United States v. $9,041,598.68

Revised January 8, 1999
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
________________________
No. 97-20413
________________________
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
$9,041,598.68 (NINE MILLION FORTY ONE THOUSAND FIVE HUNDRED
NINETY EIGHT DOLLARS AND SIXTY EIGHT CENTS),
Defendant,
MARIO RUIZ MASSIEU,
Claimant-Appellant.
_________________________________________________________________
Appeal from the United States District Court for the
Southern District of Texas
_________________________________________________________________
December 15, 1998
Before JOLLY, BARKSDALE, and BENAVIDES, Circuit Judges.
BENAVIDES, Circuit Judge:
This is an appeal from a judgment of forfeiture, pursuant to
21 U.S.C. § 881(a)(6) and 18 U.S.C. § 981, of $9,041,598.68 in
United States currency. Appellant, Mario Ruiz Massieu
(“Massieu”), contends that he is the owner of the forfeited funds
and that the district court erred in (1) entering judgment in
favor of the Government as to the entire amount of the defendant
currency, (2) finding post-verdict that he had no standing to
contest the forfeiture, and (3) determining that the Government
established probable cause for the forfeiture. Additionally, he
argues that the cumulative effect of the district court’s
discovery and procedural rulings--e.g., denial of Massieu’s
request for an unredacted copy of the seizure affidavit (in order
to seek suppression), ex parte examination of materials presented
in support of Government’s application for stay, failure to
exclude testimony of last-minute Government witnesses, and
failure to bifurcate the trial--deprived him of due process. For
the reasons set forth below, we AFFIRM the district court’s April
25, 1997 order for forfeiture.
I. PROCEDURAL BACKGROUND
On March 13, 1995, United States Magistrate Judge Frances
Stacy, acting pursuant to a sealed affidavit, issued a warrant
for the seizure of $9,041,598.68 in U.S. currency from an account
at Texas Commerce Bank (TCB). Approximately three months later,
on June 15, 1995, the United States filed a complaint for
forfeiture in rem against the seized currency. The complaint
alleged that the money constituted narcotics trafficking proceeds
given to facilitate the movement of drugs into the United States.
At the time the complaint was filed, Massieu, a former Deputy
Attorney General for the Republic of Mexico, was in federal
custody in New Jersey.1
On June 26, 1995, Massieu filed a Notice of Claim. He
served the United States with 18 multi-part interrogatories and a
1
Massieu had been arrested in Newark on March 3, 1995, for
violating 31 U.S.C. § 5316 by failing to declare that he was carrying
currency in excess of $10,000.
2
request to produce 52 categories of documents.2 He followed this
on July 6, 1995 with his answer denying the factual recitations
in the United States’ complaint and a motion to dismiss for
failure to state a claim. He also moved for a protective order
to relieve him of the duty to respond to the United States’
interrogatories, which was denied on July 28, 1995. Massieu
alleged ownership of the seized currency, claiming that he had
received the money from his brother.
On July 28, 1995, the United States moved for a protective
order and to quash the interrogatories served by Massieu. United
States District Judge Nancy Atlas granted both motions on
November 6, 1995. On the same day, the Government requested that
it be permitted to take Massieu’s deposition to determine his
claim of ownership. Judge Atlas ordered the deposition to occur
forthwith.
On March 31, 1996, the district court found that Massieu had
standing and granted his February 20, 1996, motion to expedite.
The court further addressed his motion to reconsider a January
11, 1996, order that sealed a United States’ affidavit which had
acquainted the court with informant information. The court found
that the interests of the United States in ongoing criminal
investigations continued to justify the ex parte filing of the
sealed affidavit.
2
The Government, in comparison, served Massieu with nine
interrogatories with the complaint.
3
On April 12, 1996, the Government moved the district court
pursuant to 21 U.S.C. § 881(i) to stay civil discovery pending
the criminal trial of narcotics trafficker Juan Garcia Abrego in
United States v. Abrego. At the May 31, hearing on the stay,
Massieu’s counsel requested copies of the sealed affidavits that
had formed the basis for the stay. Judge Atlas denied the
request and granted the United States’ motion to stay.
The Abrego prosecution was completed in October 1996.
Massieu moved on November 18, 1996, to vacate the stay, to unseal
documents, for an expedited pretrial conference, and for a speedy
trial. The court vacated its stay on December 11, 1996, granted
the request for a speedy trial, and set the case for trial on
March 10, 1997. The court further advised the parties that
discovery disputes would be resolved promptly.
The Government filed its amended complaint on December 16,
1996, and one week later apprised the district court that it had
answered Massieu’s interrogatories and produced over 350
documents. The Government also supplemented its production with
additional documents in January 1997.
In a hearing on January 31, 1997, Judge Atlas ordered the
Government to list its witnesses and to provide detailed witness
information to Massieu. The Government provided Massieu with a
witness list on February 9, 1997. The next day, on February 10,
1997, the district court ordered that depositions of the
Government’s witnesses begin on February 11, 1997, with the
4
Government making a rolling production of documents. At the
February 10 hearing, the parties agreed that discovery would not
be disclosed outside their respective staffs.
On February 18, 1997, the court held a hearing on the
Government’s motion for sanctions based on the dissemination of
the Government’s discovery, including the identity of its
informants and agency reports, which was the subject of a cover
story of “Processo,” a weekly Mexican magazine.3 Both parties
asserted prejudice from the leak and attributed responsibility
for the leak to the other party. Judge Atlas stated that she
could not make a decision as to the source of leaks based on the
current record and that as far as she was concerned the leak was
of unknown origin. As a security precaution, the court ordered
that the Government witnesses’ depositions be taken and filed
under seal, without copy to either party. The court, however,
did authorize both parties to review the sealed transcript in the
courthouse. Although such a limitation was no hardship for the
Government, which had offices in the courthouse, Massieu charged
that the court-imposed limitation was an enormous burden on his
out-of-town counsel. Consequently, on February 26, 1997, he
moved to obtain copies of the sealed witness depositions. The
court approved release of only those portions of informant
3
The article featured an interview with Juan Collado, Massieu’s
lawyer in Mexico, who received the Government’s discovery from Mr.
Canales, Massieu’s trial attorney.
5
depositions that the Government designated as no longer necessary
to keep under seal.
