United States of America v. Eight (8) Counterfeit Watches et al

Filing 20

REPORT AND RECOMMENDATIONS re 15 United States' Motion to Strike 3 Claim of Abdullah Luqman, or in the Alternative, to Compel Claimant Abdullah Luqman's Answers to United States' Rule G(6) Special Interrogatories, 4 Claiman t Abdullah Luqman's Motion to Dismiss, 11 Claimant Abdullah Luqman's Motion for Release of Certain Property. IT IS RECOMMENDED: (1) That the Government's Motion to Strike Luqman's Claim 15 be DENIED, without prejudice to ren ew should Luqman fail to comply with the separate Order entered this day directing him to supplement his responses to the Special Interrogatories; (2) That Claimant Luqman's motion to dismiss 4 and motion/petition for release of certain property 11 also be DENIED without prejudice to renew. Objections to R&R due by 9/11/2017. Signed by Magistrate Judge Stephanie K. Bowman on 8/28/2017. (km)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
UNITED STATES OF AMERICA
Case No. 1:17-cv-156
Plaintiff,
Dlott, J.
Bowman, M.J.

v.
EIGHT (8) COUNTERFEIT WATCHES, et. al,
Defendants.

REPORT AND RECOMMENDATION
On March 17, 2017, the United States filed an in rem forfeiture proceeding
against personal property in accordance with Supplemental Rule G(2) of the
Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions
(“Supplemental Rules”) and the Federal Rules of Civil Procedure. (Doc. 1). This matter
has been referred to the undersigned for initial review. (Doc. 9).
Three motions are currently pending before the Court: (1) a motion to dismiss the
complaint filed by Claimant Abdullah Luqman 1 (hereinafter “Claimant” or “Luqman”); (2)
Claimant’s motion for release of property; and (3) the motion of the United States to
strike Luqman’s claim. For the reasons that follow, the undersigned recommends that
1

Luqman has filed two pro se civil cases in this Court. In Case No. 1:17-cv-132, Luqman alleged that on
February 13, 2017, a charge of weapons under disability was dismissed, because the State of Ohio has
relieved him of disability and restored his civil rights. He alleged that he sought the return of seven
firearms confiscated on September 22, 2016, but that the defendant officers improperly refused to return
his guns to him. However, Case No 1:17-cv-132 was dismissed on August 16, 2017 based upon Plaintiff’s
failure to prosecute his claims.
Plaintiff recently initiated a second civil rights case on August 10, 2017 against the Hamilton County
Sheriff’s Department, alleging that the Defendant “illegally obtained a search warrant” on September 18,
2016 and arrested him for stolen guns, which charges were later dismissed. Plaintiff further alleges that
he was awaiting eye surgery at the time of his arrest. As a result of “sitting in jail for thirty days” unable to
post a high bond, Plaintiff alleges that he suffered permanent eye damage, lost business, and suffered
mental anguish. The complaint in Case No. 1:17-cv-527 is currently before the undersigned for initial
screening under 42 U.S.C. § 1915.

all three pending motions be denied without prejudice to renew. In addition, by separate
order filed herewith, the undersigned directs Claimant Luqman to supplement his
responses to the Special Interrogatories propounded by the United States, and further
directs the United States to supplement its explanation for declining to release
additional property seized in this case as to which forfeiture is not being sought.
I.

Background

The complaint alleges that on September 21, 2016, 2 the United States
(hereinafter the “Government”) seized pursuant to a warrant certain items of personal
property from 777 Jackson Street, in Cincinnati, Ohio, including eight counterfeit
watches (“Defendant 1”), and assorted counterfeit articles of clothing, shoes, and
accessories (“Defendant 2”).

