USA v. $144,638.00 In United States Currency

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
UNITED STATES OF AMERICA,
Plaintiff,
vs.
$144,638 IN UNITED STATES
CURRENCY,
Defendant.
_____________________________
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Civ. NO. 24-00124 SOM-WRP
ORDER DENYING CLAIMANT FRANK
GONZALES’S MOTION TO DISMISS
ORDER DENYING CLAIMANT FRANK GONZALES’S MOTION TO DISMISS
I. INTRODUCTION.
In January 2023, Frank Gonzales sold 2 ounces of
fentanyl and 8 ounces of crystal methamphetamine to a source for
$5,700.00 from his bedroom. Law enforcement obtained a search
warrant for his residence, seizing 4 pounds of methamphetamine
from Gonzales’s vehicle; a black iPhone from his living room; and
a Glock-style handgun with no serial number, $150,338.00 in U.S.
currency, a scale, a money counter, and many small Ziploc bags
from his bedroom. Gonzales was convicted of drug crimes with
respect to the controlled buys and criminally forfeited $5,700.00
of the $150,338.00 seized. The Government indicated in the
criminal case that it would seek the remainder, $144,638.00, via
this civil forfeiture proceeding.
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Pursuant to Rule 12(b)(6) of the federal Rules of Civil
Procedure, Gonzales, proceeding pro se, seeks dismissal of the
Complaint for civil forfeiture, arguing that it is barred by res
judicata and that it fails to state a claim. See ECF No. 14.
The court disagrees and denies the motion without a hearing
pursuant to Local Rule 7.1(c) (“Unless specifically required, the
court may decide all matters, including motions, petitions, and
appeals, without a hearing.”).
II. STANDARD.
Under Rule 12(b)(6), the court’s review is generally
limited to the contents of the complaint. See Sprewell v. Golden
State Warriors, 266 F.3d 979, 988 (9 Cir. 2001); Campanelli v.	th
Bockrath, 100 F.3d 1476, 1479 (9 Cir. 1996). If matters	th
outside the pleadings are considered, the Rule 12(b)(6) motion is
treated as one for summary judgment. See Keams v. Tempe Tech.
Inst., Inc., 110 F.3d 44, 46 (9 Cir. 1997); Anderson v.	th
Angelone, 86 F.3d 932, 934 (9 Cir. 1996). However, courts may	th
“consider certain materials--documents attached to the complaint,
documents incorporated by reference in the complaint, or matters
of judicial notice--without converting the motion to dismiss into
a motion for summary judgment.” United States v. Ritchie, 342
F.3d 903, 908 (9 Cir. 2003). Documents whose contents are	th
alleged in a complaint and whose authenticity are not questioned
by any party may also be considered in ruling on a Rule 12(b)(6)
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motion to dismiss. See Branch v. Tunnell, 14 F.3d 449, 453-54
(9 Cir. 1994).	th
On a Rule 12(b)(6) motion to dismiss, all allegations
of material fact are taken as true and construed in the light
most favorable to the nonmoving party. Fed’n of African Am.
Contractors v. City of Oakland, 96 F.3d 1204, 1207 (9 Cir.	th
1996). However, conclusory allegations of law, unwarranted
deductions of fact, and unreasonable inferences are insufficient
to defeat a motion to dismiss. Sprewell, 266 F.3d at 988; Syntex
Corp. Sec. Litig., 95 F.3d 922, 926 (9 Cir. 1996).	th
“[T]o survive a Rule 12(b)(6) motion to dismiss,
factual allegations must be enough to raise a right to relief
above the speculative level, on the assumption that all the
allegations in the complaint are true even if doubtful in fact.”
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal
quotation marks omitted); accord Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (“[T]he pleading standard Rule 8 announces does not
require ‘detailed factual allegations,’ but it demands more than
an unadorned, the-defendant-unlawfully-harmed-me accusation”).
“While a complaint attacked by a Rule 12(b)(6) motion to dismiss
does not need detailed factual allegations, a plaintiff’s
obligation to provide the ‘grounds’ of his ‘entitlement to
relief’ requires more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action will
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not do.” Twombly, 550 U.S. at 555. The complaint must “state a
claim to relief that is plausible on its face.” Id. at 570. “A
claim has facial plausibility when the plaintiff pleads factual
content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged.” Iqbal,
556 U.S. at 678.
III. BACKGROUND.
In December 2022, a source told law enforcement that
Gonzales was a multi-ounce fentanyl and multi-pound crystal
methamphetamine distributor. On January 26, 2023, that source
participated in controlled purchases of drugs from Gonzales,
which took place in his bedroom. Gonzales sold the source 2
ounces of fentanyl for $3,200 and 8 ounces of crystal
methamphetamine for $2,500. During the transaction, the source
saw a Glock-style pistol on a table near Gonzales. See
Complaint, ECF No. 1, PageID # 4.
