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United States v. $115

United States District Court, M.D. North Carolina

July 3, 2017

UNITED STATES OF AMERICA, Plaintiff,
v.
$115, 471.00 in U.S. CURRENCY, Defendant.

          MEMORANDUM OPINION AND ORDER

          N. Carlton Tilley, Jr. Senior United States District Judge

         This matter is before the Court on Plaintiff's Motion for Summary Judgment [Doc. #21] in its civil in rem action for the forfeiture of defendant currency. Plaintiff United States of America (“the Government”) argues that it has met its burden of showing by a preponderance of the evidence that the defendant currency is forfeitable. (Pl.'s Br. in Supp. of Summ. J. [Doc. #22].) Claimant Jose Joel Torres Gonzalez disputes such a conclusion and also seems to argue that, even if the Government had met its burden, he is an innocent owner of the defendant currency. (Br. in Opp'n to Pl.'s Mot. for Summ. J. [Doc. #28].) For the reasons explained herein, the Government's Motion is granted.

         I.

         As a preliminary matter, the Government has submitted two declarations, among other exhibits, in support of its Complaint and Motion, one from Kevin Cornell (Cornell Decl., Apr. 25, 2011 [Doc. 1-1]), a Deputy Sheriff in the Guilford County Sheriff's Office and a Task Force Officer with the Drug Enforcement Administration, and one from Eric Stanley (Stanley Decl., Feb. 6, 2017 [Doc. #22- 2]), a Master Corporal in the Special Operations Division/Canine Unit of the Guilford County Sheriff's Office. While Corporal Stanley's declaration is based solely on his personal knowledge as a responding canine officer, (see Stanley Decl. ¶¶ 2-5), Deputy Cornell's declaration is based on his “personal knowledge and experience and on information provided by officers who participated in the events described [in the declaration]”, (Cornell Decl. ¶ 2 (emphasis added)).

         Despite Deputy Cornell's attesting to factual details, he does not state that he was a participant in any of the activities he describes, nor does he appear to have been a participant. (See id. ¶¶ 3-23.) Instead, these details are likely those to which he referred as having been provided by officers who did participate in the relevant events. The only portion of his declaration which is based on his personal knowledge and experience is his description of drug traffickers, drug sales, and related cash. (See id. ¶ 19; see also ¶ 23 (giving opinion as to probable cause).) Any other statements are hearsay to which the Government has not argued an exception applies.

         Accordingly, in its presentation of the undisputed facts, the Court will not use the hearsay statements in Deputy Cornell's declaration. See United States v. $94, 200.00 in U.S. Currency, No. 1:11CV609, 2012 WL 2885129, at *3 n.3 (M.D. N.C. July 13, 2012) (citing United States v. 524 Cheek Rd., 425 F.Supp.2d 704, 708 n.3 (M.D. N.C. 2006)); United States v. $864, 400.00 in U.S. Currency, No. 1:05CV919, 2009 WL 2171249, at *2 n.3 (M.D. N.C. July 20, 2009), aff'd, 405 F. App'x 717 (4th Cir. 2010). Cf. United States v. Currency, U.S., $147, 900.00, 450 F. App'x 261, 264 n.2 (4th Cir. Oct. 14, 2011) (unpublished) (reviewing the admission of hearsay for plain error and finding none because, prior to the 2000 passage of the Civil Asset Forfeiture Reform Act (“CAFRA”), courts routinely permitted the Government to rely on hearsay evidence in forfeiture proceedings and only one appellate court has since explicitly recognized that hearsay evidence is no longer admissible).

         II.

         A.

         The following undisputed facts are taken from State v. Torres-Gonzalez, 741 S.E.2d 502 ( N.C. Ct. App. 2013), unless otherwise noted. In October 2010, Detective Mounce[1], an officer in the Vice Narcotics Division of the Guilford County Sheriff's Department, was working undercover when he was introduced to Ramone Ramirez Blanco, a suspected drug dealer. Id. at 505. Detective Mounce met with Blanco to purchase a small amount of cocaine and later began to inquire about purchasing larger quantities of cocaine. Id. The two set up a deal for November 16, 2010 for the sale of fifteen ounces, or about 425 grams, of cocaine for $18, 000. Id. After Detective Mounce arrived at the Belk parking lot at Four Seasons Mall, Blanco also arrived. Id. Gonzalez[2], with whom Detective Mounce had no prior contact, was in the passenger seat. Id. After confirming that Detective Mounce and another undercover detective had the purchase money, Blanco told Detective Mounce that he and Gonzalez had to go pick up the cocaine. Id.

