Court Opinion

ID: 8976561
Source: CourtListenerOpinion
Date Created: 2022-11-27 11:00:38.320241+00
Date Added: 2024-06-11T17:10:34.357363
License: Public Domain

HATCHETT, Circuit Judge.
In this forfeiture action, the government urges the reversal of the district court’s ruling that the government failed to sufficiently allege and prove the forfeitability of property a convicted drug dealer purchased with cash, but titled in the name of a person not involved in drug dealing who claims to be the supplier of the cash. We affirm.
I. FACTS
Donald K. Daniel (“Daniel”), the claimant, has been in the logging business since 1979. During July of 1983, he purchased a used International model TD15D dozer from J.C. Pate, Jr. for $16,000. Pate and Daniel were life-long friends, and Pate frequently operated dozers for Daniel. Daniel uses the dozer to build access roads for his logging trucks. When the dozer needed repairs, Daniel asked Pate to haul the doz-er to a repair shop. When the repairs were estimated at more than the value of the dozer, the tractor dealer offered to accept the used dozer as a trade-in on a new TD12 dozer.
On August 9, 1983, Daniel brought $65,-000 in cash to the home of Dorothy Daniel, his sister-in-law and bookkeeper. She delivered the cash to Pate, and he purchased the new dozer, putting it initially in the name of Bobby Daniel, Dorothy Daniel’s husband. On August 18, 1983, Dorothy Daniel received the bill of sale for the dozer through the mail. She asked Daniel and her husband about the name on the bill of sale, and subsequently arranged for Daniel’s name to appear on the bill of sale. Daniel placed the dozer on the books of the logging business and depreciated it on the business’s state and federal income tax returns.
II. PROCEDURAL HISTORY
On April 4, 1988, the government filed a civil complaint for forfeiture of real property belonging to Jackie D. Wilson, J.C. Pate, Jr., and Rita Pate. The complaint also sought the forfeiture of $35,350.22 in cash, and one International Hough Model TD 12 dozer with all appurtenances and equipment — the dozer in Daniel’s name.
In paragraph one (1) of the complaint, the government alleged that the defendant properties were subject to forfeiture pursuant to 21 U.S.C. § 881(a)(6).1 Paragraph seven (7) of the complaint, which described the dozer, makes no reference to the controlling statute or to the theory supporting forfeiture pursuant to the statute.2 The *1248government expressly referred to the statute and to a substantial connection between the described property and illegal drug transactions concerning each of the other properties.
On April 18, 1988, Daniel filed an answer to the complaint and a motion for judgment on the pleadings, which the district court treated as a motion for summary judgment. Daniel supported his motion with two affidavits showing that he purchased the dozer for his logging business and that he purchased it with “legitimate” funds. The government submitted an affidavit of Donald W. McArthur, Special Agent, Federal Bureau of Investigation (FBI), stating that Pate purchased the dozer for Daniel with cash, and that Pate had been convicted of illegal drug trafficking. The FBI agent’s affidavit further stated that Pate had shown a pattern of buying real and personal property in the names of other individuals, that he was a close associate of Donald Daniel and Bobby Daniel, and that the purchase of the dozer for $65,000 in cash is characteristic of individuals involved in illegal drug activity.
On December 8, 1988, the district court granted summary judgment in favor of Daniel, finding no genuine issue as to any material fact and that Daniel was entitled to a judgment as a matter of law. The district court found that the complaint did not show probable cause because the government did not specifically allege that Daniel acquired the dozer as a thing of value in exchange for a controlled substance or that the dozer was traceable to such an exchange as required under the statute.3 The district court also found the FBI agent’s affidavit insufficient to create a genuine material issue of fact when compared with the affidavits of Daniel and his bookkeeper that the dozer was purchased with Daniel’s $65,000 in cash. The district court specifically found no substantial evidence that Daniel or his bookkeeper filed false affidavits. It also found no substantial evidence to support a reasonable inference that Pate owned the dozer.
On December 8, 1988, the district court granted Daniel’s motion for summary judgment and ordered the government to relinquish possession and control of the property to Daniel. On December 22, 1988, the government filed a motion seeking a stay of the return of the dozer and a motion for reconsideration of the district court’s order granting summary judgment. The court denied both motions. Finally, on January 17, 1989, the district court denied the government’s second motion for a stay of the December 8 order.
III. CONTENTIONS OF THE PARTIES
The government contends that release of the dozer from the custody of the United States Marshal does not deprive the court of jurisdiction. The government also contends that the district court erred in granting summary judgment because a genuine issue of material fact exists as to whether Daniel is an “innocent owner,” as defined in 21 U.S.C. § 881(a)(6). Daniel contends that his stipulation not to remove the dozer from the jurisdiction is an insufficient basis for this court to exercise jurisdiction over the dozer. Daniel also contends that the speculations and conjectures contained in the FBI agent’s affidavit are not legally sufficient to create a genuine issue of material facts.
IV. ISSUES
The issues presented are (1) whether this court has jurisdiction over the dozer, and (2) whether the district court properly granted Daniel’s motion for summary judgment.
