Court Opinion

ID: 4343753
Source: CourtListenerOpinion
Date Created: 2018-11-21 16:15:54.844565+00
Date Added: 2024-06-11T09:24:30.265075
License: Public Domain

FILED
                                                                            Nov 21 2018, 10:45 am

                                                                                 CLERK
                                                                             Indiana Supreme Court
                                                                                Court of Appeals
                                                                                  and Tax Court

      ATTORNEY FOR APPELLANT                                    ATTORNEYS FOR APPELLEE
      Matthew Abels                                             Curtis T. Hill, Jr.
      Indianapolis, Indiana                                     Attorney General of Indiana
                                                                Justin F. Roebel
                                                                Supervising Deputy Attorney
                                                                General
                                                                Indianapolis, Indiana

                                                  IN THE
          COURT OF APPEALS OF INDIANA

      Michael Hodges,                                           November 21, 2018
      Appellant-Defendant,                                      Court of Appeals Case No.
                                                                18A-MI-78
              v.                                                Appeal from the Marion Superior
                                                                Court
      State of Indiana,                                         The Honorable John F. Hanley,
      Appellee-Plaintiff.                                       Judge
                                                                The Honorable Ian Stewart,
                                                                Commissioner
                                                                Trial Court Cause No.
                                                                49D11-1711-MI-40912

      Pyle, Judge.

                                        Statement of the Case
[1]   Michael Hodges (“Hodges”) appeals the trial court’s order granting the State’s

      motion to transfer $60,990 of his money to the United States. Hodges argues
      Court of Appeals of Indiana | Opinion 18A-MI-78 | November 21, 2018                            Page 1 of 13
      that the seizure of his money was unlawful because it exceeded the scope of the

      search warrant. Concluding that the seizure was unlawful, we reverse the trial

      court’s order granting the State’s motion to turn the currency over to the United

      States and remand with instructions to the trial court to order the return of the

      money to Hodges.

[2]   We reverse and remand with instructions.

                                                      Issue
              Whether the trial court’s order granting the State’s motion to
              transfer Hodges’ money to the United States was erroneous.

                                                      Facts
[3]   In October 2017, Indianapolis Metropolitan Police Department Detective Brian

      Thorla (“Detective Thorla”) was inspecting unopened packages at a local parcel

      shipping company when he noticed a suspicious package addressed from

      Hodges in Illinois to Christopher Smith in California. Specifically, Detective

      Thorla concluded that the package was suspicious because: (1) the shipping

      cost was paid in cash; (2) no signature was required at the time of the package’s

      delivery; (3) additional tape was added to a self-sealing box; and (4) the

      shipping box was a new box from the shipping company. Detective Thorla set

      the package aside, and his K9 partner, Hogan (“K9 Hogan”), later conducted a

      dog sniff of it. After K9 Hogan gave a positive alert to the package, which

      indicated the presence of the odor of controlled substances, the detective sought

      and received a search warrant, which authorized law enforcement officers to

      Court of Appeals of Indiana | Opinion 18A-MI-78 | November 21, 2018      Page 2 of 13
      open the package and search for: “Illegal Controlled substances (Marijuana,

      Methamphetamine, Cocaine, Heroin, MDMA) also records of drug trafficking

      and proceeds of drug trafficking, bulk cash smuggling, money laundering,

      involving the proactive attempts of concealing currency as listed in the affidavit;

      as well as money orders and gift cards.” (App. 23). The search warrant also

      authorized law enforcement officers to “seize such property, or any part

      thereof, found on such search.” (App. 23).

[4]   When Detective Thorla opened the package, he discovered vacuum sealed

      packets of United States currency. The packets contained a large quantity of

      twenty-dollar bills, which were wrapped tightly in rubber bands. The seized

      currency was removed from the sealed packets and hidden in another room

      where K9 Hogan gave another positive alert, which indicated the presence of

      the odor of controlled substances on the currency. Based on his training and

      experience, Detective Thorla recognized these factors to be indicators that the

      currency was the proceeds of drug trafficking.

[5]   In November 2017, the State filed a motion to transfer the seized money to the

      United States. Specifically, pursuant to INDIANA CODE § 35-33-5-5, the State

      alleged that during the execution of a search warrant, “U.S. Currency was

      discovered and confiscated as proceeds of narcotics trafficking under Ind. Code

      Ann. 35-48-4-1 and money laundering under Ind. Code Ann. 35-45-15-4[.]”

      (App. 6). Based on the allegation, the State “move[d] the [trial] court to issue a

      Turnover Order authorizing the State to turn over to the appropriate federal

      Court of Appeals of Indiana | Opinion 18A-MI-78 | November 21, 2018      Page 3 of 13
      authority certain property seized from [Michael Hodges] and held by the State

      for forfeiture.” (App. 6).

