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United States v. $11

United States Court of Appeals, Ninth Circuit

September 5, 2017

United States of America, Plaintiff-Appellee,
v.
$11, 500.00 in United States Currency, in rem; $2, 971.00 in United States Currency, in rem, Defendants, Charles Guerrero, Claimant-Appellant.

          Argued and Submitted May 9, 2017 Portland, Oregon

         Appeal from the United States District Court for the District of Oregon D.C. No. 3:10-cv-00097-MO, Michael W. Mosman, Chief District Judge, Presiding

          Frank de la Puente (argued), Salem, Oregon, for Claimant-Appellant.

          Alexis Lien (argued) and Annemarie Sgarlata, Assistant United States Attorneys; Kelly A. Zusman, Appellate Chief; United States Attorney's Office, Portland, Oregon; for Plaintiff-Appellee.

          Before: Jay S. Bybee and Andrew D. Hurwitz, Circuit Judges, and Jed S. Rakoff, [*] District Judge.

         SUMMARY [**]

         Civil Forfeiture

         The panel reversed the district court's judgment of civil forfeiture of $11, 500 under 21 U.S.C. § 881(a)(6) from claimant Charles Guerrero, and remanded for a new trial.

         When Guerrero, through a friend, tried to post the $11, 500 as bail for his wife, the government seized the cash. At trial, the government alleged two theories: that the money was proceeds from the claimant's drug deals, and that the claimant used or intended to use the money to facilitate drug transactions. The jury rejected the first "proceeds" theory, but found for the government on the second "facilitation" theory.

         The panel held that 21 U.S.C. § 881(a)(6) does not authorize forfeiture based on mere intent to facilitate drug transactions without proof of some act to effectuate that intent. The panel held that the district court's instructions to the jury on the facilitation theory was plain error because they permitted forfeiture even if the claimant never took any step to use the money to facilitate drug transactions. The panel concluded that there was a high probability that this plain error infected the jury's verdict.

          Judge Hurwitz concurred without reservation in Parts I- IV of the panel's opinion, but acquiesced dubitante as to Part Vconcerning the issue of plain error because he had serious doubts that the error was plain.

          OPINION

          BYBEE, Circuit Judge

         This appeal is from a civil forfeiture of $11, 500 under 21 U.S.C. § 881(a)(6). The claimant and his wife are heroin addicts, who have been buying and selling drugs for most of their lives. When the claimant, through a friend, tried to post the $11, 500 as bail for his wife, the government seized the cash. At trial, the government had two theories: first, that the money was proceeds from the claimant's drug deals; second, that the claimant used or intended to use the money to facilitate drug transactions. The jury rejected the first "proceeds" theory, but found for the government on the second "facilitation" theory.

          We hold that the district court's instructions to the jury on the facilitation theory were plain error because they permitted forfeiture even if the claimant never took any step to use the money to facilitate drug transactions. We cannot overlook the high probability that this plain error infected the jury's verdict, and we therefore reverse and remand for a new trial.

         I

         Charles and Rosalie Guerrero have been heroin addicts since the late 1980s.[1] Like many serious addicts, the Guerreros not only bought heroin but also sold it to make enough money to sustain their destructive habit. Such activities led to repeated arrests, convictions, and incarceration. This case arises out of a run-in with the law that resulted in Rosalie's arrest and detention in the Multnomah County Detention Center (MCDC) in Portland on charges of possession of heroin with intent to distribute.

         A week after Rosalie's arrest, Charles drove to Portland from Salem, where he and Rosalie resided with their friend, Virgil Wood. Because Charles lacked the necessary identification to post bail at the MCDC, he asked Wood to tag along. What Charles did have, however, was some $14, 000, in one hundred dollar bills, that Charles claimed Rosalie had given him for safekeeping after obtaining the money from an insurance settlement and used-car transactions. Because the Guerreros did not have a bank account, Charles kept the cash hidden under a carpet in Wood's home until his wife's arrest. Once in Portland, Charles gave $11, 500 to Wood with instructions to post bail for Rosalie.

         While Charles waited outside, Wood went to the MCDC's bail window and told an officer he was there to post the cash to free Rosalie. Jail officials ran Wood's records and discovered that he had a criminal history. Coupled with the fact that Wood was attempting to bail out a repeat drug offender with a wad of cash, this prompted jail officials to call Agent Guy Gino of the federal Department of Homeland Security. Agent Gino went to the MCDC, asked Wood a few questions regarding the origin of the $11, 500, and requested permission to have a drug sniffing dog smell the currency. Wood agreed.

