UNITED STATES OF AMERICA v. THE REAL PROPERTY KNOWN AS 212 EAST 47TH STREET, APARTMENT 14E, NEW YORK, NEW YORK
MEMORANDUM OPINION filed. Signed by Judge Mary L. Cooper on 4/25/2017. (mps)
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
UNITED STATES OF AMERICA
THE REAL PROPERTY KNOWN AS :
212 EAST 47TH STREET, APT. 4E,
NEW YORK, NEW YORK;
CIVIL ACTION NO. 16-8375 (MLC)(DEA)
COOPER, District Judge
This is a civil forfeiture action brought by the United States Government in rem
against real property located in New York City. Tomer Yosef is a claimant of the property at
issue and has moved to stay these proceedings under the rules applicable to forfeiture actions.
For the reasons cited below, we will grant the stay requested by Mr. Yosef. We resolve this
motion without oral argument. See L.Civ.R. 78.1(b).
Plaintiff United States of America filed a criminal complaint in this court in August
2016 against Tomer Yosef, a native and citizen of Israel.1 The substance of the allegations
against Mr. Yosef are recounted in the Complaint in this case. (Dkt. 1.)2 Briefly, the
Government alleges that Mr. Yosef committed wire fraud in violation of 18 U.S.C. § 1343 by
See United States of America v. Tomer Yosef, Case No. 3:16-mj-4528.
We will cite to documents filed on the Electronic Case Filing System (“ECF”) by referring to the
docket entry numbers as “dkt.” Pincites refer to ECF pagination.
defrauding two investors in connection with a technology startup company. (Id. at 3–4.) Mr.
Yosef allegedly made various misrepresentations to the investors about the operation and
progress of the company while taking much of the “investment” money for himself. (Id. at 4–
For the purposes of this action, the key allegation is that Mr. Yosef used these illgotten funds to purchase a condominium apartment located at 212 East 47th Street,
Apartment 14E, New York, New York (the “Property”). (Id. at 21–24.) The Complaint
describes the various bank accounts that Mr. Yosef allegedly used to purchase the Property.
(Id. at 18–21.) Technically, the Property was purchased by YG Property Holdings LLC (“YG
Holdings”), a New York Limited Liability Company formed by Mr. Yosef. (Id. at 22.) Mr.
Yosef is the sole member of YG Holdings. (Id.)
The Government contends that Mr. Yosef’s actions violated the wire fraud statute,
18 U.S.C. § 1343, and brought this case in November 2016 under 18 U.S.C. § 981, which
provides that “[a]ny property, real or personal, which constitutes or is derived from proceeds
traceable to . . . ‘specified unlawful activity’ (as defined in section 1956(c)(7) of this title)” is
subject to forfeiture. 18 U.S.C. § 981(a)(1)(C).3 Mr. Yosef filed a Notice of Claim of his
ownership of the Property in December 2016. (Dkt. 5.) Despite receiving several stipulations
by the parties extending the deadlines to respond to the Complaint (see dkt. 6; dkt. 7; dkt. 9),
Under Section 1956(c)(7)(A), the definition of “specified unlawful activity” includes offenses listed
in 18 U.S.C. § 1961(1). The offenses listed in Section 1961(1) include wire fraud in violation of
18 U.S.C. § 1343.
Mr. Yosef has not yet filed an answer. Mr. Yosef now moves to stay this case pursuant to
18 U.S.C. § 981(g)(2). (Dkt. 11.)
Defendants involved in parallel criminal and civil proceedings may face the “difficult
choice between being prejudiced in the civil litigation, if the defendant asserts his or her
Fifth Amendment privilege, or from being prejudiced in the criminal litigation if he or
she waives that privilege in the civil litigation.” Louis Vuitton Malletier S.A. v. LY
USA, Inc., 676 F.3d 83, 97 (2d Cir. 2012). On one hand, asserting the Fifth Amendment
in a civil case “may give rise to an adverse inference against the party claiming its
benefits.” Adkins v. Sogliuzzo, 625 F. App’x 565, 571 (3d Cir. 2015) (quoting SEC v.
Graystone Nash, Inc., 25 F.3d 187, 190 (3d Cir. 1994)); see also McMullen v. Bay Ship
Mgmt., 335 F.3d 215, 218 (3d Cir. 2003) (noting judicial discretion to tailor equitable
remedy to balance civil litigant’s Fifth Amendment rights and potential prejudice to
adversary). On the other hand, a civil litigant may face the risk of waiving his Fifth
Amendment protections or providing evidence that could be used against him in a
criminal case. See Graystone Nash, 25 F.3d at 193 (noting that affidavit filed in civil
case “raise[d] serious questions about whether defendants waived their privilege”).
