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United States v. Parcel of Real Property Known

argued: June 28, 1989.


Appeal from the United States District Court, Western District of Pennsylvania, D.C. Civil No. 88-00105 E.

Mansmann, Scirica and Seitz, Circuit Judges.

Author: Mansmann


MANSMANN, Circuit Judge.

In this appeal from an order of forfeiture, the wife of a defendant convicted of several violations of narcotics statutes presents us with the question of whether the wife's knowledge of her husband's violations alone is sufficient to result in forfeiture of the marital property held by tenants by the entireties used to further the illegal transactions pursuant to § 306(a) of the Comprehensive Crime Control Act of 1984, Pub.L. 98-473, codified at 21 U.S.C.A. § 881(a)(7) (West 1989 Supp.), or whether the defense of lack of consent is still available. In addition, we are faced with the challenge to the district court's admission of hearsay evidence used to rebut the wife's innocent owner defense.

We conclude that the forfeiture statute provides that an owner or an individual with an interest in real property can avoid forfeiture by proving by a preponderance of the evidence that the illegal act or omission was committed or omitted either without his knowledge or without his consent. Further, we conclude that the district court erred by considering the hearsay evidence introduced by the government for any purpose other than to determine probable cause. Consequently, we will vacate the order of forfeiture entered by the district court and remand for further proceedings consistent with this opinion.


In April 1988, the government filed civil forfeiture proceedings pursuant to § 306(a) of the Comprehensive Crime Control Act of 1984, 21 U.S.C.A. § 881(a)(7) (West 1989 Supp.), seeking to have two parcels of real property seized and forfeited. The property consisted of two parcels; one located at 6109 Grubb Road, Erie County, the other located at 708-710 West Ninth Street, Erie, Pennsylvania. The Grubb Road parcel was the residence of the appellant Jane DiLoreto, her husband Richard and their five children. Prior to the purchase of the Grubb Road property, the DiLoretos lived at the West Ninth Street address, which was subsequently held as rental property.

The forfeiture proceedings came after an investigation by the Federal Bureau of Investigation, Drug Enforcement Administration, and Pennsylvania State Police disclosed that Richard DiLoreto used both parcels to further the trafficking of illegal narcotics. The proceedings were stayed pending outcome of the trial. Richard DiLoreto was convicted in a jury trial in the Western District Court of Pennsylvania of conspiring to possess with intent to distribute and distributing cocaine (21 U.S.C.A. § 846), use of the telephone to facilitate the conspiracy (21 U.S.C.A. § 843(b)), and failing to report income received from the sale of cocaine (26 U.S.C.A. § 6723).

Thereafter, the stay was lifted and the forfeiture proceedings commenced. The DiLoretos conceded that there was probable cause to believe that the premises had been used to commit or facilitate the commission of narcotics violations. Jane DiLoreto contended, however, that she either did not have knowledge of the use or did not consent to the use of the property for facilitating narcotic violations.

At the forfeiture hearings, the government produced deposition testimony of several witnesses which was read into the record by the government's witness, Agent Kelly of the FBI. DiLoreto objected to the use of the deposition testimony because it was impermissible hearsay with regard to the issue of the innocent owner defense. The government stated the evidence was being introduced for the purpose of establishing probable cause for forfeiture pursuant to § 881 (a)(7).

The district court determined, based on all the evidence before it, that Jane DiLoreto had failed to carry her burden of showing innocent ownership by a preponderance of the evidence.*fn1 Consequently, the district court entered an order forfeiting the interest of Jane and Richard DiLoreto in the two parcels of property. In so doing, the district court also rejected the DiLoretos' arguments that: 1) 21 U.S.C.A. § 881 was unconstitutional because it was essentially criminal in nature and violated the due process clause of the fifth amendment by putting the burden of proof on them; 2) § 881 violated the bill of attainder clause of the Constitution and the eighth amendment prohibition against cruel and unusual punishment; and, 3) that the forfeiture amounted to double jeopardy because it imposed an additional punishment against Richard for his narcotics violations conviction. Jane DiLoreto appeals from the district court's order of forfeiture.

Because review of the district court's order involves the interpretation of legal principles and statutory provisions, our review is plenary. Thus, we reverse only if we determine that the district court committed an error of law. As to the district court's decision concerning the admissibility of evidence, we review for an abuse of discretion.


A) Hearsay Evidence

In a forfeiture proceeding, the government must first meet its burden of showing probable cause for the seizure of the property. United States v. 55,518.05 In U.S. Currency, 728 F.2d 192 (3d Cir. 1984). Probable cause is defined as a reasonable ground for belief in guilt. Ted's Motors v. United States, 217 F.2d 777 (8th Cir. 1954). "The determination of probable cause in a forfeiture proceeding simply involves the question whether the information relied on by the government is adequate and sufficiently reliable to warrant the belief by a reasonable person that" the property was used to further the trafficking of illegal narcotics. United States v. One 56-Foot Motor Yacht Named Tahuna, 702 F.2d 1276, 1282 (9th Cir. 1983). Probable cause can be established by hearsay. United States v. A Single Family Residence, 803 F.2d 625 (11th Cir. 1986), and United States v. One 56-Foot Yacht Named Tahuna, 702 F.2d at 1283. Consequently, the government introduced the deposition ...

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