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United States v. Thomas

February 12, 2003


ON APPEAL FROM THE DISTRICT COURT OF THE VIRGIN ISLANDS District Court Judge: Honorable Thomas K. Moore (D.C. No. 00-cr-00272)

Before: Scirica, Alito, and Rendell, Circuit Judges

The opinion of the court was delivered by: Alito, Circuit Judge


Argued: November 13, 2002


Appellant Luther Thomas contests the administrative forfeiture of $1,049 in cash. After unsuccessfully moving for a return of property pursuant to Federal Rule of Criminal Procedure 41(e), Thomas argued that the government's failure initially to assert jurisdiction over the res rendered the forfeiture invalid. The District Court found no jurisdictional deficiencies, and we affirm.


On May 25, 2000, the Drug Enforcement Administration obtained from the District Court a warrant to search Thomas's home. Officers seized $1,049 in cash pursuant to that warrant and arrested Thomas for possessing a small amount of cocaine base (crack) with intent to distribute. On June 1, a DEA task-force agent and Virgin Islands police officer converted the currency into a cashier's check and delivered the instrument to the United States Marshals' office. The DEA initiated administrative forfeiture proceedings on the money while Thomas awaited trial on the drug charges.

The DEA mailed a notice of seizure to Thomas at three different addresses and published notice in the Virgin Islands Daily News and the Wall Street Journal. Two of the mailed notices were returned to sender, and the DEA delivered another notice to Thomas granting him an additional 20 days to contest the forfeiture judicially by filing a claim and posting bond, as required by 19 U.S.C. S 1609(a). Thomas neglected to do so but moved the District Court for the property's return pursuant to Rule 41(e) of the Federal Rules of Criminal Procedure. The Magistrate Judge denied that motion, and the DEA declared the money forfeited on December 7, 2000.

Thomas then attempted to seek the return of the money administratively by petitioning the DEA for remission of forfeiture. See 28 C.F.R. S 9.5 et seq. In his petition, Thomas alleged that the $1,049 represented legitimate income from the sale of assorted knickknacks. While the petition was pending, the jury found Thomas not guilty of all of the criminal charges against him. On June 4, 2001, an attorney from the DEA's asset-forfeiture division informed Thomas that he had "failed to provide sufficient documentation showing a legitimate origin for the forfeited currency." The DEA's letter stated that a claimant alleging forfeited money to be legitimate business proceeds must provide "credible, verifiable documentation evidencing the transaction, such as bills of sale."

Thomas moved for reconsideration of his motions in both the administrative and judicial fora. Before the District Court, Thomas emphasized a different basis for his claim, arguing that the DEA never properly asserted in rem jurisdiction over the seized property, thereby undermining the forfeiture. For this argument, Thomas relied principally on Scarabin v. DEA, 966 F.2d 989 (5th Cir. 1992). The District Court ruled, citing United States v. McGlory, 202 F.3d 664, 670 (3d Cir. 2000), that it had no jurisdiction to adjudicate a Rule 41(e) motion for the return of property "once the government has initiated administrative forfeiture proceedings and the property is no longer the subject of an ongoing criminal proceeding." However, acknowledging McGlory's limited exception for a situation in which a Rule 41(e) movant alleges that the forfeiture proceedings failed to satisfy statutory and due-process requirements, see id., the District Court reached Thomas's Scarabin argument. It concluded that because the $1,049 "was at all times in the hands of the federal government," Scarabin was inapposite, and it therefore denied Thomas's motion. This appeal followed.


In Scarabin, the Fifth Circuit considered a challenge to the administrative forfeiture of $12,360 in cash. Scarabin operated a fuel dock and marine supply business at a marina in Plaquemines Parish, Louisiana. See Scarabin v. DEA, 919 F.2d 337, 338 (5th Cir. 1990) (hereinafter Scarabin I).*fn1 Acting pursuant to a warrant issued by a Louisiana state court, personnel of the Plaquemines Sheriff 's Department and the Drug Enforcement Administration (DEA) raided the marina and found two marijuana cigarette butts on the premises but not in the vicinity of Scarabin. Id. In addition, the Sheriff seized $12,360 from Scarabin. Id. Scarabin was originally charged with criminal offenses, but these charges were dismissed. Id. The seized funds, however, were forfeited in a DEA administrative proceeding. Id. Scarabin pursued remission of forfeiture via administrative channels but was rebuffed due to a technicality. Id. In an opinion issued in 1990, the Fifth Circuit acknowledged that it lacked jurisdiction to review the denial of remission but remanded the case to the DEA with the following suggestion: "[This] is the perfect case for big government to be big hearted and big enough to return ill-gotten gains to the rightful owner rather than unjustly enrich itself on the basis of a technical'gotcha.' " Scarabin I, 919 F.2d at 339.

By the time the case returned to the Fifth Circuit in 1992, additional facts had emerged concerning the treatment of the seized cash. Unbeknownst to the ...

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