Congratulations to plaintiff's attorney and FEAR member Joseph P. Kennedy on this important victory!
New Mexico Court of appeals rules that police cannot use federal courts to bypass state forfeiture reforms
by Judy Osburn   

In George Albin versus Bakas, Taylor, Danko, Maldandado, Hooper and O’Leary (New Mexico state police and their superiors), Case number 26,134 filed April 26, 2007, the Court of Appeals for the State of New Mexico examined whether state police officers who seize cash under the authority of New Mexico’s Controlled Substances Act are required to comply with the requirements of the state Forfeiture Act, or whether they may instead transfer the cash to the federal government to bring a forfeiture action under federal law, then receive from the federal government a portion of the proceeds.  

In a tremendous victory for compelling police agencies to abide by state forfeiture reform laws, the appeals court ruled: "Just because the officers subsequently decided to transfer the cash to the federal government for the purpose of bringing a federal forfeiture action did not entitle them to ignore New Mexico law.”  Plaintiff George Albin is represented by Joseph P. Kennedy of the law firm Kennedy & Oliver, P.C., Albequerue.  Joseph Kennedy is also amember of FEAR and contributes pleadings to FEAR's Brief Bank II.

 
Agencies in various states that have passed forfeiture reform legislation often use his type of federal “adoption” of forfeiture cases to avoid the requirements of state reforms. The Albin court held that New Mexico State Police officers seizing currency under state law are subject to the procedures set forth in New Mexico's Forfeiture Act, and in this case, the officers violated that Act. Therefore the court reversed the summary judgment for Defendant state police by the District Court of Santa Fe County, and remanded for further proceedings. 

When New Mexico State Senator Duncan Scott (R-Albuquerque) introduced legislation in 1994 to "overhaul New Mexico's criminal asset forfeiture law," he said the major change requires that forfeited funds or property go to the state general fund rather than allow agencies to keep what they seize.  The law existing at that time “perverts law enforcement incentives," Scott said. "Police become more interested in chasing Mercedes rather than chasing violent criminals because they get to keep the flashy car. Our Founding Fathers wisely envisioned three separate branches of government, and the existing forfeiture law allows law enforcement agencies to become both the tax collector and legislature for themselves." 

New Mexico forfeiture law now requires: 1) a criminal conviction of the owner before property may be forfeited; 2) the value of the property to be forfeited must not unreasonably exceed the financial gain derived from, or loss caused by, the related crime; and 3) that proceeds of forfeited property beyond costs of storage and restitution to victims be deposited in the general fund to be used for drug treatment, education and substance abuse prevention.   

However, under federal law police agencies that transfer seized property for “adoption” by federal courts have continued to enjoy up to 80% of the proceeds returned directly to the seizing agencies.  The court of appeals held in Albin that procedural requirements of New Mexico’s Forfeiture Act are mandatory, stating:

We acknowledge that the use of “adoptive seizures” is apparently wide-spread and follows a long history of forfeiture collaboration between state and federal agencies. We do not address whether, to what extent, or how an “adoptive seizure” to allow a federal forfeiture to proceed may be accomplished under the Forfeiture Act. Our holding in this case is limited: when property is seized by state police officers for forfeiture, compliance with the Forfeiture Act is required even if the state intends to transfer the property to the federal government to pursue a federal forfeiture action pursuant to an “adoptive seizure.” In this case, Defendants violated the Forfeiture Act.

The case began in during a traffic stop in October 2002 in which the passenger, John Albin, consented to a search that resulted in the seizure of small amounts of marijuana, psylosibin mushrooms, marijuana paraphernalia, 18 Xanax pills, a knife and $23,100 in cash. Passenger Albin pleaded no contest to one misdemeanor count of possession of a controlled substance, and received a deferred sentence of 364 days in jail. (Under New Mexico law once the period of deferment expires without further criminal activity all charges are dropped with no actual jail time served.)

 
New Mexico State Police transferred the seized currency to the United State’s Marshal Service during November 2002 in the form of a cashier’s check showing the state police as “remitter” of the $23,100.  On May 7, 2003, while the criminal charges against John Albin were still pending, the United States filed a complaint in the United States District Court for the District of New Mexico, naming the cash as the defendant and Passenger Albin as a claimant, seeking forfeiture of the cash to the United States pursuant to federal law.  John Albin subsequently died, and the forfeiture action continued against the currency as the defendant and the deceased passenger’s personal representative, George Albin, as the claimant of the currency.  The United States District Court ultimately entered a judgment forfeiting the interest of John Albin’s estate in the $23,100 to the United States. 