18 U.S.C. § 981(g)(2) enables a claimant to sidestep that dilemma by moving for a
stay in a civil forfeiture action when there are related criminal proceedings. If a claimant so
moves, the statute requires us to stay the civil proceeding if we determine that: (1) the
claimant is the subject of a related criminal investigation or case; (2) the claimant has
standing to assert a claim in the civil forfeiture proceeding; and (3) continuation of the
forfeiture proceeding will burden the right of the claimant against self-incrimination in
the related investigation or case. 18 U.S.C. § 981(g)(2).
Regarding the first inquiry, the statute defines “related criminal investigation or
case” as “an actual prosecution or investigation in progress at the time at which the request
for the stay, or any subsequent motion to lift the stay is made.” Id. § 981(g)(4). Moreover,
“[i]n determining whether a criminal case or investigation is ‘related’ to a civil forfeiture
proceeding, the court shall consider the degree of similarity between the parties, witnesses,
facts, and circumstances involved in the two proceedings, without requiring an identity with
respect to any one or more factors.” Id.
The second inquiry, standing, is designed to ensure that a claimant is properly
before the court. To contest a forfeiture, a claimant must have both Article III and statutory
standing. United States v. $8,221,877.16 in U.S. Currency, 330 F.3d 141, 150 n. 9 (3d Cir.
2003). “Article III standing requires the claimant to show an interest in the property sufficient
to create a ‘case or controversy,’ while statutory standing requires claimants to comply with
certain procedures.” Id. (quoting United States v. Contents of Accounts Numbers
3034504504 & 144-07143 at Merrill Lynch, Pierce, Fenner & Smith, Inc., 971 F.2d 974, 984
(3d Cir. 1992). To establish statutory standing, claimants must comply with the requirements
of 18 U.S.C. § 983(a)(4)(A). United States v. $487,825.000 in U.S. Currency, 484 F.3d 662,
664 (3d Cir. 2007), as amended (May 14, 2007). That statute in turn requires would-be
claimants to file a claim asserting interest in the property in accordance with the Supplemental
Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions (“Supplemental
Rules”).4 18 U.S.C. § 983(a)(4)(A). Supplemental Rule G(5)(a)(i) governs the filing of a
claim, and requires that the claim: (1) identify the specific property claimed; (2) identify the
claimant and state the claimant’s interest in the property; (3) be signed by the claimant under
penalty of perjury; and (4) be served on the applicable government attorney. Supplemental
Rule G(5)(a)(ii) sets out certain deadlines for the filing of the verified claim. Supplemental
Rule G(5)(b) requires claimants to serve and file an answer to the complaint or a motion
under Rule 12 of the Federal Rules of Civil Procedure within 21 days after the filing of the
The Third Circuit has explained that the “most significant requirement” is that the
claimant file a verified claim. See $487,825.000, 484 F.3d at 664.5 Requiring a timely
claim ensures that claimants “come forward as quickly as possible after the initiation of
forfeiture proceedings, so that the court may hear all interested parties and resolve the
dispute without delay.” Id. (quoting $8,221,877.16, 330 F.3d at 150 n. 9). And requiring
a verified claim “minimize[s] the danger of false claims by requiring claims to be verified
or solemnly affirmed.” Id. Consequently, a “claimant who fails to file a verified
statement has no standing to contest a forfeiture.” Id.; see also United States v. 8136 S.
The Federal Rules of Civil Procedure also apply to civil forfeiture proceedings, but only to the extent
they are not “inconsistent with” the Supplemental Rules. See United States v. $263,327.95, 936 F.
Supp. 2d 468, 471 (D.N.J. 2013) (citing Supplemental Rule A(2)).
Prior to amendments to the Supplemental Rules in 2005, the filing of a verified claim (previously
called a “statement of interest”) was governed by Supplemental Rule C(6). See United States v.
$410,000.00 In U.S. Currency, No. 07-0598, 2007 WL 4557647, at *4 n.3 (D.N.J. Dec. 21, 2007).
Although some of the applicable case law cites Supplemental Rule C(6), the policy concerns
underpinning those decisions apply equally to the substantively similar requirements under the nowapplicable Supplemental Rule G(5).
