TSU v. Montgomery County

MOYLAN, J. If $71,777 in eminently forfeitable cash has been sitting, since April 20, 2006, in legal limbo in the vaults of the appellee, Montgomery County, the appellants, Jeff Lien Tsu and Yuan Cheng, have done the County yeoman service by ³⁵³ causing to be made consummate a forfeiture that had arguably been theretofore only inchoate. The $71,777 in cash is what the case law refers to as “derivative contraband.” In Director of Finance v. Cole, 296 Md. 607, 619 , 465 A.2d 450 (1983), the Court of Appeals explained the term: The items proceeded against in a forfeiture proceeding are characterized, at least for our purposes, as contraband. In this regard, there are two types of contraband: contraband per se (property which is inherently illegal to possess) and derivative contraband (property which is legal to possess except for the circumstances, which make it illegal). Contraband per se, of course, requires no proceeding for forfeiture.

Derivative contraband, on the other hand, does require some kind of showing that the property was used illegally. (Emphasis supplied). The cash in question qualifies as derivative contraband by virtue of Maryland Code, Criminal Procedure Article, § 13-102 (Money presumed to be contraband) (a), which provides in pertinent part: (a) In general.—Money is prima facie contraband if a law enforcement officer in the State seizes the money in connection with an arrest for: (2) unlawfully betting on a horse race, athletic event, lottery, or game.... (Emphasis supplied).

Immediately upon its seizure, the money vested in the Director of Finance of Montgomery County pursuant to subsection (b)(2), which provides in pertinent part: (b) Vesting of money.—.... (2) All rights in, title to, and interest in money seized under subsection (a) of this section shall immediately vest in.... ³⁵⁴ (i) the county ... if the money is seized by the police of the local government, including a sheriffs department that is the local law enforcement unit; (Emphasis supplied). The Antecedent Showing That the Cash “Was Used Illegally” At shortly before midnight on April 20, 2006, a Special Assignment Team of the Montgomery County Police Department, erroneously believing that it had chanced upon narcotics activity, stumbled upon a gambling operation instead. The explanation for such good fortune may well be the general truth that people sneaking about late at night, at the very least, arouse suspicion.

Three suspect automobiles were observed making furtive contact with each other on the parking lot of the White Flint Mall in Kensington, exchanging brief greetings and transferring small packages. At the center of the web was Song Hong, driving a black Nissan Maxima, also occupied by a female companion, Hyo Lee. Hong parked the car outside Dave and Buster’s Restaurant, near where the surveilling officers were positioned. Hong spoke briefly with someone on a cell phone.

Almost immediately, Yuan Cheng arrived in a 2003 Acura and parked abreast of Hong’s vehicle. Hong exited his own vehicle, walked to the passenger side of the Acura, and got in. As he was walking toward the Acura, he appeared to be concealing an object under his shirt. After several minutes, Hong got out of the Acura and returned to his own vehicle.

On the return trip, Hong did not appear to have anything in his hands or concealed under his shirt. The Acura then drove to a different parking spot and parked again. The police eyebrows were raised. Hong, who had initially been parked on the rear parking lot of the White Flint Mall, inexplicably left his parking place there and drove around to the front parking lot of the mall, where the police team described yet a second furtive hand-off.

Hong parked at a spot well removed from other parked vehicles. Shortly thereafter, a black Toyota pulled in alongside him. One of the officers observed Hong hand, from ³⁵⁵ driver’s window to driver’s window, a white bag to the driver of the Toyota, who was later identified as the appellant Tsu. Tsu also had as a passenger in his vehicle, Vivian Tran.

As soon as that baton had passed, the police pounced on both vehicles, sure that they had come upon the distribution of illicit drugs. Only then was it revealed that the alchemy of chance had turned suspected narcotics into gold. 1 As Sergeant Hill, a member of the team, approached Tsu’s Toyota, he was able to see in plain view that the recklessly open white bag on the floor contained substantial cash. Sergeant Hill obtained consent from both Tsu and Hong to search their respective vehicles. From the white bag on the floor of Tsu’s Toyota, the police seized $54,650.

