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04/30/97 PEOPLE STATE ILLINOIS v. LUIS A. MEDINA

April 30, 1997

THE PEOPLE OF THE STATE OF ILLINOIS, PLAINTIFF-APPELLANT,
v.
LUIS A. MEDINA, DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Kane County. No. 91--CF--333. Honorable Barry E. Puklin, Judge, Presiding.

Released for Publication May 30, 1997.

The Honorable Justice Thomas delivered the opinion of the court. Geiger, P.j., and Rathje, J., concur.

The opinion of the court was delivered by: Thomas

The Honorable Justice THOMAS delivered the opinion of the court:

The State timely appeals from the circuit court's order granting the post-conviction petition of defendant, Luis A. Medina, and effectively vacating defendant's criminal conviction on the basis of double jeopardy. He asserted in the petition that he had previously been punished where the Department of Revenue issued a "jeopardy" tax assessment against him and a lien on his property pursuant to the Cannabis and Controlled Substances Tax Act (Tax Act) (Ill. Rev. Stat. 1991, ch. 120, par. 2151 et seq.). We vacate the judgment.

Following a bench trial, which began on January 13, 1992, defendant was convicted of the unlawful possession of a controlled substance (cocaine) with intent to deliver (Ill. Rev. Stat. 1991, ch. 56 1/2, par. 1401). He was sentenced to 20 years' imprisonment. The charge arose from the discovery early in March 1991 of approximately nine kilograms of cocaine in a garage on defendant's property. The judgment was affirmed on direct appeal in People v. Medina, 239 Ill. App. 3d 871, 180 Ill. Dec. 550, 607 N.E.2d 619 (1993). No further appeal in that case was taken, and that judgment became final.

On January 17, 1995, with the aid of counsel, defendant filed a post-conviction petition (725 ILCS 5/122--1 et seq. (West 1992)), arguing that the drug tax, assessed on March 7, 1991, on the cocaine taken from his possession in the criminal case, together with the subsequent lien on his property, amounted to a final judgment and was a punishment; therefore, defendant argued, his subsequent criminal prosecution was a second punishment barred by the constitutional prohibition against double jeopardy. U.S. Const., amend. V; Ill. Const. 1970, art. I, ยง 10. Defendant relied principally on Department of Revenue v. Kurth Ranch, 511 U.S. 767, 128 L. Ed. 2d 767, 114 S. Ct. 1937 (1994) (finding Montana drug tax was punitive and violated prohibition against double jeopardy; tax proceeding to impose tax was equivalent of successive criminal prosecution). See Wilson v. Department of Revenue, 169 Ill. 2d 306, 662 N.E.2d 415, 214 Ill. Dec. 849 (1996) (applying Kurth Ranch to find drug tax punitive and unconstitutional on basis of double jeopardy where tax was imposed under Tax Act following defendant's criminal prosecution and was functional equivalent of successive criminal prosecution placing defendant in jeopardy for second time for same offense).

Defendant also argued that Kurth Ranch must be retroactively applied to him because the rule against double jeopardy was well established but was simply applied to a new factual context. See United States v. McCaslin, 863 F. Supp. 1299, 1306 (W.D. Wash. 1994). The State argued that Kurth Ranch was a new ruling of constitutional law and was nonretroactive under Caspari v. Bohlen, 510 U.S. 383, 127 L. Ed. 2d 236, 114 S. Ct. 948 (1994), and Teague v. Lane, 489 U.S. 288, 103 L. Ed. 2d 334, 109 S. Ct. 1060 (1989). Alternatively, the State argued defendant's claim was waived or res judicata for his failing to assert it in the original criminal proceedings.

