UNITED STATES OF AMERICA v. $776,670.00 PREVIOUSLY CONTAINED IN BANK OF AMERICA ACCOUNT NUMBER 000376803507 HELD IN THE NAME OF SHIN'S TRADING. DBA CALA PRODUCTS

Filing 11

OPINION. Signed by Judge William J. Martini on 4/28/14. (gh, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

Civ. No. 2:13-4108 (WJM)

UNITED STATES OF AMERICA,
Plaintiffs,

OPINION
v.
$776,670.00 PREVIOUSLY CONTAINED IN
BANK OF AMERICA ACCOUNT NUMBER
000376803507 HELD IN THE NAME OF
SHIN’S TRADING, DBA CALA
PRODUCTS,
Defendant in rem.

WILLIAM J. MARTINI, U.S.D.J.:
In this in rem civil forfeiture proceeding, the Government seized roughly
$750,000.00 from a bank account held in the name of Shin’s Trading DBA Cala Products
(“Shin’s”). Claimants Jung Min Shin and Heebok Shin now move to dismiss the
Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) and Supplemental Rule
for Admiralty and Maritime Claims and Assets Forfeiture Actions G(8)(b)(i) for failure to
state a claim upon which relief can be granted. There was no oral argument. Fed. R. Civ.
P. 78(b). For the reasons set forth below, the motion to dismiss is DENIED.
I.

BACKGROUND

The verified complaint in rem sets forth the following allegations, which the Court
must accept as true for purposes of the instant motion to dismiss. Shin’s is a purported
jewelry wholesaler and exporter located in Los Angeles, California. Compl. ¶ 18, ECF
No. 1. Shin’s exports goods to countries including Mexico, Paraguay, Ecaudor,
Venezuela, Suriname, Costa Rica, El Salvador, Panama, Colombia, Curacao, and
Honduras. Id. ¶ 26. The Complaint alleges that “[m]any of these countries are routinely
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involved in the production or transportation of narcotics or narcotics proceeds.” Id. The
Complaint also alleges that drug traffickers in Colombia and other South American
countries sometimes attempt to launder money with the help of South American
importers using something called the “Black Market Peso Exchange” (“BMPE”). Id. ¶
10. The BMPE begins with a South American importer who places an order with an
American exporter. To make payment, the importer needs to convert its pesos into
dollars. To do that, the importer hires a BMPE broker. The BMPE broker trades pesos
for dollars that were acquired through illegal drug sales. Id. The physical trades take
place between people who do not know each other and probably will never meet again.
Id. ¶ 11. After the pesos are exchanged, the BMPE broker arranges to make payment in
dollars to the exporter on behalf of the importer. Id. ¶ 12. Frequently, the payments are
made at various geographical locations, not necessarily where the exporter is located. Id.
The Government alleges that payments made to Shin’s were part of the BMPE.
The specific funds at issue in this case are funds that were deposited into an
account Shin’s maintained at Bank of America, account number 000376803507 (the
“Account”). The Account was listed in the ledgers of Jose Narvaez, a man who pled
guilty to money laundering on March 6, 2012. Id. ¶ 19. From March 7, 2012—the day
after Narvaez pled guilty—through March 19, 2013, a number of cash deposits were
made to the Account at various branches located throughout the country, including one
branch located in this District. Id. ¶ 20. On multiple occasions, deposits were made on
the same or consecutive days totaling $10,000 or more. Id. ¶ 21. Representative deposits
include:
Date
3/16/2012
3/16/2012
3/16/2012

Amount
$8,000.00
$8,500.00
$8,500.00

Branch
Buckhead Crossing
Howell Ferry
Sugarloaf Financial Center

Location
Atlanta, GA
Duluth, GA
Lawrenceville, GA

4/18/2012
4/18/2012
4/18/2012
4/18/2012

$8,000.00
$5,000.00
$7,000.00
$5,000.00

Hyde Park
Pilsen-18th & Paulina
Back of the Yards
71st & Stony

Chicago, IL
Chicago, IL
Chicago, IL
Chicago, IL

8/20/2012
8/20/2012
8/20/2012

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

Rea Village
New Town Market
Blakeney Crossing

Charlotte, NC
Waxhaw, NC
Charlotte, NC

11/15/2012
11/15/2012

$9,700.00
$9,700.00

River Oaks
Chicago-24th & Cicero

Calumet City, IL
Cicero, IL

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11/15/2012
11/15/2012
11/15/2012
11/15/2012
11/15/2012
11/15/2012
11/16/2012
11/16/2012

$9,700.00
$9,700.00
$9,700.00
$9,700.00
$9,700.00
$9,700.00
$9,700.00
$9,700.00

Chicago-24th & Cicero
Cicero/Cermak
Cicero/Cermak
Berwyn
93rd & Commercial
Chicago-24th & Cicero
Cicero/Cermak
Berwyn