The following day, February 27, 1997, Massieu moved to
exclude evidence obtained after June 15, 1995 (the date the
forfeiture complaint was filed). On March 3, 1997, he moved to
bifurcate the proceeding into a bench trial to determine probable
cause and a subsequent jury trial on defenses to the forfeiture.
The court denied the motion but did require that the Government
present its hearsay evidence, admissible only for the purposes of
probable cause, outside the presence of the jury.
At 5:00 p.m. on March 5, 1997, two business days and less
than five full days before trial, the United States disclosed the
names of four additional informant witnesses, two of whom would
testify at trial. On March 7, Massieu moved to exclude the
witnesses. The court denied the motion and limited the
depositions of the new witnesses to four hours if in Spanish or
three hours if in English.
The jury trial proceeded on March 10, 1997. The morning of
trial, the district judge denied Massieu’s motion to limit the
Government’s proof to June 15, 1995, yet informed the parties
that she would make two probable cause rulings, one based on the
Government’s pre-complaint evidence and the other based on the
evidence in its entirety.
During trial, the court found that probable cause to forfeit
the currency existed both as of June 15, 1995, and as of the
6
forfeiture hearing. The jury returned what appeared to be a
mixed verdict, awarding Massieu $1,100,000 despite having
resolved most issues in favor of the Government. On April 25,
1997, the district court granted the Government’s motion for
judgment as a matter of law and set aside the $1,100,000 jury
award. Massieu appeals from that judgment.
II. FACTUAL BACKGROUND
Massieu was Deputy Attorney General of Mexico from June 1993
to January 1994 and then from July 1994 through November 1994.
Initially, he was in charge of “delegations,” the delegates to
the 31 United Mexican States (the equivalent of United States
Attorneys).4 Massieu’s duties, however, expanded in August 1993
when the Director of the Mexican Federal Judicial Police (MFJP)
began reporting to him.5
Sometime after his return to the Attorney General’s Office
in July 1994, Claimant instructed his associate, Jorge Stergios,
to begin special investigations of drug cartel leaders. Stergios
sought out Agent Stanley Pimentel of the Federal Bureau of
Investigation (FBI), who at that time was assigned as the legal
attache to the United States embassy in Mexico City, and
requested FBI agency intelligence on drug cartels. Stergios’
request was unusual given that the Drug Enforcement
4
Jorge Stergios, Massieu’s trusted associate, served as a
coordinator between Massieu and the delegates.
5
On August 25, 1993, Adrian Carrera Fuentes was appointed Director
of the MFJP.
7
Administration, not the FBI, was in charge of drug matters in
coordination with the Mexican National Institute to Combat Drugs.
More than unusual, Stergios’ request, in hindsight, was
suspect. Earlier in December 1993, Stergios had accompanied
Massieu to Houston, where Massieu opened an account at Texas
Commerce Bank. Between March 2, 1994, and February 14, 1995,
Stergios made 25 cash deposits to Massieu’s account, depositing
more than $9 million. The currency bundles that Stergios
deposited at TCB were secured by paper wrapper, rubber bands, or
cellophane. Of the 25 deposits, 18 deposits did not contain any
$100 bills; the majority of the currency was in $20 dollar bills.
On March 2, 1995, Massieu was questioned by Mexican
authorities. After the interview, he, his wife, and his daughter
flew from Mexico to Houston. Their baggage declaration stated
that they would be at a Holiday Inn in Houston for three weeks
for pleasure. However, the Massieus checked into the Holiday Inn
and left the next day.
On March 3, 1995, U.S. Customs Agent Marcy Foreman was
contacted by FBI Agent George Smith and asked to maintain a look-
out for Massieu. According to Foreman, the request for
assistance in locating Massieu originated from the FBI office in
Mexico City. In checking flight manifests, Customs determined
that Massieu was traveling to Spain via Newark, New Jersey. He
was arrested in Newark after he failed to declare the amount of
8
currency he was carrying in excess of $10,000. The charges were
later dismissed.
III. DISCUSSION
A. Standing
As a predicate to any action before a federal court, parties
must establish that they have proper standing to raise a claim.
See United States v. $321,470 in U.S. Currency, 874 F.2d 298, 302
(5th Cir. 1989). The issue of standing is one of law, and review
is plenary. See United States v. $38,570 in U.S. Currency, 950
F.2d 1108, 1111 (5th Cir. 1992). “This Circuit has held that the
burden of establishing standing to contest forfeiture is on the
claimant seeking to come before the court.” United States v. One
18th Century Colombian Monstrance, 797 F.2d 1370, 1374-75 (5th
Cir. 1986). A claimant need not prove the merit of his
underlying claim. See id. He must, however, be able to show at
least a facially colorable interest in the proceedings sufficient
to satisfy the case-or-controversy requirement and the
“prudential considerations defining and limiting the role of the
court.” Id. This principle applies to all forfeitures.
The present appeal is complicated by the district court’s
post-verdict determination that Claimant lacked standing. Prior
to trial, Judge Atlas had twice found that Massieu had standing
to contest the forfeiture of the $9,041,598.68. It was only
after the court submitted the case to the jury, reconciled the
jury’s facially inconsistent verdict, and granted judgment in
9
favor of the Government as to the entire amount of the defendant
currency that the district court inexplicably revisited the issue
of Article III standing.
Although we recognize that standing is “an indispensable
part of the plaintiff’s case” and as such, the plaintiff must
demonstrate standing in “the same way as any other matter on
which the plaintiff bears the burden of proof, i.e., with the
manner and degree of evidence required at the successive stages
of litigation,” Meadowbriar Home For Children Inc. v. G.B. Gunn,
81 F.3d 521, 529 (5th Cir. 1996) (quoting Lujan v. Defenders of
Wildlife, 504 U.S. 555, 560-61, 112 S. Ct. 2130, 2136 (1992)), we
note that a tension exists between a district court’s
post-verdict, merits-based determination of standing and the
requirement that an appellate court review standing as a
threshold matter. In finding that Massieu lacked standing, the
district court reasoned that the jury’s responses to Special
Interrogatories 1, 2, and 4--its finding that the $9,041,598.68
in its entirety constituted illegally acquired funds--necessarily
negated any theory of ownership which Massieu might have offered.
In other words, because the jury believed that all the money was
in some way tied to the facilitation of narcotics trafficking,
the court reasoned that the jury could not have, at the same
time, believed that Massieu had acquired the funds from his
family members apart from any illegal conduct.
