United States v. Tilley

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

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No. 93-1394
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UNITED STATES OF AMERICA,

Plaintiff-Appellee,

versus

TOMMY ROSS ANDERSON, SARAH JANE ANDERSON,
JERRY WAYNE TILLEY, AND SUSAN WELLS TILLEY,

Defendants-Appellees.
_________________________________________________________________

Appeals from the United States District Court for the
Northern District of Texas

_________________________________________________________________
( March 25, 1994 )

Before JOHNSON, JOLLY, and JONES, Circuit Judges.

E. GRADY JOLLY, Circuit Judge:

In this appeal, the defendants seek dismissal of their

criminal indictment for selling illegal drugs on grounds of double

jeopardy. They argue that the prior civil forfeiture of the

proceeds from these drug sales constitutes punishment for the

crimes charged in the indictment and that the Double Jeopardy

Clause precludes a second punishment. The district court, refusing

to buy into the defendants' double jeopardy argument, denied their

motion to dismiss the indictment. The defendants then filed this

interlocutory appeal. Because we hold that the forfeiture of
unlawful proceeds of illegal drug sales does not constitute

punishment, we affirm the district court.

I

In 1990, the Drug Enforcement Agency, and other authorities,

began an investigation of large-scale activities involved in this

case, which had yielded millions of dollars in drug proceeds. On

July 25, 1991, the government filed a complaint for civil

forfeiture in rem against certain personal and real property

belonging to the defendants pursuant to 21 U.S.C. §§ 881(a)(6) and

(a)(7).1 On October 8, 1992, the government issued a criminal

1
The relevant subsections provide in part:

(a) The following shall be subject to forfeiture to the
United States and no property right shall exist in them:

(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 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 . . . .

(7) 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 to facilitate the
commission of, a violation of this subchapter . . . .

21 U.S.C. §§ 881(a)(6) and (a)(7) (1988).

The government alleged that the personal property forfeited was
either the cash proceeds of drug sales or traceable to those
proceeds.

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indictment charging the defendants for the various drug crimes

committed from 1986 to 1991. On February 5, 1993, the four

defendants in this case entered into a stipulated forfeiture

agreement with the United States. They agreed to forfeit

significant amounts of cash, certificates of deposit, automobiles,

and other personal property with a total value of approximately

$650,000. Based on the stipulated agreements, the district court,

on February 8, entered final judgment of forfeiture with respect to

the personal property; however, the court stayed forfeiture

proceedings with respect to defendants' two homes pending outcome

of the criminal trial.2 On April 7, the defendants filed a motion

to dismiss the indictment on grounds that they were being subjected

to multiple punishments for the same crimes in violation of the

Double Jeopardy Clause. The defendants argued that they had

already been "punished" for the same drug trafficking in the civil

forfeiture proceeding. The district court rejected the argument

2
The final order of forfeiture did not specify whether the
cash, securities, and other personal property constituted
proceeds of illegal activities or personal property used in drug
trafficking. The complaint sought forfeiture under 21 U.S.C. §
881(a)(6) of proceeds and property traceable to proceeds of
illegal drug sales, and under § 881(a)(7) of real property used
to facilitate drug trafficking. By arguing on appeal that the
personal property forfeited was the proceeds of illegal drug
trafficking or directly traceable thereto, the defendants have
waived any argument that the forfeited property was anything but
proceeds. See In the Matter of Texas Mortgage Servs. Corp., 761
F.2d 1068, 1073-74 (5th Cir. 1985).

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and denied the motion.3 The defendants then filed this

interlocutory appeal pursuant to Abney v. United States, 431 U.S.

651, 97 S.Ct. 2034, 52 L.Ed.2d 651 (1977).