Dobson Street, 125 F.3d 1076, 1082 (7th Cir. 1997) (“If no claim is filed, a putative
claimant lacks standing to contest a forfeiture.”).
Although the Third Circuit has emphasized that claimants must carefully adhere to
the procedural requirements for filing a claim, it has also cautioned against overly-rigid
application of the rules when assessing standing. Consequently, we are mindful that our
analysis of a claimant’s compliance with procedural requirements “should not be so strict
in interpreting those requirements that the outcome defies ‘old-fashioned common
sense.’” See United States v. $263,327.95, 936 F. Supp. 2d 468, 472 (D.N.J. 2013)
(quoting United States v. Various Computers & Computer Equip., 82 F.3d 582, 585 (3d
Cir.1996)). Indeed, to assert statutory standing, the “burden is minimal and does not
require that defendants explain in any detail the nature of their interest.” United States v.
$410,000.00 In U.S. Currency, No. 07-0598, 2007 WL 4557647, at *5 (D.N.J. Dec. 21,
The final inquiry in connection with securing a stay under Section 981(g)(2) is
whether continuation of the forfeiture proceeding will burden the right of the claimant
against self-incrimination in the related investigation or case. See 18 U.S.C. § 981(g)(2).
Mr. Yosef contends that a stay in this case is appropriate because each of the required
conditions in Section 981(g)(2) is present here. First, he asserts the existence of an open
criminal investigation against him. (Dkt. 11-1 at 9–10.) Second, he claims to have the
requisite Article III and statutory standing by means of filing a timely verified claim and his
allegedly undisputed ownership interest in the Property. (Id. at 12.) Finally, he submits that
his Fifth Amendment right against self-incrimination in the related criminal case would be
burdened absent a stay. (Id. at 13–14.) Mr. Yosef observes that the allegations in the civil
forfeiture complaint here “reads like a criminal prosecution” and “explicitly alleges that [Mr.
Yosef] committed wire fraud. (Id. at 13.) Consequently, he argues that “compelling [him] to
file an answer . . ., answer interrogatories and document requests, and provide deposition
testimony, would be tantamount to compelling him to testify against himself.” (Id.)
The Government concedes that Mr. Yosef has satisfied the first requirement of Section
981(g)(2) in light of the pending criminal case against him (dkt. 13 at 10), but submits that
Mr. Yosef cannot demonstrate the second and third requirements—namely, the requisite
standing and burden on his Fifth Amendment rights.
The Government first argues that Mr. Yosef lacks statutory standing because his
verified claim fails to satisfy the procedural requirements of Supplemental Rule G(5)(a).
(Dkt. 13 at 13–15.) The alleged defect in Mr. Yosef’s verified claim is that it does not
mention YG Holdings, the record title-holder of the Property. (Id. at 13.) The Government
insists that this is “not a technical point” because Mr. Yosef has not demonstrated that he
“exercises dominion and control” over the Property and his failure to describe his relationship
to YG Holdings could result in “multiple other individuals . . . alleg[ing] to be members of
YG Holdings, and claim[ing] an ownership interest” in the Property. (Id. at 13–14.)
The Government also submits that Mr. Yosef’s failure to file an answer in the case
demonstrates that he lacks both Article III and statutory standing. They argue that Mr.
Yosef’s failure to file an answer renders us unable to determine whether there is Article III
standing because “[a]nswering the complaint enables the plaintiff and the court to determine
whether there is a ‘case and controversy’ for Article III purposes because the claimant is
required to admit, deny, or invoke the Fifth Amendment for each paragraph in the complaint.”
(Id. at 15.) They add that “[i]f all the facts are admitted or even a select group of key facts are
admitted, there may be no controversy for Article III standing.” (Id.)
The Government claims that Mr. Yosef’s failure to file an answer pursuant to
Supplemental Rule G(5)(b) means that he lacks statutory standing to seek a stay. (Id. at 15–
21.) In their view, “the law is clear that the filing of an answer is necessary for a claimant to
achieve statutory standing.” (Id. at 16.) In support of that assertion, they cite cases from our
sister courts. See United States v. All Right, Title & Interest in Prop., Appurtenances, &
Improvements Known as 479 Tamarind Drive, Hallendale, Fla., No. 98-2279 DLC, 2011 WL
1045095, at *3 (S.D.N.Y. Mar. 11, 2011) (“When a claimant fails to file an answer, he or she
does not have statutory standing to bring a claim.”); United States v. $229,590.00 in U.S.
