BRENDA GRANTLAND Cal. Bar #165899

Attorney for Claimant

265 Miller Avenue

Mill Valley, CA 94941

415-380-9108

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA :

: Case No. C 03-0000 ABC

Plaintiff, :

v. :

$123,456 IN UNITED STATES : SETTLEMENT CONFERENCE

CURRENCY : STATEMENT

Defendant. :

Claimant, John Doe, through undersigned counsel, submits the following settlement conference statement.

1. Statement of facts:

This case involves the seizure of two bank accounts belonging to John Doe.

John Doe was arrested in Illinois on ________, for distribution of marijuana. He was subsequently prosecuted in Illinois state court, and successfully completed the equivalent of diversion.

This arrest grew out of several shipments of marijuana Claimant had made to Robert Smith, a resident of Illinois, whom Claimant had met a few months earlier while employed as a chef on a yacht leased by Smith. Smith asked Claimant during the voyage if he could get Smith some marijuana when he returned to California, and Claimant said he knew some people he could ask. Smith gave Claimant $____ and asked Claimant to get him four ounces. Claimant found out that the price was higher than he thought, and he could only get 3 ounces for that amount. When he called Smith to tell him that, Smith asked him to buy ___ pounds. Claimant said he could not get that much, and they agreed on __ pounds at $_____ per pound. Claimant, who obviously was not very experienced at this, shipped the marijuana by UPS, packaging it and delivering it to UPS himself. He used a correct return address – further indication that he was a novice.

The only time Smith fronted money to Claimant was the first time, when he gave him $____. Claimant took $____ out of his own bank account to purchase the first five pounds of marijuana. (On _______, he withdrew $_____ from his ABC Bank savings account and deposited it into his checking account at XYZ Bank. He then got cash from XYZ Bank which he used for the purchase.) That was the only money he ever took out of either account to purchase marijuana.

After the shipment of three pounds and three ounces was received by Smith, Smith sent Claimant $_____; he still owed Claimant a balance of $____ on the marijuana he had already received. Claimant deposited $______ of that amount into his checking account at XYZ Bank and used $_____ of the cash remaining to purchase two more pounds of marijuana for Smith. Claimant kept the remaining $____ in cash and eventually spent it on other things.

The UPS third shipment was intercepted by police, who made a controlled delivery to Smith on _________. Smith was arrested and agreed to cooperate. Coincidentally, Claimant was in Illinois at the time. Claimant had met with Smith that morning and Smith had paid him $____ of the money he owed him. Claimant placed that money in his hotel’s safe.

On __________, Smith and an undercover officer met with Claimant and discussed the possibility of future purchases, and then Claimant was arrested. The police seized the $____ from Claimant’s hotel safe. Smith never paid him the balance owed, and the marijuana from the third shipment was seized as well.

All together Claimant’s venture into marijuana dealing resulted in three shipments – (1) __________ at $3,500 per pound, (2) _____ at $3,500 per pound, and (3) ____ at $4,100 per pound. He was paid in three installments – $____ paid up front, $_____ mailed to him in _____, and $____ given to him in person in Illinois, which the police seized and forfeited. He received a total of $_____, and spent $_____ purchasing the marijuana. Thus, he had a net loss of $_____ on these transactions.

The government’s theory for forfeiting Claimant’s two bank accounts is that they were either proceeds of marijuana distribution or used to facilitate the distribution of marijuana. The XYZ Bank checking account is the only account which ever received any proceeds. A total of $____ in proceeds from the second shipment was deposited into that account. The remainder of the money paid by Smith was reinvested in purchasing the third shipment, except for the $____ which Claimant kept out in cash and eventually spent.

Claimant’s ABC Bank savings account never had any deposits made to it, other than the initial deposit of what was left of the proceeds of his divorce settlement. Claimant’s ex-wife had bought out his interest in the marital home for $____ on ______. He used $___ to pay his divorce lawyer and deposited the rest into a XYZ Bank savings account. After September 11 and the demise of the dot com industry, Claimant was having difficulty maintaining employment as a caterer/chef, and periodically had to withdraw money from the savings account to live on. These withdrawals were deposited to his checking account. On _____, he moved his savings out of the XYZ Bank account and into a ABC Bank savings account in order to get better interest rates. No marijuana proceeds were ever deposited into Claimant’s savings account.

