August 22, 2022
By Robert Phillips, Deputy District Attorney (Ret).
The Forfeiture of Drug Money:
When Dereck McClellan was found by police in his car in a South Carolina gas station, passed out, he got popped for public intoxication and having an open bottle of alcohol in his car. A search of his vehicle incident to arrest resulted in the recovery of $69,940.50 in cash. The U.S. Department of Homeland Security eventually instituted forfeiture proceedings, arguing that the money was so-called “drug money” (i.e., money derived from trafficking in drugs) despite McClellan’s claims to the contrary.
In support of its argument, Homeland Security identified several relevant factors; i.e., the presence of a marijuana-laced “blunt” found in the car, along with two California medical marijuana cards belonging to McClellan and his girlfriend. Also, trace amounts of cocaine were found on the money. The federal district court granted summary judgment in favor of Homeland Security, allowing the forfeiture of the money. McClellan appealed.
The Fourth Circuit Court of Appeal reversed in a decision reported at United States v. McClellan (4th Cir. Aug. 10, 2022 44 F.4th 200). Under federal law, prosecutors need only show by a “preponderance of the evidence” that seized property is connected to a crime in order to secure a civil forfeiture of that property. While the Government convinced the federal district (trial) court that the facts painted a picture “definitively establishing” that the cash was drug money, the Fourth Circuit felt that the evidence was not quite so clear.
Siding with McClellan, the Appellate Court noted that a “preponderance of the evidence requires more than speculation and conjecture.” All the evidence in this case showed was that McClellan, who liked to smoke marijuana, didn’t trust banks and made poor decisions. Per the Court, despite the presence of a single blunt and the medical marijuana cards—weak evidence at best—“the government lacks any direct evidence of a drug transaction or involvement in the drug trade.” The Court noted that “the personal use of marijuana . . . does not establish a link to a broader drug trafficking scheme,” nor does simple possession alone serve as a basis for civil forfeiture under federal law.
As for the cocaine residue found on the money, the Court noted that it has long been assumed that the overwhelming majority of dollar bills in circulation throughout the country have been “incidentally contaminated with cocaine.” Finding that a “host of innocent explanations” and multiple “plausible inferences” outweigh any inferences that McClellan might have possessed so-called “drug money,” the Court held that the Government had failed to meet its burden of proof sufficient to justify a forfeiture of McClellan’s cash.
As noted by an attorney for the Institute for Justice in an amicus brief filed in this case: “If the government is going to take money from someone, they should be required to provide real evidence that the money was obtained in an illegal way, not simply throw around baseless assumptions. (This) decision sets an important precedent that will force the government to come forward with real evidence to convince a jury.” Note that a decision out of the Fourth Circuit Court of Appeal does not bind either California’s state courts (Raven v. Deukmejian (1990) 52 Cal.3rd 336, 352.) nor the Ninth Circuit (West v. City of Caldwell (9th Cir. 2019) 831 F.3rd 978, 986.), such a decision is considered to be “persuasive” authority and, at the very least, entitled to “great weight” absent a local decision to the contrary. The bottom line is that drug investigators need to be aware of this ruling and consider strengthening their investigations accordingly.
