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Docket Number

No. CV-85-3219.

Attorney(S)

Irving Cohen, New York City, for plaintiff. Raymond J. Dearie, U.S. Atty., E.D.N.Y., Brooklyn, N.Y. by Kevan Cleary, for U.S.

Judges

Jack Bertrand Weinstein

Acts

Food And Drugs — Drug Abuse Prevention And Control — Control And Enforcement — Administrative And Enforcement Provisions — Forfeitures
Customs Duties — Administrative Provisions — Tariff Act Of 1930 — Enforcement Provisions — Seizure; Value $500,000 Or Less, Prohibited Articles, Transporting Conveyances
Customs Duties — Administrative Provisions — Tariff Act Of 1930 — Enforcement Provisions — Seizure; Claims; Judicial Condemnation
Government Organization And Employees — Judicial Review — The Agencies Generally — Relief Pending Review

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Smart Summary

Opinion Summary: In the Matter of the Application of David Williams and Michael Arnold for an order directing the release of $53,040 in U.S. Currency

Factual and Procedural Background

David Williams and Michael Arnold filed a petition to compel the release of $53,040 that DEA agents seized from David Williams at LaGuardia Airport on April 1, 1985. The parties dispute aspects of Williams' detention and the reason for the stop, with Williams asserting the stop was unauthorized and the government indicating Williams was detained on a marijuana charge. A search of Williams' luggage produced the $53,040, which was seized.

Williams and Arnold, through counsel, sought to have the DEA commence forfeiture proceedings. The DEA informed counsel that claimants would need to file a claim together with either a 10% cost bond (stated by the DEA as $5,304) or an in forma pauperis petition. On June 19 the DEA received claims allocating $15,040 to Williams and $38,000 to Arnold, each accompanied by paupers' affidavits showing modest assets. Five weeks later the DEA rejected the paupers' affidavits as lacking merit. After that rejection, Williams and Arnold filed suit to obtain release of the seized funds.

The government moved to dismiss the petition on the ground that the court lacked subject matter jurisdiction. The court resolved the dispute on the written record and issued the order summarized below.

Legal Issues Presented

Whether the court has subject matter jurisdiction to consider the petition to compel release of the seized currency (as raised by the government's motion to dismiss).
Whether a pauper's affidavit (an in forma pauperis submission) alone satisfies the bond requirement imposed by Customs/DEA procedures, or whether the DEA may reject such an affidavit as lacking merit and thereby decline to commence forfeiture proceedings.
What procedural protections apply when a claimant files a pauper's affidavit that is not facially unreasonable—specifically, whether claimants must be afforded a court determination of the good faith of their indigency claim when the agency doubts it.

Arguments of the Parties

Government's Arguments

The government argued that the court lacks subject matter jurisdiction to grant the petition (government's motion to dismiss).
The government (DEA) contended that an in forma pauperis petition must be meritorious in the agency's view; implying the DEA may reject a pauper affidavit it deems lacking in merit and not commence forfeiture proceedings.

Petitioners' Arguments

Petitioners maintained that a pauper's affidavit alone complies with the bond requirement, regardless of the DEA's view of merit; permitting agency discretion would improperly combine adversary and arbiter functions.
Implicitly, petitioners argued they had established sufficient indigency to warrant waiver of bond and trigger forfeiture proceedings rather than continued retention of the seized funds without proceedings.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
United States v. Von Neumann, ___ U.S. ___, 106 S.Ct. 610 (1986)	Due process requires a determination of ownership of seized property within a reasonable period of time after seizure.	The court invoked Von Neumann as part of the authority establishing that due process requires timely resolution in forfeiture contexts.
United States v. $8,850, 461 U.S. 555, 103 S.Ct. 2005 (1983)	Due process and timely determination principles in the context of civil forfeiture.	The court cited this decision along with Von Neumann to support the proposition that ownership determinations must occur within a reasonable time to satisfy due process.
Wiren v. Eide, 542 F.2d 757 (9th Cir. 1976)	Forfeiture laws must not be enforced in a manner that denies constitutional protections to the poor; in forma pauperis provisions are constitutionally mandated for the indigent.	The court relied on Wiren to underscore the constitutional necessity of providing indigent claimants access to procedural protections (i.e., pauper provisions) in forfeiture matters.
United States v. United States Coin Currency, 401 U.S. 715, 91 S.Ct. 1041 (1971)	Illustrates the practical tension in forfeiture: action favors the person claiming rights; inaction favors the government that has the property.	The court cited this case by way of comparison ("Cf.") to describe the inherent tension in forfeiture proceedings and the practical consequences of delay or inaction.

