$132,265.00 in U.S. Currency v. State

Opinion issued June 11, 2013.
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-12-00388-CV
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$132,265.00 IN U.S. CURRENCY, Appellant
V.
THE STATE OF TEXAS, Appellee
On Appeal from the 412th District Court
Brazoria County, Texas
Trial Court Case No. 49473
OPINION
This is an appeal from a civil forfeiture proceeding under chapter 59 of the
Code of Criminal Procedure. TEX. CODE CRIM. PROC. ANN. arts. 59.01−.14 (West
2006 & Supp. 2012). In two issues, Charles Ejekute-Obi, a licensed pharmacist
from whom $132,265 was forfeited as proceeds gained from the unlawful
dispensing of narcotics, contends the State presented (1) legally insufficient
evidence of the commission of a felony offense that would justify the forfeiture
and (2) factually insufficient evidence that the currency forfeited was contraband.
We affirm.
Background
Police arrested Ejekute-Obi in October 2008 after he filled written
prescriptions presented by an undercover officer for 5,310 tablets of hydrocodone
and 3,600 tablets of Xanax at his pharmacy, Empirical Pharmacy. Ejekute-Obi
charged $3,920 for the prescriptions and requested an $80 tip from the undercover
officer. Police estimated the street value of the hydrocodone and Xanax dispensed
by Ejekute-Obi at more than $45,000.
Sergeant T. Gamble, a supervisor for the pharmaceutical squad of the
Houston Police Department’s narcotics division, and HPD Officer J. Kowal, a
member of the narcotics division, both testified that HPD began an undercover
investigation and surveillance of Ejekute-Obi after receiving a confidential
informant’s tip that Ejekute-Obi was dispensing narcotics without a valid medical
purpose. Three HPD officers, including Sergeant Gamble and Officer Kowal,
testified that the confidential informant had provided their unit with reliable
information in the past.
2
During surveillance, Officer Kowal observed a man and woman driving a
vehicle with Louisiana license plates enter Ejekute-Obi’s pharmacy with two
empty duffel bags; when the man and woman left fifteen minutes later, the duffel
bags were full. Police conducted a traffic stop, searched the vehicle, and
discovered that the duffel bags contained thousands of tablets of hydrocodone and
Xanax and almost $4,000 in cash. The two Louisiana-based individuals were
arrested. On at least two more occasions, police arrested individuals who left
Ejekute-Obi’s pharmacy with unlawfully dispensed narcotics.
Police continued the surveillance of the pharmacy and decided to set up a
sting operation. Police obtained twenty-five prescriptions for twenty-five different
people from a licensed physician. Some of the prescriptions were for hydrocodone
or Xanax or both, and others included a medication that was not a controlled
substance in addition to hydrocodone or Xanax. According to the testimony of
Officer Kowal, pharmacists who unlawfully dispense narcotics often require that
the prescriptions include medications that are not controlled substances in order to
avoid detection by the Drug Enforcement Agency. Kowal also testified that
because the potential abuse of controlled substances is well known, most legitimate
pharmacists “do their due diligence” to verify the validity of a prescription,
including whether it was issued as a result of an actual doctor-patient relationship
and for a “medical necessity.”
3
On the day of the sting, HPD Officer K. Jacobs went into Ejekute-Obi’s
pharmacy with a confidential informant who was familiar with the practices there. 1
The confidential informant introduced Jacobs as a friend, and Jacobs presented
Ejekute-Obi with all twenty-five prescriptions and a photocopy of an identification
card for each purported patient. Ejekute-Obi refused to fill the prescriptions that
did not list a medication besides hydrocodone or Xanax. He gave Jacobs a
handwritten list of other medications “he typically used when filling prescriptions
for controlled substances.” Ejekute-Obi specifically pointed out a stool softener.
Jacobs left the pharmacy so that Ejekute-Obi could fill the prescriptions.
When she returned, she put the narcotics and other medications in a duffel bag and
paid Ejekute-Obi $3,920 plus the $80 tip. More than one officer testified that the
amount Ejekute-Obi charged was high. Jacobs also noted the absence of a cash
register in the pharmacy, and she testified that Ejekute-Obi did not record the
transaction. Jacobs discussed future purchases of hydrocodone and Xanax with
Ejekute-Obi. Ejekute-Obi told her to come twice a week and to “make sure that
[she] . . . had the prescriptions in order.”