The next day, Magistrate Judge Kenneth J. Mansfield
issued a search warrant for Gonzales’s residence in Magistrate
No. 23-00107 KJM. Pursuant to the search warrant, law
enforcement seized 4 pounds of methamphetamine from a vehicle
near the residence; a black iPhone from the living room of the
residence; and $150,338.00, a Glock-style handgun with no serial
number, a scale, a money counter, and many small Ziploc bags from
the bedroom of the residence. With respect to the cash, $15,350
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was found in a safe in the bedroom, with the remainder found
throughout the bedroom. The bulk of it was found in a “Taquitos”
box wrapped with cellophane and Christmas wrapping paper. Id.,
PageID #s 4-5.
When law enforcement first attempted to execute the
search warrant, Gonzales barricaded himself in his residence for
approximately 40 minutes. Law enforcement found and seized about
1 gram of crystal methamphetamine from a toilet in the residence.
Id., PageID # 5.
In a Superseding Indictment dated May 18, 2023,1
Gonzales was charged with: (1) distributing methamphetamine and
fentanyl (Count 1, which relates to the controlled buy on January
26, 2023); (2) possessing methamphetamine (Count 2);
(3) possessing a firearm in furtherance of a drug trafficking
(Count 3); and being a felon in possession of ammunition
(Count 4). In June 2023, Gonzales was convicted on all counts
via a jury trial. Id., PageID # 6.
On July 11, 2023, the court entered a Preliminary Order
of Forfeiture, forfeiting Gonzales’s interest in $5,700.00 of the
$150,338.00. Id. On November 6, 2023, the court entered a	2
The court takes judicial notice of the date of the	1
Superseding Indictment in United States v. Frank Gonzales, Crim.
No. 23-00023 SOM.
The court takes judicial notice that the Government sought	2
forfeiture of the $150,338.00 in a Bill of Particulars for
Forfeiture of Property filed on June 18, 2023. See Crim. No. 23-
5
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Final Order of Forfeiture with respect to the $5,700.00. See
id., PageID #s 6-7. The present civil forfeiture action seeks
the remaining seized funds ($150,388.00 - $5,700.00 =
$144,638.00). See id., PageID # 7.
According to the Complaint, the seized iPhone contained
evidence that Gonzales was distributing drugs. For example, in
July 2023, Gonzales and “Cochise” purportedly sent and received
text messages discussing the exchange of narcotics for money.
See id. In November 2022, Gonzales and “Tee” purportedly sent
and received text messages discussing parcels of drugs being sent
from California to Gonzales in Hawaii. See id., PageID #s 7-8.
In January 2023, Gonzales purportedly sent and received text
messages discussing previous sales of narcotics and asking his
buyer for payment. See id., PageID # 8. Also in January 2023,
Gonzales and “Ian” purportedly sent and received text messages
discussing the sale of drugs. See id., PageID #s 8-9.
The Complaint alleges that Gonzales has no known
legitimate source of income. See id., PageID # 9.
00023 SOM, ECF No. 130, PageID # 837. The court also takes
judicial notice of the Government’s Motion for Entry of
Preliminary Order of Forfeiture, a motion later limited to
forfeiting $5,700.00 of the seized $150,338.00. The motion
stated that the Government intended to file a civil forfeiture
action with respect to the rest. See Crim. No. 23-00023 SOM, ECF
No. 160, PageID # 1022.
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IV. ANALYSIS.
Gonzales seeks dismissal of the present Complaint for
civil forfeiture of the remaining $144,638.00 seized from his
bedroom, arguing that it is barred by res judicata and that it
fails to state a claim. Neither argument is persuasive, and the
motion to dismiss is therefore denied.
A. The Complaint is Not Barred by Res Judicata.
Gonzales first seeks dismissal of the Complaint on the
ground that the forfeiture with respect to $144,638.00 was
previously determined against the Government in his criminal
case. Gonzales misconstrues the record.
In moving for a preliminary order of forfeiture in
Gonzales’s criminal case, the Government did not seek a criminal
forfeiture of the entire $150,388.00 seized from Gonzales’s
bedroom. Instead, the Government sought forfeiture of only
$5,700.00, which corresponded to the sales proceeds from the
controlled buy at issue in Count 1 of the Superseding Indictment.