It appears from the context of the pending motions that

additional property was seized at the same time, pursuant to the same warrant, that is
not the subject of this civil forfeiture proceeding.
Regardless, the Government alleges that Defendants 1 and 2 are subject to
forfeiture under 18 U.S.C. § 2323(a)(1), because all of the listed property either
constitutes articles of which the making or trafficking is prohibited under 18 U.S.C. §
2320, or alternatively, constitutes property that was used or intended to be used “in any
manner or part to commit or facilitate the commission of an offense referred to in 18
U.S.C. § 2320” (concerning the making or trafficking of counterfeit articles). (Doc. 1 at ¶
8). The Government alleges that more than three years prior to the execution of the
warrant, on July 22, 2013, a confidential source (“CHS”) made a controlled purchase of

2

The undersigned infers that the warrant that resulted in the seizure of the items that remain the subject of
this civil forfeiture case is a different warrant than the September 18, 2016 and September 22, 2016
warrants referenced in Luqman’s two civil cases.

2

several items from Claimant Luqman at the same address, including watches, jeans,
and a counterfeit “Gucci” belt, for the sum of $240.
Luqman’s motion to dismiss asserts that on July 22, 2013, the CHS first
attempted unsuccessfully to purchase a firearm from him, prior to engaging in “a story
stating that he [had been] a victim of robbery and was in need of clothing.” (Doc. 4 at
1). Luqman asserts that Claimant “generously offered to [sell] his personal clothing out
of his own closet,” which is how the CHS “ultimately obtained the counterfeit articles.”
(Id.). Luqman does not dispute that the items listed in the complaint are counterfeit, but
argues that “federal law does not prohibit an individual from buying counterfeit products
for personal use, even if they do so knowingly.” (Id.) Claimant’s motion maintains that
the seized property was “for his personal use” and was not “made [or]…used for
trafficking” in counterfeited goods, and therefore is not subject to forfeiture. (Id.)
II.

Analysis

For the convenience of the Court, the undersigned first addresses the
Government’s motion to strike Luqman’s claim before turning to the Claimant’s motions.
A. The Government’s Motion to Strike (Doc. 15)
\

The Civil Asset Forfeiture Reform Act of 2000 (CAFRA) governs civil forfeiture

actions. 18 U.S.C. § 981 et seq. Under CAFRA, “any person claiming an interest in the
seized property may file a claim….” 18 U.S.C. §983(a)(4)(A). However, in order to
contest a civil forfeiture, a claimant must have both statutory standing and Article III
standing. United States v. $515,060.42 in U.S. Currency, 152 F.3d 491, 497 (6th Cir.
1998).

While statutory standing is satisfied by filing a claim that complies with the

requirements of Rule G(5) of the Supplemental Rules, in order to establish Article III

3

standing, the claimant must have “a colorable ownership, possessory, or security
interest in at least a portion of the property.” Id. at 497-498.
The Government has moved to strike Luqman’s claim in this case based upon
his failure to fully respond to Special Interrogatories served by the Government pursuant
to Supplemental Rule G(6) of the Federal Rules of Civil Procedure. 3 The Government
asserts that it requires the Claimant’s responses in order to establish his identity and
standing. Luqman has filed no timely response to the Government’s motion.
Luqman’s initial responses to the Special Interrogatories were due on June 2,
2017, but on June 14, 2017, the Government extended his deadline to June 23, 2017.
In lieu of any substantive response, Luqman has filed a document captioned “Special
Interrogatory No. 1,” which states:
On all Interrogatory request[s] I would like to exercise my Miranda Rights.
And avoid the circus of these question[s] which [are] virtually impossible to
answer except my name[,] addresses[,] previous address, social security
no. and other information which is public record and the court has access
too! Also in reference to establishing ownership to the property seized.
The majority of the property in question was brought from street vendors
and given as gifts.
(Doc. 12). Despite being provided with a Declaration for execution, Claimant has failed
to make even this limited response under oath, as required by the Federal Rules of Civil
Procedure. See Rule 33(b)(3), Fed. R. Civ. P.
The United States does not dispute that Luqman had physical possession of the
subject property at the time that it was seized, but notes that case law supports that
simple physical possession is insufficient to establish standing under Article III, and that

3

When a claimant has filed a motion to dismiss the action, the Government is required to serve its
interrogatories within 21 days of the date the motion is served. Supplemental Rule G(6)(a). Luqman filed
his motion to dismiss on April 19, 2019, and the Government served its Special Interrogatories on May
10, 2017.

