Court Opinion

ID: 615376
Source: CourtListenerOpinion
Date Created: 2011-10-14 18:41:19+00
Date Added: 2024-06-11T17:50:33.323904
License: Public Domain

UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT

                               No. 09-1496

UNITED STATES OF AMERICA,

                Plaintiff - Appellee,

TONY LYNN BAILEY,

                Claimant - Appellant,

           v.

CURRENCY, U.S., $147,900.00,

                Defendant.

Appeal from the United States District Court for the Middle
District of North Carolina, at Greensboro. James A. Beaty, Jr.,
Chief District Judge. (1:06-cv-00197-JAB-PTS)

Argued:   September 22, 2011                 Decided:   October 14, 2011

Before MOTZ, GREGORY, and SHEDD, Circuit Judges.

Affirmed in part, reversed in part, and remanded by unpublished
per curiam opinion.

ARGUED: John Carl Vermitsky, MORROW PORTER VERMITSKY & FOWLER,
PLLC, Winston-Salem, North Carolina, for Appellant.    Lynne P.
Klauer, OFFICE OF THE UNITED STATES ATTORNEY, Greensboro, North
Carolina, for Appellee.    ON BRIEF: Benjamin D. Porter, MORROW
ALEXANDER PORTER & WHITLEY, PLLC, Winston-Salem, North Carolina,
for Appellant.    Anna Mills Wagoner, United States Attorney,
Greensboro, North Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.

                                2
PER CURIAM:

               In this civil asset forfeiture action, police officers

seized   $147,900.00          in    United    States         Currency      from    Tony    Lynn

Bailey’s       property      while       executing       a     search      for     controlled

substances.         The district court granted the Government’s motion

for summary judgment, awarding it all of the seized currency.

We    affirm    in    part,     vacate      in       part,    and   remand       for    further

proceedings consistent with this opinion.

                                             I.

               On    December      12,    2005,        officers      with    the       Davidson

County     Sheriff’s        Office,       following          up     on     tips    from    the

community, executed a controlled buy of prescription drugs from

Bailey at his home.            Under the supervision of two detectives, a

confidential         informant,       who    stated          that   he     had     previously

obtained prescription drugs from Bailey, went to Bailey’s home

and returned with hydrocodone pills from Bailey.

               Detective Jeff Jones then applied for, received, and

executed a search warrant for Bailey’s home.                             Under the sink in

the   bathroom,       the    officers       found      approximately         fifteen      pills

that were not in a prescription bottle, several items matching

the    description      of     the    stolen          property      that    the    informant

purportedly had given Bailey in exchange for prescription pills,

and eight firearms.                In a dresser drawer, the officers found

                                                 3
$9,000.     Finally, in an outbuilding, the officers found seven

more firearms and fourteen rubber-banded stacks of $100 bills in

a large green safe.

             Following     the       search,    Detective          Jones   interviewed

Bailey after he waived his Miranda rights.                           Bailey signed a

statement attesting that he sold prescription pills to pay for

his bills and medication, but that he had sold “less than 500

pain/nerve       pills.”         Further,       he        stated     that,     although

unemployed,      he    performed      odd   jobs     to     make     money.      Bailey

maintained that he had inherited the $100 bills found in the

green safe in the outbuilding from his father in “1993 or 1994.”

Detective    Jones     observed      that   some     of    those    $100     bills   were

dated from the late 1990s and 2000 and, therefore, the Detective

suspected Bailey had lied about the source of the currency found

in the safe.          As a result, Detective Jones confiscated all of

the currency, i.e., that found in the safe and the $9,000 found

in Bailey’s dresser drawer.

            A    count   of    the    seized    currency      yielded      a   total   of

$147,900.       An official at the Federal Reserve Bank of New York

subsequently reviewed the currency and concluded that the age of

the bills varied widely, with some of the bills dating from as

early as the 1950s.           More than half of the bills, however, were

released into general circulation after the death of Bailey’s

father on May 2, 1994.

