
judgment, in each case some four years after the judgment had
been entered.
A forfeiture proceeding in which a party does not
participate does not place that party in jeopardy, and therefore
that party cannot use that forfeiture as the basis of a double
jeopardy challenge to a subsequent proceeding. As the Seventh
Circuit stated in United States v. Torres, 28 F.3d 1463, (7th
Cir.) (holding that a forfeiture under 21 U.S.C. § 881(a)(6) in
0
Another issue presented by any double jeopardy claim is whether
the proceedings in which punishment has allegedly been imposed
were separate proceedings or, alternatively, constituted a
single, coordinated proceeding; if the latter is true, the double
jeopardy argument fails. See, e.g., Kurth Ranch, 114 S. Ct. at
1945 ("Montana could no doubt collect its tax . . . if it had
assessed the tax in the same proceeding that resulted in [the
taxpayer's] conviction."); Missouri v. Hunter, 459 U.S. 359, 368-
69 (1983) ("Where . . . a legislature specifically authorizes
cumulative punishment under two statutes, regardless of whether
those two statutes proscribe the 'same' conduct . . . the
prosecutor may seek and the trial court or jury may impose
cumulative punishment under such statutes in a single trial.").
We assume without deciding that the various forfeiture
proceedings and McGlory's criminal trial were all separate
proceedings.
15
which the claimant did not file a claim did not place the
claimant in jeopardy for Fifth Amendment purposes), cert. denied,
115 S. Ct. 669 (1994): "You can't have double jeopardy without a
former jeopardy." Id. at 1465 (citing Serfass v. United States,
420 U.S. 377, 389 (1975)); see also United States v. Penny, 60
F.3d 1257 (7th Cir. 1995), petition for cert. filed, 64 U.S.L.W.
____ (U.S. Oct. 24, 1995) (No. 95-6698).
In United States v. Arreola-Ramos, 60 F.3d 188 (5th Cir.
1995), the Fifth Circuit followed the reasoning of Torres in
rejecting the double jeopardy claim of a defendant who had not
participated in an earlier administrative forfeiture proceeding.
"As Arreola did not appear and contest the forfeiture, he was
never in jeopardy," the court reasoned. "Without former
jeopardy, double jeopardy cannot arise." Id. at 192. Because of
the factual similarity between Arreola-Ramos and the present
case, the Fifth Circuit's description and dismissal of the
defendant's legal theory bear quoting:
[W]e perceive that Arreola's argument runs
something like this: (1) the government arrested
me and seized my money; (2) knowing I was in jail,
the government instituted forfeiture proceedings
against my money, but sent notice only to my civil
residence; and (3) this constitutes inadequate
notice and violates my due process rights, as I
was unaware of and unable to contest the
forfeiture. Arreola then jumbles all three parts
together and, in a transparent bit of legal
alchemy, attempts to transmute the "lead" of a
civil forfeiture proceeding--in which he was not
even a party--into the "gold" of former jeopardy.
Essentially, Arreola . . . now asks us . . . to
overlook his absence from the forfeiture
proceeding and to hold--not merely "in spite of"
his absence but indeed "because of" his absence--
that former jeopardy attached in the forfeiture
16
proceeding. Despite its ingenuity, this is
nothing more than a garden variety flawed
syllogism.
Arreola-Ramos, 60 F.3d at 190.
In United States v. Baird, 63 F.3d 1213 (3d Cir. 1995),
petition for cert. filed, 64 U.S.L.W. 3318 (U.S. Oct. 17, 1995)
(No. 95-630), we also adopted the Torres rationale in rejecting
the double jeopardy argument of a defendant who had not filed a
claim in an earlier administrative forfeiture proceeding. In
that case, defendant Baird sought dismissal of a superseding
criminal indictment, arguing that it was barred by the Double
Jeopardy Clause in light of the earlier forfeiture. We found
Baird's argument wanting, stating: "Like the double jeopardy
claimant in Torres, as a non-party to the administrative
forfeiture process, Baird was not, and could not have been,
placed at risk by that process." Id. at 1219. While Halper
"extended the no-double-punishments rule to civil penalties . . .
[it] did not remove from the double jeopardy claimant's shoulders
the burden of establishing a former jeopardy." Id.
The logic of Baird applies as well to judicial forfeiture
proceedings such as that brought against the $14K and the
statues. Thus, we hold that McGlory was not "in jeopardy" in
either of the first two forfeiture proceedings.0
0
McGlory's only argument here would have to be that he did in
fact participate in the first forfeiture proceeding by filing his
motion to set aside the default judgment. However, we have
stated that "jeopardy does not, and cannot, attach until one is
made a party to a proceeding before a trier of fact having
jurisdiction to try the question of guilt or innocence, and that,
until such time, the constitutional double jeopardy prohibition
can have no application." Baird, 63 F.3d at 1218 (emphasis in
17
C.