II

The Double Jeopardy Clause prohibits more than one

"punishment" for the same offense.4 North Carolina v. Pearce, 395

U.S. 711, 717, 89 S.Ct. 2072, 2076, 23 L.Ed.2d 656 (1969). The

pending criminal trial in this case, if it results in a conviction,

would, of course, subject the defendants to punishment. Thus, if

the prior civil forfeiture proceeding, which was predicated on the

same drug trafficking offenses as charged in the indictment,

constituted a "punishment," the Double Jeopardy Clause will bar the

pending criminal trial.5

The Supreme Court has classified a civil sanction for wrongful

conduct as a "punishment" under the Double Jeopardy Clause when the

sanction served a traditional goal of punishment, that is,

deterrence or retribution, instead of the remedial goal of

3
The district court ruled without the benefit of the Supreme
Court's subsequent decision in Austin v. United States, ___ U.S.
___, 113 S.Ct. 2801, 122 L.Ed.2d 347 (1993).
4
U.S. Const. amend V ("[N]or shall any person be subject for
the same offense to be twice put in jeopardy of life or
limb . . .").
5
Regardless of the order of the civil and criminal
proceedings, the Double Jeopardy Clause will bar the second
sanction if both the first and second sanctions are deemed
punishment. United States v. Sanchez-Escareno, 950 F.2d 193, 200
(5th Cir. 1991), cert. denied, ___ U.S. ___, 113 S.Ct. 123, 121
L.Ed.2d 78 (1992).

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reimbursing the government and society for the costs that result

from that wrongful conduct. United States v. Halper, 490 U.S. 435,

448-49, 109 S.Ct. 1892, 1902, 104 L.Ed.2d 487 (1989). In Halper,

the Supreme Court established the analytical methodology that will

guide our determination of whether the civil forfeiture of the

proceeds from illegal drug sales in this case served a punitive

purpose, or a wholly remedial purpose. As explained below, this

methodology focuses on the relationship between the amount of the

civil sanction and the amount required to serve the remedial

purpose of reimbursing the costs incurred by the government and

society as a result of the wrongful conduct. We should make clear,

however, that the sanction in Halper did not involve the proceeds

from the crimes charged and the fact that the property forfeited in

today's case constitutes unlawful proceeds is crucial to our

analysis.

In Halper, 490 U.S. at 437-39, 109 S.Ct. at 1896-97, the

government secured the conviction of a defendant on sixty-five

counts of violating the False Claims Act by submitting fraudulent

medicare claims. His crimes, however, had only netted him $585 in

excess payments from the government, and the district court

estimated the government's costs at $16,000. Nevertheless, the

government, in a separate civil action, sought to impose an

additional penalty of $130,000. Halper argued that the civil

penalty constituted a second punishment on him for the same

wrongful acts for which he had been criminally convicted and thus

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violated the Double Jeopardy Clause. Id. at 440, 109 S.Ct. at

1897. The Supreme Court reasoned that a government-imposed

sanction, whether labelled as "criminal" or "civil," constituted

punishment under the Double Jeopardy Clause if--and only if--the

sanction, "as applied in the individual case serve[d] the goals of

punishment," that is, retribution and deterrence, instead of only

the traditional remedial purpose of reimbursing the government for

the costs incurred because of the defendant's wrongful conduct.

Id. at 448, 109 S.Ct. at 1899-1902 (emphasis added). The Court

declined to determine whether a sanction is punitive by focusing on

whether a defendant subjectively feels the "sting of punishment."

Id. at 447, 109 S.Ct. 1901 n.7. Instead, the Halper Court examined

the civil sanction in that case with a focus on whether it was so

excessive that it was punitive. See id., 490 U.S. at 447, 109

S.Ct. 1902. The Court stated that a civil sanction constitutes

criminal punishment only in the "rare case" in which the amount of

the sanction is "overwhelmingly disproportionate" to the damages

caused by the wrongful conduct and thus "bears no rational relation

to the goal of compensating the government for its loss, but rather

appears to qualify as `punishment' within the plain meaning of the

word." Id. at 449, 109 S.Ct. at 1902 (emphasis added). The Court

then remanded to the district court for a determination of the

government's actual costs and an application of its rational

relation test. Id. at 452, 109 S.Ct. at 1904.

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 In United States v. Ward, 448 U.S. 242, 254, 100 S.Ct. 2636,

2644, 65 L.Ed.2d 742 (1980), the Supreme Court made clear that the

compensation of both the government and society are remedial goals

that a civil sanction may serve. The Court stated that a sanction

that bore "absolutely no correlation to any damages sustained by

society or the cost of enforcing the law" would be criminal. Id.