4

the claimant must also allege facts “regarding how the claimant came to possess the
property, the nature of the claimant’s relationship to the property, and/or the story
behind the claimant’s control of the property. See $515,060.42 in U.S. Currency, 152
F.3d at 498. Because of the danger of false claims, even Supplemental Rule G(5)(a)(i)
requires more than a conclusory statement of ownership. See also $25,982.28 in U.S.
Currency, 2015 WL 410590 at *1 (N.D. Ohio Jan. 29, 2015) (internal citations omitted).
Thus, courts have consistently held that claimants in civil forfeiture cases must answer
interrogatories regarding their interest in the defendant property where the claimant’s
ownership interest in the property forms a central issue in the proceeding.

See

$133,420.00 in U.S. Currency, 672 F.3d 629, 642-43 (9th Cir. 2012).
On the other hand, courts have found that in some cases, the Government’s own
allegations can establish a claimant’s standing. See, e.g., $515,060.42 in U.S.
Currency, 152 F.3d at 499-500 (collecting cases).

In the instant case, the

Government’s complaint alleges that all of the defendant property was seized from
Claimant Luqman by the Federal Bureau of Investigation (“FBI”) on September 21,
2016. The complaint alleges that Luqman operated a snack business out of the front
room of 777 Jackson Street in Cincinnati, Ohio, which appears to be the Claimant’s
residence, though that fact is not entirely clear from the complaint. Unlike a sum of
cash in a vehicle, the subject property consists largely of clothing and similar personal
property items found in what appears to have been the Claimant’s residence. Thus, the
allegations of the Government’s complaint and the nature of the property seized raise
some question, in the undersigned’s view, as to the centrality of the information sought

5

and legitimacy of any challenge to Article III standing that the Government claims to be
exploring through the Special Interrogatories.
Still, there is no question that the Special Interrogatories, a copy of which are
attached to the Government’s motion, all generally relate to the Claimant’s identity and
to his relationship to the seized property. Although the Government does not allege that
anyone else lived in the residence or that it has some other basis for challenging
standing, it’s argument that it requires the information to more fully determine Luqman’s
standing remains unopposed by Luqman. The Government has adequately supported
its position that each of the Interrogatories relates to Claimant’s standing, identity, and
asserted defense to forfeiture.
The undersigned further agrees with the Government that Luqman’s vague and
limited response that he has an ownership interest because he obtained a “majority” of
the seized items “from street vendors and… as gifts” constitutes a wholly insufficient
and incomplete response to the Special Interrogatories. Such as it is, the response fails
to identify with any precision which of the seized items were allegedly purchased from
vendors, which were allegedly received as gifts, the dates on which the alleged
transactions may have occurred, or any other highly relevant information pertinent to the
Claimant’s alleged ownership interest.
The Government cites Supplemental Rule G(8)(c)(i)(A) as providing for the
sanction of dismissal if a claimant refuses to respond to properly served special
interrogatories under Rule G(6).

See also United States v. Twelve Thousand Six

Hundred Sixty-Seven and 00/100 Dollars in United States Currency, 2014 WL 2535229,
at *2 (S.D. Ohio June 5, 2014). While the rule permits the Government to make a

6

motion to strike a claim or answer based on a claimant’s failure to respond to Special
Interrogatories, striking a claim for failing to respond is not mandatory, but discretionary
with this Court. On the record presented, where the allegations of the complaint itself
suggest that the Claimant has standing to challenge the civil forfeiture, the undersigned
declines to recommend dismissal of Luqman’s claim based upon his failure to fully
respond to the Special Interrogatories. Giving the Government the benefit of the doubt
and in light of the failure of Claimant to respond to the Government’s motion to strike,
the undersigned will instead direct Claimant to further respond to the Interrogatories.
See generally United States v. $77,090.00 U.S. Currency Tompkins, 2017 WL 413799,
at *7 & n.5 (M.D. Tenn. Jan. 31, 2017).
Luqman’s stated refusal to respond based upon the exercise of his “Miranda
Rights” is construed to be an invocation of his Fifth Amendment privilege against selfincrimination.