In order to establish that his double jeopardy rights were
violated, McGlory must also show that the forfeitures themselves
constituted "punishment" under Halper, Austin, and Kurth Ranch.
Two courts of appeals have addressed this issue with respect to
§881(a)(6), reaching opposite conclusions. Adopting the Fifth
Circuit's reasoning and rejecting the Ninth Circuit's, we hold
that the forfeitures here did not constitute "punishment."
In United States v. Tilley, 18 F.3d 295 (5th Cir.), cert.
denied, 115 S. Ct. 574 (1994), the Fifth Circuit held that
forfeiture of illegal drug proceeds under § 881(a)(6) is not
"punishment." Applying the test of Halper -- whether the amount
forfeited was so great that it bore "no rational relation to the
costs incurred by government and society from the defendant's
criminal conduct," id. at 298-99, and citing national statistics
on revenues produced and costs imposed by illegal drug
activities, the court held that the amounts confiscated in that
case were not grossly disproportionate to governmental and
original). Under this definition, McGlory's double jeopardy
claim fails, since until and unless the default judgment was set
aside, McGlory was not "a party to a proceeding before a trier of
fact having jurisdiction to try the question of guilt or
innocence." Alternative definitions offered by other courts of
appeals are also of no help to McGlory in this regard. See
Torres, 28 F.3d at 1465 (jeopardy attaches when evidence is first
presented to trier of fact); United States v. Ursery, 59 F.3d
568, 572 (6th Cir. 1995) (in nontrial proceeding ended by a
consent judgment, jeopardy attaches when judge accepts
stipulation of forfeiture and enters judgment of forfeiture),
cert. granted, 116 S. Ct. 762 (1196). United States v. Kearns, 61
F.3d 1422, 1428 (9th Cir. 1995) (jeopardy attaches no earlier
than date on which defendant files answer to forfeiture
complaint).
18
societal costs. Id. at 299. The court distinguished Austin,
reasoning that the concerns about forfeitures of conveyances and
real estate under §§ 881(a)(4) and (a)(7), i.e., that they could
be wildly disproportionate to the costs imposed by the
defendant's illegal activities, were not applicable to
forfeitures of proceeds under § 881(a)(6). "[T]he forfeiture of
drug proceeds will always be directly proportional to the 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 government and society by
the drug sale." Id. at 300.
Alternatively, the court held, even without the "rational
relation" test of Halper, forfeiture of illegal drug proceeds is
not "punishment" because of their very nature as illegally
derived property. "When . . . the property taken by the
government was not derived from lawful activities, the forfeiting
party loses nothing to which the law ever entitled 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." Tilley, 18
F.3d at 300.
We find the Fifth Circuit's reasoning to be sound. We
therefore hold that the forfeiture under 21 U.S.C. § 811(a)(6) of
proceeds from illegal drug transactions, or proceeds traceable to
19
such transactions, does not constitute "punishment" within the
meaning of the Double Jeopardy Clause.
In so holding, we reject the contrary reasoning and
conclusion of the Ninth Circuit regarding § 881(a)(6) in United
States v. $405,089.23 U.S. Currency, 33 F.3d 1210 (9th Cir.
1994), amended on denial of rehearing, 56 F.3d 41 (9th Cir.
1995), cert. granted, 116 S. Ct. 762(1996). Eschewing the case-
by-case approach urged by the government (and adopted by the
Fifth Circuit in Tilley), the Ninth Circuit looked to "the entire
scope of the statute which the government seeks to employ, rather
than to the characteristics of the specific property the
government seeks to forfeit." Id. at 1220; see also id. (citing
Austin and Kurth Ranch as compelling a "categorical approach"
under which a court "must look to the requirements of the
forfeiture statute as a whole"). It noted that the scope of
§881(a)(6) was not limited to proceeds, but included all moneys
"'furnished or intended to be furnished'" in exchange for drugs,
and all moneys "'used or intended to be used'" to facilitate
violations of the drug statute. Id. at 1221 (emphases in
opinion). The panel's reasoning was sharply criticized in a
seven-judge opinion dissenting from the court's denial of
rehearing and of rehearing en banc:
The panel's opinion collapses Halper [a double
jeopardy case] into Austin [an excessive fines
case], converting Halper's rule of reason for the
"rare" case into a per se rule for the routine
case. It also merges the inquiry for excessive
fines cases--whether the amount forfeited is
partly punishment--into double jeopardy cases,
where the issue is whether the amount forfeited is
entirely punishment. And, perhaps most
20
critically, the opinion treats proceeds, which are
forfeitable under § 881(a)(6), like a car or a
house used to facilitate a drug offense. This has
to be wrong. 89 Firearms--which Austin
distinguishes but leaves intact--says otherwise;
and so does the Fifth Circuit . . . .
