United States v. $43,258.00 in United States Currency

• Court: District Court, D. Arizona
• Decided: March 16, 2023
• Docket: 2:22-cv-01388
• Status: Unknown

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 United States of America, No. CV-22-01388-PHX-DWL

10 Plaintiff, ORDER

11 v.

12 $43,258.00 in United States Currency,

13 Defendant. 14 15 Pending before the Court is Plaintiff’s motion for default judgment. (Doc. 11.) For 16 the following reasons, the motion is granted. 17 BACKGROUND 18 At Phoenix Sky Harbor Airport, members of the United States Drug Enforcement 19 Administration’s (“DEA”) Phoenix Financial Investigation Group’s Commercial Narcotic 20 Interdiction Unit (“FIG/CNIU”) “utilize a variety of resources, including confidential 21 informants, suspicious flight itineraries, other law enforcement agencies, and prior 22 knowledge of criminal activity or intelligence” in order to “identify and disrupt potential 23 drug and/or money couriers related to drug organizations and criminal syndicates.” (Doc. 24 1 ¶¶ 5, 10.) Members of the FIG/CNIU seize illicit drugs and drug proceeds and FIG/CNIU 25 investigators conduct financial investigations pursuant to these seizures. (Id. ¶ 5.) “Based 26 on training and experience and information obtained from law enforcement throughout the 27 country,” FIG/CNIU investigators “are aware” that St. Louis, Missouri is a “demand” 28 location and Phoenix, Arizona is a “source” location for illicit drugs and that “proceeds 1 from the sale of illicit drugs are transported from demand locations to source locations.” 2 (Id. ¶¶ 6, 8.) The investigators are further aware that drug/proceeds couriers often book 3 one-way tickets within 48 hours of departure and travel with co-conspirators. (Id. ¶¶ 7, 9.) 4 On September 9, 2021, Calvin K. Walters (“Calvin”) and Tyrone Chappell Jr. 5 (“Chappell”) flew from St. Louis to Phoenix on Southwest Airlines flight #3555 with one- 6 way tickets purchased within 24 hours of departure. (Id. ¶¶ 12-13.) Both Calvin and 7 Chappell had a record of various drug-related arrests. (Id. ¶¶ 14-15.) 8 Upon arriving at Phoenix Sky Harbor Airport, Calvin was greeted by DEA Task 9 Force Officer Travis Myers. (Id. ¶ 16.) Officer Myers introduced himself, showed Calvin 10 his law enforcement credentials, and asked Calvin if he could speak with him. (Id.) Calvin 11 agreed. (Id.) Officer Myers asked Calvin if he was traveling with any narcotics or large 12 amounts of United States currency, and Calvin replied that he was traveling with 13 approximately $40,000. (Id. ¶ 18.) Calvin added that he was a rapper and intended to use 14 the money to pay another rapper with whom he was collaborating. (Id.) Calvin “was unable 15 or unwilling” to provide the contact information for the collaborating rapper or his business 16 manager or the name of the recording studio. (Id. ¶¶ 27-29.) 17 Calvin initially stated that he was traveling with a female friend, but later identified 18 Chappell as his best friend’s brother who was accompanying him on his trip to Arizona. 19 (Id. ¶ 31.) Meanwhile, another DEA task force officer, accompanied by Phoenix Police 20 Department officers, contacted Chappell in the jetway and arrested him for outstanding 21 felony warrants. (Id. ¶ 54.) Chappell was in possession of $9,132.00 and denied traveling 22 with Calvin. (Id.) 23 When asked where he planned to stay while in Arizona, Calvin stated he planned to 24 stay in a hotel near the airport but had not yet made reservations. (Id. ¶ 30.) 25 Calvin denied traveling with drugs and consented to having his bags searched. (Id. 26 ¶¶ 19-20, 24.) The searches revealed a light brown cloth sack inside Calvin’s carry-on bag 27 that contained a large amount of cash (a portion of which was bound with a rubber band, 28 while the rest was loose among broken rubber bands), an electronic money-counting 1 machine, a plastic bag containing approximately 58 grams of marijuana, and three cellular 2 phones. (Id. ¶¶ 21, 24, 44.) 3 The currency in Calvin’s possession consisted of 167 one-hundred-dollar bills, 73 4 fifty-dollar bills, 1,077 twenty-dollar bills, 91 ten-dollar bills, 74 five-dollar bills, and 88 5 one-dollar bills, for a total of $43,258.00. (Id. ¶¶ 25-26.) When asked how he had obtained 6 the money, Calvin said that his mother, Latonya Walters (“Latonya”), had inherited the 7 money after the death of her mother and had distributed large amounts of money to him 8 over the past seven months and that, additionally, he had received money following the 9 death of his paternal grandfather. (Id. ¶¶ 32-35.) When asked for Latonya’s contact 10 information, Calvin provided a phone number but “was unable or unwilling” to provide 11 her address or “any additional information to corroborate the origin of the currency in his 12 possession.” (Id. ¶¶ 36-38.) Calls to the phone number Calvin provided for Latonya 13 consistently were met with a busy signal. (Id. ¶ 36.) 