However, such a broad, wholesale assertion of Fifth Amendment rights

to avoid responding to all of the Special Interrogatories does not excuse the Claimant’s
obligation to respond to those questions that are not incriminatory, including (at least
potentially) his identity and other information that he claims is of “public record.” To the
extent that Luqman intends to assert a Fifth Amendment privilege, he must do so with
greater particularity by asserting the privilege only as to those Special Interrogatories
that would elicit potentially incriminating information.
Moreover, while a claimant seeking to prevent a civil forfeiture need not forfeit all
Fifth Amendment rights, the claimant is cautioned that he cannot leverage that right
solely for his benefit. See e.g., $133,420.00, 672 F.3d at 642-643 (claimant cannot
answer some special interrogatories supporting his claim and assert Fifth Amendment

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as to questions testing their veracity; district court did not err in striking responses);
United States v. $110,873.00 in U.S. Currency, 159 Fed Appx. 649, 652-53 (6th Cir.
2005) (court did not “penalize” claimant for exercising Fifth Amendment rights by
granting summary judgment to the United States in civil forfeiture case, when claimant
remained silent as to the source of the money; claimant cannot use Fifth Amendment as
both a sword and a shield). If Luqman fails to supplement his responses to the Special
Interrogatories, then the Court may reconsider granting the Government’s motion to
strike his claim, unless the Court determines that the Fifth Amendment privilege has
been properly invoked.

Moreover, any information withheld by Luqman under a Fifth

Amendment privilege may not later be used as a “sword” to defeat the civil forfeiture.
Last, the undersigned notes that the Government includes - in a footnote - a
cursory argument that because all of the property for which the Government seeks
forfeiture is counterfeit, it is “contraband” under 49 U.S.C. § 80302(a)(6)(D). Assuming
that the counterfeit items are “contraband,” the Government “raises the question of
whether the Claimant can assert an ownership interest,” since 18 U.S.C. § 983(d)(4)
explicitly prohibits the assertion of any ownership interest in “contraband or other
property it is illegal to possess.” (Doc 15 at 11). The undersigned declines to reach this
issue in the context of the motion to strike, as it is not clear from the decision to relegate
the discussion to a footnote, or from the Government’s phrasing that merely “raises the
question” whether the Government is seeking dismissal of the claim on this basis. 4
B. Claimant’s Motion to Dismiss (Doc. 4)
Luqman’s motion to dismiss the in rem case against the seized property rests on
the argument that the counterfeit items seized by the Government were “not for sale”
4

The Government remains free to flesh out its argument in a later dispositive motion.

8

and therefore not used in trafficking. (Doc. 4 at 2). However, as discussed, Luqman
has declined to respond to the Special Interrogatories served on May 10, 2017 under
Supplemental Rule G(6).

Rule G(6)(C) provides that “[t]he Government need not

respond to a claimant’s motion to dismiss the action under Rule G(8)(B) until 21 days
after the claimant has answered these interrogatories.”

See also United States v.

$22,900.00 in U.S. Currency, 2014 WL 2574052 at *1-2 (M.D. Fla., June 9, 2014)
(denying motion to dismiss as premature because the claimant had not answered
special interrogatories). Therefore, Luqman’s motion to dismiss this lawsuit should be
denied, without prejudice to renew following his submission of a more complete
response to the Special Interrogatories and/or following a response on the merits of any
renewed motion by the United States.
C. Claimant’s Motion for Release of Property (Doc. 11)
The third motion presented before the undersigned is Luqman’s motion to
release “all items” that are “not consider[ed] counterfeit such as: IPad, IPhone, birth
certificate, Business Ledgers, social security card, clothing items sunglasses [etc.].”
(Doc. 11). A motion or petition for release of property in a civil forfeiture action is
governed by 18 U.S.C. § 983(f).
The statute provides for prompt disposition of such motions. 5 Thus, under 18
U.S.C. §983(f)(1), a claimant whose property has been seized is entitled to immediate
release of the seized property if the record shows the following five conditions:
(A) the claimant has a possessory interest in the property;

5

Ordinarily, such motions are to be decided within thirty (30) days of the filing of the petition or motion,
unless extended by consent of the parties or by the court for good cause. 18 U.S.C. §983(f)(5). The
Government filed its response to Luqman’s motion on August 3, 2017, and Luqman’s reply time did not
expire until August 17, 2017.