10
Because the district court’s determination that Massieu did
not have standing to contest the forfeiture was based entirely on
the jury’s verdict, that finding can only be upheld if this Court
were to determine: (1) that the district court properly
interpreted the jury’s responses to the Special Interrogatories
as supporting a finding that the total sum of $9 million U.S.
currency was tied to illegal narcotics activity, and (2) that
none of Massieu’s claims on appeal require reversing or
invalidating the jury verdict. And so, in the present case, a
threshold review of the issue of standing without a consideration
of the merits becomes an impossibility. Allowing a district
court to revisit the question of standing post-verdict
necessarily invites this Court to chase its tail--we ought review
standing as a threshold matter yet in order to do so we must
review the merits. For this reason, we consider Judge Atlas’
post-verdict discussion of standing as no more than a recognition
of the fact that the jury verdict defeated all possible claims of
Massieu on the merits, and we find the trial court’s earlier
determinations that Massieu had standing to be dispositive of
that issue.6
B. Probable Cause
6
As such, it is unnecessary for this Court to address
Massieu’s claim on appeal that the district court erroneously
granted the Government’s Motion for Summary Judgement on the
issue of gift.
11
In a forfeiture action, the Government bears the initial
burden of demonstrating probable cause for belief that a
substantial connection exists between the property to be
forfeited and the criminal activity defined by the statute. See
United States v. One 1986 Nissan Maxima GL, 895 F.2d 1063, 1064
(5th Cir. 1990). The probable cause threshold in this context is
the same as that which applies elsewhere: “reasonable ground for
belief of guilt, supported by less than prima facie proof but
more than mere suspicion.” United States v. $364,960 in United
States Currency, 661 F.2d 319, 323 (5th Cir. 1981). The
government may prove the requisite probable cause by both
circumstantial and hearsay evidence. See One 1986 Nissan, 895
F.2d at 1065. Although this Court reviews the district court’s
findings of fact for clear error, “[whether] the facts [are]
sufficient to constitute probable cause is a question of law,”
which we review de novo. United States v. 1988 Oldsmobile
Supreme, 983 F.2d 670, 674 (5th Cir. 1993).
Here, the Government proceeded to trial on four separate
theories of forfeiture. First, the Government argued that the
currency represented proceeds of drug trafficking activities in
the United States and was thus forfeitable under § 881(a)(6).
Second and third, the Government argued that the proceeds were
involved in financial transactions in violation of § 1956(a) that
occurred in the United States in furtherance of an overarching
conspiracy and were thus forfeitable pursuant to § 981. The
12
fourth theory was based on Stergios’ transportation of the drug
proceeds from Mexico City for deposit to the TCB account, which
would again make the money forfeitable under § 981 as involved in
an § 1957(a) offense.
Massieu argues first that the Government should have been
required to establish probable cause utilizing only that evidence
which the Government had obtained prior to June 15, 1995, the
date the complaint was filed, and second that the evidence at
trial was insufficient to support the district court’s findings
of probable cause. In denying Massieu’s motion to limit the
Government’s proof to pre-complaint evidence, the district court
relied upon United States v. Monkey, 725 F.2d 1007 (5th Cir.
1984). The district court’s reliance, however, is misplaced.
This Court in United States v. Monkey did not have before it the
issue with which we are presently confronted--whether post-
complaint evidence is admissible to establish probable cause for
forfeiture.
In United States v. Monkey, the Government sought forfeiture
of a vessel on the grounds that it was used for importing
controlled substances. See id. The issue before the court in
that case was whether probable cause existed for the warrantless
seizure and what effect, if any, an unlawful seizure would have
on the forfeiture proceeding. See id. at 1011-12. We held that
improper seizure does not jeopardize the Government’s right to
secure forfeiture if probable cause to forfeit the vessel can be
13
supported with untainted evidence. See id. at 1012. The
unlawful seizure would only result in the inadmissibility of
evidence obtained through the seizure. See id.
The confusion over the precedential effect of the Monkey
decision results from the fact that, in finding probable cause
for the forfeiture, we explicitly relied on evidence obtained by
the Government after the forfeiture complaint was filed. This
Court’s past reliance on post-complaint evidence, although
instructive, is not binding. The issue of the admissibility of
post-complaint evidence was not subjected to scrutiny in Monkey.
We also note that here, unlike in Monkey, the defendant currency
was seized pursuant to a valid warrant, and the Government at no
time sought to introduce evidence obtained from the seizure,
namely the $9 million U.S. currency.
In the thirteen years since Monkey, we have not addressed
the precise issue of whether the Government may rely upon
evidence acquired after institution of forfeiture proceedings in
showing probable cause. Because this is a matter of first
impression in this Circuit, we look to our sister circuits for
guidance. At present, there is a split on the issue of the
admissibility of post-complaint evidence with respect to the
probable cause showing. The Ninth, First, and Eighth Circuits
have held that the Government is restricted to evidence acquired
14
at the time of the complaint, while the Second and Sixth Circuits
have reached the opposite conclusion.7
In the instant case, however, we do not reach the issue of
whether post-complaint evidence is admissible to establish
probable cause for forfeiture and, therefore, do not take sides
in this circuit conflict. Because the district court separately
considered whether probable cause existed as of June 15 and
because we agree with its conclusion that probable cause existed
as of that date, we address only the district court’s finding of
probable cause as of June 15, 1995.
The district court based its probable cause determination on
the following factual findings:
First of all, the circumstances of the
$9 million . . . . I rely on Jose Nieto’s
testimony with respect to the manner in which
the money was delivered to the bank, the way
it was bundled . . . and at least on one or
more occasions wrapped in cellophane . . .
and that the cash deposits did not contain
any 100-dollar bills, in Nieto’s experience,
was unusual. The cash deposits he said of
more than $100,000 were extremely unusual and
the number of 20s he found unusual in
commercial matters . . . .
7
For the propostion that post-complaint evidence is not
admissible, see e.g., United States v. $191,910.00 in United
States Currency, 16 F.3d 1051, 1066-67 (9th Cir. 1994); United
States v. One Lot of U.S. Currency ($36,634), 103 F.3d 1048,
1053-54 (1st Cir. 1997); United States v. Parcels of Property, 9
F.3d 1000, 1003 (1st Cir. 1993); United States v. $91,960.00, 897
F.2d 1457, 1462 (8th Cir. 1990).
