Appeals Court Tells Government It Needs Actual Evidence If It Wants To Keep The $70,000 It Seized During An Accident Investigation

from the evidence-standard-is-low-but-not-THAT-low dept

It’s not often you see a civil forfeiture case handled by an appeals court. Most cases are never given their day in court. Many go completely unchallenged. The evidentiary bar for the government is low and the obligations placed on those whose property has been taken is high. Most people can’t afford to fight forfeitures, something the government takes full advantage of by seizing amounts too small to be worth fighting for in court.

Quantity over quality gets the job done. And the job, apparently, is to enrich the agencies performing the seizures. There’s scant evidence showing civil forfeiture does what law enforcement says it does: i.e., dismantle criminal enterprises.

But this case [PDF] — the seizure of nearly $70,000 in cash from a couple following a fender bender at a gas station — has reached the next level of adjudication. The Fourth Circuit Appeals Court was asked to examine the lower court’s decision to give the government full control of the seized cash.

Dereck McClellan — one of the two appellants — hit a concrete pillar at a gas station. The responding officer claimed to “notice the strong odor of marijuana.” That should not have permitted the search that resulted in the discovery of the couple’s cash. At least not alone. Both people in the car — McClellan and his girlfriend, Yvonna Silver — had valid medical marijuana cards. Unfortunately, McClellan also appeared to be drunk and their was an empty bottle of Hennessy in the front seat next to McClellan.

But while driving while intoxicated may be a crime, carrying cash — even an amount of cash that could not readily be explained in full detail during an accident investigation — is not. Nonetheless, the cash was seized and the DHS [???!!!] moved forward with the forfeiture.

The couple offered up evidence in support of the cash being legitimately acquired. Yvonna Silver ran her own business, albeit one that produced limited proceeds. She also worked at a bar earning $2,500 a week. The couple lived in a “mortgage-free” home, one allegedly left to McClellan by his mother (along with $110,000) when she passed away in 2014. Unfortunately, tax returns produced by the government showed significantly less income than Silver claimed, including zero income from the bar and net profits of only $63,000 over the last four years.

According to the lower court, this financial information, along with McClellan’s previous drug convictions (the most recent being 2013 — six years before this incident), were all the evidence the government needed to assume the money found had criminal origins.

Not so fast, says the Fourth Circuit. The same stuff the lower court said sufficiently alleged criminal origin could also be taken to indicate the money was legitimately obtained. And the other stuff thrown into the mix — like McClellan’s previous convictions — is evidence of nothing, at least not in terms of this seizure.

The Appeals Court points out the government still bears the burden of proof, even if it’s significantly less than what’s required to convict a person of criminal activity. And the government just doesn’t have what it needs to meet this lower bar. (Emphasis in the original.)

We start with a piece of evidence that contributes nothing to the whole. The Government argues that McClellan’s prior drug charges and the cash forfeited in 2013 are evidence that he was likely dealing drugs when the cash was seized. In doing so, the Government asks us to make exactly the kind of “forbidden propensity inference” that the Federal Rules of Evidence prohibit.

Rules of evidence may allow some probative examination of criminal history, but mainly when determining sentence length. But each criminal trial stands alone. The person is only asked to respond to current allegations, not defend themselves against charges already processed or dismissed. Just because McClellan may have been involved in drug trafficking in the past does not necessarily mean the cash discovered during this arrest was the result of drug sales.

The other so-called evidence — scans that showed traces of drugs on the seized cash — doesn’t prove anything either. If anything, the method used here is even more worthless than aiming a drug dog at the cash and waiting for the inevitable “alert.”

As for the rest of the evidence, the Government first tries to connect the cash to drug transactions based on the five ion scans that tested positive for cocaine. Ion scans detect particles and determine their substance. Because ion scans can detect mere particles, extremely small amounts of a substance may well trigger a “positive” result. So a positive scan may only show that the cash has a trace amount of cocaine on it. Standing alone then, the positive scan tells us little about when, where, or why the cash contacted cocaine. And the Government put forward no evidence to provide context for interpreting the positive scan of this cash. At least some information suggests “widespread” cocaine contamination
in our money supply. Jones v. DEA, 819 F. Supp. 698, 720 (M.D. Tenn. 1993) (noting studies estimating that between one-third and 97% of cash is contaminated with cocaine). So as it stands, we cannot reasonably infer that the positive ion test suggests this cash was uniquely connected to drugs.

Perhaps the Government has information that would explain how these scans tell us something more. Maybe it can distinguish the positive scan here from the trace amounts that may appear on ordinary bills. But, at this stage, using the positive ion scan alone to connect this cash to drug trafficking is speculative at best.

Making things worse for the government, it tried to convert the (lol) positive ion scan test that detected cocaine (pointing towards cocaine trafficking) into marijuana (since no cocaine was found), because the officer smelled marijuana (before he spotted the open alcohol container) and both people in the car had (apparently legitimate) medical marijuana cards.

That alone is pretty tenuous. But it gets worse. The government wanted the cash so badly it apparently forgot to build a semi-credible case.

Next, the Government turns from cocaine to marijuana, arguing that the Claimants’ medical marijuana cards should create an inference that they engaged in marijuana trafficking. This inference arises, they contend, because marijuana dealers often use medical marijuana cards to buy marijuana in states where it is legal and then bring it to other states for illegal sale. But California legalized even recreational marijuana before they obtained the cards in 2017. And even if the cards are sometimes used by drug dealers as the Government describes, the cards can also be used to buy marijuana for personal use. Other than these cards, the Government has presented no evidence of marijuana trafficking. Indeed, the marijuana blunt found in the car tends to suggest the personal use of marijuana that McClellan admitted to.

