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U.S. v. PARCEL OF REAL ESTATE LOC. AT 1948 MARTIN

March 28, 2000

UNITED STATES OF AMERICA, PLAINTIFF,
V.
ONE PARCEL OF REAL ESTATE LOCATED AT 1948 MARTIN LUTHER KING DRIVE, SPRINGFIELD, ILLINOIS, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Richard Mills, District Judge.

OPINION

Melvin Logan was not very creative in laundering the mountain of drug money that he accumulated during his career as a drug dealer.

He placed hundreds of thousands of dollars in property in the names of his immediate family members, perhaps thinking that no one would notice that at the very same time that he is accumulating hordes of cash from drug sales, his family members suddenly decided to become real estate tycoons. Perhaps he also thought that no one would notice that the properties so acquired would be bought with unusually large amounts of cash or paid off quickly with large cash payments.

He was wrong.

The bench trial has been concluded and written closing arguments have been filed by the parties.

This order incorporates the Court's findings of fact and conclusions of law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure.

I. BACKGROUND

Melvin Logan is not a party to this proceeding, but the case is based in large part on his illegal drug dealing and money laundering career that spanned more than a decade, from the early-1980s to the mid-1990s. This is a civil forfeiture case, in which the Government seeks the forfeiture of the properties — or at least some of the properties — that Melvin Logan bought with his drug proceeds or that were used to facilitate the drug transactions. After Counts 5, 13, 25, 26 and 31 were dismissed, the case proceeded to a lengthy bench trial on the remaining twenty six counts of the amended complaint. The Government seeks to forfeit the following real and personal properties:

A. Real property:

1. 1948 Martin Luther (Count 1) King Drive, Springfield, IL 2. 2037 East Cedar, (Count 2) Springfield, IL 3. 2041 East Cedar, (Count 3) Springfield, IL 4. 2045 East Cedar, (Count 4) Springfield, IL 5. 1955 So. 19th (Count 6) Street, Springfield, IL 6. 1209 East Laurel, (Count 7) Springfield, IL 10. 2038 South Grand (Count 8) Ave. East, Springfield, IL 11. 2246 East Cedar (Count 9) 12. 2248 East Cedar (Count 10) 13. 2250 East Cedar (Count 11) 14. 2420 Wembley, (Count 12) Springfield, IL 12. 1825 South Martin (Count 14) Luther King, Springfield, IL 13. 1820 Spruce (Count 15) 14. 2237 East Cedar, (Count 16) Springfield, IL 15. 2240 East Cedar, (Count 17) Springfield, IL 16. 1004 So. 13th (Count 18) Street, Springfield, IL

In addition to these real properties, the Government seeks forfeiture of the following personal properties:

B. Personal properties

1. 1988 Honda (Count 19) Goldwing Motorcycle 2. 1988 GMC Stepside (Count 20) Pickup Truck 3. 1989 Honda (Count 21) Goldwing Motorcycle 4. 1991 Chevrolet (Count 22) Lumina 5. 1995 Volkswagon (Count 23) Jetta 6. 1993 Hyundai Excel (Count 24) 7. 1994 Hyundai Excel (Count 27) 8. 1994 Cadillac Eldorado (Count 28) 8. 1994 Ford Probe (Count 29) 9. 1995 GMC Stepside (Count 30) Pickup Truck

The Government contends that all 26 of these properties, except for the 1994 Ford Probe, were allegedly bought with the proceeds of illegal drug transactions while the Probe was allegedly used to transport illegal drugs. Several of the properties were allegedly subject to forfeiture either because they were bought with drug proceeds or were used to facilitate drug transactions: (1) 1948 South Martin Luther King Drive; (2) 1955 So. 19th Street; (3) 2420 Wembley; (4) the 1988 Honda Goldwing in Count 19; (5) the 1991 Chevrolet Lumina; (6) the 1995 Volkswagen Jetta, and (7) the 1994 Cadillac Eldorado.

The Claimants in this case are relatives and associates of Melvin Logan or his immediate family who claim some interest in the above-listed properties. Specifically, they are Marvin Logan, who is Melvin Logan's father, Prince Ella Logan, who is Melvin Logan's sister, Cleveland Logan and J.B. Logan, both of whom are Melvin Logan's brothers, Shawnika Champion and LaDonna Robinson Champion, both of whom are step-daughters of Melvin Logan, and Rhonda Davis, an associate or friend of Cleveland Logan.