For the proposition that evidence acquired up to trial could
be used to show probable cause, see, e.g., United States v.
$67,220.00 in United States Currency, 957 F.2d 280, 284 (6th Cir.
1992); United States v. Premises and Real Property at 4492 S.
Livonia Rd., 889 F.2d 1258, 1268 (2d Cir. 1989).
15
Robert Rutt testified that . . . there
were different stories given by Stergios and
absolutely no documentation for his
explanations . . . .
With respect to the TCB deposits . . .
within one week . . . three deposits of
almost $1 million were made . . . Mr. Massieu
was Deputy Attorney General of PGR delegates
. . . from June 1993, to January, 1994, and,
in March the substantial deposits began . . .
The fact that the money was not immediately
deposited is not material for the purposes of
probable cause . . . .
With respect, though, to the timing of
the money, in March, 1994, 1.5 million was
deposited; in April, 1,650,000; in May,
650,000; in June, 500,000; in August, 300,000
[listing several more deposits]. . .
There is no meaningful explanation to
the bankers or the Customs Service for the
vast sums of money deposited . . . . And,
so, the size of the deposits in such a short
period of time in the condition it existed
would be one factor to consider on probable
cause to believe the money was drug proceeds
. . . .
Mr. Menger testified that he was in the
Customs Service and . . . that it was very
rare for people to carry over $100,000 and
the only people doing so were money
exchangers . . . .
As to Massieu’s taking of payments, the
payments—the testimony of Robert Rutt and the
matters in which he relied are of great
significance. The Court does rely on Agent
Munks’ work prior to June 15 . . . who met
with informants [like] Juan Antonio Ortiz
. . . . Munks met with informants and
learned that Carrera Fuentes . . . had
delivered bribe money from drug traffickers .
. . to Massieu . . . . Munks told Rutt that
those informants were reliable. Rutt also
said that he had information from an
informant in touch with Agent Hanna that drug
trafficking organizations in Mexico were
paying bribes to Mexican law enforcement,
although Mr. Massieu was not specifically
mentioned . . . .
The other evidence is Adrian Carrera
Funetes’ statement . . . [that] implicates
16
Massieu and Stergios having information from
traffickers or others with knowledge of the
[cocaine] shipment . . . .
Stergios’ odd request for assistance and
information on the cartels to Pimentel, the
FBI Agent . . . was known to the Government
prior to June, 1995 . . . .
In sum, while this evidence clearly
would be insufficient for any finding other
than probable cause . . . it just barely gets
over the line as to this defendant currency,
but I find that it is sufficient as of June
15, 1995.
We agree with the district court’s conclusion. Our review
of the record leaves us with no doubt that the testimony of TCB
bank representative Nieto with respect to the manner in which the
money was bundled, the testimony of informant Tony Ortiz
regarding his first-hand knowledge of the Abrego drug
organization’s practice of paying bribes to Mexican law
enforcement, the hearsay testimony of Agent Rutt that bribe money
had been paid from drug traffickers to Massieu, the statement of
Adrian Carrera Fuentes implicating Massieu with knowledge of a
cocaine shipment, and the records of Massieu’s bank deposits
revealing substantial cash deposits of largely twenty dollar
bills could reasonably support a belief that the seized currency
was derived from illicit drug transactions. This Court has found
probable cause under less implicating circumstances. See, e.g.,
United States v. $400,000.00 in United States Currency, 831 F.2d
84 (5th Cir. 1987) (affirming the district court’s determination
of probable cause on the basis of the defendant’s failure to
report currency transported into the United States, a lack of
17
evidence of any completed report, and nervousness while currency
was being counted). Accordingly, we hold that the district court
did not err in finding that the Government’s evidence as of June
15 satisfied the requirement of probable cause.
C. Judgment as to Entire Amount of Defendant Currency
Post-verdict judgments as a matter of law are examined de
novo. See Fed.R.Civ.P. 50. In reviewing the district court's
decision to grant a judgment as a matter of law, this Court
employs the same standard that guided the district court:
We consider all the evidence with all
reasonable inferences in the light most
favorable to the party opposed to the motion.
If the facts and the inferences point so
strongly and overwhelmingly in favor of [the
movant] that reasonable jurors could not
arrive at a contrary verdict, then the motion
was properly granted. If there is
substantial evidence--that is, evidence of
such quality and weight that reasonable and
fair-minded jurors might reach a different
conclusion--then the motion should have been
denied.
Robertson v. Bell Helicopter Textron, Inc., 32 F.3d 948 (5th
Cir.1994) (citations omitted).
Massieu asserts that the district court erred in denying his
Motion For Judgment on Jury Question 5 and in entering judgment
in favor of the Government as to the entire amount of the
defendant currency. He claims that Judge Atlas disregarded the
jury’s finding in response to Special Interrogatory Number 5.
The Government, in response, argues that the district court did
not disregard the jury’s response to Special Interrogatory
18
Number 5. Instead, it argues the court attempted to reconcile
the apparently inconsistent answers provided by the jury to the
five submitted special interrogatories.8
8
Question No. 1
Do you find from a preponderance of the evidence that the
Defendant $9,041,598.68, in whole or in part, was not the proceeds of
and was not used to facilitate drug trafficking activity?
Answer “yes” or “no”: ___________
Proceed to Question No. 2.
Question No. 2
Do you find from a preponderance of the evidence that the
Defendant $9,041,598.68, in whole or in part, was not involved in a
financial transaction that was conducted or attempted to be conducted
with the intent to promote the carrying on of drug trafficking activity?
Answer “yes” or “no”: __________
Proceed to Question No. 3.
Question No. 3
Do you find by a preponderance of the evidence that the Defendant
$9,041,598.68, in whole or in part, was not transported or transferred
from a place inside the United States to or through a place outside the
United States with the intent to promote drug trafficking activity?
Answer “yes” or “no”: __________
Proceed to Question No. 4.
Question No. 4
Do you find by a preponderance of the evidence that any one or
more of the deposits to the account at Texas Commerce Bank is/are not a
monetary transaction in criminally derived property of a value greater
than $10,000.00 in United States currency derived from drug trafficking
activity?
Answer “yes” or “no”: __________
Proceed to Question No. 5.
Question No. 5
If you have answered “yes” to any of the above questions, then
answer Question No. 5. If you have answered “no” to all of the above
questions, then do not answer Question No. 5.
