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United States v. Sperow

United States District Court, D. Idaho

March 20, 2017

UNITED STATES OF AMERICA, Plaintiff,
v.
GREGORY FRANK SPEROW, Defendant.

          MEMORANDUM DECISION AND ORDER

          B. Lynn Winmill Chief Judge.

         INTRODUCTION

         Pending before the Court is Gregory Frank Sperow's (“Sperow”) Motion for Return of Property Pursuant to Rule 41(g) (Dkt. 1207). Having reviewed the Motion together with the Government's Response (Dkt. 1210), Sperow's Reply (Dkt. 1219), the parties' respective supporting affidavits, the criminal record, and the record in the related 28 U.S.C. § 2255 proceeding in Case No. 1:12-cv-00158-BLW, the Court enters the following Order granting the Motion in part and denying in part.

         BACKGROUND

         1. Factual

         On June 19, 2006, Sperow was indicted by a federal grand jury in the District of Idaho along with eleven other individuals and charged with drug trafficking, money laundering, and related forfeitures. Indictment, Crim. Dkt. 1. Sperow and five others were also charged with operating a continuing criminal enterprise (primarily involving marijuana) from 1975 through June 16, 2006, in over twenty states. Id. The 196-page indictment included 98 predicate acts in connection with the criminal enterprise count. Id.

         During his approximately thirty years of criminal activity, Sperow was convicted of drug trafficking charges in the districts of New Mexico, Southern California, and Oregon and sentenced to terms of incarceration in each case. Prior to the Oregon conviction, he had been a fugitive for eight years living under an assumed identity. His drug trafficking and money laundering activities continued during his fugitive years. He was arrested on May 26, 2004, in Orinda, California, on a District of Oregon warrant.

         2. Procedural

         After many unsuccessful pre-trial challenges, Sperow ultimately pleaded guilty to certain charges in the then pending Second Superseding Indictment in return for several concessions by the Government. More specifically, he pleaded guilty pursuant to a Federal Rule of Criminal Procedure 11(c)(1)(C) binding Plea Agreement to conspiracy to distribute/possess with intent to distribute controlled substances in violation of 21 U.S.C. §§ 841(a)(1), 841(b)(1)(A), and 846 (Count Two); conspiracy to launder money in violation of 18 U.S.C. § 1956(h) (Count Three); drug forfeiture pursuant to 21 U.S.C. § 853(a)(1) and (2) (Count Seven); and money-laundering forfeiture pursuant to 18 U.S.C. § 982(a)(1) (Count Eight). Amended Plea Agreement, Crim. Dkt. 666.[1] Counts Seven and Eight sought forfeiture of cash proceeds of $16, 000, 000 and the property described in Count Six which included thirteen parcels of real property, thirteen bank accounts, six conveyances including motor vehicles and aircraft, currency, computer and hard drive, and the property and proceeds of ten businesses.

         On July 1, 2009, the Court imposed a sentence of 181 months on each of Counts Two and Three to run concurrently. Judgment, Dkt. 883. His conviction and sentence were upheld on appeal. USCA Mem. Dec., Dkt. 1130. On March 30, 2015, the Court dismissed Sperow's timely filed § 2255 Motion on the merits and declined to issue a certificate of appealability. Mem. Dec. and Order, Case No. 1:12-cv-00158-BLW at Dkt. 61. On July 9, 2015, the Ninth Circuit denied Sperow's request for a certificate of appealability. USCA Order, Id. at Dkt. 65. On September 18, 2015, the Ninth Circuit denied his motion for reconsideration en banc. Id. at Dkt. 66. Finally, on March 21, 2016, the United States Supreme Court denied Sperow's petition for a writ of certiorari. Ltr. from Sup. Ct., Id. at Dkt. 68.

         At the time Sperow filed the pending Rule 41(g) Motion and the Government filed its Response, the § 2255 proceeding was still pending. Subsequently, the Supreme Court denied his petition for a writ of certiorari, and Sperow's conviction became final.

         3. Oregon Motion

         As more fully explained in his Motion, Sperow had first sought in the District of Oregon to have property removed from his apartment, truck, and person returned to him. Motion at 2-3. He did so by seeking to enforce a general order issued by that court regarding the return of his property. The district court found that the government had complied with the general order “to the extent reasonably possible” or, alternatively, that the order was moot. Sperow appealed. On June 25, 2014, the Ninth Circuit issued a memorandum decision affirming the district court. The court found that “his property was transferred to Idaho for use in his criminal prosecution there or returned to federal officials in California” where the property had been seized. United States v. Sperow, 581 Fed.Appx. 641, 642 (9th Cir. 2014). The court concluded, “Our disposition is without prejudice to Sperow filing a new request for return of his otherwise non-forfeited, non-contraband property in his criminal case in Idaho or any other appropriate venue.” Id.

