United States v. All Funds in Account Nos. 747.034/278, 747.009/278, & 747.714/278 Banco Espanol De Credito

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 25, 2002 Decided July 12, 2002

No. 01-5220

United States of America,
Appellee

v.

All Funds in Account Nos. 747.034/278,
747.009/278, & 747.714/278 Banco
Espanol de Credito, Spain,
Appellee

Nancy Marlene Vasquez-Martinez,
Appellant

Appeal from the United States District Court
for the District of Columbia
(97cv02436)

Raymond A. Connell argued the cause and filed the briefs
for appellant.

 Laurel Loomis, Attorney, U.S. Department of Justice, ar-
gued the cause and filed the brief for appellee.

Before: Sentelle, Henderson, and Randolph, Circuit
Judges.

Opinion for the Court filed by Circuit Judge Randolph.

Randolph, Circuit Judge: This is an appeal from the
judgment of the district court in favor of the United States in
a civil forfeiture action. The government brought the action
pursuant to 28 U.S.C. s 1355 and 21 U.S.C. s 881 against
$4.6 million on deposit at the Banco Espanol de Credito in
Madrid, Spain. The claimant, Nancy Marlene Vasquez-
Martinez, intervened and argued that the court had no juris-
diction because the property was outside the court's territori-
al jurisdiction and because the five-year statute of limitations
had run. See 19 U.S.C. s 1621.

Vasquez is the wife of Juan Ramon Matta, the leader and
organizer of a crime ring that smuggled massive quantities of
cocaine into the United States in the 1980s. See, e.g., United
States v. Matta-Ballestreros, No. 91-50165, 1995 WL 746007
(9th Cir. Dec. 15, 1995) (per curiam). Matta is currently
imprisoned in a federal penitentiary. The $4.6 million, con-
tained in three accounts at the Banco Espanol, is derived
from Matta's criminal operations. See United States v. All
Funds in Account Nos. 747.034/278, 747.009/278, &
747.714/278 in Banco Espanol de Credito, Spain, 141
F. Supp. 2d 548, 549 (D.D.C. 2001) [hereinafter Banco Espa-
nol].

Civil forfeiture actions are brought against property, not
people. The owner of the property may intervene to protect
his interest. Forfeiture is an ancient penalty; its origins can
be traced to Biblical times. See generally Calero-Toledo v.
Pearson Yacht Leasing Co., 416 U.S. 663, 680-90 (1974),
citing Exodus 21:28 ("If a bull gores a man or a woman to
death, the bull must be stoned to death, and its meat must
not be eaten. But the owner of the bull will not be held
responsible."). Although the American common law did not
adopt forfeiture as a penalty, early federal statutes authorized
its imposition for violations of customs laws and revenue laws.

Id. at 683. In exercising in rem jurisdiction, the court has
authority over the property (the res) and may adjudicate
claims of ownership. Traditionally, the property had to be
present within the court's territorial jurisdiction.

Even though the $4.6 million is outside of the United
States, the district court determined it had "constructive
possession" of the bank accounts because the record demon-
strated "a degree of cooperation" such that a forfeiture order
from the court would likely be enforced by the Kingdom of
Spain. Banco Espanol, 141 F. Supp. 2d at 551. The district
court also held that the statute of limitations had been tolled.
For one of the bank accounts, containing $985,000 and first
discovered in 1992, the court held that the statute of limita-
tions did not begin to run until 1993, the effective date of the
bilateral treaty between the United States and Spain provid-
ing for cooperation in the seizure of drug proceeds. See
Treaty on Mutual Legal Assistance in Criminal Matters, Nov.
20, 1990, U.S.-Spain, 1730 U.N.T.S. 113; Banco Espanol, 141
F. Supp. 2d at 553-54. The other two bank accounts were
not discovered until 1999. As to these accounts, the court
ruled that the funds had been concealed. Concealment tolls
the running of the limitations period for civil forfeiture. 19
U.S.C. s 1621(2).

