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Thursday, September 18, 2014

Forefeiture reversed State v $4194.00 IN U.S. CURRENCY

Forefeiture reversed




$4194.00 IN U.S. CURRENCY,


                                                                                    SUPERIOR COURT OF NEW JERSEY
                                                                                    APPELLATE DIVISION
                                                                                    DOCKET NO. A-4340-11T3

Argued May 28, 2014 – Decided July 31, 2014

Before Judges Messano and Hayden.

On appeal from Superior Court of New Jersey, Law Division, Special Civil Part, Mercer County, Docket No. DC-5568-11.

Keith D. Sklar argued the cause for appellant Dontae Barnes (Law Offices of Sklar Smith-Sklar, attorneys; Mr. Sklar, on the brief).

Sean D. McMurtry, Assistant Prosecutor, argued the cause for  respondent State of New Jersey (Joseph L. Bocchini, Jr., Mercer County Prosecutor, attorney; Mr. McMurtry, of counsel and on the brief).

            In this civil forfeiture action, Dontae Barnes appeals from the March 19, 2012 Law Division - Special Civil Part order, which extinguished Barnes' right to his property, $4194 in currency, and vested title to that property with Mercer County.  On appeal, Barnes contends that the State failed to prove by a preponderance of the evidence a proximate and substantial connection between the $4194 and an indictable activity.  We reverse the order and remand to the trial court for entry of an order returning the currency to Barnes.
            We discern the following facts from the record.  On March 20, 2011, Trenton Police Detective Pedro Perez and Officer William Salhanick pulled over a minivan late at night in a high crime area after noticing the driver was not wearing a seat belt.  Barnes was the driver, and his friend Tyquasia Scott was in the passenger seat.  When Salhanick approached the passenger side, he observed a large amount of cash strewn over the front seat and floorboard area of the minivan.  Perez asked Barnes to step outside the vehicle while Salhanick collected the loose money.
According to Salhanick, when questioned about the source of the money, Barnes responded that he had just been released from prison and was not working, but he got the money from "just doing my thing, running the streets."  Based on his years of experience as a police officer with over 500 narcotics investigations, Salhanick understood the phrase "running the streets" to mean "selling drugs."  Neither Barnes nor Scott attempted to elude police when stopped, the police did not see or smell any controlled dangerous substances (CDS), and the police had not witnessed any activity resembling the sale or purchase of CDS.  The money was not tested for CDS residue and was not associated with any contraband in the minivan.
When the officers discovered that Barnes had an outstanding warrant, they took him into custody.  They also confiscated the currency, as they were suspicious of the funds being related to past or future drug activity, but released the minivan to Scott, because they did not suspect drug activity was "in progress."  At police headquarters, the officers counted the currency from the minivan, finding it totaled $4194.  A record check of Barnes' criminal history revealed "numerous convictions for narcotics distribution related offenses."  Based upon all the circumstances, the police decided to permanently seize the funds.  As police did not observe any indication of criminal activity in progress, no criminal charges were filed.
On June 13, 2011, the State filed a verified complaint seeking forfeiture of the $4194 pursuant to N.J.S.A. 2C:64-1.  The complaint alleged that the currency was the proceeds of illegal activity, and the concealment and transportation of the currency violated the State's prohibition against money laundering, N.J.S.A. 2C:21-25.  Barnes subsequently filed an answer denying the complaint's allegations.