Police arrested Ejekute-Obi immediately after Jacobs completed the
transaction. During questioning after his arrest, Ejekute-Obi stated that he only
worked with cash and did not accept insurance. Sergeant Gamble and Officer
1
The confidential informant who participated in the sting operation was not the
same person who initially tipped police off to Ejekute-Obi’s practices.
4
Kowal testified that the pharmacy did not have a cash register, did not have any
billing records, was disorganized, and had little medicine on the shelves.
Ejekute-Obi signed a written consent to a search of his home. Officer M.
Backas, a narcotics officer and specialist in the area of illegal pharmaceutical sales,
transported Ejekute-Obi to the house and assisted with the search. Backus testified
that Ejekute-Obi initially informed police that he did not have anything at his home
related to the pharmacy; however, when officers discovered $39,710 in cash
stuffed in several envelopes along with 2,700 tablets of hydrocodone and 720
tablets of Xanax in unmarked vials in Ejekute-Obi’s front closet, Ejekute-Obi
informed Backas that the money was from the pharmacy’s business. Ejekute-Obi
told Backas that he was holding the money at his home because he was going
through a divorce and did not want to make regular deposits into a bank account
his wife could access. Police did not locate any of the paperwork required for a
pharmacist to remove controlled substances from the pharmacy.
Police also discovered $92,555 in a suitcase in Ejekute-Obi’s bedroom. The
suitcase had Ejekute-Obi’s name on it and contained his medical identification
card. Officer Backus testified that Ejekute-Obi told him that the suitcase belonged
to a Nigerian businessman named “Mr. Uche,” who was out of town. In the more
than three years following Ejekute-Obi’s arrest and the seizure of the $92,555 in
cash, Mr. Uche never made a claim for the money.
5
The State filed a civil forfeiture proceeding against the $132,265 in cash
found in Ejekute-Obi’s home. At the time of the trial, Ejekute-Obi’s criminal
charges were still pending. After hearing the testimony and considering the
evidence, the trial court entered twenty-eight fact findings, including the following:
• Based upon information from a confidential informant (who had
provided reliable information in the past to the Houston P. D.) the
Houston P. D. conducted surveillance on Empirical on September
29, 2008. During the day, very few customers entered the
pharmacy. Late in the afternoon a black male and a black female
entered the pharmacy with empty duffel bags. After a few minutes
the pair exited the store with full duffel bags. A few minutes later
after a traffic stop, the duffel bags were found to contain 9,000
tablets of hydrocodone and Xanax, plus cash.
• On October 20, 2008, an undercover Houston P. D. officer entered
Empirical with 25 prescriptions in 25 different patients’ names.
Each prescription was for Hydrocodone (a penalty group three
controlled substance) in 90 tablet quantities and Xanax (or
Alprazolam, also a penalty group three controlled substance) in 60
tablet quantities. Most prescriptions also included non-controlled
substances as well. The prescriptions called for 5,310 tablets of
Hydrocodone and 3,600 tablets of Xanax.
• All prescriptions were signed by [a licensed physician].
• [Ejekute-]Obi refused to fill prescriptions which did not have a
non-controlled substance in addition to the controlled substance.
• The Houston P. D. knew that this was [Ejekute-]Obi's practice
based on information from a prior confidential informant.
• [Ejekute-]Obi filled [the remaining] prescriptions.
6
• [Ejekute-]Obi and the officer also discussed future transactions in
which [Ejekute-]Obi could fill at least 25 prescriptions three to
four times per week.
• [Ejekute-]Obi provided the officer with a list of non-controlled
substances which could be included on future prescriptions for
controlled substances. [Ejekute-]Obi suggested the use of a stool
softener.
• All sales by Empirical were for cash, but no cash register was
visible in the store.
• [Ejekute-]Obi informed the officer to come twice a week and make
sure the prescriptions were in order before coming in again.
The court also made eleven conclusions of law, including the following:
1. Both Texas and federal law recognize that a pharmacist, such as
[Ejekute-]Obi, has an affirmative duty only to fill a prescription he
knows was issued for a legitimate medical purpose and in the
course of professional practice. . . . In this case, [Ejekute-]Obi’s
violation of this duty under Texas Health and Safety Code section
481.071 serves as the predicate felony offense for the seizure and
forfeiture of the U.S. currency at issue. . . .
2. From [Ejekute-]Obi’s refusal to fill prescriptions that did not
include non-controlled substances, coupled with his providing a
list of non-controlled substances and requesting the officer to have
his prescriptions in order, this Court can reasonably infer that
[Ejekute-]Obi knew that the prescriptions were not issued for
legitimate medical purposes.
