Commonwealth v. One 2004 Audi Sedan Automobile

Citations: 456 Mass. 34; 921 N.E.2d 85; 2010 Mass. LEXIS 26

Court: Massachusetts Supreme Judicial Court; February 9, 2010; Massachusetts; State Supreme Court

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On February 17, 2006, Bruce Kneller was arrested by state police for possession of a class E substance with intent to distribute. During the arrest, police seized Kneller's 2004 Audi Sedan and $4,359 in cash. The following day, a search warrant executed at a Bank of America branch led to the temporary freezing of $226,511.92 in Kneller's account. The Commonwealth initiated a civil forfeiture action under G.L. c. 94C. 47, claiming the seized items were connected to Kneller’s illegal steroid distribution operation. An ex parte preliminary order to secure the frozen funds was granted on February 27, 2006.

Kneller intervened in the case, filed an answer, and successfully moved to stay the proceedings. On February 14, 2007, he moved to dismiss the complaint regarding the bank account funds. The judge granted this motion on May 1, 2007, finding insufficient evidence connecting the funds to Kneller's drug activities. The Commonwealth appealed, and the Appeals Court vacated the dismissal and remanded the case for further proceedings.

The court addressed the appropriate standard for dismissing civil forfeiture actions, noting the Commonwealth's position that the standard under Mass. R. Civ. P. 12 (b)(6) applies, while Kneller contended that the Commonwealth must demonstrate probable cause for forfeiture. The court highlighted the need to examine the civil forfeiture statute's language and history to determine the correct standard moving forward.

A district attorney or the Attorney General can initiate civil forfeiture proceedings in Superior Court by filing a motion in a criminal case or a civil action. This applies to property related to controlled substances, including money exchanged for drugs or proceeds from such transactions. If someone other than the Commonwealth claims ownership of the property, the Commonwealth must demonstrate probable cause to pursue the forfeiture. If successful, the burden shifts to the claimant to prove the property is not subject to forfeiture.

Before the 1989 amendment, the Commonwealth was required to prove all material facts by a preponderance of the evidence. The amendment aligned the burden of proof with federal standards, requiring the Commonwealth to prove probable cause for initiating the action, similar to the federal forfeiture statute prior to the Civil Asset Forfeiture Reform Act of 2000 (CAFRA). 

Under the current statute, the Commonwealth's obligation is to show the existence of probable cause, not to prove it outright. This burden is akin to that required for obtaining an indictment and is less stringent than that at a probable cause hearing. The Commonwealth may rely on reliable hearsay to establish a money-drug connection, thus justifying the commencement of forfeiture proceedings, even if it lacks sufficient evidence for a trial. The claimant then bears the responsibility to prove their entitlement to the contested property.

The focus on "the existence of probable cause to institute the action" in G. L. c. 94C. 47(d) is rooted in pre-CAFRA Federal civil forfeiture law, which permits property seizure without a judicial finding of probable cause. Under 21 U.S.C. 881(b), the U.S. Attorney General had two methods for seizing property: filing a complaint in Federal District Court, which requires adherence to heightened pleading standards to justify preliminary seizure, and seizing property without judicial process under specific conditions, such as during an arrest or if the property poses a danger to health or safety. In cases of seizure without judicial process, the Attorney General must promptly initiate forfeiture proceedings. Consequently, the burden of proof at trial under G. L. c. 94C. 47(d) reflects Federal law, requiring the government to demonstrate probable cause for instituting the action. However, the Massachusetts Attorney General and district attorneys do not possess the same authority as the U.S. Attorney General to seize property pending trial without a court order.

