United States of America v. Currency

Filing 13

MEMORANDUM OPINION AND ORDER that the 9 MOTION to Dismiss is DENIED and claimants are directed to file an answer by 4/13/2015, as more fully set out in order. Signed by Judge C Lynwood Smith, Jr on 3/30/2015. (AHI)

FILED
2015 Mar-30 AM 11:37
U.S. DISTRICT COURT
N.D. OF ALABAMA

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ALABAMA
NORTHEASTERN DIVISION
UNITED STATES OF
AMERICA,
Plaintiff,
vs.
$134,972.34 SEIZED FROM FNB
BANK, ACCOUNT NUMBER5351,
Defendant.

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Civil Action No. CV-15-S-6-NE

MEMORANDUM OPINION AND ORDER
Plaintiff, the United States of America, asserts a civil action in rem for the
forfeiture of $134,972.34 in United States currency (“the defendant currency”) seized
on August 20, 2014, from FNB Bank, account number -5351, pursuant to 31 U.S.C.
§ 5317(c)(2).1 The United States alleges that the defendant currency was involved
in, or traceable to, acts of illegally structuring currency transactions in violation of 31
U.S.C. § 5324.2 The case presently is before the court on the motion to dismiss and
1
2

Doc. no. 1 (Complaint), ¶ 1.

Id. ¶ 5. “Structuring” in the jargon of the banking industry is the practice of executing financial
transactions, such as bank deposits or withdrawals, in a pattern calculated to avoid the creation of
records and reports required by law, such as the statutes adopted by Congress in 1970 that require
financial institutions to report cash transaction exceeding $10,000 to the government. Pub. L. No.
91-508, §§ 221-23, 84 Stat. 1122 (1970) (codified as amended at 31 U.S.C. § 5313(a); 31 C.F.R. §
102.1(b) (1970)). “Structuring” includes the act of parceling what would otherwise be a transaction
exceeding $10,000 into a series of smaller transactions to avoid such reporting requirements, and to
avoid scrutiny by regulators or law enforcement officers. Congress made it a crime in 1987 to

for return of the defendant currency or, in the alternative, motion for a more definite
statement, filed by CWE Enterprises, Inc., and Carlton Wayne Edwards (collectively,
“the claimants”) pursuant to Federal Rule of Civil Procedure 12(b)(6) and Rule
G(8)(b) of the Supplemental Rules for Admiralty or Maritime and Asset Forfeiture
Claims.3 Upon consideration, the motion will be denied for the reasons set out below.
I. LEGAL STANDARDS
Civil asset forfeiture cases are governed by the Supplemental Rules for
Admiralty or Maritime Claims and Asset Forfeiture Actions. See 18 U.S.C. §
983(a)(4)(A) (“In any case in which the Government files in the appropriate United
States district court a complaint for forfeiture of property, any person claiming an
interest in the seized property may file a claim asserting such person’s interest in the
property in the manner set forth in the Supplemental Rules for Certain Admiralty and
Maritime Claims, . . .”). The Supplemental Rules apply to, among other proceedings,
“forfeiture actions in rem arising from a federal statute.” Fed. R. Civ. P. Supp. R.
A(1)(B). Further, “[a] claimant who establishes standing to contest forfeiture may
move to dismiss the action under [Federal Rule of Civil Procedure] 12(b).” Fed. R.

“structure” financial transactions for the purpose of evading such reporting requirements. See
generally Sarah N. Welling, Smurfs, Money Laundering, and the Federal Criminal Law: The Crime
of Structuring Transactions, 41 Fla. L. Rev. 287 (1989).
3

See doc. no. 9 (Motion to Dismiss). See also doc. no. 11 (Response in Opposition to Motion to
Dismiss).

2

Civ. P. Supp. R. G(8)(b)(i) (bracketed alteration supplied).
Federal Rule of Civil Procedure 12(b) permits a party to move to dismiss a
complaint for, among other reasons, “failure to state a claim upon which relief can be
granted.” Fed. R. Civ. P. 12(b)(6).4 That rule must be read together with Rule 8(a),
which requires that a pleading contain only a “short and plain statement of the claim
showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). While that
pleading standard does not require “detailed factual allegations,” Bell Atlantic Corp.

4

In full text, Rule 12(b) provides that:
Every defense to a claim for relief in any pleading must be asserted in the responsive
pleading if one is required. But a party may assert the following defenses by motion:
(1) lack of subject-matter jurisdiction;
(2) lack of personal jurisdiction;
(3) improper venue;
(4) insufficient process;
(5) insufficient service of process;
(6) failure to state a claim upon which relief can be granted; and
(7) failure to join a party under Rule 19.
A motion asserting any of these defenses must be made before pleading if a
responsive pleading is allowed. If a pleading sets out a claim for relief that does not
require a responsive pleading, an opposing party may assert at trial any defense to
that claim. No defense or objection is waived by joining it with one or more other
defenses or objections in a responsive pleading or in a motion.

Fed. R. Civ. P. 12(b).

3

v. Twombly, 550 U.S. 544, 550 (2007), it does demand “more than an unadorned, thedefendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (citations omitted).
A pleading that offers “labels and conclusions” or “a formulaic
recitation of the elements of a cause of action will not do.” [Twombly,
550 U.S., at 555]. Nor does a complaint suffice if it tenders “naked
assertion[s]” devoid of “further factual enhancement.” Id., at 557.
To survive a motion to dismiss founded upon Federal Rule of
Civil Procedure 12(b)(6), [for failure to state a claim upon which relief
can be granted], a complaint must contain sufficient factual matter,
accepted as true, to “state a claim for relief that is plausible on its face.”
Id., at 570. A claim has facial plausibility when the plaintiff pleads
factual content that allows the court to draw the reasonable inference
that the defendant is liable for the misconduct alleged. Id., at 556. The
plausibility standard is not akin to a “probability requirement,” but it
asks for more than a sheer possibility that a defendant has acted
unlawfully. Ibid. Where a complaint pleads facts that are “merely
consistent with” a defendant’s liability, it “stops short of the line
between possibility and plausibility of ‘entitlement to relief.’” Id., at
557 (brackets omitted).
Two working principles underlie our decision in Twombly. First,
the tenet that a court must accept as true all of the allegations contained
in a complaint is inapplicable to legal conclusions. Threadbare recitals
of the elements of a cause of action, supported by mere conclusory
statements, do not suffice. Id., at 555 (Although for the purposes of a
motion to dismiss we must take all of the factual allegations in the
complaint as true, we “are not bound to accept as true a legal conclusion
couched as a factual allegation” (internal quotation marks omitted)).
Rule 8 marks a notable and generous departure from the hyper-technical,
code-pleading regime of a prior era, but it does not unlock the doors of
discovery for a plaintiff armed with nothing more than conclusions.
Second, only a complaint that states a plausible claim for relief survives
4

