4th Cir.: Intervenor’s claim to seized cash not plausible

A man alleging that $200,000 found in a storage unit was his life savings did not have standing to claim it in a civil-forfeiture proceeding, as his financial difficulties contradicted his ability to save such a sum.

Background

In 2014, law-enforcement officers investigating suspected drugs inside a storage facility discovered a duffle bag containing 12 vacuum-sealed plastic bags containing a total of $200,000 cash. A drug-sniffing dog indicated an odor of narcotics on the cash. The owner of the storage unit had previously been convicted of drug crimes.

After the government claimed the money was subject to civil forfeiture, Claimant-Appellant Damian Phillips, the unit-owner’s brother, filed a verified claim stating that the cash belonged to him, that it was not exchanged for controlled substances, and that it was actually his life savings. The district court granted the government’s motion for summary judgment on its civil-forfeiture claim, concluding that Phillips lacked standing to intervene as a claimant. Phillips appealed.

Civil-forfeiture standing

The appropriate test for third-party standing in civil-forfeiture cases is a matter of first impression in the 4th Circuit. Following every circuit in the past 20 years that has addressed this issue of the manner and degree of evidence required to establish standing at the summary-judgment stage in such cases, this court adopts the “colorable interest” test, which requires a claimant to present “some evidence of ownership” beyond the mere assertion of an ownership interest in the property.

Applying the colorable-interest test preserves the important distinction between constitutional standing and the merits of a civil-forfeiture case, in which the government has the burden to prove that the property is subject to forfeiture. Thus, requiring Phillips to prove his assertion by demonstrating something more than a colorable interest could impermissibly shift the merits burden to him.

Here, although Phillips alleged that the $200,000 is his life savings, the undisputed record evidence belies that claim. His total income from any source from 2003 to 2014 was $242,613.45. Less the $200,000 at issue here, he would have had $42,613.45 on which to live during that 12-year period. But according to Phillips himself, his expenses in 2013 alone totaled $54,624. His $250,000 in expenses from 2003 to 2014 shows that he could not have saved any money, let alone $200,000.

This conclusion is supported by further evidence of Phillips’s significant financial troubles during this period, including two car repossessions, his wife’s bankruptcy, failure to file tax returns in 2005 and 2010-2013, and delinquency in rent payments.

Phillips is mistaken that the court, in properly viewing evidence in his favor, is required to consider the years in which the IRS had no tax returns from him to be “blanks” in the evidence. The court construes evidence in the light most favorable to the non-movant on summary judgment, not the absence of evidence. Were it otherwise, parties opposing summary judgment would be best advised to submit no evidence at all, assured that the court would fill the void with imaginary evidence that favors them.

Affirmed.

United States v. Phillips, Case No. 16-2358, Feb. 21, 2018. 4th Cir. (Motz), from MDNC at Greensboro (Biggs). David Allen Bauernfeind for Appellant; Steven N. Baker for Appellee. VLW No. 018-2-033, 10 pp.