3. Because all prescriptions were so similar, [Ejekute-]Obi would
have a responsibility to make sure each and every prescription was
valid.
...
7
5. Although there is no evidence as to what portion of the money can
be attributed to non-controlled substances, a wrong-doer may not
commingle funds derived from the commission of a felony with
funds derived from lawful endeavors, and argue the taint is
removed.
6. Based upon prior surveillance, the filling of fictitious prescriptions
was not an isolated circumstance in this case. The State established
that there is a reasonable belief that there is a substantial
connection of the property to be forfeited and the criminal activity.
7. The State proved that it was more probable than not that the seized
property was intended for use in, or derived from, a violation of the
offenses enumerated in the foreclosure statute[.]
...
10.Based on the large amount of controlled substances prescribed
coupled with the suspicious circumstances under which
[Ejekute-]Obi dispensed them requires this Court to conclude that
[Ejekute-]Obi knew these narcotics were being sold without a
legitimate medical purpose.
11. Based on [Ejekute-]Obi’s admission that the substantial proceeds
in the front closet were store proceeds, the lack of cash registers or
other means to record or keep the proceeds at Empirical, and his
admission that he was keeping money at home because of his
divorce, this Court can reasonably infer that all proceeds in the
house were from sales of controlled substances from Empirical or
from sales of controlled substances like those found in his house.
Because more than 3 years have elapsed, and Mr. Uche has made
no claim on the property in the suitcase, this Court concludes that
Mr. Uche has no interest in the funds in the suitcase and that
[Ejekute-]Obi was not being truthful in his statements pertaining to
Mr. Uche or the funds in the suitcase.
Therefore, the Court finds that the ONE HUNDRED THIRTY-
TWO THOUSAND TWO HUNDRED SIXTY-FIVE AND
NO/100 DOLLARS ($132,265.00) in currency money of the
United States at issue in this proceeding are the proceeds gained
8
from the commission of a felony under Chapter 481 of the Texas
Health and Safety Code, and should be forfeited to the State of
Texas, subject to disposition under article 59.06 of the Texas Code
of Criminal Procedure.
(Citations omitted).
Forfeiture
Chapter 59 of the Code of Criminal Procedure authorizes the forfeiture of
contraband, which is defined to include the proceeds gained from the commission
of any felony under chapter 481 of the Health and Safety Code (the Controlled
Substances Act). See TEX. CODE CRIM. PROC. ANN. art. 59.01(2)(B)(i), (D); see
also State v. $11,014.00, 820 S.W.2d 783, 784 (Tex. 1991) (“Money is subject to
forfeiture if it is derived from or intended for use in manufacturing, delivering,
selling, or possessing a controlled substance.”). Forfeiture proceedings under
chapter 59 are civil in nature. TEX. CODE CRIM. PROC. ANN. art. 59.05(b).
To prevail in a forfeiture proceeding, the State must satisfy a two-part test.
First, the State must show probable cause, or “a reasonable belief that ‘a substantial
connection exists between the property to be forfeited and the criminal activity
defined by the statute.’” State v. $90,235.00 in U.S. Currency, 390 S.W.3d 289,
293 (Tex. 2013) (quoting $56,700 in U.S. Currency v. State, 730 S.W.2d 659, 661
(Tex. 1987)). “It is that link, or nexus, between the property to be forfeited and the
statutorily defined criminal activity that establishes probable cause, without which
9
the State lacks authority to seize a person’s property.” $56,700 in U.S. Currency,
730 S.W.2d at 661.
Second, the State must prove by a preponderance of the evidence that the
seized property is contraband and therefore subject to forfeiture. See TEX. CODE
CRIM. PROC. ANN. art. 59.02(a); $18,800 in U.S. Currency v. State, 961 S.W.2d
257, 260 (Tex. App.—Houston [1st Dist.] 1997, no writ). When there is no direct
evidence showing that the seized property is the fruit of the commission of the
statutorily enumerated felonies, the State must present “sufficient circumstantial
evidence.” Antrim v. State, 868 S.W.2d 809, 812 (Tex. App.—Austin 1993, no
writ). “When relying on circumstantial evidence, ‘the State is required to offer
proof which does more than raise a mere surmise or suspicion regarding the source
of the currency.’” Id. (quoting Money of the U.S. $8,500 v. State, 774 S.W.2d 788,
792 (Tex. App.—Houston [14th Dist.] 1989, no writ)). The State is not required,
however, to exclude every other possible means by which the currency might have
been acquired. Id.; $7,058.84 in U.S. Currency v. State, 30 S.W.3d 580, 586 (Tex.