I. FACTUAL BACKGROUND

The parties stipulated to certain limited facts concerning the proceedings. The salient facts were that defendant was convicted of the drug offense on January 17, 1992, and was sentenced on March 20, 1992. Pursuant to the Tax Act, on March 7, 1991, the Department of Revenue (Department) had assessed a tax on the cocaine of $2,415,000, a penalty of $9,660,000, and interest of $362,234.03, all of which totalled $12,437,234.03. (The amount of interest appears to derive from the final assessment of February 5, 1992, rather than that of March 7, 1991.) The tax was assessed on the same cocaine involved in the offense of which defendant was convicted. Defendant was now liable to pay the tax, and there was a lien on all property which defendant owned or would thereafter acquire until the tax was paid. He was subsequently tried and convicted before the court and filed his direct appeal.

The stipulation states that defendant also "appealed" the Department's assessment and this "appeal" was denied on January 17, 1992. The parties stipulated to the accuracy of the documents in the record from the tax proceeding. The trial court granted defendant's post-conviction petition on February 23, 1996, and later released defendant pursuant to a bail bond.

The record also reveals that, at the criminal trial, the first witness was sworn and the trial judge began to hear evidence on January 13, 1992. The documents from the tax proceeding show that the initial notice of a statutory "jeopardy" assessment was issued on March 7, 1991, stating defendant's total tax liability was $12,105,187.50, including penalties and interest. The notice was entitled "Notice of Tax Liability For Cannabis & Controlled Substance Tax Jeopardy Assessment." The use of the term "jeopardy" in the context of the Tax Act shows that the tax is immediately due and payable because, for example, the Department finds that the taxpayer will depart the state or will conceal his property, or there will be some other difficulty in collecting the tax. In other words, the collection of the tax may be somehow jeopardized. See Ill. Rev. Stat. 1991, ch. 120, pars. 11-1102, 2166. In issuing a jeopardy notice, the Department may then also file a jeopardy assessment lien in the county recorder's office. Ill. Rev. Stat. 1991, ch. 120, par. 2166(b). The notice of tax liability issued to defendant states that a jeopardy assessment lien was filed and that defendant has 20 days to request a hearing. See People v. Provenzano, 265 Ill. App. 3d 33, 36-37, 202 Ill. Dec. 244, 637 N.E.2d 783 (1994) (describing procedure generally).

On March 7, 1991, the Department also filed a notice of intent to seize assets and a demand for payment within 10 days. A "Notice Of Levy Upon Bank Accounts Or Other Assets Of A Taxpayer Held By A Financial Institution" was issued on March 25, 1991, to various financial institutions. The notice of levy states that the assets are to be held for 20 days and then will be levied upon for payment of the taxes owed. "Levy" under the Tax Act means "the power of distraint and seizure by any means." Ill. Rev. Stat. 1991, ch. 120, par. 2173. If the tax remains unpaid during the specified time and no protest has been lodged, the Department may issue a warrant directing any sheriff or other person to levy on the property; enforcement of the tax levy "proceeds in the same manner as *** against property upon judgments by a court." Ill. Rev. Stat. 1991, ch. 120, par. 2173. The notice of levy here demanded that the institution not disburse funds or assets from the account, and, after the 20-day period expired, if the institution does not receive a release, the notice becomes a demand by the Department for any sums due to be applied to the tax liability.

The "Notice of Decision" issued on February 5, 1992, states that a recommended decision of the Administrative Hearings Division has been accepted by the Director of the Department and is now a final administrative decision; it advises defendant of his right to administrative review in the circuit court within 35 days of the date of mailing of the notice. The final assessment recommended on the same date is $12,437,234.03, with interest computed through February 29, 1992. In accordance with the Tax Act provisions for a protest hearing, a "Final Assessment" in that amount was issued on February 25, 1992. See Ill. Rev. Stat. 1991, ch. 120, par. 2166(c) (within 20 days of notice of jeopardy assessment lien, taxpayer may protest that he does not owe some or all of amount of jeopardy assessment and request a hearing in accordance with section 908 of the Illinois Income Tax Act (Ill. Rev. Stat. 1991, ch. 120, par. ...


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