The government’s proceeds theory only applies to $____ of Claimant’s checking account. The remainder of that account ($____) could be forfeited on a facilitation theory only if the government can prove by a preponderance of the evidence that the account was used to disguise the nature and source of drug proceeds. The mere pooling or commingling of tainted and untainted funds in a bank account does not without more render the untainted contents forfeitable. United States v. Tencer, 107 F.3d 1120, 1134 (5^th Cir.), cert. denied 522 U.S. 960 (1997). Proving the untainted portion of a bank account is forfeitable under that theory is much more difficult now that the Civil Asset Forfeiture Reform Act of 2000 raised the government’s burden of proof to preponderance, and imposed a “substantial connection” requirement.

The government’s burden of proving the untainted portion of Claimant’s checking account is forfeitable is difficult, but proving its facilitation theory as to the savings account is virtually impossible under CAFRA. The only involvement that the savings account had at all in this offense is that it was the original source of the $____ which Claimant used to purchase the three pounds of marijuana. The money did not come directly from the savings account. Claimant transferred money from the savings account to his checking account first. More importantly, the remainder of the savings account did not in any way disguise drug profits, nor “taint” the remainder of the account. The money had already been withdrawn from the account before the amount withdrawn was “tainted” by its use to purchase marijuana. The funds that remained in the account after the withdrawal had nothing to do with this taint.

In addition to these defects in the government’s ability to prove its case, John Doe would have an Eighth Amendment proportionality defense.

2. Summary of proceedings:

The parties began trying to settle this case from the outset. We have voluntarily exchanged paper discovery, including police reports and bank records, and have had several case management conferences. We have not engaged in any formal discovery such as interrogatories or depositions. Two of the key witnesses live in Illinois, which would make deposing them expensive, particularly in light of the small dollar amount at stake here.

3. Undisputed matters:

It is not disputed that John Doe was charged in a Illinois state court with distribution of marijuana. That case was continued without a finding.

4. Disputed issues of fact:

See section 1 above. If this case were to go to trial, the government would have to prove the elements of the offense, since there was no conviction upon which to claim collateral estoppel. Claimant has not formally admitted guilt. The government would also have to prove that both bank accounts were used to facilitate marijuana distribution, and/or that the $5,000 deposited into the checking account was proceeds.

5. Disputed issues of law:

See section 1, pp. 3-4. The government has an almost insurmountable task of showing the savings account is forfeitable. No cases I have found – not even pre-CAFRA cases – suggest that the balance of a bank account from which money was withdrawn is tainted by the withdrawal.

6. Relief sought:

Claimant seeks to obtain the return of his savings account, or as much of it as possible. His son starts college soon, and he will need these funds to help pay his son’s tuition.

7. Costs:

Claimant has paid counsel $____, most if not all of which has been earned. Depositions of the two witnesses in Illinois would cost another $____ or more, including travel time and expenses. A deposition of J.W. Claimant would add about $___ to that amount. The case would then probably be resolved by summary judgment, at a cost of $____ to $____, and might go to trial, at a cost of $_____ or more.

8. Prior settlement discussions:

The parties have been engaging in settlement discussions, and are now only $ apart. The government’s latest offer is that Claimant forfeit $____. Claimant’s latest offer is that he forfeit $____.

9. Settlement analysis:

There is a high likelihood that Claimant would win on summary judgment as to the savings account, and probably a jury question as to whether the untainted portion of the checking account is forfeitable under a facilitation theory. However, the cost of going to trial would far exceed the $_____ of untainted funds in the checking account. We have approached settlement expecting to give up the entire checking account – $_____ – because it would not be cost effective to go to trial on that issue. Because our chances of prevailing on summary judgment as to the entire amount of the savings account, we are not willing to give up much of that amount in settlement. Our best offer to date – $_____ – recognizes the nuisance value of this lawsuit. We figured it would cost us at least $_____ more to litigate discovery and summary judgment. We are not willing to go very much higher because if we win as to that account at summary judgment, Claimant will be entitled to reimbursement of attorney’s fees under CAFRA.

10. Discrete Issues:

None.

11. Current Settlement Position:

Claimant can probably be persuaded to settle by allowing the government to keep $______, so long as the government pays interest on the savings account amount for the period of time the government has had it in its forfeiture fund account. In such a settlement, Claimant will not seek attorney’s fees under CAFRA.

Respectfully submitted,

________________________

BRENDA GRANTLAND, ESQ.