Federal Court Upholds The Right To Carry Cash

The federal government can’t use “circumstantial evidence” to permanently confiscate nearly $70,000 in cash, a federal appeals court ruled on Wednesday. “While it may be dubious to drive around with a large amount of cash in one’s car,” Judge Julius Richardson wrote for the Fourth Circuit U.S. Court of Appeals, “it does not create an inescapable inference of criminal activity. Not using a bank does not necessarily make one a criminal.”

After Dereck McClellan passed out in his car at a South Carolina gas station in January 2019, police searched the vehicle. Inside they found a blunt in the ashtray, an empty liquor bottle riding shotgun, and a duffle bag stuffed with cash in the trunk. Their search also revealed a bundle of cash in the console. All told, Dereck was carrying $69,940.50 in cash. That money, Dereck said, came from a retail business he was running with his girlfriend.

Although Dereck was arrested for public intoxication and driving with an open container, he wasn’t charged with drug trafficking (or any other crime that would authorize civil forfeiture). Nevertheless, law enforcement seized every penny from Dereck’s car, claiming it was drug money.

Under a program known as “equitable sharing,” the case was then handed over to the U.S. Department of Homeland Security, which filed a federal forfeiture complaint against Dereck’s cash. By participating in equitable sharing, state and local agencies can keep up to 80% of the proceeds from forfeited property. Over the past two decades, South Carolina law enforcement has received more than $103 million in revenue from equitable sharing.

To justify the forfeiture, the federal government identified several factors. While searching Dereck’s car, police found not only a blunt but also California medical marijuana cards belonging to him and his girlfriend. Scanning the cash itself later revealed trace amounts of cocaine.

At first, a federal district court sided with the government, claiming “there was no genuine dispute of material fact that the seized cash was the proceeds of a drug trafficking operation.” And under federal law, prosecutors must prove by a “preponderance of the evidence” (i.e. more likely than not) that the seized property is connected to a crime to win a civil forfeiture case.

But as the Institute for Justice argued in an amicus brief, “preponderance of the evidence requires more than speculation and conjecture.” Far from unquestionably incriminating the couple, “the evidence showed nothing of the sort: It just showed that Dereck made poor decisions and possessed a large amount of cash.”

On appeal, the Fourth Circuit agreed. Although the government’s claims “paint a picture that definitively establishes that the cash was drug money,” the Fourth Circuit countered that “the record is not quite so clear. The painting is more Pollock than Monet.” “The government has the burden of proof here, and that makes all the difference,” Judge Richardson noted.

Aside from the single blunt and the medical marijuana cards, “the government lacks any direct evidence of a drug transaction or involvement in the drug trade.” And in any case, “the personal use of marijuana also does not establish a link to a broader drug trafficking scheme,” nor would simple possession alone serve as a basis for civil forfeiture under federal law.

Meanwhile, it’s been known for decades that the overwhelming majority of dollar bills in circulation throughout the country have been “incidentally contaminated with cocaine.” Simply put, there was a “host of innocent explanations” and multiple “plausible inferences” for the cash Dereck was carrying.

“If the government is going to take money from someone, they should be required to provide real evidence that the money was obtained in an illegal way, not simply throw around baseless assumptions,” said Institute for Justice Attorney Rob Johnson, who authored the amicus brief and argued before the Fourth Circuit. “Today’s decision sets an important precedent that will force the government to come forward with real evidence to convince a jury.”