Cicero, IL
Cicero, IL
Cicero, IL
Berwyn, IL
Chicago, IL
Cicero, IL
Cicero, IL
Berwyn, IL

3/6/2013
3/7/2013

$5,000.00
$5,185.00

Laredo
Laredo

Laredo, TX
Laredo, TX

Id. Furthermore, on November 15 and 16, 2012, 10 deposits totaling $97,000.00 were
made to the Account at branches in the Chicago area. Id. ¶ 22. (Indeed, according to a
Shin’s sale associate, many of Shin’s invoices were in the amount of $100,000.00. Id. ¶
32.) Based on the handwriting on deposit slips used for the Account, the deposits were
made by more than one person. Id. ¶ 25. Additionally, though the deposits were made
outside of California, there are “no indications” that Shin’s Trading maintains any place
of business or agent outside of the Los Angeles area. Id. ¶ 23.
While the single-day and consecutive-day deposits identified by the Government
aggregated to amounts in in excess of $10,000.00 from March 7, 2012 through March 19,
2013, only one individual deposit exceeded $10,000.00. Id. ¶ 20 n.1. The Government
makes special note of this point because federal law requires (a) that financial institutions
file Currency Transaction Reports (“CTRs”) with the Government for cash transactions
exceeding $10,000.00, and (b) that businesses that receive more than $10,000.00 in
related cash transactions file a “form 8300” with the Financial Crimes Enforcement
Network (“FinCen”). Id. ¶¶ 15, 17 (citing 31 U.S.C. §§ 5313, 5331). Shin’s Trading
never filed a form 8300 with FinCen. Compl. ¶ 24.
On July 3, 2013, the Government filed the instant verified Complaint for forfeiture
in rem. ECF No. 1. The Complaint alleges that $776,670.00 contained in the Account
was subject to forfeiture for three reasons. First, the Government claims that the money
in the Account was subject to forfeiture under 18 U.S.C. § 981(a)(1)(A) as property that
involved a transaction or attempted transaction in violation of 18 U.S.C. §§ 1956 (money
laundering) or 1957 (transacting in property derived from specified unlawful activity).
Second, the Government claims that the money in the account was subject to forfeiture
under 21 U.S.C. § 881 as property traceable to the sale of a controlled substance. Third,
the Government claims that the money in the account was subject to forfeiture under 31

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U.S.C. § 5317(c) as property involved in a violation of 31 U.S.C. § 5324 (structuring
transactions to evade reporting requirement).
On July 3, 2013, the day the Complaint was filed, a seizure warrant was issued for
$776,670.00 contained in the Account (the “Property”). Id. ¶ 27. On April 24, 2013, the
Drug Enforcement Administration (“DEA”) executed that warrant and seized the
$776,670.00. Id. ¶ 28. On April 29, 2013, law enforcement officers interviewed Shin’s
owners Jung Min Shin and Jenny Shin. Id. ¶ 29. Jenny Shin informed the officers that
Shin’s Mexican and South American customers “prefer” to pay using third party cash
deposits made in the United States. Id. Jenny Shin also said that she did not know the
identities of the people who deposited money into the Account, and she also did not know
where the deposits were made. Id. ¶ 30. Both Jung Min Shin and Jenny Shin claimed to
be unaware of the reporting requirement associated with form 8300. Id. ¶ 33.
On August 26, 2013, Jung Min Shin and Heebok Shin (apparently this is the Jenny
Shin interviewed by law enforcement) moved to dismiss the Complaint.
II.

LEGAL STANDARD

In a civil forfeiture proceeding, the “sufficiency of the complaint is governed by
Supplemental Rule G(2) not by the Civil Rule 12(b) plausibility standard set forth in Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) and
Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).” United States
v. $263,327.95, 936 F. Supp. 2d 468, 471 (D.N.J. 2013) (internal quotations and citations
omitted). Supplemental Rule G(2)(f) provides that a complaint must “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. G(2)(f). Also, Supplemental Rule E(2)(a)
provides that “the complaint shall state the circumstances from which the claim arises
with such particularity that the defendant or claimant will be able, without moving for a
more definite statement, to commence an investigation of the facts and to frame a
responsive pleading.” Fed. R. Civ. P. Supp. E(2)(a)
III.

