Michael Hodges v. State of Indiana

FILED
Nov 21 2018, 10:45 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEY FOR APPELLANT ATTORNEYS FOR APPELLEE
Matthew Abels Curtis T. Hill, Jr.
Indianapolis, Indiana Attorney General of Indiana
Justin F. Roebel
Supervising Deputy Attorney
General
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Michael Hodges, November 21, 2018
Appellant-Defendant, Court of Appeals Case No.
18A-MI-78
v. Appeal from the Marion Superior
Court
State of Indiana, The Honorable John F. Hanley,
Appellee-Plaintiff. Judge
The Honorable Ian Stewart,
Commissioner
Trial Court Cause No.
49D11-1711-MI-40912
Pyle, Judge.
Statement of the Case
[1] Michael Hodges (“Hodges”) appeals the trial court’s order granting the State’s
motion to transfer $60,990 of his money to the United States. Hodges argues
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that the seizure of his money was unlawful because it exceeded the scope of the
search warrant. Concluding that the seizure was unlawful, we reverse the trial
court’s order granting the State’s motion to turn the currency over to the United
States and remand with instructions to the trial court to order the return of the
money to Hodges.
[2] We reverse and remand with instructions.
Issue
Whether the trial court’s order granting the State’s motion to
transfer Hodges’ money to the United States was erroneous.
Facts
[3] In October 2017, Indianapolis Metropolitan Police Department Detective Brian
Thorla (“Detective Thorla”) was inspecting unopened packages at a local parcel
shipping company when he noticed a suspicious package addressed from
Hodges in Illinois to Christopher Smith in California. Specifically, Detective
Thorla concluded that the package was suspicious because: (1) the shipping
cost was paid in cash; (2) no signature was required at the time of the package’s
delivery; (3) additional tape was added to a self-sealing box; and (4) the
shipping box was a new box from the shipping company. Detective Thorla set
the package aside, and his K9 partner, Hogan (“K9 Hogan”), later conducted a
dog sniff of it. After K9 Hogan gave a positive alert to the package, which
indicated the presence of the odor of controlled substances, the detective sought
and received a search warrant, which authorized law enforcement officers to
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open the package and search for: “Illegal Controlled substances (Marijuana,
Methamphetamine, Cocaine, Heroin, MDMA) also records of drug trafficking
and proceeds of drug trafficking, bulk cash smuggling, money laundering,
involving the proactive attempts of concealing currency as listed in the affidavit;
as well as money orders and gift cards.” (App. 23). The search warrant also
authorized law enforcement officers to “seize such property, or any part
thereof, found on such search.” (App. 23).
[4] When Detective Thorla opened the package, he discovered vacuum sealed
packets of United States currency. The packets contained a large quantity of
twenty-dollar bills, which were wrapped tightly in rubber bands. The seized
currency was removed from the sealed packets and hidden in another room
where K9 Hogan gave another positive alert, which indicated the presence of
the odor of controlled substances on the currency. Based on his training and
experience, Detective Thorla recognized these factors to be indicators that the
currency was the proceeds of drug trafficking.
[5] In November 2017, the State filed a motion to transfer the seized money to the
United States. Specifically, pursuant to INDIANA CODE § 35-33-5-5, the State
alleged that during the execution of a search warrant, “U.S. Currency was
discovered and confiscated as proceeds of narcotics trafficking under Ind. Code
Ann. 35-48-4-1 and money laundering under Ind. Code Ann. 35-45-15-4[.]”
(App. 6). Based on the allegation, the State “move[d] the [trial] court to issue a
Turnover Order authorizing the State to turn over to the appropriate federal
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authority certain property seized from [Michael Hodges] and held by the State
for forfeiture.” (App. 6).
[6] Hodges filed an answer objecting to the State’s motion to transfer wherein he
argued that the seizure of the $60,990 was unlawful because it exceeded the
scope of the search warrant. In support of his objection, Hodges cited Bowman
v. State, 81 N.E.3d 1127 (Ind. Ct. App. 2017), modified on denial of rehearing,
trans. denied, cert. denied, which involved the same detective and facts similar to
his own case.
