By Daniel
Wise
New York Law Journal
February 6,
2001
THE
GOVERNMENT gets only one bite at the apple when it
seeks the forfeiture of cash seized from people as
they are leaving the country, an Eastern District
judge has ruled.
In a
potentially groundbreaking ruling that could throw a
monkey wrench into the way the government handles cash
forfeiture cases, Judge Charles P. Sifton held that
the government's failure to contest certain findings
relevant to sentencing in a criminal case could tie
its hands when it later seeks to forfeit cash.
The ruling
clears the way for Cesar Castro, who was prosecuted
criminally for failing to declare the proper amount of
cash he was carrying, to retrieve $119,984 taken from
him in 1996 as he was about to leave JFK Airport for
the Dominican Republic.
According
to Mr. Castro's lawyer, Steven L. Kessler, Judge
Sifton is the first judge in the nation to bar the
government from bringing a civil forfeiture proceeding
after it has failed to challenge a finding in a
pre-sentencing report that there is no link between
cash seized by customs officers and criminal activity.
Mr. Castro
was sentenced in March 1997 to two year's probation
and a fine of $2,500 for declaring only $2,000 cash,
when in fact he was carrying $119,984.
When informed
by a customs officer that he had to declare any U.S.
currency he was carrying in excess of $10,000, Mr.
Castro had told the officer that he was carrying only
$2,000. He was subsequently searched and the cash
taken from him.
On Jan. 13,
1997, Mr. Castro pleaded guilty to one count of
willful failure to report currency that was unrelated
to any criminal activity. At his sentencing two months
later, Mr. Castro was credited with six points under
the U.S. Sentencing Guidelines for proving that the
money was neither the proceeds of a crime nor intended
to be used for an unlawful purpose.
Without
that finding, according to Mr. Kessler, Judge Sifton
would have lacked the discretion to impose a sentence
of probation.
No
Criminal Purpose
The finding
was contained in a pre-sentencing report prepared by
the probation department, which is a court agency. At
the time the report was issued, the prosecution chose
not to challenge the probation department's finding
that the cash could not be traced to a criminal
activity or purpose.
Two years
later, when the government filed a civil action to
forfeit the cash, the defense claimed that the lawsuit
was undermined by the prior finding relating to the
imposition of sentence.
Citing a 1998
U.S. Supreme Court decision, U.S. v. Bajakajian,
524 U.S. 321, the defense contended that the
forfeiture of unreported currency derived from a legal
source is barred as an excessive fine under the Eighth
Amendment.
Judge Sifton
agreed that under the doctrine of collateral estoppel,
the finding at sentencing that the cash was
unconnected to a crime controlled the outcome of the
civil forfeiture proceeding two years later.
Mr.
Kessler said that the ruling, if sustained, could have
a major impact on the way the government handles
forfeiture cases. In the two years since the Bajakajian
ruling, he said, the government has brought
hundreds of forfeiture cases after acquiescing to
findings in pre-sentencing reports that the seized
cash was unconnected to any criminal activity.
William J.
Muller, executive assistant U.S. Attorney in the
Eastern District, declined to comment except to say
that the decision is "under review."
Civil
Forfeiture
In concluding
that collateral estoppel applies, Judge Sifton held in
U.S. v. U.S. Currency in the Amount of $119,984,
99-1978, that it was irrelevant whether the
matter actually had been contested once the government
declined to dispute the probation department's finding
that the cash was clean.
The
prosecution in the criminal proceeding had ample
incentive to have disputed the fact, but decided not
to, he concluded. "The government's desire to
impose appropriate punishment for persons who secretly
export the proceeds of illegal activity is at least as
great if not greater than the need to add $120,000 to
the U.S. Treasury," he wrote.
In a separate
finding, Judge Sifton concluded that Bajakajian's holding
that the excessive fines clause applies to a criminal
forfeiture proceeding is equally applicable in the
context of a civil forfeiture proceeding like the one
the government commenced against Mr. Castro.
Whether the
forfeiture is sought within the confines of a criminal
prosecution, as was the case in Bajakajian, or
a separate civil proceeding, the purpose is
"punitive," he concluded.
Simone
Monasebian was co-counsel with Mr. Kessler in
representing Mr. Castro. The prosecution was
represented by Assistant U.S. Attorney David Goldberg.