George Albin sued the state police officers for illegally transferring the seized currency to the U.S. Marshals, but the District Court of Santa Fe dismissed his complaint in a summary judgment for the state police officers. The New Mexico court of appeals reversed that summary judgment, holding that defendant state police were not entitled to avoid all requirements of the state’s forfeiture laws merely because they intended to transfer the property to the federal government.  

The appeals court in Albin agreed with the Maryland Court of Appeals that a state police agency “is not free to circumvent State law altogether when it decides to forgo State forfeiture proceedings in favor of federal forfeiture proceedings." 1  New Mexico’s Forfeiture Act directs that: “Seized currency alleged to be subject to forfeiture shall be deposited with the clerk of the district court in an interest-bearing account.”  The New Mexico Court of Appeals held that:

Depositing the cash with the district court clerk as directed by the statute brings it under the direct jurisdiction and supervision of the district court. The clerk deposits the money into a trust fund checking account, which holds all money that belongs to litigants or might be refunded to litigants. NMSA 1978, § 34-6-36 (1968). The clerk is only authorized to pay money out of this account in accordance with a written order of the district court filed with the clerk. Id. 

Forfeitures are in rem proceedings under New Mexico law. [Citations omitted.] The effect of the legislative directive to deposit currency alleged to be subject to forfeiture into an account subject to the direct jurisdiction and supervision of the district court is that the district court acquires jurisdiction over the currency and maintains it to the exclusion of any other court, be it a state court or federal court. Since 1935, when the United States Supreme Court decided Penn General Casualty Co. v. Pennsylvania, ex rel. Schnader, 294 U.S. 189 (1935), it has been well settled that the court that first acquires control of the res subject to forfeiture retains exclusive jurisdiction over it to the exclusion of any other court. Id. at 195. In keeping with this precedent, we reject the suggestion made by Defendants that federal forfeiture statutes preempt [New Mexico’s] Forfeiture Act. Therefore, the federal court could not obtain jurisdiction over the cash unless, and until, the state district court relinquished its own jurisdiction and control of the cash. See, e.g., United States v. One 1987 Mercedes Benz, 2 F.3d 241, 244 (7th Cir. 1993) (finding that even though no state forfeiture proceeding had commenced, the federal government had to comply with state law requiring a turnover order from the district court before the federal government could obtain jurisdiction over seized property subject to adoptive forfeiture); Scarabin v. Drug Enforcement Admin., 966 F.2d 989, 995 (5th Cir. 1992) (requiring the DEA to “first seek a turn over order from the state court, or wait until that court relinquishes control over the res” before proceeding with a federal forfeiture complaint); United States v. One 1979 Chevrolet C-20 Van, 924 F.2d 120, 122-23 (7th Cir. 1991) (requiring that the federal government seek a turnover order from the state court before seizing the property in question because “[a] local police department may not take seized property and just pass it on as it pleases to the FBI in flagrant disregard of state laws mandating judicial authority for such turnovers”), superseded by statute as stated in United States v. Sixty-Two Thousand Six Hundred Dollars, 899 F. Supp. 378 (N.D. Ill. 1995).

Instead of complying with his duty to deposit the cash with the clerk of the district court, Agent Carr immediately made the decision to contact the DEA “to pursue seizure of the currency,” and placed the cash “in evidence for safekeeping” until a decision was made on what procedure to follow.

A  second material requirement of [New Mexico’s] Forfeiture Act was subsequently violated. The Act directs: “Within thirty days of making a seizure, the state shall file a complaint of forfeiture or return the property to the person from whom it was seized.” [Citation omitted.] Instead of filing a forfeiture complaint against the cash within thirty days, the State Police kept it in its personal custody from the time it was seized on October 20, 2002, until December 3, 2002, when the cashier’s check was delivered to the United States Marshal Service. The State Police officers circumvented this additional requirement of the Forfeiture Act. If the cash had been deposited with the clerk of the district court, it would have been under the exclusive jurisdiction of the district court, with the consequence that with no state forfeiture complaint being filed with thirty days, Passenger could have petitioned the district court to order the cash returned to him. The Forfeiture Act clearly contemplates that the authority and jurisdiction to determine the status of the cash lies with the district court and not the State Police acting independently of statutory requirements.