[7] Specifically, in Bowman, Detective Thorla obtained a search warrant to open
and search two suspicious parcels “for controlled substances, records of drug
trafficking, and proceeds of drug trafficking.” Bowman, 81 N.E.3d at 1128.
One parcel was sent by Bowman in Illinois to Jacob Murphy (“Murphy”) in
California, and the second parcel was sent by Tommy Maurry (“Maurry”) in
Illinois to Murphy in California. Law enforcement officials found $15,000 in
each parcel and seized the $30,000. The State filed motions to transfer the
$30,000 to the United States. After concluding that the appearance of the
parcels, the excessive taping, the type of shipping and payment, the multiple
parcels to the same destination in a known controlled substance import-export
state, the positive K9 alert to the presence of the odor of controlled substances,
and the reasonable inferences to be drawn therefrom constituted probable cause
to authorize the seizure, the trial court granted the State’s motion.
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[8] On appeal, Bowman, Murphy, and Maurry argued that the seizure of the
$30,000 was unlawful because the seizure went beyond the scope of the search
warrant. This Court agreed. Id. at 1131. Specifically, we explained that the
only evidence that this money was obtained through drug trafficking was: (1)
the parcels were being shipped to California; (2) they were being sent to the
same recipient; (3) they were heavily taped; (4) they were shipped priority
overnight; and (5) a K9 unit alerted to the parcels. Id. at 1130. We further
explained the insignificance of this evidence as it related to drug trafficking as
follows:
We can easily dispense with the first four pieces of evidence. We
are confident that a voluminous number of parcels meeting those
criteria and having nothing to do with drug trafficking are
shipped in this country every day. If all money shipped in
heavily taped parcels mailed to California via priority overnight
mail could be seized as proceeds of drug trafficking, many last-
minute gift recipients at holiday and birthday time would be
sorely disappointed (and surprised).
Id. We also explained that the remaining fact that a K9 unit gave positive alerts
on both parcels meant only that at some point, someone handling the parcels
transferred an odor of controlled substances to them. Id. We further explained
that this could have been the parcels’ senders or any number of individuals
involved with handling the parcels in transit. Id.
[9] We concluded that where no evidence of drug trafficking or any other unlawful
activity was found in the parcels and neither the senders nor the recipient had
been charged with any state or federal offenses in connection with the parcels,
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no reasonable person would conclude that the currency discovered in the
parcels was the proceeds of drug trafficking. Id. at 1131. Accordingly, we
further concluded that the seizure was unlawful, and the trial court’s order
granting the State’s motion to turn the currency over to the United States was
erroneous. Id. We therefore reversed and remanded with instructions to order
the return of the currency to the appellants. Id.
[10] In his answer objecting to the State’s motion to transfer his $60,990 to the
United States, Hodges argued that:
14. The same analysis the Court of Appeals applied in Bowman
to reverse the trial court’s order granting the turnover order
request should apply to this case. Detective Thorla cited the
same essential factors in this case for deeming the package
suspicious as he did in Bowman. This case involves a positive
dog alert but no additional evidence of criminality once the
package was opened just as in Bowman. The Court of Appeals in
Bowman clearly explained that a positive dog alert could be
completely consistent with legal activity . . . .
15. It makes no difference that the State has amended its search
warrant affidavit and/or the search warrant to include a request
to seize records or proceeds of “bulk cash smuggling” or “money
laundering” in addition to its previous request in Bowman to
search for “proceeds of drug trafficking”, because the State still
has presented insufficient evidence that the money seized in this
case is records or proceeds of any of those things. The fact that a
dog alerted to the package is no more an indication it is evidence
that the money is proceeds of “money laundering or “bulk cash
smuggling” no more so than it was considered evidence that the
money was proceeds of drug trafficking in Bowman.
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16. Based on the holding of Bowman and the information
presented in the search warrant and search warrant affidavit of
this case, defendant would request the court deny the State’s
turnover request in this case, because the seizure of the currency
was unlawful just as it was in Bowman.
(App. 14).