a motion to dismiss. Id., at 556. Determining whether a complaint
states a plausible claim for relief will, as the Court of Appeals observed,
be a context-specific task that requires the reviewing court to draw on
its judicial experience and common sense. 490 F.3d, at 157-158. But
where the well-pleaded facts do not permit the court to infer more than
the mere possibility of misconduct, the complaint has alleged — but it
has not “show[n]” — “that the pleader is entitled to relief.” Fed. Rule
Civ. Proc. 8(a)(2).
In keeping with these principles a court considering a motion to
dismiss can choose to begin by identifying pleadings that, because they
are no more than conclusions, are not entitled to the assumption of truth.
While legal conclusions can provide the framework of a complaint, they
must be supported by factual allegations. When there are well-pleaded
factual allegations, a court should assume their veracity and then
determine whether they plausibly give rise to an entitlement to relief.
Iqbal, 556 U.S. at 678-79 (emphasis added).
Due to the nature of this case, however, the traditional pleading rules are
modified by Rule G(2) of the Supplemental Rules for Admiralty or Maritime Claims
and Asset Forfeiture Actions, which set out specific pleading requirements for
forfeiture actions in rem. Courts are instructed to evaluate the sufficiency of a
complaint seeking a forfeiture of assets by determining, among other things, whether
the complaint meets that requirement of Supplemental Rule G(2) specifying that the
pleading should “state sufficiently detailed facts to support a reasonable belief that the
government will be able to meet its burden of proof at trial.” Fed. R. Civ. P. Supp. R.

5

G(2)(f).5 The government’s burden of persuasion was modified by the Civil Asset
Forfeiture Reform Act of 2000 (“CAFRA”), Pub. L. No. 106-185, 114 Stat. 202
(codified primarily at 18 U.S.C. § 983), providing that “the burden of proof is on the
Government to establish, by a preponderance of the evidence, that the property is
subject to forfeiture.” 18 U.S.C. § 983(c)(1).
In light of the requirements of Supplemental Rule G and CAFRA, it is unclear
to what extent, if any, the Twombly/Iqbal “plausible claim for relief” standard applies
to civil forfeiture complaints commenced by the government. Judge Kyle of the

5

In full text, Supplemental Rule G(2) provides that:
The complaint must:
(a) be verified;
(b) state the grounds for subject-matter jurisdiction, in rem jurisdiction over
the defendant property, and venue;
(c) describe the property with reasonable particularity;
(d) if the property is tangible, states its location when any seizure occurred
and — if different — its location when the action is filed;
(e) identify the statute under which the forfeiture action is brought; and
(f) state sufficiently detailed facts to support a reasonable belief that the
government will be able to meet its burden of proof at trial.

Fed. R. Civ. P. Supp. R. G(2). Claimants only contest whether the complaint states a claim upon
which relief can be granted, i.e., whether the complaint states sufficiently detailed facts to support
a claim for relief, and does not contest whether the other requirements of Supplemental Rule G(2)
are satisfied. See doc. no. 9 (Motion to Dismiss), at 8-12.

6

District Court of Minnesota illuminated this issue in United States v. Real Property
and Premises, 657 F. Supp. 2d 1060 (D. Minn. 2009), where he observed that:
In the context of civil forfeiture proceedings, . . . it is unclear
whether, or to what extent, Twombly applies. Although Supplemental
Rule G(8)(b)(i) expressly references Federal Rule of Civil Procedure
12(b), which was discussed in Twombly[,] Supplemental Rule
G(8)(b)(ii) states that “[t]he sufficiency of the complaint is governed by
Rule G(2).” Supplemental Rule G(2), in turn, lists several items a
forfeiture complaint must contain, including inter alia a description of
the property to be forfeited, the location of the property, and
“sufficiently detailed facts to support a reasonable belief that the
government will be able to meet its burden of proof at trial.”
Supplemental Rule G(2)(a)-(f). There are no similar requirements in
Federal Rule of Civil Procedure 8, which sets forth the pleading
standard for civil actions to which the Supplemental Rules do not apply.
Hence, because the Supplemental Rules provide the standards against
which a forfeiture complaint must be measured, it is questionable
whether Twombly has any application here.
Real Property and Premises, 657 F. Supp. 2d at 1065-66 (alterations in original,
ellipses added).
The Supplemental Rules make clear that they “apply to . . . forfeiture actions in
rem,” and that the “Federal Rules of Civil Procedure also apply to the foregoing
proceedings except to the extent that they are inconsistent with these Supplemental
Rules.” Fed. R. Civ. P. Supp. R. A. (emphasis supplied). In Twombly and Iqbal, the
issue before the Supreme Court was the standard to be applied in deciding a Rule
12(b)(6) motion to dismiss for failure to state a claim, where Rule 8 governed the

7

sufficiency of a pleading. See Iqbal, 556 U.S. at 677-79; Twombly, 550 U.S. at 55558; see also American Dental Association v. Cigna Corp., 605 F.3d 1283, 1290 (11th
Cir. 2010) (observing that “Iqbal explicitly held that the Twombly plausibility standard
applies to all civil actions, not merely antitrust actions, because it is an interpretation
of Rule 8”) (citing Iqbal, 556 U.S. at 684 (emphasis supplied)).
Thus, because Supplemental Rule G(2) governs the pleading standard for civil
asset forfeiture cases, rather than Federal Rule of Civil Procedure 8, the standard
enunciated and clarified in Twombly and Iqbal does not govern the sufficiency of such
complaints.6 Instead, the heightened pleading standard of Supplemental Rule G(2)(f)
applies: that is, “state sufficiently detailed facts to support a reasonable belief that the
government will be able to meet its burden of proof at trial.”7
Even so, to the extent that the Twombly and Iqbal holdings do not conflict with
Supplemental Rule G(2), they may provide guidance in deciding a motion to dismiss
a civil asset forfeiture complaint. See $22,173.00 in United States Currency, 716 F.
6