Question No. 5
To the extent, and only to the extent, you have found in answer to
the foregoing questions
that all or part of the defendant $9,041,598.68, if any, was:
• money used to facilitate drug trafficking activities or the
19
This Circuit has long held that a district court judge has a
duty to attempt to reconcile a jury’s apparently inconsistent
responses to special interrogatories. See Davis v. West
Community Hosp., 755 F.2d 455, 465 (5th Cir. 1985). Federal
district courts are granted considerable latitude in interpreting
special interrogatories because a judge is in the best position
“to analyze the jury’s intention and thus is charged, in the
first instance, with the obligation of giving effect to those
intentions in light of the surrounding circumstances.” P & L
Contractors, Inc. v. American Norit Co., Inc., 5 F.3d 133, 138
(5th Cir. 1993) (citing McVey v. Phillips Petroleum Co., 288 F.2d
53, 59 (5th Cir. 1961)).
In the present case, the district court properly exercised
its discretion by adopting a view of the case which made the
jury’s answers consistent. See, e.g., Mercer v. Long MFG. N.C.,
Inc., 671 F.2d 946, 948 n.1 (5th Cir. 1982) (explaining that
proceeds of drug trafficking activities;
• a financial transaction that was conducted or attempted to be
conducted with the intent to promote the carrying on of drug
trafficking activity;
• money transported or transferred from a place inside the United
States to or through a place outside the United States with the
intent to promote drug trafficking activity; and/or,
• monetary transaction(s) in criminally derived property of a value
greater than $10,000.00 in United States currency derived from
drug trafficking activity,
what amount of the Defendant $9,041,598.68, if any, do you find from a
preponderance of the
evidence was from a source other than the above sources?
Answer in dollars and cents: _______________
20
“[i]f there is a view of the case which makes the jury’s answers
consistent, the court must adopt that view and enter judgment
accordingly”). In order to give proper effect to all of the
jury’s responses, the court had to reconcile the jury’s negative
responses to Questions No. 1, 2, and 4, indicating that all of
the defendant currency came from drug-related sources, with the
jury’s answer to Special Interrogatory Number 5 which could be
construed as awarding Claimant $1,100,000. Because the jury was
not to answer Question No. 5 unless it had answered “yes” to any
of the previous interrogatories, the court properly reasoned that
the jury’s answer to Question No. 5 served as an explanation of
its answer to Question No. 3, the only interrogatory to which the
jury had answered “yes.” According to the court, the response to
Special Interrogatory Number 5 therefore only indicated that
Massieu proved to the jury’s satisfaction that $1,100,000 was not
money “transported or transferred from a place inside the United
States to or through a place outside the United States with the
intent to promote drug trafficking activity,” as referenced in
Question No. 3. Thus, the court reasoned that because the answer
of $1,100,000 to Question No. 5 applied to only one of the
government’s four theories of forfeiture, it was academic and
Massieu was not entitled to the $1,100,000.
Furthermore, Judge Atlas properly reconciled the jury’s
responses “in light of the surrounding circumstances, including
the instructions of the court.” Davis v. West Community Hosp.,
21
755 F.2d 455, 465 (5th Cir. 1985). Here, the court supplied the
parties with a copy of the “Court’s Instructions to the Jury” and
the Verdict Form prior to closing arguments. The Government and
Massieu both argued directly from the Verdict Form during their
closing arguments, going so far as to indicate to the jury
whether they desired a “yes” or “no” response to each question.
For these reasons, Judge Atlas upheld the jury verdict and
entered judgment in favor of the Government as to the entire
$9,041,598.68.
Because we find the district court’s reconciliation
persuasive, we hold that the district court properly denied
Massieu’s Motion For Judgment on Jury Question 5 and properly
entered judgment in favor of the Government as to the entire
amount of the defendant currency.
D. Due Process
The Due Process Clause of the Fifth Amendment guarantees that
“[n]o person shall . . . be deprived of life, liberty, or
property, without due process of law.” U.S. Const. Amend. V.
The established rule is that claimants whose property is subject
to forfeiture are entitled to due process including the right to
reasonable notice of the basis on which forfeiture is sought and
a reasonable opportunity to defend. See United States v. James
Daniel Good Real Property, 510 U.S. 43, 48-63, 114 S. Ct. 492,
498-506 (1993); United States v. Marsh, 105 F.3d 927, 930-31 (5th
Cir. 1997). This Court has held, “[w]here the Government seeks
22
the traditionally disfavored remedy of forfeiture, due process
protections ought to be diligently enforced, and by no means
relaxed . . . .” Armandariz-Mata v. U.S. Dept. of Justice, 82
F.3d 679, 683 (5th Cir.) cert denied, 117 S. Ct. 317 (1996).
Massieu submits that the district court’s discovery and
procedural rulings, either individually or cumulatively, deprived
him of due process and asks this Court to review those rulings de
novo. Massieu, however, provides no authority for altering the
usual abuse of discretion standard. We note that a ruling which
does not rise to the level of an abuse of discretion cannot alone
constitute a due process deprivation. Therefore, the appropriate
standard of review for the individual discovery and procedural
rulings remains an abuse of discretion. See Mills v. Beech
Aircraft Corp., 886 F.2d 758, 761 (5th Cir. 1989).
Moreover, Massieu requests that this Court utilize a
cumulative error analysis. Such an approach, however, is
employed only in those cases where individual rulings are
erroneous--where the appellant has “ . . . [some]thing to
cumulate.” Derden v. McNeel, 938 F.2d 605, 609 (5th Cir. 1991)
(applying cumulative error analysis in the context of a habeas
proceeding). In Massieu’s view, the district court committed
reversible error in denying his request for an unredacted copy of
the seizure affidavit (in order to seek suppression), conducting
ex parte examination of Government exhibits presented in support
of its application for stay, failing to exclude testimony of
23
last-minute Government witnesses, and failing to bifurcate the
trial. We shall examine each of these claims of error in turn.
1. Denial of request for unredacted copy of the
seizure affidavit.
Massieu argues that the district court erred in denying his
request for an unredacted copy of the court-sealed seizure
affidavit. He claims that without access to the affidavit he was
unable to ascertain the basis for the seizure in order to contest
its legality. Massieu’s claim lacks merit. First, Federal Rule
of Civil Procedure 26(c) provides for the sealing of records upon
a showing of “good cause” by the moving party. Fed.R.Civ.P. Rule
26(c). A corollary to Rule 26(c) is that, once a district court
has sealed a document, it is well within its discretion to deny a
party’s request for an unredacted copy of that same document.