DISCUSSION

The Government has sufficiently pled that the Property (the $776,670.00
contained in the Account) was forfeitable under 31 U.S.C. § 5317(c) because it was
structured, in violation of 31 U.S.C. § 5324.
Title 31, Section 5317(c) of the United States Code provides that “any property
involved in a violation of [31 U.S.C.] section 5324 . . . and any property traceable to any
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such violation . . .” is forfeitable to the United States. Accordingly, to establish that the
Property seized in this case was forfeitable, the Government must establish a violation of
31 U.S.C. § 5324 (“Section 5324”), which prohibits a practice known as “structuring.”
An individual structures a transaction when he or she “breaks up a single transaction
above the reporting threshold into two or more separate transactions [ ] for the purpose of
evading a financial institution’s reporting requirement.” Ratzlaf v. United States, 510
U.S. 135, 136 (1994). To prove a violation of Section 5324, the Government must
establish that “(1) the person knowingly structured, attempted to structure, or assisted in
structuring a currency transaction; (2) the person knew of the domestic financial
institution’s legal obligation to report transactions in excess of $10,000; and (3) the
purpose of the structured transaction was to evade the reporting obligation.” United
States v. $255,427.15 in U.S. Currency, 841 F. Supp. 2d 1350, 1356 (S.D. Ga. 2012). As
such, “the only mens rea required to violate § 5324 is to have the purpose of evading the
reporting requirement—not knowledge that structuring itself is illegal.” Id.
Here, the Complaint’s allegations set forth a pattern of activity highly suggestive
of structuring. Specifically, the Complaint alleges that over the course of a year, Shin’s
received a number of cash deposits at bank branches located across the country, even
though Shin’s did not maintain a business or keep an agent outside of the Los Angeles
area. The Complaint also alleges that depositors frequently made multiple deposits to the
Account in a single city on a single day or on consecutive days, and that with just one
exception, these deposits were individually less than $10,000.00, but combined the
deposits aggregated to more than $10,000.00. Furthermore, the Complaint alleges that
Shin’s Account was identified in the ledger of a convicted money launderer. If true,
these allegations give rise to the “reasonable belief” that the deposits in the Account were
knowingly structured to evade the requirement to report transactions exceeding
$10,000.00. See $263,327.95, 936 F. Supp. 2d at 474 (denying motion to dismiss
forfeiture claim based on structuring where deposits, each less than $10,000 but totaling
roughly $650,000, were often made on the same day at the same bank). Furthermore, the
facts provide sufficient notice for the Claimants to frame a responsive pleading. See Fed.
R. Civ. P. Supp. E(2)(a).
Claimants respond with two arguments, neither of which succeeds. First,
Claimants argue that the Complaint lacks sufficient information to tie Claimants to the
alleged structuring. Claimants note that the Complaint suggests that other individuals—
not Claimants—made the deposits at issue. Claimants also point to their statement to the
DEA that they were unfamiliar with applicable reporting requirements. But regardless of
whether the deposits were structured by claimants, the Complaint gives rise to the
reasonable belief that the deposits were structured—if not by claimants, then by the
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depositors. That is sufficient to allow this case to proceed to discovery. See United
States v. Sandini, 816 F.2d 869, 872 (3d Cir. 1987) (“The innocence of the owner [in a
civil forfeiture proceeding] is irrelevant—it is enough that the property was involved in a
violation to which forfeiture attaches.”). Ultimately, if they did not violate Section 5324,
Claimants will be able to appeal to the “innocent owner” affirmative defense provided by
18 U.S.C. § 983(c).
Second, Claimants argue that the Government will not be able to prove that the
Property was structured in violation of Section 5324 because the Claimants do not know,
and likely cannot discover, the identity of the depositors, who allegedly participated in
the BMPE. This argument implicates fact issues, and it is premature at this stage of the
litigation. (Notably, even if the Government does not currently know the identities of the
depositors now, it might be able to discover the identities through discovery. See 18
U.S.C. § 983(a)(c)(2) (permitting Government to use evidence collected during discovery
to meet its burden of proof).) In sum, the Court finds that the Government has met its
burden at this stage of the proceeding to allege that the Property was structured, and
therefore forfeitable. Accordingly, the Court will DENY the motion to dismiss.
Before concluding, the Court notes that besides from their challenge to the
structuring allegations, Claimants also challenge the two additional bases the
Government offers for the forfeiture: that the property was (a) laundered money or
property derived from an unlawful activity, in violation of 18 U.S.C. §§ 1956 and or 1957
(transacting in property derived from specified unlawful activity), and/or (b) property
traceable to the sale of a controlled substance, in violation of 21 U.S.C. § 881. While the
the allegations linking the Property to the BPME are fairly speculative, the Court must
consider them along with the additional allegations in the Complaint. Given the
structuring allegations (which survive a motion to dismiss), and given the alleged
connection between the Account and a convicted money launderer, the Court finds it
proper to allow discovery on whether the Property was connected with money laundering
and/or drug sales.
IV.

CONCLUSION

For the reasons set forth above, the motion to dismiss is DENIED. An appropriate
order follows.

/s/ William J. Martini
WILLIAM J. MARTINI, U.S.D.J.
Date: April 28, 2014
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