Court's Reasoning and Analysis

The court analyzed the statutory and regulatory framework governing DEA seizures and Customs' forfeiture procedures (including 21 U.S.C. § 881(a)(6), 21 U.S.C. § 881(d), 19 U.S.C. §§ 1607 and 1608, Customs regulations at 19 C.F.R. § 162.47(e), and DEA regulations 21 C.F.R. §§ 1316.71–1316.81). The court concluded that under the combined statutory and regulatory framework, presentation of a proper notice of claim together with either a bond or a pauper's affidavit obligates the government to commence formal condemnation (forfeiture) proceedings pursuant to 19 U.S.C. § 1608. The court emphasized that these procedures exist to protect the constitutional right not to be deprived of property without due process and that in forma pauperis provisions are constitutionally mandated for indigent claimants.

The court framed the disagreement as follows: the government held that the DEA may insist that an in forma pauperis petition be meritorious as judged by the agency; the petitioners insisted that a pauper's affidavit alone should suffice without agency substantive vetting because permitting agency discretion would combine adversary and adjudicative functions.

To reconcile these positions, the court adopted a balancing approach: an in forma pauperis claim need only demonstrate a reasonable or good faith claim of indigency. If doubt exists, the claimant is entitled to a judicial determination of good faith under the Administrative Procedure Act standards cited (5 U.S.C. §§ 705–706). The court found additional procedural deficiencies in how DEA handled these claimants: the DEA did not warn claimants of adverse consequences if the affidavit were deemed not meritorious, nor did it inform claimants that technical compliance must satisfy the agency director as to overall merit and honesty. The court held that where a pauper's affidavit is not facially unreasonable, procedural fairness requires the DEA to permit the claimant the opportunity to post the bond if the agency rejects the affidavit.

Applying the factual record, the court determined no hearing was necessary and that the affidavits demonstrated borderline economic situations. The court noted the DEA had misinformed the claimants about the applicable bond amount, stating a 10% bond ($5,304) when the statutory maximum was $2,500. Given that misinformation and the marginal economic circumstances presented, it was not unreasonable for the claimants to believe a bond was beyond their means.

Holding and Implications

Holding: The court ordered that Williams and Arnold must post a $2,500 bond within ten days or waive their right to a forfeiture proceeding. Upon timely posting, the government must promptly commence a forfeiture proceeding or return the seized cash to the person from whom it was seized.

Implications:

Direct effect on the parties: Williams and Arnold were given a defined, short period (ten days) to post the statutory $2,500 bond. Failure to do so constitutes waiver of their right to a forfeiture proceeding under the court's order.
Obligation on the government: If the bond is timely posted, the government is ordered either to initiate forfeiture (condemnation) proceedings promptly or to return the seized funds to the original possessor.
Broader precedent: The opinion emphasizes constitutional protections for indigent claimants and requires procedural fairness when an agency rejects a pauper affidavit that is not facially unreasonable. The court did not purport to announce a novel rule beyond applying constitutional due-process principles and existing statutes/regulations; the decision enforces existing obligations (statutory/regulatory and constitutional) rather than creating an expansive new precedent.

Order: SO ORDERED.

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In the Matter of the Application of David WILLIAMS and Michael Arnold for an order directing the release of $53,040 in U.S. Currency or in the alternative, directing that forfeiture proceedings be instituted.

WEINSTEIN, Chief Judge:

David Williams and Michael Arnold bring this petition to compel the release of $53,040 seized at LaGuardia Airport. The United States had not instituted a forfeiture proceeding because, in its view, petitioners failed to comply with the bond requirements established by the Drug Enforcement Administration. The government now moves to dismiss the petition on the ground that this court lacks subject matter jurisdiction.

FACTS

David Williams was stopped by DEA agents on April 1, 1985, while waiting to board a flight from LaGuardia Airport in New York to Miami. The parties dispute the reason for the stop. Williams contends that the stop was unauthorized. The government's position is that Williams was detained on a marijuana charge even though, according to Williams, the agents did not mention marijuana until hours after the stop and a search of Williams' luggage.

The DEA agents arrested Williams. A search of his luggage revealed $53,040 in cash. It was seized. In the ensuing weeks Williams' and Arnold's attorney attempted to have the DEA commence forfeiture proceedings. On May 22, the DEA informed Williams' and Arnold's attorney that his clients would have to file a claim, together with either a 10% cost bond of $5,304 or an in forma pauperis petition. On June 19, the DEA received a notice of claim from David Williams as owner of $15,040 and Michael Arnold as owner of the balance, $38,000, with pauper's affidavits from both men.

The affidavits reflected modest assets. Williams claimed a salary of $1000 per month, $900 in a bank account, and a house valued at $14,800 on which he owed $11,000 in taxes. Arnold claimed $300 per week in salary, $14,440 a year in rent payments, $3400 in a bank account, and a $90,000 house, approximately two-thirds owned free and clear. Both men claimed four dependents each.

