United States of America v. $121,675.00 in U.S. Currency

Filing 24

ORDER adopting in part 17 Memorandum and Recommendation and denying 11 Motion to Dismiss for Failure to State a Claim. Signed by Chief U.S. District Judge Richard E. Myers II on 3/26/2023. (McNally, Kimberly)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
NO. 5:23-CV-00223-M
UNITED STATES OF AMERICA,
Plaintiff,
V.

$121 ,675.00 IN U.S. CURRENCY,
Defendant.
ISSAM AHMAD,
Claimant.

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ORDER

This matter comes before the court on the Claimant's Motion to Dismiss [DE 11]. Claimant
contends that venue is improper in this district under Rule 12(b)(3) of the Federal Rules of Civil
Procedure, and that the operative pleading "fails to sufficiently allege probable cause for the
seizure or forfeiture of the funds belonging to the Claimant" pursuant to Rule 12(b)(6). Id. The
United States opposes the motion, asserting that Claimant fails to support his Rule 12(b)(6)
argument and that defendant currency was seized in a different district only because Claimant
intentionally avoided this district "where he had previously been stopped by law enforcement and
had cash seized from him." DE 14. The government further requests that, if the court finds venue
improper, the court transfer venue pursuant to 28 U.S.C. § 1406(a) in lieu of dismissal. Id.
Pursuant to 28 U.S.C. § 636(b)(l) and Federal Rule of Civil Procedure 72(b), United States
Magistrate Judge Robert B. Jones, Jr. entered a memorandum and recommendation ("M&R"),
recommending that the court deny Claimant's motion on the condition that this court transfer the
action to the United States District Court for the Middle District of North Carolina. DE 17. The

United States and Claimant both filed timely objections to the M&R; the government objects solely
to Judge Jones' finding that 28 U.S.C. § 1355(b) does not authorize venue in this district. DE 18.
Claimant objects to Judge Jones ' finding that the "government transporting the defendant currency
from the M.D.N.C. to the E.D.N.C. was [] a mere technicality," saying "the Court should not give
the government a free pass on its venue error, but instead dismiss." DE 22. For the reasons that
follow, the court respectfully adopts the M&R in part, finds both jurisdiction and venue proper in
this district, and denies the Claimant's motion to dismiss.
I.

Standard of Review
A magistrate judge' s recommendation carries no presumptive weight. The court "may

accept, reject, or modify, in whole or in part, the . .. recommendation[] . .. receive further evidence
or recommit the matter to the magistrate judge with instructions." 28 U.S.C. § 636(b)(l); accord
Mathews v. Weber, 423 U.S. 261 , 271 (1976). The court "shall make a de novo determination of
those portions of the report or specified proposed findings or recommendations to which objection
is made." Id. § 636(b)(1 ). Absent a specific and timely objection, the court reviews only for "clear
error" and need not give any explanation for adopting the recommendation. Diamond v. Colonial
Life & Accident Ins. Co., 416 F.3d 310, 315 (4th Cir. 2005).
II.

Failure to State a Claim under Rule 12(b)(6)
The court notes first that, in his objection, Claimant repeats his contention that the

"Verified Complaint in the instant matter not only fails to state a claim upon which relief can be
granted, but it more importantly fails to sufficiently allege probable cause for the seizure or
forfeiture of the funds belonging to Claimant." Obj.
statement in his motion to dismiss. Mot.

,r 5, DE 12.
2

,r 5, DE 22.

Claimant made an identical

Judge Jones concluded that such statement

constitutes a "perfunctory and undeveloped argument[] , and [an] argument[] ... unsupported by
pertinent authority," which is "deemed waived" and, thus, Judge Jones did not address Claimant's
Rule 12(b)(6) contentions. M&R at 3-4, DE 17. Claimant did not object to this ruling and the
court, finding no clear error, adopts this portion of the recommendation. See Diamond, 416 F.3d
at 315.

III.