Currency Seized from a Safe in the Home of Dallas Cty. Com’r Price, No. 3:12-0893, 2012
WL 4354814, at *2 (N.D. Tex. Sept. 24, 2012) (“The filing of an answer as required by the
statute and Rule G is a necessary prerequisite to statutory standing in a civil forfeiture case.”)
The Government believes procedural leniency would be particularly inappropriate here
because Mr. Yosef has already been granted multiple extensions to file an answer. (Dkt. 13 at
20.) The Government also argues that Section 981(g)(2) does not authorize stay at this stage
of the proceeding because “[t]he focus of section 981(g)(2) is on delaying discovery, not
pleadings” and this case has not yet entered discovery. (Dkt. 13 at 15.)
The Government also disputes Mr. Yosef’s contention that answering the Complaint
would burden his Fifth Amendment rights. They submit that Mr. Yosef is “free to invoke the
Fifth Amendment protections at any time,” including in his answer, and that “[a]dmitting to or
denying the facts in the complaint will not tell the Government anything that it does not
already know.” (Dkt. 13 at 22–23.) They characterize an answer as merely a “procedure for
the Court to determine what issues will and will not be contested,” while also “indicating
whether the Claimant will contest the jurisdiction and venue of the court.” (Id. at 23.) The
Government portrays Mr. Yosef’s concerns about engaging in discovery absent a stay as an
“unwarranted procedural jump” that “conflates multiple different stages of litigation.” (Dkt.
13 at 25.) They argue that Mr. Yosef “only needs to file an answer, not respond to discovery
requests,” at this time. (Id.) Thus, although the Government does not dispute the idea that
“civil discovery would burden the Claimant’s right against self-incrimination,” they suggest
that there is less potential burden at the pleading stage. (Id. at 26.) They dismiss in a footnote
Mr. Yosef’s concerns about potential adverse inferences from his Fifth Amendment
invocations by noting that such adverse inferences are permissible, not mandatory. (Id.)
Lastly, and apparently apart from the parties’ dispute over whether the requirements
for a stay under Section 981(g)(2) have been met, the Government argues that a stay would
undercut its interest in the prompt resolution of this case and potentially cause the Property to
lose value over time. (Id. at 21.) Any such depreciation would in turn injure victims who
might be compensated should the government prevail in this forfeiture action. (Id.) The
Government cites unpaid maintenance fees and back taxes as examples of how the value of
the Property has declined over time. (Id.) In reply, Mr. Yosef responds that steps have been
taken to repay those debts and that he is willing to stipulate that he will not “sell, assign,
mortgage, or in any way encumber the property for the duration of the requested stay.” (Dkt.
14 at 8.)
Before turning to the statutory requirements for a stay under Section 981(g)(2), we
must first address the Government’s contention that Section 981(g)(2) does not authorize us to
issue a stay before an answer is filed. (Dkt. 13 at 15–16.) Although the bulk of the
Government’s opposition brief frames Mr. Yosef’s failure to file to answer as a defect in
standing (one of the Section 981(g)(2)’s requirements), they also argue that Section 981(g)(2)
“does not permit claimants to seek a stay . . . because an answer is a pleading and not part of
discovery” and “[t]he focus of Section 981(g)(2) is on delaying discovery, not pleadings.”
(Id. at 15.)
After considering the language of the statute, we conclude that Section 981(g)(2)
authorizes us to grant a stay, including prior to the filing of an answer, if the enumerated
conditions of that provision are present. Section 981(g)(2) authorizes us to “stay the civil
forfeiture proceeding” without reference to discovery. Although a subsequent provision,
Section 981(g)(3), references the “impact of civil discovery described in [Section 981(g)(2)],”
we do not read that provision as circumscribing our authority to grant a stay before an answer
is filed. Where, as here, the filing of an answer implicates the claimant’s Fifth Amendment
rights, we conclude that Section 981(g)(2)’s authorizes a stay here.6
The Government argues that our inherent discretion to stay proceedings has been “circumscribed” in
forfeiture cases by Section 981(g). See United States v. $9,041,598.68 (Nine Million Forty One
Thousand Five Hundred Ninety Eight Dollars & Sixty Eight Cents), 163 F.3d 238, 251 (5th Cir.
