United States of America v. $166,450.48 in U.S. Currency et al
Filing
75
OPINION AND ORDER. Based on the foregoing, claimants' motions for summary judgment (#29, #32, #49, & #71) are DENIED. The stay of this proceeding as to all claimants except Knezevich has expired. IT IS ORDERED that the parties shall complete discovery within 60 days of the date of this Opinion and Order. IT IS SO ORDERED. Signed on 08/07/2014 by Judge Malcolm F. Marsh. (pvh)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
UNITED STATES OF AMERICA,
3:13-cv-00562-MA
Plaintiff,
OPINION AND ORDER
v.
$166,450.48 IN UNITED STATES
CURRENCY SEIZED FROM CHASE
BANK ACCOUNT NO. XXXXXX3320,
$121,000.00 IN UNITED STATES
CURRENCY, and.
APPROXIMATELY $372,000.00
WORTH OF ASSORTED PRECIOUS
METALS, ALL SEIZED FROM THREE
SAFES AT ALDER GOLD EXCHANGE
ON OCTOBER 29, 2012, in rem,
Defendants.
S. AMANDA MARSHALL
United States Attorney
District of Oregon
KATHERINE C. LORENZ
Assistant United States Attorney
1000 S.W. Third Avenue, Suite 600
Portland, OR 97204-2902
Attorneys for Plaintiff
Ill
Ill
1 - OPINION AND ORDER
DAVID H. ANGELI
BENJAMIN N. SOUEDE
Angeli Law Group LLC
121 S.W. Morrison Street, Suite 400
Portland, OR 97204
Attorneys for Claimant Michael Knezevich
NORMAN SEPENUK
520 S.W. Yamhill Street, Suite 600
Portland, OR 97204
Attorney for Claimant VanHaverbeke
PAUL J. PASCHELKE
9320 S.W. Barbur Blvd., Suite 135
Portland, OR 97219
Attorney for Claimant Barney
RONALD V. CHOTT
14950 N.W. Oak Hills Dr.
Beaverton, OR 97006
Claimant, pro se
MAUREEN ANNE & MICHAEL JOHN KLOBERTANZ
7535 S.E. Reed College Place
Portland, OR 97202
Claimants, pro se
MOUNT HOOD MINISTRY
c/o Scott D. Haanstad
P.O. Box 1825
Hood River, OR 97031
Claimant, pro se
MARSH, Judge
The United States of America brings this civil forfeiture
proceeding pursuant to 18 U.S.C.
2 - OPINION AND ORDER
§§
981 and 984; and 28 U.S.C.
§§
1345, 1355, 1356 and 1395.
Currently before the court are the
motions for summary judgment by Claimants Joe VanHaverbeke, Neal D.
Barney, Maureen and Michael Klobertanz, and Mount Hood Ministry.
For the reasons set forth below, claimants' motions are denied.
BACKGROUND
I.
Seizure of Currency and Precious Metals
The government seeks the forfeiture of $166,450.48 in U.S.
Currency,
$121,000.00
in
U.S.
Currency,
and
approximately
$372,000.00 worth of assorted precious metals, on the basis that
they were involved in transactions or attempted transactions in
violation
business)
of
18
U.S.C.
§
1960
by Michael Knezevich,
Gold Exchange.
(unlawful
money
transmitting
the owner and operator of Alder
In support of its complaint, the government relies
on the declaration of Internal Revenue Service Special Agent Scott
McGeachy.
According
to
Agent
McGeachy,
Knezevich
was
operating
an
unlicensed money transmitting business by buying and selling metals
to
and from customers,
storing the customers'
metals on site,
keeping customers' cash on deposit, and writing checks or wiring
money
on
behalf
of
his
customers
directly
to
third
parties,
including trusts, brokerage accounts, automobile dealerships, and
credit card companies.
On
October
Investigation
Unit
29'
and
3 - OPINION AND ORDER
2012,
the
agents
Portland
from
Police
the
IRS
Bureau
Criminal
seized
the
defendant currency and precious metals from three safes located at
Alder
Gold Exchange,
and a
Chase
Bank account
Precious Metals & Gems, dba Alder Gold Exchange.
in
the
name
of
Agent McGeachy
states that when the property was seized, Knezevich was unable to
differentiate
the
contents
of
the
three
safes,
explaining
to
officers that the metals located in the three safes "might reflect
his personal precious metals, precious metals owned by ALDER GOLD
EXCHANGE, or precious metals due to a client.•
After being advised of his Miranda rights, Knezevich made the
following
statements
regarding
his
operation
of
Alder
Exchange:
KNEZEVICH stated that clients keep their money on deposit
with KNEZEVICH because they don't trust banks. KNEZEVICH
does not charge them a fee, per se, to store their gold.