[11] At a hearing on the turnover order, Hodges testified that he is an NBA agent
and that he also owns a company that resells tickets to sporting events. He
explained that the $60,990 belonged to him and that he had sent it to a contact
in California to purchase a large number of World Series tickets that he had
planned to resell. Hodges denied obtaining the $60,990 from selling drugs or
other illegal activity. It does not appear that Hodges was charged with any state
or federal offenses in connection with the parcel.
[12] After the parties had presented evidence, the following colloquy ensued:
Trial Court: So, in Bowman that it appears from my reading the
case that affidavit said proceeds from drug
trafficking. So, Bowman had to determine was –
were these proceeds from drug trafficking? Here,
our affidavit does not say just proceeds of drug
trafficking, correct?
State: That’s correct.
Trial Court: It says bulk cash smuggling.
State: Correct.
Trial Court: So, do I even need to determine whether this cash is
connected to drugs?
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State: No, you don’t. It could be just bulk cash smuggling.
Trial Court: And did the evidence show bulk cash?
State: Yes, it did.
Trial Court: And would that give me probabl[e] cause to find,
okay, this could be – could be legitimate, could not
be legitimate, but is this probable cause for bulk
cash smuggling?
State: That would be our argument, Judge. That’s where
we would be coming from.
* * * * * * * *
Trial Court: Bowman does create an exception which is if the
seizure went beyond the search warrant. In
Bowman, the search warrant was only for proceeds
of drug trafficking. In this case, the search warrant
was for something greater, specifically identified
bulk cash. I think the evidence presented shows
that this does not go beyond the search warrant. As
such, I think there is probabl[e] cause for the seizure
based on the search warrant, based on what was
discovered, and I will be Granting the Motion to
Transfer this over.
(Tr. 49-50, 55-56).
[13] Hodges now appeals the trial court’s grant of the State’s motion to transfer his
money to the United States.
Decision
[14] At the outset, we note United States Supreme Court Justice Clarence Thomas’
recent commentary on forfeiture:
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Modern civil forfeiture statutes are plainly designed, at least in
part, to punish the owner of property used for criminal purposes. .
. . [C]ivil forfeiture has in recent decades become widespread
and highly profitable. . . . And because the law enforcement
entity responsible for seizing the property often keeps it, these
entities have strong incentives to pursue forfeiture. . . . This
system – where police can seize property with limited judicial
oversight and retain it for their own use – has led to egregious
and well-chronicled abuses.
Leonard v. Texas, 137 S.Ct. 847, 847-48 (2017) (Justice Thomas respecting the
denial of certiorari) (emphasis added).
[15] We now turn to Hodges’ argument that the seizure of his money went beyond
the scope of the search warrant. This presents a question of law, to which we
apply a de novo standard of review. See Bowman, 81 N.E.3d at 1129.
[16] The statute authorizing the turnover of seized property provides as follows:
Upon motion of the prosecuting attorney, the court shall order
property seized under IC 34-24-1 transferred, subject to the
perfected liens or other security interest of any person in the
property, to the appropriate federal authority for disposition
under 18 U.S.C. 981(e), 19 U.S.C. 1616(a), or 21 U.S.C. 881(e)
and any related regulations adopted by the United States
Department of Justice.
IND. CODE § 35-33-5-5. However, both the Indiana Supreme Court and this
Court have held that if the seizure order was unlawful, the turnover order must
be reversed. See Membres v. State, 889 N.E.2d 265, 268 (Ind. 2008); Bowman, 81
N.E.3d at 1129.
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[17] Here, as we did in Bowman, we must determine whether the seizure of Hodges’
money was unlawful. Further, as we explained in Bowman:
A search warrant must describe ‘with particularity . . . the items
to be seized.’ Pavey v. State, 764 N.E.2d 692, 702 (Ind. Ct. App.
2002). This requirement ‘restricts the scope of the search,
authorizing seizure of only those things described in the warrant.
. . .’ Id. An exact description is not required, but the items to be
searched for must be described with some specificity. Overstreet v.
State, 783 N.E.2d 1140, 1158 (Ind. 2003).
Bowman, 81 N.E.3d at 1129-30.