                                            4
            The 2005 search was not Bailey’s first run-in with law

enforcement.        In    2001,       officers       with     the     Davidson    County

Sheriff’s Office executed a controlled buy of prescription drugs

from Bailey at the same home.                   In a subsequent search of his

home and outbuildings, the officers seized ten firearms, twenty-

five units of Alprazolam, 2,128 grams of marijuana, boxes of

plastic bags, a set of digital scales, and $33,100.                         Bailey was

arrested and charged with various state narcotics offenses, but

he was not convicted of any crime. 1

            On February 28, 2006, the Government filed this civil

forfeiture    action      pursuant     to       21   U.S.C.    §    881(a)(6)     and   18

U.S.C. § 981(a)(1)(C) and sought an in rem arrest warrant for

all of the currency found during the December 12, 2005 search of

Bailey’s     home   and    outbuildings.              After     the    district    court

initially denied the warrant, the Government filed an amended

complaint     and   arrest      warrant,         which   the       court   granted      on

November 16, 2006.        Bailey filed a claim to the currency.                    After

discovery,    Bailey      and   the    Government        each      moved   for    summary

judgment.      On March 31, 2009, the district court granted the

     1
       The Government filed a forfeiture action with respect to
the $33,100 seized and settled the action on terms favorable to
Bailey: $20,051.50 to Baptist Hospital for Bailey’s outstanding
medical bills; $5,694.00 to Bailey’s girlfriend who claimed that
those funds represented her tax refunds; $395.00 to the United
States in costs related to the action; and $6,959.50 back to
Bailey.

                                            5
Government’s motion and denied Bailey’s.                          Most relevant to this

appeal, the court held that, as a matter of law, the Government

had met its burden of showing by a preponderance of the evidence

that all of the currency in question was subject to forfeiture.

Bailey timely noted this appeal.

                                                II.

             Federal law provides that currency traceable to the

exchange of controlled substances is subject to forfeiture.                                  18

U.S.C. § 981(a)(1)(C); 21 U.S.C. § 881(a)(6).                            In 2000, Congress

passed the Civil Asset Forfeiture Reform Act of 2000, Pub. L.

No. 106-185, 114 Stat. 202 (“CAFRA”), which modified the burdens

of proof in civil forfeiture proceedings.                             Prior to CAFRA, the

Government        had      the   initial    burden          of   demonstrating        probable

cause    that      property       was   subject        to    forfeiture.        See     United

States v. Thomas, 913 F.2d 1111, 1114 (4th Cir. 1990).                                       The

burden      then      shifted      to     the        claimant     to    establish,      by     a

preponderance of the evidence, that the property at issue was

not   acquired        in    violation      of    the     law     or    linked   to    unlawful

activity.       Id.        CAFRA eliminated this burden-shifting framework;

it    put   the    burden        solely    on    the     Government       and   raised       the

quantum of proof to a preponderance of the evidence.                                 18 U.S.C.

§ 983(c)(1) (“[T]he burden of proof is on the Government to

                                                 6
establish, by a preponderance of the evidence, that the property

is subject to forfeiture.”).

           In   a   forfeiture     proceeding,     we     review   the    district

court’s factual findings for clear error, but review de novo the

legal determination of whether those facts render the property

at issue subject to forfeiture.            See United States v. $84,615 in

U.S.   Currency,     379 F.3d 496,     501    (8th    Cir.     2004).     In

determining whether the Government has met its burden, courts

should not view each piece of evidence in isolation, but rather

“consider the totality of the evidence as a whole and in the

appropriate context.”        United States v. Funds in the Amount of

$30,670.00, 403 F.3d 448, 469 (7th Cir. 2005).

           A district court may grant summary judgment only “if

the movant shows that there is no genuine dispute as to any

material fact and the movant is entitled to judgment as a matter

of law.”    Fed. R. Civ. P. 56(a).                A court should not grant

summary judgment “if the evidence is such that a reasonable jury

could return a verdict for the nonmoving party.”                     Anderson v.

Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).                    In making this

determination,      the    court   “must    view   the     evidence      presented

through the prism of the substantive evidentiary standard.”                    Id.

at 254.

                                       7
                                 III.

          Bailey initially challenges the Government’s evidence

as insufficient to connect the seized currency with his alleged

drug activities.    The district court disagreed, and so do we.

          First, Bailey has a history of involvement with

illegal drugs. 2   The Government presented uncontroverted evidence

that drugs were found on Bailey’s property in both 2001 and

2005, providing a sound basis for the district court’s finding

that the Government had presented “significant evidence of

[Bailey’s] substantial involvement in the sale of controlled

substances for several years.”    United States v. $147,900.00 in

U.S. Currency, 2009 WL 903356, Civ. No. 06-197 (M.D.N.C. Mar.

