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UNITED STATES v. ELEVEN VEHICLES

August 29, 1996

UNITED STATES OF AMERICA, Plaintiff,
v.
ELEVEN VEHICLES, ET AL., Defendants.



The opinion of the court was delivered by: ROBRENO

 EDUARDO C. ROBRENO, J.

 AUGUST 29, 1996

 This case comes before the Court on the motion of the Government for a certificate of reasonable cause pursuant to 28 U.S.C. § 2465, and the motion of claimants Robert Clyde Ivy and Irene Ivy for attorney's fees, expenses, and costs pursuant to the Equal Access to Justice Act ("EAJA"), 28 U.S.C. § 2412. For the reasons that follow, the Government's motion for a certificate of reasonable cause is granted. Claimants' motion for attorney's fees, expenses, and costs is granted in part and denied in part.

 I. BACKGROUND

 The underlying case involves the forfeiture of claimants' property as a result of Robert Clyde Ivy's alleged involvement with money laundering activities. The alleged criminal conduct is the subject of a criminal prosecution before another judge of this court, United States v. Armaments of South Africa, Ltd., Crim. Action No. 91-602 (E.D. Pa.). See also United States v. Jasin, 1993 U.S. Dist. LEXIS 9120, Crim. Action No. 91-602-8, 1993 WL 259436, at *1-4 (E.D. Pa. July 7, 1993) (DuBois, J.). The Government instituted the forfeiture proceeding under 18 U.S.C. § 981(a) (1) (A) and § 981(a) (1) (C) on October 30, 1991, the day before Robert Clyde Ivy was indicted for money laundering activities and wire fraud.

 Claimants moved for summary judgment, asserting that the Government lacked probable cause to establish that the subject properties were the proceeds of the predicate crimes, that the properties owned jointly or solely by Irene Ivy could not be forfeited due to her status as an innocent owner, and that retroactive application of the 1988 amendments to 18 U.S.C. § 981 violated the ex post facto clause. On October 21, 1993, this Court found that the Government had failed to establish probable cause to forfeit certain defendant properties, approximately 40%-45% of the original total seized, under 18 U.S.C. § 981(a) (1) (C) and ordered those properties released. United States v. Eleven Vehicles, 836 F. Supp. 1147 (E.D. Pa. 1993) [hereinafter Eleven Vehicles I]. As to the remaining properties, the Court found that probable cause to forfeit existed under 18 U.S.C. § 981(a)(1)(A). The Court also concluded that the existence of a genuine issue of material fact as to Irene Ivy's lack of knowledge of the illicit activities alleged in the complaint precluded the granting of summary judgment in her favor on the innocent owner defense. Finally, the Court found that application of the forfeiture statute to properties acquired prior to enactment of the 1988 amendments did not violate the ex post facto clause.

 On September 5, 1995, the Court granted in part claimants' second motion for summary judgment, ordering the release of certain of the remaining properties held by the Government, another 40%-45% of the original properties seized. The Order was predicated on a finding that the Government's reliance on the 1988 amendments to the federal money laundering statute, 18 U.S.C. § 981(a) (1) (A), for the forfeiture of properties which were acquired prior to the effective date of the amendments, constituted an impermissible retroactive application of law. See United States v. Eleven Vehicles, 898 F. Supp. 1143, 1145 (E.D. Pa. 1995) [hereinafter Eleven Vehicles II ]. The Court, however, denied claimants' motion for release of the balance of the properties, approximately 10%-20%, on the grounds that, as to the properties acquired after the effective date of the 1988 amendments, one automobile and two bank accounts, there remained an issue of fact as to whether the properties had been involved in money laundering. *fn1" Id.

 On October 3, 1995, the Government moved to stay the Order of September 5, 1995, until either the expiration of the period for taking an appeal or, if an appeal were taken, 30 days after final disposition of such an appeal. *fn2" The Government contended that, because the issue of retroactive application of the 1988 amendments was one of first impression in this circuit, it needed time to consult with the Department of Justice in Washington, D.C., in order to determine whether to file an appeal. The Court granted the stay, allowing the Government until November 26, 1995, to complete its review of the case and to determine whether to appeal. See United States v. Eleven Vehicles, 1995 U.S. Dist. LEXIS 15884, 1995 WL 635332 (E.D. Pa. Oct. 24, 1995).