Congress declared that "no property right shall exist" in
"all proceeds traceable" to illegal drug sales. 21 U.S.C.
s 881(a)(6). Both parties concede that the money at Banco
Espanol was earned through illegal narcotics activity, and--if
a United States court can order its forfeiture--then the
money must be forfeit. Vasquez claims that long-standing
precedent requires the district court to have possession of the
res before it may exercise in rem jurisdiction. For instance,
The Brig Ann, 13 U.S. (9 Cranch) 289, 291 (1815) (Story, J.),
an admiralty case, held that in "order to institute and perfect
proceedings in rem, it is necessary that the thing should be
actually or constructively within the reach of the Court."
See, e.g., La Vengeance, 3 U.S. (3 Dall.) 297 (1796).

The forfeiture provisions for drug proceeds adopt the tradi-
tional requirements "for violations of the customs laws" but

only "insofar as applicable and not inconsistent" with the drug
forfeiture laws. 21 U.S.C. s 881(d). To the Second Circuit,
the traditional requirement that the property be present
within the court's territorial jurisdiction applies in drug forfei-
ture cases, but this may be satisfied through the court's
"constructive possession" of the property whenever the gov-
ernment has "demonstrated cooperation" such that the orders
of a United States court will be carried into effect by foreign
government officials. United States v. All Funds on Deposit
in any Accounts Maintained in the Names of Heriberto
Castro Meza, 63 F.3d 148, 153-54 (2d Cir. 1995). Following
the Second Circuit's approach, the district court found that
the "history of cooperation between authorities in the United
States and Spain" gave it jurisdiction. 141 F. Supp. 2d at
552.

The general statute governing forfeiture actions states that
"[u]nless otherwise provided by Act of Congress ... in cases
of seizures on land the forfeiture may be enforced by a
proceeding in libel which shall conform as near as may be to
proceedings in admiralty." 28 U.S.C. s 2461(b). If this were
the only statute providing jurisdiction, we too would have
little doubt that traditional rules of in rem jurisdiction devel-
oped under admiralty law would apply. But in 1992, Con-
gress provided that "[w]henever property subject to forfei-
ture under the laws of the United States is located in a
foreign country, or has been detained or seized pursuant to
legal process or competent authority of a foreign government,
an action or proceeding for forfeiture may be brought ... in
the United States District court for the District of Columbia."
28 U.S.C. s 1355(b)(2).

The claimant argues that this statute merely provides
venue in the district court, rather than jurisdiction over
foreign assets. Subsection (d) of the same statute, however,
specifically refers to "[a]ny court with jurisdiction over a
forfeiture action pursuant to subsection (b)...." 28 U.S.C.
s 1355(d). It would make little sense for Congress to provide
venue in a district court if there were no means for that court
to exercise jurisdiction. The claimant answers that a foreign
country might transfer the property to the District of Colum-

bia. But this does not explain the statute's reference to
property "located in a foreign country." 28 U.S.C. s 1355(b)
(emphasis added).

Senator D'Amato introduced S.1665, the Money Launder-
ing Improvements Act, containing the language eventually
enacted as 28 U.S.C. s 1355(b). His explanatory statement
indicates that he, at least, meant to give the district courts
jurisdiction over the forfeiture of assets located in foreign
countries:

Subsection (b)(2) addresses a problem that arises when-
ever property subject to forfeiture under the laws of the
United States is located in a foreign country. As men-
tioned, under current law, it is probably no longer neces-
sary to base in rem jurisdiction on the location of the
property if there have been sufficient contacts with the
district in which the suit is filed. See United States v.
$10,000 in U.S. Currency, [860 F.2d 1511 (9th Cir. 1988)].
No statute, however, says this, and the issue has to be
repeatedly litigated whenever a foreign government is
willing to give effect to a forfeiture order issued by a
United States court and turn over seized property to the
United States if only the United States is able to obtain
such an order.

