Court Opinion

ID: 9297077
Source: CourtListenerOpinion
Date Created: 2022-11-29 19:01:32.475128+00
Date Added: 2024-06-11T17:13:23.823635
License: Public Domain

IN THE
             ARIZONA COURT OF APPEALS
                              DIVISION ONE

                            In re the Matter of:

                U.S. CURRENCY ($39,500.00 DOLLARS)
            ____________________________________________

                 STATE OF ARIZONA, Plaintiff/Appellee,

                                      v.

                  JERRY JOHNSON, Claimant/Appellant.

                          No. 1 CA-CV 21-0060
                           FILED 11-29-2022

           Appeal from the Superior Court in Maricopa County
                          No. CV2020-012190
               The Honorable Randall H. Warner, Judge

                    REVERSED AND REMANDED

                                COUNSEL

Maricopa County Attorney’s Office, Phoenix
By Dallen Gardner
Counsel for Plaintiff/Appellee

Diggs Law PLC, Phoenix
By Keith Everett Diggs
Co-Counsel for Claimant/Appellant
Institute for Justice, Arlington, Virginia
By Dan Alban
Co-Counsel for Claimant/Appellant

Martinet Law, Phoenix
By Philippe Martinet
Co-Counsel for Claimant/Appellant

Goldwater Institute, Phoenix
By Stephen E. Silverman
Counsel for Amicus Curiae

                                  OPINION

Presiding Judge Peter B. Swann delivered the opinion of the court, in which
Judge David D. Weinzweig and Judge Paul J. McMurdie joined.

S W A N N, Judge:

¶1            This is an appeal from the superior court’s orders denying
Jerry Johnson’s claim to $39,500 cash and entering a judgment of forfeiture.
We reverse and remand because the court impermissibly considered
whether there was probable cause for the forfeiture in finding that Johnson
failed to meet his burden of proving ownership of the money under A.R.S.
§ 13-4310(D) (2017)1, and Johnson in fact proved he owned the money by a
preponderance of the evidence.

                 FACTS AND PROCEDURAL HISTORY

¶2            On August 17, 2020, the Drug Enforcement Bureau of the
Phoenix Police Department (the “Bureau”) received Johnson’s travel
itinerary from a confidential informant. According to the itinerary, Johnson
was flying with a checked bag from North Carolina to Phoenix, he would
be in Phoenix for less than 48 hours, and he had booked the flight less than
24 hours before departure. The Bureau conducted a background check on

1      We cite the 2017 version of the applicable statutes because revisions
have occurred since the superior court’s orders that would have been
material to this case had it arisen after the revisions. Most importantly, in
2021, the legislature amended the statutory forfeiture scheme to require that
forfeiture arise from an actual criminal conviction. 2021 Ariz. Sess. Laws,
ch. 327, § 12 (1st Reg. Sess.) (H.B. 2810).

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                            STATE v. JOHNSON
                            Opinion of the Court

Johnson, which revealed several drug-related arrests. Based on this
information, the Bureau flagged Johnson as a probable drug courier and
decided to confront him on arrival.

¶3           Three detectives waited for Johnson at baggage claim.
Johnson consented to a search, and the detectives found $39,500 in cash
between Johnson’s two bags. Johnson signed a disclaimer of ownership,
and the detectives seized the money.

¶4            Johnson was never charged with a crime, but the state began
forfeiture proceedings, filing a notice of seizure for forfeiture and a notice
of pending forfeiture in the superior court under A.R.S. § 13-4307. Johnson
timely objected to the forfeiture and avowed that he owned the money. See
A.R.S. § 13-4311(D), (E). The state then filed a complaint alleging that the
money was used or intended to be used in a transaction involving
prohibited drugs, and constituted proceeds of a transaction involving
prohibited drugs. The state also alleged that Johnson knew or had reason
to know that he was transporting and concealing racketeering proceeds. See
A.R.S. §§ 13-2314(G)(3), -2317(B). Johnson filed an answer and requested a
probable cause hearing. See A.R.S. § 13-4310(B). The superior court issued
an order to show cause. See id.

