United States of America v. Approx. $1,200,000.00 in U.S. Currency, et al.

Filing 107

STIPULATION AND ORDER TO DISMISS signed by Judge John A. Mendez on 9/23/13, Pursuant to the Stipulation for Dismissal and the allegations set forth in the Complaint for Forfeiture In Rem filed January 24, 2005, the Court enters this Certificate of Reasonable Cause pursuant to 28 U.S.C. § 2465, that there was reasonable cause for the seizure of the funds identified as the approximately $225,958.84 in U.S. Currency seized from Bank of America account No. 004653665607.(Mena-Sanchez, L)

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BENJAMIN B. WAGNER
United States Attorney
KEVIN C. KHASIGIAN
Assistant U.S. Attorney
501 I Street, Suite 10-100
Sacramento, CA 95814
Telephone: [phone]

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Attorneys for the United States

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IN THE UNITED STATES DISTRICT COURT
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FOR THE EASTERN DISTRICT OF CALIFORNIA
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UNITED STATES OF AMERICA,

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Plaintiff,

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2:05-CV–00149 JAM-DAD
STIPULATION TO DISMISS AS TO
ONE DEFENDANT AND ORDER
THEREON

v.
APPROXIMATELY $1,200,000.00 IN
U.S. CURRENCY SEIZED FROM FIRST
CALIFORNIA BANK ACCT. NO.
2005638,
APPROXIMATELY $225,958.84 IN U.S.
CURRENCY SEIZED FROM BANK OF
AMERICA ACCT. NO. 004653665607,
and
APPROXIMATELY $177,695.11 IN
FUNDS CONNECTED TO A
TRANSFER TO THE UNITED STATES
OF AMERICA FROM BULLIVANT
HOUSER BAILEY,

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Defendants.

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The United States of America and claimants Judith L. Hollis on behalf of the Estate

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of John W. Hollis (“Hollis”), Universal Insurance Exchange ("Universal"), and Bennett

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Truck Transport, LLC ("Bennett"), stipulate as follows:

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1.

Universal is a general unsecured creditor of Tri-Continental Exchange Ltd.

("TCE"), Combined Services, Ltd. ("CSL") and/or Alternative Market Exchange Ltd.
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Stipulation to Dismiss as to
One Defendant and Order

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("AME), collectively referred to herein as the "Debtors." Bennett asserts constructive trust

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and unsecured claims against the debtors and the forfeiture funds. Bennett also asserts

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a lien on the funds pursuant to California Code of Civil Procedure § 708.410.

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2.

The United States has filed a civil forfeiture action against the defendant

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funds, alleging that the funds were involved in, or are traceable to, money laundering

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violations committed by Robert L. Brown a.k.a. Matthew Schachter ("Brown) through

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TCE and CSL, and/or constitute or are derived from the proceeds of mail fraud, or a

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conspiracy to commit such offense, committed by Brown through TCE and CSL.

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3.

Bennett filed a Claim to all of the defendant funds on November 23, 2005,

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filed a Lien on Pending Action on January 10, 2006, and filed an Answer to the Complaint

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on January 9, 2006.

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4.

John W. Hollis (“Hollis”) filed a Claim to all of the defendant funds on or

about December 19, 2005.
5.

Universal filed a Claim to all of the defendant funds on March 24, 2006, and

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filed an Answer to the Verified Complaint for Forfeiture In Rem (the "Complaint") on April

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11, 2006.

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6.

In a Memorandum of Opinion and Order dated July 19, 2005, (hereafter

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"District Court Order") this Court granted, in part, the United States's motion to dismiss

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Hollis's claim. This Court ruled that Hollis did not have standing to assert an interest in

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the $1.2 million seized from his trust account at First California Bank Account No.

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2005638 (Order, at 16), nor did he have standing to assert an interest in the $177,695.11

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connected to a transfer to the United States from Bullivant Houser Bailey.

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7.

This Court ruled that Hollis does have standing to assert a claim to the

$225,958.84 seized from Hollis' personal bank account at Bank of America.
8.

Thereafter, Hollis filed an Answer to the Complaint (under seal) on

September 19, 2006, and filed an Amended Answer (under seal) on September 26, 2006.
9.

The United States and the Liquidators for the debtors (see ¶ 13(a) infra)

entered into a stipulation to transfer the defendant funds, other than the $225,958.84
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Stipulation to Dismiss as to
One Defendant and Order

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described in ¶ 7, to the bankruptcy court for distribution to the debtors' creditors in

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accordance with all applicable laws.

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10.

On December 12, 2006, an Order was filed dismissing defendants

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approximately $1.2 million seized from First California Bank Account No. 2005638, and

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the approximately $177,695.11 connected to a transfer to the United States from Bullivant

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Houser Bailey to the Bankruptcy Court.

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11.

The United States and claimants Hollis, Bennett, and Universal now seek

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to dismiss this forfeiture action without prejudice, pursuant to Rule 41(a)(2) of the Federal

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Rules of Civil Procedure against the approximately $225,958.84 in U.S. Currency seized

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from Bank of America Acct. No. 004653665607.
12.

The rights of Bennett and Universal, if any, to the sum described in the

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preceding paragraph will be determined in accordance with applicable bankruptcy law,

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forfeiture law, and/or state law. Nothing in this stipulation is intended to adjudicate,

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hinder, or impair the rights of claimants to the funds, and such rights, if any, are

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preserved and will be addressed in the insolvency proceedings discussed below.

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13.

The facts in support of this stipulation and request for an Order are as

follows:
a.