At the March 15, 2012 trial, Salhanick was the sole witness for the State.  At the close of the State's evidence, Barnes moved for a directed verdict, arguing that the State's evidence did not "by any stretch of the imagination, connect the money found with any nexus of criminal activity."  The trial judge denied Barnes' motion. 
Next, Barnes, his brother, and Scott testified that the $4194 was derived from gambling earnings from a recent trip to Atlantic City.  Barnes' brother testified that prior to their trip, their cousin gave Barnes $900, and Barnes won approximately $3100 in profit from the casino.  Scott testified that she was counting the money for Barnes when they were pulled over, and the police also confiscated $1500 from her pocket, which she had received as a gift from her mother.  On cross-examination, neither witness could remember many details of their trip to Atlantic City.
Barnes testified that the confiscated money comprised of his winnings from Atlantic City, which amounted to $2600, and $1500 that Scott was in the process of handing him when the car was pulled over.  Barnes also testified that he had thrown out the receipt he received for his winnings in Atlantic City and had made no attempt to contact the casino to obtain a record of his winnings.
In rebuttal, the State presented Charles Kimmel, a Deputy Attorney General with the New Jersey Division of Gaming Enforcement.  Kimmel testified that people only receive receipts for their winnings if they established an account at the casino and were leaving the money on deposit.  In addition, Kimmel testified that the federal tax law required casinos to report winnings over $1200.
At the conclusion of the trial, the trial judge found the witnesses' accounts regarding the trip to Atlantic City to be "incredible" and replete with "many little inconsistencies."  Moreover, the judge found the circumstances around the currency to be suspect, such as the time of night, the manner in which the money was loose on the floorboards, the high crime area, and Barnes' criminal record.  The judge concluded, "[I]t's just my overall feeling in this particular case after seeing all the testimony and the witnesses . . . and the little inconsistencies here that the State has proven by a preponderance of the evidence that they're entitled to forfeiture[.]"  The judge issued an order memorializing his findings on March 19, 2012.  This appeal followed.
            On appeal, Barnes argues the trial judge erred because the State failed to carry its burden to show a "substantial connection" between the currency and criminal activity.  We agree.
            We begin by restating the basic principle that forfeitures are not favored in the law.  State v. Pontiac Trans Am, 98 N.J. 474, 481 (1985); State v. One 1985 Ford Bronco, 261 N.J. Super. 643, 646 (App. Div. 1993).  Forfeiture of property seized by the State must be done pursuant to New Jersey's forfeiture statute, N.J.S.A. 2C:64-1 to -9.  Further, forfeiture statutes must be strictly construed against the State and "in a manner as favorable to the person whose property is to be seized as is consistent with the fair principles of interpretation."  State v. Seven Thousand Dollars, 136 N.J. 223, 238 (1994) (internal quotation marks and citations omitted).
Forfeiture proceedings are in rem proceedings "brought not against the owner or possessor of the property but . . . against the property."  Id. at 232-33.  The action is brought against the property because "[t]he theory of forfeiture is 'based on the misuse of the property rather than resulting from the commission of an offense by its owner or user.'"  Id. at 233 (quoting State v. One 1986 Subaru, 230 N.J. Super. 451, 455 (App. Div. 1989), aff'd in part, rev'd in part, 120 N.J. 310 (1990)). 
            A forfeiture may be brought against two types of property: prima facie contraband and derivative contraband.  Ibid.  Prima facie contraband is defined as:
Controlled dangerous substances, firearms which are unlawfully possessed, carried, acquired or used, illegally possessed gambling devices, untaxed or otherwise contraband cigarettes or tobacco products, untaxed special fuel, unlawful sound records and audiovisual works and items bearing a counterfeit mark.