9

(B) the claimant has sufficient ties to the community to provide assurance that
the property will be available at the time of trial;
(C) the continued possession by the Government pending the final disposition
of forfeiture proceedings will cause substantial hardship to the claimant, such
as preventing the functioning of a business, preventing an individual from
working, or leaving an individual homeless.
(D) the claimant’s likely hardship from the continued possession by the
Government of the seized property outweighs the risk that the property will be
destroyed, damaged, lost, concealed, or transferred if ti is returned to the
claimant during the pendency of the proceeding; and
(E) none of the conditions set forth in paragraph (8) applies.
The referenced exceptions to release of seized property in paragraph (8) provide
as follows:
(8) This subsection shall not apply if the seized property –
(A) is contraband….
(B) is to be used as evidence of a violation of the law;
(C) by reason of design or other characteristic, is particularly suited for use
in illegal activities; or
(D) is likely to be used to commit additional criminal acts if returned to the
claimant.
Id.
Some of the property as to which the Government seeks forfeiture is asserted to
be counterfeit clothing and counterfeit sunglasses. However, the Government appears
to concede that none of the specific property listed in Claimant’s motion for release is
counterfeit.

In addition, with the possible exception of some sunglasses and clothing

items, 6 none of the items as to which Luqman seeks release have been included in the

6

The Government does seek forfeiture of counterfeit items of clothing and sunglasses. For purposes of
the pending motion, the undersigned assumes that some items of clothing and sunglasses are not
counterfeit and therefore are not included on the defendant list of property as to which forfeiture is sought.

10

list of “defendants” in this in rem lawsuit. Nevertheless, the Government objects to the
release of any of the items on grounds that the items are evidence both in this civil
forfeiture case, and “in a related criminal investigation into the Claimant’s activities.”
(Doc. 18 at 2). The Government maintains that all of the items were seized pursuant to
the same Federal Search and Seizure Warrant executed on September 21, 2016.
The Government has failed to adequately explain how the non-counterfeit items
are connected to this in rem proceeding. The undersigned has closely examined the
complaint, which does include a reference to “business ledgers showing purse sales for
the period of January- May 2016, totaling in excess of $45,000.00.” (Doc. 1 at ¶18). To
that extent, the undersigned infers that the business ledgers included in the Claimant’s
motion to release may be “related to” the civil forfeiture proceeding. However, there is
nothing in the complaint and the Government has offered no explanation as to how
other property that Claimant seeks to release relates to this civil forfeiture case.
The relevant statute generally requires the Government either to institute civil
forfeiture proceedings with respect to the seized property within ninety days, or to
release said property. 7 18 U.S.C. §983(a)(3).

Here, the Government does not

(apparently) seek forfeiture of any items that are not alleged to be counterfeit, and has
yet to offer any explanation as to why items such as the referenced IPad, IPhone, and
social security card would otherwise be subject to forfeiture if they are related to some
(undefined) other criminal activity or investigation.

7

“In circumstances where the government does not take any of the actions set forth in § 983(a)(3)(B)
within the ninety-day period, the second sentence of § 983(a)(3)(C) applies if the government later
pursues a criminal forfeiture action in relation to the same assets.” U.S. v. One Silicon Valley Bank
Account, 3300355711, In the Amount of One Hundred Thirteen Thousand Nine Hundred Fifty-Two and
62/100 Dollars ($ 113,952.62), 549 F.Supp.2d 940, 948 (W.D. Mich. ,2008)(internal citation omitted).