Thus, under Halper, we must classify the civil forfeiture of

the unlawful proceeds of illegal drug sales under § 881(a)(6) as a

punishment under the Double Jeopardy Clause if, in this particular

case, the amount of the proceeds forfeited was so great that it

bore no rational relation to the costs incurred by the government

and society resulting from the defendant's criminal conduct.

III

Unlike the fine imposed in Halper, the forfeiture of proceeds

in this particular case is not so excessive as to render the

relationship between the amount of the forfeiture and the resulting

costs to the government and society irrational. The forfeiture of

proceeds of illegal drug sales serves the wholly remedial purposes

of reimbursing the government for the costs of detection,

investigation, and prosecution of drug traffickers and reimbursing

society for the costs of combatting the allure of illegal drugs,

caring for the victims of the criminal trade when preventative

efforts prove unsuccessful, lost productivity, etc. See One Lot

Emerald Cut Stones v. United States, 409 U.S. 232, 237, 93 S.Ct.

489, 493, 34 L.Ed.2d 438 (1972) (stating that forfeiture of

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property under the customs laws serves remedial purpose by

"provid[ing] a reasonable form of liquidated damages for violation

of the inspection provisions [by] . . . reimburs[ing] the

Government for investigation and enforcement expenses"); Halper,

490 U.S. at 444, 109 S.Ct. at 1900 (stating that costs of detection

and investigation are remedial in nature); Rex Trailer Co. v.

United States, 350 U.S. 148, 153-54, 76 S.Ct. 219, 222 & n.6, 100

L.Ed. 149 (1956) (recognizing market and societal costs resulting

from wrongdoing and avoidance of unjust enrichment as remedial

purposes); Ward, 448 U.S. at 254, 100 S.Ct. at 2644 (recognizing

repayment of damages to society as remedial).

Although revenue from illegal drug sales and the cost to the

government and society are incapable of exact measurement, a

principle recognized in Halper, 490 U.S. at 449, 109 S.Ct. at 1902,

the amount of illicit drug proceeds confiscated in this case do not

appear to be excessive in comparison to the resulting governmental

and societal costs. Various sources estimate that illegal drug

sales produce approximately $80 to $100 billion per year while

exacting $60 to $120 billion per year in costs to the government

and society. See, e.g., Martin Wolf, Thinking About Drug

Legislation, THE FINANCIAL TIMES (London), Sept. 4, 1989, at I-19

(estimating drug revenues in the United States to approximate $80

billion per year); 134 CONG. REC. S15,630 (statement of Sen.

Danforth) (estimating drug revenues at $100 billion per year and

the costs to the government and society of drugs to total at least

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$110 billion); Drug Abuse Costs to U.S. May Be 125 Billion

Dollars--Study, Reuter Library Report, LEXIS, MAJPAP Library,

Sept. 5, 1991 (estimating economic costs of drug abuse to range

from $60.4 billion to $124.9 billion); see also Rex Trailer, 350

U.S. at 154, 76 S.Ct. at 222 (recognizing that intangible and

immeasurable costs to the government are appropriate considerations

in determining whether a sanction is remedial or punitive).6

Clearly, the above overlapping estimates of proceeds and resulting

costs are not "overwhelmingly disproportionate" on a national level

and, we believe, indicate a rough proportionality between the

$650,000 sanction and the resulting governmental and societal costs

in this case. Thus, if the drug dealers forfeited all the proceeds

of their drug sales, the relationship between the amount of the

proceeds and the resulting governmental and societal costs would

not exhibit the excessive quality found Halper and would not be

irrational for that reason.

Further, in this case, the defendants only forfeited a portion

of the total proceeds that their large-scale drug operation

produced over several years, i.e., the proceeds on hand at the time

of seizure. The amount of the forfeiture bears a direct relation

to the specific drug sales that generated those proceeds, but fails

6
The overlap of the ranges of estimated proceeds of illegal
drug sales and resulting governmental and societal costs
indicates a rough proportionality in this case in contrast to the
overwhelmingly disproportionate relationship between the $130,000
fine and the $16,585 approximation of governmental costs in
Halper, 490 U.S. at 437-39, 109 S.Ct. at 1896-97.

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to compensate fully for the wrongs done from all the drug sales.

Thus, instead of roughly approximating the resulting governmental

and societal costs, the instant forfeiture failed to compensate

fully for the wrongs done.

