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United States v. Twenty-Five Thousand Dollars ($25

United States District Court, Eastern District of Michigan, Southern Division

April 2, 2015

UNITED STATES OF AMERICA, Plaintiff,
v.
TWENTY-FIVE THOUSAND DOLLARS ($25, 000.00) IN U.S. CURRENCY, Defendant.

ORDER GRANTING MOTION TO SET ASIDE THE DEFAULT (DOC. #13) AND DENYING MOTION FOR DEFAULT JUDGMENT (DOC. #11)

Victoria A. Roberts, United States District Judge

I. INTRODUCTION

On December 30, 2014 the Government filed a Motion for Default Judgment based on the Default entered by the Clerk of the Court on December 15, 2014. On January 9, 2015 Claimants Thomas E. Nelson, Sr. and Christelle Tillerson filed a Motion to Set Aside the Entry of Default under F.R.C.P. 55(c).

The issue presented is whether “good cause” exists under F.R.C.P. 55 (c) for the Court to set aside the default, or, in the alternative, to grant the Government’s Motion for an Entry of Default Judgment.

The Court finds that good cause does exist, GRANTS the Motion to set aside the Default, and DENIES the Motion for Default Judgment.

II. BACKGROUND AND FACTUAL HISTORY

On March 12, 2014 DEA agents received information related to Claimant Christelle Tillerson, and initiated a “consensual police/citizen encounter” while Ms. Tillerson waited for a flight to Los Angeles at Detroit Metro Airport. Ms. Tillerson agreed to speak to the agents, and told the agents she was traveling to Los Angeles to purchase a semi tractor. Tillerson told agents that she had “about $20, 000" in her checked luggage and gave permission for them to search her luggage. Agents found rubber-banded currency showing signs of “street use, ” which was later calculated at $25, 000 and constitutes the seized money. Agents explained to Tillerson that she was not under arrest but asked Tillerson if she would be willing to go to an office to speak to them about the money in her luggage. Tillerson stated that she was going to purchase a semi tractor and that she would get a discount if she paid cash. She said she was purchasing this truck for “Ten Investment Group, LLC” which she ran with her fiancé Thomas Nelson, who is listed as the registered agent for Ten Investment Group. Tillerson told agents that Nelson worked for the United States Postal Service and he withdrew the money from his 401k sometime in December 2013. Tillerson was asked if she or the money had been in contact with any controlled substances and Tillerson said no. However, a drug dog gave a positive response when near it.

Agents believed they had probable cause that the money was either derived from the sale of drugs or was intended to purchase drugs; they believed they had authority to seize the money under 21 U.S.C. § 881(a)(6).

Notice of seizure was published on April 22, 2014 by the DEA. On May 1 2014, the attorney for Mr. Nelson, Mr. Goldberg, sent a claim for the money to the forfeiture division of the DEA, along with a letter asking that any further filings be sent to him. On July 29, the Government filed a Complaint for the forfeiture of the money and filed a Warrant of Arrest and Notice In Rem for the money on July 30. On July 31, the Government sent service to Tillerson, Nelson and Mr. Goldberg by certified and regular mail. The Government placed a notice about the money on www.forfeiture.gov for thirty consecutive days starting August 1, 2014. On September 5, after the expiration of the time to file a claim, the Government sent a letter to Mr. Goldberg informing him of this lapse. On September 9, Mr. Goldberg called Assistant United States Attorney Dydell, stating that Nelson and Tillerson had stopped paying him, and stopped communicating with him after he told Tillerson of the outstanding debt to him and the forfeiture Complaint filed.

The certified mail sent to both Tillerson and Nelson was returned unclaimed. The Government tried to serve them again by certified and regular mail on October 27 and on November 10. All certified mailings were returned ‘unclaimed’ or ‘return to sender’, but none of the regular mail was returned. On December 15, the Government obtained a Default by the Clerk of the Court, and on December 30, the Government moved for Default Judgment based on the Default. On January 9, 2015 the Claimants, through new counsel, moved to set aside the default under F.R.C.P. 55(c).

III. ANALYSIS

A. Standard of Review

The standard for setting aside a default is provided in F.R.C.P. 55(c):

The court may set aside an entry of default for good cause, and it may set aside a default judgment under Rule 60(b).

In federal court, there is a “strong preference for trial on the merits” (INVST FinancialGroup, Inc. v. Chem-Nuclear Systems, Inc., 815 F.2d 397 (6th Cir. 1987). Accordingly, when determining whether to set aside an entry of default, courts should take all disputed facts in the light most favorable to the defaulted party. United Coin Meter Co., Inc. v. Seaboard Coastline RR., 705 ...


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