14 Calvin consented to allow Officer Myers to look through the recent text messages 15 and photographs in his three cell phones. (Id. ¶ 46.) He explained that he used one phone 16 for family, one for his rap business, and one for his friends. (Id. ¶ 44.) The phone he 17 described as being for family had a dead battery, but Officer Myers was able to view text 18 messages on the other two phones that contained prices, names, and quantities of illicit 19 drugs and requests for illicit drugs and was also able to view photographs of large amounts 20 of currency in rubber banded bundles. (Id. ¶¶ 47-50.) When asked about the text messages, 21 Calvin admitted to selling marijuana in Missouri. (Id. ¶ 51.) 22 At that point, Calvin “appeared nervous” and “spontaneously told investigators he 23 was currently an informant for the FBI in Missouri and had made several purchases of 24 illicit drugs at the FBI’s direction.” (Id. ¶ 52.) Investigators contacted FBI Special Agents 25 in Missouri who stated that Calvin was never an informant but did cooperate with law 26 enforcement until he was found to be unreliable. (Id. ¶ 53.) 27 The $43,258.00 in United States currency (“defendant property”) was seized at the 28 airport and is currently in the custody of the United States Marshals Service. (Id. ¶ 4.) 1 On October 20, 2021, the FBI executed a search warrant at Calvin’s residence in St. 2 Louis, which resulted in the seizure of firearms, ammunition, $54,873.00 in U.S. currency, 3 drug paraphernalia including multiple electric grinders, pill press devices, sifters and 4 scrappers, and multiple plastic bags containing pills, capsules, and powdery substances in 5 various quantities. (Id. ¶ 55.) 6 On May 23, 2022, DEA received a claim to the defendant property from Calvin’s 7 mother, Latonya. (Id. ¶ 56.) The “Interest in Property Information” section of the online 8 claim states: “please explain why you have a valid, good faith and legally recognizable 9 interest in this asset.” (Id.) Latonya responded, “I gave my son to hold the money for me 10 because am not good with money I got the money from my mother from her passed away.” 11 (Id.) As supporting documentation for her claim, Latonya Walters provided a one-page 12 image of a USBank statement for a Money Market Savings account number ending 5468 13 held in the name of Latonya Walters, statement period August 21, 2020, through September 14 21, 2020, reflecting a beginning balance on August 21, 2020 of $10.00 and a deposit of 15 $49,069.75 on September 21, 2020. (Id. ¶ 57.) No additional portions of the statement 16 were provided. (Id.) 17 On August 17, 2022, Plaintiff filed the verified complaint for forfeiture in rem. 18 (Doc. 1.) The following day, a warrant for the arrest of the defendant property issued. 19 (Doc. 3.) The United States Marshals Service seized and took possession of the currency 20 on August 24, 2022. (Doc. 5.) 21 On November 7, 2022, Plaintiff filed a notice that service had been executed 22 pursuant to Rule G(4) of the Federal Rules of Civil Procedure Supplemental Rules for 23 Admiralty or Maritime and Asset Forfeiture Claims by posting “a notice of forfeiture on 24 an official government internet site (www.forfeiture.gov) for at least thirty consecutive 25 days, beginning August 25, 2022 and ending September 23, 2022.” (Doc. 6.) 26 On November 8, 2022, Plaintiff filed a second notice of service indicating that “on 27 August 24, 2022, notice of the forfeiture was sent to Latonya Walters and on September 28 13, 2022, notice of the forfeiture was sent to Calvin K. Walters by First Class and Certified 1 U.S. Mail,” and that each mailing had included the complaint and other case documents. 2 (Doc. 7.) 3 On November 15, 2022, no response to the complaint having been filed, Plaintiff 4 filed an application for entry of default “against the interest of Latonya Walters, Calvin K. 5 Walters and all others in the defendant property.” (Doc. 8.) The following day, the Clerk 6 entered default. (Doc. 9.) 7 On December 30, 2022, Plaintiff filed the pending motion for default judgment. 8 (Doc. 11.) No response has been filed. 9 ANALYSIS 10 I. Forfeiture Procedures 11 Rule G of the Supplemental Rules for Admiralty or Maritime Claims and Asset 12 Forfeiture Actions governs forfeiture actions in rem.1 13 Rule G(2) states that the complaint must:

14 (a) be verified;

15 (b) state the grounds for subject-matter jurisdiction, in rem jurisdiction over the defendant property, and venue; 16 (c) describe the property with reasonable particularity; 17 (d) if the property is tangible, state its location when any seizure occurred 18 and—if different—its location when the action is filed;

19 (e) identify the statute under which the forfeiture action is brought; and

20 (f) state sufficiently detailed facts to support a reasonable belief that the government will be able to meet its burden of proof at trial. 21 22 The complaint in this action conforms in all respects. (Doc. 1.) 23 Next, Rule G(3) mandates a warrant and supplemental process. Those procedures 24 were followed here. (Doc. 3; Doc. 11 at 2.) 25 Next, Rule G(4) sets forth the notice requirements, which include notice by 26 publication as well as notice to known potential claimants. When the government knows 27 1 See also 21 U.S.C. § 881; 18 U.S.C. § 981. 28 1 the identity of the property owner, the Due Process Clause of the Fifth Amendment 2 “requires the Government to make a greater effort to give him notice than otherwise would 3 be mandated . . . .” United States v. Real Prop., 135 F.3d 1312, 1315 (9th Cir. 1998); 4 United States v. $296,000.00 in U.S. Currency, 2012 WL 3260442, *3-4 (E.D. Cal. 2012). 5 The government must provide notice that is “reasonably calculated, under all the 6 circumstances, to apprise interested parties of the pendency of the action and afford them 7 an opportunity to present their objections.” Dusenbery v. United States, 534 U.S. 161, 168 8 (2002). Rule G(4)(b)(iii)(A) likewise provides that “[t]he notice must be sent by means 9 reasonably calculated to reach the potential claimant.”2 10 Here, the government sent the notice of forfeiture, complaint, and scheduling order 11 via First Class and Certified U.S. Mail to both Calvin and Latonya at two separate Missouri 12 addresses, which the Court assumes are the last-known addresses for these individuals. 13 (Doc. 7.) Courts have held that certified mail may be a means of providing notice 14 reasonably calculated to reach known potential claimants. $296,000.00 in U.S. Currency, 15 2012 WL 3260442 at *4-5. The Court concludes that the government satisfied the notice 16 requirements. 17 The complaint indicates that on May 23, 2022—several months before the 18 complaint was filed—the DEA received a claim to the defendant property from Latonya. 19 (Doc. 1 ¶ 56.) The complaint does not indicate how the claim was received or whether the 20 agency responded. Nevertheless, under Rule G(5), it was incumbent upon Latonya to file 21 a claim in the context of this action by the deadline indicated in the notice and to file an 22 answer or Rule 12 motion no later than 21 days after filing the claim. “Failure to comply 23 with the procedural requirements for opposing the forfeiture precludes a person from 24 establishing standing as a party to the forfeiture action.” United States v. 2007 Chevrolet