See, e.g., United States v. 4323 Bellwood Circle, Atlanta, Georgia 30349, 680 F. Supp. 2d 1370,
1372 (N.D. Ga. 2010) (finding that “the traditional pleading rules are modified by the Supplemental
Rules,” and applying Supplemental Rule G(2) to determine the sufficiency of the forfeiture
complaint); United States v. $22,173.00 in United States Currency, 716 F. Supp. 2d 245, 249 (S.D.
N.Y. 2010) (finding that Supplemental Rule G(2), rather than Fed. R. of Civ. P. 8 and the Twombly
and Iqbal decisions, governs the sufficiency of a civil forfeiture complaint); United States v. All
Assets Held at Bank Julius Baer & Company, Ltd., 571 F. Supp. 2d 1, 16 (D. D.C. 2008) (finding
that Supplemental Rule G creates a heightened pleading requirement for civil forfeiture complaints
as compared to the Fed. R. Civ. P. 8 standard applicable in other cases).
7

See supra note 5.

8

Supp. 2d at 249 (“[T]o the extent the[ Twombly and Iqbal] decisions and their progeny
do not conflict with the Supplemental Rules, they may help to clarify when a civil
forfeiture complaint survives the motion to dismiss phase.”). Specifically, the
requirement that a court ruling on a Rule 12(b)(6) motion to dismiss must disregard
conclusory allegations in determining the sufficiency of a complaint does not conflict
with Supplemental Rule G(2).
In summary, therefore, when a claimant moves to dismiss a civil asset forfeiture
complaint under Rule 12(b)(6) for “failure to state a claim upon which relief can be
granted,” the court should determine the sufficiency of the complaint by first
separating the factual and conclusory allegations, and then applying the standard of
Supplemental Rule G(2)(f): i.e., does the complaint “state sufficiently detailed facts
to support a reasonable belief that the government will be able to meet its burden of
proof at trial”?
Additionally, when ruling upon any motion to dismiss, the court must assume
that the facts set forth in a well-pleaded complaint are true. See Anza v. Ideal Steel
Supply Corp., 547 U.S. 451, 453 (1994) (stating that, on a motion to dismiss, the court
must “accept as true the factual allegations in the amended complaint”); Marsh v.
Butler County, 268 F.3d 1014, 1023 (11th Cir. 2001) (en banc) (setting forth the facts
in the case by “[a]ccepting all well-pleaded factual allegations (with reasonable
9

inferences drawn favorably to Plaintiffs) in the complaint as true”).
Accordingly, that which is set out in the following portions of this memorandum
opinion as a summary of “the facts” for the purpose of ruling upon claimants’ Rule
12(b)(6) motion are those factual allegations from the complaint that have been
separated from conclusory allegations, and may, or may not, be the actual facts. See,
e.g., Williams v. Mohawk Industries, Inc., 465 F.3d 1277, 1281 n.1 (11th Cir. 2006).
II. SUMMARY OF THE FACTS AS ALLEGED
On August 1, 1987, an account numbered -5351 was opened at FNB Bank in the
name of C.W.E. Enterprises, Inc., with Carlton Edwards, among others, listed as a
signatory (“the bank account”).8 Due to Edwards’s banking practice of engaging in
large, frequent withdrawals, he was placed on a currency transaction report (“CTR”)
exemption list on January 7, 2000, which lifted FNB Bank’s requirement to file CTR’s
each time Edwards deposited, withdrew, or exchanged more than $10,000 in currency
from the bank.9 Thereafter, the frequency of his withdrawals slowed and the amount
of cash withdrawn decreased.10 As a result, FNB Bank took Edwards off the CTR
exemption list on March 5, 2007, and reinstated the requirement that the bank file
8

Doc. no. 1 (Complaint), ¶ 15. The complaint also alleges that Carlton Edwards’s wife (E. Faye
Edwards), daughter (Sherry Edwards Brown), and employee (Stacey Blevins) were listed as
signatories for the bank account. Id. The complaint does not allege who opened the bank account.
9

Id. ¶ 18.

10

Id. ¶ 19.

10

CTRs any time Edwards deposited, withdrew, or exchanged more than $10,000 in
currency from the bank.11 Shortly thereafter, Edwards asked bank personnel why he
had to fill out a CTR when conducting large cash transactions.

After that

conversation, Edwards began withdrawing money in increments less than $10,000 in
amount.12
Between October 1, 2013, and May 23, 2014, Carlton Edwards made the
following cash withdrawals from the bank account:13
Date
10/1/2013
10/2/2013
10/4/2013
10/9/2013
10/11/2013
10/15/2013
10/16/2013
10/17/2013
10/21/2013
10/23/2013
10/24/2013
10/31/2013
11/1/2013
11/4/2013
11/8/2013
11/12/2013

11

Id. ¶ 20.

13

Time
1:24:00 PM
1:48:00 PM
1:11:00 PM
1:57:00 PM
1:10:00 PM
1:30:00 PM
3:09:00 PM
1:22:00 PM
1:51:00 PM
2:38:00 PM
1:24:00 PM
1:00:00 PM
3:03:00 PM
1:25:00 PM
1:26:00 PM
1:07:00 PM

Id.

12

Day
Tuesday
Wednesday
Friday
Wednesday
Friday
Tuesday
Wednesday
Thursday
Monday
Wednesday
Thursday
Thursday
Friday
Monday
Friday
Tuesday

Id. ¶ 16.

