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October 1991
CIVIL FORFEITURE:
REAL PROPERTY USED IN DRUG TRAFFICKING
By
Thomas V. Kukura
J.D., Special Agent
Drug Enforcement Administration
Legal Instructor
FBI Academy
The U.S. Department of Justice has determined that a
crucial component of effective drug law enforcement is the
forfeiture of real property used to facilitate illicit drug
trafficking. It was not until 1984 that Congress, in 21 U.S.C.
Section 881(a)(7) of the Controlled Substances Act (CSA),
authorized the civil forfeiture of real property used or
intended to be used to facilitate drug trafficking. (1)
This article discusses recent court decisions involving both
Federal and State investigations where the Federal forfeiture of
real property has provided law enforcement with an important
additional weapon to fight the war on drugs. Specifically, the
article addresses the following three legal issues:
1) How courts define real property subject to civil
forfeiture,
2) What evidence law enforcement must produce to establish
that real property facilitated drug trafficking, and
3) The circumstances under which the "innocent owner
defense" will defeat law enforcement's ability to
forfeit real property. Knowledge of the way Federal
courts have addressed these three issues is essential to
law enforcement officers contemplating the forfeiture of
real property for violation of 21 U.S.C. Section
881(a)(7).
REAL PROPERTY SUBJECT TO CIVIL FORFEITURE
The range of real property subject to civil forfeiture
under Section 881(a)(7) is very broad and includes unimproved
land, as well as improvements built on land, such as
residences, (2) restaurants, apartment buildings, (3) office
buildings, (4) athletic clubs, (5) and taverns. In addition,
real property used to manufacture, grow, store, conceal,
deliver, receive, or process illicit drugs, as well as property
used as a meeting place to negotiate drug trafficking, is
potentially subject to forfeiture.
There is also significant case authority that Section
881(a)(7) allows for the forfeiture of an entire tract of land,
even though only a portion of the land is used in violation of
the statute. For example, United States v. Reynolds (6) involved
a 30-acre tract of land on which only the house, driveway, and
swimming pool had been used to facilitate the distribution of
cocaine. The U.S. Court of Appeals for the Fourth Circuit
upheld the forfeiture of the entire 30-acre tract, finding that
"Congress expressly contemplated forfeiture of an entire tract
based upon drug-related activities on a portion of the tract."
(7)
In a similar case, United States v. Santora, (8) the
defendant's real property consisted of approximately 26 acres
bisected by a road that had been taxed as two separate parcels.
However, the property's deed described it as a single undivided
tract. On one side of the road was a 5-acre parcel on which a
home, barn, and several outbuildings were located. The balance
of the property, all of which was unimproved, was on the other
side of the road.
Following a State investigation, a Federal forfeiture
action was initiated against the defendant's real property,
based on the distribution of small amounts of cocaine to an
undercover officer on four separate occasions. All of the
cocaine sales occurred on the smaller portion of the property.
The owner attempted to characterize the property as two tracts
of land and argued that only the smaller portion of the
property, where the cocaine sales actually occurred, could be
forfeited.
The Fourth Circuit Court of Appeals rejected the
defendant's argument and ruled that "the whole of any lot or
tract of land" must be determined from the duly recorded
instruments and documents filed in the county offices where the
property is located and not simply from the tax records. Thus,
the court held the entire 26-acre parcel was subject to
forfeiture. (9) In this regard, law enforcement officers should
carefully research county land records to help determine the
exact extent of property subject to forfeiture.
EVIDENCE IN CIVIL FORFEITURE CASES
The forfeiture of real property must be based on a showing
of probable cause that the property was used or intended to be
used to commit or to facilitate a felony drug violation. A
Federal forfeiture action against real property is often
initiated based on evidence gathered during a joint
Federal/State criminal investigation or during an independent
State criminal investigation. A conviction of the owner in
either Federal or State court can serve as the necessary
probable cause to initiate civil forfeiture against a parcel of
real property, if the violation leading to conviction involved
the use of that property.
