Posts Tagged ‘forfeiture of cash assets’

Judge Bars Forfeiture of Seized Cash

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.

Steven L. Kessler is recognized as one of the leading authorities in the areas of civil forfeiture and RICO. This web site contains information about his law practice, his best-selling authoritative books, and legal articles that have appeared in law journals and newspapers and publications of general circulation.

The New York Times called Steven L. Kessler “an expert in asset forfeiture in the state.” (January 31, 1999, Week in Review, page 6.)

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