Finally, we note that by its conduct, the State Police circumvented what our Supreme Court requires in Nunez: if the State wanted to seek forfeiture of the cash, it was required to do so in Passenger’s criminal case. “[H]enceforth, all forfeiture complaints and criminal charges for violations of the Controlled Substances Act may both be brought only in a single, bifurcated proceeding.”

Therefore the Albin court concluded that the summary judgment record established that New Mexico’s Forfeiture Act was violated.  The Defendants contended (and the District Court of Santa Fe had apparently agreed) that they were not required to comply with state law when turning cash over to the federal government to pursue an “adoptive seizure” as described in Johnson v. Johnson, 849 P.2d 1361, 1363 (Alaska 1993) :

Through informal arrangements, local police departments agree to notify the DEA when they seize property which may be subject to forfeiture pursuant to federal narcotics laws. Upon a DEA request, the local police department will transfer the property to the DEA, which will treat the property as if it had been seized by federal authorities. That is, the DEA will “adopt” the seizure. The DEA will then institute federal forfeiture proceedings against the property. Once the forfeiture is complete, the DEA is authorized to “split the pot” with the cooperating local police department. 2

 
The Albin court rejected Defendant state police’ argument that no language in the New Mexico statutes renders the state Forfeiture Act the exclusive law under which a forfeiture action may be commenced, stating:
This argument overlooks the plain, unambiguous requirement of the Forfeiture Act … that seized currency that is alleged to be subject to forfeiture “shall be deposited with the clerk of the district court in an interest-bearing account.” Clearly and unambiguously, the statute requires deposit of the cash with the clerk of the district court to provide for its safekeeping under the exclusive jurisdiction of the district court.

The appeals court noted that authority to stop, detain and arrest the driver and passenger were derived exclusively under New Mexico law, and there “was no federal involvement in stopping the vehicle, in detaining, questioning and arresting Driver and Passenger, in searching the vehicle, or in seizing and detaining the cash. … Just because the officers subsequently decided to transfer the cash to the federal government for the purpose of bringing a federal forfeiture action did not entitle them to ignore New Mexico law.”

The Albin court remanded for further proceedings to determine issues of fact about whether Defendant police converted the $23,100.  “By unilaterally transferring the property without authority and in contravention of state statutes, the [c]ity committed a conversion." 3  "Conversion is the unlawful exercise of dominion and control over property belonging to another in defiance of the owner’s rights, or acts constituting an unauthorized and injurious use of another’s property, or a wrongful detention after demand has been made.”  Additionally, the appeals court remanded for examination of whether the Tort Claims Act waives immunity for Plaintiff’s claims and other procedural issues.

Upon sharing the news of this appellate court holding that New Mexico State Police officers are now subject to the procedures set forth in the New Mexico Forfeiture Act, Albuquerque forfeiture defense attorney Jody Neal-Post exclaimed: “BEAUTIFUL, BEAUTIFUL!  State law must be followed and currency turned over to state district court NOT feds.”

Endnotes:

1. Citing DeSantis v. State, 866 A.2d 143, 147-48 (Md. 2005).

2. The Albin court continued:

Similar descriptions of an “adoptive seizure” from various sources are collected in Cavaliere v. Town of North Beach, 646 A.2d 1058, 1060 (Md. Ct. Spec. App. 1994) (noting that although not expressly authorized in the federal statutes or regulations, the United States Attorney General has permitted the DEA to “adopt” seizures made by local officials and to use federal forfeiture procedures with respect to that property as part of a cooperative effort with state and local officials to fight drugs). See 21 U.S.C. § 873(a)(2) (2000) (authorizing the Attorney General of the United States to cooperate with local and state agencies concerning traffic of controlled substances “in the institution and prosecution of cases in the courts of the United States”); 21 U.S.C. § 881(e)(1)(A) (2000) (authorizing the Attorney General of the United States to “transfer” property forfeited in a federal action “to any State or local law enforcement agency which participated directly in the seizure or forfeiture of the property”); Internal Revenue Service Manual, 9.7.2.7.3 (07-15-2002), available at http://www.irs.gov/irm/part9/ch07s02.html (stating that the state police often opt to turn over the currency to the federal government when state forfeiture law prohibits forfeiture or when it would be more advantageous to proceed under federal law).

3.  Citing Johnson, 849 P.2d at 1365; and Sec. Pac. Fin. Servs. v. Signfilled Corp., 1998-NMCA-046, ¶ 15, 125 N.M. 38, 956 P.2d 837.