However, KNEZEVICH gets the benefit of a zero interest
loan.
KNEZEVICH stated he will use his customers'
precious metals to sell to a different client at any time
without obtaining customer approval. KNEZEVICH stated he
will eventually replace the customers' precious metals in
the safe at a later date when the price of the metal is
most beneficial for KNEZEVICH. KNEZEVICH stated he uses
his clients' precious metals and/or cash without asking
their permission and whenever it is most beneficial to
KNEZEVICH' s bottom line of earning a profit through ALDER
GOLD EXCHANGE. KNEZEVICH admitted that he currently owes
some of his clients several thousand dollars.
* * * * *
KNEZEVICH maintained precious metals owned by customers
in all three safes located within the office of ALDER
GOLD EXCHANGE.
KNEZEVICH explained that the metals
located in any of the safes might reflect his personal
metals, precious metals owned by ALDER GOLD EXCHANGE, or
precious metals due to a client.
KNEZEVICH stated that
if he owed a client $200,000.00 he might take metal from
4 - OPINION AND ORDER
Gold
ALDER GOLD or from his personal collection of metal or
from another client's metal collection to pay off the
client requesting the $200,000.
Agent McGeachy examined two Alder Gold Exchange bank accounts
and discovered checks and wire transfers to third parties on behalf
of several customers.
Two customers confirmed that they sold gold
to Alder Gold Exchange, and Knezevich, in turn, transferred funds
on their behalf to third parties.
Knezevich confirmed that he
carried out this type of transaction to Trinity Life Ministries, on
behalf of a
checks
to
customer identified as
car
dealerships,
"L. S.," but denied writing
brokerage
accounts,
or
credit
card
companies.
II.
Customer Claims
The
following customers of Alder Gold Exchange have filed
claims seeking the recovery of currency and precious metals seized
from Alder Gold Exchange:
A.
1
Joe VanHaverbeke
Joe VanHaverbeke claims that he is the lawful owner of 151.45
ounces of miscellaneous gold coins seized by the government.
In
support of his motion for summary judgment, VanHaverbeke declares
that
he
entrusted
his
gold with
Knezevich
with
the
following
understanding:
1
Michael Knezevich also filed a claim as a bailee for his
customers. However, his claim has been stayed during the
pendency of a related criminal investigation. Order (#21); see
also U.S. v. 2.7250 Acres of Real Prop., 3:12-cv-01963-MA.
5 - OPINION AND ORDER
I always had access to the gold I entrusted to and stored
with Mr. Knezevich. I never paid Mr. Knezevich any money
to store the gold. He was free to sell the gold as long
as this gold was replaced by gold of equal or greater
value.
Mr. Knezevich. told me that he would always have
sufficient inventory on hand (including gold and silver)
equal to the value of the gold I stored with him.
B.
Neal Barney
Neal Barney seeks to recover 105 ounces of miscellaneous gold
coins,
$2, 000
labeled "Neal."
in
U.S.
currency,
and
one
canvas
bank coin bag
Barney declares that in 2008 he purchased 6,300
ounces of silver bars and 33 ounces of assorted gold coins from
Knezevich.
6,
2012,
According to Barney, between June of 2008, and February
the composition
of
his
investment
changed because he
reinvested his holdings with Knezevich in an attempt to capitalize
on price shifts in the market.
Barney's description of Knezevich's
authority to. sell his precious metals
VanHaverbeke,
Knezevich' s
with
authority
the
was
exception
limited
is
that
to
identical
Barney
selling
a
to that
states
"few
Mr. Knezevich agreed that he could only dispose of
my gold by selling it to customers of Alder Gold if he
needed it [to] complete a transaction that he could not
cover with his own inventory. Otherwise, he was required
to keep the exact gold that I entrusted to him.
Mr.
Knezevich further agreed that he would release my gold to
me at any time upon my request.
C.
Maureen and Michael Klobertanz
6 - OPINION AND ORDER
that
ounces."
Claimant Barney elaborated in a second declaration:
Ill
of
Maureen and Michael Klobertanz seek to recover eleven 100ounce silver bars and $225,470.00 in U.S. Currency.
The Klobertanz
state that their agreement with Knezevich was "to use him as a
broker"
for
the
purpose
"of
using
the
lows
and
highs
in
the
precious metals market to increase claimant's property in precious
metal and currency."
Ms. Klobertanz attests that the currency was
stored at Alder Gold "for safe keeping and convenience of future
metal
exchange[s] ,"
but
she
"never
consented
to
or
had
any
knowledge of Michael Knezevich using the metals or currency .
for his use or any other business."
D.
Mount Hood Ministry
Mt.