[18] The search warrant in this case authorized law enforcement officers to open and
search the package for “Illegal Controlled substances (Marijuana,
Methamphetamine, Cocaine, Heroin, MDMA) also records of drug trafficking
and proceeds of drug trafficking, bulk cash smuggling, money laundering,
involving the proactive attempts of concealing currency as listed in the affidavit;
as well as money orders and gift cards.” (App. 23). Therefore, the only way in
which the seizure of Hodges’ currency falls under the search warrant is if it can
reasonably be concluded to be “proceeds of drug trafficking, bulk cash
smuggling, [or] money laundering.”
[19] The trial court in this case correctly pointed out that although the search
warrant in Bowman authorized the seizure of only the proceeds of drug
trafficking, the search warrant in this case also included the proceeds of bulk
cash smuggling or money laundering. The trial court then concluded that it did
not need to determine whether the currency was connection to drug trafficking
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because there was evidence that it was the proceeds of bulk cash smuggling.
Based on this alleged evidence of bulk cash smuggling, the trial court further
concluded that the seizure of Hodges’ $60,990 was lawful.
[20] First, although the search warrant authorized law enforcement officers to search
for the proceeds of drug trafficking, money laundering, and bulk cash
smuggling, the State’s motion to transfer the seized money to the United States
alleged only that the money had been confiscated as proceeds of narcotics
trafficking and money laundering. The State’s motion no longer mentioned
bulk cash smuggling.
[21] We further note that Indiana statutes include neither the offense nor the
definition of bulk cash smuggling. Rather, bulk cash smuggling is a federal
offense, which is codified at 31 UNITED STATES CODE § 5332. Specifically, this
statute provides that it is unlawful to knowingly conceal more than $10,000 in
currency or other monetary instruments on a person or in a container and to
transport or attempt to transport this currency across the border of the United
States with the intent to avoid currency reporting requirements.
[22] Even if we were to apply this definition of bulk cash smuggling to the facts of
this case, we find absolutely no evidence that Hodges attempted to transport his
money across the United States’ border with the intent to avoid currency
reporting requirements. Rather, the parties agree that Hodges attempted to ship
the currency from Illinois to California. Based on these facts, no reasonable
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person could conclude that the currency discovered in the parcel was the
proceeds of bulk cash smuggling.
[23] With regard to the State’s argument that the currency in the parcel was the
proceeds of drug trafficking, we note that the facts before us are analogous to
those in Bowman. Specifically, without more, Hodges’ method of payment, his
use of extra tape, his use of a new shipping company box, and his failure to
require a delivery signature are not indicative of drug trafficking. See id. We
agree with Bowman that many parcels meeting these criteria and having nothing
to do with drug trafficking are shipped in this country every day. See id. We
further agree with Bowman that the fact that a K9 alerts to a parcel, or even
cash, means only that at some point, someone handling the parcels and the cash
transferred the odor of controlled substances to them. See id. Based on these
facts, no reasonable person could conclude that currency discovered in the
parcels was the proceeds of drug trafficking. See id.
[24] Lastly, the State also argues that the currency was evidence of money
laundering. INDIANA CODE § 35-45-15-4 provides that money laundering is the
knowing or intentional transfer of the proceeds of criminal activity. Where we
have already determined that there is no evidence that Hodges’ currency was
the proceeds of criminal activity, no reasonable person could conclude that the
currency discovered in the parcel was the proceeds of money laundering.
[25] As we explained in Bowman, 81 N.E.3d at 1131, where no evidence of unlawful
activity was found in the parcel, and there has been no allegation that Hodges
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has been charged with any state or federal offenses in connection with the
parcel, no reasonable person would conclude that the currency discovered in
the parcel was the proceeds of bulk cash smuggling, drug trafficking, or money
laundering. The seizure of the currency was therefore unlawful, and the trial
court’s order granting the State’s motion to turn the currency over to the United
States was erroneous. See id. We therefore reverse and remand this case with
instruction to the trial court to order the return of the currency to Hodges.
[26] Reversed and remanded.
Vaidik, C.J., and Barnes, Sr.J., concur.
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