The Government seeks forfeiture of these properties pursuant to 21 U.S.C. § 881(a)(7), 21 U.S.C. § 881(a)(4) and 21 U.S.C. § 881(a)(6). Specifically, 21 U.S.C. § 881(a)(7) provides for forfeiture of real property that meets the following conditions:

All real property, including any right, title, and 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 punishable by more than one year's imprisonment, except that no property shall be forfeited under this paragraph, to the extent of an interest of an owner, by reason of any act or omission established by that owner to have been committed or omitted without the knowledge or consent of that owner.

Similarly, 21 U.S.C. § 881(a)(4) provides that the following types of personal property may be subject to forfeiture:

All conveyances, including aircraft, vehicles, or vessels, which are used, or are intended for use, to transport, or in any manner to facilitate the transportation, sale, receipt, possession, or concealment of property described in paragraph (1), (2), or (9).

The property referred to above is described at 21 U.S.C. § 881(a)(1), (a)(2), and (a)(9) as follows:

(1) All controlled substances which have been manufactured, distributed, dispensed, or acquired in violation of this subchapter.
(2) All raw materials, products, and equipment of any kind which are used, or intended for use, in manufacturing, compounding, processing, delivering, importing, or exporting any controlled substance or listed chemical in violation of this subchapter;
(9) All listed chemicals, all drug manufacturing equipment, all tableting machines, all encapsulating machines, and all gelatin capsules, which have been imported, exported, manufactured, possessed, distributed, dispensed, acquired, or intended to be distributed, dispensed, acquired, imported, or exported, in violation of this subchapter or subchapter II of this chapter.

As can be seen from these code sections, § 881(a)(4) and (a)(7) allow for forfeiture of properties that are used to commit illegal drug transactions. But § 881(a)(6) provides for the forfeiture of the proceeds of drug transactions or property traceable to the proceeds. Most of the properties in question here are alleged to have been bought with the proceeds of Melvin Logan's drug dealing.

Because of the shifting burdens and the somewhat complicated timing of the evidence that is properly considered at the various stages, the Court will state separately its findings of fact and conclusions of law for the probable cause determination and the Claimant's case in chief, combined with the Government's rebuttal.

II. FINDINGS OF FACT AND CONCLUSIONS OF LAW

Because the legal conclusions regarding probable cause impact the evidence that is properly considered, the conclusions of law will be set out first, followed by the factual findings.

A. Conclusions of Law

I. Burdens

The burden in a forfeiture case initially is upon the Government to show that probable cause exists to believe that the property in question is subject to forfeiture. See United States v. All Assets and Equipment of West Side Building Corp., 58 F.3d 1181, 1187 (7th Cir. 1995). If the Government meets this burden, the "ultimate burden shifts to the claimants to prove by a preponderance of the evidence that the property is not subject to forfeiture." United States v. All Assets and Equipment of West Side Building Corp., 58 F.3d 1181, 1187 (7th Cir. 1995).

Probable cause is more than mere suspicion and requires that the Government show a "nexus" between the property and illegal drug activity. See Id. at 1189, n. 13. This means that the Government must show that it has "reasonable ground for the belief of guilt supported by less than prima facie proof but more than mere suspicion." United States v. All Assets and Equipment of West Side Building Corp., 58 F.3d 1181, 1188 (7th Cir. 1995), A nexus is less than a substantial connection and requires that the connection between the drug proceeds or activity and the property be more than merely "incidental or fortuitous." United States v. 916 Douglas Ave., 903 F.2d 490, 493 (7th Cir. 1990). Also, hearsay and other circumstantial evidence are properly considered in making the initial probable cause determination, so long as the evidence bears "strong indicia of reliability."*fn1 See, e.g. United States v. United States Currency Deposited in Account No. 1115000763247 for Active Trade Co., 176 F.3d 941, 945 (7th Cir. 1999).

2. Timing of Evidence Obtained by Government

Claimants also argue that the Government is limited to proof obtained prior to the institution of the forfeiture proceeding when attempting to show probable cause for the forfeiture. The Government, on the other hand, agrees that it must have evidence sufficient to establish probable cause at the time forfeiture proceedings are initiated, but argues that it may also supplement with additional proof obtained after the forfeiture has been instituted.

The Circuits are not in accord with regard to whether the Government may rely on evidence obtained after the forfeiture proceeding has begun in demonstrating probable cause. Several Circuits have indicated that the Government's proof is limited to the evidence that it has obtained prior to the institution of the forfeiture proceeding, while other Circuits hold that the Government may rely on evidence obtained after the forfeiture proceeding has been initiated. Compare United States v. $191,910.00 in U.S. Currency, 16 F.3d 1051 (9th Cir. 1994); United States v. Parcels of Property, 9 F.3d 1000, 1004 (1st Cir. 1993) (probable cause determination made as of time that forfeiture proceeding was instituted); United States v. $91,960.00, 897 West Page 1233 F.2d 1457, 1462 (8th Cir. 1990) (holding that district court should consider only evidence obtained prior to forfeiture proceeding) with United States v. Premises and Real Property at 4492 S. Livonia Rd., 889 F.2d 1258, 1268 (2d Cir. 1989) (holding district court may rely on "after acquired" evidence); United States v. $67,220.00 in United States Currency, 957 F.2d 280, 284 (6th Cir. 1992) (same, adopting Livonia).

