                     United States Court of Appeals
                            FOR THE EIGHTH CIRCUIT
                                    ___________

                                    No. 09-3903
                                    ___________

United States of America,              *
                                       *
            Appellee,                  * Appeal from the United States
                                       * District Court for the
     v.                                * District of Minnesota.
                                       *
Robert Lee Bailey, also known as Rell, * [UNPUBLISHED]
                                       *
            Appellant.                 *
                                 ___________

                              Submitted: June 20, 2010
                                 Filed: January 13, 2011
                                  ___________

Before LOKEN, BYE, and SHEPHERD, Circuit Judges.
                            ___________

PER CURIAM.

       Robert Bailey appeals the district court's denial in part of his Federal Rule of
Criminal Procedure 41(g) motion for the return of property. We review the district
court's legal conclusions de novo and its findings of fact for clear error. See Jackson
v. United States, 526 F.3d 394, 396-97 (8th Cir. 2008). For the following reasons, we
affirm in part and reverse in part.

        The Minneapolis Police Department executed a search warrant and seized
property from Bailey's home and cars, some of which it turned over to the federal
government. We agree with the district court that Bailey is not entitled to the return
of (i) items he did not prove belonged to him or were seized from him; (ii) items –
identified in Part B.2. of the district court's Opinion and Order – that were used to
facilitate Bailey's federal crimes and thus are derivative contraband, see United States
v. Felici, 208 F.3d 667, 670-71 (8th Cir. 2000); and (iii) items never possessed by the
federal government, other than non-contraband items that were in the federal
government's constructive possession when used as evidence in Bailey's federal
prosecution, see Clymore v. United States, 164 F.3d 569, 571 (10th Cir. 1999),

       We conclude, however, that the district court clearly erred in its determination
that the government had returned $2,036 in United States currency that it once
possessed to state custody, because the court received no evidence to support this
factual finding. See Fed. R. Crim. P. 41(g) (district court must receive evidence on
any factual issue necessary to decide motion). When the government asserts that it
no longer possesses property whose return is sought under Rule 41(g), the district
court must determine whether the government retains the property, and if the court
finds the government no longer possesses the property, then it must determine what
happened to the property. See United States v. Chambers, 192 F.3d 374, 378 (3d Cir.
1999). The government asserted that it had returned the currency to state custody;
however, it proffered no evidence to support this assertion. The only evidence the
court received regarding the currency was an affidavit by an agent of the Bureau of
Alcohol, Tobacco, Firearms and Explosives, who merely stated that the government
no longer possessed the currency, without stating its current possessor. Cf. United
States v. Stevens, 500 F.3d 625, 628 (7th Cir. 2007) (reversing district court's
determination that government did not possess property sought under Rule 41(g)
because court received no evidence regarding government’s possession of property;
arguments in government brief, unsupported by documentary evidence, are not
evidence). Under these circumstances, the district court should have conducted an
evidentiary hearing to determine the current possessor of the currency and whether
Bailey is entitled to its return. See United States v. Albinson, 356 F.3d 278, 282 (3d
Cir. 2004) (government's unsubstantiated assertion that it no longer possesses property
at issue is insufficient basis to refuse to hold evidentiary hearing; Rule 41(g) requires

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court hold hearing on any disputed issue of fact necessary to resolve motion, which
may include determining what happened to seized property); United States v. Burton,
167 F.3d 410, 410-11 (8th Cir. 1999) (reversing and remanding where district court
improperly denied Rule 41(e) (now 41(g)) motion without receiving evidence to
determine who had custody of subject property); but see Diaz v. United States, 517
F.3d 608, 612-13 (2d Cir. 2008) (indicating the doctrine of sovereign immunity may
bar what would essentially be an award of damages to compensate for lost currency).

       We also find the district court erred in denying the return of a blue cell phone,
wallet, and "Promotion Piece" from a musician that also were seized from Bailey. The
government acknowledged having once possessed these items in its response to
Bailey's motion, but also apparently asserted (again without evidentiary support) that
it no longer possesses these items. Because the government acknowledged once
having had actual possession of these items, Bailey is entitled to seek their return
under Rule 41(g), see Clymore, 164 F.3d at 571, and the district court erred in not
receiving evidence as to their current possessor, see Albinson, 356 F.3d at 282.
Again, the circumstances warranted an evidentiary hearing to determine who
possesses the blue cell phone, wallet, and "Promotion Piece," and whether Bailey is
entitled to their return. Burton, 167 F.3d at 410-11.

        Accordingly, we affirm the district court's denial of Bailey's motion except as
to the currency, blue cell phone, wallet, and "Promotion Piece." We reverse the denial
of Bailey's motion as to these items, and we remand to the district court to conduct an
evidentiary hearing to determine what happened to these items of property.
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