For example, the U.S. Court of Appeals for the Second
Circuit decided that a civil forfeiture of real property
pursuant to Section 881(a)(7) may be based on illicit drug
activity resulting in a State conviction. (10) In that case,
undercover New York City police officers entered a five-story
building with a street-level storefront and several residential
apartments. Once inside, the undercover officer purchased
several vials of crack from the owner, who was subsequently
convicted in State court.
Approximately 1 year later, the New York City Police
Department and the Drug Enforcement Administration (DEA)
determined that the storefront, operating as a restaurant, was
actually a lucrative crack cocaine distribution point. The
court noted that the property owner's earlier State court drug
conviction alone provided sufficient probable cause for
forfeiture of the owner's property. Despite the owner's
argument that his State conviction did not support forfeiture
because he had filed a notice of appeal, the court found that
the trial transcript of the State criminal proceedings provided
probable cause that the defendant's property was used for an
unlawful purpose. (11)
It is important to note that if the owner's State
conviction had been overturned, civil forfeiture of his property
would not be precluded. Unlike criminal forfeiture cases,
conviction for the underlying criminal activity is not a
prerequisite for the civil forfeiture of real property.
Civil forfeiture is an "in rem" proceeding against the
property that has been involved in some violation. "In rem"
refers to any legal proceeding directed solely against property.
The property is the defendant. Therefore, real property is
subject to civil forfeiture "even if its owner is acquitted
of--or never called to defend against--criminal charges." (12)
In this regard, the Supreme Court stated in Various Items of
Personal Property v. United States that "it is the property
which is proceeded against, and by resort to a legal fiction,
held guilty and condemned as though it were conscious instead of
inanimate....The forfeiture is no part of the punishment for the
criminal offense." (13)
A Clear Connection Required
The provision in Section 881(a)(7) for the forfeiture of
real property that "facilitates" drug trafficking has spawned
considerable litigation and some judicial disagreement. The
litigation and extent of disagreement centers on the degree of
connection or "nexus" that must be shown between drug
trafficking and the property to be forfeited. (14) However, all
courts agree that the connection must be more than merely
incidental or fortuitous. As the following cases illustrate,
there is a judicial willingness to interpret the "facilitation"
provision broadly to permit forfeiture whenever law enforcement
establishes a clear connection between real property and a drug
felony.
Case Accounts
One of the first cases to interpret the "facilitation"
provision was United States v. 124 East North Avenue, Lake
Forest, Illinois. (15) In this case, the government's complaint
alleged that the property was used for a 6-month period to
facilitate the sale and delivery of cocaine as follows:
1) The telephone at the residence was used regularly to
negotiate the sale of cocaine; (16)
2) The owner used an electronic paging device to be
contacted at the property regarding cocaine sales;
3) The owner used the property as the only location where
he would be contacted by telephone regarding the sale of
cocaine; and
4) The owner arranged to use the property as a location
for the delivery of approximately 5 kilograms of
cocaine.
The court held that the facts alleged in the complaint
were sufficient to constitute probable cause to believe the
defendant's property facilitated the violation of Federal drug
laws. The court highlighted the "intent" to deliver 5 kilograms
to the property and the regular use of the telephone at the
property to negotiate the sale of cocaine as providing a
"sufficient nexus between the alleged illegal activity and the
defendant property." (17) Importantly, the court noted that an
isolated use of a telephone in a home to discuss a drug sale
might not be a sufficient basis to subject the home to
forfeiture. (18)
In another case, United States v. Real Property and
Residence, (19) the owner arranged for and directed a
10-kilogram cocaine delivery, which occurred on the driveway of
his residence. A court-authorized interception of the owner's
telephone conversations prior to the transaction demonstrated
his insistence that the deal take place on familiar territory at
his home. The court upheld the forfeiture since "...a portion
of the defendant property, the driveway, served as the planned
site of a ten kilogram cocaine delivery." (20)
A different result was reached in United States v. Certain
Lots in Virginia Beach, (21) where a government informant contacted
the property owner and requested a drug transaction be
consummated at the owner's home. The owner at first refused and
only upon the informant's insistence agreed to use his home as
the transaction site. A Federal district court did not uphold
forfeiture, because the necessary "substantial connection"
between the illegal activity and the defendant property did not
exist sufficiently to prove facilitation. The court found that
the owner merely allowed the government informant to meet him
there, and then only as a result of the informant's insistence.
