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Nature of Suit Code: 625
Nature of Suit: Drug Related Seizure of Property
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 25, 2002 Decided July 12, 2002

No. 01-5220

United States of America,

Appellee

v.

All Funds in Account Nos. 747.034/278,

747.009/278, & 747.714/278 Banco

Espanol de Credito, Spain,

Appellee

Nancy Marlene Vasquez-Martinez,

Appellant

Appeal from the United States District Court

for the District of Columbia

(97cv02436)

Raymond A. Connell argued the cause and filed the briefs

for appellant.

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Laurel Loomis, Attorney, U.S. Department of Justice, argued the cause and filed the brief for appellee.

Before: Sentelle, Henderson, and Randolph, Circuit

Judges.

Opinion for the Court filed by Circuit Judge Randolph.

Randolph, Circuit Judge: This is an appeal from the

judgment of the district court in favor of the United States in

a civil forfeiture action. The government brought the action

pursuant to 28 U.S.C. s 1355 and 21 U.S.C. s 881 against

$4.6 million on deposit at the Banco Espanol de Credito in

Madrid, Spain. The claimant, Nancy Marlene VasquezMartinez, intervened and argued that the court had no jurisdiction because the property was outside the court's territorial jurisdiction and because the five-year statute of limitations

had run. See 19 U.S.C. s 1621.

Vasquez is the wife of Juan Ramon Matta, the leader and

organizer of a crime ring that smuggled massive quantities of

cocaine into the United States in the 1980s. See, e.g., United

States v. Matta-Ballestreros, No. 91-50165, 1995 WL 746007

(9th Cir. Dec. 15, 1995) (per curiam). Matta is currently

imprisoned in a federal penitentiary. The $4.6 million, contained in three accounts at the Banco Espanol, is derived

from Matta's criminal operations. See United States v. All

Funds in Account Nos. 747.034/278, 747.009/278, &

747.714/278 in Banco Espanol de Credito, Spain, 141

F. Supp. 2d 548, 549 (D.D.C. 2001) [hereinafter Banco Espanol].

Civil forfeiture actions are brought against property, not

people. The owner of the property may intervene to protect

his interest. Forfeiture is an ancient penalty; its origins can

be traced to Biblical times. See generally Calero-Toledo v.

Pearson Yacht Leasing Co., 416 U.S. 663, 680-90 (1974),

citing Exodus 21:28 ("If a bull gores a man or a woman to

death, the bull must be stoned to death, and its meat must

not be eaten. But the owner of the bull will not be held

responsible."). Although the American common law did not

adopt forfeiture as a penalty, early federal statutes authorized

its imposition for violations of customs laws and revenue laws.

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Id. at 683. In exercising in rem jurisdiction, the court has

authority over the property (the res) and may adjudicate

claims of ownership. Traditionally, the property had to be

present within the court's territorial jurisdiction.

Even though the $4.6 million is outside of the United

States, the district court determined it had "constructive

possession" of the bank accounts because the record demonstrated "a degree of cooperation" such that a forfeiture order

from the court would likely be enforced by the Kingdom of

Spain. Banco Espanol, 141 F. Supp. 2d at 551. The district

court also held that the statute of limitations had been tolled.

For one of the bank accounts, containing $985,000 and first

discovered in 1992, the court held that the statute of limitations did not begin to run until 1993, the effective date of the

bilateral treaty between the United States and Spain providing for cooperation in the seizure of drug proceeds. See

Treaty on Mutual Legal Assistance in Criminal Matters, Nov.

20, 1990, U.S.-Spain, 1730 U.N.T.S. 113; Banco Espanol, 141

F. Supp. 2d at 553-54. The other two bank accounts were

not discovered until 1999. As to these accounts, the court

ruled that the funds had been concealed. Concealment tolls

the running of the limitations period for civil forfeiture. 19

U.S.C. s 1621(2).

Congress declared that "no property right shall exist" in

"all proceeds traceable" to illegal drug sales. 21 U.S.C.

s 881(a)(6). Both parties concede that the money at Banco

Espanol was earned through illegal narcotics activity, and--if

a United States court can order its forfeiture--then the

money must be forfeit. Vasquez claims that long-standing

precedent requires the district court to have possession of the

res before it may exercise in rem jurisdiction. For instance,

The Brig Ann, 13 U.S. (9 Cranch) 289, 291 (1815) (Story, J.),

an admiralty case, held that in "order to institute and perfect

proceedings in rem, it is necessary that the thing should be

actually or constructively within the reach of the Court."

See, e.g., La Vengeance, 3 U.S. (3 Dall.) 297 (1796).

The forfeiture provisions for drug proceeds adopt the traditional requirements "for violations of the customs laws" but

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only "insofar as applicable and not inconsistent" with the drug

forfeiture laws. 21 U.S.C. s 881(d). To the Second Circuit,

the traditional requirement that the property be present

within the court's territorial jurisdiction applies in drug forfeiture cases, but this may be satisfied through the court's

"constructive possession" of the property whenever the government has "demonstrated cooperation" such that the orders

of a United States court will be carried into effect by foreign

government officials. United States v. All Funds on Deposit

in any Accounts Maintained in the Names of Heriberto

Castro Meza, 63 F.3d 148, 153-54 (2d Cir. 1995). Following

the Second Circuit's approach, the district court found that

the "history of cooperation between authorities in the United

States and Spain" gave it jurisdiction. 141 F. Supp. 2d at

552.