See Complaint, ECF No. 1, PageID #s 6-7.
The court takes judicial notice of the filings in the
criminal case. Pursuant to 21 U.S.C. § 853, the Superseding
Indictment had sought forfeiture of “any and all property
constituting, or derived from, any proceeds obtained, directly or
indirectly, as the result of such offenses and any and all
property used, or intended to be used, in any manner or part, to
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commit, or to facilitate the commission of, such offense.” See
Superseding Indictment, Crim. No. 23-00023 SOM, ECF No. 60,
PageID # 309. Gonzales was convicted of drug crimes under 21
U.S.C. § 841. Section 853(a)(1) required this court to order
that Gonzales forfeit “any property constituting, or derived
from, any proceeds the person obtained, directly or indirectly,
as the result of such violation.” Because Gonzales was convicted
in Count 1 with respect to the controlled drug buys, the court
was required to order that the proceeds of those sales
($5,700.00) be forfeited. However, the remaining $144,638.00
found in Gonzales’s bedroom did not constitute proceeds of the
drug crimes for which he was convicted (or property derived
therefrom). Accordingly, those funds were not necessarily
forfeitable pursuant to § 853(a)(1), and the Government chose to
pursue a civil forfeiture of the funds in this action.
Gonzales is incorrect in asserting that the forfeiture
issue with respect to the remaining $144,638.00 was disposed of
in his earlier criminal case. Res judicata applies when there is
an identity of claims, a final judgment on the merits, and
privity between the parties. See United States v. Liquidators of
Eur. Fed. Credit Bank, 630 F.3d 1139, 1150 (9 Cir. 2011).	th
There was no final judgment on the merits issued with respect to
the $144,638.00. Res judicata is therefore inapplicable.
The court recognizes that in Liquidators of European
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Federal Credit Bank, the Ninth Circuit explained that, although
the Government’s aim in both criminal in personam forfeiture
proceedings and civil in rem forfeiture proceedings is forfeiture
of property, those proceedings differ in one important way. In a
criminal forfeiture proceeding, the Government must prove
culpability relating to the underlying crime beyond a reasonable
doubt.
However, in a civil forfeiture proceeding, the
Government must prove culpability only by a preponderance of the
evidence. “For that reason, if the government’s criminal
prosecution of the property owner fails, that failure does not
prevent the government from pursuing civil forfeiture. The
government may pursue civil forfeiture even after a failed
criminal prosecution.” Id. (citation omitted); see United States
v. Dunn, 802 F.2d 646, 647 (2d Cir. 1986) (holding that res
judicata and collateral estoppel do not bar a civil forfeiture
action with respect to the same $28,500 for which a criminal
forfeiture claim was unsuccessful); see also United States v. One
Assortment of 93 NFA Regulated Weapons, 897 F.3d 961, 968 (8th
Cir. 2018) (stating that acquittal in a criminal case does not
bar a civil forfeiture proceeding given the differing burdens of
proof); United States v. Real Prop. Located at 2323 Main St.,
Irvine, California, 2023 WL 2817354, at *6 (C.D. Cal. Mar. 22,
2023) (holding that a decision to drop criminal forfeiture
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proceedings against certain property does not have any preclusive
effect on civil forfeiture proceedings with respect to the same
property).
In his Reply, ECF No. 18, Gonzales argues that the
present civil forfeiture action is barred because the claim could
have been brought in the criminal action. He is unpersuasive, as
he does not establish that the $144,638.00 at issue here could
have been criminally forfeited in the earlier criminal case. For
purposes of this motion to dismiss, the court must assume the
factual allegations in the Complaint to be true, including its
allegation that the $144,638 was not tied to Gonzales’s
conviction on Count 1 and was therefore not forfeitable in the
criminal action. See ECF No. 1, PageID # 7. Moreover, the money
at issue in this civil action has not been directly tied to any
count in the criminal case, including the 4 pounds of
methamphetamine at issue in Count 2 and the firearm and
ammunition charges at issue in Counts 3 and 4.
B. The Complaint Asserts a Viable Claim.
The Complaint seeks civil forfeiture of the $144,638.00
pursuant to 21 U.S.C. § 881(a)(6). See ECF No. 1, PageID # 2.
That subsection states:
The following shall be subject to
forfeiture to the United States and no
property right shall exist in them:
. . . .