 On January 16, 1996, the Government again moved for a stay until twenty days after the Supreme Court published its decision on two pending cases concerning double jeopardy, United States v. $ 405,089.23 in U.S. Currency, 33 F.3d 1210 (9th Cir. 1994), and United States v. Ursery, 59 F.3d 568 (6th Cir. 1995). *fn3" The Court denied this motion on January 29, 1996, and scheduled the case for a non-jury trial on February 5, 1996. Two days later, the Government moved for dismissal of its case against the remaining properties. On February 5, 1996, claimants cross-moved to have the matter dismissed with prejudice. Three days later, the Government moved for the issuance of a certificate of reasonable cause and clarified their motion, requesting that the Court dismiss the case without prejudice.

 The Court dismissed the case with prejudice on March 13, 1996, and ordered the balance of the properties released forthwith. The Court retained jurisdiction to entertain the Government's motion for a certificate of reasonable cause and claimants' motion to establish entitlement to costs, attorney's fees, and expenses, both issues to which the Court now turns.

 II. DISCUSSION

 A. Certificate of Reasonable Cause

 Section 2465 of title 28 of the United States Code, entitled, "Return of property to claimant; certificate of reasonable cause; liability for wrongful seizure," provides,

 
Upon the entry of judgment for the claimant in any proceeding to condemn or forfeit property seized under any Act of Congress, such property shall be returned forthwith to the claimant or his agent; but if it appears that there was reasonable cause for the seizure, the court shall cause a proper certificate thereof to be entered and the claimant shall not, in such case, be entitled to costs, nor shall the person who made the seizure, nor the prosecutor, be liable to suit or judgment on account of such suit or prosecution.

 28 U.S.C. § 2465 (West 1994). The certificate of reasonable cause "protect[s] the person at whose instance the seizure was made, should an action of trespass be brought against him by the claimant for the wrongful seizure of the latter's property." United States v. Abatoir Place, 106 U.S. (16 Otto) 160, 162, 1 S. Ct. 169, 170, 27 L. Ed. 128 (1882). In other words, the statute immunizes government officials from liability and bars successful claimants from recovering costs incurred from the seizure of their property in cases where these officials had "reasonable cause" to seize the property. See United States v. 255 Broadway, 795 F. Supp. 1225, 1229 (D.Mass. 1992), aff'd, 9 F.3d 1000 (1st Cir. 1993).

 For the purposes of issuing the certificate, "reasonable cause" is essentially the same as "probable cause." See Stacey v. Emery, 97 U.S. (7 Otto) 642, 646, 24 L. Ed. 1035 (1878) ("If there was a probable cause of seizure, there was a reasonable cause. If there was a reasonable cause of seizure, there was a probable cause.").

 
Probable cause to forfeit requires only a reasonable ground for belief of guilt, supported by less than prima facie proof but more than mere suspicion that the property is subject to forfeiture. In other words, the government has a relatively light burden of showing probable cause to believe that the subject property is forfeitable. Moreover, because there are so many variables in the probable cause equation, probable cause findings are not invariably bound by precedent.

 255 Broadway, 9 F.3d at 1004 (citations and internal quotations omitted); see also United States v. $ 191,100.00 in U.S. Currency, 16 F.3d 1051, 1071 (9th Cir. 1994) ("The standard of probable cause to support a forfeiture is similar to that required for a search warrant. As the requirement is traditionally stated, the government's belief that the property is subject to forfeiture must be more than a mere suspicion but can be less than prima facie proof."); United States v. $ 67,220.00 in U.S. Currency, 957 F.2d 280, 284 (6th Cir. 1992) (defining standard as same). "Probable cause to believe that the property is involved in some illegal activity is not enough -- the government must have probable cause to believe that the property is involved in the activity subject to the specific forfeiture statute it invokes." $ 191,100.00 in U.S. Currency, 16 F.3d at 1071.