$405,089.23 U.S. Currency, 56 F.3d at 42-43 (Rymer, J.,
dissenting).
D.
Moreover, both of McGlory's double jeopardy claims must also
fail for an additional reason: the challenged forfeitures were
not predicated on the "same offense" as that which formed the
grounds for the earlier forfeiture or his criminal conviction.0
The basic test for determining whether two offenses are the
"same offense" for double jeopardy purposes is the "same
elements" test set forth in Blockburger v. United States, 284
U.S. 299, 304 (1932): "The applicable rule is that where the same
act or transaction constitutes a violation of two distinct
statutory provisions, the test to be applied to determine whether
0
Since Halper was decided in 1989, no court of appeals has dealt
squarely with the "same offense" issue in connection with
§881(a)(6). Several courts of appeals have addressed the issue
tangentially, or with respect to a different provision of § 881.
See United States v. Ursery, 59 F.3d 568 (6th Cir. 1995)
(analyzing § 881(a)(7)), cert. granted, 116 S. Ct. 762 (1996);
United States v. $405,089.23 U.S. Currency, 33 F.3d 1211 (9th
Cir. 1994), (distinguishing case at bar from Missouri v Hunter,
459 U.S. 359(1983)); amended on denial of rehearing, 56 F.3d 41
(9th Cir. 1995), cert. granted, 116 S. Ct. 762 (1996) United
States v. One 1978 Piper Cherokee Aircraft, Tail No. N 5538V,
Including Its Tools and Appurtenances, 37 F.3d 489 (9th Cir.
1994) (remanding for consideration of "same offense" issue under
§ 881(a)(4)). But see United States v. Sherrett, 877 F. Supp.
519, 527 (D. Or. 1995) (holding that indictment and forfeiture
under § 881(a)(6) were based on same offense where indictment
included conspiracy count and forfeiture complaint included
"allegations of conspiracy").
21
there are two offenses or only one, is whether each provision
requires proof of a fact which the other does not."0 The
Blockburger "same elements" test was confirmed in United States
v. Dixon, 113 S. Ct. 2849 (1993), which rejected the alternative
"same conduct" test in overruling Grady v. Corbin, 495 U.S. 508
(1990).
Here, all three forfeiture complaints sought forfeiture
"pursuant to 21 U.S.C. § 881." App. 11, 14, 17. The government
supported its complaint against the 14K and the 184K with
allegations that they were "proceeds from sales or exchanges of
controlled substances, in violation of Title 21, United States
Code." App. 12, 18. This language implicitly invoked
§881(a)(6). Regarding the statues, the government alleged that
they were "acquired with proceeds traceable to unlawful exchanges
of controlled substances in violation of 21 U.S.C. § 881(a)(6)."
0
The Supreme Court clarified the applicability of the Blockburger
test in Missouri v. Hunter, 459 U.S. 359 (1983), where the Court
characterized the test as a rule of statutory construction that
bars cumulative punishments for the same offense "'in the absence
of a clear indication of contrary legislative intent.'"
Blockburger, 459 U.S. at 366 (quoting Whalen v. United States,
445 U.S. 684, 692 (1980)) (emphasis in Blockburger). Thus,
[w]here . . . a legislature specifically authorizes
cumulative punishment under two statutes, regardless of
whether those two statutes proscribe the "same" conduct
under Blockburger, a court's task of statutory construction
is at an end and the prosecutor may seek and the trial court
or jury may impose cumulative punishment under such statutes
in a single trial.
Id. at 368-69. The Hunter limitation on the scope of Blockburger
would apply in the present appeal only if the civil and criminal
proceedings were considered a single, coordinated proceeding
rather than separate proceedings. See Part III.B supra.
22
Ohio App. 15.0 Our analysis thus must begin with the language of
§881(a)(6):
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,
except that no property shall be forfeited under
this paragraph, to the extent of the interest of
an owner, by reason of any act or omission
established by that owner to have been committed
or omitted without the knowledge or consent of
that owner.