¶5              The court properly began the probable cause hearing by
having Johnson prove he owned the money by a preponderance of the
evidence pursuant to A.R.S. § 13-4310(D). Johnson testified that he received
the money from two sources: his trucking business and a $9,000 loan from
his uncle. He said he flew to Phoenix to buy a truck at auction for his
business, and brought cash because he thought he would get a better deal
than if he financed the truck. As proof of ownership, Johnson presented his
tax returns from 2015 through 2018; an account statement, which had a
balance of over $42,000 and showed a withdrawal of over $18,000; a
document showing transfers of over $19,000 to Johnson’s account; an
affidavit in which Johnson’s uncle avowed he loaned Johnson $9,000 to
purchase a truck for his business; and evidence of Johnson’s trucking
business. During the hearing, the court twice said that Johnson met his
burden of proving ownership because “he[ ] testified that [it] was his cash,
and . . . that’s sufficient.”

¶6             Even so, the state asked the court to reserve any decision on
ownership until the state presented its evidence, and the court agreed. The
state informed the court that it would “give . . . the probable cause part, too,
so we can kill two birds with one stone.” As evidence of probable cause,
the state called one of the detectives who confronted Johnson at the airport

                                       3
                           STATE v. JOHNSON
                           Opinion of the Court

to testify how Johnson fit the drug courier profile. The detective testified
that drug couriers usually book flights 24 to 48 hours before departure and
often have quick turnaround trips. He testified that drug couriers often
travel with a large sum of cash to avoid bank records of the transaction,
store the cash in bundles secured by rubber bands, and place it in a checked
bag to evade detection by airport officials. The detective identified Arizona
as a drug-source state because of its proximity to Mexico and testified that
the cash involved in drug transactions flies from east to west while drugs
fly from west to east.

¶7             Johnson fit this profile. He booked a flight from North
Carolina to Arizona less than 24 hours before departure. He was traveling
with $39,500 in cash, most of which was stored in rubber-band bundles in
his checked bag, and a detective said the money smelled like marijuana.
His return flight was less than 48 hours after he landed in Phoenix. Finally,
Johnson has a prior drug conviction.2

¶8            To disprove ownership, the detective stressed that Johnson
did not know how much money he had in his bags. Before the detective
searched Johnson’s bags, Johnson informed the detective that he had
$10,000 in cash in his suitcase. But as the detective’s search revealed more
money, Johnson claimed to be carrying anywhere from $10,000 to $40,000,
stating that he “really didn’t know” how much he had on him. The
detective also identified Johnson’s conflicting statements about the source
of the money. At the airport, Johnson said he had borrowed money from
his mother and sisters. But at the hearing, Johnson presented evidence that
he borrowed money from his uncle.              The detective pointed out
inconsistencies in Johnson’s statements about his return flight. In his
verified claim, Johnson said he planned to purchase the truck and drive it
back to North Carolina, despite booking a return flight for two days after
he arrived. But Johnson testified that he was only going to inspect the truck
because the auction was not for another week and there was no guarantee
he would purchase the truck. He also said that he made a mistake in
booking his return flight and planned to stay in Phoenix until the auction.
Finally, the detective questioned Johnson’s purported reason for the trip
because the auction no longer accepted in-person bidding or cash

2      These facts, taken together, prove nothing. “A drug courier profile
is a loose assortment of general, often contradictory, characteristics and
behaviors used by police officers to explain their reasons for stopping and
questioning persons about possible illegal drug activity.” State v. Lee, 191
Ariz. 542, 544, ¶ 10 (1998). Arizona prohibits the use of such evidence to
prove substantive guilt in criminal cases. Id. at 545, ¶ 12.

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                           STATE v. JOHNSON
                           Opinion of the Court

payments, which Johnson would have learned when he visited the
auction’s website.

¶9            The superior court found that Johnson failed to prove he
owned the money by a preponderance of the evidence. The court found
that Johnson’s testimony was “not believable.” It reasoned that “[a]s
between two possibilities—that [Johnson] flew with his own cash to
possibly buy a truck, or that [Johnson] was transporting the proceeds of
drug transactions—the latter is more likely.” The court never reached the
issue of probable cause. Accordingly, the court denied Johnson’s claim to
the money. With no claims of ownership in the money remaining at the
end of the statutory period to contest the forfeiture, the state moved for a
judgment of forfeiture, which the court granted. See A.R.S. §§ 13-4311(D),
-4314(A).

¶10           Johnson appeals.

                               DISCUSSION

I.     THE SUPERIOR COURT ERRED BY CONFLATING EVIDENCE OF
       PROBABLE CAUSE WITH EVIDENCE OF OWNERSHIP IN
       FINDING THAT JOHNSON FAILED TO PROVE OWNERSHIP OF
       THE MONEY.