25 2 An optional way to provide notice is by serving a summons under Rule 4. Fed. R. Civ. P. 4(n)(1) (“The court may assert jurisdiction over property if authorized by a federal 26 statute. Notice to claimants of the property must be given as provided in the statute or by serving a summons under this rule.”). See generally $296,000 in U.S. Currency, 2012 WL 27 3260442 at *4 (“Notwithstanding the Supplemental Rules . . . the Government provides sufficient notice if such notice complies with Federal Rule of Civil Procedure 4 28 requirements.”). 1 Tahoe SUV, 2010 WL 489682, *4 (E.D. Cal. 2010). Neither Calvin nor Latonya has 2 participated in any manner in this litigation. Accordingly, the government has satisfied the 3 procedural requirements for bringing this forfeiture action in rem. 4 II. Default Judgment Standard 5 The “decision whether to enter a default judgment is a discretionary one.” Aldabe 6 v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). The following factors, known as the Eitel 7 factors, may be considered when deciding whether default judgment is appropriate: (1) the 8 possibility of prejudice to the plaintiff, (2) the merits of the claims, (3) the sufficiency of 9 the complaint, (4) the amount of money at stake, (5) the possibility of factual disputes, (6) 10 whether the default was due to excusable neglect, and (7) the policy favoring decisions on 11 the merits. Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). 12 “[T]he general rule” for default judgment purposes “is that well-pled allegations in 13 the complaint regarding liability are deemed true.” Fair Housing of Marin v. Combs, 285 14 F.3d 899, 906 (9th Cir. 2002). “The district court is not required to make detailed findings 15 of fact.” Id. “However, necessary facts not contained in the pleadings, and claims which 16 are legally insufficient, are not established by default.” Cripps v. Life Ins. Co. of N. Am., 17 980 F.2d 1261, 1267 (9th Cir. 1992). 18 III. The First, Fifth, Sixth, And Seventh Eitel Factors 19 In cases like this one, where no one aside from Plaintiff has participated in the 20 litigation at all and the motion for default judgment is uncontested, “the first, fifth, sixth, 21 and seventh [Eitel] factors are easily addressed.” Zekelman Indus. Inc. v. Marker, 2020 22 WL 1495210, *3 (D. Ariz. 2020). 23 The first factor weighs in favor of default judgment. “[D]enying the motion would 24 unduly prejudice the Government because it would be required to litigate this action even 25 though no potential claimants have appeared to contest this forfeiture.” United States v. 26 $27,800 in U.S. Currency, 2017 WL 6345394, *4 (S.D. Cal. 2017). 27 The fifth and sixth factors weigh in favor of default judgment or are neutral. 28 Because no potential claimant has participated, there is no dispute over material facts and 1 no indication that default is due to excusable neglect. 2 The seventh factor generally weighs against default judgment, given that cases 3 “should be decided on their merits whenever reasonably possible.” Eitel, 782 F.2d at 1472. 4 However, the existence of Rule 55(b), which authorizes default judgments, “indicates that 5 this preference, standing alone, is not dispositive.” PepsiCo, 238 F. Supp. 2d at 1177. 6 IV. The Fourth Eitel Factor—The Amount Of Money At Stake 7 Under the fourth factor, the Court considers the amount of money at stake in relation 8 to the seriousness of the conduct at issue in the litigation. The amount at stake, $43,258.00, 9 is a substantial amount of money. This factor weighs against granting default judgment. 10 Nevertheless, courts have granted default judgments in similar cases. $296,000.00 in U.S. 11 Currency, 2012 WL 3260442 at *7 (“[T]he sum of money in dispute here [$52,120.19] is 12 not substantial enough to warrant the denial of the Government’s motion.”). 13 V. The Second And Third Eitel Factors—Merits And Sufficiency 14 That leaves the second and third Eitel factors—the merits of the claim and the 15 sufficiency of the complaint. “These two factors are often analyzed together and require 16 courts to consider whether a plaintiff has stated a claim on which it may recover.” Vietnam 17 Reform Party v. Viet Tan - Vietnam Reform Party, 416 F. Supp. 3d 948, 962 (N.D. Cal. 18 2019) (internal quotation marks omitted). “Of all the Eitel factors, courts often consider 19 the second and third factors to be the most important.” Id. 20 The complaint seeks forfeiture under two theories. First, the complaint asserts that 21 “the defendant currency was furnished or intended to be furnished by a person in exchange 22 for a controlled substance or listed chemical in violation of Title II of the Controlled 23 Substances Act, 21 U.S.C. § 801 et seq., or constitutes proceeds traceable to such an 24 exchange, or was used or intended to be used to facilitate a violation of Title II of the 25 Controlled Substances Act, 21 U.S.C. § 801 et seq., and [is] therefore subject to forfeiture 26 to the United States pursuant to 21 U.S.C. § 881(a)(6).” (Doc. 1 at 12.) Second, the 27 complaint asserts that the “defendant property constitutes or is derived from proceeds 28 traceable to some form of specified unlawful activity, [was used to] conduct[] and 1 attempted to conduct a financial transaction, i.e., the movement of the proceeds of 2 trafficking in controlled substances in violation of 18 U.S.C. § 1952, and therefore is 3 subject to forfeiture to the United States pursuant to 18 U.S.C. § 981(a)(1)(C).” (Id. at 12- 4 13.) 