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In Re Return of Seized $11

July 17, 2012

IN RE RETURN OF SEIZED $11,915 IN
U.S. CURRENCY, LORALEE SCHMALSTIG, MOVANT.



The opinion of the court was delivered by: Hon. Jeffrey T. Miller United States District Judge

ORDER RE: MOTION FOR RETURN OF PROPERTY

Claimant and Movant Loralee Schmalstig ("Movant") moves for the return of forfeited currency pursuant to 18 U.S.C. §983(a)(3)(A). The Government opposes the motion. Following an evidentiary hearing, for the reasons set forth below, the court grants the motion in part, finding that Movant's claim was timely filed. However, at this time, the court does not order that the property be returned to Movant. Rather, the court restarts the 90 day filing period of 18 U.S.C. §983(a)(3)(A) during which the Government may file an action to forfeit the currency.

BACKGROUND

The Criminal Proceeding*fn1

On March 11, 2011, members of the East County Regional Gang Task Force served a search warrant on the home of James and Loralee Schmalstig located on Easy Street in San Diego, California. The Task Force's narcotics-trained canine alerted in the shed in the backyard of the residence. In the shed, agents discovered two bags of marijuana, a bag of methamphetamine, a digital scale, hundreds of new ziplock bags, about $1,200 in U.S. currency, jewelry, and drug paraphernalia. The agents also discovered a safe. James Schmalstig provided the combination to the safe and inside agents discovered $10,700 in U.S. currency, jewelry, collectible coins, and a social security card for James Schmalstig. The canine alerted on the currency. Underneath the floorboards of the shed, agents discovered additional jewelry, silverware, coins, baseball card collections, and a handgun and ammunition.

Based upon Detective Vest's experience and training, the presence of the controlled substances, the scale and ziplock bags, and jewelry, she believed that James Schmalstig was not only accepting cash but jewelry and other items of value in exchange for payment of the controlled substances. (Oppo. Exh. A). James Schmalstig was subsequently charged and convicted of possession of hydromorphone hydrochloride for sale and possession of methamphetamine for sale.

The Forfeiture Proceedings

On May 16, 2011 the DEA provided notice to James Schmalstig via certified mail, return receipt requested, of the forfeiture of the $11,915 seized during the execution of the search warrant. On May 18, 2011, the DEA provided notice to Movant via certified mail, return receipt requested, of the forfeiture of the $11,915 seized during execution of the warrant. The notice provided to Movant indicated that the deadline to file a claim was June 20, 2011. As acknowledged by Movant, both certified letters were received at her home and the receipts were signed by James Schmalstig. (Reply at p.3:3-5).

The Government also published three notices of forfeiture in the Wall Street Journal, a newspaper of general circulation. Based upon the last publication, the last date to file a claim in the action was July 15, 2011.

On June 24, 2011 the DEA received a claim from Movant, presented by her counsel Richard M. Barnett, Esq. On July 12, 2011, the DEA rejected the claim because it was filed after the June 20, 2011 deadline identified in the personal notice letter mailed to her home. On September 28, 2011, the DEA administratively forfeited the $11,915 in U.S. currency to the United States pursuant to 19 U.S.C. §1609.

DISCUSSION

The primary issue raised by Movant is whether she is entitled to equitable tolling of the 30 day period identified in 18 U.S.C. §938(a)(2)(B). The court concludes that Movant diligently pursued her rights and that she was prevented from timely filing a claim by extraordinary circumstances outside her control. The court tolls the statutory period by four days and finds that Movant's claim for return of property was timely filed.

The Civil Asset Forfeiture Reform Act ("CAFRA") sets forth the procedures applicable in civil forfeiture procedures. Deep Sea Fisheries, Inc. v. 144,744 Pounds of Blue King Crab, 410 F.3d 1131, 1134 (9th Cir. 2005). Property worth $500,000 or less is subject to administrative forfeiture without judicial involvement. 19 U.S.C. §§1607 and 1609. A person asserting a claim to seized property may not file a claim later than the deadline set forth in a "personal notice letter," except that if the letter is not received, a claim may be filed not later than 30 days after the date of the final publication of the notice of seizure. 18 U.S.C. §938(a)(2)(B). If a claim is not timely received, the government may declare the property forfeited. 19 U.S.C. §1609. If a claim is timely received, the administrative proceedings are terminated and the Government must file an action in federal court within 90 days or return the seized property. 18 U.S.C. §983(a)(3)(A). As the Government has not moved for forfeiture of the property within 90 days or receipt of her claim, Movant argues that it must return the seized property.

Notice must be provided "in a manner to achieve proper notice as soon as practicable." 18 U.S.C. ยง983(a)(1)(A)(I). The statute is silent on whether the term "proper notice" means actual or constructive receipt of notice. However, the statutory language, as argued by Movant, also suggests that actual receipt, and not constructive notice may be required. The statutory scheme provides that any claim must be filed, in the case of a "personal notice letter (which deadline may be not earlier than 35 days after the date the letter is mailed), except that if that letter is not ...


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