Five weeks after receiving the claim, the DEA rejected the paupers' affidavits as lacking in merit. Shortly thereafter, Williams and Arnold sued to obtain the release of the $53,040.

LAW

The Drug Enforcement Administration may seize money that is "furnished or intended to be furnished by any person in exchange for a controlled substance. . . ." 21 U.S.C. § 881(a)(6). Process is governed by United States Customs Service laws. 21 U.S.C. § 881(d).

When it seizes property valued at $100,000 or less, the DEA must publish, for at least three weeks, notice of the seizure and its intention to have the property forfeited. 19 U.S.C. § 1607. Within 20 days of the first publication of the notice, a person claiming an interest in the property must file a notice of claim and a bond of $2500 or ten percent of the claimed property, whichever is less:

Any person claiming such [property] may at any time within twenty days from the date of the first publication of the notice of seizure file with the appropriate customs officer a claim stating his interest therein. Upon the filing of such claim, and the giving of a bond to the United States in the penal sum of $2,500 or 10 percent of the value of the claimed property, whichever is lower, but not less than $250, with sureties to be approved by such customs office . . . such customs officer shall transmit such claim and bond . . . to the United States attorney for the district in which seizure was made, who shall proceed to a condemnation of the merchandise or other property in the manner prescribed by law.

19 U.S.C. § 1608.

DEA regulations concerning claimed property do not provide for in forma pauperis petitions. 21 C.F.R. § 1316.71-1316.81. The Customs Service regulations control. 21 U.S.C. § 881(d). "Upon satisfactory proof of financial inability to post the bond, the district director shall waive the bond requirement for any person who claims an interest in the seized property." 19 C.F.R. § 162.47(e).

As a result of the combination of statutes and regulations, if a bond or a pauper's affidavit, together with a notice of claim is presented to the DEA agency, formal condemnation proceedings must be commenced by the government. 19 U.S.C. § 1608. Due process then requires a determination of the ownership of seized property within a reasonable period of time after the seizure. See United States v. Von Neumann, ___ U.S. ___, ___, 106 S.Ct. 610, 613, 88 L.Ed.2d 587 (1986); United States v. $8,850, 461 U.S. 555, 103 S.Ct. 2005, 76 L.Ed.2d 143 (1983).

The network of statutes and regulations governing the handling and disposition of seized property exist to protect the constitutional right not to be deprived of property without due process of law. In forma pauperis provisions are thus constitutionally mandated for the indigent. See Wiren v. Eide, 542 F.2d 757, 763 (9th Cir. 1976) (forfeiture laws must not be enforced so as to create "a profitable or self-supporting operation by denying the fifth amendment rights of the poor").

In forma pauperis claims raise practical as well as constitutional issues. The forfeiture situation is one of inherent tension, with an individual's rights temporarily suspended. Action favors the person claiming rights to seized property; inaction the government, which has the property. Cf. United States v. United States Coin Currency, 401 U.S. 715, 91 S.Ct. 1041, 28 L.Ed.2d 434 (1971).

The government's argument is essentially that an in forma pauperis petition must be meritorious in the eyes of the DEA. Petitioners maintain that a pauper's affidavit alone complies with the bond requirement, even if the DEA concludes that the affidavit lacks merit, for to allow any discretion to the agency would unite the functions of adversary and arbiter.

An appropriate balance requires a reasonable or good faith claim of indigency. Where there is a doubt, the claimant must be afforded the right to have the court determine good faith. 5 U.S.C. § 705-706.

The DEA does not warn a claimant of adverse consequences if the affidavit is deemed not meritorious. It does not give notice that compliance with the technical requirements must satisfy the agency director as to its overall merit and honesty. Should the DEA reject a pauper's affidavit that is not facially unreasonable, procedural fairness dictates that it must allow petitioners to subsequently file the bond.

APPLICATION OF LAW TO THE FACTS

Both parties are content to rely on their submission of a written record. No hearing is required.

Williams' and Arnold's affidavits, taken at face value, demonstrate a borderline economic station. Arnold might have been able to afford a pro rata share of the bond. Williams probably could not. It should be noted that the DEA misinformed petitioners as to the amount of the bond: The sum mentioned was $5,304, or ten percent of the amount seized, rather than the statutory maximum of $2,500. It was not unreasonable for Williams and Arnold to believe that a bond was beyond their means.

CONCLUSION

Williams and Arnold, now apprised of the correct amount needed, shall post the $2500 bond within ten days or waive their right to a forfeiture proceeding.

Upon timely posting, the government shall promptly commence a forfeiture proceeding or return the cash to the person from whom it was seized.

SO ORDERED.

APPLICATION OF WILLIAMS, (E.D.N.Y. 1986)