11

Amount
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00

Date
11/13/2013
11/15/2013
11/18/2013
11/20/2013
11/25/2013
11/26/2013
11/29/2013
12/2/2013
12/5/2013
12/6/2013
12/9/2013
12/11/2013
12/12/2013
12/16/2013
12/17/2013
12/20/2013
12/23/2013
12/26/2013
12/27/2013
12/30/2013
1/2/2014
1/6/2014
1/13/2014
1/15/2014
1/21/2014
1/23/2014
1/24/2014
1/27/2014
1/30/2014
1/31/2014
2/5/2014
2/10/2014
2/13/2014

Day
Wednesday
Friday
Monday
Wednesday
Monday
Tuesday
Friday
Monday
Thursday
Friday
Monday
Wednesday
Thursday
Monday
Tuesday
Friday
Monday
Thursday
Friday
Monday
Thursday
Monday
Monday
Wednesday
Tuesday
Thursday
Friday
Monday
Thursday
Friday
Wednesday
Monday
Thursday

Time
1:25:00 PM
2:13:00 PM
1:59:00 PM
1:49:00 PM
1:05:00 PM
1:36:00 PM
3:11:00 PM
1:03:00 PM
1:41:00 PM
12:34:00 PM
1:19:00 PM
1:57:00 PM
1:07:00 PM
12:35:00 PM
12:06:00 PM
1:49:00 PM
12:41:00 PM
1:47:00 PM
2:57:00 PM
1:58:00 PM
2:50:00 PM
1:18:00 PM
1:48:00 PM
1:30:00 PM
2:24:00 PM
1:52:00 PM
1:48:00 PM
1:06:00 PM
1:51:00 PM
1:00:00 PM
2:03:00 PM
1:42:00 PM
2:02:00 PM
12

Amount
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$8,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$8,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$3,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00

Date
2/21/2014
2/26/2014
3/6/2014
3/11/2014
3/14/2014
3/21/2014
3/25/2014
3/26/2014
4/16/2014
4/22/2014
4/23/2014
4/30/2014
5/1/2014
5/7/2014
5/8/2014
5/19/2014
5/21/2014
5/22/2014
5/23/2014

Day
Friday
Wednesday
Thursday
Tuesday
Friday
Friday
Tuesday
Wednesday
Wednesday
Tuesday
Wednesday
Wednesday
Thursday
Wednesday
Thursday
Monday
Wednesday
Thursday
Friday

Time
2:06:00 PM
1:24:00 PM
12:06:00 PM
12:46:00 PM
1:50:00 PM
4:27:00 PM
12:38:00 PM
12:19:00 PM
11:27:00 AM
1:09:00 PM
2:21:00 PM
1:14:00 PM
1:06:00 PM
2:42:00 PM
12:42:00 PM
1:22:00 PM
12:36:00 PM
11:51:00 AM
11:47:00 AM

Amount
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$8,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00
$9,000.00

As the table of withdrawals shows, Carlton Edwards made 68 cash withdrawals from
the bank account over a 234-day period. The vast majority of the cash withdrawals
were for exactly $9,000, and all were for less than $10,000. The 68 cash withdrawals
totaled $603,000.14 Records from the Alabama Department of Industrial Relations
indicate that for the entire year of 2013 and the first quarter of 2014, Carlton Edwards
did not report any income.15
14

Doc. no. 1 (Complaint), ¶ 16.

15

Id. ¶ 14.

13

On August 20, 2014, agents of the Internal Revenue Service, Criminal
Investigations (“IRS–CI”), seized the defendant currency from the bank account.16
After the government filed its verified complaint for forfeiture in rem on
January 5, 2015, claimants timely filed a verified claim on February 4, 2015,
contesting the forfeiture action in accordance with Supplemental Rule G(5)(a).17
III. DISCUSSION
The government’s complaint is based upon that portion of 31 U.S.C. § 5317
which provides that:
Any property involved in a violation of section 5313, 5316, or
5324 of this title, or any conspiracy to commit any such violation, and
any property traceable to any such violation or conspiracy, may be
seized and forfeited to the United States in accordance with the
procedures governing civil forfeitures in money laundering cases
pursuant to section 981(a)(1)(A) of title 18, United States Code.
31 U.S.C. § 5317(c)(2); See also 18 U.S.C. § 981(a)(1)(A) (providing that “[a]ny
property, real or personal, involved in a transaction or attempted transaction in
violation of section 1956, 1957 or 1960 of this title, or any property traceable to such
property” is subject to forfeiture to the United States).
The government alleges that the defendant currency was “involved in or
traceable to a structuring offense in violation of 31 U.S.C. § 5324,” which provides
16

Id. ¶ 5.

17

Doc. no. 6 (Verified Claim).

14

that:
No person shall, for the purpose of evading the reporting
requirements of section 5313(a) or 5325 or any regulation prescribed
under any such section, the reporting or recordkeeping requirements
imposed by any order issued under section 5326, or the recordkeeping
requirements imposed by any regulation prescribed under section 21 of
the Federal Deposit Insurance Act or section 123 of Public Law
91-508—
...
(3)

structure or assist in structuring, or attempt to structure or
assist in structuring, any transaction with one or more
domestic financial institutions.

31 U.S.C. § 5324(a);18 see also 31 C.F.R. § 1010.314 (prohibiting the structuring of
financial transactions “for the purpose of evading the transactions in currency
reporting requirements of this chapter”). The “reporting requirements of section
5313(a)” and its corresponding, implementing regulations require financial institutions
to report to the Internal Revenue Service any withdrawals that exceed $10,000. See
31 U.S.C. § 5313(a); 31 C.F.R. § 1010.311.19 The crime of structuring currency
transactions occurs when an individual “break[s] up a single transaction above the
reporting threshold into two or more separate transactions . . . for the purpose of

18

For a detailed history of this statute and the criminal behavior that resulted in its enactment, see
Sarah N. Welling, Smurfs, Money Laundering, and the Federal Criminal Law: The Crime of
Structuring Transactions, 41 Fla. L. Rev. 287, 288-304 (1989).
19

The reports financial institutions are required to file are often called “Currency Transaction
Reports.” See, e.g., Ratzlaf v. United States, 510 U.S. 135, 148 n.17, 160-61 (1994).