Improper Venue under Rule 12(b)(3)
Turning to the parties' objections regarding Judge Jones' Rule 12(b)(3) ruling, the United

States alleges in the operative Complaint that "[t]he Court has in rem jurisdiction by virtue of 28
U.S.C. § 1355(b)" and "[v]enue in this district is proper by virtue of28 U.S.C. § 1395(c)." Compl.

,r 2.

The government also alleges that during an investigation of a criminal trafficking organization

operating along the east coast of the United States, it identified Claimant as a courier who used the
interstate highway system to move controlled substances, contraband cigarettes, and bulk amounts
of United States currency between North Carolina and the northeastern United States. Declaration
of Matthew Greer, April 24, 2023 , at 1-2, DE 1-1. On April 28, 2022, law enforcement observed
Claimant drive his Toyota Tundra to the back entrance of a building in Raleigh, North Carolina,
where it appeared to be in the process of receiving cargo. Id. at 4-5. The city of Raleigh is located
in the Eastern District of North Carolina. The next day, April 29, 2022, law enforcement suspected
that Claimant had delivered the contraband to the greater New York area and observed Claimant
drive southbound into North Carolina toward the city of Greensboro, which is located in the Middle
District of North Carolina. Id. Orange County Sheriffs deputies stopped the vehicle for traffic
violations and a K-9 officer alerted to the odor of narcotics. Id. During a search of the vehicle,

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officers discovered the defendant currency tucked within a void in the vehicle's tailgate and seized
the currency as suspected illicit proceeds. Id.
Claimant seeks dismissal of the Complaint, arguing that section 1395(c) is an improper
ground on which to establish venue. Memo., DE 12 at 2-4. The United States counters that it
properly alleged jurisdiction under 28 U.S.C. § 1355(b), which "expands upon the other venue
options available under § 1395 by providing that "[a] forfeiture action or proceeding may be
brought in . . . the district in which any of the acts or omissions giving rise to the forfeiture
occurred," which, the United States argues, is the Eastern District of North Carolina. Resp., DE
14 at 6. Judge Jones rejected the United States' argument, finding that the government relies on
an out-of-circuit case that has been essentially abrogated by the Fourth Circuit's decision in United
States v. Batato, 833 F.3d 413 , 419-20 (4th Cir. 2016). M&R, DE 17 at 6. The magistrate judge

also determined that dismissal is not required under 28 U.S.C. § 1406(a) when the interest of justice
counsels a transfer of the action to the proper venue, which, in this case, is the Middle District of
North Carolina. Id.
When, as here, no evidentiary hearing has been held, the plaintiff need only make a prima
facie showing of venue to survive a motion to dismiss for improper venue. Mitrano v. Hawes, 377
F.3d 402,405 (4th Cir. 2004). "In assessing whether there has been a prima facie venue showing,
courts must view the facts in the light most favorable to the plaintiff." Aggarao v. MOL Ship
Mgmt. Co. , 675 F.3d 355, 366 (4th Cir. 2012) (citing Global Seafood Inc. v. Bantry Bay Mussels
Ltd. , 659 F.3d 221 , 224 (2d Cir. 2011)). In addition, courts may examine evidence outside the

pleadings when addressing Rule 12(b)(3) motions. Amos v. Amazon Logistics, Inc., 74 F.4th 591 ,
594 n.2 (4th Cir. 2023).
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In support of its venue allegation, the United States relies on 28 U.S.C. § 1355, which
provides, in pertinent part:
(a) The district courts shall have original jurisdiction, exclusive of the courts of the
States, of any action or proceeding for the recovery or enforcement of any fine,
penalty, or forfeiture, pecuniary or otherwise, incurred under any Act of Congress,
except matters within the jurisdiction of the Court of International Trade under
section 1582 of this title.
(b )(1) A forfeiture action or proceeding may be brought in(A) the district court for the district in which any of the acts or omissions giving
rise to the forfeiture occurred, or
(B) any other district where venue for the forfeiture action or proceeding is
specifically provided for in section 1395 of this title or any other statute.
28 U.S.C. § 1355. Section 1395, which governs venue, provides in pertinent part:
(a) A civil proceeding for the recovery of a pecuniary fine, penalty or forfeiture
may be prosecuted in the district where it accrues or the defendant is found .
(b) A civil proceeding for the forfeiture of property may be prosecuted in any
district where such property is found.
(c) A civil proceeding for the forfeiture of property seized outside any judicial
district may be prosecuted in any district into which the property is brought.
28 U.S.C. § 1395. 1 The government concedes that it improperly alleged venue under section
1395(c) in the Complaint; however, it contends that venue is proper in this district under section