Tsu told the police that the money represented his winnings from gambling on football. From Hong’s Nissan Maxima, the police recovered a notepad with notations indicative of bookmaking. Hong admitted that he was a bookmaker and that he accepted wagers on professional and collegiate sports events. A consent search of Hong’s person produced another $2,877.

Meanwhile, two other members of the police team moved in on Cheng’s Acura. A consent search of it produced a bag containing another $14,250. Cheng told the officer that he had won the money in a “Texas Hold-em game” in Washington, D.C., and that the winnings had just been delivered to him. Hong, Tsu, and Cheng were all taken by the police to the 2nd District Station to be interviewed by Detective Herbert of the Vice and Intelligence Unit.

Tsu gave the following written statement: I called Eric (Song) Hong earlier this evening to see if he had the money he owed me. He said he did so we agreed to meet at the Dave & Busters at the White Flint Mall. ³⁵⁶ He (Hong) owed me approx. $13,000.00 from betting on Football in 2005. I pulled into the parking lot of White Flint Mall at approx. 0030 hrs. I parked next to Hong and he handed me a paper bag with the money inside, we were still talking when you guys pulled up.

Q. How long have you been betting through Hong? A. About 1 year. Sometimes he bets through me and sometimes I bet through him. Depending on who can get the best “juice”.

(Emphasis supplied). In his written statement, Cheng made the following admissions: On 04/21/06 I met a guy at Dave & Buster’s parking lot. This subject gave me $14,000 in cash. I then left Dave & Buster’s sometime later on in the night and the police pulled me over....

I was ok with talking with the officers and having them search my vehicle. The other officer then found a bundle of cash. When asked where the money came from, I stated from playing Texas hold um playing in DC. The officer then stated it was gambling money and which I stated it was.

(Emphasis supplied). All of the monies taken from all three vehicles that night, totaling $71,777, were hand counted and packaged by Sergeant Hill and were logged in as evidence at the 2nd District Police Station. The Criminal Case On April 21, 2006, Hong was placed under formal arrest and was charged with a violation of Maryland Code (2002 Repl. Vol.), Criminal Law Article, § 12-102, “Betting, wagering, gambling, etc.” Tsu and Cheng were not charged and were released.

Hong was also served with and signed a Notice of Money Seizure form (Form MCP 559), reciting the lump sum of $71,777. On July 17, 2006, Hong entered a guilty plea in ³⁵⁷ the District Court to the gambling charge. At no time has he filed a claim for the return of the seized money. It would seem that for the two closely related exchanges of gambling proceeds on the night of April 20-21, 2006, the appellants Tsu and Cheng could have been charged with criminal violations of the gaming laws just as surely as was Hong.

Counsel for the appellants, however, at a hearing before Judge William J. Rowan, III, in the Circuit Court for Montgomery County on August 5, 2008, provided the explanation for the State’s charging strategy: [T]he back story is the State’s Attorney’s Office wanted to use these two as witnesses against Mr. Hong. They didn’t charge them. That strategy no longer had to be implemented once Hong entered a guilty plea on July 17, 2006. In any event, the guilty plea constituted a final disposition of the criminal case arising out of the events of April 20, 2006, on the parking lots of the White Flint Mall.

Section 13-101 (b) provides a definition of “Final disposition.” “Final disposition” includes an acquittal, dismissal, nolle prosequi, finding of guilty, probation before judgment, plea of guilty or of nolo contendere, marking the charge “stet” on the docket, and an order of an appellate court ending a criminal case. (Emphasis supplied). The cash that was seized by the police on April 20-21, moreover, particularly the $54,650 seized from Tsu and the $17,250 seized from Cheng, indisputably represented gambling proceeds that constituted the evidence in that criminal case. The Status of the Cash The issue in this case is whether a party bearing the obligation to alter the status quo with respect to the cash effectively did so.

