United States v. Pellegrino

12-2210-cv
United States v. Pellegrino

In the
United States Court of Appeals
For the Second Circuit
________

No. 12-2210-cv

UNITED STATES OF AMERICA,
Plaintiff-Appellee,

v.

THE SUM OF $185,336.07 UNITED STATES
CURRENCY SEIZED FROM CITIZEN’S BANK
ACCOUNT L7N01967,
Defendant,

DOMINIC PELLEGRINO,
Claimant-Appellant.
________

Appeal from the United States District Court
for the Western District of New York.
No. 08 CV 6287 ― David G. Larimer, Judge.
________

ARGUED: JUNE 19, 2013
DECIDED: SEPTEMBER 25, 2013
________
2 No. 12-2210-cv

Before: CALABRESI, CABRANES, and PARKER, Circuit Judges.
________

In this appeal from the United States District Court for the
Western District of New York (David G. Larimer, Judge), we
consider whether the District Court erred in concluding that
claimant-appellant Dominic Pellegrino’s funds were subject to
forfeiture following his state-court conviction for the sale of
prescription drugs.

Although Pellegrino’s arguments on appeal are without merit,
we nonetheless act nostra sponte to hold that it was plain error not to
apply the civil forfeiture standards established by the Civil Asset
Forfeiture Reform Act of 2000.

Accordingly, we VACATE the judgment of the District Court
and REMAND the cause for further proceedings consistent with this
opinion.
________

DONALD M. THOMPSON, Easton Thompson
Kasperek Shiffrin, LLP, Rochester, NY, for
Dominic Pellegrino.

GRACE M. CARDUCCI, Assistant United States
Attorney, for William J. Hochul, Jr., United States
Attorney for the Western District of New York,
Rochester, NY, for the United States of America.

________
3 No. 12-2210-cv

JOSÉ A. CABRANES, Circuit Judge:

In this appeal, we must decide whether to recognize, nostra
sponte, “plain error”1 in the legal standards applied by the District
Court in concluding that certain funds of the appellant seized by the
government were the product of illegal activities and therefore
subject to forfeiture.

Our review of the record leads us to conclude that, although
the several claims of error asserted by the appellant are without
merit, the District Court’s application of legal standards antedating
adoption of the Civil Asset Forfeiture Reform Act of 2000
(“CAFRA”), Pub. L. No. 106-185, 114 Stat. 202 (codified principally
at 18 U.S.C. § 983) constituted plain error and affected appellant’s
substantial rights. Consequently, we vacate the judgment of the
United States District Court for the Western District of New York
(David G. Larimer, Judge) and remand the cause for further
proceedings consistent with this opinion.

I. BACKGROUND

On April 27, 2007, Dominic Pellegrino (“Pellegrino” or
“appellant”), now a 66-year-old retired deputy sheriff, was caught
selling prescription drugs illegally to a confidential informant.
Based on this information, law enforcement obtained a search
warrant for Pellegrino’s residence, where, upon executing the
warrant on May 3, 2007, they found additional prescription pills—
some of which contained controlled substances—and empty
prescription bottles. Pellegrino was arrested on May 16, 2007 and

1The concept of “plain error” review permits us to “notice” errors or defects affecting
substantial rights even though they were not brought to the attention of the district court.
See Fed. R. Evid. 103(e); Fed. R. Crim. P. 52(b). For further discussion see note 6 and
accompanying text, post.
4 No. 12-2210-cv

charged in state court with having violated New York’s narcotics
laws. On July 11, 2008, he pleaded guilty in state court to one count
of criminal possession of a controlled substance in the seventh
degree, in violation of N.Y. Penal Law § 220.03.2 Pellegrino was
sentenced on September 11, 2008 to a “conditional discharge.” 3

During the search of Pellegrino’s home, law enforcement also
found bank statements identifying Pellegrino as the owner of a
Citizens Bank brokerage account. The ensuing investigation
revealed that between May 25, 2004 and April 5, 2007—the three-
year period immediately preceding his arrest—Pellegrino deposited
$169,000 and transferred $17,000 into the brokerage account. The
documents Pellegrino had completed to open the account, however,
stated that his sole source of income during this period was a Social
Security disability payment of $12,000 per year. He also had not
filed federal tax returns for the six-year period from 2001 through
2006. On the basis of this information, on June 20, 2007, law
enforcement seized the brokerage account, which had a balance at
that time of $185,336.07.