App.—Texarkana 2000, no pet.).
A. Standard of Review
In an appeal from a bench trial, we review the legal and factual sufficiency
of the evidence supporting a trial court’s findings of fact by the same standards we
apply to jury verdicts. See Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex. 1996);
10
$27,877.00 Current Money of U.S. v. State, 331 S.W.3d 110, 117 (Tex. App.—Fort
Worth 2010, pet. denied). Evidence is legally insufficient when (1) there is a
complete absence of evidence of a vital fact, (2) the court is barred from giving
weight to the only evidence offered to prove a vital fact, (3) the evidence offered is
no more than a scintilla, or (4) the evidence conclusively establishes the opposite
of a vital fact. City of Keller v. Wilson, 168 S.W.3d 802, 810 (Tex. 2005). The
ultimate test is “whether the evidence . . . would enable reasonable and fair-minded
people to reach [the findings] under review.” Id. at 810. In making this
determination, we credit favorable evidence if a reasonable fact-finder could, and
we disregard contrary evidence unless a reasonable fact-finder could not. Id. at
827. We may not substitute our judgment for that of the fact-finder so long as the
evidence falls within the zone of reasonable disagreement. Id. at 822.
When considering a factual-sufficiency challenge, we consider and weigh all
of the evidence, not just that which supports the verdict. Pool v. Ford Motor Co.,
715 S.W.2d 629, 635 (Tex. 1986); $43,774 in U.S. Currency v. State, 266 S.W.3d
178, 183 (Tex. App.—Texarkana 2008, pet. denied). We will set aside a finding
only if the evidence is so weak or the finding is so against the great weight and
preponderance of the evidence that it is clearly wrong and unjust. Pool, 715
S.W.2d at 635; $43,774 in U.S. Currency, 266 S.W.3d at 183.
11
B. Legal Sufficiency
In his first issue, Ejekute-Obi argues that the evidence is legally insufficient
to support the forfeiture because the State failed to prove that he committed a
felony by dispensing a controlled substance without a valid medical purpose.
Although Ejekute-Obi challenges the legal sufficiency of the evidence under the
federal statutes regulating prescription medications, see 21 C.F.R. § 1306.04(a),2
the trial court determined that section 481.071 of the Health and Safety Code
served as “the predicate felony offense for the seizure and forfeiture” of
Ejekute-Obi’s currency. Accordingly, we consider whether the State presented
legally sufficient evidence of an offense under section 481.071.
Section 481.071 prohibits, in pertinent part, a pharmacist from dispensing a
controlled substance “except for a valid medical purpose and in the course of
medical practice.” TEX. HEALTH & SAFETY CODE ANN. § 481.071 (West 2010); see
also TEX. HEALTH & SAFETY CODE ANN. § 481.128 (providing that knowing
violation of section 481.071 is state jail felony). There is no dispute that the
hydrocodone and Xanax dispensed by Ejekute-Obi were controlled substances. See
2
The federal regulation cited by Ejekute-Obi imposes a duty on a pharmacist to
properly dispense a controlled substance. See 21 C.F.R. § 1306.04(a). It provides
that “[t]he responsibility for the proper prescribing and dispensing of controlled
substances is upon the prescribing practitioner, but a corresponding responsibility
rests with the pharmacist who fills the prescription.” Id. A pharmacist who fills
“[a]n order purporting to be a prescription issued not in the usual course of
professional treatment . . . shall be subject to the penalties provided for violations
of the provisions of law relating to controlled substances.” Id.
12
TEX. HEALTH & SAFETY CODE ANN. §§ 481.002(5), 481.104(a)(2), (4). The trial
court stated in its conclusions of law that Ejekute-Obi’s knowledge that he
dispensed the hydrocodone and Xanax without a valid medical purpose could be
inferred from “the large amount of controlled substances prescribed coupled with
the suspicious circumstances under which [Ejekute-Obi] dispensed them.” We
agree.
