Dealers Seize on Ruling to Seek Assets, Freedom

From a rustic ranch in eastern Orange County, Daniel James Fowlie ran an drug trafficking ring that bundled off bales of marijuana to cities across the nation.

But his drug dynasty began to crumble a decade ago when authorities filed a civil lawsuit to win possession of his Rancho Del Rio headquarters in the Santa Ana Mountains, while Fowlie sought refuge in Mexico.

After Fowlie lost his fight against extradition back to the United States in 1990, he was hit with criminal charges. Following his conviction, he was fined $1 million and sentenced to 30 years without the possibility of parole, virtually guaranteeing that the then-57-year-old drug kingpin would die in prison.

Now, however, Fowlie and other convicted drug dealers are entertaining hopes of walking free again--thanks in part to a controversial federal court decision declaring that the government cannot prosecute a drug dealer and seize his assets in separate court proceedings.

Ruling on a legal argument written by a prison inmate, a three-judge panel of the U. S. 9th Circuit Court of Appeals in Pasadena said the double-barreled approach to justice, routinely used by prosecutors against drug dealers, amounts to double jeopardy and is barred by the U. S. Constitution.

With the force of a legal earthquake, the ruling has jolted the law enforcement community.

A top Justice Department official said that since the September 1994 decision, a few drug dealers have been released from prison, seized assets have been returned, and several hundred people--convicted of drug dealing, money laundering and other crimes--have asked judges to reverse their sentences or return their property.

Scores more have cited the ruling in asking courts to dismiss pending criminal charges against them. A few have been successful.

“For some, it’s a get-out-of-jail-free card,” said Stefan D. Cassella, deputy chief of the U. S. Justice Department’s asset forfeiture and money laundering section in Washington.

Cassella and other federal prosecutors say the court’s decision has hobbled the government’s War on Drugs. They say it is probably one reason why the federal Asset Forfeiture Fund--where the proceeds from drug-tainted assets confiscated nationwide are pooled--declined from $550 million in 1994 to $488 million last year, an 11% decrease.

U. S. Atty. Nora M. Manella, the chief federal prosecutor for seven Southern California counties, said the ruling has made it more difficult to seize a drug dealer’s ill-gotten goods, and has fundamentally altered the way law enforcement agencies prosecute drug dealers and organized criminals.

In some cases, accused drug dealers have offered to surrender their property in civil proceedings with the intention of preventing prosecutors from filing criminal charges, which would then amount to a “second” punishment.

In the Central District of California alone, more than a hundred people have challenged their sentences and indictments on double jeopardy grounds. With 16 million people, this federal court district, which stretches from San Luis Obispo to Riverside, is the most populous in the United States.

“If this decision stands, it will have an impact on many convictions that have already been secured, and on future criminal litigation nationwide,” Manella said.

Miriam A. Krinsky, who heads the appellate section at the U.S. attorney’s office in Los Angeles, and other Justice Department officials have argued that the 9th Circuit decision--written by Judge Stephen Reinhardt--was wrong. They contend that confiscating a drug dealer’s assets is not punishment, but akin to seizing a bank robber’s loot. He or she never had a right to the stolen cash in the first place.

But a cadre of lawyers, and another federal appeals court, have sided with the Pasadena court’s ruling, saying it merely reinforced the centuries-old American legal principle that the government cannot penalize someone twice for the same offense.

Richard J. Troberman, a Seattle lawyer who is co-chair of the National Assn. of Criminal Defense Lawyer’s forfeiture abuse task force, said federal prosecutors who criticize the 9th Circuit’s ruling were making “much ado over not so much. They are running around like Chicken Little, when very few [convicted] people” are going to be released from prison or have their property returned.

Troberman said a subsequent 9th Circuit ruling, also written by Reinhardt, declares that felons cannot claim to have been penalized twice if they never contested the seizure of their property in the first place. The second ruling effectively precludes about two-thirds of those whose property has been seized from succeeding in their appeals, Troberman said.