         4. Idaho Motion

         Sperow states that as of the filing of his pending Rule 41(g) Motion, he had never been provided a complete inventory of his seized non-contraband, non-forfeited property being held by the Government and has not been advised where it is being stored. Motion at 5. He then provides his own inventory of items seized in California subsequent to his arrest. Id. at 6-8. The list is extensive and will be addressed more specifically below as Sperow Inventory, paragraphs 1-22, Id. However, generally speaking, the property includes (1) contents contained in the cab of his Ford F-250 truck or in the cross-cab toolbox at the time of his arrest and the seizure of his truck; (2) contents seized from his apartment at the time of his arrest; (3) papers and business records seized in Aptos, California; (4) contents seized from Maxair Aviation; (5) contents contained in a seized Cessna U206; and (6) contents contained in a seized Cessna 182.

         Sperow claims that the Government has not followed proper procedure or protocol with respect to the seized items, and they have not been declared contraband. Motion at 9. In his supporting Declaration, Sperow details his observations of what was seized at the time of his arrest and contends that he was never provided with a copy of a search warrant for the search of his truck. Sperow Declaration, Dkt. 1207-1. He alleges that he was advised by Alameda County Jail personnel that his truck had been returned absent personal belongings and tools. He then provides a detailed inventory of what he claims was in the truck and cab. He follows with a detailed inventory of the contents of his aircraft hangars, aircraft, apartment, and his parents' residence.

         In its Response, the Government contends that of the various categories of items sought, only one group (Sperow Inventory, paragraph 1) can be returned; namely, the Olympus SLR camera, black Tamrac camera bag, attached 35-180 mm zoom lens, and unattached super wide angle Macro lens. Relying on the Affidavit of Gregory E. Gleason, the Government further contends that it cannot release the other items for various reasons including that they are not within the custody of the United States in the District of Idaho, they must be retained as evidence pending conclusion of Sperow's challenges to his convictions and sentence, or he has no standing to recover certain items. With regard to the return of cash, coins, or other items of value, the Government contends that these items were either returned “early on, ” forfeited, or never seized, and in any event would have been sought to satisfy the $6 and $5 million forfeiture money judgments listed in his Preliminary Order of Forfeiture (Dkt. 872) or as substitute assets if not directly forfeitable.

         The Government noted in its Response that despite agreeing in the Plea Agreement to forfeit properties and to assist in the recovery of assets, Sperow has “continuously fought enforcement of the forfeitures he agreed to.” Response at 4.

         Finally, in his Reply, Sperow again requests a complete inventory of property seized in connection with the Oregon or Idaho cases “and any cases that were filed in the Northern, Central or Southern Districts of California where property was taken.” Reply at 1. He challenges the Gleason Affidavit on the grounds that it is “unsigned” and lacking in specificity as to evidentiary value and renews his request for an inventory and a chain of custody log. Id. at 2-3. He alleges that the seizure of property from his truck, hangars, and aircraft was illegal. Id. at 5. And he submits the Affidavit of Bruce Allen Borjesson in support of his claim regarding the “missing tools” from the cross-cab toolbox that conflicts with the Gleason Affidavit which, he argues, entitles him to an evidentiary hearing. Id. Sperow concludes by requesting the Gleason Affidavit to be stricken as an unsigned affidavit. Id. at 7.

         STANDARD OF LAW

         Since 1944, Rule 41 of the Federal Rules of Criminal Procedure has provided an avenue for individuals seeking the return of seized property. See 3A Charles Alan Wright, et al., FEDERAL PRACTICE AND PROCEDURE: CRIMINAL § 690 (4th ed. 2016). Rule 41 addressed motions to return property in subdivision (e) until a 2002 revision redesignated that provision as subdivision (g). Id. Case law interpreting former Rule 41(e) is generally applicable to the current Rule 41(g). Id. See also De Almeida v. United States, 459 F.3d 377, 380 n.2 (2d Cir. 2006) (noting that redesignating the provision from (e) to (g) did not involve substantive any change).

         As it now reads, Rule 41(g) provides that A[a] person aggrieved by an unlawful search and seizure of property or by deprivation of property may move for the property's return.” Fed. R. Crim. P. 41(g). The motion is to be filed in the district court where the property was seized, and “the court must receive evidence on any factual issue necessary to decide the motion.” Id. The rule provides for return of property in possession of the government upon a proper showing, but it does not allow for damages for property no longer in its possession. See Ordonez v. United States, 680 F.3d 1135, 1138-40 (9th Cir. 2012) (joining eight other circuits holding that sovereign immunity bars an award of damages where the property cannot be returned).