*1249V. DISCUSSION
A. Jurisdiction
The court has jurisdiction over the dozer. In rem jurisdiction derives entirely from the court’s control over the defendant res. United States v. One Lear Jet Aircraft, 836 F.2d 1571 (11th Cir.) (in banc), cert. denied, 487 U.S. 1204, 108 S.Ct. 2844, 101 L.Ed.2d 881 (1988). In One Lear Jet, the court held that it lacked in rem jurisdiction over the aircraft because it had been removed from the court’s territorial jurisdiction at the time of the appeal. The claimant did not file a motion for stay of judgment with the district court or a supersedeas bond with the appellate court. After the expiration of the automatic ten-day stay provided by Federal Rule of Civil Procedure 62(a), the government removed the aircraft to a warehouse in Missouri.4 In United States v. One (1) 1983 Homemade Vessel Named Barracuda, 858 F.2d 643 (11th Cir.1988), the court found that it had jurisdiction over a fishing vessel that lay sunken on the bottom of Biscayne Bay. The government argued that because of the physical changes in the vessel and because of the virtual impossibility of salvaging it, the court should treat the vessel as if it had been removed from the court’s jurisdiction. The court declined to treat the ability to salvage the boat as dispositive; “once in rem jurisdiction has attached, it is not defeated solely because a physical change occurs in the res.” One 1983 Homemade Vessel Named Barracuda, 858 F.2d at 647.
The government has diligently attempted to maintain the court’s jurisdiction over the defendant dozer. The district court denied two motions seeking a stay of the return of the dozer. The government contends that jurisdiction is supported by Daniel’s sworn affidavit filed on December 28, 1988, in
support of his response m opposition to the government’s motion for a stay. In this affidavit, Daniel states: “I will not remove my dozer from the Northern District [of Alabama] so long as there are any pending proceedings in this case. Therefore, there will be no loss of jurisdiction.”
Daniel does not now assert that the doz-er has been removed from this court’s territorial jurisdiction.5 Absent any claim that the dozer is not within the court’s jurisdiction, we find in rem jurisdiction over it.
B. Summary Judgment
The government contends that the district court erred in granting summary judgment for Daniel because a genuine issue of material fact existed concerning the source of the funds used to purchase the dozer.
1. Probable Cause for Forfeiture
In order to establish probable cause for forfeiture under section 881(a)(6), the government must show that “a substantial connection exists between the property to be forfeited and an illegal exchange of a controlled substance.” United States v. A Single Family Residence and Real Property Located at 900 Rio Vista Bird., 803 F.2d 625, 628 (11th Cir.1986) (citing United States v. Four Million, Two Hundred Fifty-Five Thousand, 762 F.2d 895 (11th Cir. 1985), cert. denied, 474 U.S. 1056, 106 S.Ct. 795, 88 L.Ed.2d 772 (1986)) ($4,255,625.39). In demonstrating a substantial connection between the property and illegal drug transactions, the government is not required to show a relationship between the property and a specific drug transaction. $4,255,625.39, 762 F.2d at 904. The government’s burden of demonstrating probable cause requires “less than prima facie proof but more than mere suspicion.” *1250United States v. One 1978 Chevrolet Impala, 614 F.2d 983, 984 (5th Cir.1980).
The district court found that the government’s pleadings were insufficient to establish a substantial connection between Pate’s illegal drug transactions and the purchase of the dozer. We agree. In addition to failing to specify what subsection of the forfeiture statute it was proceeding under regarding the dozer, the government’s pleadings failed to state any connection between the purchase of the dozer and illegal drug transactions. Although the government may establish probable cause by circumstantial evidence, United States v. One 1976 Ford F-150 Pick-Up, 769 F.2d 525 (8th Cir.1985), pleadings which merely allege that the dozer was purchased with cash and placed in the name of a person other than the cash bearer do not sufficiently establish probable cause.
In United States v. $38,000 in United States Currency, 816 F.2d 1538 (11th Cir. 1987), we held that the government’s complaint failed to establish probable cause for the forfeiture because it was “completely devoid of factual support for the government’s allegation that it [had] probable cause for forfeiture under section 881.” In that case, a Drug Enforcement Administration (“DEA”) agent had seized $38,000 from a person in the Atlanta Hartsfield Airport. The person holding the money claimed that he was delivering the cash to a friend’s mother in Miami, Florida.
Where we have found probable cause for forfeiture, the government has demonstrated a far more substantial connection between the property and illegal drug transactions. In United States v. Four Million, Two Hundred Fifty-Five Thousand, 762 F.2d 895 (11th Cir.1985), cert. denied, 474 U.S. 1056, 106 S.Ct. 795, 88 L.Ed.2d 772 (1986), we upheld the forfeiture under section 881(a)(6) where the “totality of the circumstances” overwhelmingly connected the funds to illegal drugs. That case involved a money-laundering scheme in which the claimant held a checking account in the name of his travel agency and money exchange house. An employee of the claimant made cash deposits of one to two million dollars to the account as often as two or three times a week. The employee received the cash from Colombian couriers who did not request, and on occasion refused to accept, receipts for the cash, which consisted mostly of small and medium denomination bills. The claimant alleged that the purpose of the account was to facilitate the transfer of United States dollars into checks on the account or pesos to be delivered by the claimant’s business in Colombia. We found that the totality of the circumstances including the nationality of the couriers and the amount of money involved — over $242,000,000 passed through the account in less than 8 months — established probable cause to believe that a substantial connection existed between the forfeited money and illegal drug transactions. The totality of the circumstances in United States v. $41,305.00 in Currency and Travelers Checks, 802 F.2d 1339 (11th Cir.1986), also established probable cause for the forfeiture. We relied on eight factors in that case including the correlation between the amount of money seized and the price of a kilo of cocaine. $41,305.00, 802 F.2d at 1344.