 "Because courts have held that 28 U.S.C. § 2465 was enacted to protect the officials responsible for the seizure of potentially forfeitable property, courts generally look to the moment of seizure in considering whether or not to grant the certificate. Thus, rather than considering later developments which either support or counsel against the issuance of the certificate, courts limit their review to the evidence as it existed at the time of seizure for purposes of assessing whether reasonable cause for the seizure existed within the meaning of the statute." United States v. One DLO Model A/C, 30.06 Machine Gun, 904 F. Supp. 622, 637 (N.D. Ohio 1995) (citing 255 Broadway, 795 F. Supp. at 1230) (internal quotations omitted). Furthermore, a court's finding that "the government had probable cause to believe that all of the [property] seized . . . was subject to forfeiture" must be supported by the circumstances on the date of the institution of the forfeiture proceeding "taken as a whole." 255 Broadway, 9 F.3d at 1005.

 In the instant case, the basis for the Government's probable cause determination is set forth in the affidavit of Special Agent David G. Herbert. See Compl., Ex. 2 ("Herbert Aff."). Special Agent Herbert averred that he was "familiar with the methods used by those engaged in corporate financial fraud to attempt to shield their activities and [that he had] specialized in this investigation in tracing the proceeds of the unlawful activities of . . . Robert C. Ivy." Herbert Aff. at P 9. He concluded that "substantially all of Robert C. Ivy['s] . . . incomes were the proceeds of [the] unlawful conduct [alleged in the underlying criminal indictment] and these proceeds have been traced to the defendant properties herein." Id. at P 12. Furthermore, he attested that "over the period November 1986 through December 1989, Robert C. Ivy earned in salary, bonuses, stock options and other remuneration approximately $ 796,000 from ISC. With these proceeds, he purchased or otherwise acquired in whole or part the following defendant properties: [list of the properties later seized in the forfeiture proceeding]." Id. at P 13. "Based on the foregoing information, [Herbert concluded that] there is probable cause that the defendant properties are subject to forfeiture under Title 18, United States Code, Section 981(a) (1) (A), (C)." Id. at P 17. Relying on the averments contained in the Herbert affidavit, the Government instituted the present civil forfeiture action on October 30, 1991. Warrants were subsequently executed on October 31, 1991, and November 1, 1991, and returned on November 4 & 5, 1991. *fn4"

 The Herbert affidavit provided "a reasonable ground for [the Government's] belief of guilt, supported by less than prima facie proof but more than mere suspicion that the properties were subject to forfeiture." 255 Broadway, 9 F.3d 1000. Keeping in mind the Government's "relatively light burden of showing probable cause to believe that the subject property is subject to forfeiture," id., the Court concludes that seizure of all of claimants' property at the time of the institution of the proceeding was supported by probable cause. Since probable cause is essentially the same as reasonable cause, a certificate of reasonable cause shall issue. *fn5"

 B. Attorney's Fees, Costs, and Expenses under the EAJA

 Once a court determines that a certificate of reasonable cause shall issue, the government official is immunized from claimants seeking to recover costs incurred in defending the action. However, "the statute speaks only in terms of 'costs,' and [the Court has been] referred to no instance where a statutory award of costs under § 2465 has been interpreted to include lawyer's fees." 255 Broadway, 795 F. Supp. at 1234. Thus, the Court concludes "that the certificate of reasonable cause under § 2465 does not bar the claimant[s] from seeking attorney fees under the EAJA." Id. ; see also United States v. One Parcel of Real Estate, 864 F. Supp. 1267, 1269 (S.D. Fla. 1994) ("As I understand 28 U.S.C § 2465, it operates primarily to immunize prosecutors, and those persons who perform the actual seizure, from individual liability for suits or judgments resulting from a claimant's successful defense of a forfeiture action. The statute envisions that a 'certificate' of reasonable cause for the seizure may issue and that such certificate will not only immunize the prosecutor but will also prohibit a claimant from recovering the 'costs' of litigating the forfeiture action. The term 'costs' in 28 U.S.C. § 2465 does not embrace attorney[']s fees.") (citing 255 Broadway, 795 F. Supp. at 1234). Having found that issuance of a certificate of reasonable cause is warranted in this case and that the Government is therefore immune from liability for costs, this Court now turns to the question of whether claimants are entitled to attorney's fees.

 "The specific purpose of the EAJA is to eliminate for the average person the financial disincentive to challenge unreasonable governmental actions." Commissioner, Immigration and Naturalization Service v. Jean, 496 U.S. 154, 163, 110 S. Ct. 2316, 2321, 110 L. Ed. 2d 134 (1990). The specific statutory goals of the EAJA are to "encourage private parties to vindicate their rights and [to] curb[] excessive regulation and the ...


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