If such party fails to do so, the status quo remains unaltered. It is important at the outset, therefore, to establish just what the status quo was with respect to the cash seized on the early morning hours of April 21, 2006. As of the ³⁵⁸ moment it was seized “in connection with an arrest for ... unlawfully betting,” the cash was prima facie contraband. § 13-102(a). “All rights in, title to, and interest in” the cash “immediately vest[ed]” in the Director of Finance of Montgomery County. § 13-102(b). Pursuant to § 13-103, the money was then photographed and recorded and deposited to the account of Montgomery County.

Pursuant to § 13-104, the Director of Finance was responsible for “aceount[ing] for and depositing] seized money in an interest-bearing bank account or investing] the seized money in accordance with Article 95 of the [Maryland] Code.” That was the status quo ante with respect to the funds that are the subject of this appeal, and nothing has effectively altered it. Unless and until that status quo was altered, Director of Finance v. Cole, 296 Md. at 623 , 465 A.2d 450 , leaves no doubt that the money lawfully belonged to Montgomery County. Because it is within the power of the legislature to determine when the transfer of rights to seized goods takes place, the Maryland Legislature has fixed the point at the moment the seizure occurs. At this time the money is prima facie contraband and belongs to the jurisdiction whose authorities consummate the seizure.

(Emphasis supplied). That status quo, once established, is not lightly, automatically, or inferentially changed. It enjoys a truly Newtonian staying power. Director of Finance v. Cole, 296 Md. at 631 , 465 A.2d 450 , made clear that even a nol pros of the gambling charge, resulting in a presumption that the money was not contraband, would not have altered that status quo.

Throughout the pendency of these proceedings the character and status of the money seized did not change one whit. Once an ultimate disposition of nol pros was reached there was prima facie evidence that the money was not contraband. Article 27, § (d)(2). However, all rights, title, and interest still had vested in the county and until a civil proceeding was held to determine, by a preponderance of ³⁵⁹ the evidence, whether the money had in fact been part of a gambling operation, all rights, title, and interest would remain in the county.

(Emphasis supplied). Even a failed attempt by the County to forfeit the money, moreover, ending in a demurrer because the County had not satisfied a condition precedent, failed to alter the status quo. Within ninety days of the State’s entry of nol pros Prince George’s County filed a petition for forfeiture of the funds seized. This petition was demurred to in a civil proceeding and the demurrer was properly sustained by the trial judge because there had been no conviction forming a basis for the State’s application.

Nonetheless, custody of the money was still vested in Prince George’s County. Id. (emphasis supplied). A Hole in the Statutory Bucket In terms of who or what may alter the status quo, the next two sections of the subtitle to be examined prescribe which parties may bring which formal actions with respect to the disposition of the seized funds.

Section 13-105 points toward the forfeiture of the seized money by the governmental unit. Section 13-106, in turn, points in the opposite direction toward the return of the seized money to the suspect. The problem is (and it is the problem which permeates this case) that these two opposing procedures by no means exhaust the possibilities of the case. Title 13, Subtitle 1 is not a tightly drawn statute.

There is a gaping hole in the bucket, and the statute does not presume to spell out, except by possible inference, what should happen if nobody performs as directed and if the money, therefore, threatens to remain in a legal limbo, neither forfeited nor returned. Section 13-105(a) provides that an “application for the forfeiture of contraband shall be by complaint.” Subsection (b) follows as the action clause: If a conviction, including a plea of guilty or plea of nolo contendere, is entered against a person arrested in connec ³⁶⁰ tion with the seizure of the money, the financial authority shall apply to the District Court or circuit court for an order forfeiting the money to the jurisdiction that the financial authority serves. (Emphasis supplied). Even a successful forfeiture proceeding, however, would not actually alter the status quo.

