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United States v. Approximately $67

United States District Court, Ninth Circuit

October 15, 2013



MARIA-ELENA JAMES, Magistrate Judge.


This is a forfeiture action brought by Plaintiff United States of America regarding Defendant $67, 391.00 in U.S. currency ("Defendant"). Claimant Sandy Do ("Claimant") has moved for summary judgment, asserting (1) that the Government did not have probable cause to institute this forfeiture action; and (2) an innocent owner defense. Dkt. No. 38. The Government has filed an Opposition, in which it contends that factual issues surrounding the forfeiture of the defendant currency do not support summary judgment. Dkt. No. 82. The Court previously found this matter suitable for disposition without oral argument and vacated the noticed hearing. Dkt. No. 91. After carefully considering the parties' briefs and the controlling legal authorities, the Court DENIES Claimant's Motion for the reasons set forth below.


On September 15, 2011, the Government filed its Verified Complaint for Forfeiture In Rem against approximately $67, 391.00 in United States Currency. Dkt. No. 1. In response, on October 12, 2011, Claimant filed a verified claim opposing the forfeiture. Dkt. No. 7. On October 20, 2011, Claimant filed both an amended verified claim and an answer to the Complaint, asserting, among other things, an affirmative defense of innocent possessor or owner. Dkt. Nos. 10, 11.

On April 11, 2013, Claimant filed this Motion for Summary Judgment. Dkt. Nos. 38. The Government has filed an Opposition (Dkt. No. 82), to which Claimant filed a Reply (Dkt. No. 86). Dkt. No. 82.


In conjunction with this Motion, the parties filed a Joint Statement of Undisputed Facts, submitted on May 9, 2013, which identified six undisputed facts: (1) The United States is the plaintiff in this civil forfeiture action; (2) Defendant is $67, 391.00 in U.S. currency, which was seized on March 25, 2011 from the bedroom closet in the home of Claimant at 252 Palm Valley Boulevard, Apt. 303, in San Jose, California; (3) at all pertinent times, Claimant lived at this address; (4) Claimant filed a verified claim for Defendant $67, 391.00; (5) Minh Thanh Lam ("Lam") pled guilty to transportation of cocaine base in violation of California Health and Safety Code section 11352(a) and to possession of cocaine for sale in violation of California Health and Safety Code section 11351; and (6) Lam admitted two prior convictions of possession of cocaine base for sale in violation of California Health and Safety Code section 11351.5. Dkt. No. 74. The remaining facts are taken from the evidence filed in support of and opposition to the present Motion.

This civil forfeiture action arises out of the criminal investigation of the drug trafficking activities of Claimant's husband, Lam, who had four prior convictions for possession or sale of cocaine and cocaine base. The San Jose Police Department ("SJPD") investigation of Lam began in November of 2010 when officers developed evidence that Lam was involved in the trafficking of cocaine and cocaine base. This evidence came from police surveillance between November 2010 and March 2011, and two controlled buys of cocaine base in December 2010 and March 2011.

The investigation connected Lam to two locations: 1082 Thorndale Court ("Thorndale") and 252 Palm Valley Boulevard, Apartment 303 ("Palm Valley"). Officer Palacios prepared an affidavit in support of a search warrant for these locations on March 17, 2011, based on probable cause to believe that cocaine trafficking was occurring there. On March 25, 2011, SJPD officers executed two search warrants at locations connected to Lam during the investigation.

From Lam's room at the Thorndale apartment, officers seized 2.8 kilos of cocaine and 131.81 grams of cocaine base, with indicia of a manufacturing operation to turn the cocaine into cocaine base. The indicia included a heating source (burners), propane, a metal pot, beakers used to convert the powder cocaine into cocaine base, digital scales, razors which could cut the crack cocaine, and packaging material.

Lam was arrested outside of the Thorndale apartment as he exited his Mercedes. Lam had an ounce of crack cocaine and $1, 423.00 in U.S. currency when he was arrested. At that time, the street price of an ounce of crack cocaine was approximately $1, 000.00. The officers did not find any money inside the residence.

The officers executed a search warrant at the Palm Valley location on the same date. SJPD officers located and seized $67, 391.00 (the Defendant in this case) from the bedroom closet. The currency was found in a black duffle bag filled loosely with U.S. currency, along with two rubber-banded bundles of currency on top of the duffle in a plastic container; in a black Sephora shopping bag; and in a pink Victoria's Secret bag. From a shelf in the closet, SJPD officers also seized a number of white pills, which tested positive for Amphetamine, a Schedule IV controlled substance.

The black duffle contained $39, 938.00 in U.S. currency, consisting of the following denominations: 175 × $100; 32 × $50; 992 × $20; 47 × $10; 50 × $5; and 278 × $1. The black Sephora paper bag contained $25, 510.00 in the following denominations: 205 × $100; 1 × $50; and 248 × $20. The pink Victoria's Secret bag contained $1, 943.00 in U.S. currency consisting of the following denominations: 36 × $20; 76 × $10; 71 × $5; and 8 × $1. Of the 2, 220 bills, the majority were in denominations of $20 or lower. The denominations and number of bills were consistent with what Officer Palacios would expect from street sales of illegal drugs.