15

evading a financial institution’s reporting requirement.” Ratzlaf v. United States, 510
U.S. 135, 136 (1994), superceded by statute on other grounds, Riegle Community
Development and Regulatory Improvement Act of 1994, Pub. L. No. 103-325. In
greater detail, but in harmony with that definition, United States Department of
Treasury regulations state that a person “structures” a transaction if
that person, acting alone, or in conjunction with, or on behalf of, other
persons, conducts or attempts to conduct one or more transactions in
currency, in any amount, at one or more financial institutions, on one or
more days, in any manner, for the purpose of evading the reporting
requirements under §§ 1010.311, 1010.313, 1020.315, 1021.311 and
1021.313 of this chapter. “In any manner” includes, but is not limited
to, the breaking down of a single sum of currency exceeding $10,000
into smaller sums, including sums at or below $10,000, or the conduct
of a transaction, or series of currency transactions at or below $10,000.
The transaction or transactions need not exceed the $10,000 reporting
threshold at any single financial institution on any single day in order to
constitute structuring within the meaning of this definition.
31 C.F.R. §1010.100(xx).
Thus, to prove a criminal violation of § 5324(a), the government must prove
“‘only that a defendant had knowledge of the reporting requirements and acted to
avoid them.’” United States v. Van Allen, 524 F.3d 814, 820 (7th Cir. 2008) (quoting
United States v. Cassano, 372 F.3d 868, 878 (7th Cir. 2004), vacated and remanded
for further consideration on other grounds, 543 U.S. 1109 (2005) (citing United States
v. Booker, 543 U.S. 220 (2005)) (in turn, quoting United States v. Jackson, 983 F.2d

16

757, 767 (7th Cir. 1993)), vacated on other grounds, 543 U.S. 1109 (2005).20
20

See also United States v. Hovind, 305 F. App’x 615, 621 (11th Cir. 2008) (upholding a conviction
for structuring currency transactions in violation of § 5324 because the “[e]vidence established that
[the defendants] structured cash transactions with knowledge of, and the intent to avoid, reporting
of those transactions by [their bank].”) (citing United States v. MacPherson, 424 F.3d 183, 189 (2d
Cir. 2005); Cassano, 372 F.3d at 878); United States v. Vazquez, 53 F.3d 1216, 1220 (11th Cir.
1995); MacPherson, 424 F.3d at 189.
The elements required to establish a criminal violation of § 5324(a) have evolved over time,
and, as explained below, older cases may state that a third, willfulness element must be satisfied to
establish a criminal violation of § 5324(a). Courts have consistently held that the government must
prove that the defendant (1) knew of the reporting requirements, and (2) acted to avoid those
requirements. However, as originally enacted by the Money Laundering Control Act of 1986, 18
U.S.C. § 1956 et seq., 31 U.S.C. § 5324 prohibited structuring, but the act of structuring was made
a crime by another statutory section, § 5322(a). The Tenth Circuit, in United States v. Dashney, 937
F.2d 532 (10th Cir. 1991), summarized the statutory provisions at that time as follows:
Section 5324 states in part that “[n]o person shall for the purpose of evading
the reporting requirements of section 5313(a) with respect to such transaction . . .
structure or assist in structuring, any transaction with one or more domestic financial
institutions.” 31 U.S.C. § 5324. Section 5313(a) of Title 31 requires financial
institutions to file reports of currency transactions involving more than $10,000.
Section 5322(a) of Title 31 provides in part that “[a] person willfully violating
this subchapter . . . shall be fined not more than $250,000, or imprisonment [of] not
more than five years, or both.” Thus § 5322(a) acts to prescribe criminal penalties for
a variety of Title 31 violations, including § 5324.
Dashney, 937 F.2d at 533 n.1 (bracketed alterations and ellipses in original). Due to the “willfully
violating” requirement of § 5322(a), courts were split as to whether a third, willfulness element —
i.e., knowledge of the illegality of structuring transactions — was required to establish a criminal
violation of § 5324. Compare United States v. Aversa, 984 F.3d 493, 502 (1st Cir. 1993) (en banc)
(holding that knowledge of the illegality of structuring is required to establish a criminal violation of
§ 5324), with Dashney, 937 F.2d at 537-40 (10th Cir. 1991) (holding that knowledge of the illegality
of structuring is not required to establish a criminal violation of § 5324). See also Ratzlaf v. United
States, 510 U.S. 135, 136 (1994) (acknowledging the circuit split).
Then, in Ratzlaf v. United States, 510 U.S. 135 (1994), the Supreme Court held that to convict
a person for structuring currency transactions in violation of 31 U.S.C. §§ 5324(3) and 5322(a), the
government must establish that the violation was willful. Id. at 149 (“ To convict [the defendant] of
the [structuring currency transactions] crime with which he was charged, violation of 31 U.S.C. §§
5322(a) and 5324(3), the jury had to find he knew the structuring in which he engaged was
unlawful.”). In response, Congress, through the Riegle Community Development and Regulatory
Improvement Act of 1994, Pub. L. No. 103-325, amended § 5324 by adding a criminal penalty

17

In moving to dismiss the verified complaint, claimants make two arguments.
First, they contend that the defendant currency is not forfeitable pursuant to 31 U.S.C.
§ 5317 because it is not the property involved in the offense of structuring. Second,
they contend that the complaint fails to allege sufficient facts to infer the requisite
elements of forfeiture.21
To prevail at trial, the government must establish that Carlton Edwards violated
31 U.S.C. § 5324(a)(3) because he had knowledge of, and acted to avoid, the statutory
and regulatory reporting requirements, and that the subject currency was involved in
or traceable to his violation of § 5324(a)(3). See 31 U.S.C. § 5324(a)(3); 31 U.S.C.
§ 5317(c)(2).
A.

Whether the complaint states sufficient facts to show that Carlton Edwards
had knowledge of, and acted to avoid, the reporting requirements
Claimants contend that “[t]he government improvidently relies on the volume

of withdrawals alone to establish the requisite intent to avoid reporting.”22
Circumstantial evidence, particularly the conduct of the alleged violator, may be used

provision, so that reliance on the criminal penalty provision of § 5322(a) was no longer required to
convict a person for structuring transactions in violation of § 5324. See United States v. Vazquez, 53
F.3d 1216, 1218 n.2 (11th Cir. 1995). The amended § 5324 does not require that the defendant act
“willfully” and, thus, it is no longer necessary to show that a defendant knew that it was illegal to
structure currency transactions in order to convict the defendant under § 5324. See 31 U.S.C. § 5324;
see also Vazquez, 53 F.3d at 1218 n.2.
21

Doc. no. 9 (Motion to Dismiss), at 8-12.