         The dog (Nikko) alerted to a drug odor on the money. Agent Gino asked Wood if Nikko could sniff his car. Again, Wood agreed. On the way to the car, the group encountered Charles, who was waiting for Woods to come out of the jail. Charles objected to law enforcement searching the car but Wood nonetheless permitted Nikko to do so. Nikko alerted to a black bag in the vehicle-which, the officers later discovered, belonged to Charles-containing 3.6 grams of heroin. Officers also found an additional $2, 971 in cash on Charles. Agent Gino arrested Charles and seized the drugs, the $2, 971 found on Charles, and the $11, 500 Wood had tried to post as bail.

         The government then initiated civil in rem forfeiture proceedings against the seized currency under 21 U.S.C. § 881(a)(6). Along with the complaint, the government submitted Agent Gino's affidavit asserting "probable cause to believe the $11, 500 in U.S. Currency . . . represent[ed] the proceeds from the distribution of controlled substances by [the Guerreros]." Charles filed a claim to the cash, and this litigation ensued.

         The district court granted summary judgment in favor of the government as to the $11, 500, finding that the money was the "proceeds of illegal drug activity or was used to facilitate such activity." At a subsequent trial, a jury found the $2, 971 also forfeitable as drug proceeds. Charles appealed, and we affirmed the judgment with respect to the $2, 971, but reversed as to the $11, 500, finding a genuine issue of material fact as to whether it was legitimately derived. United States v. $11, 500.00 in U.S. Currency, 710 F.3d 1006, 1009 (9th Cir. 2013).

         At trial following our remand, the government again maintained that the $11, 500 was subject to forfeiture as drug proceeds. The government painted a grim picture of two unemployed drug addicts, living off food stamps and sleeping on friends' couches, who only could have derived the money from one source: sales of controlled substances, including heroin. Charles testified and frankly admitted to his criminal record, addiction, and regular involvement in the drug trade. But he claimed that the $11, 500 came from an insurance settlement Rosalie had reached four years before the seizure. He said she had taken that money and invested it in her own used-car business. Rosalie corroborated her husband's testimony, attesting that the $11, 500 came from an insurance settlement and used-car sales. The government attacked the Guerreros' testimony, noting, for instance, that four years had passed since the settlement, that during that time the Guerreros had few means of support, and that there were no records of Rosalie's alleged car business.

          The jury instructions presented alternative legal theories for the forfeiture. The first was the "proceeds theory, " on which the government had focused its case, which authorized forfeiture of any money derived from drug sales. The second theory-which the district court called the "facilitation theory"-authorized forfeiture if the money "was used or was intended to be used to facilitate illegal drug activity." Although the district court did not divide the second theory into its two distinct prongs ("used" and "intended to be used"), it broadly instructed the jury that "'[f]acilitating property' includes any property that makes the prohibited conduct 'less difficult or more or less free from obstruction or hindrance.'" The jury instructions on the two theories of forfeiture were derived directly from the controlling statute, § 881(a)(6), and neither party objected to them.

         In closing, the government spent the vast majority of its time on the proceeds theory, attempting to convince the jury that the money came from heroin sales. But, at a few points, the government also mentioned the facilitation theory, focusing almost exclusively on the "intended to be used" prong. The government argued forcefully that if "Ms. Guerrero hadn't ended up in jail, " the Guerreros would have used the $11, 500 "to facilitate drug trafficking." The only evidence cited in support of that proposition was that the Guerreros were heavily addicted to heroin, "using daily, buying and selling on a daily or weekly basis." In light of such addiction, it was very likely, the government argued, that the Guerreros would have used the $11, 500 "to keep their habit going, " and though on "[t]his particular occasion, [they were] using [their] money for one thing, . . . what did [they] intend to use it for?"

          After closing arguments, the district court issued a special verdict form almost identical to one jointly submitted by the parties. The form asked the jury two questions:

1. Has the United States proven by a preponderance of the evidence that the $11, 500 is the proceeds of an exchange or exchanges for a controlled substance?
2. Has the United States proven by a preponderance of the evidence that at least a portion of the $11, 500 was used or intended to be used to facilitate an exchange or exchanges of a controlled substance?

         During deliberations, the jury advised the court that it could not reach a unanimous verdict. The parties stipulated to a non-unanimous verdict. Each juror then voted against the proceeds theory, and six of seven jurors voted in favor of the facilitation theory. The $11, 500 was thus forfeited to the government.

         Charles subsequently filed a Motion to Amend Judgment under Rule 59, asserting violations of his Fifth Amendment due process rights and his Eighth Amendment right to be free from cruel and unusual punishment. Charles argued that the verdict could be explained on only one ground: the jury must have found that the $11, 500 was "clean" but that the Guerreros nonetheless intended, at some indeterminate point in time, to use the money to buy drugs. Such a verdict could not ...


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