¶11           Johnson argues that the superior court improperly merged
the standing inquiry with the merits inquiry by requiring him to prove the
money was not connected to criminal activity to own the money. See A.R.S.
§§ 13-4310(B), (D), -4311(M). He contends that the court’s interpretation of
§ 13-4310(D) violated due process. We review questions of statutory
interpretation and constitutional law de novo. In re U.S. Currency in the
Amount of $26,980.00 (“$26,980.00 I”), 193 Ariz. 427, 429, ¶ 5 (App. 1998).

¶12            To contest a forfeiture action, a claimant must file a verified
claim that meets the requirements of § 13-4311(E), which include “[t]he
nature and extent of the claimant’s interest in the property,” “the
circumstances of the claimant’s acquisition of the interest in the property,”
and any facts supporting the claim. When property is seized without a
prior judicial determination of probable cause, the claimant may request a
hearing on the sole issue of whether probable cause for the forfeiture then
exists. A.R.S. § 13-4310(B). In any judicial forfeiture hearing, the claimant
must prove by a preponderance of the evidence that he owns the property
before any other evidence is taken. A.R.S. § 13-4310(D). The state may, but
need not, rebut the claimant’s ownership interest. Id. If the claimant proves
ownership by a preponderance of the evidence, the court then collects

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                           STATE v. JOHNSON
                           Opinion of the Court

evidence and determines whether the state has probable cause for the
forfeiture. See A.R.S. § 13-4310(B), (D).

¶13            The burden of proving probable cause is on the state. A.R.S.
§ 13-4310(B); In re U.S. Currency in the Amount of $315,900.00, 183 Ariz. 208,
211 (App. 1995). If the state fails to prove probable cause for forfeiture of
the property, the property must be returned to the claimant pending a final
hearing on whether the property is subject to forfeiture. A.R.S. § 13-4310(B).
If the state proves probable cause for the forfeiture, the property remains in
the state’s possession until the forfeiture hearing. Id. At the forfeiture
hearing, the state has the burden of proving by clear and convincing
evidence that the property is connected to criminal activity and subject to
forfeiture. See A.R.S. § 13-4311(M).

¶14            In finding that Johnson failed to prove ownership by a
preponderance of the evidence, the court relied in part on evidence of
probable cause for the forfeiture, including that Johnson was carrying cash
for the truck rather than using a bank, the money was hidden and stored in
a suspicious manner, and there were several indicia of criminal activity
present, including the last-minute flight purchase, the short trip, and that
Johnson was carrying “so much cash” that smelled like marijuana. But
evidence that Johnson fit the drug courier profile, by the state’s own
argument, went to probable cause, not ownership. Accordingly, the court
committed legal error by considering evidence of probable cause in finding
that Johnson failed to prove ownership. See A.R.S. § 13-4310(D). This was
not a trivial or technical error—by using evidence of probable cause to
defeat Johnson’s claim of ownership, the court effectively transformed
evidence of probable cause into a substitute for the clear and convincing
proof of criminal activity that § 13-4311(M) requires.

¶15            Johnson argues that if § 13-4310(D) requires a claimant to
prove that his ownership is not connected to criminal activity, the statute
violates due process. The statute as written did not violate due process. As
discussed above, the statute requires a claimant to prove ownership by a
preponderance of the evidence. A.R.S. § 13-4310(D). This is a low burden.
During Johnson’s presentation of evidence, the superior court correctly
acknowledged that any evidence of ownership, including a claimant’s
testimony that the property is his, without evidence that the property
belonged to someone else, will likely be sufficient to prove ownership. So
even if a claimant traveled with money to participate in a drug transaction,
the claimant could still prove he owned the money. A person may own ill-
gotten gains.