Hood
Ministry,
through
its
Executive
Director
Haanstad has filed a claim to 403 ounces of silver.
Scott
Haanstad's
description of Knezevich's authority to sell his precious metals is
identical to that of Claimant VanHaverbeke.
STANDARDS
Summary judgment is appropriate if there is no genuine dispute
of material fact and the moving party is entitled to judgment as a
matter of law.
Fed. R. Civ. P. 56(a)
The moving party bears the
burden of proving the absence of a genuine dispute of material
fact.
City of Pomona v. SXM North America Coro., 750 F.3d 1036,
1049 (9th Cir. 2014) (citing Celotex Corp. v. Cattrett, 477 U.S. 317,
323
(1986)).
This court reviews the evidence in the light most
favorable to the non-moving party,
7 - OPINION AND ORDER
and must draw all reasonable
inferences in favor of that party.
1049; U.S. v. Real Proo.
City of Pomona,
750 F.3d at
874 Gartel Dr., Walnut, Calif.,
79 F.3d
918, 921 (9th Cir. 1996).
DISCUSSION
A civil forfeiture operates in rem against the property on the
theory that the property itself is guilty of wrongdoing.
Liquidators of European Federal Credit Bank,
(9th Cir. 2011).
the
forfeiture
In the instant proceeding,
of
U.S. v.
630 F.3d 1139, 1149
the government seeks
currency and precious metals
pursuant
to
18
U.S.C. §§ 98l(a) (1) (A) and 984, which provide for the forfeiture of
property, real or personal, involved in a transaction or attempted
transaction
by
an
unlicensed
money
transmitting
business
in
violation of 18 U.S.C. § 1960. 2
Claimants move for summary judgment on the basis that they are
innocent owners whose property is not subject to forfeiture.
18 U.S. C. § 983 (d) ( 1) .
See
The government opposes summary judgment on
the basis that there are genuine issues of material fact as to (1)
whether claimants are "owners" of the seized property as defined by
2
To establish a violation of 18 U.S.C. § 1960(a), the
government must prove that a defendant knowingly conducts,
controls, manages, supervises, directs, or owns an unlicensed
money transmitting business.
18 U.S.C. § 1960(a) & (b) (1) (B); 31
U.S.C.
5330; U.S. v. 47 10-0unce Gold Bars, 2005 WL 221259
(D.Or. Jan. 28, 2005).
"[T]he term 'money transmitting' includes
transferring funds on behalf of the public by any and all means
including but not limited to transfer within this country or to
locations abroad by wire, check, draft, facsimile, or courier."
18 u.s.c. § 1960(2).
8 - OPINION AND ORDER
18 U.S.C. § 983(d) (6);
(2) whether claimants are "innocent owners"
as defined by 18 U.S.C. §
any,
983 (d) (2)
&
(3); and
(3)
how much,
if
of the seized currency and precious metals belong to each
claimant. 3
A claimant seeking recovery of property subject to a civil
forfeiture
proceeding must demonstrate Article
III
standing by
showing that he or she has a colorable interest in the property,
which includes an ownership interest or a possessory interest in
the specific property seized.
U.S. v. $133,420 in U.S. Currency,
672 F.3d 629, 637-38 (9th Cir. 2012); U.S. v. Real Prop. Located at
475 Martin Lane,
Beverly Hills, CA,
545 F. 3d 1134, 1140 (9th Cir.
2008).
Although the burden of demonstrating a colorable ownership
interest is not a heavy one, federal courts have consistently held
that unsecured creditors of the person whose property was seized
lack a sufficient property interest to have standing to challenge
the forfeiture.
U.S. v. $20,193.39 U.S. Currency, 16 F.3d 344, 346
(9th Cir. 1994); U.S. v. One Hundred Thirty-Three (133) U.S. Postal
Serv. Money Orders Totaling $127,479.24 in U.S. Currency, 496 Fed.
Appx.
723,
724
(9th Cir.
2012);
see 18 U.S.C.
§
983 (d) (6) (B) (I)
(excluding "a person with only a general unsecured interest in, or
3
I reject the government's additional argument that
summary judgment should be denied on the basis that the
government has yet to conduct discovery.
9 - OPINION AND ORDER
claim
against,
the
property
definition of "owner•).
or
estate
of
another•
from
the
The Ninth Circuit explains!
"Unlike secured creditors, general creditors cannot claim
an interest in any particular asset that makes up the
debtor's estate.
For this reason, the federal courts
have consistently held that unsecured creditors do not
have standing to challenge the civil forfeiture of their
debtors' property.
$20,193.39 U.S. Currency, 16 F.3d at 346.
Claimants contend that they are not unsecured creditors, but
rather the lawful owners of the property that was held by Knezevich
as a bailee.