It would simply “clinch” it. As Judge Roszel Thomsen characterized the phenomenon in United States v. Mayor and City Council of Baltimore, 416 F.Supp. 380, 387 (D.Md.1976), “[T]he forfeiture proceeding merely perfects the prior passage of title.” Director of Finance v. Cole, 296 Md. at 619 , 465 A.2d 450 , uses the same language of “perfecting” the financial authority’s already vested interest in the seized money. [T]he forfeiture is a civil proceeding completely separate and apart from the criminal proceeding. The result of the civil proceedings either perfects the government’s interest in the goods or results in a determination that they are not contraband and should be returned. (Emphasis supplied).

Section 13-106, by contrast, points in the opposite direction and provides as follows: (a) In general—Seized money may be returned only as provided in this section. (b) Right to file.—Subject to subsection (c) of this section, on a final disposition a claimant may ask the appropriate court for a determination that the money is the property of the claimant and an order that the money be returned. (c) Deadlines for filing complaint.—A claimant under subsection (b) of this section must: (1) apply within 1 year after the judgment or order was entered or the final disposition was taken; and (2) give written notice to the financial authority at least 10 days before filing the complaint. (Emphasis supplied).

Section 13-107 then simply supplements both action sections and provides that at a hearing to resolve entitlement to ³⁶¹ the seized money, either on a complaint for forfeiture under § 13-105 or on a complaint for the return of money under § 13-106, certain evidentiary presumptions will apply. (a) Prima facie evidence that money is not contra band.—In a proceeding on a complaint for a return of money, an acquittal, dismissal, or nolle prosequi with respect to the gambling charges or indictments involved in the seizure of the money is prima facie evidence that the money is not contraband. (b) Prima facie evidence that money is contraband.—A conviction, plea of guilty or of nolo contendere, or probation under § 6-220 of this article is prima facie evidence that the money is contraband. (c) Marking of “stet —Marking a charge “stet” on the docket does not create any presumption as to whether money is contraband.

(Emphasis supplied). Who Loses The Nothing-To-Nothing Tie? On its surface, Title 13, Subtitle 1 creates two opposite-pointing burdens of going forward. It does not clearly spell out, however, the respective risks of non-production.

If the County (or the State) enjoys the advantageous launching pad of a conviction on the gambling charge (or its functional equivalent), the Subtitle seems to contemplate that the County should go forward, pursuant to § 13-105, and file a complaint for the forfeiture of the money. When it does so, however, the County assumes the procedural obligation of properly serving process and of giving proper notice pursuant to § 13-105(a)(2): The complaint shall be served in accordance with Maryland Rule 2-121 or 3-121(a), or if service of process is unable to be made and the summons is returned non est, substitute service may be made in accordance with Maryland Rule 2-122 or 3—121(b) or (c). The County (or State) also assumes the obligation of proceeding within prescribed time limits pursuant to § 13-105(b)(2): ³⁶² The financial authority shall apply for the order within 90 days after entry of the conviction or plea, unless the case is appealed. If, on the other hand, the claimant, even without an advantageous launching pad, wants the benefit of a formal courtroom determination, the claimant may file for the return of the money pursuant to § 13-106.

When the claimant does so, however, the claimant assumes the procedural obligation of filing the claim within prescribed time limits and of giving appropriate notice pursuant to § 13-106(c): Deadlines for filing complaint.—A claimant under subsection (b) of this section must: (1) apply within 1 year after the judgment or order was entered or the final disposition was taken; and (2) gives written notice to the financial authority at least 10 days before filing the complaint. The claimant also assumes the critical burden of proving that the seized money was NOT contraband. The hole in the bucket is that neither party seems to have had expressly allocated to it the ultimate risk of non-compliance. If both parties do nothing, who gets the money?

If both parties try but perform improperly, who gets the money? If both parties end up in default, which is the fatal default that will “trump” the more venial default? An Inferential Forfeiture Proceeding Although the record in this case is frustratingly incomplete in this regard, we infer that Montgomery County timely filed a complaint for forfeiture pursuant to § 13-105 and that a District Court or circuit court judge properly ordered such forfeiture. There is regretfully not in the record, however, a copy of any such complaint, a record of any such hearing, an indication of when such a hearing took place before what judge in what court, or a copy of any forfeiture order.