1998). Because we conclude that Mr. Yosef has satisfied the requirements for a stay under Section
Turning to the requirements of Section 981(g)(2), we note preliminarily that the
Government has conceded the existence of a related criminal case and that the first
requirement of Section 981(g)(2) is satisfied. (Dkt. 13 at 10.) Consequently, we turn now to
whether Mr. Yosef has standing to seek this stay and whether allowing this forfeiture action to
continue would burden his Fifth Amendment rights. We then address the Government’s
concern about preserving the value of the Property during the stay.
As noted above, Mr. Yosef must have both Article III and statutory standing to seek a
stay in this case. See United States v. $8,221,877.16 in U.S. Currency, 330 F.3d 141, 150 n. 9
(3d Cir. 2003). For Article III standing, Mr. Yosef’s interest in the Property must be sufficient
to satisfy the United States Constitution’s “case or controversy” requirement. Here, we
conclude that Mr. Yosef has Article III standing to seek a stay because of his ownership
interest in the property subject to forfeiture in this case. Mr. Yosef’s ownership of the
Property is not seriously disputed. He has filed a verified claim stating his ownership interest.
(Dkt. 5.) The Government’s Complaint explains that Mr. Yosef both formed and is the sole
member of YG Holdings, the record title-owner of the Property. (Dkt. 1 at 22.) Further, the
Government’s opposition brief describes YG Holdings as “an alter ego” that Mr. Yosef
“created to conceal . . . the true owner of the Defendant in rem”—namely, Mr. Yosef. (Dkt.
981(g)(2), we need not address whether the reasoning in that case—which in any event analyzed a
different provision of Section 981—would prevent us from staying the case under our inherent
discretion if warranted by the circumstances.
13 at 13.) In sum, Mr. Yosef’s ownership interest in the Property satisfies Article III standing
The most vigorous dispute between the parties is whether Mr. Yosef’s failure to file
an answer strips him of statutory standing to pursue a stay under Section 981(g)(2). The
Government submits that only strict adherence to the procedural requirements of
Supplemental Rule G(5)—including filing an answer under Rule G(5)(b)—confers statutory
standing on a claimant. (Dkt. 13 at 12.) Mr. Yosef urges a more lenient approach
emphasizing the greater importance of the verified claim. (Dkt. 14 at 5–8.)
Although the Government asserts that “the law is clear that the filing of an answer is
necessary for a claimant to achieve statutory standing” (dkt. 13 at 16), they cite no cases
within the Third Circuit directly supporting that proposition. As the Government notes, the
Third Circuit has stated that “[t]o establish statutory standing in a forfeiture case, the claimant
must comply with the procedural requirements set forth in [the Supplemental Rules] and §
983(a)(4)(A).” $487,825.000, 484 F.3d at 664. But $487,825.000 does not address the failure
of a claimant to file an answer; indeed, the Third Circuit explained there that “[t]he most
significant requirement is that the claimant must timely file a verified statement of interest.”
Id. The Third Circuit’s emphasis on the statement of interest (now a “verified claim” under
the amended Supplemental Rules) was explicitly premised on two policy goals: first,
In light of the Government’s own allegations describing Mr. Yosef’s interest in YG Holdings, we
reject the Government’s argument that Mr. Yosef’s subsequent failure to describe that interest in his
verified claim somehow deprives him of statutory standing. (Dkt. 13 at 13–14.) We are likewise
unconvinced by the Government’s assertion that Mr. Yosef’s failure to file an answer makes it
impossible for us to assess standing. (Id. at 15.) There is no dispute about Mr. Yosef’s ownership of
the Property, which is the crux of his Article III standing to challenge the forfeiture.
“forc[ing] claimants to ‘come forward as quickly as possible . . . so that the court may hear all
interested parties and resolve the dispute without delay’” and second, “‘minimiz[ing] the
danger of false claims by requiring claims to be verified or solemnly affirmed.’” Id. (quoting
United States v. $8,221,877.16 in U.S. Currency, 330 F.3d 141, 150 n.9 (3d Cir. 2003)). Such
procedural rigor makes sense in light of the “substantial danger of false claims” that arise in
forfeiture actions. United States v. Commodity Account No. 549 54930 at Saul Stone & Co.,