[N.J.S.A. 2C:64-1(a)(1).]

In contrast, derivative contraband "is itself innocent in nature but has been used or is intended to be used in furtherance of an unlawful activity or is the proceeds of illegal activities."  Seven Thousand Dollars, supra, 136 N.J. at 233 (citing N.J.S.A. 2C:64-1(a)(2)-(4)).  It is undisputed that the State is seeking the currency at issue based on a claim that it is derivative contraband.
Unlike prima facie contraband, derivative contraband is not automatically forfeited to the State.  N.J.S.A. 2C:64-3.  Rather, to obtain a forfeiture of derivative contraband, the State must bring a civil action within ninety days of its seizure.  N.J.S.A. 2C:64-3(a).  For a successful forfeiture of derivative contraband, there must exist "a direct causal relationship between the use of the property and the unlawful activity."  State v. One 1986 Subaru, 120 N.J. 310, 320 (1990) (internal quotation marks and citation omitted).  The State must prove by a preponderance of evidence that the property is connected to an indictable offense.  Seven Thousand Dollars, supra, 136 N.J. at 233.  As a mere causal relationship is not sufficient, the State carries the burden to "prove that the connection is proximate and substantial."  Id. at 235.  Even so, the statute does not require that anyone actually be charged with the indictable activity.  See State v. One 1988 Honda Prelude, 252 N.J. Super. 312, 315 (App. Div. 1991) (noting that even when charges are dismissed by the State, courts still permit forfeiture); State v. Rose, 173 N.J. Super. 478, 483-84 (App. Div. 1980) (finding that seized money could be detained for forfeiture proceedings, even if the defendant was not indicted or was acquitted).
            Establishing the proximate and substantial connection requires the court to make a case-by-case determination based on the individual facts.  Seven Thousand Dollars, supra, 136 N.J. at 238.  Only after the State has satisfied its burden does the burden shift to the "owner" of the money to provide evidence of its legitimacy.  Ibid. 
            In Seven Thousand Dollars, a seminal case concerning derivative forfeiture, the police seized $7000 from under the passenger seat during a traffic stop where drug paraphernalia was also present, as well as a cell phone and two beepers.  Id. at 227-28.  A certified drug dog reacted to the money and the scale, indicating the presence of drug residue.  Id. at 228.  The owner of the money claimed the funds were proceeds from the sale of property and he intended to use those funds to buy a car.  Id. at 228-29.  In the forfeiture proceeding, the trial court concluded that it was "more likely than not" that the money "was being used illegally in connection with a drug operation" and ordered it forfeited.  Id. at 231.
The Supreme Court found that the link between the money and the alleged criminal offense, possession with intent to distribute CDS, was too "weak" to carry the State's burden, noting that the only concrete evidence was the presence of the money and the drug paraphernalia in the car.  Id. at 240.  The State did not produce records of drug transactions attributable to the owner, or demonstrate he had been involved in or suspected of illegal drug activity prior to the stop, or planned such activity for the future.  Ibid.  The Court found that while the State had a general suspicion that an illegal drug deal had or was going to take place, "[t]he record contain[ed] no indication of when any drug deal was to take place and why the State believed that [the owner] would use this specific $7000 in that deal."  Ibid.  The Court concluded that the State failed to meet its burden as "[a]lthough the State's evidence raise[d] a suspicion that a crime may have been or would have been committed at some time, it [did] not show that [the owner] was going to use the seized $7000 to finance a drug transaction."  Id. at 241.
Applying the above principles, we find that the State's evidence failed to demonstrate with the necessary specificity that Barnes' currency had a direct causal relationship to criminal activity.  See One 1986 Subaru, supra, 120 N.J. at 320.  The police did not see or smell any CDS, find any drug paraphernalia, observe any illegal transactions, test the money for CDS residue, or discover any contraband in the minivan.  Indeed, they released the minivan because they did not think any drug activity was then occurring.  The manner in which the money was scattered on the floor of the vehicle, the ambiguous statement attributed to Barnes that he acquired the money by "running the streets," the time of night, and the area of the stop, do no more than create mere suspicion of criminal activity, which is simply not enough.  See Seven Thousand Dollars, supra, 136 N.J. at 234-35.
As the State did not establish the necessary causal relationship to indictable criminal activity in its case-in-chief, the trial judge should have granted Barnes' motion for directed verdict when the State rested.  See id. at 238 (noting that only when the State has demonstrated a "direct causal connection to unlawful activity" does the burden shift to the person challenging the forfeiture to show a legitimate use). 
A defendant may make "[a] motion for judgment . . . either at the close of all the evidence or at the close of the evidence offered by an opponent."  R. 4:40-1.  In determining a directed verdict motion under Rule 4:40-1, the court uses the standard "for a motion for involuntary dismissal under Rule 4:37-2(b)."  Alves v. Rosenberg, 400 N.J. Super. 553, 565 (App. Div. 2008) (citing Dolson v. Anastasia, 55 N.J. 2, 5 (1969)).  That is, the motion must be denied if reasonable minds could differ regarding "whether 'the evidence, together with the legitimate inferences therefrom, could sustain a judgment in . . . favor' of the party opposing the motion[.]"  Dolson, supra, 55 N.J. at 5 (quoting R. 4:37-2(b)).  We "employ[] the same standard on review as the trial court did in deciding the defendant's motion for a directed verdict."  Luczak v. Twp. of Evesham, 311 N.J. Super. 103, 108 (App. Div.), certif. denied, 156 N.J. 407 (1998).   
We find that the evidence at the close of the State's case-in-chief, giving all reasonable inferences in favor of the State, failed to establish the requisite connection between the money and criminal activity, thereby making a directed verdict appropriate.  See Dolson, supra, 55 N.J. at 5.  Since the directed verdict motion should have been granted, the evidence Barnes presented regarding his trip to Atlantic City should never have been considered by the judge.  Thus, the trial judge's credibility determination regarding the proffered legitimate origin of the money is not relevant to our determination. 
In sum, the State did not meet its burden of proving that the seized money was proximately and substantially connected to criminal activity.  Thus, Barnes had no burden to prove a legitimate source.
Reversed and remanded to the Law Division for entry of an order vacating the order for forfeiture of the $4194 and returning the currency to Barnes.