In A Single Family Residence, the court found that probable cause existed for a forfeiture because the drug trafficker admitted to co-conspirators that the property was purchased with proceeds from the sale of illicit drugs and that the claimant corporation had been formed specifically to hide assets from illegal drug transactions. Based on this evidence, the court found probable cause to believe that the property was purchased with profits from illegal drug sales and that the drug trafficker was the beneficial owner of the property. A Single Family Residence, 803 F.2d at 629.
By comparison, the evidence in this case is deficient in establishing a substantial connection between the dozer and illegal drug transactions. For example, the government failed to offer co-conspirator admissions or any evidence linking the doz-er to illegal drug transactions. Likewise, the government offered no evidence to show that Daniel’s logging business was *1251merely a front for hiding Pate's illegal drug trafficking. On motion for summary judgment, the FBI agent based his affidavit on his personal conclusions that because Pate, a convicted drug trafficker, had a pattern of making cash purchases in the names of others, the dozer was purchased with illegal drug proceeds. We find such conclusory allegations insufficient to suggest the probable cause requirement of a "substantial connection" between the doz-er-owned by a legitimate businessman- and illegal drug transactions.
2. Claimant’s Burden of Proof
“Once the government demonstrates that probable cause exists, the burden of proof in a civil forfeiture proceeding shifts to the claimant to establish by a preponderance of the evidence that the property is not subject to forfeiture.” A Single Family Residence, 80S F.2d at 629 (citing $4,255,625.39, 762 F.2d at 904). The claimant can meet this burden in one of two ways: (1) by rebutting the government’s evidence that the property represents proceeds of illegal drug activities; or (2) by showing that it is an innocent owner without knowledge of the property’s connection with illegal drug transactions. A Single Family Residence, 803 F.2d at 629. Daniel does not claim innocent ownership; he offers proof that the dozer has no connection with illegal drug transactions. The affidavits of Daniel and his bookkeeper establish that the dozer was purchased with legitimate funds from Daniel’s logging business. The bookkeeper also stated in her affidavit that Daniel transacted virtually all of his business in cash.
Daniel contends that even if probable cause existed for the seizure of the dozer, the district court’s grant of summary judgment was proper because Daniel was entitled to judgment as a matter of law. The grant of summary judgment will be affirmed if the government submits insufficient evidence to send the case to a jury. See Everett v. Napper, 833 F.2d 1507, 1510 (11th Cir.1987). Even viewed in the light most favorable to the government, the evidence supporting forfeiture only amounts to speculation and conjecture. The government’s case is based on the following evidence: (1) Pate had recently pleaded guilty to managing a continuing criminal enterprise involving illegal drugs; (2) Pate was a life-long friend of Donald Daniel; (3) Pate had shown a pattern of purchasing real and personal property with proceeds from illegal drug transactions in other names; (4) photographs show the dozer parked at Pate’s residence and Pate driving it; and (5) the dozer was purchased with cash, a common practice of individuals involved in illegal drug activities.
In response to the photographs, Daniel explained that he often let Pate use the dozer in exchange for Pate’s uncompensated work for the logging business. The other evidence only tends to indict Pate, not Daniel’s legitimate ownership of the dozer. Daniel has not been implicated in drug trafficking. He has shown a legitimate source for the funds used to purchase the dozer and a legitimate business purpose for its use. Cf. A Single Family Residence, 803 F.2d at 629 (fictitious corporation set up by drug trafficker in the name of a third person to hide drug proceeds).
It is a well-established principle of law that forfeitures are not favored and should only be enforced when they are within the spirit and letter of the law. United States v. One Ford Coach, 307 U.S. 219, 226, 59 S.Ct. 861, 865, 83 L.Ed. 1249 (1939). If the evidence offered by the government here is sufficient to cause the forfeiture of property, the property of any friend of a drug trafficker would be subject to forfeiture simply because a purchase was made with cash. Such conclusory allegations of connection to drug transactions are not sufficient to defeat Daniel’s proof by a preponderance of the evidence that the dozer was purchased with legitimate funds. We hold, therefore, that Daniel was entitled to summary judgment as a matter of law.
YI. CONCLUSION
Finding that we have jurisdiction over this case, we conclude that the district *1252court properly granted summary judgment in favor of Daniel.
AFFIRMED.