219 F.3d 595, 597 (7th Cir. 2000).
But we are also mindful of the Third Circuit’s instruction that our application of the
procedural rules should not defy “old-fashioned common sense.” United States v. Various
Computers & Computer Equip., 82 F.3d 582, 585 (3d Cir. 1996). Indeed, in Various
Computers, the Third Circuit found that a claimant with a “colorable claim to ownership” of
the property at issue had standing to challenge a forfeiture proceeding. Id. Although the
claimant in that case had failed to submit a verification with his claim, the Third Circuit
concluded it could not “equitably deny” standing, particularly where “the court and the
Government were aware of the source of [the claimant’s] interest in the property and the basis
for his claim of ownership.” Id. In another recent case assessing whether a claimant had
statutory standing in a forfeiture action, we adopted a similar common sense approach. See
United States v. $263,327.95, 936 F. Supp. 2d 468, 473 (D.N.J. 2013). In $263,327.95, the
issue was whether a simple description of a claimant’s ownership interest in a verified claim
was sufficient to confer standing. Id. We held that it was, explaining that “in cases where the
complaint describes the claimant's interest in the property in detail, the goals of the Rules have
been met because the Government is on notice of the claimant’s interest in the property, and
there is very little risk that the claimant is filing a false claim.” Id.
Common sense here likewise compels us to conclude that Mr. Yosef has statutory
standing to pursue a stay here. He timely filed a verified claim of ownership in the Property
(dkt. 5), which is explicitly the “most significant requirement” for establishing statutory
standing. See $487,825.000, 484 F.3d at 664. And importantly, there is simply no real
dispute about Mr. Yosef’s ownership interest in the defendant Property: the parties appear to
agree that Mr. Yosef, as sole member of YG Holdings, owns the Property at issue here. The
policy concerns behind requiring strict compliance with the rules—i.e., resolving disputes
quickly and weeding out false claims—are not implicated here where the undisputed sole
owner of the property timely filed a claim. See $263,327.95, 936 F. Supp. 2d 468 at 473
(“The application of the statutory requirements should be strict, but not needlessly pedantic.”).
We note that the Government cites a pair of cases suggesting that claimants must file
an answer to have statutory standing. In 479 Tamarind Drive, the court concluded that
“[w]hen a claimant fails to file an answer, he or she does not have statutory standing to bring a
claim.” United States v. All Right, Title & Interest in Prop., Appurtenances, & Improvements
Known as 479 Tamarind Drive, Hallendale, Fla., No. 98-2279, 2011 WL 1045095, at *3
(S.D.N.Y. Mar. 11, 2011). That case, however, dealt with a much more tenuous claim of
ownership and a far more delinquent claimant. There, the claimant had not filed an
answer in thirteen years of litigation and, unlike here, the claimant’s ownership interest in the
property was legally insufficient to support even Article III standing. Id. at *2–3. The
Government also cites an unpublished case from the Northern District of Texas holding that
“[t]he filing of an answer as required by the statute and Rule G is a necessary prerequisite to
statutory standing in a civil forfeiture case.” See United States v. $229,590.00 in U.S.
Currency Seized from a Safe in the Home of Dallas Cty. Com’r Price, No. 3:12-0893, 2012
WL 4354814, at *2 (N.D. Tex. Sept. 24, 2012). That case relied primarily on an unpublished
per curiam opinion of the Eleventh Circuit. See id. (citing United States v. $12,126.00 in
U.S. Currency, 337 Fed. Appx. 818, 820 (11th Cir.2009)).8 We disagree that these cases
make it “clear that the filing of an answer is necessary for a claimant to achieve statutory
standing” (dkt. 13 at 16), particularly in light of Third Circuit precedent urging a more
nuanced approach. See, e.g., $263,327.95, 936 F. Supp. 2d at 472.
For these reasons, we conclude that Mr. Yosef has satisfied the standing requirement
of Section 981(g)(2)(B).
Burden to Fifth Amendment Rights
The final inquiry under Section 981(g)(2) is whether allowing this forfeiture action to
continue would burden Mr. Yosef’s Fifth Amendment rights. 18 U.S.C. § 981(g)(2)(C). Mr.
Yosef’s argument is straightforward; he argues that answering the Complaint necessarily
implicates his right against self-incrimination because the Complaint contains explicit
allegations that he committed criminal acts. (Dkt. 11-1 at 13.) A review of the Complaint
bears out that assertion. Among other allegations, the Complaint states that Mr. Yosef
“defrauded the Victims of more than $1.6 million in additional funds” (dkt. 1 at 4); made
The Eleventh Circuit concluded that a district court had not abused its discretion by striking a claim
where the claimant had failed to file a timely claim or submit an answer. See $12,126.00, 337 Fed.