(22)
In United States v. Schifferli, (23) the U. S. Court of
Appeals for the Fourth Circuit found a substantial connection
between a dentist's office building and his drug offenses, and
therefore, permitted forfeiture of the office building and
property on which it was located. Facts in the case indicated
the dentist used his office over 40 times during a 4-month
period to write illegal prescriptions. In upholding the
forfeiture, the court broadly interpreted the "facilitation"
requirement by noting that it is irrelevant whether the
property's role in the crime is indispensable. (24)
In another case, the U. S. Court of Appeals for the Eighth
Circuit upheld the forfeiture of a residence, finding that it
was substantially connected to illegal drug activity because a
2-ounce purchase of cocaine occurred at the residence and law
enforcement officers found $12,585 in a pocket of a sportscoat
hanging in a closet intermingled with $250 in official
government funds that had been used in previous undercover
purchases of cocaine. (25) Cocaine, drug scales, and weapons
were also found in the residence. The court upheld the
forfeiture, even though the quantity of the drug actually
involved was "relatively small." (26)
The U. S. Court of Appeals for the 11th Circuit found
probable cause to believe a residence and the surrounding
property facilitated the importation of cocaine where evidence
indicated the property was used to negotiate and plan the
importation of cocaine. (27) The co-conspirators met several
times on the defendant's property and discussed the details of
their plan. They also traveled from the residence to inspect a
proposed landing site for the aircraft used to transport the
cocaine. (28) The court ruled the real property was forfeitable,
even though it was not used or intended for use as a delivery or
storage site for cocaine. (29)
As the above cases reveal, courts have broadly interpreted
the plain language of the facilitation provision of Section
881(a)(7). However, law enforcement's use of this provision
should be tempered by reason and fundamental fairness, because
an overzealous use of the facilitation provision to forfeit real
property could produce adverse public opinion or court
decisions, which could spawn more restrictive legislation. (30)
It is, therefore, recommended that law enforcement agencies
adopt a policy that limits the civil forfeiture of real property
to cases where there has been a substantial use of the real
property to facilitate a drug felony violation as opposed to a
remote or incidental use. (31)
THE "INNOCENT OWNER" DEFENSE
Section 881(a)(7) provides for an "innocent owner" defense
to forfeiture where property owners can establish their lack of
knowledge or consent to the drug trafficking. Once the
government establishes probable cause that property facilitated
drug trafficking, the burden shifts to owners of the property to
prove by a preponderance of the evidence that they did not know
of or consent to the underlying illegal conduct. This statutory
defense is available to any person with a recognizable legal or
equitable interest (i.e., standing) in the property, such as an
owner, spouse of the owner, or lienholder.
The possession of bare legal title, however, may be
insufficient to establish such standing. (32) Because people
engaged in drug trafficking often attempt to disguise their
interest in property to prevent forfeiture by placing title in
another's name, law enforcement officers investigating drug
trafficking should look behind the formal title to determine
whether the record title owner is a "strawman" (33) set up to
conceal the true owner.