On June 30, 2008, the federal government (the “government”)
commenced the instant civil forfeiture action in the District Court
pursuant to 21 U.S.C. § 881(a)(6) (“§ 881(a)(6)”),4 seeking forfeiture
2N.Y. Penal Law § 220.03 provides: “A person is guilty of criminal possession of a
controlled substance in the seventh degree when he or she knowingly and unlawfully
possesses a controlled substance . . . .”
3A sentence of “conditional discharge” entitles the defendant to be released “with
respect to the conviction for which the sentence is imposed without imprisonment or
probation supervision but subject, during the period of conditional discharge, to such
conditions as the court may determine.” N.Y. Penal Law § 65.05.
4 21 U.S.C. § 881(a)(6) provides:
The following shall be subject to forfeiture to the United States and no
property right shall exist in them:
5 No. 12-2210-cv

of the assets held in the brokerage account. The government alleged
in its complaint and supporting affidavit that the entire sum of
$185,336.07 constituted proceeds of illegal drug sales. That same
day the District Court issued a warrant of arrest in rem. On October
23, 2009, Pellegrino filed a verified claim requesting that the
currency be returned to him because it was the product of lawful
activity. On August 1, 2011, following the completion of discovery,
the government moved for summary judgment in the civil forfeiture
proceeding, which the District Court granted in a decision and order
dated May 2, 2012. See United States v. Sum of $185,336.07 U.S.
Currency Seized from Citizen’s Bank Account L7N-01967, 858 F. Supp.
2d 246, 250 (W.D.N.Y. 2012) (“Sum of $185,336.07”).

This appeal followed.

II. DISCUSSION

“We review an order granting summary judgment de novo,
drawing all factual inferences in favor of the non-moving party.”
Viacom Int’l, Inc. v. YouTube, Inc., 676 F.3d 19, 30 (2d Cir. 2012).
Summary judgment is required if “there is no genuine dispute as to
any material fact and the movant is entitled to judgment as a matter
of law.” Fed. R. Civ. P. 56(a); see also Lyons v. Lancer Ins. Co., 681 F.3d
50, 56 (2d Cir. 2012).

....
(6) All moneys, negotiable instruments, securities, or other things of
value furnished or intended to be furnished by any person in exchange
for a controlled substance or listed chemical in violation of this
subchapter, all proceeds traceable to such an exchange, and all moneys,
negotiable instruments, and securities used or intended to be used to
facilitate any violation of this subchapter.
6 No. 12-2210-cv

A.

On appeal, Pellegrino raises three arguments: (1) the District
Court “abused its discretion” by failing to “accommodate” his
invocation of the Fifth Amendment; (2) the District Court
improperly “sanctioned” him for discovery violations by granting
summary judgment; and (3) the District Court’s decision allowing
the seizure of the $185,336.07 violated the Eighth Amendment’s ban
on disproportionate punishment. We do not find these arguments
persuasive, but we briefly discuss them before turning to the
question of the correct standard for civil forfeiture proceedings. See
Part B, post.

1.

Pellegrino’s first argument is that the District Court “abused
its discretion” by failing to “accommodate” his invocation of the
Fifth Amendment right to remain silent. See In re Sims, 534 F.3d 117,
132 (2d Cir. 2008) (explaining the term of art “abuse of discretion” as
a ruling based on “an erroneous view of the law or on a clearly
erroneous assessment of the evidence, or . . . a decision that cannot
be located within the range of permissible decisions.” (internal
quotation marks and alteration omitted)). Pellegrino did not,
however, invoke his Fifth Amendment privilege until the eve of his
deposition, well over three years after discovery had begun. And in
those proceeding years, Pellegrino refused to respond to the
government’s interrogatories, document requests, and requests for
admission, but never by invoking his Fifth Amendment right to
silence. It was not abuse of discretion for the district court,
7 No. 12-2210-cv

suspicious of Pellegrino’s gamesmanship, to discredit
unauthenticated documents that Pellegrino first produced in
opposition to summary judgment.