. Title 21 U.S.C. § 881(a)(6) provides:
(a) The following shall be subject to forfeiture to the United States and no property right shall exist in them:
(6) All moneys, negotiable instruments, securities, or other things of value furnished or intended to be furnished by any person in exchange for a controlled substance in violation of this subchapter, all proceeds traceable to such an exchange, and all moneys, negotiable instruments, and securities used or intended to be used to facilitate any violation of this subchapter, except that no property shall be forfeited under this paragraph, to the extent of the interest of an owner, by reason of any act or omission established by that owner to have been committed or omitted without the knowledge or consent of that owner. [Emphasis added.]

. 7. On or about August 9, 1983, One (1) International Hough Model TD12 Dozer equipped with D-2 hydraulic straight blade with hydraulic tilt, rops canopy, 22" track shoes, engine enclosures with perforated hood, back up alarm and all other standard equipment (S/N 729) was purchased with $65,000.00 in cash plus a trade in by J.C. Pate, Jr. On or about May 16, 1984, a new International Hough Ripper Model 21RS was purchased for this dozer by J.C. Pate, Jr. for $12,025.70 in currency. The transactions were carried out in the name of Bobby Daniels.
8. Confidential informants have informed federal agents that J.C. Pate, Jr. and Jackie D. Watson have been active in the importation of marijuana, cocaine, and other controlled substances since at least 1980. In October 1984, an unclaimed aircraft was seized by agents of the Drug Enforcement Administration on Parcel 1; the aircraft contained marijuana residue and J.C. Pate, Jr.’s fingerprints. Neither *1248Pate nor Wilson show income on their Federal tax returns which would support the large amount of currency expended as set forth in paragraphs 2 through 7, supra.
The complaint also identified Bobby and Donald Daniel as potential claimants of the dozer, but does not allege any connection between either Daniel and illegal drug transactions.

. In an abundance of caution, the district court separately considered whether the government alleged sufficient facts to show probable cause for forfeiture under any subsection of 21 U.S.C. § 881.

. Fed.R.Civ.P. 62(a) provides:
Except as stated herein, no execution shall issue upon a judgment nor shall proceedings be taken for its enforcement until the expiration of 10 days after its entry.

. Although accidental, fraudulent, or improper removal of the res does not destroy in rem jurisdiction, after the expiration of the automatic ten-day stay provided in Federal Rule of Civil Procedure 62(a) and absent a stay pending appeal, a prevailing plaintiff is free to do as it wishes with the res, including removing it from the court’s jurisdiction. U.S. v. One Lear Jet Aircraft, 836 F.2d at 1574 n. 2. We need not consider, however, the hypothetical question of whether Daniel would be subject to legal sanctions for violating the promise in his affidavit.