What we have to fill that gap, however, is the representation made by the appellants in their Plaintiffs’ Opposition to Defendants’ ³⁶³ Motion for Summary Judgment and Memorandum of Law In Support Thereof filed on June 16, 2008. Song Hong’s charges (M.C. District Court case number 0D00173558) were resolved on July 17, 2006 by way of a guilty plea. The monies seized from Plaintiff Tsu and Plaintiff Cheng was forfeited to Montgomery County, specifically the Treasury Division of the Department of Finance. (Emphasis supplied).

Indeed, in their appellate brief the appellants again acknowledge that a forfeiture, even if a proeedurally flawed one, formally took place. Hong’s charges (Montgomery County District Court case number 0D00173558) were resolved on July 17, 2006 by way of a guilty plea. Hong, who had no claim of right to the seized money, did not file a claim for return of the seized money. The monies seized from Tsu and Cheng was forfeited to the County, specifically the Treasury Division of the Montgomery County Department of Finance.

(Emphasis supplied). Our inference that there was, indeed, a § 13-105 forfeiture we find weightier than the possible counter-inference based on an apparent counter-concession made by Montgomery County in its argument before Judge Rowan on August 5, 2008. Mr. Hong was convicted as a result of this incident. The County’s position is that as a result of his conviction, monies are contraband.

Mr. Hong never requested the money back in the first place. The County admits that it never filed a petition for forfeiture, which it could have done, but it was not required to do so under the statute. (Emphasis supplied). That statement, however, could be read as an acknowledgment that the County never filed petitions for forfeiture specifically against the appellants Tsu and Cheng.

If all of this really mattered, we would be in the unusual position of trying to decide which party before us had more effectively conceded away its case. Fortunately, however, it ³⁶⁴ does not really matter. The appellants’ sole contention is not that a formal forfeiture never took place but, rather, that whatever forfeiture took place, formally or informally, was done without proper notice having been given to Tsu and Cheng. We are dealing, therefore, only with the lack of notice issue.

Appellants’ Complaint The appellants filed their Complaint for Return of Money pursuant to § 13-106 on February 13, 2008. There was no allegation that a formal forfeiture had never taken place. The heart of the appellants’ complaint was: Per §§ 13-108(b), “For the seized money to be forfeited, timely notice must be given by certified mail or other appropriate means to any known claimants, at their last known addresses, of the requirements of this section for making claim for the return of seized money.” (emphasis added) In this case, no notice was provided to Plaintiffs prior to or subsequent to the forfeiture of their money. (Emphasis in original).

Summary Judgment The County filed its Amended Answer to the complaint on April 3, 2008. On June 2, 2008, Montgomery County filed for summary judgment. It also filed on that date a Memorandum of Law in support of the motion. On June 16, 2008, the appellants filed their own Motion for Summary Judgment and Memorandum of Law in Support Thereof.

Both motions agreed that there was no genuine dispute of material fact and that the motions merely required a ruling on the law. The case was ripe for summary judgment. A hearing on the cross motions for summary judgment was conducted before Judge Rowan on August 5, 2008. At the conclusion of the hearing, Judge Rowan granted summary judgment in favor of Montgomery County and, accordingly, denied summary judgment in favor of the appellants.

Judge Rowan voiced some of his thinking: ³⁶⁵ I’m going to bite the bullet, and the decision that the Court is going to make, although I must admit it’s close in my mind, because of the Vieira case where you have cited to me that they did not follow the statutory remedy and the Court seemed to indicate in that case that albeit that it was contraband, it went back to the claimants. But the Court is going to adopt the argument of Mr. Nicholas [for the County] that even if the complainants had timely filed for the money, they would not have ever gotten it back had they received notice, et cetera, because it would still have