Free Response in Opposition - District Court of Colorado - Colorado

Case 1:04-cr-00084-REB

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Criminal Case No. 04-cr-00084-REB UNITED STATES OF AMERICA, Plaintiff, vs. GABRIEL VELAZQUEZ-FLORES, Defendant,

UNITED STATES' RESPONSE IN OPPOSITION TO APPLICATION FOR RETURN OF SEIZED CASH

COMES NOW, the United States of America, by and through Assistant United States Attorneys Jaime A. Pena and James S. Russell, and opposes the Application For Return of Seized Cash filed by defendant Gabriel Velazquez-Flores; in support, Plaintiff states: STATEMENT OF FACTS 1. On February 9, 2004 Martin Sainz-Garcia was arrested pursuant to a routine traffic stop near Grand Junction, Colorado by officers of the Grand Junction Police Department; at that time, he was found to be in possession of 1,293.6 gross grams of heroin, wrapped in several layers of plastic, and placed inside a spare tire the vehicle's trunk. Sainz-Garcia agreed to cooperate with law enforcement, and agreed to participate in a controlled buy of the heroin with the intended purchaser, Gabriel Velazquez-Flores (hereinafter "Flores"). 2. Later the same day, Martin Sainz-Garcia, accompanied by law enforcement, traveled

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to a LaQuinta Inn located at 3500 Park Avenue West, Denver, Colorado, where he called Flores on his cellular phone and arranged for Flores to pick up the heroin in exchange for $4,520.00 in U.S. Currency ("subject Currency"). 3. Upon arriving at the hotel, Flores went into Sainz-Garcia's hotel room, placed the subject Currency on a table in the room, then both Flores and Sainz-Garcia walked out to SainzGarcia's vehicle to retrieve the heroin. Flores was arrested as he took the spare tire containing the heroin from Sainz-Garcia's vehicle and placed it in his own vehicle's trunk area. 4. The buy money (subject Currency) Flores left in the hotel room for Sainz-Garcia was seized as drug proceeds by the Drug Enforcement Administration (DEA) and administrative forfeiture proceedings initiated. 5. Flores was indicted by the District of Colorado on February 27, 2004. He pleaded guilty on February 1, 2005, and was sentenced to 120 months incarceration on June 21, 2005. 6. In March 2004, Flores was incarcerated at the Douglas County Correctional

Institute located at 4000 Justice Way, Castle Rock, Colorado; he was not released from that facility until June of 2005. See attached Affidavit of Nicole Davidson. 7. As more fully set forth in the attached Declaration of John Hieronymus, DEA Forfeiture Counsel, notice of the forfeiture was sent to Flores at the Douglas County Correctional Facility on March 23, 2004, and to Sainz-Garcia on March 23 and 24, 2004; notice of the forfeiture was published for three consecutive weeks via The Wall Street Journal. After no claims to the subject Currency were received, the subject Currency was declared administratively forfeited by DEA on October 6, 2004.

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8. On or about May 11, 2006, Flores filed an Application for Return of Seized Funds; although no statutory references are made; the United States presumes his Application is pursuant to Fed.R.Crim.P.Rule 41(g), formerly 41(e). 9. Pursuant to the Minute Order entered by this Court, the United States has until June 5, 2005 to respond to defendant's Application for Return of Seized Funds. ARGUMENT 10. Defendant seeks return of $4,520.00 allegedly taken from his pocket during his arrest on February 9, 2004. As explained above, this allegation is incorrect; the subject Currency was seized from the hotel room of Sainz-Garcia, after Flores gave the Currency to Sainz-Garcia as payment for 2,193 grams of heroin. 11. The subject $4,520.00 are illegal drug proceeds: they were handed from defendant

Flores to Sainz-Garcia in exchange for heroin, and seized from Sainz-Garcia's hotel room but a few moments later. See attached Affidavit if DEA Special Agent Mike Marshall. As Flores thus had relinquished dominion and control over the subject funds before they were seized, he no longer had any property or ownership rights to the subject funds, and thus he may not avail himself of Rule 41(g), which is only available to "a person aggrieved by an unlawful search and seizure of property or by the deprivation of property..." In other words, having relinquished the subject funds, Flores cannot now complaint that his funds were seized from another. 12. Further, these funds constitute monies furnished in exchange for controlled

substance in violation of 21 U.S.C. §801 et. seq., 21 U.S.C. §881(a)(6), and thus no property rights in these funds exist in Flores. 21 U.S.C. §881(a). His claim to the funds must be rejected