In Massachusetts, the Commonwealth must seek an ex parte order from the Superior Court to seize or secure property pending the resolution of a civil case, requiring a showing of probable cause as per G. L. c. 94C. 47(f). Kneller argues that the Commonwealth must demonstrate probable cause to defeat a motion to dismiss a civil forfeiture complaint based on the language of G. L. c. 94C. 47(d). However, federal court interpretations of pre-CAFRA 19 U.S.C. 1615 indicate that while the Attorney General must initiate the forfeiture action with probable cause, proof of that probable cause is not required until trial. For civil forfeiture actions, the government’s burden at the complaint stage is two-fold: the complaint must meet heightened pleading requirements and establish a reasonable belief that probable cause for forfeiture can be shown at trial. This standard applies to Massachusetts civil forfeiture complaints, meaning they can survive a motion to dismiss if they plead sufficient facts to support a reasonable belief that probable cause exists at trial. The facts in the complaint are assumed true, and reasonable inferences are made in favor of the plaintiff. Although Massachusetts law does not adopt federal Supplemental Rules' specific pleading requirements, the complaint must still be sufficiently particular to allow a judge to apply the standard of review. If lacking particularized allegations, a complaint may not support a reasonable belief of probable cause for forfeiture. Kneller argues that this motion to dismiss standard is inadequate for civil forfeiture actions, as it is the only opportunity for property owners to contest preliminary seizures under G. L. c. 94C. 47(f).

A preliminary order of seizure can be granted based on probable cause through an ex parte application by the Commonwealth, but the current provision does not allow the property owner to contest the seizure at an adversary hearing. Acknowledging that seizure is a significant deprivation of property, the court emphasizes the need for procedural due process, which includes the right to be heard. The court asserts that a motion to dismiss is not the sole avenue for challenging a preliminary seizure; alternative methods exist under art. 12 of the Massachusetts Declaration of Rights. It notes that a judge’s assessment of probable cause during an ex parte motion may change upon hearing both sides, highlighting the importance of fairness in these determinations. Additionally, the Commonwealth's financial interest in civil forfeitures heightens the risk of erroneous deprivations. The court establishes a remedy for civil forfeiture claimants, allowing them to file a motion to vacate the preliminary seizure order prior to trial by demonstrating that the Commonwealth's evidence was insufficient, contained inaccuracies, or that new information could negate the probable cause.

An individual whose property has been preliminarily seized will have the opportunity to contest the probable cause of that seizure before a forfeiture trial, balancing the Commonwealth's interest in property forfeiture with the individual's due process rights. This approach requires consideration of the individual's risk of erroneous deprivation against the government's administrative interests. The Commonwealth's civil forfeiture complaint, supported by affidavits from State Trooper Timothy J. Curtin and Sergeant Mark W. Kiley, outlines the investigation into an underground steroid operation led by Kneller and Somerville. The investigation began in December 2004 when DEA Special Agent Tidwell was informed of an email account facilitating illegal steroid orders. Tidwell's inquiries led to the identification of Kneller as a key operator of Red Star Laboratories, which used various email addresses to manage steroid sales. Payments were made in cash to mail-drop locations, and after placing an order in October 2005, Tidwell received a parcel containing steroids, part of a larger scheme involving over a hundred suspect packages. Additionally, Kneller publicly acknowledged his involvement in manufacturing performance-enhancing products during a live interview on bodybuilding.com.

On November 29, 2005, Kneller was seen mailing twelve parcels with false return addresses from the Randolph post office, including packages connected to prior steroid orders worth $704 and $900. Around the same time, he sent an email promoting a business called Red Star, claiming a successful history with no intercepts of their packages. In late November and early February 2006, Kneller received 94 pounds of packaging supplies suspected to be for steroids. On February 14, 2006, he mailed fifteen more packages, again with fictitious return addresses, which were later found to contain anabolic steroids and Cialis, both controlled substances. Following this, a search warrant executed on February 17 at his Canton apartment led to the seizure of significant assets including cash, firearms, and over a thousand bottles of unlabelled powder capsules believed to be steroids, with an estimated retail value of $124,800. A subsequent search warrant froze over $226,000 in his Bank of America account, revealing multiple wire transfers totaling over $650,000, including significant amounts from Gaspari Nutrition, Inc. and other entities. Affidavits from law enforcement indicated that drug dealers often mix illicit proceeds with legitimate funds and suggested Kneller's operations were consistent with these practices. The Commonwealth's complaint was deemed to have probable cause to pursue legal action, establishing a reasonable belief in a money-drug nexus based on the presented allegations.