5 “Under 21 U.S.C. § 881(a)(6), seized money is subject to forfeiture if it is 6 (1) furnished or intended to be furnished in exchange for a controlled substance; (2) 7 traceable to such an exchange; or (3) used or intended to be used to facilitate a violation of 8 federal drug laws.” United States v. Currency, U.S. $42,500.00, 283 F.3d 977, 979-80 (9th 9 Cir. 2002). “The government has the initial burden of establishing probable cause 10 connecting the seized property with illegal drug transactions.” Id. In a contested action— 11 unlike this one—the burden then shifts to a claimant “to prove by a preponderance of the 12 evidence, that the money was not connected with illegal drug activity.” Id. 13 “The determination of probable cause is based on the aggregate of facts, including 14 circumstantial facts.” Id. “The government must show that it had reasonable grounds to 15 believe a connection existed between the property and drug activities, supported by more 16 than mere suspicion but less than prima facie proof.” Id. “Each case stands upon its own 17 facts, and the presence or absence of any one fact is not dispositive; indeed probable cause 18 is not an exacting standard.” Id. 19 Here, the facts, when viewed in the aggregate, establish probable cause that the 20 defendant property was obtained as proceeds from selling illicit drugs. The most telling 21 facts are Calvin’s text messages containing pricing and requests for various illicit drugs, 22 Calvin’s possession of marijuana and confession to selling marijuana, the large sum of 23 money itself, much of it in $20 bills, bundled with rubber bands,3 and the drug 24 paraphernalia, firearms, cash, and apparent drugs found at Calvin’s home. Calvin’s 25 inability to provide a consistent or detailed alternative explanation for how he obtained the 26 3 According to the well-pleaded allegations in the complaint, which are accepted as 27 true in light of the default, investigators consider a “large amount of money” with a “vast majority of the bills in the twenty-dollar denomination” to be “evidence that the money is 28 drug-related” and consider “bundling” the money “using rubber bands” to be “further evidence” of “drug trafficking or other illegal activity.” (Doc. 1 ¶ 26.) || money or why he was carrying it,* his one-way ticket, his electronic money-counter and 2|| three cell phones, his history of drug-related arrests, and his affiliation with Chappell are 3|| also telling. Taken as a whole, the Government had reasonable grounds to believe a connection existed between the property and drug activities, supported by more than mere 5 || suspicion. 6|| VI. Balancing The Factors 7 Having considered the Lite! factors, the Court concludes that default judgment is 8 || appropriate. 9 Accordingly, 10 IT IS ORDERED that Plaintiff's motion for default judgment (Doc. 11) is granted. A separate judgment will issue, after which the Clerk shall terminate this action. 12 Dated this 15th day of March, 2023. 13 14 } 9 fo 15 Dominic W. Lanza United States District Judge 16 . 17 18 19 20 21 22 4 Plaintiff notes that “Latonya Walters did submit a claim wherein she stated that she had given the defendant property to her son (Calvin K. Walters) to hold because she was not good with money and went on to advise that she obtained the defendant funds from her mot er upon her passing” and asserts that “[w]hile this explanation is consistent with Calvin K. Walters’ assertion that the defendant property came from his mother, it | contradicts his assertion that the money was in fact his and he intended to use it to further his rap career.” (Doc. 11 at 5.) The Court does not agree that Calvin’s explanation 26 necessarily undermined his mother’s claim. Latonya could have entrusted her inheritance to her son’s safekeeping, and her son could have decided to spend his mother’s money on his rap career rather than safeguarding it for her. However, in the absence of □□□□□□□ □□ participation in this litigation, the Court does not hesitate to conclude that the facts here 28 provide reasonable frounds to believe a connection existed between the property and drug activities, supported by more than mere suspicion. -10-