United States v. Real Property 10338 Marcy Rd. N.W.
938 F.3d 802
| 6th Cir. | 2019Background
- Winston bought (contracted to buy) a vacant lot on Marcy Road for $36,500 in Nov. 2012 and made cash payments totaling $26,500; the property was never deeded to him.
- Between 2009–2012 Winston reported $169,132 in legitimate income but his 2012 tax return showed only $16,243 for that year.
- Concurrently Winston ran a large-scale marijuana-trafficking operation: he rented warehouses (~$62,091), paid an associate $25,000, and bought a van with drug proceeds ($6,875); he later pleaded guilty and was sentenced.
- The Government sued to forfeit the Marcy Road property under 21 U.S.C. § 881(a)(6). After this Court reversed an initial summary judgment for the Government, a bench trial occurred on remand.
- The district court found Winston’s known expenditures exceeded his legitimate income by ~$68,114 (after attributing $30,000 in remodel costs and $90,440 in living expenses) and concluded, under the totality of the circumstances, the Property was purchased with drug proceeds.
- The Sixth Circuit affirmed, holding the Government met its burden by a preponderance with circumstantial evidence and Winston failed to rebut it.
Issues
| Issue | Winston's Argument | Government's Argument | Held |
|---|---|---|---|
| Whether the Government proved by a preponderance that the Marcy Road property was purchased with drug-sale proceeds under § 881(a)(6) | Government failed to meet burden; evidence was circumstantial and consistent with legitimate purchase | Circumstantial evidence (income/expenses gap, cash payments, concealment, conviction) cumulatively shows property was bought with illegal proceeds | Government met its § 881(a)(6) burden; forfeiture affirmed |
| Whether the district court clearly erred in calculating expenses (remodeling, living costs) | Court overstated remodeling and living expenses and double-counted automobile costs | Calculations were supported by evidence and adopted a conservative remodel figure; living-expense adjustment used Winston’s own PSI figures | No clear error on remodeling or living-expense basis; minor errors (Ford Taurus duplication, van counted as unrebutted) did not change result |
| Whether including drug-related expenditures (warehouses, payments to associate, van) as unrebutted expenses was improper | Those expenses were paid with drug proceeds (not legitimate income) so including them against legitimate income is circular or requires tracing | Unrebutted expenditures show legitimate income insufficient; inclusion of warehouse and associate payments supported by record | Court correctly treated warehouse rents and payments as unrebutted expenditures; van purchase and Taurus duplication were errors but did not undermine totality conclusion |
| Whether the Government must perform direct tracing when legitimate income exists and funds may be commingled | When significant legitimate income exists, Government must use direct tracing to apportion tainted vs. untainted funds | No categorical tracing rule; totality of circumstances (direct or circumstantial evidence) can satisfy preponderance standard | No per se tracing requirement; circumstantial proof may suffice under a totality test |
Key Cases Cited
- United States v. Real Prop. 10338 Marcy Rd. Nw., [citation="659 F. App'x 212"] (6th Cir. 2016) (remanding summary-judgment forfeiture; clarified substantial-connection standard under § 881(a)(6))
- Concrete Pipe & Prods. v. Constr. Laborers Pension Tr., 508 U.S. 602 (1993) (definition of preponderance of the evidence)
- United States v. $174,206.00 in U.S. Currency, 320 F.3d 658 (6th Cir. 2003) (use of legitimate income vs. expenses to prove forfeiture)
- United States v. $99,990.00 in U.S. Currency, [citation="69 F. App'x 757"] (6th Cir. 2003) (circumstantial factors supporting forfeiture under totality test)
- United States v. $110,873.00 in U.S. Currency, [citation="159 F. App'x 649"] (6th Cir. 2005) (totality-of-the-circumstances evaluation of circumstantial tracing evidence)
- United States v. Premises Known as 8584 Old Brownsville Rd., 736 F.2d 1129 (6th Cir. 1984) (real property forfeitable when purchased with drug-sale proceeds)
- United States v. Veggacado, [citation="37 F. App'x 189"] (6th Cir. 2002) (claimant can rebut government by producing evidence of legitimate source or innocent ownership)