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United States of America v. Maria Ferro

June 11, 2012

UNITED STATES OF AMERICA, PLAINTIFF-APPELLANT,
v.
MARIA FERRO, CLAIMANT-APPELLEE, AND ROBERT FERRO, CLAIMANT, AND 1,679 FIREARMS; 87,983 ROUNDS OF AMMUNITION; 3 AIRBURST PROJECTILES; ASSORTED FUSES,
DEFENDANTS. UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
MARIA FERRO, CLAIMANT-APPELLANT, AND
ROBERT FERRO, CLAIMANT, AND 1,679 FIREARMS; 87,983 ROUNDS OF AMMUNITION; 3 AIRBURST PROJECTILES; ASSORTED FUSES, DEFENDANTS.



Appeal from the United States District Court for the Central District of California Patrick J. Walsh, Magistrate Judge, Presiding D.C. No. 2:06-cv-05014-PJW

The opinion of the court was delivered by: Bea, Circuit Judge:

FOR PUBLICATION

OPINION

D.C. No. 2:06-cv-05014-PJW

Argued and Submitted February 17, 2012-Pasadena, California

Before: Harry Pregerson, Michael Daly Hawkins, and Carlos T. Bea, Circuit Judges.

Opinion by Judge Bea

OPINION

These cross-appeals arise from what we understand to be the largest civil in rem forfeiture proceeding against firearms unlawfully possessed by a convicted felon in American history. In dispute is a forfeiture order against hundreds of collectable guns valued at $2.55 million. After a bench trial, the district court ruled the entire collection forfeitable, but it later ordered that the government return 10% of the value of the collection, $255,000, to Claimant-Appellant Maria Ferro on the ground that a forfeiture so large violated the Eighth Amendment's prohibition on the imposition of an excessive fine. The government and the claimant both appealed. The government wants to pay back nothing. Maria Ferro wants the government to pay back much more.

This opinion addresses several issues. First, we hold that Maria Ferro is not entitled to the protections of the so-called "innocent owner" defense, and the district court was therefore correct to hold that the entire collection was subject to forfeiture. Second, we hold that, following a comprehensive revision to the forfeiture statutes in 2000, forfeitures of instrumentalities of crimes are subject to excessiveness analy- sis under the Eighth Amendment's Excessive Fines Clause. Third, we hold that excessiveness review must consider the individualized culpability of the property's owner and, when analyzing the offending conduct, it must focus only on the conduct that actually gave rise to the forfeiture of the property at issue, not other criminal conduct by the same person. Because the district court erred on this third point, we remand for the district court to undertake once again the excessiveness inquiry.*fn1

I.

The facts of this case are unusual.

A.

The sole valid claimant in this case, Maria Ferro, married Robert Ferro in 1979. In 1983, the Ferros moved to their current home at 2045 Tapia Way in Upland, California. After their marriage, Robert began to collect firearms, and Robert obtained federal firearms licenses to do so. All 1,679 firearms eventually seized in 2006 were obtained by Robert between 1983 and May 1992, while he was married to Maria Ferro and while the couple resided in California.*fn2

In 1991, Robert was arrested by local police in California for possessing explosives. He was charged on November 16, 1991 with California state crimes that prohibit the possession of explosives and explosive ingredients. On May 1, 1992, before his state court trial, Robert conveyed in writing "all of his property and possessions" to his wife Maria. The district court found this conveyance included the transfer of ownership of all of his firearms, and, in a separate filing, Robert himself expressly declared this to be true.

Robert was convicted of the crimes related to possession of explosives in that state court action and sentenced to two years in prison. Sometime in 1992, the Bureau of Alcohol, Tobacco, and Firearms (ATF) denied an application for renewal of Robert's firearms license which he had filed before his conviction. In a letter addressed to Robert, an ATF official explained that Robert "could continue his licensed operations under his now expired firearms licenses until 30 days after his conviction became final." The official explained in the letter that Robert's "conviction would be 'final' under the regulations when all appeals were exhausted." However, Robert Ferro lied to his wife by telling her that he legally could still possess firearms even after his conviction became final.

Robert's conviction became final in 1994. Robert then went to prison in June 1995 and was paroled in September 1996.

A decade later, in April, 2006, ATF agents searched the Ferros' home and initially seized over 700 firearms. ATF officials executed a second, more thorough search and found additional firearms as well as "87,983 rounds of ammunition, 35 machineguns, 130 silencers, three short-barreled rifles, three destructive devices, a live hand grenade, a military rocket launcher tube, five bullet-proof vests, grenade fuses, and grenade hulls." These additional firearms were hidden in the walls and floors of the Ferros' home. The ATF agents also discovered hidden rooms containing weapons, as well as an underground bunker that housed a shooting range.*fn3 Maria "did not know about the vast majority ...


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