The court agrees with Judge Jones that section 1395(a) does not apply in this case, as it has been
historically used to establish venue for in personam actions, rather than in rem proceedings. M&R,
DE 17 at 5 n.1 (citing United States v. One 1974 Cessna Model 310R Aircraft, Serial No.
310R0203, FAA Registration No. N5083J, 43 2 F. Supp. 364, 368 (D.S.C. 1977)); see also United
States v. 51 Pieces of Real Prop. Roswell, NM , 17 F.3d 1306, 1310 n.4 (10th Cir. 1994). Judge
Jones also found improper any application of section 1395(c) in this case, simply because there is
no dispute that the defendant currency was seized within a judicial district. M&R, DE 17 at 5.
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1355(b)(l)(A), "which, though codified among the jurisdiction-conferring statutes, explicitly
expands upon the other venue options available under§ 1395." Resp. , DE 14 at 6 (citing United
States v. $633,021.67 in US. Currency, 842 F. Supp. 528, 534 (N.D. Ga. 1993)). In its objection
to the M&R, the United States contends that it was error for the magistrate judge to interpret the
Fourth Circuit's ruling in Batato as finding that section 1355 confers jurisdiction only, rather than
finding that the statute confers both jurisdiction and venue. Obj. at 4-5, DE 18. This court agrees.

In Batato, the court affirmed the district court' s conclusion that it had in rem jurisdiction
over assets seized in Hong Kong and New Zealand pursuant to section 1355(b). 833 F.3d at 418.
Relevant here, the Fourth Circuit addressed the claimants' argument that "the statute cited by the
district court as establishing its jurisdiction speaks to venue rather than jurisdiction." Id. The court
rejected a ruling by the Second Circuit, relied on by the claimants, that "Section 1355(b) addresses
venue in forfeiture actions." Id. at 419 (quoting United States v. All Funds on Deposit in Any
Accounts Maintained in Names ofMeza or De Castro ("Meza"), 63 F.3d 148, 152 (2d Cir. 1995)).
The Batato court "adopted the majority approach" set forth in decisions by "the Third, Ninth, and
D.C. Circuits,"2 and concluded that the "plain meaning of the statutory text and the legislative
history both support finding that 28 U.S.C. § 1355(b) is jurisdictional." Id. at 419,420.

