United States v. $16,072.00 in U.S. Currency

374 F. Supp. 3d 205
CourtDistrict Court, N.D. New York
DecidedMarch 15, 2019
Docket1:17-cv-308 (GLS/DJS)
StatusPublished
Cited by1 cases

This text of 374 F. Supp. 3d 205 (United States v. $16,072.00 in U.S. Currency) is published on Counsel Stack Legal Research, covering District Court, N.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. $16,072.00 in U.S. Currency, 374 F. Supp. 3d 205 (N.D.N.Y. 2019).

Opinion

Gary L. Sharpe, U.S. District Judge

On May 2, 2013, after a lengthy investigation into a large narcotics trafficking operation in the Berkshires, the Rensselaer County Drug Task Force seized $ 296,172.00 and a 2008 Ford Expedition (hereinafter "SUV") from claimant Joshua G. Stegemann's premises pursuant to a *206New York search warrant.2 (Am. Compl., Dkt. No. 32 ¶¶ 2-3, 5, 12, 24, 27; Dkt. No. 44, Attach. 1.) A few days later, the Berkshire County Drug Task Force seized $ 160,020.00 inside a safe at Stegemann's sister's residence pursuant to a Massachusetts search warrant. (Am. Compl. ¶¶ 4, 31;3 Dkt. No. 44, Attachs. 2, 4.) Thereafter, the government obtained ex parte turnover orders4 from the respective state courts, which authorized a transfer of the seized property identified above (hereinafter "the defendant property") to the Drug Enforcement Administration (DEA) for the commencement of administrative forfeiture proceedings, "upon probable cause to believe that it was used to facilitate a violation of a drug offense or represents drug proceeds." (Dkt. No. 44, Attachs. 3, 4.) Following execution of the turnover orders, the DEA served administrative forfeiture notice upon Stegemann; in turn, Stegemann filed claims for the defendant property.5 (Am. Compl. ¶¶ 35-36.)

On September 18, 2013, a grand jury indicted Stegemann, charging him with violations of 21 U.S.C. § 841(a)(1) (possession with intent to distribute controlled substances), 18 U.S.C. § 924(c)(1)(A) (possession of firearms in furtherance of a drug trafficking crime), and 18 U.S.C. § 922(g)(1) (possession of firearms and ammunition by a prohibited person). (Dkt. No. 10, 1:13-cr-357 at 1-2.) The indictment also included a forfeiture allegation naming the defendant property, pursuant to 21 U.S.C. § 853(a), as proceeds from and property used or intended to be used to commit or facilitate violations of 21 U.S.C. § 841(a)(1). (Id. at 3-6.) After lengthy motion practice6 and a trial, a jury convicted Stegemann on all counts, (Dkt. No. 150, 1:13-cr-357), and determined that the defendant property was subject to forfeiture, (Dkt. No. 151, 1:13-cr-357). Thereafter, the court ordered forfeiture of the defendant property. (Dkt. No. 208, 1:13-cr-357.)

However, on appeal to the Second Circuit, the government conceded that it failed to demonstrate the requisite nexus between the defendant property and the criminal activity outlined in 21 U.S.C. § 841(a)(1) because, in its opinion, "the evidence at trial proved only that the cash was likely the proceeds of prior drug transactions and that the [SUV]

*207was the instrumentality of prior drug transactions." (United States of America v. Stegemann , Case No. 16-2596, Dkt. No. 75 at 60-62.) On the same day as the government's concession, it filed this civil forfeiture proceeding alleging that the defendant property is subject to forfeiture pursuant to 21 U.S.C. § 881(a)(4) and (6). (Compl. ¶¶ 9-10, Dkt. No. 1.) Eventually, the Second Circuit reversed the order of forfeiture as to the defendant property, based on the government's lack of opposition. (Dkt. No. 223, 1:13-cr-357.)

Stegemann then sought dismissal of the government's complaint in rem as well as various other forms of relief, (Dkt. No. 10), which the court denied, (Dkt. No. 31). At the time, the court noted that "the government has thus far failed to convince the court that it took the proper steps to maintain custody of the [defendant] property or that [ 18 U.S.C.] § 983(a)(3)(B)(ii)(II) is not implicated," but it stopped short of fully addressing the argument because it was improperly raised in Stegemann's reply papers. (Id. at 4 n.2.) Thereafter, the government filed an amended complaint, (Am. Compl., Dkt. No. 32), which was followed by Stegemann's pending motion to dismiss pursuant to Rule G(5)(b) of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions and Fed. R. Civ. P. 12(b)(6), (Dkt. No. 33).7 Stegemann argues that, like the initial complaint in rem , the amended complaint in rem must be dismissed because the government failed to satisfy the requirements of 18 U.S.C. § 983(a)(3)(B)(ii)(II).8 (Id. , Attach. 1 at 9-13.) For the following reasons, Stegemann's motion is denied with leave to renew in part.

The general rules regarding civil forfeiture proceedings are outlined by Section 2 of the Civil Asset Forfeiture Reform Act of 2000 (CAFRA), P.L.106-185, 114 Stat. 202 (2000), which is codified at 18 U.S.C. § 983(a)(3) and states, in pertinent part:

(A) Not later than 90 days after a claim has been filed, the [g]overnment shall file a complaint for forfeiture in the manner set forth in the Supplemental Rules for Certain Admiralty and Maritime Claims or return the property pending the filing of a complaint, except that a court in the district in which the complaint will be filed may extend the period for filing a complaint for good cause shown or upon agreement of the parties.
(B) If the [g]overnment does not-
(i) file a complaint for forfeiture or return the property, in accordance with subparagraph (A); or

Related

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Bluebook (online)
374 F. Supp. 3d 205, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-1607200-in-us-currency-nynd-2019.