[6]   Hodges filed an answer objecting to the State’s motion to transfer wherein he

      argued that the seizure of the $60,990 was unlawful because it exceeded the

      scope of the search warrant. In support of his objection, Hodges cited Bowman

      v. State, 81 N.E.3d 1127 (Ind. Ct. App. 2017), modified on denial of rehearing,

      trans. denied, cert. denied, which involved the same detective and facts similar to

      his own case.

[7]   Specifically, in Bowman, Detective Thorla obtained a search warrant to open

      and search two suspicious parcels “for controlled substances, records of drug

      trafficking, and proceeds of drug trafficking.” Bowman, 81 N.E.3d at 1128.

      One parcel was sent by Bowman in Illinois to Jacob Murphy (“Murphy”) in

      California, and the second parcel was sent by Tommy Maurry (“Maurry”) in

      Illinois to Murphy in California. Law enforcement officials found $15,000 in

      each parcel and seized the $30,000. The State filed motions to transfer the

      $30,000 to the United States. After concluding that the appearance of the

      parcels, the excessive taping, the type of shipping and payment, the multiple

      parcels to the same destination in a known controlled substance import-export

      state, the positive K9 alert to the presence of the odor of controlled substances,

      and the reasonable inferences to be drawn therefrom constituted probable cause

      to authorize the seizure, the trial court granted the State’s motion.

      Court of Appeals of Indiana | Opinion 18A-MI-78 | November 21, 2018        Page 4 of 13
[8]   On appeal, Bowman, Murphy, and Maurry argued that the seizure of the

      $30,000 was unlawful because the seizure went beyond the scope of the search

      warrant. This Court agreed. Id. at 1131. Specifically, we explained that the

      only evidence that this money was obtained through drug trafficking was: (1)

      the parcels were being shipped to California; (2) they were being sent to the

      same recipient; (3) they were heavily taped; (4) they were shipped priority

      overnight; and (5) a K9 unit alerted to the parcels. Id. at 1130. We further

      explained the insignificance of this evidence as it related to drug trafficking as

      follows:

              We can easily dispense with the first four pieces of evidence. We
              are confident that a voluminous number of parcels meeting those
              criteria and having nothing to do with drug trafficking are
              shipped in this country every day. If all money shipped in
              heavily taped parcels mailed to California via priority overnight
              mail could be seized as proceeds of drug trafficking, many last-
              minute gift recipients at holiday and birthday time would be
              sorely disappointed (and surprised).

      Id. We also explained that the remaining fact that a K9 unit gave positive alerts

      on both parcels meant only that at some point, someone handling the parcels

      transferred an odor of controlled substances to them. Id. We further explained

      that this could have been the parcels’ senders or any number of individuals

      involved with handling the parcels in transit. Id.

[9]   We concluded that where no evidence of drug trafficking or any other unlawful

      activity was found in the parcels and neither the senders nor the recipient had

      been charged with any state or federal offenses in connection with the parcels,

      Court of Appeals of Indiana | Opinion 18A-MI-78 | November 21, 2018        Page 5 of 13
       no reasonable person would conclude that the currency discovered in the

       parcels was the proceeds of drug trafficking. Id. at 1131. Accordingly, we

       further concluded that the seizure was unlawful, and the trial court’s order

       granting the State’s motion to turn the currency over to the United States was

       erroneous. Id. We therefore reversed and remanded with instructions to order

       the return of the currency to the appellants. Id.

[10]   In his answer objecting to the State’s motion to transfer his $60,990 to the

       United States, Hodges argued that:

               14. The same analysis the Court of Appeals applied in Bowman
               to reverse the trial court’s order granting the turnover order
               request should apply to this case. Detective Thorla cited the
               same essential factors in this case for deeming the package
               suspicious as he did in Bowman. This case involves a positive
               dog alert but no additional evidence of criminality once the
               package was opened just as in Bowman. The Court of Appeals in
               Bowman clearly explained that a positive dog alert could be
               completely consistent with legal activity . . . .

               15. It makes no difference that the State has amended its search
               warrant affidavit and/or the search warrant to include a request
               to seize records or proceeds of “bulk cash smuggling” or “money
               laundering” in addition to its previous request in Bowman to
               search for “proceeds of drug trafficking”, because the State still
               has presented insufficient evidence that the money seized in this
               case is records or proceeds of any of those things. The fact that a
               dog alerted to the package is no more an indication it is evidence
               that the money is proceeds of “money laundering or “bulk cash
               smuggling” no more so than it was considered evidence that the
               money was proceeds of drug trafficking in Bowman.

       Court of Appeals of Indiana | Opinion 18A-MI-78 | November 21, 2018       Page 6 of 13
               16. Based on the holding of Bowman and the information
               presented in the search warrant and search warrant affidavit of
               this case, defendant would request the court deny the State’s
               turnover request in this case, because the seizure of the currency
               was unlawful just as it was in Bowman.