31, 2009).

     2
        To demonstrate Bailey’s involvement with drugs, the
Government presented hearsay evidence, primarily regarding his
involvement prior to 2005. Bailey did not object to the hearsay
in the district court.    Indeed, he does not clearly object to
the admissibility of that evidence before us.        Instead, he
argues generally that the Government offers “little more than
rank hearsay . . . to support [its] allegation that the Claimant
engaged in drug trafficking for a long period of time;” thus,
his argument appears to dispute the sufficiency, rather than the
admissibility, of the Government’s evidence.     Accordingly, we
assess the admissibility of the hearsay evidence only for plain
error. Fed. R. Evid. 103(a), (d). Given that courts routinely
permitted the Government to rely on hearsay evidence in
forfeiture proceedings prior to CAFRA, and only one appellate
court has explicitly recognized that hearsay evidence is no
longer admissible following CAFRA, see United States v.
$92,203.00 in U.S. Currency, 537 F.3d 504, 510 (5th Cir. 2008);
but see United States v. $291,828.00 in U.S. Currency, 536 F.3d
1234, 1237 (11th Cir. 2008), we cannot hold admission of the
evidence to be plain error.

                                  8
               Furthermore, Bailey’s possession of large sums of cash

at the same time as his engagement in drug activity provides

“strong evidence that the cash is connected with drug activity.”

$84,615 in U.S. Currency, 379 F.3d at 501-02; see also United

States    v.     $252,300.00     in   U.S.       Currency,   484 F.3d 1271,    1275

(10th Cir. 2007) (“A large amount of currency, while not alone

sufficient to establish a connection to a drug transaction, is

‘strong evidence’ of such a connection.” (quoting United States

v. $149,442.43 in U.S. Currency, 965 F.2d 868, 877 (10th Cir.

1992)).

               Finally, Bailey has no reported income or work history

that     could       explain   the    large       amount     of    currency    in    his

possession.          See United States v. $174,206.00, 320 F.3d 658, 662

(6th Cir. 2003) (holding that “evidence of legitimate income

that is insufficient to explain the large amount of property

seized” satisfies the preponderance of the evidence standard).

               Taken     together,     this        is   sufficient,        albeit    not

overwhelming, evidence that some of the currency seized from

Bailey’s property is connected to his drug activities.

                                         IV.

               The    district   court   erred,         however,    in     viewing   the

above evidence as sufficient to grant summary judgment to the

Government as to all of the currency found on Bailey’s property.

                                             9
                                                        A.

                 Police seized the vast majority of the currency here -

-    $138,900         in       $100    bills       --   from     a    green      safe       in    Bailey’s

outbuilding.            In deposition, Bailey swore that he inherited all

of   this    currency            from       his    father       and     had      buried      it    in    his

backyard in glass jars.                       He stated that he dug up the jars only

occasionally           and       had       never    exchanged         the     currency           for    more

recently         issued          currency.              Under    most       circumstances,              such

testimony        of        a    legitimate         source       would    suffice        to       create   a

genuine dispute of material fact as to the entire sum.

                 In    this          case,     however,         undisputed         record         evidence

requires     rejection                of   Bailey’s          testimony      as    to    a    legitimate

source for a portion of the currency.                                See Scott v. Harris, 550
U.S. 372, 380 (2007).                      More than half of the seized currency was

not in circulation at the time of the death of Bailey’s father

on   May    2,        1994.           Thus,    because        this    “new”       currency        plainly

cannot      be    part          of    an    inheritance         from     his      father,         Bailey’s

testimony about his inheritance cannot create a genuine dispute

as to the source of this “new” currency.                                      And, given that in

deposition, Bailey swore that the currency in the safe consisted

exclusively of an inheritance from his father, he cannot now

contend that this “new” currency came from any other legitimate

source.      Cf. Barwick v. Celotex Corp., 736 F.2d 946, 960 (4th

Cir. 1984).            Moreover, that Bailey plainly lied about the source

                                                        10
of this “new” currency constitutes additional probative evidence

that the currency is connected to criminal behavior.                       See United

States v. $67,220.00 in U.S. Currency, 957 F.2d 280, 286 (6th

Cir. 1992).          Accordingly, with respect to this “new” currency,

we affirm the district court’s grant of summary judgment to the

Government.

                                             B.

