CA2: Seizure of property and cash for forfeiture requires a judicial finding of probable cause

Seizure of property and cash for forfeiture, even after exigency, requires a judicial finding of probable cause or a forfeiture count in an indictment. United States v. Cosme, 2015 U.S. App. LEXIS 13996 (August 10, 2015):

II. Probable Cause Determination

Cosme argues that the restraining order issued on August 6, 2013 violates the Fourth Amendment because there was never a judicial finding of probable cause. We review this question of law de novo. See Bonventre, 720 F.3d at 128. After examining the record, we agree that no proper finding of probable cause has occurred in this case and, thus, we must remand the case to the district court to determine whether probable cause supports the forfeitability of the restrained property.

Government seizures of property in criminal cases must comply with the Fourth Amendment. While “the government need not obtain a judicial determination of probable cause prior to seizure,” it must establish probable cause if a defendant protests restraints on his property. Daccarett, 6 F.3d at 50 (stating that “the fourth amendment mandates the existence of probable cause at the time of seizure”).

The government’s switch from civil forfeiture to criminal forfeiture in this case does not immunize it from having to demonstrate probable cause. When it first seized Cosme’s property in 2012, the government cited civil forfeiture provision 18 U.S.C. § 981(b)(2)(B)(ii). That provision allows the government to seize property without a warrant if “there is probable cause to believe that the property is subject to forfeiture” and an “exception to the Fourth Amendment warrant requirement would apply.” 18 U.S.C. § 981(b)(2)(B)(ii). At the August 6, 2013 hearing, the government, at that point seeking only criminal forfeiture, relied on 21 U.S.C. § 853(e),5 which enables a court to “enter a restraining order or injunction … or take any other action to preserve the availability of property … upon the filing of an indictment or information charging a violation … for which criminal forfeiture may be ordered ….” See 18 U.S.C. § 983(a)(3)(C) (“If criminal forfeiture is the only forfeiture proceeding commenced by the Government, the Government’s right to continued possession of the property shall be governed by the applicable criminal forfeiture statute.”). We identify no inherent problem with the government’s pursuit of criminal forfeiture after first initiating civil forfeiture proceedings, but this tactic cannot serve as a tool for the government to seize assets without ever showing probable cause. It is evident from the district court’s April 21, 2014 opinion that, when making its probable cause finding, the district court relied on a mistaken understanding of what the grand jury voted on in the indictment. In particular, the district court cited to Kaley v. United States, 134 S. Ct. 1090, 1098, 188 L. Ed. 2d 46 (2014), which suggests to us that it believed that the grand jury had voted on the forfeiture allegations. In Kaley, the Supreme Court held that a judge could not “second-guess[]” a grand jury’s finding of probable cause. Id. (“If judicial review of the grand jury’s probable cause determination is not warranted (as we have so often held) to put a defendant on trial or place her in custody, then neither is it needed to freeze her property.”). Here, however, as the government concedes in its brief on appeal, the grand jury did not vote on the forfeiture allegations, which were simply notice provisions not subject to a grand jury vote. Accordingly, Kaley does not apply, and the district court was required to make its own probable cause finding where none had yet been made in the case.

The government argues that this error is harmless, but we disagree. Although the substantive allegations in the indictment mention the assets in connection with the criminal conduct, at no point in this case has the government had to demonstrate that it had probable cause to restrain Cosme’s assets as required by the Fourth Amendment. See Daccarett, 6 F.3d at 50. Cosme is thus entitled to a proper judicial determination of whether probable cause existed at the time of the seizure to support the forfeitability of his property—although not necessarily to the adversarial hearing that often precedes such a determination.

III. The Warrantless Seizure of Cosme’s Bank Accounts

Cosme also argues that the government’s seizure and continued possession of his bank accounts violates the Fourth Amendment. We agree.

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