The Commonwealth must demonstrate that seized money is likely derived from illegal drug transactions or intended to facilitate violations of controlled substance laws, rather than needing to prove a direct link to specific transactions. In this case, the Commonwealth presented facts indicating probable cause that Kneller’s Bank of America account was connected to his illegal steroid operation. Kneller managed a business involved in the manufacture and distribution of illegal steroids, admitted possession of steroids valued at $124,800, and stated he traveled to China for product inspections. He operated Red Star with Somerville, fulfilling 15,000 orders, which supports the inference that he sourced steroids from Chinese factories. The wire transfers from his account to China and Hong Kong likely funded these purchases. Although a significant incoming wire transfer was from Gaspari Nutrition, Inc. (which is not alleged to be involved in illegal activities), law enforcement noted that drug distributors commonly mix illegal proceeds with legitimate funds. Collectively, these facts suggest probable cause for the forfeiture of funds in the Bank of America account, either as proceeds from illegal steroid transactions or intended for illegal steroid purchases. The court vacated the Superior Court's order granting Kneller's motion to dismiss and remanded the case for further proceedings, emphasizing that the standards for dismissing complaints have evolved since earlier cases, and noting that the specific standard for the claimant's evidence in forfeiture cases was not addressed in this instance. Additionally, the Civil Asset Forfeiture Reform Act of 2000 shifted the burden of proof to the government, requiring it to establish the property’s forfeiture by a preponderance of the evidence.

Complaints filed under 21 U.S.C. 881(b) prior to the arrest and seizure of property must adhere to the Supplemental Rules for Certain Admiralty and Maritime Claims. However, ambiguity exists regarding whether post-seizure complaints are also bound by these rules. The Eleventh Circuit described this uncertainty as a "procedural morass," noting that Supplemental Rules C(2) and E(2)(a) seem applicable to all in rem actions, including forfeitures, regardless of when the seizure occurs. The Supreme Court recognized civil forfeiture under 21 U.S.C. 881 as an action in rem, aligning it with admiralty proceedings. Generally, civil forfeiture complaints must meet heightened pleading standards per the Supplemental Rules, irrespective of the timing of the seizure. 

The Second Circuit ruled that the government can seize property upon filing a complaint without needing to demonstrate probable cause until the trial. This view was reaffirmed in subsequent cases. Circuit courts are divided, with a majority asserting that the government can only rely on evidence in its possession at the time of filing the complaint to establish probable cause. The court evaluates probable cause during the forfeiture hearing, not before. The government’s obligation to demonstrate probable cause arises at trial, not earlier. A judge may consider affidavits accompanying the complaint to determine if the allegations are sufficiently detailed to withstand a motion to dismiss.

Procedural due process under Article 12 of the Massachusetts Declaration of Rights is the focus, with no determination made regarding the Fourteenth Amendment’s due process clause. The U.S. Supreme Court vacated a prior decision related to the Illinois Drug Asset Forfeiture Procedure Act, which had mandated a mechanism for property owners to contest seizures, as the case became moot when the property disputes were resolved. The Fourteenth Amendment requires a prompt post-seizure, pre-judgment hearing before a neutral party. The Supreme Court’s vacatur of the Seventh Circuit's decision allows for future litigation on these issues. This ruling clarifies that property claimants are entitled to an adversary hearing under Article 12, though it remains undecided whether such hearings must be evidentiary if requested. The complaint references an affidavit by State Trooper Timothy J. Curtin, which also incorporates Sergeant Mark W. Kiley’s affidavit.