App’x. at 820 (explaining that “the district court was entitled to insist upon strict compliance with the
procedural requirements set forth in Rule G(5).”)
various false representations (id. at 6); disguised his “scheme” by taking “steps to prevent the
Victims from discovering that the App was not achieving what Yosef had claimed” (id. at 6);
and “misappropriated substantial amounts of these funds for his own personal use” (id. at 13).
Indeed, this entire action is premised on the allegation Mr. Yosef purchased the Property
“with the proceeds of his scheme to defraud the Victims.” (Id. at 24.) Mr. Yosef’s alleged
criminal conduct is the backbone of the Complaint, and we agree that compelling him to
specifically admit or deny those allegations in an answer would burden his right against selfincrimination.
The Government raises a handful of arguments in response. First, they assert that an
answer is “is a procedure for the Court to determine what issues will and will not be
contested” and that “[a]dmitting or denying facts in the complaint will not tell the
Government anything it does not already know.” (Dkt. 13 at 23.) While that may be true, the
Government avoids the question of whether Mr. Yosef’s admissions or denials of those
allegations could yield admissible evide nce in the pending criminal prosecution against him
or cause him to waive his Fifth Amendment rights with respect to certain of those allegations.
The Government next argues that Mr. Yosef’s decision to invoke the Fifth
Amendment does not relieve him of his burden to establish standing. (Id. at 24.) We agree,
but as noted above, we conclude that Mr. Yosef does have the requisite standing.
The Government also objects to Mr. Yosef’s concerns about self-incrimination by
noting that the case is not yet in discovery. (Id. at 25.) They argue that Mr. Yosef “only
needs to file an answer, not respond to discovery requests,” which they believe is an important
distinction because they do not dispute that civil discovery would burden Mr. Yosef’s Fifth
Amendment rights. (Id. at 25–26.) As noted above, we believe that requiring Mr. Yosef to
individually respond to specific factual allegations regarding his allegedly criminal conduct
would unduly burden his Fifth Amendment rights. The Government’s concession that
discovery in this case would burden those rights does not persuade us otherwise. Indeed, it
bolsters Mr. Yosef’s argument that this action is closely entwined with the related criminal
proceeding against him.
Nor are we persuaded by the Government’s suggestion that Mr. Yosef bears little risk
from invoking the Fifth Amendment in this case because adverse inferences from those
invocations are “permissible, not mandatory.” (Dkt. 13 at 25.) It is too soon to know whether
or how any Fifth Amendment invocations might be used against Mr. Yosef in this case. The
inquiry before us now is whether continuation of this case will burden Mr. Yosef’s Fifth
Amendment rights in the related criminal case. We hold that it would. Accordingly, and for
the reasons above, we conclude that Mr. Yosef has satisfied the burden requirement of
Preserving Property Value
Lastly, the Government urges us to deny Mr. Yosef’s request for a stay because they
are concerned that the defendant Property may lose value over time, potentially to the
detriment of alleged victims who might benefit from the sale of the Property if it is forfeited.
(Dkt. 13 at 21.) In response, Mr. Yosef represents that steps have been taken to pay any fees
that might reduce the value of the property, and has indicated that he will not “sell, assign,
mortgage, or in any way encumber the property for the duration of the requested stay.” (Dkt.
14 at 8.)
While the Government’s concerns are understandable, they do not affect our decision
to stay this case. The statutory conditions for a stay under Section 981(g)(2) do not include an
assessment of whether the value of the defendant property will decline over time. The statute
does, however, authorize us to “enter any order necessary to preserve the value of the property
or to protect the rights of lienholders or other persons with an interest in the property while the
stay is in effect.” 18 U.S.C. § 981(g)(6). In light of Mr. Yosef’s stated willingness to both
cover the fees associated with the property and to not sell or otherwise encumber the Property,
we will direct the parties to submit a stipulation, to be signed by the Court, outlining Mr.
Yosef’s duties and obligations towards the Property while this case is stayed. Should the
parties fail to agree on the terms of such a stipulation, we will direct the parties to submit
proposed forms of order to preserve the Property pursuant to 18 U.S.C. § 981(g)(6).
For the reasons discussed above, we will grant Mr. Yosef’s Motion to Stay (dkt. 11)
and issue an appropriate order.
s/ Mary L. Cooper
MARY L. COOPER
United States District Judge
Dated: April 25, 2017
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