In resolving this conflict, I apply the law of the
state giving rise to the property interest (in this case Oregon).
U.S. v.
1187,
Real Prop. Located at 5208 Los Franciscos Way,
1191
(9th
Cir.
2004).
determines whether that
Federal
statutory
law,
385 F.3d
in
turn,
interest is sufficient to overcome the
government's interest in forfeiture.
See 18 U.S.C.
§
983(d) (6).
Oregon law defines a bailment as the delivery of personal
property by one person to another,
to be held according to the
purpose or object of the delivery, and to be returned when that
purpose is accomplished.
Gage v. All Nations Ins. Co.,
314 Or.
700, 706, 842 P.2d 784 (1992); Dundas v. Lincoln Ctv., 48 Or. App.
1025, 1031-32, 618 P.2d 966 (1962); U.S. v. Felber, 1996 WL 795555
*l (D.Or. Oct. 30, 1996).
It is necessary to examine the intent of
the parties and duties assumed by those parties to resolve whether
a bailment exists.
Dundas, 48 Or. App. at 1032; Felber, 1996 WL
10 - OPINION AND ORDER
795555 *l.
A bailment will not be implied where it appears that it
was the intention of the parties, viewing all of the surrounding
circumstances, that the property was to be held in some capacity
other than.a bailment.
Owen v. Bradley, 231 Or. 94, 103, 371 P.2d
966 (1962); Dundas, 48 Or. App. at 1032; Felber, 1996 WL 795555 *l.
Savage v. Salem Mills Co., 48 Or. 1, 85 P. 69 (1906).
The government contends that Knezevich is not a bailee of
claimants' property, and that claimants are properly regarded as
unsecured creditors.
Because an unsecured creditor does not claim
an interest in the "specific property sought to be forfeited," but
rather has an interest in the funds/property as a whole, he or she
is not an "owner" of the seized property for purposes of civil
forfeiture.
18
U.S.C.
983(d) (6) (B) (I)
§
(emphasis
added);
$20.193.39 U.S. Currency, 16 F.3d at 346; U.S. v. 47 10-0unce Gold
Bars,
2005 WL 221259 *4
(D.Or.
Jan.
28,
795555 *3; United States v. BCCI Holdings
2005);
Felber,
1996 WL
(Luxembourg), S.A.,
73
F.3d 403, 405 (C.A.D.C. 1996).
Viewing
government,
the
and
evidence
in
light
in
of
the
(1)
light
most
favorable
Knezevich's
to
statements
the
to
investigators regarding his authority to buy and sell precious
metals
to and from his customers,
keep his
customers'
cash on
deposit, and his admission that he.wrote a check on behalf of at
least one customer directly to a third party;
(2) the majority of
claimants' declarations that they understood Knezevich could sell
11 - OPINION AND ORDER
their
precious
metals
provided
that
they
were
replaced
with
precious metals of equal or greater value; and (3) Agent McGeachy's
interviews
records
parties,
of
customers
indicating
and
payments
examination
on
behalf
of
of
Alder
Gold's
customers
to
bank
third
I conclude that there is a genuine dispute of material
fact as to whether claimants and Knezevich intended to create a
bailment,
This,
or whether claimants are simply unsecured creditors.
in turn,
creates a
4
genuine issue of material fact as to
whether claimants are "owners" for purposes of standing and the
innocent owner defense.
Consequently,
summary judgment is not
warranted.
Finally, it is worthy of note that because there is a genuine
dispute of material fact as to whether claimants have standing, I
need not address at this juncture whether the government ultimately
will prevail in demonstrating a
substantial connection between
claimants' property and the criminal offenses allegedly committed
by Knezevich.
Ill
Ill
4
Neither Lamb Bros., Inc. v. First State Bank, 285 Or. 39,
589 P.2d 1094 (1979) (holding that subordination agreement
created bailment), nor McBee v. Ceasar, 15 Or. 62 (1887) (holding
that deposit of wheat in a public warehouse creates a bailment),
cited by Claimants VanHaverbeke and Barney, change the state law
principle that a bailment will not be implied where it
contradicts the intention of the parties.
12 - OPINION AND ORDER
CONCLUSION
Based
judgment
on
(#29,
the
foregoing,
#32,
#49,
&
#71)
claimants'
motions
are DENIED.
for
summary
The stay of this
proceeding as to all claimants except Knezevich has expired.
IT IS
ORDERED that the parties shall complete discovery within 60 days of
the date of this Opinion and Order.
IT IS SO ORDERED.
DATED this
_tj'_
day of August, 2014.
Malcolm·F. Marsh
United States District Judge
13 - OPINION AND ORDER
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