The general statute governing forfeiture actions states that

"[u]nless otherwise provided by Act of Congress ... in cases

of seizures on land the forfeiture may be enforced by a

proceeding in libel which shall conform as near as may be to

proceedings in admiralty." 28 U.S.C. s 2461(b). If this were

the only statute providing jurisdiction, we too would have

little doubt that traditional rules of in rem jurisdiction developed under admiralty law would apply. But in 1992, Congress provided that "[w]henever property subject to forfeiture under the laws of the United States is located in a

foreign country, or has been detained or seized pursuant to

legal process or competent authority of a foreign government,

an action or proceeding for forfeiture may be brought ... in

the United States District court for the District of Columbia."

28 U.S.C. s 1355(b)(2).

The claimant argues that this statute merely provides

venue in the district court, rather than jurisdiction over

foreign assets. Subsection (d) of the same statute, however,

specifically refers to "[a]ny court with jurisdiction over a

forfeiture action pursuant to subsection (b)...." 28 U.S.C.

s 1355(d). It would make little sense for Congress to provide

venue in a district court if there were no means for that court

to exercise jurisdiction. The claimant answers that a foreign

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bia. But this does not explain the statute's reference to

property "located in a foreign country." 28 U.S.C. s 1355(b)

(emphasis added).

Senator D'Amato introduced S.1665, the Money Laundering Improvements Act, containing the language eventually

enacted as 28 U.S.C. s 1355(b). His explanatory statement

indicates that he, at least, meant to give the district courts

jurisdiction over the forfeiture of assets located in foreign

countries:

Subsection (b)(2) addresses a problem that arises whenever property subject to forfeiture under the laws of the

United States is located in a foreign country. As mentioned, under current law, it is probably no longer necessary to base in rem jurisdiction on the location of the

property if there have been sufficient contacts with the

district in which the suit is filed. See United States v.

$10,000 in U.S. Currency, [860 F.2d 1511 (9th Cir. 1988)].

No statute, however, says this, and the issue has to be

repeatedly litigated whenever a foreign government is

willing to give effect to a forfeiture order issued by a

United States court and turn over seized property to the

United States if only the United States is able to obtain

such an order.

Subsection (b)(2) resolves this problem by providing for

jurisdiction over such property in the United States

District Court for the District of Columbia, in the district

court for the district in which any of the acts giving rise

to the forfeiture occurred, or in any other district where

venue would be appropriate under a venue-for-forfeiture

statute.

* * *

137 Cong. Rec. 21,995, 21,998 (1991).

Although the Second Circuit in Meza, 63 F.3d at 152, held

that jurisdiction was not available under 28 U.S.C. s 1355 and

therefore applied the traditional rules of admiralty, a year

later the Second Circuit concluded that the 1992 amendments

"provide district courts with in rem jurisdiction over a res

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located in a foreign country." United States v. Certain

Funds Located at the Hong Kong & Shanghai Banking

Corp., 96 F.3d 20, 22 (2d Cir. 1996) [hereinafter Hong Kong

Banking]. The court of appeals went on to hold that the

jurisdictional amendments could be applied retroactively to

forfeiture actions begun before their enactment. Id.

We find ourselves in agreement with Hong Kong Banking.

Congress intended the District Court for the District of

Columbia, among others, to have jurisdiction to order the

forfeiture of property located in foreign countries. Unless

the Constitution commands otherwise-and the claimant has

raised no constitutional objections at all-the statute must be

enforced.* It may well be that a forfeiture order of a United

States court will not have its full effect until the res--the

money--is brought within the territory of the United States.

Cf. R.M.S. Titanic, Inc. v. Haver, 171 F.3d 943, 964-66 (4th

Cir. 1999). Spain may be expected to live up to its treaty

obligations, even if it would not otherwise be required to

effectuate the judgments of United States courts. But

Spain's compliance and cooperation determines only the effectiveness of the forfeiture orders of the district courts, not

their jurisdiction to issue those orders.

The remaining issue is whether the action was brought

within the limitations period. The general statute of limitations for forfeiture actions in admiralty, 21 U.S.C. s 1621,

applies to the forfeiture of drug proceeds. See United States

v. James Daniel Good Real Property, 510 U.S. 43, 63 (1993).

Under that provision, the limitations period is five years from

discovery of the offense. The statute is tolled during "any

concealment or absence of the property," id. We conclude

__________

* On appeal, Vasquez also argued that the district court lacked

jurisdiction because Congress did not provide for service of process

in foreign countries. But the district court issued a warrant for

arrest in rem, and a Spanish court restrained the funds pursuant to

a request from the Spanish government. And Vasquez had notice

and an opportunity to be heard in this forfeiture proceeding, so we

need not consider whether her status as a foreign national outside

the United States precludes any constitutional claims.

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that the statute of limitations had not run on any of the

accounts in Spain, although for reasons different than those

given by the district court. The $4.6 million was outside the

United States. This action therefore commenced during the

"absence of the property." The claimant argues that property cannot be absent unless it was first in this country and

then removed. There is no particular reason, at least none

the claimant has offered, for stretching the word "absence" to

mean something other than not present. If Congress had

meant what the claimant suggests, we would expect some

reference in the statute to the act of removal, but there is

none. When we ask why Congress would have wanted to toll

the limitations period for drug profits removed from this

country but not for payments deposited directly in foreign

accounts, no sensible answer comes to mind. Nor do we

believe property in a foreign country is no longer absent from

the United States simply because a foreign government is

willing to assist a forfeiture action seeking its return. In

short, when property is not here it is absent. We recognize

that our reading tolls the running of the limitations period

indefinitely for bringing actions against drug proceeds located

in foreign countries. But given the uncertainties of foreign

cooperation, Congress may not have wanted to force the

government to bring forfeiture proceedings within five years

to recover such property. Because the limitations period was

tolled on all three accounts in Spain, we do not reach the

district court's holding that two of the accounts were also

concealed.

Affirmed.

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