21 U.S.C. § 881(a)(6). Thus, proceeds from, or proceeds
traceable to, exchanges of controlled substances in violation of
"this subchapter" are subject to forfeiture. "This subchapter"
is subchapter I of Title 21, covering 21 U.S.C. §§ 801-904. In
addition, section 965 makes the forfeiture provision applicable
to violations of subchapter II, 21 U.S.C. §§ 951-971. 21 U.S.C.
§ 965; see also United States v. Sherrett, 877 F. Supp. 519, 525-
0
This level of specificity in the forfeiture complaints
eliminates the need to undertake a detailed examination of
indictments, affidavits, etc. of the sort conducted by the court
in United States v. Ailemen, 893 F. Supp. 888 (N.D. Cal. 1995).
There the court was faced with vague seizure notices that simply
noted that the defendant's money was seized "for forfeiture under
Title 21, United States Code (U.S.C.), Section 881, because it
was used [in] or acquired as a result of a drug related offense,"
id. at 905 (emphasis in original), and had to determine whether
the forfeitures were based on the same offenses as those charged
in the criminal indictments, all of which were drug-related.
23
26 (D. Or. 1995). Therefore, forfeiture under section 881(a)(6)
can punish a property owner only for violations of 21 U.S.C.
§§801-971.
A Blockburger/Dixon analysis of the three forfeitures is
straightforward: each forfeiture requires proof of an element
that the others do not require, i.e., that the particular piece
of property seized constituted illegal proceeds or was acquired
with illegal proceeds. McGlory's assertions notwithstanding, the
three forfeitures among themselves do not satisfy the "same
elements" test.
We must also apply the Blockburger/Dixon test to the
offenses underlying the third forfeiture (the $184K) and those
underlying McGlory's criminal punishment, since this last
forfeiture followed the criminal conviction. Of the criminal
charges for which McGlory was indicted and convicted, only two
fall within the range of violations covered by section 881(a)(6):
conspiracy to possess with intent to distribute, and to
distribute, heroin, in violation of 21 U.S.C. § 846; and
possession of heroin with intent to distribute, in violation of
21 U.S.C. §§ 841(a)(1), (b)(1)(C). See United States v. McGlory,
968 F.2d 309, 314-15 (3d Cir. 1992), cert. denied, 113 S. Ct.
1388 (1993). As noted above, the forfeitures were based on the
allegations that the seized property was "proceeds from sales or
exchanges of controlled substances" or "acquired with proceeds
traceable to unlawful exchanges of controlled substances."
Under the Blockburger/Dixon test, the violations underlying
the forfeitures and those for which McGlory was convicted also do
24
not constitute the "same offenses." Conviction on the criminal
charges required proof that McGlory participated in a conspiracy
or that he possessed a controlled substance (namely, heroin);
forfeiture under § 881(a)(6) did not require proof of either of
these elements. Similarly, forfeiture required proof of a sale
or exchange, and proof that the specific property was proceeds
of, or traceable to, a sale or exchange; neither of the criminal
charges required proof of either of these elements.0
IV.
For the reasons stated above, we reverse the orders of the
district court and remand for further proceedings not
0
Halper and Kurth Ranch provide a useful contrast to the present
case. The criminal and civil charges against Halper were both
based on his submission of the 65 false Medicare claims. The
criminal false claims statute, 18 U.S.C. § 287, prohibited
"mak[ing] or present[ing] . . . any claim upon or against the
United States, or any department or agency thereof, knowing such
claim to be false, fictitious or fraudulent." The civil False
Claims Act, 31 U.S.C. § 3729, prohibited "knowingly mak[ing],
us[ing], or caus[ing] to be made or used, a false record or
statement to get a false or fraudulent claim paid or approved."
See Halper, 490 U.S. at 437-38.
The statute at issue in Kurth Ranch imposed a tax on the
possession and storage of dangerous drugs. See Kurth Ranch, 114
S. Ct. at 1941. Thus, it was "conditioned on the commission of a
crime." Id. at 1947. Moreover, the Court explained: "In this
case, the tax assessment not only hinges on the commission of a
crime, it is also exacted only after the taxpayer has been
arrested for the precise conduct that gives rise to the tax
obligation in the first place." Id. Thus, while neither Halper
nor Kurth Ranch explicitly addressed the "same offense" issue, it
seems clear that in both cases application of the
Blockburger/Dixon test would have shown that both punishments
were based on the same offense.
25
inconsistent with this opinion in Nos. 94-3674 and 94-3675, and
affirm the order of the district court in No. 94-3528.0
0
Judge Sloviter concurs with all of this opinion except for
section III.D. Neither party has briefed the "same offense"
issue, and the district court, which did not discuss the double
jeopardy issue at all, obviously never addressed this particular
issue. Under these circumstances I would leave that issue for
another day.
26