                The currency found in the safe that was released into

general circulation before the death of Bailey’s father on May

2,   1994       presents    a    different     question.       No   record   evidence

requires rejection of the possibility that Bailey inherited this

“old” currency from his father. 3

                To   the   contrary,     the      record   lends    some   support   to

Bailey’s inheritance claim.               First, Bailey’s former girlfriend,

Sherry Richie, testified under oath that she accompanied Bailey

when       he   retrieved       the   inheritance      money   from    his   father’s

property and that Bailey then kept the money buried in glass

jars in his backyard.                 Second, the age of the “old” currency

       3
        At oral argument and in his brief, counsel for Bailey
stated that $54,600 of the seized currency consisted of bills
that pre-dated 1994.     The Government has not disputed this
figure.    But the record contains no factual finding on this
point.    On remand, we leave it to the district court to
determine the precise amount of the “old” currency, i.e,
currency seized from Bailey’s safe that was released into
circulation prior to May 2, 1994.

                                             11
suggests    it    could      be    an     inheritance.            According      to   the

Government’s     own    expert      from       the    Federal     Reserve    Bank,    the

average lifespan of a $100 bill is eighty-nine months (or seven

years and five months).            Of course, we recognize the difficulty

in   deriving    significance           from    a    mathematical    average      without

further information as to context, but a fact-finder could find

this   testimony       relevant         and    persuasive.          With    an    average

lifespan of eighty-nine months, bills released into circulation

prior to May 2, 1994 would not normally be in circulation at the

time of the Government’s seizure of the currency in 2005.                             And

yet, some of the seized bills are several decades old.                           Bailey’s

purported practice of keeping his inheritance buried underground

in jars and out of the bank could explain the age of this “old”

currency.

            Of course, a fact-finder could determine that Bailey

and his ex-girlfriend lied and the age of the “old” currency is

immaterial.      But these are questions to be determined by a fact-

finder.     Accordingly, we reverse the district court’s grant of

summary     judgment      to      the     Government       with     respect      to   the

forfeiture of the “old” currency found in the safe.

                                               C.

            Bailey     has     also      established       a    genuine     dispute    of

material fact as to the source of the $9,000 that the police

                                               12
officers found in his dresser drawer.                      In deposition, Bailey

testified that this money derived from a 1966 Mustang, which he

bought at an auction, fixed up, and then sold to a man named

Tony.

              The    district      court        rejected     this    testimony       as

uncorroborated.       But corroboration is not necessary to establish

a   genuine    dispute      of   material       fact.      Cf.   Berry     v.   Chicago

Transit Auth., 618 F.3d 688, 691 (7th Cir. 2010) (holding that

uncorroborated testimony from a non-movant at summary judgment

can be evidence of disputed material facts if the testimony is

based on personal knowledge or firsthand experience); see also

Liberty Lobby, 477 U.S. at 255 (noting that juries, not judges,

must weigh evidence and determine the credibility of testimony).

              Bailey’s testimony about this transaction was specific

and consistent with his other statements that he occasionally

purchased and sold cars to make money.                     Moreover, the $9,000,

which was kept separate and apart from the currency in the safe

in the outbuilding, is not an amount that on its own would

suggest   linkage      to    drug    activity.           See     United    States     v.

$191,910.00     in   U.S.    Currency,      16 F.3d 1051,    1072    (9th    Cir.

1994).    Therefore, the district court erred in granting summary

judgment to the Government as to this $9,000.

                                           13
                                          V.

               For the foregoing reasons, we affirm the judgment of

the district court with respect to the “new” currency found in

the safe, but reverse the judgment of the district court and

remand       for     further    proceedings         to     determine     whether     the

following      currency    is   subject    to       forfeiture:        (1)   the   “old”

currency found in the safe, i.e., currency that was released

into       general   circulation   prior       to    May    2,   1994;   and   (2)   the

$9,000 found in Bailey’s dresser drawer. 4

                                                                   AFFIRMED IN PART,
                                                                   REVERSED IN PART,
                                                                        AND REMANDED

       4
       The district court noted that the Government co-mingled
the bills found in the dresser drawer with the bills found in
the safe.   If the Government is unable now to determine which
bills were found in the safe, on remand, the district court
should assume that all of the “old” bills were found in the safe
and the $9,000 in the dresser drawer consisted of “new” bills.

                                          14