22

Id. at 11.

18

to establish both that the alleged violator had knowledge of the reporting
requirements, and that he acted in a manner designed to avoid the requirements.23
Even though there is no binding precedent on point in the Eleventh Circuit, a number
of other circuit courts of appeal have held that both elements — knowledge of, and
acting to avoid, the reporting requirements — may be established by evidence of a
pattern of withdrawals at or below the $10,000 reporting threshold.24 At some point,
a jury may find that an innocent person would not suffer the inefficiency of making
many small transactions under the reporting threshold, rather than fewer transactions
above the reporting threshold, unless that person knew of, and acted to avoid, the
reporting requirements.25
23

See Ratzlaf, 510 U.S. at 149 n.19 (“A jury may, of course, find the requisite knowledge on
defendant’s part by drawing reasonable inferences from the evidence of defendant’s conduct.”);
United States v. Richards, 638 F.2d 765, 768 (5th Cir. 1981) (“The supporting evidence may be
direct or circumstantial and we do not discriminate against sufficiently probative evidence because
it is indirect.”). In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), the
Eleventh Circuit adopted as binding precedent all decisions of the former Fifth Circuit handed down
prior to October 1, 1981.
24

See MacPherson, 424 F.3d at 189-93; Van Allen, 524 F.3d at 820; Cassano, 372 F.3d at 878-79;
United States v. Wynn, 61 F.3d 921, 927 (D.C. Cir. 1995); United States v. Nersesian, 824 F.2d
1294, 1309-15 (2d Cir. 1987).
25

See MacPherson, 424 F.3d at 191 (“In sum, [the defendant’s] willingness to sacrifice efficiency
and convenience in depositing a quarter-million dollars through multiple small transactions
structured to ensure that no one exceeded $10,000 amply supported a reasonable inference that [the
defendant] knew of and was intent on avoiding [the] reporting requirements.”); United States v.
Gibbons, 968 F.2d 639, 645 (8th Cir. 1992) (“Since the receipt and cashing of six checks would have
been less efficient and convenient than receiving and cashing one, it is difficult to explain this
change except that [the defendants] sought to evade the reporting requirements.”); Nersesian, 824
F.2d at 1314-15 (“The jury could have inferred from the fact that [the defendant] chose to carry out
his [transactions] in a series of small transactions over a number of days, rather than in a single

19

In United States v. MacPherson, 424 F.3d 183 (2d Cir. 2005), for example, the
defendant parceled $250,000 into 32 separate deposits over a four-month period, all
of which were below $10,000, and 23 of which were in amounts close to the $10,000
reporting threshold ($9,000 to $9,200). Id. at 191. Additionally, on multiple
occasions, the defendant traveled to three different banks on the same day to make
deposits of $9,000. Id. Reviewing the sufficiency of the evidence supporting the
jury’s guilty verdict, the court concluded that the defendant’s “willingness to sacrifice
efficiency and convenience in depositing a quarter-million dollars through multiple
small transactions structured to ensure that no one [deposit] exceeded $10,000 amply
supported a reasonable inference that [the defendant] knew of and was intent on
avoiding [the] reporting requirements.” Id. (bracketed alterations supplied).
In United States v. Nersesian, 824 F.2d 1294 (2d Cir. 1987), the defendant had
been convicted of conspiring to defraud the United States, and, conspiring to cause
financial institutions to conceal a material fact by structuring currency transactions to
prevent the filing of a currency transaction report. Id. at 1309, 1313.26 Over a five-day
transaction or several larger transactions, that he knew of the reporting requirements and was
attempting to avoid them.”).
26

Specifically, defendant was convicted of conspiring to violate 18 U.S.C. § 371, which makes it a
crime to defraud the government by “impairing and obstructing its lawful governmental functions
of collecting data and reports of currency transactions in excess of $10,000.” Nersesian, 824 F.2d
at 1313. Defendant was also convicted of conspiring to cause financial institutions to violate 18
U.S.C. § 1001, which makes it a crime to “knowingly and willfully . . . falsif[y], conceal[], or cover[]
up by any trick, scheme, or device a material fact” in “a matter” within the jurisdiction of the United

20

period, defendant and his co-conspirators converted “in excess of $117,000 in cash
into money orders and travelers checks,” all in $1,000 denominations. Id. at 1309; see
also id. at 1313. The defendant argued that the evidence was insufficient to prove that
he engaged in the transactions with knowledge of, and with the intent to avoid, the
reporting requirements. Id at 1310. As the basis for that argument, the defendant
pointed to the fact that the money orders and travelers checks purchased were not for
amounts close to the reporting threshold, the lack of evidence that he had ever been
informed of the reporting requirements, and other evidence of actions he took that he
asserted was inconsistent with knowledge of the reporting requirements. Id. at 1314.
Ruling on the sufficiency of the evidence in support of the defendant’s conviction, the
court held that “[t]he jury could have inferred from the fact that [the defendant] chose
to carry out his currency exchanges in a series of small transactions over a number of
days, rather than in a single transaction or several larger transactions, that he knew of
the reporting requirements and was attempting to avoid them.” Nersesian, 824 F.2d
at 1314-15.
Finally, in United States v. Van Allen, 524 F.3d 814 (7th Cir. 2008), the
defendant operated a used auto-parts business. Id. at 817. Over a two-year period he
drafted more than 3,000 checks on his bank account, totaling more than $5.8 million,
States government. 18 U.S.C. § 1001.