Subsection (b)(2) resolves this problem by providing for
jurisdiction over such property in the United States
District Court for the District of Columbia, in the district
court for the district in which any of the acts giving rise
to the forfeiture occurred, or in any other district where
venue would be appropriate under a venue-for-forfeiture
statute.

* * *

137 Cong. Rec. 21,995, 21,998 (1991).

Although the Second Circuit in Meza, 63 F.3d at 152, held
that jurisdiction was not available under 28 U.S.C. s 1355 and
therefore applied the traditional rules of admiralty, a year
later the Second Circuit concluded that the 1992 amendments
"provide district courts with in rem jurisdiction over a res

located in a foreign country." United States v. Certain
Funds Located at the Hong Kong & Shanghai Banking
Corp., 96 F.3d 20, 22 (2d Cir. 1996) [hereinafter Hong Kong
Banking]. The court of appeals went on to hold that the
jurisdictional amendments could be applied retroactively to
forfeiture actions begun before their enactment. Id.

We find ourselves in agreement with Hong Kong Banking.
Congress intended the District Court for the District of
Columbia, among others, to have jurisdiction to order the
forfeiture of property located in foreign countries. Unless
the Constitution commands otherwise-and the claimant has
raised no constitutional objections at all-the statute must be
enforced.* It may well be that a forfeiture order of a United
States court will not have its full effect until the res--the
money--is brought within the territory of the United States.
Cf. R.M.S. Titanic, Inc. v. Haver, 171 F.3d 943, 964-66 (4th
Cir. 1999). Spain may be expected to live up to its treaty
obligations, even if it would not otherwise be required to
effectuate the judgments of United States courts. But
Spain's compliance and cooperation determines only the effec-
tiveness of the forfeiture orders of the district courts, not
their jurisdiction to issue those orders.

The remaining issue is whether the action was brought
within the limitations period. The general statute of limita-
tions for forfeiture actions in admiralty, 21 U.S.C. s 1621,
applies to the forfeiture of drug proceeds. See United States
v. James Daniel Good Real Property, 510 U.S. 43, 63 (1993).
Under that provision, the limitations period is five years from
discovery of the offense. The statute is tolled during "any
concealment or absence of the property," id. We conclude

__________
* On appeal, Vasquez also argued that the district court lacked
jurisdiction because Congress did not provide for service of process
in foreign countries. But the district court issued a warrant for
arrest in rem, and a Spanish court restrained the funds pursuant to
a request from the Spanish government. And Vasquez had notice
and an opportunity to be heard in this forfeiture proceeding, so we
need not consider whether her status as a foreign national outside
the United States precludes any constitutional claims.

that the statute of limitations had not run on any of the
accounts in Spain, although for reasons different than those
given by the district court. The $4.6 million was outside the
United States. This action therefore commenced during the
"absence of the property." The claimant argues that proper-
ty cannot be absent unless it was first in this country and
then removed. There is no particular reason, at least none
the claimant has offered, for stretching the word "absence" to
mean something other than not present. If Congress had
meant what the claimant suggests, we would expect some
reference in the statute to the act of removal, but there is
none. When we ask why Congress would have wanted to toll
the limitations period for drug profits removed from this
country but not for payments deposited directly in foreign
accounts, no sensible answer comes to mind. Nor do we
believe property in a foreign country is no longer absent from
the United States simply because a foreign government is
willing to assist a forfeiture action seeking its return. In
short, when property is not here it is absent. We recognize
that our reading tolls the running of the limitations period
indefinitely for bringing actions against drug proceeds located
in foreign countries. But given the uncertainties of foreign
cooperation, Congress may not have wanted to force the
government to bring forfeiture proceedings within five years
to recover such property. Because the limitations period was
tolled on all three accounts in Spain, we do not reach the
district court's holding that two of the accounts were also
concealed.

Affirmed.