A smoked blunt in a car and cash with trace amounts of cocaine adds up to nothing. The court says the personal use of marijuana simply cannot be evidence of drug trafficking of any sort, much less affirm the illicit origin of cash found in a vehicle.

Finally, the government argues there’s no credible explanation for the amount of cash seized other than one that involves drug trafficking. The Appeals Court disagrees. Whether or not the couple’s stated sources of income failed to align with tax returns may be evidence of something else, but it cannot simply be assumed that, just because the government finds their arguments incredible, a jury would view them similarly. And just because things don’t immediately add up to the government’s satisfaction does not immediately prove the seized funds were linked to drug trafficking.

Here, the Government’s argument takes the same shape. The Government argues that lawful citizens do not carry around large amounts of cash that are rubber-banded and bundled, so the Claimants must explain the source of the cash, or the Government is entitled to summary judgment.

[…]

While it may be dubious to drive around with a large amount of cash in one’s car, it does not create an inescapable inference of criminal activity. Not using a bank does not necessarily make one a criminal. Even if a jury rejects the Claimants’ assertion that the cash was Labelz’s [Yvonna Silver’s business] funds, and even if Claimants have no other explanation, the jury could still conclude that, given the dearth of direct evidence of drug dealing, the cash does not constitute drug proceeds

The district court saw nothing wrong with drawing these inferences. The Fourth Circuit refuses to do the same thing.

All the government had at the time of the arrest was an open container of alcohol, two valid medical marijuana cards, the “odor of marijuana,” a smoked blunt, and $69,940.50 in cash. Somehow, the government thought this added up to drug trafficking. The local cops even called in the fed (the DHS for some fucking reason) to help shield its take from local restrictions. But, as the Fourth Circuit opinion clearly shows, there was no evidence of anything other than the government’s apparently overwhelming desire to claim these people’s cash for itself. Fortunately, the Appeals Court isn’t going to allow that to happen.

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Comments on “Appeals Court Tells Government It Needs Actual Evidence If It Wants To Keep The $70,000 It Seized During An Accident Investigation”

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6 Comments
Naughty Autie says:

To play devil’s advocate, the couple were guilty of tax evasion, which the FBI had to settle for against Al Capone when they couldn’t tie him to his other crimes. Still doesn’t justify seizing all that cash, though. Tax evasion is a crime that the IRS was set up to prosecute, and how are they supposed to do that when the DHS have oh-so-‘helpfully’ seized the evidence?

Anonymous Coward says:

Re:

the couple were guilty of tax evasion

Sorry, where did you find that? Wasn’t in the court decision, doesn’t seem to have made it to the first or second page of google results.

Footnote 11 discounts the tax evasion theory entirely. The government did not brief on tax evasion… and any such claims would be predicated on “they were dealing drugs and not declaring the income”. … which circles back to “okay, now prove they were dealing drugs”.

Naughty Autie says:

Re: Re:

From the article:

The couple offered up evidence in support of the cash being legitimately acquired. Yvonna Silver ran her own business, albeit one that produced limited proceeds. She also worked at a bar earning $2,500 a week. The couple lived in a “mortgage-free” home, one allegedly left to McClellan by his mother (along with $110,000) when she passed away in 2014. Unfortunately, tax returns produced by the government showed significantly less income than Silver claimed, including zero income from the bar and net profits of only $63,000 over the last four years.

Under-declaring, as described in the quote above, is tax evasion. No sale of illegally possessed substances required. Maybe read a bit before commenting next time.

Tanner Andrews (profile) says:

Re: Re: Re: Having a Good Accountant

Under-declaring, as described in the quote above, is tax evasion

Since we do not have the actual tax returns, we cannot say that there was under-declaring. I know that a good accountant will often shield income from taxation through use of deductions.

Someone running a business will almost surely have heavy deductions, whether directly passed through (S-corp) or taken at the corporate level (C-corp). Many things involved with the business may be deductible, though the business owner may simply save everything and dump it on an accountant at end-of-year and let them decide what is properly deductible.

Prudent kids in mortgage-free house may well invest in rentals. At that age, the rentals will show up on tax returns offsetting any other income. This is not so much under-reporting as the effects of interest, maintenance, depriciation, and other good work by the accountant.

They could invest in other things. I merely remember my own path through youth. The real estate company I dealt with ran an advert in the Sun-News urging investment in real estate. I went in and talked to my real estate lady. She agreed that it was good to buy real estate, so I did. There are, however, lots of other things in which these victims of robbery-at-badgepoint might have invested which wouild throw off both money and tax deductions.

The rich often have near zero taxable income because the little that might be taxable turns out to be dividends (special lower rate), tax-free (municipal bonds and the like), and offset by deductions appropriately marked up. Of course there are also ``legitimate” deductions: cosrts to maintain property, commissions, management fees, even occasional actual cash donations. It is said that Warren Buffett pays less tax than his secretary.

(and, yes, preview is still borken w/ firefox no javascript on linux, not sure why they cannot look back to old site for a method to fix it)

Kaleberg says:

Is this the first world?

This is the kind of garbage one reads about as hindering development in Africa. A group of guys with guns, sometimes in an official capacity, sometimes not, set up a roadblock and stop every car and demand some kind of payment if you want to move on. Unlike the police here, they usually just demand a cut rather than the whole thing.

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