21

but each in an amount less than $10,000. Id. at 817-18. He then cashed the checks at
currency exchanges, and paid a processing fee for each transaction. Id. at 817. He
explained the practice as being necessary due to the nature of the used auto-parts
business. Id. He claimed that his suppliers conducted business exclusively in cash,
so each day he would write checks to cover the anticipated purchase of parts that day.
Id. He also took checks paid by his customers, cashed them at currency exchanges,
and then deposited the cash into his bank account. Id. The defendant asserted that he
engaged in this practice because his customers transacted business primarily through
checks, and he wanted to ensure that the funds deposited into his account would be
immediately available, and he also wanted to “‘avoid the aggravation’ of filing extra
paperwork.” Id. Over a two-year period, the defendant and his family “made 1,148
separate cash deposits totaling over $5.5 million into [his] account, and all but three
of the deposits were in amounts under $10,000.” Id. at 818 (bracketed alteration
supplied). The defendant was charged with twenty-five counts of illegally structuring
transactions, with each count alleging “a group of cash deposits totaling over $10,000
with no single deposit exceeding $10,000, all occurring on a single day.” Id. at 820.
Reviewing the sufficiency of the evidence in support of the structuring conviction, the
court held that “[t]he sheer volume of the transactions almost compels the conclusion
reached by the jury.” Id. The court found that “[t]he fact that [the defendant] was
22

willing to sacrifice efficiency and convenience and paying exorbitant transaction fees
by going to separate banks in the same day to make almost identical deposits supports
the inference that he knew of and intended to avoid the reporting requirements.” Van
Allen, 524 F.3d at 820.
In the present case, Carlton Edwards made 68 withdrawals from the bank
account over a 234-day period in amounts typically of $9,000 and totaling $603,000.
He never made more than one withdrawal on any given day.
Because Carlton Edwards engaged in so many transactions over that period of
time, and none of the transactions exceeded $10,000, a reasonable jury could
reasonably infer that he had knowledge of, and that he sought to evade, the statutory
reporting requirements. Moreover, all but two of the 68 withdrawals were for exactly
$9,000 — conspicuously close to the $10,000 reporting threshold — and all were for
less than $10,000. A reasonable jury could conclude that it was highly unlikely that
an individual would need to make withdrawals in such amounts without ever needing
to make a withdrawal in excess of $10,000, and that virtually every withdrawal would
need to be for exactly $9,000, unless the individual knew of, and was attempting to
evade, the statutory reporting requirements. See Cassano, 372 F.3d at 879 (“Finally,
it is unlikely, to the point of absurdity, that it was pure coincidence that all fifty-one
checks cashed by [the defendant] were in denominations under $10,000.”). Moreover,
23

Carlton Edwards frequently withdrew cash on consecutive business days. A jury
could find that an individual would not undertake such a burdensome and inefficient
policy unless he knew of, and sought to avoid, the reporting requirements. Thus, the
complaint states sufficiently detailed facts to support a reasonable belief that the
government will be able to meet its burden of proof to show that Carlton Edwards had
knowledge of, and acted to avoid, the statutory reporting requirements.
B.

Whether the complaint states sufficient facts to show that the defendant
currency was involved in or traceable to a violation of 31 U.S.C. § 5324
Claimants contend that the defendant currency was not subject to forfeiture

because the government fails to allege any scheme or facts supporting a tracing of the
seized funds to the transactions at issue.27 In other words, the government did not
allege revolving deposits of the withdrawn funds, and, thus, according to claimants,
any money remaining in the bank account, such as the defendant currency, is separate
and distinct from any property involved in the offense of structuring and is not
forfeitable under 18 U.S.C. § 981.
The government contends that the defendant currency is forfeitable pursuant to
18 U.S.C. § 984, which provides:
(a)(1) In any forfeiture action in rem in which the subject property is
cash, monetary instruments in bearer form, funds deposited in an
27

Doc. no. 9 (Motion to Dismiss), at 8-9.

24

account in a financial institution . . . , or precious metals —
(A)

it shall not be necessary for the Government to identify the
specific property involved in the offense that is the basis for
the forfeiture; and

(B)

it shall not be a defense that the property involved in such
an offense has been removed and replaced by identical
property.

(2)

. . . [A]ny identical property found in the same place or account as
the property involved in the offense that is the basis for the
forfeiture shall be subject to forfeiture under this section.

(b)

No action pursuant to this section to forfeit property not traceable
directly to the offense that is the basis for the forfeiture may be
commenced more than 1 year from the date of the offense.

18 U.S.C. § 984(a). In other words, § 984 allows for the civil forfeiture of property,
including funds deposited in an account in a financial institution, with a physical and
temporal nexus to the tainted property.
Here, the cash withdrawn from the bank account by Edwards was the tainted
property because it was involved in a structuring offense. Thus, the court must
determine whether the defendant currency may be substitute property under § 984
because it had a physical and temporal nexus to the tainted, withdrawn cash.
The temporal nexus is met because the structuring violation occurred in October
of 2013, and the defendant currency was seized in August of 2014 — less than one
year later. Likewise, the physical nexus is met because the defendant currency was
25

identical property as the cash involved in the structuring offense — both are money
— and seized currency was taken out of the same account from which the traceable
cash was withdrawn. See U.S. v. Currency, 300,000 Seized from Bryant Bank Account
No. XXX-XX-XXXX, No. 2:12-CV-2431-AKK, 2013 WL 1498972, *3 (N.D. Ala. Apr.
9, 2013) (where the property involved in or traceable to a structuring offense was
originally located in a bank account, the Government can seize the identical amount
of funds involved in the offense from the account).
Accordingly, the complaint states sufficiently detailed facts to support a
reasonable belief that the government will able to meet its burden of proof at trial to
establish that the defendant currency is forfeitable pursuant to § 984.
Additionally, although the government does not make the argument, the
defendant currency is also forfeitable because it “facilitated” the structuring offense
and was, therefore, “involved in” the allegedly structured withdrawals. 31 U.S.C. §
5317(c)(2) provides that “[a]ny property involved in a violation of section 5313, 5316,
or 5324 of this title, or any conspiracy to commit any such violation, and any property
traceable to any such violation or conspiracy, . . .” may be civilly forfeited to the
United States. 31 U.S.C. § 5317(c)(2). A sister provision, 31 U.S.C. § 5317(c)(1),
provides for the criminal forfeiture of any property “involved in” the offense of
structuring currency transactions, or “traceable thereto.” 31 U.S.C. § 5317(c)(1). In
26