In deciding this issue of statutory construction, the actual statutory language must be considered first, and it is quite clear. Specifically, 19 U.S.C. § 1615, which is incorporated by virtue of 21 U.S.C. § 881(d), provides that

In all suits or actions . . . brought for the forfeiture of any vessel, vehicle, aircraft, merchandise . . . where the property is claimed by any person, the burden of proof shall lie upon such claimant; and in all suits or actions brought for the recovery of the value of any vessel, vehicle, aircraft, merchandise . . . the burden of proof shall be upon the defendant: Provided, That probable cause shall be first shown for the institution of such suit or action. (Emphasis added)

The language is clear that probable cause must be shown "for the institution of" the forfeiture proceeding. This is a fairly strong indication that the Government is limited to the evidence that it has obtained up to the point at which the forfeiture proceeding has been instituted. Though the forfeiture provisions are clearly intended to provide an extra weapon in the war on drugs, this plain language also shows Congress's intent that before a claimant is required to go to the considerable trouble and expense of defending against a forfeiture of his home or property, the Government must at least have probable cause to institute the proceedings. This is not an onerous burden.

Surprisingly, the parties in this case spend very little time analyzing the actual language of the statute. For the most part, the parties simply note the circuit split, and then urge the Court to rule in accord with the Circuits favoring their respective positions.

The Government also advances several policy arguments. First, it contends that preventing the use of evidence acquired after the institution of a forfeiture proceeding would lead to "ridiculous results" in that the criminal defendant might plead guilty at some point after the forfeiture proceeding had begun. If so, that plea might be deemed inadmissible to prove probable cause.

This argument, however, ignores the statutory language quoted above. In short, the fact that some very helpful evidence may come to light later is irrelevant to the Government's initial burden to have probable cause at the time the forfeiture proceedings are instituted. If the defendant pleads guilty after the proceedings have begun, the evidence may still be admissible, just not admitted to prove probable cause but instead to rebut or cast doubt on the claimant's prima facie case. None of this changes the fact that the Government simply must have (and demonstrate) probable cause as of the time that it institutes the forfeiture proceedings.

The Government's other policy argument is that there is "no good reason" to keep out additional evidence of probable cause that is obtained after the forfeiture proceedings have begun. It is true that some courts have employed this method of analysis, concluding, at least impliedly, that more is preferable to less in this context. See Livonia, 889 F.2d at 1268; $67,220.00 in U.S. Currency, 957 F.2d at 284. But it should be noted that the language of the statute says absolutely nothing about the use of evidence obtained after the forfeiture is instituted. District Courts in the Sixth Circuit have correctly criticized the opinion in $67,000 for its complete failure to analyze the language of the statute it was interpreting. See Jones v. U.S. Drug Enforcement Admin., 819 F. Supp. 698, 715-16 (M.D.Tenn. 1993). Also, since the Government agrees that it must have probable cause to institute the proceedings, there is also no good reason to allow the Government to heap on redundant evidence as part of its probable cause showing. The only effect of the admission of such evidence would be to prejudice the fact-finder against the claimants.

The Court is aware that the Government has a great deal of evidence regarding all the properties, and if the temporal framework were no barrier, probable cause would likely be shown to forfeit all or almost all the properties. But the statutory language is quite clear, and the Government's burden to show probable cause is not a difficult one to meet. Since the Seventh Circuit has not yet taken a position on this issue, the Court will follow the clear statutory language and the persuasive opinions from those Circuits that limit the Government to the evidence it had obtained prior to the institution of the forfeiture proceeding. Thus, the Court will not consider evidence obtained by the Government after the forfeiture complaint was filed in determining the existence of probable cause. The forfeiture complaint in this case was filed on January 22, 1997, so the Court concludes that it will consider only the evidence obtained prior to that date in making the probable cause determination.

The Court's ruling regarding this initial probable cause determination, of course, does not mean that the Government's evidence obtained after the institution of the suit will be ignored for the ultimate determination as to whether the claimants have proved by a preponderance that the properties are not subject to forfeiture.

B. Factual Findings

With these conclusions of law set out, the Court will turn to its findings of fact regarding probable cause.