         Where there are no pending criminal proceedings at the time a motion is filed under Rule 41(g), the motion is treated as a civil complaint governed by the Federal Rules of Civil Procedure. United States v. Ibrahim, 522 F.3d 1003, 1007 (9th Cir. 2008) (citing United States v. Ritchie, 342 F.3d 903, 906-07 (9th Cir. 2003)). If a court cannot decide the matter on the pleadings, then it should first convert the government's opposition into a summary judgment, then determine whether the government had met the Rule 56(c) standard, and, if not, then “go forward with additional proceedings consistent with the Federal Rules of Civil Procedure.” Id. at 1008 (citing Taylor v. United States, 484 F.3d 385, 387-88; 389-990) (5th Cir. 2007)). “In ruling on the [Rule 41(e)] motion, the court must take into account all equitable considerations.” United States v. Martinson, 809 F.2d 1364, 1366-67 (9th Cir. 1987) (citations omitted). When a trial is complete, A[t]he person from whom the property is seized is presumed to have a right to its return, and the government has the burden of demonstrating that it has a legitimate reason to retain the property.'" Id. at 1367. See also United States v. Kriesel, 720 F.3d 1137, 1144 (9th Cir. 2013) (A. . . Rule 41(g) motion should presumptively be granted if the government 'no longer needs the property for evidence.'") (citation omitted). “A district court has both the jurisdiction and the duty to return the contested property >once the government's need for it has ended.'" Martinson, at 1370 (citations omitted). Although the presumption is in a defendant's favor after a criminal proceeding is over, the government can rebut that presumption by showing that it has a “legitimate reason” for retaining the property and that retention of the property is reasonable taking into consideration all of the circumstances. United States v. Gladding, 775 F.3d 1149, 1152 (9th Cir. 2014) (citations omitted). The government easily meets its burden by demonstrating that the property sought to be returned is subject to forfeiture. Id. (citing Martinson, 809 F.2d at 1369; United States v. Fitzen, 80 F.3d 387, 389 (9th Cir. 1996)).

         DISCUSSION

         Sperow seeks only the return of “the non-forfeited and non-contraband property” being held by the Government in connection with the Oregon case and the Idaho case. Motion at 1. The Court notes at the outset that any challenge to the legality of the various searches and seizures will not be considered. Rule 41(g) is not a vehicle for such challenges, and a plea of guilty waives any pre-plea constitutional issues. See Martinson, 809 F.2d at 1369 (the legality of the search is no longer an issue). See also Stevens v. United States, 530 F.3d 502, 506 (7th Cir. 2008) (defendant may not use Rule 41(g) to challenge his conviction); United States v. Penry, 2013 WL 2378577 at *4 (10th Cir. 2013) (finding no legal precedent stating that a defendant can collaterally challenge the circumstances surrounding a search and seizure through a post-conviction Rule 41(g) motion).

         As mentioned above, the Government submitted its Response while the § 2255 Motion was still pending on appeal at the Ninth Circuit. Although it is questionable whether the pendency of a § 2255 motion meets the criteria that a criminal proceeding is “still pending, ” the Supreme Court's denial of Sperow's petition for a writ of certiorari leaves no doubt that his conviction is now final and his case is not pending. Thus, Sperow is entitled to the return of any property being held solely to prove the drug or money laundering. On the other hand, it is clear that property subject to forfeiture or needed for forfeiture related issues is not to be returned. Likewise, the District of Idaho cannot be required to return any property not in its possession or control.

         Referring to Sperow's Inventory, paragraphs 2, 3, 6, 8, 9, 10, and 12, the Government argues that “[m]any of these categories include direct evidence of Sperow's use of third-party nominees to conceal his criminal drug and money-laundering proceeds, and to put his property out of reach of the federal government, including the use of his construction business, and evidence of his contacts with others during the time of his hiding out from law enforcement.” Response at 5-6.

         The Government's Response relies primarily on the Declaration of Gregory E. Gleason, the primary case agent in the Idaho investigation that culminated in the indictment of Sperow and his co-Defendants in the District of Idaho. Gleason Decl. ¶ 4 (Dkt. 1210-1). Agent Gleason was extensively involved in the investigation of the conspiracy and throughout trial and post-trial proceedings as well as the numerous forfeiture actions to date initially as a Special Agent of the IRS-CI and subsequently as a government contractor. See generally Gleason Decl. ¶¶ 5-10. He reviewed all of the seized evidence currently in the custody of either the Criminal Division of the IRS or the USAO for the District of Idaho. Id. at ¶ 11.

         It is important to note that none of the property Sperow seeks was seized in Idaho or under the control of Idaho agents. Although challenged by Sperow, the Court also notes that the Gleason Declaration is, in fact, signed. See District of Idaho Civil Rule 5.1(j); see also Electronic Case Filing Procedures 2.F (“ . . . an electronic document is deemed signed when filed by an attorney, trustee, judicial officer, deputy clerk or other person authorized by the ...


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