United States v. Seher, 562 F.3d 1344 (11th Cir. 2009), the Eleventh Circuit, because
of the identical “involved in” or “traceable” to language in § 5317(c)(1) and another
criminal forfeiture statute, 18 U.S.C. § 982(a)(1), held that both provisions subject the
same property to forfeiture. See Seher, 562 F.3d at 1369 (“Given that the two statutes
essentially mirror each other, it seems incongruous to interpret those provisions as
covering different arrays of property.”). Because the statutory provision that applies
here, § 5317(c)(2), also contains the same “involved in”or “traceable to” language
found in 18 U.S.C. § 982(a)(1), this court finds that § 5317(c)(2) and § 982(a)(1)
subject the same property to forfeiture. See Seher, 562 F.3d at 1369.
Property eligible for forfeiture under the “involved in” language of § 982(a)(1)
and, thus, also subject to forfeiture under the same language of § 5317(c)(2), includes
any “‘money or other property [that was actually] laundered (the corpus), any
commissions or fees paid to the launderer, and any property used to facilitate the
laundering offense.’” United States v. Puche, 350 F.3d 1137, 1153 (11th Cir. 2003)
(quoting United States v. Bornfield, 145 F.3d 1123, 1135 (10th Cir. 1998)) (bracketed
alteration supplied); see also United States v. $255,427.15 in United States Currency,
841 F. Supp. 2d. 1343, 1348 (S.D. Ga. 2012) (“The Eleventh Circuit has instructed
that § 5317’s use of the term ‘involved in’ permits courts to order forfeiture of
property ‘involved in, used to commit, or used to facilitate’ a violation of § 5324.”)
27

(quoting Seher, 562 F.3d at 1369). “‘Facilitation occurs when the property makes the
prohibited conduct less difficult or more or less free from obstruction or hindrance.’”
Puche, 350 F.3d at 1153 (quoting Bornfield, 145 F.3d at 1135).
No binding precedent exists in which a court applied the facilitation theory to
a currency transaction structuring offense similar to that alleged in this suit. However,
the existing precedent does clarify the broad contours of the facilitation theory of
forfeiture. In Seher, the court held that depositing laundered funds into a bank account
causes the other funds in that account to become “involved in” the illegal money
laundering because they “help disguis[e] the source of those tainted funds.” Seher,
562 F.3d at 1369. Similarly, in Puche, the court held that when tainted and legitimate
funds are intermingled in one account, the legitimate funds may facilitate the illegal
money laundering by “acting as a ‘cover’ and hence reduc[ing] suspicion of the . . .
source [of the tainted funds].” Puche, 350 F.3d at 1154 (bracketed alteration
supplied). Also, in Seher, the court held that where money was laundered through the
purchase of jewelry from two stores, the entire inventory of jewelry at the stores was
subject to forfeiture for facilitating the money laundering, because the “inventories
made it easier . . . to launder money by giving potential buyers a large variety of
jewelry options.” Seher, 562 F.3d at 1369.
While the decision of the Southern District of Georgia in United States v.
28

$255,427.15 in United States Currency is not binding precedent, that court confronted
facts similar to those before this court. The United States sought to forfeit a sum of
currency pursuant to § 5317(c)(2) on the grounds that it was traceable to or involved
in the structuring of withdrawals in violation of § 5324. See id. at 1344-47. The
claimants moved to dismiss the complaint for failure to state a claim, and specifically
asserted that the complaint failed to show that the defendant currency was “traceable
to or involved in a violation of § 5324.” Id. at 1347. The claimants had made 286
cash withdrawals, all under $10,000, from three business checking accounts. Id. at
1345. The United States then seized the defendant currency, which consisted of the
funds in those three accounts. Id. The claimants asserted that, “because the Defendant
Currency seized was not directly deposited into the account by structuring,” but rather
the only alleged illegal structuring related to those accounts consisted of withdrawals,
the defendant currency was “not traceable to the structuring violations and not
available for seizure.” Id. at 1348. The United States asserted that the defendant
currency was involved in the structuring violations. Id. The court found that the
“Complaint sufficiently allege[d] that the Defendant Currency was property involved
in transactions structured to evade the reporting requirement,” because the “structured
withdrawals were made directly from the bank accounts from which the Defendant
Currency was seized.” Id. (bracketed alteration supplied, emphasis in original).
29

This court finds the reasoning of the Southern District of Georgia in United
States v. $255,427.15 in United States Currency to be persuasive. When withdrawals
from an account are illegally structured so as to avoid the reporting requirements, the
funds in the account facilitate the illegally structured withdrawals because the illegally
structured withdrawals are made possible by the existence of the funds in the account.
Without the funds in the account, the illegal structured withdrawals could not be made.
Thus, the existence of the funds in the account does more than just make the
structuring of withdrawals less difficult, as required to establish that the funds
facilitated the structuring. Instead, the funds in the account are a necessary precursor
to the structured withdrawals. Additionally, where there exists an ongoing pattern of
withdrawals structured to avoid the reporting requirements, the funds in the account
are involved in the structuring because, unless seized, they are the next funds in line
to be withdrawn through a structured withdrawal. See United States v. $83,274.51
Seized from BBVA Compass Bank Account Number xxxx9194, No. 2:13-CV-153-JEO,
2013 WL 5524729, *5 (N.D. Ala. Sept. 30, 2013); United States v. $438,040.65 in
United States Currency, No. 5:11-CV-984-CLS, doc. no. 12 at 24 (N.D. Ala. Mar. 16,
2012).
Here, the defendant currency was seized from an account from which an alleged
pattern of 68 structured withdrawals were made over a 234-day period. Thus, the
30

complaint states sufficiently detailed facts to support a reasonable belief that the
government will able to meet its burden of proof at trial to establish that the defendant
currency was “involved in” the allegedly structured withdrawals.
IV. CONCLUSION
For the foregoing reasons, this court finds that the complaint satisfies the
standard of Supplemental Rule G(2)(f) because it states sufficiently detailed facts to
support a reasonable belief that the government will be able to meet its burden of
proof at trial. Therefore, claimants’ motion to dismiss is due to be, and it hereby is,
DENIED. Claimants are directed to file an answer on or before April 13, 2015.
DONE this 30th day of March, 2015.

______________________________
United States District Judge

31