The United States did not object to these conclusions and, finding no clear error, the court adopts
the magistrate judge' s findings.
2 The Batato court cites United States v. All Funds in Account Nos. 747.034/278, 747.009/278, &
747.714/278 in Banco Espanol de Credito, Spain, 295 F.3d 23, 26 (D.C. Cir. 2002) and United
States v. Approximately $1.67 Million, 513 F.3d 991 , 996 (9th Cir. 2008), but does not cite the
Third Circuit case to which it refers. The court believes Batato may have intended to reference
Contents of Account Number 03001288 v. United States, 344 F.3d 399 (3d Cir. 2003), which
contains a similar analysis of whether section 1355(b) confers venue for forfeiture actions. Id. at
403-04.
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Here, the United States argues that Batato "did not have the occasion to consider whether
§ 1355(b) confers venue in addition to jurisdiction" and "did not directly address the venue aspect
of the analysis." Obj., DE 18 at 5. This court agrees. The question before the Fourth Circuit was
whether "the statute cited by the district court as establishing its jurisdiction speaks to venue rather
than jurisdiction," and the court determined that "[t]he plain meaning of § 1355(d) . .. renders the
Meza court 's finding that '[s}ection 1355(b) addresses venue' impossible-courts may acquire
jurisdiction by operation of the provision." Batato, 833 F.3d at 420. In other words, section
1355(d), by its plain terms,3 provides that section 1355(b) confers jurisdiction for forfeiture claims.
Judge Jones agrees that the Fourth Circuit in Batato found section 1355 to be a
jurisdictional statute; however, the magistrate judge interpreted Batato to conclude that section
1355 confers only jurisdiction, not venue. Respectfully, this court disagrees for the following
reasons.
First, the Fourth Circuit did not address any question of whether venue was proper. The
issue addressed was whether section 1355 confers only venue, as determined in Meza, or whether
it confers not only venue, but also jurisdiction. If the court were to adopt the theory that section
1355 confers only jurisdiction, then it must rely solely on section 1395 for venue; in so doing, this
case would be transferred to a venue at which the defendant currency was seized but which holds
no other aspect of this case, including the acts or omissions underlying the charges, any evidence
or witnesses concerning the criminal conduct, and the law enforcement personnel who investigated
and/or lodged the criminal charges. While the seizure here occurred in a district adjacent to this

Section 1355(d) states: Any court with jurisdiction over a forfeiture action pursuant to subsection
(b) may issue and cause to be served in any other district such process as may be required to bring
before the court the property that is the subject of the forfeiture action. 28 U.S.C. § 1355(d)
(emphasis added).
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district, if the currency had been seized in New York or New Jersey, the court cannot fathom that
Congress meant for forfeiture parties, along with all of their witnesses and evidence, to be required
to travel across several states or, perhaps in some cases, across the country to litigate their claims.
In addition, the court agrees with the United States that any ruling by the Fourth Circuit
that section 1355 solely confers jurisdiction "would have the ironic effect of finding jurisdiction
only to abolish venue" inBatato. Obj ., DE 18 at 5 (citing 833 F.3d at 418). In that case, the court
affirmed the district court's finding that it had jurisdiction to issue forfeiture orders pursuant to
section 1355. Batato, 833 F.3d at 420. However, the defendant-claimants and the property at
issue were located in either Hong Kong or New Zealand (id. at 418); thus, neither the "district
where such property is found" nor the "district into which the property is brought" provisions of
sections 1395(b) and (c), respectively, would have sufficed to confer venue under the facts
presented.

This court will not adopt an interpretation of a judicial opinion that creates an

inconsistency or contradiction. Cf Kelley v. Bohrer, 93 F.4th 749, 757 (4th Cir. 2024). A logical
reading of Batato requires that it be interpreted as finding section 1355 confers both jurisdiction
and venue.
Further, the United States contends that the plain language of the statute demonstrates that
it confers venue by using the "same 'action or proceeding may be brought' language that is found
in other venue-conferring statutes." Obj., DE 18 at 5. The Supreme Court instructs that "in all
statutory construction cases, [courts] 'assume that the ordinary meaning of [the statutory] language
accurately expresses the legislative purpose. "' Marx v. Gen. Revenue Corp., 568 U.S. 371 , 376
(2013) (quoting Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242 (2010)) (cleaned up). As
explained above, the ordinary language of section 1355 provides that "district courts shall have
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original jurisdiction ... of any action or proceeding for the recovery or enforcement of any ...
forfeiture ... ," and specifies that "[a] forfeiture action or proceeding may be brought in" a district
court in a district where the activities giving rise to the forfeiture action occurred or in a district in
which venue is proper pursuant to section 1395. 28 U.S.C. § 1355 (emphasis added). Section
1355(b) was added after section 1395 had been already in effect due to "confusion" arising from
a lack of direction from Congress regarding jurisdiction over certain forfeiture cases, which is
cogently explained by the senator who introduced the legislation:
"Title 28, Section 1355, gives the district courts subject matter jurisdiction over
civil forfeiture cases." ... "[V]enue statutes for forfeiture actions provide for venue
in the district in which the subject property is located, 28 U.S.C. § 1395, or in the
district where a related criminal action is pending, 18 U.S.C. § 981(h)," but "no
statute defines when a court has jurisdiction over the property that is the subject of
the suit."
Contents of Account Number 03001288, 344 F.3d at 403-04 (quoting 137 Cong. Rec. S16640,