The Supreme Court's recent opinion in Austin v. United States,

___ U.S. ___, 113 S.Ct. 2801, 122 L.Ed.2d 347 (1993), does not

affect our holding today. Austin, ___ U.S. at ___, 113 S.Ct. at

2803, dealt with whether forfeitures under §§ 881(a)(4)--

conveyances, or means of transporting drugs such as automobiles--

and (a)(7)--real estate used in drug transactions--constituted

punishment under the Excessive Fines Clause. In distinguishing the

civil forfeiture in One Lot Emerald Cut Stones, 409 U.S. at 237, 93

S.Ct. at 493--a double jeopardy case in which a forfeiture was held

not to constitute punishment--the Austin Court, 113 S.Ct. at 2811-

12, stated that the 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. Unlike the real estate forfeiture statute that can

result in the confiscation of the most modest mobile home or the

stateliest mansion, the forfeiture of drug proceeds will always be

directly proportional amount of drugs sold. The more drugs sold,

the more proceeds that will be forfeited. As we have held, these

proceeds are roughly proportional to the harm inflicted upon

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government and society by the drug sale. Thus, the logic of Austin

is inapplicable to § 881(a)(6)--the forfeiture of drug proceeds.

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 IV

Even absent the rational relation test of Halper, we would

nevertheless be required to hold that the forfeiture of the

proceeds from illegal drug sales does not constitute punishment

because of the implicit and underlying premise of the rational

relation test: The nature of the forfeiture proceeding may

constitute punishment because it involves the extraction of

lawfully derived property from the forfeiting party. Indeed,

under the common law, "property was a right derived from society

which one lost [through forfeiture] by violating society's laws."
*
1 WILLIAM BLACKSTONE, COMMENTARIES ON THE LAWS OF ENGLAND 299, 4 id. at
*
382.

When, however, the property taken by the government was not

derived from lawful activities, the forfeiting party loses nothing

to which the law ever entitled him. Unlike the $130,000 fine in

Halper, 490 U.S. at 438, 109 S.Ct. at 1896, the forfeiture of

approximately $650,000 of illegal proceeds does not punish the

defendant because it exacts no price in liberty or lawfully derived

property from him. The possessor of proceeds from illegal drug

sales never invested honest labor or other lawfully derived

property to obtain the subsequently forfeited proceeds.

Consequently, he has no reasonable expectation that the law will

protect, condone, or even allow, his continued possession of such

proceeds because they have their very genesis in illegal activity.

See generally, Lucas v. South Carolina Coastal Council, ___ U.S.

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___, ___, 112 S.Ct. 2886, 2894, 120 L.Ed.2d 798 (1992); Penn

Central Transp. Co. v. New York City, 438 U.S. 104, 124, 98 S.Ct.

2646, 2659, 57 L.Ed.2d 631 (1978). In short, the wrongdoer has

nothing, at least nothing to which the law entitles him, to lose

from the possible confiscation of the proceeds from his criminal

trade. Thus, we believe the forfeiture of proceeds from illegal

drug sales is more closely akin to the seizure of the proceeds from

the robbery of a federal bank than the seizure of lawfully derived

real property. See Caplin & Drysdale, Chartered v. United States,

491 U.S. 671, 626, 109 S.Ct. 2646, 2652-53, 105 L.Ed.2d 528 (1989)

(stating that "the government does not violate the Sixth Amendment

if it seizes . . . robbery proceeds, and refuses to permit the

defendant to use them to pay for his defense . . ." because, "[t]he

money, though in [the defendant's] possession, is not rightfully

his"); see also Rex Trailer, 350 U.S. at 153, 76 S.Ct. at 222 n.6

(stating that civil sanction may serve to avoid unjust enrichment).

Consequently, instead of punishing the forfeiting party, the

forfeiture of illegal proceeds, much like the confiscation of

stolen money from a bank robber, merely places that party in the

lawfully protected financial status quo that he enjoyed prior to

launching his illegal scheme. This is not punishment "within the

plain meaning of the word." Halper, 490 U.S. at 449, 109 S.Ct. at

1902.

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 V

Accordingly, we AFFIRM the district court's denial of the

defendants' motion to dismiss because the Double Jeopardy Clause

does not bar the criminal prosecution of the defendants.

A F F I R M E D.

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