The Government also alleges that substantial evidence connected Lam to the Palm Valley apartment during the investigation and execution of the search warrant. In December of 2010, Officer Palacios showed Officer Alvarez a photograph of Lam, and asked him to do a "knock and talk" to determine whether Lam was there and whether he lived there. Officer Alvarez identified Lam from his photo and by the date of birth on the driver's license he produced. Lam told Officer Alvarez he lived at Palm Valley with the Asian woman standing behind him and their dog. Lam also told an officer that he lived on Palm Valley Boulevard during a traffic stop made in early March of 2011, after the second controlled buy. In December 2010, while the SJPD had Lam under surveillance, officers twice observed him going into the Palm Valley apartment and not coming out in the evening.

SJPD officers observed and photographed indicia that demonstrated Lam spent time there and kept personal property there: Lam's and Claimant's names were on an insurance declaration showing they jointly insured three vehicles, one of which was the Mercedes Lam was often seen driving; Lam and Claimant jointly held title to the Mercedes; a number of male suit or sports jackets were in the bedroom closet; one of the jackets had a hotel receipt in Lam's name from 11 days earlier (March 14, 2011); there was a certificate from 2005 showing Lam completed a substance abuse recovery program. A key to the Mercedes was also seized from the top of the dresser in Claimant's residence.

Claimant disputes that Lam's trafficking is connected to her Palm Valley apartment. Lam and Claimant have been married since 2002, though they have lived apart since 2009. Claimant disputes that Lam told Officer Alvarez that he lived there in December 2010. However, she admits that Lam visits her home "regularly" to help care for the dog they own together, although he "generally" had to get permission first. Claimant also was aware that Lam had "drug problems, " and Lam's drug use was a source of contention between them. Claimant was aware that Lam had "some drug-related criminal court cases" for which he had served time. She was not aware that the arrests were for drug sales until after the seizure of the money.

Claimant also disputes that the seized funds are connected to Lam's drug trafficking activities and asserts that the money is legitimate income from the following sources: $40, 318.00 from Claimant's business for the period of January 1 to December 31, 2010; $24, 973.00 from Claimant's business for the period of January 1 to March 24, 2011; $2, 100.00 from personal savings. Claimant asserts that she kept the $67, 391.00 at home because, as part of her Vietnamese culture, she distrusted banks. The interest rates were also not to her liking. However, Claimant also maintained a business bank account for her business and used a personal bank account for her own personal earnings from her employment. Claimant planned to put the $67, 391.00 in the bank when she decided to buy a house.

Claimant has also presented detailed evidence regarding the source of the funds. Shortly after graduating from college, in July of 2008, Claimant borrowed approximately $15, 000 or $20, 000 from various family members. She could not recall the exact amount of the loans. Claimant used the money to purchase Tina's Beauty Salon and Barber Shop ("Tina's"). Tina's is primarily a cash-based business, although they also accept credit cards and checks.

Claimant's mother worked at Tina's and was responsible for tallying the daily sales totals. Claimant would collect the cash and tally slips several times a week. She would deposit enough money into the business bank account to cover monthly expenses. Claimant would count the money and would exchange the small bills for hundred dollar bills at the bank once or twice a month. She would bundle the money she had already counted. Once she counted all the money she made in 2010, she did not recount it again.

Claimant usually kept the cash in her safe, but the day before the seizure, she had taken the money out for counting and did not put it back. She locked the safe "most of the time." The day before the seizure, Claimant had the money out for counting but did not put it back in her safe. Instead, she placed it in bags in the back of her closet. She could not recall how much money was in each bag or what cash receipts for Tina's from 2010 or 2011 she placed in which bag. Claimant also testified that she did not count the 2010 money because it was already bundled up and counted.

When Claimant purchased the business in July of 2008, it was bringing in a profit of approximately $5, 000 per year. She tried different strategies throughout 2009 to build up the business. Claimant reported $96, 047.00 in gross receipts and a net profit of $40, 318.00 on her 2010 federal income tax statement. Claimant asserted that $40, 318.00 of the defendant funds comprised the net cash profits from her business in 2010. She calculated this number by looking at the 2010 tax return, seeing how much she made, and subtracting the expenses.

In 2011, Claimant's business declined sharply. Between January 1, 2011 and March 25, 2011, the gross receipts were $24, 973.00. Lam was arrested on March 25, 2011. After that date, the business earned only $24, 000.00 for the rest of the year. Claimant attributed the decline to a former employee opening a competing business, the economy, and her depression over the forfeiture.

Claimant reported $48, 551.00 in gross receipts, and a net profit of $7, 464.00 on her 2011 federal income tax return. Claimant stated that she calculated how much cash she had at home from her January 2011 through March 2011 business receipts by looking at the daily sales transactions and subtracting the credit card transactions from that total. She would then look at her bank statement to see how much cash she actually deposited and estimate what she left at the store for change. Claimant also reported $41, 087.00 in ...

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