United States of America v. 2009 Dodge Challenger, VIN 2B3LJ44V49H561559 et al
Filing
78
OPINION & ORDER: The governments motion to stay (# 67 ) is GRANTED. This action shall be stayed for a period of 90 days. Claimants motions for summary judgment (# 41 , # 43 , # 45 , and # 47 ) are held in abeyance during the pendency of the stay. Claimants cross-motions for protective disclosure of the ex parte affidavit (# 71 , # 72 , # 73 , # 74 & # 75 ) are DENIED. Signed on November 30th, 2011 by Judge Malcolm F. Marsh. (eo)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
PORTLAND DIVISION
UNITED STATES OF AMERICA,
03:11-cv-328-MA
Plaintiff,
OPINION AND ORDER
v.
2009 Dodge Challenger, VIN
2B3LJ44V49H561559, et al., in
rem,
Defendants.
S. Amanda Marshall
United States Attorney
Amy E. Potter
Assistant United States Attorney
405 E. 8th Avenue
Eugene, OR 97401
Attorneys for United States of America
Shaun S. McCrea
1147 High Street
Eugene, OR 97401
Attorney for Claimants Nicholas Bettencourt
and Harold Bettencourt, III
///
///
1 - OPINION AND ORDER
Steven L. Wilgers
243 W Commercial Avenue
P.O. Box 29
Coos Bay, OR 97420
Attorney for Peter Bettencourt
and Kustom Products, Inc.
Larry Setchell
1001 Fourth Avenue
Suite 4200
Seattle, WA 98154
Attorney for Harold Bettencourt, III
Marc D. Blackman
1001 SW Fifth Avenue
Suite 1400
Portland, OR 97204
Attorney for Harold Bettencourt, Jr.
MARSH, Judge
The United States of America brings this civil forfeiture
action pursuant to 18 U.S.C. § 981, 28 U.S.C. §§ 1345, 1355, 1356
and 1395. Currently before the court is the government’s motion to
stay, and the claimants’ cross motions for protective disclosure of
James McKaken’s ex parte affidavit.
For the reasons set forth
below, claimants’ motions are denied, the government's motion to
stay is granted, and this proceeding is stayed for a period of 90
days.
BACKGROUND
This is one of two related civil forfeiture proceedings
seeking the forfeiture of vehicles and funds seized as part of an
ongoing investigation involving the claimants, who are believed to
2 - OPINION AND ORDER
be involved in, or benefitted from, a conspiracy to defraud the
United States by providing nonconforming, substitute parts and
supplies to the Department of Defense.
The alleged probable cause
for the seizure of vehicles and funds is set forth in the affidavit
of James McMaken, Special Agent, United States Department of
Defense.
In May and June, 2011, claimants filed their Claims and
Answers to the Amended Complaint.
On August 12, 2011, claimants
filed Motions for Summary Judgment contending that the seized funds
and vehicles are not directly traceable to the alleged fraud to be
forfeitable under 18 U.S.C. § 981, and that these forfeiture
proceedings are time barred because the complaints were not filed
within the one-year limitation set forth in 18 U.S.C. § 984.
The
government opposes summary judgment as premature, and moves the
court to stay these proceedings under 18 U.S.C. § 981(g).
DISCUSSION
Pursuant to 18 U.S.C. § 981(g)(1), “[u]pon the motion of the
United States, the court shall stay the civil forfeiture proceeding
if the court determines that civil discovery will adversely affect
the ability of the Government to conduct a related criminal
investigation or the prosecution of a related criminal case.”
If
the government requests a stay, it may “submit evidence ex parte in
order to avoid disclosing any matter that may adversely affect an
3 - OPINION AND ORDER
ongoing criminal investigation or pending criminal trial.” 18
U.S.C. § 981(g)(5).
I.
Submission of Ex Parte Affidavit.
Claimants object to the submission of James McMaken’s ex parte
affidavit in support of the government’s motion to stay.
Having
reviewed the ex parte affidavit, I conclude that its disclosure
could
adversely
investigation.
parte.
affect
the
government’s
ongoing
criminal
Accordingly, the affidavit is properly filed ex
18 U.S.C. § 981(g)(5).
Claimants’ motions for protective
disclosure or redaction of the affidavit are denied.
II.
Propriety of Stay.
It is uncontested that the government’s ongoing criminal
investigation and this civil forfeiture proceeding are “related”
because they arise out of the same facts and circumstances, and
involve the same parties. See 18 U.S.C. § 981(g)(4). Furthermore,
after reviewing the government’s amended complaint, James McMaken’s
supporting affidavit, and the ex parte affidavit in support of the
government’s motion to stay, I find that civil discovery likely
will adversely affect the ability of the government to conduct the
related
criminal
government's
investigation
criminal
because
investigation
to
it
will
broader
subject
and
the
earlier
discovery than would occur in a related criminal proceeding.