Moreover, Pellegrino’s reliance on United States v. Certain Real
Property & Premises Known As: 4003-4005 5th Ave., Brooklyn, NY, 55
F.3d 78 (2d Cir. 1995), is misplaced because it requires district courts
to “make special efforts to accommodate” a claimaint, but only
“upon [his] timely motion.” Id. at 83 (internal quotation mark
omitted). A district court is not required to review discovery
materials—which can be voluminous, if not vast—in search of
arguable privileges that have not been so much as identified by a
litigant. At no point in the proceedings before Judge Larimer, did
Pellegrino make any motion—much less a “timely motion” based on
articulable grounds of Fifth Amendment privilege—for any such
“accommodation.” Indeed, Pellegrino did not bring to the District
Court’s attention his invocation of the Fifth Amendment until the
filing of his opposition to the government’s motion for summary
judgment, notwithstanding a conference with the magistrate judge
on March 1, 2011 to discuss the status of discovery. Accordingly, in
the absence of any authority requiring district courts to grant such
an “accommodation” sua sponte, we conclude that Pellegrino’s
argument is without merit.

2.

Pellegrino next argues that, by granting summary judgment to
the government, the District Court improperly “sanctioned” him for
failing to comply with discovery requests and for invoking the Fifth
8 No. 12-2210-cv

Amendment. Yet the Court granted summary judgment, not as a
penalty for a violation of the rules governing discovery, see Black’s
Law Dictionary 1458 (9th ed. 2009) (defining a “sanction” as “[a]
penalty or coercive measure that results from a failure to comply
with a law, rule, or order”), but in response to the government’s
motion pursuant to Rule 56 of the Federal Rules of Civil Procedure.5
The Court’s holding was based on Pellegrino’s supposed failure to
demonstrate any genuine dispute of material fact and the resulting
conclusion that the movant was entitled to judgment as a matter of
law. Sum of $185,336.07, 858 F. Supp. 2d at 247. This decision was
not a “sanction.”

3.

Pellegrino’s final argument on appeal is that the District
Court’s decision, which permitted the seizure of the $185,336.07 in
illegal drug sale proceeds under 21 U.S.C. § 881(a)(6), violated the
Eighth Amendment’s ban on disproportionate punishment. We
have not spoken directly on the question of whether the Eighth
Amendment’s prohibition on disproportionate punishment applies
to § 881(a)(6); we do so now, and hold that it does not. In Austin v.
United States, 509 U.S. 602 (1993), the Supreme Court held that,
notwithstanding statutory language that “no property right . . .
exist[s]” in the property described under 21 U.S.C. § 881(a)(1)-(11),
the Excessive Fines Clause of the Eighth Amendment applies to

5 Rule 56 provides, in relevant part, that a court “shall grant summary judgment if
the movant shows that there is no genuine dispute as to any material fact and the movant
is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).
9 No. 12-2210-cv

forfeitures of conveyances and real estate under 21 U.S.C. § 881(a)(4)
and 21 U.S.C. § 881(a)(7). Id. at 622. In reaching this conclusion, the
Court stated that “Congress understood those provisions as serving
to deter and to punish” rather than “serv[ing] solely a remedial
purpose.” Id.