Second, even assuming arguendo an “illegal” seizure of the
defendant currency, because the Government did not seek to
introduce the actual currency at trial, there was no evidence in
the present case that Massieu could have sought to suppress. See
United States v. Monkey, 725 F.2d 1007, 1011-12 (5th Cir. 1984)
(explaining that a lack of probable cause for the seizure would
“only result in the suppression of evidence obtained by the
wrongful seizure and would have no further bearing on the
forfeitability of the property.”). Accordingly, Massieu cannot
show any prejudice to his “substantial rights” that would justify
reversal. See Fed.R. Civ.P Rule 61.
24
2. Ex parte examination of materials in support of
application for stay.
Generally, the power to stay a pending matter derives from a
trial court’s wide discretion to control the course of
litigation. In the present case, however, this inherent
discretion has been explicitly circumscribed by statute. The
plain language of both 18 U.S.C. § 981(g) and 21 U.S.C. § 881(i)
requires a district court to find two elements in order to grant
a stay: (1) that forfeiture proceedings be “related to” an
offense for which there has been an indictment,9 and (2) that the
Government show “good cause” for the stay. See In re Ramu, 903
F.2d 312, 319 (5th Cir. 1990) (considering appropriateness of
stay in context of 21 U.S.C. § 881(i)). Fifth Circuit precedent
additionally mandates that a district court make express findings
of fact and conclusions of law concerning the existence of the
statutory prerequisites. See Id.
The district court granted a stay of litigation until the
conclusion of the Abrego trial on the basis of oral argument by
both the Government and Massieu, as well as two sealed affidavits
which the court examined ex parte. Massieu argues that the
district court’s denial of his request for copies of the two
sealed affidavits deprived him of the opportunity to rebut
9
21 U.S.C. § 881(i) requires that the indictment be for a drug
offense. 18 U.S.C. §981(g) mandates that the indicted offense be a
violation of federal, state, or local law.
25
meaningfully the contentions of the Government at the May 31,
1996, hearing.
It is well established in this Circuit that district courts
have an inherent power to receive in camera evidence and place
such evidence under seal. See United States v. De Los Santos,
810 F.2d 1326, 1331-1333 (5th Cir. 1987). In the criminal
context, we have recognized that the receipt of evidence ex parte
permits the court to balance the interests of the Government--in
safeguarding its confidential informants and in ensuring the
viability of its ongoing investigations--against the interests of
defendants in confronting adverse witnesses. See United States
v. Singh, 922 F.2d 1169, 1172 (5th Cir. 1991) (holding that
district court’s in camera review was appropriate, and that
furnishing the appellant with a copy of the transcript of that
review “would defeat the very purpose of the in camera
procedure.”). Unlike criminal defendants, civil forfeiture
claimants are not afforded the protections of the Sixth
Amendment’s Confrontation Clause. See Austin v. United States,
509 U.S. 692, 608 n.4, 113 S. Ct. 2801, 2804 n.4 (1998). As a
result, submission of evidence ex parte is more readily justified
in a civil forfeiture action than in a criminal case.
Because courts routinely balance the interests of the
Government in anonymity against that of civil litigants in full
disclosure and have permitted the submission of evidence ex
parte, see, e.g., Abell v. Potomac Insurance Co., 858 F.2d 1104,
26
1143 (5h Cir. 1988), vacated on other grounds, 492 U.S. 914, 109
S. Ct. 3236 (1989) (sealing the record of in camera discussions
with FBI agent about attempts to bribe jury members); In re Grand
Jury Witness, 835 F.2d 437, 441 (2d Cir. 1988) (permitting
Government to file a sealed ex parte affidavit and to adjourn to
chambers for ex parte discussion in closed civil contempt
hearing), we find no abuse of discretion in the present case.
Moreover, Massieu has not demonstrated any prejudice to his
“substantial rights” that resulted from the imposition of the
stay. See Fed.R. Civ.P Rule 61. In particular, it is
interesting to note that less than one month after he
unsuccessfully sought a writ of mandamus from this Court to be
relieved of the hardship of what he deemed court-indulged blanket
non-disclosure by the Government, Massieu moved the district
court for a speedy trial. Upon agreement of the parties, the
case was set for trial on March 10, 1997, approximately three
months following the district court’s lift of the stay.
3. Failure to exclude testimony of last-minute witnesses.
Massieu’s next point of error is that the district court
erred in failing to exclude the trial testimony of Cesar
Dominguez10 and Raul Macias,11 who were two of the four
10
Cesar Dominguez was a city policeman commissioned by the
MFJP until 1995. As a police officer assigned to the MFJP,
Dominguez would deliver “quotas” (payoffs in the form of either
cash or drugs) from drug traffickers to the MFJP office. He
testified that drug traffickers also delivered money to the
office in boxes, briefcases, or bags. The money was wrapped in
27
prospective witnesses that the Government disclosed less than
five full days before trial. According to Massieu, the last-
minute witness disclosure violated Federal Rule of Civil
Procedure 26(a)(3)(A)12 and should have prompted mandatory
cellophane or secured by rubber bands. The most money Dominguez
was involved in counting was a little more than $6 million.
Beginning in 1991, Dominguez began working for the Amado
Carillo Fuentes organization. In 1993, Dominguez on four
different occasions transported money to the airport. Once at
the airport the money would be loaded onto a plane belonging to
the Attorney General’s office. While Dominguez was a police
officer, money continued to be brought to the airport destined
for the Attorney General’s office regardless of who held the
position. Dominguez quit in 1995 because over 17 of his co-
workers were murdered.
11
Raul Macias was a police officer in Mexico from 1989 to
1995. In 1994, he was assigned to work under the direction of
Commander David Grajeda Lara in Zacatecas, Mexico. Macias
testified that on August 4, 1994, an airplane loaded with cocaine
landed at an airstrip near the city of Sombrerete, Mexico, where
the cocaine was unloaded and taken to the local MFJP’s office in
two trucks. At the office the cocaine was weighed. Eight tons
of the approximately 10 tons of cocaine were loaded into a truck
and driven away by Commander Lara under escort. The remaining
two tons along with bricks of fake cocaine were taken elsewhere
and burned the next day.