In a recent case illustrating this "strawman" concept, the
U. S. Court of Appeals for the 11th Circuit held that possession
of mere legal title by one who does not exercise dominion and
control over the property is insufficient to establish standing
to challenge a forfeiture. The court found the claimant lacked
standing to contest the forfeiture because: (1) He presented no
documentary evidence regarding his finances or payments with
respect to the purchase of property; (2) he could not remember
how much he had contributed or borrowed from others; and (3)
there was no record to support his claim that he had paid the
property taxes on the land for at least 2 years. (34)
Courts have also held that a fugitive from justice does not
have standing to contest a forfeiture action. For example, the
11th Circuit Court of Appeals ruled that a fugitive who had been
indicted for drug trafficking and was residing in Colombia was
precluded from contesting the forfeiture of his estate located
in Miami, Florida. (35)
Some courts hold that claimants must establish both lack
of knowledge and lack of consent to avoid the forfeiture, (36)
while others hold that owners with knowledge of drug activity
may nonetheless avoid forfeiture by establishing that the
illegal drug activity took place on their property without their
consent. (37) Courts that recognize lack of consent alone as a
sufficient basis for the "innocent owner" defense nevertheless
require owners to prove they did all that reasonably could be
expected to prevent illegal activity after learning of it. (38)
For example, the "innocent owner" defense based on a lack
of consent was rejected by the U. S. Court of Appeals for the
Second Circuit in a case involving the forfeiture of a
six-story, 41-unit apartment complex that the court
characterized as "a veritable anthill of drug activity." (39)
The court found that the owner who asserted a lack of consent
did not prove he did all that reasonably could be expected to
prevent the illegal activity.
From December 1986, through May 1988, New York City police
received complaints of drug trafficking in 24 of the 41
apartments and determined that the common areas of the building
were littered with crack vials and other paraphernalia and that
lookouts were constantly posted in front of the building. Law
enforcement officers were able to produce evidence of numerous
unsuccessful attempts to contact the owner about these drug
problems through telephone calls, letters, and discussions with
the superintendent of the building. In June 1988, several
arrests were made at the apartment complex. While the owner
admitted visiting the apartment complex on approximately 100
occasions and speaking with the superintendent on a weekly
basis, he claimed he had no idea that drug transactions were
occurring on the premises until the June 1988, arrests, at which
time he instructed the superintendent not to accept rent from
the tenants arrested and called his lawyer. The court denied
the "innocent owner" defense, reasoning that the owner either
knew of the drug activity before June 1988, and did nothing to
stop it, or that his response after learning of it was
inadequate. (40)
CONCLUSION
The civil forfeiture of an entire tract of land where the
whole tract or just a portion of the tract has facilitated drug
trafficking is a powerful weapon in the war on drugs. The
government must establish probable cause that the property has
facilitated and/or is intended to facilitate a felony drug
violation.
Owners of real property can successfully assert an
innocent owner defense only if they can prove lack of knowledge
or consent to the illegal activity subjecting the property to
forfeiture. Early coordination between the various
investigative agencies and the U. S. Attorney's Office is a
strategic necessity in any investigation that may potentially
lead to the forfeiture of real property. (41)
FOOTNOTES
(1) 21 U.S.C. Section 881(a)(7) subjects to forfeiture:
"All real property, including any right, title, and interest
(including any leasehold interest) in the whole of any lot or
tract of land and any appurtenances or improvements, which is
used, or intended to be used, in any manner or part, to commit
or facilitate the commission of, a violation of this title
punishable by more than one year's imprisonment, except that no
property shall be forfeited under this paragraph, to the extent
of an interest of any owner, by reason of any act or omission
established by that owner to have been committed or omitted
without the knowledge or consent of that owner." It should be
noted that in 1978, Congress, in 21 U.S.C. Section 881(a)(6),
authorized the civil forfeiture of real property that is
traceable to the proceeds of drug trafficking. Also, real
property is subject to criminal forfeiture under 21 U.S.C.
Section 853.
(2) United States v. Lots 12, 13, 14, and 15, Keeton
Heights, 869 F.2d 942 (6th Cir. 1989).
(3) United States v. All Right, Title and Interest, 901
F.2d 288 (2d Cir. 1990).
(4) United States v. Schifferli, 895 F.2d 987 (4th Cir.
1990).
(5) United States v. Parcel of Land With Building App. And
Imp., 928 F.2d 1 (1st Cir. 1991).
(6) 856 F.2d 675 (4th Cir. 1988).