The current case, however, deals with subsection (a)(6)—
which concerns proceeds from illicit drug sales. See note 4, ante. All
of our sister courts of appeal that have considered this provision
have concluded that the forfeiture of “guilty property,” such as illicit
drug proceeds, “has been traditionally regarded as non-punitive” as
to which the Eighth Amendment’s restrictions on punishment do
not apply. United States v. Real Prop. Located at 22 Santa Barbara Drive,
264 F.3d 860, 874-75 (9th Cir. 2001) (internal quotation marks
omitted); see also United States v. One Parcel of Real Prop. Described as
Lot 41, Berryhill Farm Estates, 128 F.3d 1386, 1395 (10th Cir. 1997);
Smith v. United States, 76 F.3d 879, 882-83 (7th Cir. 1996); United
States v. Buchanan 70 F.3d 818, 830 n.12 (5th Cir. 1995); cf. United
States v. Alexander, 32 F.3d 1231, 1236 (8th Cir. 1994). In so doing,
these courts have viewed the forfeiture of drug proceeds as
categorically distinct from the forfeiture of conveyances and real
estate. See United States v. Tilley, 18 F.3d 295, 300 (5th Cir. 1994)
(“[T]he forfeitures of conveyances and real estate have no correlation
to, or proportionality with, the costs incurred by the government
and society because of the large and unpredictable variances in the
values of real estate and conveyances in comparison to the harm
inflicted upon government and society by the criminal act,” whereas
“the forfeiture of drug proceeds will always be directly proportional
to the amount of drugs sold. The more drugs sold, the more
10 No. 12-2210-cv

proceeds that will be forfeited.”). We agree with this view and hold
that the Eighth Amendment does not apply to forfeitures under 21
U.S.C. § 881(a)(6).

The District Court found that all of the seized money
constituted proceeds of illegal drug sales. See Sum of $185,336.07,
858 F. Supp. 2d at 250. Accordingly, “no property right [ ] exist[s] in
them,” 21 U.S.C. § 881(a); see also Adames v. United States, 171 F.3d
728, 733 (2d Cir. 1999), and therefore seizure of the unlawfully
obtained money cannot violate the Eighth Amendment. We hold,
therefore, that Pellegrino’s Eighth Amendment argument is
meritless.

B.

Our review of the District Court’s entry of summary judgment
reveals that the Court applied an outdated standard for civil
forfeiture proceedings, thereby committing a significant legal error.
Although Pellegrino did not raise this argument in the District Court
or on appeal, “[t]he Court has the power to notice a ‘plain error’
though it is not assigned or specified,” Silber v. United States, 370 U.S.
717, 718 (1962).6 “[‘Plain error’] is a doctrine that should only be

6As a general rule, “a federal appellate court does not consider an issue not passed
upon below.” Singleton v. Wulff, 428 U.S. 106, 121 (1976). But as Justice Black, writing for
the Court, recognized more than seventy years ago, “[t]here may always be exceptional
cases or particular circumstances which will prompt a reviewing or appellate court,
where injustice might otherwise result, to consider questions of law which were neither
pressed nor passed upon by the court or administrative agency below.” Hormel v.
Helvering, 312 U.S. 552, 557 (1941). More recently, the Supreme Court reaffirmed this
approach, stating that whether to deviate from the waiver rule is “a matter ‘left primarily
to the discretion of the courts of appeals, to be exercised on the facts of individual cases.’”
11 No. 12-2210-cv

invoked with extreme caution in the civil context.” United States v.
Carson, 52 F.3d 1173, 1188 (2d Cir. 1995). Under this exacting
standard,

an appellate court may, in its discretion, correct an error
not raised at trial only where the appellant
demonstrates that (1) there is an error; (2) the error is
clear or obvious, rather than subject to reasonable
dispute; (3) the error affected the appellant’s substantial
rights, which in the ordinary case means it affected the
outcome of the district court proceedings; and (4) the
error seriously affect[s] the fairness, integrity or public
reputation of judicial proceedings.

United States v. Marcus, 130 S. Ct. 2159, 2164 (2010) (internal
quotation marks and citations omitted). These factors are present
here and warrant a remand.

1.