Two weeks ago, the U. S. Supreme Court waded into the double jeopardy debate when the justices agreed to review the 9th Circuit ruling, along with a similar decision by the 6th Circuit in Cincinnati, which reversed the conviction of a Michigan marijuana grower. The Cincinnati court said the man had already been punished when the government succeeded in seizing his entire $13,250 net worth in a civil proceeding.

With the Supreme Court’s decision several months away, top prosecutors across the country say the 9th Circuit’s decision is jeopardizing their ability to effectively pursue civil asset forfeiture--one of the most potent weapons in the government’s anti-drug strategy.

The government has seized ill-gotten property--such as smuggled goods and pirate ships--for centuries. But during the past decade, prosecutors have used a 1984 federal forfeiture law to rake in more than $4 billion worth of cars, cash, airplanes, real estate and other property in both civil and criminal forfeitures.

A large portion of these assets have been seized in civil proceedings, in which authorities need only prove that they had “probable cause” to believe that the assets were somehow connected to a criminal enterprise. Once this standard has been met, the burden then shifts to the property owner to disprove the government’s case.

Opponents of such civil forfeiture actions maintain that they are often abused by law enforcement officials who have a selfish interest in the seized property. Proceeds from the sale of asset forfeitures are routinely distributed to the law enforcement agencies that seized the assets in the first place.

Said Troberman, “As long as law enforcement has a vested interest in the outcome of the proceedings--that is, they get to keep the money to buy guns, computers and other war toys--they’re going to be more interested in these kinds of cases, and in abusing and violating citizens’ rights in order to get the property.”

As a likely case in point, defense lawyers point to the notorious 1992 “drug raid” by Los Angeles sheriff’s deputies on Donald P. Scott’s Malibu ranch. After the ranch’s owner was shot to death in an armed confrontation and the deputies came up empty-handed in their search for drugs, Ventura County Dist. Atty. Michael D. Bradbury denounced the raid as a botched land grab by law enforcement officials hungry for Scott’s ranch.

Legal scholars say the dispute over civil forfeiture has become one of the hottest topics in constitutional law. In this term alone, the Supreme Court has agreed to review five cases involving forfeiture law, according to Jimmy Garule, a professor at Notre Dame Law School.

But few cases have triggered a firestorm like the 9th Circuit’s decision, known as U.S. vs. $405,089.23 in U.S. Currency et. al.

The case involved James Wren and Charles Arlt, who were sentenced to life in prison without parole after being convicted on numerous counts of narcotics trafficking and money laundering.

Prosecutors alleged that the two ran a wildly profitable methamphetamine operation in the Southland. Using a series of front corporations, including a firm called Payback Mines, they pretended to be running legitimate gold mining operations.

Five days after the men were indicted on criminal charges, prosecutors filed a separate civil action to seize $405,089.23 in a Security Pacific Bank account; $123,000 in cash; $8,929.93 in Bank of America accounts; 138 bars of silver bullion; a Bell 47 G-2 helicopter; a Piper 6 Cherokee airplane; two seagoing vessels, including a shrimp boat; and 11 cars, including Porsches and Jaguars.

On April 1, 1993, about a year after securing the men’s convictions, prosecutors persuaded a federal judge in Los Angeles to award their assets to the government, saying their goods were the fruits of an illegal drug ring.

From their cell at Lompoc Federal Penitentiary, Arlt and Wren tried unsuccessfully to get lawyers to recover their property.

Several top criminal lawyers shied away from the case, saying that previous court decisions had specifically held that seizing the illegal profits from a drug ring was “remedial,” not punishment. One decision from New York’s 2nd Circuit said the two separate proceedings--civil forfeiture and criminal prosecution--were part of “a single, coordinated prosecution” and therefore not double jeopardy.

When attorneys declined to take their case, the two convicts turned to a jailhouse lawyer named Michael Montalvo, also facing life without parole for dope dealing.

Montalvo, who was researching similar arguments for his own appeal, filed the appeal on behalf of his fellow inmates.

His argument scored with Judge Reinhardt, who opined that prosecutors violated the Constitution’s double jeopardy provisions by obtaining criminal convictions, and then pursuing a civil action.