(7) Id. at 676.
(8) 866 F.2d 1538 (4th Cir. 1989).
(9) Id. at 1540-43.
(10) Supra note 3.
(11) Id. at 292.
(12) See United States v. Property Ident. As 3120 Banneker
Dr. N.E., 691 F.Supp. 497 (D.DC. 1988). For a discussion of the
various legal procedures available to initiate the seizure of
real property, see Landman and Hieronymus, "Civil Forfeiture of
Real Property under 21 U.S.C. 881 (a)(7)," Michigan Bar Journal,
February 1991, pp. 176-177.
(13) 282 U.S. 577, 581 (1931).
(14) Three Federal circuit courts have held that the
government must show the real property had a "substantial
connection" to a drug felony. See United States v. Parcel of
Land and Residence at Emery Street, 914 F.2d 1 (1st Cir. 1990);
United States v. One Parcel of Real Estate Located at 7715 Betsy
Bruce Lane, 906 F.2d 110 (4th Cir. 1990); United States v.
Premises known as 3639--2nd St. N.E., 869 F.2d 1093 (8th Cir.
1989). However, another court rejected the "substantial
connection" test and required only that the real property had
"more than an incidental or fortuitous connection to the crime."
See United States v. Real Estate Commonly Known as 916 Douglas
Avenue, 903 F.2d 490 (7th Cir. 1990).
(15) 651 F.Supp. 1350 (N.D. Ill. 1987).
(16) The use of a telephone to arrange or otherwise
facilitate a drug felony violation is itself a felony violation
under 21 U.S.C. Section 843(b).
(17) Supra note 15, at 1352-54.
(18) Id. at 1353.
(19) 921 F.2d 1551 (11th Cir. 1991).
(20) Id. at 1556.
(21) 657 F.Supp 1062 (E.D. Va. 1987).
(22) Id. at 1065.
(23) 895 F.2d 987 (4th Cir. 1990).
(24) Id. at 990-91.
(25) United States v. Premises Known as 3639--2nd St.,
N.E., supra note 14.
(26) Id. at 1096.
(27) United States v. Approximately 50 Acres of Real
Property, 920 F.2d 900 (11th Cir. 1991).
(28) The property used as a landing strip was a separate
parcel of property owned by the same claimant and was also
forfeited under the authority of Section 881(a)(7).
(29) Supra note 27, at 903.
(30) Possible constitutional challenges to
disproportionately severe forfeitures were raised in United
States v. Real Estate Known as 916 Douglas Ave., supra note 14;
and United States v. Livonia Road, 889 F.2d 1258 (2d Cir. 1989).
(31) For example, see DEA's policy statement in Drug
Agents' Guide to Forfeiture of Assets (rev. 1987). (Available
from U.S. Department of Justice, Drug Enforcement
Administration.)
(32) United States v. Real Property at 5000 Palmetto Drive,
928 F.2d 373 (11th Cir. 1991).
(33) The term "strawman" is used to denote one who holds
title in name only or is a nominal owner. h) 0*0*0* 34 United
States v. Lot 111-B, Tax Map Key 4-4-03-71(4), 902 F.2d 1443
(9th Cir. 1990).
(35) United States v. One Parcel of Real Estate Dade
County, Fla., 868 F.2d 1214 (11th Cir. 1989).
(36) Supra note 34.
(37) See, e.g., United States v. 141st Street Corp. by
Herch, 911 F.2d 870 (2d Cir. 1990).
(38) Id.
(39) Id. at 877.
(40) Id. at 880.
(41) For more expansive discussions of forfeiture concepts,
see Drug Agents' Guide to Forfeiture of Assets (rev. 1987)
(Available from the U.S. Department of Justice, Drug Enforcement
Administration); Asset Forfeiture: Law, Practice, and Policy
(vols. I & II) (Available from the U.S. Department of Justice,
Asset Forfeiture Office); and David B. Smith, Prosecution and
Defense of Forfeiture Cases (1991).