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(6) All moneys, negotiable instruments,
securities, or other things of value
furnished or intended to be furnished by any
person in exchange for a controlled substance
or listed chemical in violation of this
subchapter, all proceeds traceable to such an
exchange, and all moneys, negotiable
instruments, and securities used or intended
to be used to facilitate any violation of
this subchapter.
21 U.S.C. § 881(a)(6).
Civil forfeiture actions are governed by the Civil
Asset Forfeiture Reform Act of 2000, 18 U.S.C. § 983, and the
Supplemental Rules for Admiralty or Maritime Claims and Asset
Forfeiture Actions. See United States v. Aguilar, 782 F.3d 1101,
1108 (9 Cir. 2015). Supplemental Rule G(2)(f) requires that a	th
civil forfeiture complaint “state sufficiently detailed facts to
support a reasonable belief that the government will be able to
meet its burden of proof at trial.” Fed. R. Civ. P. Supp. R.
G(2)(f). The Ninth Circuit explained that, while more demanding
than notice pleading, this is not an onerous standard: “a
complaint must state the circumstances giving rise to the
forfeiture claim with sufficient particularity that the claimant
can commence a meaningful investigation of the facts and draft a
responsive pleading and permit a reasonable belief for pleading
purposes that the property in question is subject to forfeiture.”
Aguilar, 782 F.3d at 1108–09 (quotation marks, citations, and
alterations omitted).
The Complaint in this matter satisfies this pleading
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standard. It asserts that the seized $144,638.00 is money
intended to be used in exchange for a controlled substance,
proceeds from such an exchange, and/or money used or intended to
be used for illegal drug transactions. See ECF No. 1, PageID
# 3. The Complaint alleges that the seized $144,638.00 was found
in Gonzales’s bedroom during the execution of a search warrant
following a controlled buy of fentanyl and methamphetamine in
that bedroom. That controlled buy occurred after an informant
told law enforcement that Gonzales was a multi-ounce fentanyl and
multi-pound crystal methamphetamine drug distributor. At the
time the $144,638.00 was seized, law enforcement also seized 4
pounds of methamphetamine, a black iPhone, a Glock-styled handgun
with no serial number, a scale, a money counter, and many small
Ziploc bags. While some money was located in a safe in the
bedroom, the bulk of it was found in a “Taquitos” box that was
wrapped in cellophane and Christmas wrapping paper. A search of
the iPhone showed text messages purportedly indicating that
Gonzales was involved in the sale and distribution of illegal
drugs. Additionally, Gonzales prevented law enforcement from
entering his residence for long enough for him to have flushed
drugs down the toilet, which was found to contain drugs.
Given these factual allegations, this court concludes
that the Complaint sufficiently alleges that the $144,638.00 was
either intended to be used to buy illegal drugs, constituted
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proceeds from the sale of illegal drugs, or was money used or
intended to be used to facilitate drug transactions. This court
rules that the Complaint satisfies the pleading standard based on
these allegations.
Gonzales says that, on June 6, 2023, this court denied
the Government’s motion in limine in Gonzales’s criminal case to
admit certain recordings and text messages. Gonzales represents
that this court stated, “[j]ust because a text was sent from the
Defendant’s phone does not necessarily mean that he sent it.”
This court has reviewed the transcript of that proceeding and did
not find that quotation. See Crim. No. 23-00023 SOM, ECF No.
193. But even assuming that this court made that statement, the
Complaint in this matter is not thereby rendered subject to
dismissal. In adjudicating the present motion to dismiss, the
court must assume the facts alleged in the Complaint to be true.
This order does not end this case. It instead allows the case to
proceed. At trial, Gonzales may argue to the trier of fact that
he did not send or receive a particular text message. However,
for purposes of this motion to dismiss, that argument is
unavailing.
Similarly, the court is unpersuaded by Gonzales’s
argument that he had a legitimate source of income that can
explain the cash in his bedroom. For purposes of the present
motion, it is sufficient that the Complaint alleges that the cash
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was derived from or intended to be used for or to facilitate drug
transactions.
V. CONCLUSION.
The court denies the motion to dismiss.
It is so ordered.
DATED: Honolulu, Hawaii, July 8, 2024.
/s/ Susan Oki Mollway
Susan Oki Mollway
United States District Judge
United States v. $144,638.00 in United States Currency, Civ. No. 24-00124 SOM-WRP;
ORDER DENYING CLAIMANT FRANK GONZALES’S MOTION TO DISMISS
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