“We fail to see how two separate actions, one civil and one criminal, instituted at different times, tried at different times before different fact-finders, presided over by different district judges, and resolved by separate judgments, constitute the same ‘proceeding,’ ” the judge wrote.

According to Reinhardt, prosecutors had maneuvered themselves into a no-lose position: If they won the criminal case, they could move to seize the men’s assets based on their convictions. If the men were not convicted, prosecutors could still seize their assets because the more lenient standards in civil forfeitures would place the burden on the accused drug dealers to prove their assets had not been purchased with illegal drug profits.

“We believe that such a coordinated, manipulative prosecution heightens, rather than diminishes, the concern that the government is forcing the individual to ‘run the gantlet’ more than once,” Reinhardt wrote. “We are not willing to whitewash the double jeopardy violation in this case by affording constitutional significance to the label of ‘single, coordinated prosecution,’ ”

The decision had an immediate impact.

In San Francisco, a federal judge dismissed 43 felony counts against an accused Oakland heroin smuggler, ruling that authorities had already punished him for any drug offenses by seizing his Alfa-Romeo and $4,900 in cash.

In Alaska, federal charges were also dropped against an Anchorage man accused of using his ties to the Cali Cartel to ship about 500 pounds of cocaine from Los Angeles and Houston to New Jersey. A judge ruled that the government had already penalized the man, Gerald Frank Plunk, when they seized his cash, firearms, gold, and a Rolex watch worth $1,500.

State courts in Washington have also dismissed drug charges because prosecutors had previously seized defendants’ assets, according to Troberman, who said two of his clients in separate cases benefited from the decision.

In some cases, courts have also ordered that assets be returned to convicted drug dealers who had been punished already by criminal prosecution.

One of those who benefited from the double jeopardy ruling is Darnell Garcia, a former agent of the Drug Enforcement Administration whose arrest triggered one of the largest scandals in recent law enforcement history.

Prosecutors alleged that Garcia and two of his colleagues at the DEA stole narcotics from suspects and from the drug agency’s vault, stashing away millions of dollars in Swiss bank accounts. Garcia was caught in 1989 in Luxembourg, where he had fled after he was indicted by a federal grand jury. He was eventually sentenced to 80 years in prison.

But Garcia, citing the 9th Circuit decision, challenged the seizure and sale of his posh estate in Rancho Palos Verdes. U. S. District Judge Manuel Real of Los Angeles agreed, and reversed the forfeiture. The judge’s decision has been placed on hold--pending the Supreme Court’s review of the case.

Word that some felons have been successful in challenging their convictions has caused a flurry of appeals.

One of those comes from Fowlie, who lost his Orange County ranch in an odd chain of events that started on a February morning in 1985, when one of Fowlie’s ranch foremen, high on drugs, began shooting a gun in the early morning darkness in Laguna Beach.

The commotion brought on police, who found $73,000 in cash and a 50-pound bale of marijuana in the Laguna home where the foreman was staying. The follow-up investigation led police to Fowlie’s remote ranch on a winding dirt road just off Ortega Highway near Ronald W. Caspers Wilderness Park.

Sheriff Brad Gates controlled the ranch for six years and promoted it as a site for a regional drug-enforcement training center. In 1989, President George Bush used it as a backdrop for a nationally televised anti-drug speech. The ranch was eventually sold to the Girl Scouts of America in 1994 for $2.38 million.

Now Fowlie is contending that the seizure of his Rancho Del Rio and his criminal conviction years later constitutes double jeopardy.

But Elana Shavit Artson, the assistant U. S. attorney in Santa Ana who is arguing the case against Fowlie, said the dope dealer cannot claim he was penalized twice, because he never contested the seizure of Rancho Del Rio in the first place.

Prosecutors say that even though they are winning nine out of 10 cases, appeals like Fowlie’s are keeping them busy.

Leslie Westphal, an assistant U.S. attorney who heads the asset forfeiture unit in Oregon, said her office has had to retry about 70% of their drug cases since the 9th Circuit’s decision.

“It’s eating up all our time,” Westphal said.

Times librarians Sheila A. Kern and Lois Hooker provided legal research for this article.