S16642 (1991)) (emphasis in original).

The plain language of section 1355 expresses the

legislative purpose to clarify that federal district courts have original jurisdiction over forfeiture
cases and that venue is proper under both section 1355(b)(1 )(A) and the provisions of section 1395
(see§ 1355(b)(l)(B)).

Finally, this court agrees with the government that a "substantial weight of authority"
supports a finding that section 1355 confers both venue and jurisdiction. See supra n.2. In fact,
in Contents ofAccount Number 03001288, the Third Circuit determined that "[t]hough the District
Court concluded that § 13 55(b) merely provides for venue, we find that it also grants district courts
jurisdiction over the property at issue in forfeiture actions based on the plain language of the
statute." 344 F.3d at 403 (emphasis added). In this case, the court finds that section 1355 confers
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both jurisdiction and venue in the Eastern District of North Carolina, in which no party disputes
that the alleged acts or omissions giving rise to the forfeiture occurred.
Regarding Claimant's objection, Claimant contends in the present motion that, because the
United States, relying on section 1395(c), chose the "wrong" venue in which to bring this action,
the case should be dismissed. Judge Jones found that, due to the applicable 90-day statute of
limitations, dismissal would bar the government from refiling the action and ruled, "it is in the
interest of justice to transfer this action to the Middle District of North Carolina, not punish the
Government for a mere technicality." M&R, DE 17 at 7 (citing 28 U.S.C. § 1406(a)). Claimant
objects, arguing that "[f]orfeiture statutes must be strictly construed against the government under
the rule of lenity, since civil forfeiture is quasi-criminal and punitive (and because forfeiture is
disfavored). And thus, the Court should not give the government a free pass on its venue error, but
instead dismiss." Obj., DE 22 at 2. Given this court's decision that the United States did not err
in relying on section 1355 for jurisdiction and venue in this district, the court finds no basis on
which to grant Claimant' s motion to dismiss.
One final note: the United States requests in its response to the present motion that the
court grant it leave to amend the Complaint "if the court finds any formal defects." DE 14 at 6
n.3. All parties agree that the United States' reference to 28 U.S.C. § 1395(c) in the Complaint as
a basis for venue is incorrect. However, the court has found on the facts alleged in the Complaint
and the applicable law that jurisdiction and venue are proper in this court, and nothing in the
Federal Rules of Civil Procedure requires an amendment to correct the error. See Fed. R. Civ. P.
8(a) (requiring short and plan statements of the grounds for the court's jurisdiction and of the claim
showing that the pleader is entitled to relief, as well as a demand for the relief sought).

IV.

Conclusion

In light of this court' s finding that jurisdiction and venue are proper in this district, the
Claimant's objection is overruled, the United States' objection is sustained, and the court finds, in
accordance with Batato, that section 1355 applies to confer jurisdiction on the United States
District Courts to preside over in rem forfeiture actions and to confer venue for this forfeiture
action in the Eastern District of North Carolina.
Accordingly, the M&R is ADOPTED IN PART as set forth herein. Claimant's Motion to
Dismiss [DE 11] is DENIED, and the case shall proceed in accordance with the Scheduling Order
issued by Judge Jones on August 10, 2023.

~

SO ORDERED this 2 Co

day of March, 2024.

RICHARD E. MYERS II
CHIEF UNITED STATES DISTRICT JUDGE

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