Prior to the enactment of CAFRA, civil forfeiture proceedings
were analyzed under a two-step burden-shifting framework. Under
the first step, “the initial burden in judicial forfeiture proceedings
was placed on the government to establish probable cause for
forfeiture.” United States v. $557,933.89, More or Less, in U.S. Funds,
287 F.3d 66, 77 (2d Cir. 2002) (describing and applying the pre-
CAFRA framework). In the case of a bank account, the government
was required to show probable cause that “the funds represent
proceeds traceable to a drug transaction.” United States v. All Right,
Title & Interest in Real Prop. & Appurtenances Thereto Known as 785 St.

Exxon Shipping Co. v. Baker, 554 U.S. 471, 487 (2008) (citing Singleton, 428 U.S. at 121)). In
light of the errors discussed below, see Part B(2)-(3), post, we exercise such discretion here.
12 No. 12-2210-cv

Nicholas Ave. & 789 St. Nicholas Ave., 983 F.2d 396, 403 (2d Cir. 1993).
The government was not required, as part of its initial burden, to
demonstrate “a substantial connection between the drug activities
and the property in question, but only a nexus between them.” Id.
Once the government met its initial burden, the ultimate burden of
proof then shifted to the claimant “to show by a preponderance of
the evidence that the property was not subject to forfeiture.” United
States v. Parcel of Prop., 337 F.3d 225, 227 (2d Cir. 2003).

In response to criticism of the broad scope of the
government’s civil forfeiture authority, see United States v. Davis, 648
F.3d 84, 92-93 (2d Cir. 2011), Congress in 2000 enacted CAFRA,
which “consolidated and dramatically overhauled the procedures
for civil judicial forfeiture proceedings.” United States v. $557,933.89,
More or Less, in U.S. Funds, 287 F.3d at 76 n.5. Among the most
notable changes was the heightened standard by which the
government must prove that the property is subject to forfeiture.
Under CAFRA, the burden of proof now rests solely with the
government to show by a preponderance of the evidence—rather
than mere probable cause—that the property is subject to forfeiture.
See von Hofe v. United States, 492 F.3d 175, 179 (2d Cir. 2007). CAFRA
also replaced the existing “‘nexus’ standard” with the more rigorous
“substantial connection” test, which we had specifically declined to
adopt in the pre-CAFRA era. See United States v. Daccarett, 6 F.3d 37,
55-56 (2d Cir. 1993); see also 18 U.S.C. § 983(c)(3) (effectively
abrogating Daccarett).

2.

Although the District Court here twice stated that it was
applying a “preponderance of the evidence” standard, Sum of
$185,336.07, 858 F. Supp. 2d at 247, 250, in substance it applied the
13 No. 12-2210-cv

pre-CAFRA framework. The Court stated at the outset of its
decision:

In proving entitlement to civil forfeiture, the
Government must demonstrate, by a preponderance of
the evidence, that the defendant assets are forfeitable.
See Fischl v. Armitage, 128 F.3d 50, 55 (2d Cir. 1997).
That is, “the Government must show that it has
reasonable grounds to believe that [the] property is
subject to forfeiture. These grounds must rise above the
level of mere suspicion but need not amount to what
has been termed ‘prima facie proof.’” United States v.
$8,880 in United States Currency, 945 F. Supp. 521, 523-
524 (W.D.N.Y. 1996) (internal quotation marks omitted).
The Government need not link the [subject] property to
a particular transaction or show a substantial
connection between the drug activities and the property
in question, “but only a nexus between them.” Id.,
quoting United States v. Daccarett, 6 F.3d 37, 55 (2d Cir.
1993). Such a nexus may be established through the use
of circumstantial evidences. See Daccarett, 6. F.3d 37 at
56.

Once the Government meets its burden of proof
to establish probable cause, “the ultimate burden of
proving that the factual predicates for forfeiture have
not been met” shifts to the claimant. United States v. One
Parcel of Property Located at 15 Black Ledge Drive, 897 F.2d
97, 101 (2d Cir. 1990) (emphasis added).

Sum of $185,336.07, 858 F. Supp. 2d at 247-48.