       (App. 14).

[11]   At a hearing on the turnover order, Hodges testified that he is an NBA agent

       and that he also owns a company that resells tickets to sporting events. He

       explained that the $60,990 belonged to him and that he had sent it to a contact

       in California to purchase a large number of World Series tickets that he had

       planned to resell. Hodges denied obtaining the $60,990 from selling drugs or

       other illegal activity. It does not appear that Hodges was charged with any state

       or federal offenses in connection with the parcel.

[12]   After the parties had presented evidence, the following colloquy ensued:

               Trial Court: So, in Bowman that it appears from my reading the
                            case that affidavit said proceeds from drug
                            trafficking. So, Bowman had to determine was –
                            were these proceeds from drug trafficking? Here,
                            our affidavit does not say just proceeds of drug
                            trafficking, correct?

               State:            That’s correct.

               Trial Court: It says bulk cash smuggling.

               State:            Correct.

               Trial Court: So, do I even need to determine whether this cash is
                            connected to drugs?

       Court of Appeals of Indiana | Opinion 18A-MI-78 | November 21, 2018          Page 7 of 13
               State:            No, you don’t. It could be just bulk cash smuggling.

               Trial Court: And did the evidence show bulk cash?

               State:            Yes, it did.

               Trial Court: And would that give me probabl[e] cause to find,
                            okay, this could be – could be legitimate, could not
                            be legitimate, but is this probable cause for bulk
                            cash smuggling?

               State:            That would be our argument, Judge. That’s where
                                 we would be coming from.

                                 *       *        *        *       *         *   *   *

               Trial Court: Bowman does create an exception which is if the
                            seizure went beyond the search warrant. In
                            Bowman, the search warrant was only for proceeds
                            of drug trafficking. In this case, the search warrant
                            was for something greater, specifically identified
                            bulk cash. I think the evidence presented shows
                            that this does not go beyond the search warrant. As
                            such, I think there is probabl[e] cause for the seizure
                            based on the search warrant, based on what was
                            discovered, and I will be Granting the Motion to
                            Transfer this over.

       (Tr. 49-50, 55-56).

[13]   Hodges now appeals the trial court’s grant of the State’s motion to transfer his

       money to the United States.

                                                      Decision
[14]   At the outset, we note United States Supreme Court Justice Clarence Thomas’

       recent commentary on forfeiture:

       Court of Appeals of Indiana | Opinion 18A-MI-78 | November 21, 2018               Page 8 of 13
               Modern civil forfeiture statutes are plainly designed, at least in
               part, to punish the owner of property used for criminal purposes. .
               . . [C]ivil forfeiture has in recent decades become widespread
               and highly profitable. . . . And because the law enforcement
               entity responsible for seizing the property often keeps it, these
               entities have strong incentives to pursue forfeiture. . . . This
               system – where police can seize property with limited judicial
               oversight and retain it for their own use – has led to egregious
               and well-chronicled abuses.

       Leonard v. Texas, 137 S.Ct. 847, 847-48 (2017) (Justice Thomas respecting the

       denial of certiorari) (emphasis added).

[15]   We now turn to Hodges’ argument that the seizure of his money went beyond

       the scope of the search warrant. This presents a question of law, to which we

       apply a de novo standard of review. See Bowman, 81 N.E.3d at 1129.

[16]   The statute authorizing the turnover of seized property provides as follows:

               Upon motion of the prosecuting attorney, the court shall order
               property seized under IC 34-24-1 transferred, subject to the
               perfected liens or other security interest of any person in the
               property, to the appropriate federal authority for disposition
               under 18 U.S.C. 981(e), 19 U.S.C. 1616(a), or 21 U.S.C. 881(e)
               and any related regulations adopted by the United States
               Department of Justice.

       IND. CODE § 35-33-5-5. However, both the Indiana Supreme Court and this

       Court have held that if the seizure order was unlawful, the turnover order must

       be reversed. See Membres v. State, 889 N.E.2d 265, 268 (Ind. 2008); Bowman, 81

       N.E.3d at 1129.

       Court of Appeals of Indiana | Opinion 18A-MI-78 | November 21, 2018       Page 9 of 13
[17]   Here, as we did in Bowman, we must determine whether the seizure of Hodges’

       money was unlawful. Further, as we explained in Bowman:

               A search warrant must describe ‘with particularity . . . the items
               to be seized.’ Pavey v. State, 764 N.E.2d 692, 702 (Ind. Ct. App.
               2002). This requirement ‘restricts the scope of the search,
               authorizing seizure of only those things described in the warrant.
               . . .’ Id. An exact description is not required, but the items to be
               searched for must be described with some specificity. Overstreet v.
               State, 783 N.E.2d 1140, 1158 (Ind. 2003).