The State presented the following circumstantial evidence that Ejekute-Obi
was prescribing hydrocodone and Xanax without a valid medical purpose: (1)
police seized thousands of narcotic pills from a Louisiana couple leaving Ejekute-
Obi’s pharmacy, (2) Ejekute-Obi dispensed a large quantity of narcotics to Officer
Jacobs (i.e., prescriptions for twenty-five individuals, none of whom were present
and none of whom testified that they were contacted to verify the prescription), (3)
Ejekute-Obi refused to fill prescriptions that could be flagged as suspicious by the
DEA, (4) Ejekute-Obi provided Jacobs with a list of non-controlled substances for
inclusion on future prescriptions, (5) Ejekute-Obi told Jacobs he could fill orders
for her twice weekly, (6) Ejekute-Obi charged an amount that more than one police
officer testified exceeded the amount charged for valid prescriptions, (7) there was
no cash register at the pharmacy, (8) there was only a small quantity of other
medicine at the pharmacy, (9) Ejekute-Obi had a large quantity of narcotics in a
closet in his home without supporting documentation, (10) Ejekute-Obi had large
13
quantities of cash at his home, and (11) Ejekute-Obi made inconsistent statements
about the cash discovered at this home. Cf. United States v. Rosen, 582 F.2d 1032,
1036 (5th Cir. 1978) (finding that physician did not have valid medical purpose for
issuing prescriptions supported by “inordinately large quantity of controlled
substances” prescribed, “[l]arge numbers of prescriptions” that were issued, and
warnings given by physician to avoid detection).
Viewing this evidence in the light most favorable to the verdict, we hold that
“reasonable and fair-minded people” could conclude that Ejekute-Obi knowingly
violated section 481.071’s prohibition against dispensing controlled substances
without a valid medical purpose. See City of Keller, 168 S.W.3d at 822. We
overrule Ejekute-Obi’s first issue challenging the legal sufficiency of the evidence.
C. Factual Sufficiency
In his second issue, Ejekute-Obi contends that there is factually insufficient
evidence that the $39,710 found in his closet and the $92,555 found in a suitcase in
his bedroom were contraband. When determining whether currency is contraband,
courts have considered the following factors: (1) the proximity of the money to
drugs and evidence of drug trafficking, (2) evidence that the money was previously
in contact with drugs, (3) suspicious activity consistent with drug trafficking, (4)
the amount of money at issue, and (5) the presence of expert testimony indicating
that there was probable cause to seize the property subject to forfeiture, in that a
14
substantial connection exists between the property to be forfeited and the criminal
activity. See Antrim, 868 S.W.2d at 814; $24,180 in U.S. Currency v. State, 865
S.W.2d 181, 184 (Tex. App.—Corpus Christi 1993, writ denied).
Here, the evidence detailed above constitutes evidence that Ejekute-Obi was
engaged in suspicious activity that was consistent with unlawfully dispensing
narcotics. This case involves both a large amount of narcotics and a large amount
of cash, and the evidence of the circumstances under which the cash was seized is
undisputed. The evidence showed that (1) Ejekute-Obi’s pharmacy business was a
cash business without a cash register or any other method of accounting for
transactions, (2) Ejekute-Obi admitted that he kept cash from his pharmacy
business at his home in order to keep the income out of his divorce proceeding, (3)
police discovered $39,710 in a closet in Ejekute-Obi’s home along with thousands
of hydrocodone and Xanax pills, (4) police did not find paperwork permitting
Ejekute-Obi to store the pills at his home, (5) police discovered an additional
$92,555 in a suitcase containing Ejekute-Obi’s medical identification card, and (6)
Ejekute-Obi lied about owning the suitcase containing the $92,555.
The State was not required to exclude every possible way in which Ejekute-
Obi could have acquired $132,265 in cash. See Antrim, 868 S.W.2d at 812; Spurs
v. State, 850 S.W.2d 611, 614 (Tex. App.—Tyler 1993, writ denied). We conclude
that the uncontradicted evidence of all the circumstances, taken together, supports
15
the trial court’s finding that $132,265 in cash was contraband. That is, the trial
court’s findings that the $39,710 in the closet and the $92,555 in the suitcase was
subject to forfeiture was not so contrary to the overwhelming weight of the
evidence as to be clearly wrong or unjust. We overrule Ejekute-Obi’s second issue
challenging the factual sufficiency of the evidence.
Conclusion
Having concluded that the evidence is legally and factually sufficient to
support the forfeiture of $132,265 from Ejekute-Obi as proceeds gained from the
commission of a felony under the Health and Safety Code, we affirm the judgment
of the trial court.
Harvey Brown
Justice
Panel consists of Justices Jennings, Brown, and Huddle.
16