Pedro Cruz-Hernandez v. Funds in the Amount of $271,08
2016 U.S. App. LEXIS 4909
7th Cir.2016Background
- Chicago police searched a van registered to Pedro Cruz-Hernandez after a drug dog alerted; they found a safe with $271,080 in bundled currency and two pages of handwritten notes; no drugs were found in the van or safe.
- Police had found a handgun, a digital scale, and a small bag of marijuana in a bedroom of the house where Pedro and his brother Abraham lived with others.
- Pedro initially told police he did not know whose money it was and that Abraham had said the safe contained "important papers." Abraham was not present at the scene.
- The government filed a civil forfeiture action under 21 U.S.C. § 881(a)(6), alleging the currency was proceeds of or used to facilitate drug trafficking; the brothers contested, asserting lawful savings and submitted income records and affidavits.
- The district court granted summary judgment for the government after applying the sham-affidavit rule and questioning the brothers’ ownership evidence; the brothers appealed.
- The Seventh Circuit vacated and remanded, holding that genuine disputed facts exist about ownership and the government failed to carry its burden to prove the money’s substantial connection to drug trafficking by a preponderance.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing: whether claimants’ earlier statements disavowing ownership defeated standing | Government: prior disavowals (Pedro to police; Abraham on ICE form and immigration filing) mean claimants lack ownership to contest forfeiture | Brothers: affidavits and explanations suffice to establish claimant standing; prior statements are plausibly explained | Held: district court erred in applying sham-affidavit rule; claimants’ explanations were plausible and standing was established |
| Burden of Proof: whether claimants must prove legitimate ownership | Government: argued claimants effectively disavowed ownership so they cannot meet standing; court treated insufficiency as de facto burden on claimants | Brothers: once standing is shown, burden rests on government to prove connection to drug trafficking by preponderance; claimants need not prove legitimate ownership at summary stage | Held: court improperly shifted burden; government must prove forfeiture elements, claimants need only show standing |
| Sufficiency of evidence for civil forfeiture (preponderance) | Government: circumstantial evidence—drug dog alerts to van and safe, bundled cash, handwritten notes characterized as a "drug ledger," paraphernalia in house, and low reported income—supports forfeiture | Brothers: no drugs found; notes plausibly related to remittances; income records could account for savings; no evidence on drug dogs’ training or notes’ link to drugs | Held: genuine factual dispute exists; government did not meet preponderance standard—summary judgment for government improper |
| Application of sham-affidavit doctrine | Government/district court: later affidavits contradicted prior sworn statements and were sham | Brothers: changes were plausible, explained (confusion, timing, misunderstanding of form); rule applies only when changes are incredible and unexplained | Held: sham-affidavit rule misapplied; later affidavits credible enough to create genuine disputes for jury to resolve |
Key Cases Cited
- United States v. Funds in the Amount of $239,400, 795 F.3d 639 (7th Cir.) (distinguishes standing burden from government’s burden to prove forfeiture)
- United States v. Funds in Amount of One Hundred Thousand One Hundred & Twenty Dollars ($100,120.00), 730 F.3d 711 (7th Cir.) (sham-affidavit doctrine discussion in forfeiture/summary judgment context)
- McCann v. Iroquois Mem'l Hosp., 622 F.3d 745 (7th Cir.) (sham-affidavit rule applies only where changes in testimony are incredible and unexplained)
- Bank of Ill. v. Allied Signal Safety Restraint Sys., 75 F.3d 1162 (7th Cir.) (use sham-affidavit rule with great caution because credibility is for the jury)
- United States v. $506,231 in U.S. Currency, 125 F.3d 442 (7th Cir.) (large cash and drug-dog alerts insufficient alone to justify forfeiture)
- United States v. Ten Thousand Seven Hundred Dollars & No Cents ($10,700.00) in U.S. Currency, 258 F.3d 215 (3d Cir.) (drug-dog alert without evidence of dog’s reliability insufficient to prove drug connection)
- United States v. $11,500.00 in U.S. Currency, 710 F.3d 1006 (9th Cir.) (comparison of income records and lack of other evidence can preclude forfeiture)