Foreign insolvency proceedings were commenced against the

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Debtors in St. Vincent and the Grenadines before the Eastern

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Caribbean Supreme Court (the “SVG Proceedings”). A three-

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person Foreign Representative was duly appointed in the SVG

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Proceedings to serve as the Joint Liquidators (hereafter "the

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Liquidators") of the Debtors.

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b.

The U.S. Bankruptcy Court in the Eastern District of

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California has granted the Liquidator's Petition seeking

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recognition as the Foreign Representative of the Debtors in a

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procedure authorized pursuant to Chapter 15 of the United

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States Bankruptcy Code, 11 U.S.C. § 1501 et seq. Attached to
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Stipulation to Dismiss as to
One Defendant and Order

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this stipulation as Ex. 1 is a copy of Judge Klein's

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Memorandum Decision Regarding Recognition of Foreign Main

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Proceeding filed September 11, 2006.

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c.

In addition, the United States and the Liquidators entered into

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a stipulation in which the United States agreed that it would

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seek dismissal of this forfeiture action so that the funds could

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be transferred to the Bankruptcy Court for administration. A

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copy of that stipulation is attached as Ex. A to Judge Klein's

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Order Approving Modified Stipulation Between the United

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States of America, the Debtors, and John W. Hollis, [hereafter

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"Order"] attached hereto as Ex. 2.

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14.

In addition, the United States, claimant Hollis, and the Liquidators entered

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into a separate stipulation in which the parties agreed that the defendant funds identified

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as the approximately $225,958.84 seized from Bank of America account No. 004653665607

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would remain under the jurisdiction of the district court pending completion of the

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resolution of the competing claims to the $225,958.84. A copy of that stipulation is

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attached as Ex. B to Judge Klein's Order (Ex. 2).

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15.

As noted above, the Order (Ex. 2) incorporates the stipulation between the

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United States and the Liquidators on behalf of the debtor, and the stipulation between

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claimant Hollis, the United States, and the Liquidators.

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16.

John W. Hollis passed away on June 15, 2012.

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The United States contends that the funds that were seized from claimant

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Hollis' personal account at Bank of America (approximately $225,958.84) also belong to

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TCE and CSL and should be administered in the Chapter 15 case under the supervision

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of the Bankruptcy Court. Judith L. Hollis, on behalf of the Estate of John W. Hollis, now

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agrees and stipulates that the approximately $225,958.84 should be administered in the

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Chapter 15 cases of TCE and CSL under the supervision of the Bankruptcy Court.

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Accordingly, at this time the United States, Hollis, Universal, and Bennett seek the
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Stipulation to Dismiss as to
One Defendant and Order

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dismissal of the forfeiture action as to the defendant approximately $225,958.84 in U.S.

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Currency seized from Bank of America account No. 004653665607 to the Bankruptcy

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Court.

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18.

Upon dismissal of this action as to the $225,958.84, the United States will

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take all steps necessary to transfer these funds from the U.S. Department of the Treasury

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Suspense Account to the Liquidators identified in the September 11, 2006, Memorandum

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Decision Regarding Recognition of Foreign Main Proceedings (Ex. 1).

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19.

The parties to this stipulation agree that there was reasonable cause for the

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seizure and arrest of the defendant approximately $225,958.84 in U.S. Currency seized

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from Bank of America account No. 004653665607, and that the Court may enter a

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Certificate of Reasonable Cause pursuant to 28 U.S.C. § 2465.

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20.

The parties further stipulate that even if they receive any distribution of

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funds in the bankruptcy proceedings, that distribution is not to be considered as a

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"judgment for the claimant" within the meaning of 28 U.S.C. § 2465(a), nor will that

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claimant be considered a "prevailing party" within the meaning of 28 U.S.C. § 2465(b).

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21.

Any claimant's entitlement to costs or attorney fees will be determined solely

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in accordance with applicable law. Under no circumstances will the United States be

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liable for costs or attorney fees incurred by claimants in this forfeiture action or in the

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Stipulation to Dismiss as to
One Defendant and Order

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bankruptcy proceedings.

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There are no other terms or conditions other than those specified herein.

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DATED: 9-19-13

BENJAMIN B. WAGNER
United States Attorney

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By:

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/s/ Kevin C. Khasigian
KEVIN C. KHASIGIAN
Assistant U.S. Attorney

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DATED: 9-17-13

/s/ Judith L. Hollis
JUDITH L. HOLLIS
On behalf of the Estate of Claimant
John W. Hollis

DATED: 9-17-13

/s/ Tim Warriner
TIM WARRINER
Attorney for Judith L. Hollis

DATED: 6-19-13

/s/ Thomas R. Phinney
THOMAS R. PHINNEY
Attorneys for Claimant Bennett
Truck Transport, LLC

DATED: 7/2/13

/s/ Gregory J. Hughes
GREGORY J. HUGHES
Attorneys for Universal
Insurance Exchange

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(Signatures retained by attorney)
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IT IS SO ORDERED.

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DATED: 9/23/2013

/s/ John A. Mendez
JOHN A. MENDEZ
United States District Court Judge

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Stipulation to Dismiss as to
One Defendant and Order

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CERTIFICATE OF REASONABLE CAUSE
Pursuant to the Stipulation for Dismissal and the allegations set forth in the

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Complaint for Forfeiture In Rem filed January 24, 2005, the Court enters this

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Certificate of Reasonable Cause pursuant to 28 U.S.C. § 2465, that there was

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reasonable cause for the seizure of the funds identified as the approximately

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$225,958.84 in U.S. Currency seized from Bank of America account No. 004653665607.

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DATED: 9/23/2013

/s/ John A. Mendez
JOHN A. MENDEZ
United States District Court Judge

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Stipulation to Dismiss as to
One Defendant and Order