         Blanco and Gonzalez then drove to Blanco's home where Gonzalez's vehicle was parked. Id. at 506. The plan was for Gonzalez to go to his home, get the cocaine, and then meet Blanco at a nearby Food Lion where Blanco would pick up the drugs. Id. After Blanco had been waiting at the Food Lion for a period of time, he called Gonzalez who had people at his house and required Blanco to come there to pick up the cocaine. Id. While under surveillance, Blanco left Food Lion, drove to Gonzalez's house, and retrieved the cocaine at which time Gonzalez told Blanco to return with the money and make sure he was not being followed. Id. Blanco then called Detective Mounce, and they eventually met at a Home Depot where the sale of cocaine was completed and Blanco arrested. Id.

         While Blanco's possessions were being processed, one of his two cell phones rang repeatedly. Id. The cell phone number was matched to Gonzalez whose address was determined to be the same residence Blanco visited to retrieve the cocaine. Id. That night, law enforcement obtained a search warrant for Gonzalez's residence which had been under surveillance throughout the application process. Id. During the execution of the search warrant, law enforcement found triple-beam scales and “two $100 bills, two cardboard boxes containing a total of fifteen bundles of money, a paper bag with seven envelopes of money, two individual envelopes containing more cash, and Defendant's wallet, which contained $342. The cash found at the scene totaled $115, 371[3].” Id. According to Gonzalez's son, Joel Gonzalez Lopez, Jr., who observed officers as they conducted the search and seized the money, the money was found in a kitchen cabinet, under the bed in the master bedroom, and from the master bedroom closet. (Lopez Aff. ¶ 7 [Doc. #26].) Based on Deputy Cornell's training and experience, drug traffickers store proceeds from drug sales in an area that gives them access to the funds for future drug transactions and that they deal in bulk cash in order to conceal their activities and to avoid the creation of a paper trail. (Cornell Decl. ¶ 19.)

         Corporal Stanley and his canine partner Bo responded to the residence during the search. (Stanley Decl. ¶ 3.) Corporal Stanley directed Canine Bo to conduct a narcotics detection sniff of the interior of the residence. (Id. ¶ 4.) In Gonzalez's bedroom, Canine Bo positively alerted to the presence of an illegal narcotic odor on the left front corner of the bed. (Id.) After searching the residence, the cash seized was combined and Canine Bo was directed to conduct a sniff of the currency, the result of which was a positive alert to the odor of narcotics. (Id. ¶ 5.) Gonzalez was found guilty by a jury of felony conspiracy to traffic in cocaine. Gonzalez, 741 S.E.2d at 507.

         B.

         Also undisputed is that Gonzalez operated a sole proprietorship, JTG Drywall & Paint, from approximately 2000 until 2010 when he was arrested for the offense described above. (Lopez Decl. ¶ 2.) From 2005 to 2010, the years for which Gonzalez's joint tax returns were submitted[4], the business had increasingly significant gross receipts and corresponding increasingly significant expenses. (See 2005-2010 Tax Returns [Doc. #22-3] (showing $211, 037 in gross receipts and $201, 226 in total expenses for 2005; $285, 362 in gross receipts and $264, 925 in total expenses for 2006; $297, 888 in gross receipts and $260, 959 in total expenses for 2008; $486, 572 in gross receipts and $419, 272 in total expenses for 2009; and $915, 847 in gross receipts and $831, 439 in total expenses for 2010).[5])

         JTG Drywall & Paint had many customers, many of which were companies doing repeat business, while some were homeowners. (Lopez Aff.[6] ¶ 8.) Companies issued 1099's and “ordinarily” paid by check, while homeowners paid in cash. (Id.) Gonzalez's “standard practice” was to “[s]ometimes” take the customer's check to his bank, deposit part of it, and cash part of it. (Id. ¶ 9.) “[M]ore frequently, ” he would cash the check in its entirety at the customer's bank. (Id.)

         The business's expenses included vehicle expenses, contract labor, insurance, interest, legal and professional services, office expenses, equipment leases, supplies, taxes and licenses, meals and entertainment, and utilities, the largest of which by far was labor. (See 2010 Tax Return [Doc. #22-3 at 21].) While some employees were paid in cash, (cf. Lopez Aff. ¶ 12 (noting that “all” employees were paid in cash)), thirteen of the approximately twenty employees in 2010 were paid throughout the year by check from an account in the name of Jose J Torres Gonzales Special Account, (Payroll Checks [Doc. #29-1]; Lopez Aff. ¶ 12 (averring that from 2005 to 2010 his father had between five and twenty employees and that at the time of his arrest he had “more like 20 employees”)), the checks totaling nearly $90, 000, compared to the $595, 555 claimed as ...


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