Macias returned to the airport that same night and observed
approximately 15 Suburbans parked near the airport entrance.
Lara instructed Macias to load 12-15 suitcases into Lara’s
Suburban. While guarding two of the suitcases at a hotel that
night, Macias opened the suitcases and saw that they contained
United States Currency in denominations of 50's, 20's, and 10's.
The following day, Lara picked up Macias, the suitcases, two
other agents and they went to Mexico City. The next morning the
men drove to the offices of the MFJP where Lara began talking to
the passenger of a blue Marquis. Lara signaled to Macias, who
took the suitcases with the currency from the Suburban and placed
them in the trunk of the Marquis. Macias recognized the
passenger who Lara was speaking with in the blue Marquis as
Massieu.
12
According to Rule 26(a)(3)(A), a party shall provide to other
parties the name, address, and telephone number of each witness that it
may present at trial other than solely for impeachment purposes,
28
exclusion under Rule 37. Specifically, he complains that the
late disclosure forced inadequate depositions of other witnesses
and precluded investigation of the witnesses’ allegations as well
as development of impeachment and rebuttal testimony.
Federal Rule of Civil Procedure 37(c)(1) provides that a
party who “without substantial justification fails to disclose
information required by Rule 26(a) or 26(e)(1) shall not, unless
such failure is harmless, be permitted to use as evidence at a
trial, at a hearing, or on a motion any witness or information
not so disclosed.” Fed.R. Civ.P. 37(c)(1). In determining
whether a violation of Rule 26(a) or (e)(1) is harmless, the
trial court’s discretion is to be guided by the consideration of
four factors: (1) the importance of the witness's testimony;
(2) the prejudice to the opposing party of allowing the witness
to testify; (3) the possibility of curing such prejudice by
granting a continuance; and (4) the explanation, if any, for the
party's failure to identify the witness. See Bradley v. United
States, 866 F.2d 120, 125 (5th Cir. 1989).
We uphold the district court’s decision not to exclude the
witness testimony. First, the applicable standard of review for
a trial court’s decision in a matter relating to discovery is
abuse of discretion. See Harris v. Amoco Production Co., 768
F.2d 669, 684 (5th Cir. 1985). We will not substitute our
“separately identifying those whom the party expects to present and
those whom the party may call if the need arises . . . .” Fed.R. Civ.P.
Rule 26(a)(3)(A).
29
judgment for that of Judge Atlas; instead, we must only decide
whether the district court “could have entered the order which
[it] did.” See id. Second, neither Rule 37 and the Advisory
Committee Notes to Rule 37 nor Fifth Circuit case law requires
that a district court make express findings of fact or
conclusions of law concerning the existence of substantial
justification or harmless failure to disclose. Accordingly,
Judge Atlas’ statements in open court on March 10, 1997,
regarding witness safety concerns and minimal prejudice as well
as the reasons asserted by the Government in justification for
its three week delay in providing the discovery, which was
nonetheless disclosed in advance of trial, are sufficient to
support the district court’s determination that Rule 37 sanctions
were not in order.13
4. Failure to bifurcate the trial.
A motion to bifurcate “is a matter within the sole
discretion of the trial court, and we will not reverse the
court’s decision absent an abuse of that discretion.” First Tex.
Sav. Ass’n v. Reliance Ins. Co., 950 F.2d 1171, 1174 n.2 (5th
Cir. 1992). Massieu asserts that the district court abused its
discretion when it failed to bifurcate the proceeding into a
13
Before the district court, the Government justified its
tardy disclosure of Cesar Dominguez and Raul Macias as follows:
(1) the loss of anticipated trial witnesses as a result of the
leaked “Processo” story and (2) the difficulty in arranging the
lawful entrance of Dominguez and Macias, both Mexican citizens,
into the United States.
30
bench trial to determine probable cause and a subsequent jury
trial on defenses to the forfeiture. Massieu argues that, as a
result of the one proceeding, hearsay evidence offered to show
probable cause was placed before the jury. According to Massieu,
the admission of this otherwise inadmissible evidence was highly
prejudicial and deprived him of a fair trial.
Massieu’s argument is without merit. Judge Atlas restricted
hearsay before the jury to only those instances where an
exception under Rules 803 or 804 of the Federal Rules of Evidence
applied. All hearsay, which was not otherwise admissible but for
purposes of probable cause, was heard outside the presence of the
jury. Accordingly, the district court’s failure to bifurcate
Massieu’s forfeiture proceeding was not an abuse of discretion.
5. 0 + 0 + 0 + 0 =0
In order for cumulative error analysis to apply, Massieu
must have “ . . . [some]thing to cumulate.” Derden v. McNeel,
938 F.2d at 609. Because the foregoing analysis has revealed no
ground for reversal, he has nothing to cumulate. Accordingly, we
deny Massieu relief on his cumulative due process claim.
E. Admissibility of Ortiz and Iglio Testimony
Massieu additionally claims that the district court erred in
admitting the testimony of two witnesses: Government informant
“Tony” Ortiz and money laundering expert Agent Vincent Iglio.
Evidentiary rulings are accorded considerable deference on
31
appeal; “error may not be predicated upon a ruling which admits
or excludes evidence unless a substantial right of the party is
affected.” Fed.R. Evid. 103(a); see General Electric Co. v.
Joiner, 118 S. Ct. 512 (1997); Mills v. Beech Aircraft Corp., 886
F.2d 758 (5th Cir. 1989). We first examine the testimony of Tony
Ortiz.
1. Testimony of Tony Ortiz
Massieu argues that the district court erred by failing to
exclude “Tony” Ortiz’s testimony and that the admission of such
testimony invited the conclusion that all Mexican law enforcement
officials are corrupt. Specifically, he asserts that Ortiz’s
testimony was irrelevant and unfairly prejudicial. See Fed.R.
Evid 402 and 403.
At trial, Ortiz testified about the payment of drug proceeds
to Mexican officials for the purpose of facilitating the movement
of cocaine through Mexico into the United States. He explained
that he had joined the Juan Garcia Abrego drug trafficking
organization in 1989 and had been in charge of a transportation
arm of the organization until his arrest in 1993. According to
Ortiz, his job included responsibility for transporting cocaine
from Brownsville to Houston and then to New York as well as
responsibility for transporting the drug proceeds from the United
States to Matamoros, Mexico.