The probable cause determination here is slightly complicated by the fact that the properties are not formally owned by Melvin Logan, the person who has pleaded guilty and been sentenced for his drug distribution activities. If all the properties were listed as owned by Melvin Logan, the probable cause determination would be relatively easy since there was a great deal of testimony that he had no legitimate source of income sufficient to explain the level of wealth needed to acquire the property. Here, as described above, the family members who were listed as the owners of the properties were employed and had at least some legitimate sources of income. Thus, more evidence than a mere disparity between Melvin Logan's income and his assets will be required to show probable cause in this case.

The Government points, without specificity, to the evidence that it obtained from Alec Sanders and Ralph Jackson to establish probable cause. Despite the Court's conclusion that the parties would be able to present arguments about the existence of probable cause at the end of the case, the Government seems rather content to rest on the Court's earlier tentative ruling that probable cause had been shown. (See Tr. p. 795 and pp. 1821-1822). This decision has greatly complicated the Court's task, in that the Court must now sift, without assistance from the parties, through the entire voluminous record, and has delayed the resolution of this case.

The Government relied upon David E. Hood, who is an agent with the Federal Bureau of Investigation, and Sue Roderick, an agent with the Internal Revenue Service. Agent Hood testified about an investigation of a conspiracy to distribute cocaine involving the Joiner family in Springfield, Illinois. He also testified that several individual members of the Joiner conspiracy agreed to cooperate with the Government, and that he interviewed these cooperating witnesses as part of his investigation of Melvin Logan. (Tr. 20-22). The statements relayed by Agent Hood came from several witnesses: Brian Kirkham, Michael Brooks, Sheila Dickerson, Herbie Drake, Larry Granderson, Bruce Green, Raphael Jackson, Annie Joiner, Willie Joiner, Leashawn Logan, Thelma Logan, Debra Poole, Troy Powers, Al-Jo Sanders, Eddie Shannon, and Frank Watts.

However, the interviews of Ms. Dickerson, Mr. Green, Mr. Watts, Mr. Shannon, Ms. Joiner, Mr. Joiner, and Leashawn Logan were conducted after the forfeiture complaint was filed, so the admittedly damning evidence obtained during those interviews will not be considered in making the probable cause determination.

Not surprisingly, the Claimants attack the credibility of the informants and the reliability of the statements on two primary grounds: their statements are hearsay, and the informants are felons, drug dealers, and/or liars. Individually, the threads of hearsay from these informants may be relatively weak, but in their substantial overlap and consistency they make for a strong fabric. Hearsay, of course, is properly admitted, so long as it is reliable. Also, the Court did not expect members of the cloth to testify about the intricacies of Melvin Logan's drug dealing and money laundering operation, and the use of witnesses who are cooperating and have criminal histories is not unusual in this context. The impeachment of these witnesses revealed nothing unusual or out of context. It did, however, reveal that Melvin Logan knew and associated with a lot of people who were engaged in the illegal drug trade.

Thus, the Court does not discount the reliability of all the statements obtained by Agent Hood and Agent Roderick. These statements were consistent with one another, they were supported by the property records obtained by Agent Hood, and corroborated by other statements, such as those from the car salesman who negotiated with Melvin Logan over the purchase of the 1994 Cadillac automobile, and the statements from the manager at Rex Appliances. The specificity of the statements from Al-Jo Sanders and Brian Kirkham also is a factor to consider in assessing their reliability. Those informants indicated to the Government the specific real properties that Melvin Logan bought with drug proceeds. This, again, was consistent with the property records obtained by the Government. The Court finds these statements to be reliable.

Though Agent Roderick gave very detailed testimony regarding financial records of the Claimants, it is clear that many of these records, if not all of them, were obtained after the complaint was filed, so they will not be considered in making the probable cause determination. The Government did not specifically note when Agent Roderick obtained the records.

This lacuna in the Government's proof is even more surprising considering the fact that Counsel for Claimant Cleveland Logan and Counsel for Marvin Logan explicitly inquired on cross-examination as to the date by which Agent Roderick had obtained the financial information. (See Tr. pp. 552-556, and pp. 688-689). This cross-examination did reveal that Agent Roderick had deeds from county records and a credit report at her disposal prior to January 22, 1997. (Tr. 553). In addition, Agent Roderick testified that she relied on several interviews that were conducted prior to January 22, 1997, including interviews of Willie Joiner, Annie Joiner, and Al-Jo Sanders with respect to Cleveland Logan. (Id.). The Government, on redirect examination, did not attempt to show when Agent Roderick had obtained the information about the properties in question or the financial information about the Claimants. (See Tr. pp. 743 ff.).

Having determined that the Court may properly rely on the evidence and the statements that were obtained by Agents Hood and Roderick prior to the filing of the complaint in this case, the Court makes the ...


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