11

Something more than a vague reference to an unspecified “ongoing criminal
investigation” is required to permit the Government to continue to hold indefinitely items
of personal property that are not alleged to be counterfeit and that have not been
identified as defendants in this in rem civil forfeiture proceeding or otherwise shown to
be required as evidence. 8 See also generally Nexus Holdings, Inc. v. Dafcan Finance,
Inc., 531 F.Supp.2d 839, 844 (S.D. Ohio, 2008) (assuming §983 applies rather than
Criminal Rule of Procedure 41(g), where the government had not instituted forfeiture
proceedings and claimed an interest in an “ongoing criminal investigation,” government
did not have sufficient interest to retain stock and seized money as to which borrower
had demonstrated interest in release).
On the other hand, Luqman’s petition/motion for release of the property fails to
show that he complied with the requisite steps to obtain the return of any property prior
to filing the his motion for release. Procedurally, § 983(f) requires that the claimant first
seek relief directly from the appropriate official.

18 U.S.C. § 983(f)(2). Only if

the property is not released within fifteen days may the claimant file a petition with this
Court detailing “(i) the basis on which the requirements of paragraph (1) are met; and (ii)
the steps the claimant has taken to secure release of the property from the appropriate
official.” § 983(f)(2)–(3). Thus, § 983(f) provides a detailed mechanism for obtaining
the release of seized property. U.S. v. Contents of Accounts, 629 F.3d 601, 607 (6th
Cir., 2011). Even if Luqman can show the steps he took to obtain the return of his
property from the appropriate official prior to seeking relief in this Court, he bears the
burden of showing that he meets all five requirements § 983(f)(1) for release of the
8

Pursuant to 18 U.S.C. §983(f)(4), “the Government may in appropriate cases submit evidence ex parte in
order to avoid disclosing any matter that may adversely affect an ongoing criminal investigation or
pending criminal trial.”

12

property.

To the extent that the Government claims that any of the property may be

subject to forfeiture, “substantial hardship” is very narrowly defined. Id. at 608.
Moreover, any hardship demonstrated by the party seeking return of the property must
outweigh the risk that the returned property may be “destroyed, damaged, lost,
concealed, or transferred.” 18 U.S.C. §983(f)(1)(D).
Based upon the Government’s representation to this Court that the referenced
items continue to be held as evidence either in this civil forfeiture proceeding and/or in a
related and ongoing criminal investigation, and particularly in light of the failure of
Claimant to demonstrate: (1) that he complied with procedural requirements prior to
filing his motion/petition for release of the property; and (2) that he is entitled to return of
the property under § 983(f)(1), the undersigned will recommend the denial of Claimant’s
motion at this time. However, the undersigned will direct the Government to explain its
basis for continuing to hold the property as to which release has been sought by
separate order, and the recommended denial of Claimant’s pending motion for release
will be without prejudice to Claimant to renew that motion at a later date.
III. Conclusion and Recommendation
For the reasons explained above, IT IS RECOMMENDED:
(1) That the Government’s Motion to Strike Luqbal’s Claim (Doc. 15) be DENIED,
without prejudice to renew should Luqbal fail to comply with the separate
Order entered this day directing him to supplement his responses to the
Special Interrogatories;

13

(2) That Claimant Luqball’s motion to dismiss (Doc. 4) and motion/petition for
release of certain property (Doc. 11) also be DENIED without prejudice to
renew.
s/ Stephanie K. Bowman
Stephanie K. Bowman
United States Magistrate Judge

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
UNITED STATES OF AMERICA
Case No. 1:17-cv-156
Plaintiff,
Dlott, J.
Bowman, M.J.

v.
EIGHT (8) COUNTERFEIT WATCHES, et. al,
Defendants.

NOTICE
Pursuant to Fed. R. Civ. P. 72(b), any party may serve and file specific, written
objections to this Report & Recommendation (“R&R”) within FOURTEEN (14) DAYS of
the filing date of this R&R. That period may be extended further by the Court on timely
motion by either side for an extension of time. All objections shall specify the portion(s)
of the R&R objected to, and shall be accompanied by a memorandum of law in support
of the objections. A party shall respond to an opponent’s objections within FOURTEEN
(14) DAYS after being served with a copy of those objections.

Failure to make

objections in accordance with this procedure may forfeit rights on appeal. See Thomas
v. Arn, 474 U.S. 140 (1985); United States v. Walters, 638 F.2d 947 (6th Cir. 1981).

15