Ortiz also testified that his ability to move drugs without
incident in Mexico depended upon paying commandants and other
32
Mexican officials. He testified that there were times that he
would have to wait for cocaine to arrive in Brownsville because
the commandants of the district had not yet been paid. According
to Ortiz, when commandants changed, payment would not stop.
Other arrangements would be made. As to the mode of payment,
Ortiz explained that commandants would be paid from the drug
proceeds which Ortiz would collect in the United States. He
testified that he knows that Abrego continued to move cocaine
after Ortiz’s arrest and that the only way to stay in business
was to pay bribes “all the way to the top.”
Rule 401 of the Federal Rules of Evidence defines relevant
evidence as evidence “having any tendency to make the existence
of any fact that is of consequence to the determination of the
action more probable or less probable than it would be without
the evidence.” Fed.R. Evid. 401. Rule 403, however, provides
that “[a]lthough relevant, evidence may be excluded if its
probative value is substantially outweighed by the danger of
unfair prejudice . . . .” Fed.R. Evid. 403. In United States v.
Pace, 10 F.3d 1106, 1115-16 (5th Cir. 1993), the Fifth Circuit
explained, however, that “[u]nless trials are to be conducted on
scenarios, on unreal facts tailored and sanitized for the
occasion, the application of Rule 403 must be cautious and
sparing. Its major function is limited to excluding matters of
scant or cumulative probative force, dragged in by the heels for
the sake of its prejudicial effect.” Id.
33
There is no doubt that the testimony of Tony Ortiz was
relevant to the forfeiture proceeding. Under 18 U.S.C.
§ 981(a)(1), the seized currency would be forfeitable if it was
involved in a transaction violating 18 U.S.C. § 1956. With
regard to § 1956(a)(2)(A), the Government must demonstrate that
there was a transportation or transfer or attempt to transfer
“monetary instruments or funds from a place . . . outside the
United States to a place inside the United States with the intent
to promote the carrying on of specified unlawful activity.”
Ortiz’s testimony was relevant to whether money and cocaine
readily flowed between Mexico and the United States and that some
Mexican officials were given pay-offs in order to facilitate
narcotics trafficking. Additionally, Ortiz provided first-hand
knowledge about the operation of the Abrego drug organization--
one of the groups from which the Government alleged Massieu
received pay-off money. In order for the district court to
properly find Ortiz’s testimony to be relevant, it was not
necessary for Ortiz to provide the conclusive link between Abrego
and Massieu.
Furthermore, Ortiz’s testimony was not so unfairly
prejudicial that it should have been excluded. In conducting an
inquiry into the prejudicial effect of contested testimony, we
have recognized that “[t]estimony presented by the Government
will invariably be prejudicial to a criminal defendant or
forfeiture claimant. But Rule 403 only excludes evidence that
34
would be unfairly prejudicial to the defendant.” United States
v. Townsend, 31 F.3d 262, 270 (5th Cir. 1994). While there is no
doubt that Tony Ortiz’s testimony was harmful to Massieu, its
prejudicial effect did not substantially outweigh its probative
value.
For the reasons stated above in analyzing the relevance of
Ortiz’s testimony, the district court properly found that it was
not unfairly prejudicial.
2. Testimony of Vincent Iglio.
Claimant next argues that the district court erred by
admitting the testimony of Vincent Iglio as an expert on money
laundering. Massieu does not contest Iglio’s qualifications to
testify as an expert, rather he asserts that Iglio’s testimony
constituted inadmissible legal conclusion. See Fed.R. Evid 702
and 704.
The admission or exclusion of expert testimony will not be
disturbed on appeal unless it is “manifestly erroneous.” First
Natl. Bank of Durant v. Trans Terra Corp. Intl., 142 F.3d 802,
811 (5th Cir. 1998). Rule 702 of the Federal Rules of Evidence
states: “If scientific, technical, or other specialized knowledge
will assist the trier of fact to understand the evidence or to
determine a fact in issue, a witness qualified as an expert by
knowledge, skill experience, training, or education, may testify
thereto in the form of an opinion or otherwise.” Fed.R. Evid.
702. With regard to the permissible scope of expert testimony,
35
Rule 704 explicitly provides that “testimony in the form of an
opinion or inference otherwise admissible is not objectionable
because it embraces an ultimate issue to be decided by the trier
of fact.” Fed.R. Evid. 704. This Court, however, has repeatedly
held that Rule 704 does not allow an expert to render conclusions
of law. See Snap-Drape, Inc. v. Commissioner of Internal
Revenue, 98 F.3d 194 (5th Cir.1996).
Massieu charges that Iglio’s statement to the jury--that the
testimony he had heard so far in the case was consistent with
money laundering--supplanted Iglio’s judgment for their own.
Where an expert’s trial testimony included the bases for the
expert’s conclusion, and the conclusion was supported by the
overwhelming evidence, as is true in the present matter, Fifth
Circuit case law supports a determination that there was not
significant risk that the expert’s testimony "supplant[ed the]
jury's independent exercise of common sense." United States v.
Willey, 57 F.3d 1374, 1389 (5th Cir. 1995) (quoting Scott v.
Sears, Roebuck & Co., 789 F.2d 1052, 1055 (4th Cir.1986)). We
find no error in allowing Iglio’s testimony.
Cases from the Fourth and Eighth circuits bolster the
determination that the district court properly allowed Agent
Iglio to testify. The Fourth and Eighth Circuits when confronted
with the admissibility of expert testimony on questions involving
money laundering each found that such testimony was admissible
and did not present problems of experts acting as an additional
36
juror. See United States v. Barber, 80 F.3d 964 (4th Cir. 1995)
(noting that the district court did not abuse its discretion in
allowing the Government’s agent to testify and explain how the
defendant’s activities constituted concealment for purposes of
money laundering); United States v. Acty, 969 F.2d 652 (8th Cir.
1992), aff’d on other grounds, 511 U.S. 513, 114 S. Ct. 1747
(1994) (admitting, as permissible under rule 704(a), expert
testimony that deposited checks affect interstate commerce under
§ 1956(a)(1)(B), that banks into which defendant deposited money
were financial institutions under statute and that defendant’s
activities constituted concealment of money under
§ 1956(a)(1)(B)). Accordingly, we hold that the district court
properly admitted the expert testimony of Agent Vincent Iglio.
CONCLUSION
For the foregoing reasons, the judgment of the district
court is AFFIRMED.
37