Appeals court reinstates claim for cash seized by police

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A federal appeals court has reinstated a claim for more than $8,000 that was seized by law enforcement officials in a drug case where the defendant was ultimately acquitted.

Police officers seized $8,040 when they searched the West Main Street home of Cristal Starling as part of a drug trafficking investigation into Starling’s then-boyfriend,

The boyfriend, identified in court papers as K.B., was ultimately acquitted of all charges.

Police gave the money to the U.S. Drug Enforcement Administration, which started an administrative forfeiture procedure to claim the funds as proceeds from drug sales.

Acting pro se, Starling filed a claim for the money, which forced the government to terminate the administrative process and open a judicial forfeiture proceeding in the U.S. District Court for the Western District of New York.

Starling failed to meet the deadline to challenge the seizure in court and a default judgment was issued. Starling then sent several letters to the District Court and the U.S. Attorney’s Office to file a late claim to the money.

U.S. District Court Judge Charles J. Siragusa ruled that she had not shown “excusable neglect,” denied her request for an extension of time to file a claim and entered a final default judgment for the money.

The ruling was appealed and, in a decision released Aug. 4, the U.S. Court of Appeals for the Second Circuit ruled that Siragusa “erred in granting default judgment to the government.”

“Starling was never charged with a crime, let alone convicted. She should have the opportunity to show that she was an innocent owner,” Judge Dennis Jacobs wrote.

The Second Circuit sent the case back to the District Court.

Government officials posted notice of the forfeiture proceeding on its website and sent a notice in the mail to Starling. She claims she missed the notice because she was out of town.

In the appeal, Starling’s attorney argued that Siragusa should not have used the strict “excusable neglect” standard. He should have used the more permissive “good cause” standard.

“The district court read Starling’s pro se letters too narrowly as a motion to file an untimely claim, ignoring Starling’s request to lift the entry of default. Viewed properly as a motion seeking both forms of relief, we hold that the good cause standard applies and is satisfied,” Jacobs wrote.

Government officials offered to settle the claim by splitting the funds with Starling. She rejected the offer and decided to move forward with the court proceedings to recover all the money.

Government lawyers argued that she missed the deadline to claim the funds. Starling responded that her claim should be allowed because she had challenged the administrative proceeding and followed the advice of the district attorney presiding over the case.

The government submitted affidavits from the two assistant district attorneys who handled K.B.’s prosecution. One wrote that he never communicated with Starling. The other one wrote that she did not recall ever communicating with Starling.

Starling provided “a description and documents evidencing two conversations she allegedly had with (the second prosecutor) concerning cars that were also seized in the search, but ultimately returned to Starling,” Jacobs wrote.

“Applying the good cause standard, we conclude that the district court should have lifted the entry of default and permitted Starling to file her claim to the assets,” he wrote.

“While excusable neglect penalizes negligent parties for failing to prosecute their cases, the good cause standard attaches consequences only to bad faith or tactical violations of court orders,” according to the decision.

“The good cause factors overwhelmingly favor Starling … The government does not suggest Starling was acting in bad faith; at worst, she was negligent in prosecuting her claim, having relied on advice from a state prosecutor… that she could not make a claim until K.B. was acquitted,” Jacobs wrote.

“The government has made no effort to show its interests would be harmed by having to defend a forfeiture suit against a claimant it knew of from the beginning,” he wrote.

“Because each factor weighs in Starling’s favor, we hold that she has demonstrated the good cause necessary to lift entry of default and file a belated claim to the defendant assets,” Jacobs wrote.

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