This legal framework, supported by citations to pre-CAFRA
cases, is not applicable to this forfeiture action, which was
14 No. 12-2210-cv

commenced after the year 2000, the effective date of CAFRA. See
CAFRA, Pub. L. No. 106-185, 114 Stat. 202 (2000); $557,933.89, More
or Less, in U.S. Funds, 287 F.3d at 76 n.5 (noting that “the new
forfeiture proceedings apply only to proceedings commenced on or
after August 23, 2000”). The District Court stated three outdated
standards from pre-CAFRA case law: (1) it required the government
to show “reasonable grounds” for forfeiture based on the less-
stringent “probable cause” requirement, see, e.g., Daccarett, 6 F.3d at
55; (2) it rejected the more demanding “substantial connection” test
laid out in CAFRA, see 18 U.S.C. § 983(c)(3), in favor of the outdated
“nexus” test, which courts no longer apply; and (3) most
problematically, it placed the ultimate burden of proof on Pellegrino
by using a burden-shifting framework which CAFRA had
overhauled.

The District Court then applied this outdated burden-shifting
framework in its analysis. It first found “that the Government ha[d]
demonstrated probable cause for forfeiture here.” Sum of $185,336.07,
858 F. Supp. 2d at 248 (emphasis added).7 In line with a burden-
shifting framework, the Court then turned to Pellegrino’s “attempt[ ]
to demonstrate that grounds for forfeiture do not exist,” id. at 249,

7The government notes this error in its appellate brief, but labels it a mistake of
“nomenclature” rather than an application of outdated law. See Appellee Br. 10 n.4. In
support of this argument, the government points out that the District Court used the
correct term, “preponderance of the evidence,” at the end of its opinion in evaluating the
“totality of the circumstances.” Id. As noted above, however, the District Court defined
the applicable forfeiture standard incorrectly at the outset of the opinion, relying entirely
on case law antedating the enactment of CAFRA. In addition, the pre-CAFRA
framework used the “preponderance of the evidence” standard when describing the
claimant’s burden of proof, see United States v. Parcel of Prop., 337 F.3d 225, 232 (2d Cir.
2003), and the language in the District Court’s opinion to which the government refers
does not specify which party bore the burden of proof in this case. Regardless, this
language does not remedy the District Court’s application of the outdated “nexus” test
instead of the more-stringent “substantial evidence” test.
15 No. 12-2210-cv

before ultimately holding that the entire account balance was
traceable to illegal narcotics activity.

Accordingly, the District Court committed error that was clear
and obvious under current law.

3.

This error affected Pellegrino’s substantial rights because the
evidence of record falls well short of demonstrating, by a
preponderance of the evidence, under CAFRA, that all of the seized
money constituted proceeds from federal drug crimes. On May 25,
2004, Pellegrino made his first deposit into the seized brokerage
account in the amount of $100,000. From October 2004 through
April 2007, Pellegrino made steady deposits into the seized account
that amounted to roughly $25,000 per year. Based on the volume of
controlled substances seized from Pellegrino’s home, the testimony
of a confidential informant, and the absence of any legitimate source
of income, the Court found that all of these funds—including the
initial $100,000 deposit—were the proceeds of illegal drug sales. See
Sum of $185,336.07, 858 F. Supp. 2d at 248-49.

Yet the evidence does not support this conclusion as to the
initial $100,000 deposit. First, the District Court found, without
adequate evidentiary support, that Pellegrino’s illegal drug activities
spanned a four-year period, beginning in 2003 and ending with his
arrest in 2007. In making this finding of fact, the Court relied
primarily upon the “testimony of a confidential informant that he
had engaged in over 700 purchases of controlled substances from
[Pellegrino] over the previous four years.” See Sum of $185,336.07, 858
F. Supp. 2d at 248 (emphasis added). Yet the confidential
informant’s own affidavit attests to “approximately 700
[prescription drug] transactions” with Pellegrino during the time
period “[o]n or about and between Spring 2005 through May 2007.”
16 No. 12-2210-cv