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                            STATE v. JOHNSON
                            Opinion of the Court

¶16           But the manner in which the court applied the statute to
Johnson violated due process. By conflating evidence of probable cause for
the forfeiture with proof of ownership, the court placed the burden on
Johnson to prove the money was not connected to criminal activity—merely
to have standing to challenge the forfeiture. But see In re U.S. Currency in
the Amount of $315,900.00, 183 Ariz. at 216 (“[T]here is nothing even
remotely criminal in possessing . . . a large sum of cash.”) (internal
quotation marks and citation omitted). The burden of proving that
property is connected to criminal activity and thus subject to forfeiture is a
burden placed squarely on the state under § 13-4311(M). By shifting this
burden to Johnson, the court violated due process. See Nelson v. Colorado,
137 S. Ct. 1249, 1256 (2017) (“[T]o get their money back, defendants should
not be saddled with any proof burden. Instead, . . . they are entitled to be
presumed innocent.”); see also Harjo v. City of Albuquerque, 307 F. Supp. 3d
1163, 1210–11 (D.N.M.), modified, 326 F. Supp. 3d 1145 (D.N.M. 2018)
(holding that a forfeiture ordinance requiring a claimant to prove her
innocence creates a risk of erroneous deprivation violating due process).

II.    JOHNSON PROVED OWNERSHIP OF THE MONEY BY A
       PREPONDERANCE OF THE EVIDENCE.

¶17           Johnson also argues that he met his burden of proving
ownership.      “[W]hether a claimant has proven ownership by a
preponderance of the evidence is a question of fact.” In re U.S. Currency in
Amount of $26,980.00 (“$26,980.00 II”), 199 Ariz. 291, 295, ¶ 9 (App. 2000).
We accept the court’s factual findings unless clearly erroneous. Id. “[W]e
do not reweigh conflicting evidence or redetermine the preponderance of
the evidence, but examine the record only to determine whether substantial
evidence exists to support the trial court’s action.” Id. at ¶ 10 (citation
omitted).

¶18            Stripped of the evidence pertaining to probable cause, the
record does not support the court’s finding that Johnson failed to prove
ownership by a preponderance of the evidence. The court could properly
have considered the conflicting evidence about which of Johnson’s relatives
some of the funds came from, the disclaimer of ownership, and Johnson’s
lack of knowledge about how much money he was carrying, because this
evidence goes toward the credibility of his claim of ownership. See In re
U.S. Currency in the Amount of $315,900.00, 183 Ariz. at 211 (assessing the
credibility of witnesses is a matter clearly within the province of the trier of
fact). But the court went beyond this evidence, despite its acknowledgment
at the hearing that Johnson had proved ownership.

                                       7
                           STATE v. JOHNSON
                           Opinion of the Court

¶19             The state argues that Johnson failed to prove ownership, but
if it is not Johnson’s money, then whose money is it? The state failed to
introduce any evidence of who owned the money. See $26,980.00 II, 199
Ariz. at 295, ¶ 11 (finding the state’s evidence that the claimant could be an
intermediary in a drug transaction fell short of affirmative evidence that
another individual was the true owner). And no one else filed a claim for
the money. Accordingly, we hold that the court erred in finding that
Johnson did not meet his burden of proving ownership when he presented
evidence of ownership, and the state failed to present any evidence of who
the true owner was.

¶20            Our determination that Johnson met his burden of proving
ownership by a preponderance of the evidence comports with the aims of
the standing requirements under § 13-4311(E) and § 13-4310(D). The
standing requirements in forfeiture cases exist because the “danger of false
claims in these cases is substantial.” In re $70,269.91 in U.S. Currency, 172
Ariz. 15, 20 (App. 1991) (citation omitted). Here, the danger of false claims
is slight. The detectives seized the money directly from Johnson. Johnson
filed a timely verified claim asserting that he owned the money. He
presented testimony and documentary evidence that the money consisted
of income from his trucking business and a loan from his uncle. The state
did not present evidence that someone else owned the money, nor were any
other claims filed. See Wohlstrom v. Buchanan, 180 Ariz. 389, 393 (1994)
(finding the state’s concerns of protecting against fraudulent claims were
alleviated where the claimant asserted that he owned the money, the money
was taken directly from the claimant’s possession, and no one else claimed
an interest in it). And the superior court acknowledged twice that Johnson
proved ownership before the state put on its evidence.

                                      8
                          STATE v. JOHNSON
                          Opinion of the Court

                             CONCLUSION

¶21           The court committed legal error by considering evidence of
probable cause in finding that Johnson did not prove he owned the money
by a preponderance of the evidence. Considering the evidence of
ownership presented by the parties, the court also erred in finding that
Johnson did not meet his burden of proving he owned the money by a
preponderance of the evidence. Accordingly, we reverse the orders
denying Johnson’s claim and entering a judgment of forfeiture, and remand
the matter for further proceedings.

                         AMY M. WOOD • Clerk of the Court
                         FILED: AA

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