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upon proof that he held the funds unlawfully. United States v. Maez, 915 F.2d 1466, 1468 (10th Cir. 1990). As also set forth in the Statement of Facts and Special Agent Mike Marshall's affidavit, the subject funds were drug proceeds, not lawfully in his possession, and thus he has no right to them pursuant to 21 U.S.C. §881. See also Senior District Judge Richard P. Matsch's Order Denying Motion For Return Of Property (Docket #1130) in United States v. Moses Cooley, 1:03-cr-00036-RPM (March 8, 2006), attached. 13. Although not referenced in defendant's Application, the United States believes

defendant is seeking return of the property pursuant to Fed.R.Crim.P.Rule 41(g), formerly 41(e), which allows such a motion by "a person aggrieved by...the deprivation of property...". Rule 41(g) is an equitable remedy, which may only be utilized by someone, unlike defendant, who has clean hands. United States v. Grover, 119 F.3d 850, 852 (10th Cir. 1997); United States v. Howell, 425 F.3d 971, 974 (11th Cir. 2005). See: United States v. Parlavecchio, 192 F. Supp. 2d. 349, 352 (M.D. Pa., 2002); Hocker v. New Hampshire Insurance Co., 922 F.2d 1476, 1486 (10th Cir. 1991). In the United States v. Clymore, 245 F.3d 1195,1200 (10th Cir. 2001), that drug dealer, like Flores here, sought return of property involved in his drug dealing because the United States had not initiated a forfeiture proceeding. The Tenth Circuit disagreed. "No property right shall exist" in ...proceeds from selling illegal drugs... 21 U.S.C. §881 (1999) ... At the time the government takes possession of property used to commit drug offenses, it holds an unperfected right to title to it, and ownership will retroactively vest in the government from the time the illegal act was committed upon a judicial quieting of title to the property in favor of the United States. See [21 U.S.C.] §881 [further citations omitted] ...

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Accord: Alli-Balogun v. United States, 281 F.3d 362, 371-372 (2nd Cir. 2002); United States v. Parlavecchio, supra,192 F. Supp 2d at 352; Babb v. U.S. Drug Enforcement Agency, 146 Fed. Appx. 614, 619 (4th Cir. 2005). 14. The subject funds are drug proceeds. Defendant used the funds to purchase

heroin. Based on his purchase of drugs involving the subject funds, defendant pleaded guilty to drug trafficking. Therefore, defendant's possession and use of these drugs proceeds disqualify him form utilizing the equitable remedy of Fed.R.Crim.P. 41(g) to obtain possession of these drug proceeds. 15. Presuming defendant Flores is attempting to utilize Rule 41(g) to try to obtain the drug proceeds, Rule 41(e) jurisdiction should be exercised with caution and restraint. E.g., Hunsucker, 497 F.2d at 34. A Rule 41(e) Motion should be dismissed if the claimant has an adequate remedy at law or can not show irreparable injury. Floyd v. United States of America, 860 F.2d 999, 1003 (10th Cir. 1998). In this case, unlike the original proceedings in Floyd, supra, defendant did have an adequate remedy at law: an administrative forfeiture proceeding was timely initiated, and notice was sent to him at his jail address; such mailing of notice to Flores' jail, where it was received, is perfectly adequate, Dusenbery v. United States, 534 US 161 (2002). Flores could have and should have contested the administrative forfeiture. He did not. In such a situation, We have held that where the property sought to be returned has been administratively forfeited, the Court should not exercise Rule 41(e) jurisdiction if the movant has failed to challenge the forfeiture Page 5 of 7

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through the appropriate administrative and judicial proceedings. United States v. Dennino, 103 F.3d 82, 84 (10th Cir. 1996). Further, By failing to file a claim in the forfeiture proceedings, [defendant] has missed his opportunity to litigate the question of his interest in the seized currency. His later Rule 41(e) Motion does not suffice as a contest to the forfeiture and does not place him back in a position of jeopardy. United States v. Clark, 84 F.3d 378, 381-382 (10th Cir. 1996). See also: in re: Harper, 835 F.2d 273 (8th Cir. 1988); Frazee v. Internal Revenue Service, 947 F.2d 448 (10th Cir. 1991). 16. Finally, should defendant Flores somehow prevail by establishing that there has been some due process violation, this Court should not just order the subject Currency returned to defendant. In the present posture of this case this Court could only rule that the DEA failed to follow due process requirements in sending defendant Notice of the Administrative Forfeiture. In such a situation, this Court should only order that the DEA to void the Administrative Forfeiture and allow defendant to submit a claim to the subject Currency. See: United States v. One 1987 Jeep Wrangler Automobile, 972 F.2d 472, 482 (2nd Cir. 1992). CONCLUSION 17. As defendant cannot contest the seizure of funds from another, as he cannot obtain possession of drug proceeds, and as the subject property was seized properly and administratively forfeited after proper notice to defendant and his failure to contest the forfeiture, the United

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States submits the Application for Return of Seized Cash should be DENIED. Respectfully submitted this 5th day of June, 2006. William J. Leone Acting United States Attorney

By: s/Jaime A. Pena JAIME A. PENA Assistant United States Attorney 1225 Seventeenth Street, Ste. 700 Denver, Colorado 80202 Telephone: (303) 454-0100 Fax: (303) 454-0402 E-mail: [email protected] Attorney for Plaintiff By: s/ James S.Russell JAMES S. RUSSELL Assistant United States Attorney 1225 Seventeenth Street, Ste. 700 Denver, Colorado 80241 Telephone: (303) 454-0100 Fax: (303) 454-0402 E-mail: [email protected] Attorney for Plaintiff

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