App’x 84, ¶ 2, 4 (emphasis added).8 Accordingly, the initial $100,000
deposit, which was made on May 25, 2004, occurred before the
applicable two-year period. Second, even assuming arguendo that
Pellegrino was selling drugs in May 2004, the evidence is insufficient
to support seizure of the entire $100,000. The Court’s decision
assumes, without explanation, that the scope of Pellegrino’s illegal
enterprise amounted to $100,000 in proceeds in 2004, but then
decreased considerably to only $25,000 per year in subsequent years.
Another, arguably more plausible inference at the summary
judgment stage is that most, if not all, of the $100,000 deposit
constituted prior savings, which Pellegrino had earned from
legitimate sources.

These errors merely underscore the weakness of the
government’s case at the summary judgment stage, and the extent to
which the District Court’s application of the less-strenuous pre-
CAFRA legal framework prejudiced Pellegrino.

8The District Court’s reliance upon a four-year timeframe might stem from Officer
Tuttle’s affidavit, in which Officer Tuttle states that another officer informed him that a
confidential informant had been purchasing prescription drugs from Pellegrino for four
years. See App’x 53 ¶ 34, 79. Pre-CAFRA case law recognized an exception, no longer
applicable, in civil forfeiture actions to the typical requirement that affidavits be based
upon personal knowledge and admissible evidence. See United States v. One Parcel of
Prop. Located at 15 Black Ledge Drive, Marlborough, Conn., 897 F.2d 97, 101–02 (2d Cir. 1990)
(“In view of the unusual relative burdens of proof in civil forfeiture proceedings . . . the
government [is allowed] to establish probable cause on the basis of hearsay affidavits” so
long as the information contained therein is reliable.). However, in a civil forfeiture
proceeding under CAFRA, there is no basis for admitting the “double” hearsay contained
in Officer Tuttle’s affidavit. See United States v. $92,203.00 in U.S. Currency, 537 F.3d 504,
510 (5th Cir. 2008) (“[B]y enacting CAFRA, Congress intended to end the practice of
reliance on hearsay in civil forfeiture decisions. The Government’s only argument to the
contrary rests on outdated cases that use the pre-CAFRA probable cause standard, which
obviously does not apply to this post-CAFRA proceeding.”).
17 No. 12-2210-cv

4.

Lastly, the District Court’s application of the pre-CAFRA legal
standard undermined the fairness of its decision—particularly
because that error was obscured by repeated references in the
opinion to a “preponderance of the evidence” standard that was
defined in the form prescribed by pre-CAFRA law. Moreover, the
decision deprived Pellegrino, a 66-year-old retiree, of what may well
be a substantial amount of legitimate savings. Based on the
foregoing, we exercise our discretion to recognize plain error in the
circumstances presented by this case. See note 6 and accompanying
text, ante. The proper course, in our view, is to remand for further
proceedings at which the CAFRA legal-standards are properly
applied.

CONCLUSION

To summarize, we hold that:

(1) The District Court did not err in not providing, sua sponte,
Pellegrino with an “accommodation” after his invocation of
the Fifth Amendment right to silence.

(2) The District Court did not improperly “sanction” Pellegrino
for discovery violations by granting summary judgment
pursuant to Federal Rule of Civil Procedure 56.

(3) In holding that Pellegrino’s assets were subject to forfeiture,
the District Court did not violate the Eighth Amendment’s
prohibition on disproportionate punishment because the
Eighth Amendment does not apply to forfeitures under 21
U.S.C. § 881(a)(6).
18 No. 12-2210-cv

(4) By applying a pre-CAFRA standard for civil forfeiture
proceedings, the District Court “plainly” erred in
contravention of established law. The error affected
Pellegrino’s substantial rights—particularly in light of
evidence indicating that not all of the seized assets were
proceeds of federal drug crimes—and, in our view, seriously
affected the fairness of the civil forfeiture proceeding.

For the reasons stated above, we VACATE the District Court’s
May 4, 2012 judgment, and REMAND the cause for further
proceedings consistent with this opinion.