       Bowman, 81 N.E.3d at 1129-30.

[18]   The search warrant in this case authorized law enforcement officers to open and

       search the package for “Illegal Controlled substances (Marijuana,

       Methamphetamine, Cocaine, Heroin, MDMA) also records of drug trafficking

       and proceeds of drug trafficking, bulk cash smuggling, money laundering,

       involving the proactive attempts of concealing currency as listed in the affidavit;

       as well as money orders and gift cards.” (App. 23). Therefore, the only way in

       which the seizure of Hodges’ currency falls under the search warrant is if it can

       reasonably be concluded to be “proceeds of drug trafficking, bulk cash

       smuggling, [or] money laundering.”

[19]   The trial court in this case correctly pointed out that although the search

       warrant in Bowman authorized the seizure of only the proceeds of drug

       trafficking, the search warrant in this case also included the proceeds of bulk

       cash smuggling or money laundering. The trial court then concluded that it did

       not need to determine whether the currency was connection to drug trafficking

       Court of Appeals of Indiana | Opinion 18A-MI-78 | November 21, 2018       Page 10 of 13
       because there was evidence that it was the proceeds of bulk cash smuggling.

       Based on this alleged evidence of bulk cash smuggling, the trial court further

       concluded that the seizure of Hodges’ $60,990 was lawful.

[20]   First, although the search warrant authorized law enforcement officers to search

       for the proceeds of drug trafficking, money laundering, and bulk cash

       smuggling, the State’s motion to transfer the seized money to the United States

       alleged only that the money had been confiscated as proceeds of narcotics

       trafficking and money laundering. The State’s motion no longer mentioned

       bulk cash smuggling.

[21]   We further note that Indiana statutes include neither the offense nor the

       definition of bulk cash smuggling. Rather, bulk cash smuggling is a federal

       offense, which is codified at 31 UNITED STATES CODE § 5332. Specifically, this

       statute provides that it is unlawful to knowingly conceal more than $10,000 in

       currency or other monetary instruments on a person or in a container and to

       transport or attempt to transport this currency across the border of the United

       States with the intent to avoid currency reporting requirements.

[22]   Even if we were to apply this definition of bulk cash smuggling to the facts of

       this case, we find absolutely no evidence that Hodges attempted to transport his

       money across the United States’ border with the intent to avoid currency

       reporting requirements. Rather, the parties agree that Hodges attempted to ship

       the currency from Illinois to California. Based on these facts, no reasonable

       Court of Appeals of Indiana | Opinion 18A-MI-78 | November 21, 2018     Page 11 of 13
       person could conclude that the currency discovered in the parcel was the

       proceeds of bulk cash smuggling.

[23]   With regard to the State’s argument that the currency in the parcel was the

       proceeds of drug trafficking, we note that the facts before us are analogous to

       those in Bowman. Specifically, without more, Hodges’ method of payment, his

       use of extra tape, his use of a new shipping company box, and his failure to

       require a delivery signature are not indicative of drug trafficking. See id. We

       agree with Bowman that many parcels meeting these criteria and having nothing

       to do with drug trafficking are shipped in this country every day. See id. We

       further agree with Bowman that the fact that a K9 alerts to a parcel, or even

       cash, means only that at some point, someone handling the parcels and the cash

       transferred the odor of controlled substances to them. See id. Based on these

       facts, no reasonable person could conclude that currency discovered in the

       parcels was the proceeds of drug trafficking. See id.

[24]   Lastly, the State also argues that the currency was evidence of money

       laundering. INDIANA CODE § 35-45-15-4 provides that money laundering is the

       knowing or intentional transfer of the proceeds of criminal activity. Where we

       have already determined that there is no evidence that Hodges’ currency was

       the proceeds of criminal activity, no reasonable person could conclude that the

       currency discovered in the parcel was the proceeds of money laundering.

[25]   As we explained in Bowman, 81 N.E.3d at 1131, where no evidence of unlawful

       activity was found in the parcel, and there has been no allegation that Hodges

       Court of Appeals of Indiana | Opinion 18A-MI-78 | November 21, 2018     Page 12 of 13
       has been charged with any state or federal offenses in connection with the

       parcel, no reasonable person would conclude that the currency discovered in

       the parcel was the proceeds of bulk cash smuggling, drug trafficking, or money

       laundering. The seizure of the currency was therefore unlawful, and the trial

       court’s order granting the State’s motion to turn the currency over to the United

       States was erroneous. See id. We therefore reverse and remand this case with

       instruction to the trial court to order the return of the currency to Hodges.

[26]   Reversed and remanded.

       Vaidik, C.J., and Barnes, Sr.J., concur.

       Court of Appeals of Indiana | Opinion 18A-MI-78 | November 21, 2018      Page 13 of 13