Although claimants stress that they do not seek discovery, the
government would be compelled to compile and reveal information and
4 - OPINION AND ORDER
evidence collected in support of its criminal investigation in
order
to
judgment.
effectively
oppose
claimants’
motions
for
summary
The government ordinarily need not reveal all of its
evidence during the course of criminal discovery.
See Fed. R.
Crim. P. 16(a)(2) & (3) (internal government documents, government
witness
statements,
and
grand
jury
proceedings
generally
not
discoverable).
Moreover,
given
the
number
of
people
involved,
and
the
complexity and amount of financial transactions involved, it is
likely that discovery will need to take place before this court can
determine if there is a genuine issue of material fact as to
whether any of the seized funds or vehicles can be traced to the
alleged fraud under 18 U.S.C. § 981 and, if not, if this action has
been commenced in a timely manner under 18 U.S.C. § 984.
See
United States v. Check No. 25128 in Amount of $58,654.11, 122 F.3d
1263, 1264 (9th Cir. 1997) (concluding that tracing of money for
civil forfeiture under 21 U.S.C. § 881(a)(6) does not require that
the identical money be traced); United States v. Real Property
Located at 6415 N. Harrison Ave., 2011 WL 2580335 *3 (E.D. Cal.
2011) (applying same rule under 18 U.S.C. § 981); see also United
States v. Banco Cafetero Panama, 797 F.2d 1154, 1158-62 (2nd Cir.
1986) (outlining various accounting methods for tracing forfeitable
funds in bank accounts).
5 - OPINION AND ORDER
In sum, I conclude that civil discovery, whether initiated by
claimants
or
necessitated
by
claimants’
motions
for
summary
judgment, would adversely affect the ability of the government to
prosecute the related criminal investigation.
See U.S. v. Approx.
$69,577 in U.S. Currency, 2009 WL 1404690 *3 (N.D.Cal. May 19,
2009)
(staying
civil
forfeiture
case
so
as
not
to
subject
government to broader and earlier discovery than would occur in
criminal proceeding); U.S. v. Assorted Firearms-Motorcycles and
Other Personal Property, 677 F.Supp.2d 1214, 1216 (C.D.Cal. 2009)
(same).
In so holding, I find the case relied upon by claimants,
United States v. Contents of Accounts, 2010 WL 2682397 (W.D.Ky.
July 2, 2010), unconvincing and factually distinguishable in that
the court’s analysis was based, at least in part, upon the fact
that the seizure of the claimants’ property was premised “largely
on misdemeanor Jenkins Act violations and disputed readings of
state tax laws”, and upon its conclusion that the government’s
interests could be protected through the issuance of a protective
order.
Similarly, claimants’ reliance upon the Second Circuit’s
conclusion in Banco Cafetero Intem., 797 F.2d at 1163, that the Due
Process
Clause
prohibits
an
indefinite
delay
of
a
criminal
forfeiture proceeding, sheds little light on the propriety of a 90day stay in this civil proceeding pursuant to § 981(g)(1).
6 - OPINION AND ORDER
Finally, I reject Claimant Harold Bettencourt Jr.’s contention
that granting a stay in this civil forfeiture proceeding is
improper because it will undermine his constitutional right to
counsel of choice in the related criminal investigation.
Claimant
relies upon United States v. Kaley, 579 F.3d 1246 (11th Cir. 2009),
a case addressing when a criminal defendant must be given a
pretrial evidentiary hearing for the return of seized assets in
order to protect his right to retain counsel of choice.
I find the
constitutional analysis in Kaley, a criminal proceeding, to be
sufficiently distinguishable so as not to compel a particular
result in the instant civil proceeding.
More importantly, Claimant Harold Bettencourt, Jr., has not
been indicted, nor has he provided any evidence to support his
contention that he is financially unable to retain counsel of
choice.
In the event that he is indicted, Fed. R. Crim. P. 41(g)
appears to provide the appropriate remedy.
See United States v.
Unimex, Inc., 991 F.2d 546, 550-51 (9th Cir. 1993) (opining that
criminal defendant may move pursuant to Fed. R. Crim. P. 41 for the
release of property held pursuant to civil forfeiture in order to
pay the fees of defense counsel).
Finally, the court notes that
claimants’ constitutional rights are protected by the fact that the
stay of this proceeding is not indefinite.
///
///
7 - OPINION AND ORDER
CONCLUSION
Based on the foregoing, the government’s motion to stay (#67)
is GRANTED.
This action shall be stayed for a period of 90 days.
Claimants’ motions for summary judgment (#41, #43, #45, and #47)
are held in abeyance during the pendency of the stay.
Claimants’
cross-motions for protective disclosure of the ex parte affidavit
(#71, #72, #73, #74 & #75) are DENIED.
IT IS SO ORDERED.
DATED this _30th___ day of November, 2011.
/s/Malcolm F. Marsh__
Malcolm F. Marsh
United States District Judge
8 - OPINION AND ORDER
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