United States of America v. One Parcel of Property Described as: 21279 Vantage Point Dr., Lake Preston, Kingsbury County, South Dakota et al
ORDER granting in part and denying in part 92 Motion for Summary Judgment; granting in part and denying in part 92 Motion to Strike. Signed by U.S. District Judge Karen E. Schreier on 1/26/2016. (JLS)
UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
UNITED STATES OF AMERICA,
ONE PARCEL OF PROPERTY
DESCRIBED AS: 21279 VANTAGE
POINT DR., LAKE PRESTON,
KINGSBURY COUNTY, SOUTH
DAKOTA, with all appurtenances,
fixtures, attachments, and
improvements thereon; 2005 MERCURY
$147,594.22 in GOLD COINS,
ORDER GRANTING IN PART
AND DENYING IN PART
MOTION TO STRIKE
Plaintiff, United States of America, pursuant to Rule G(8)(c) of the
Supplemental Rules for Certain Admiralty or Maritime Claims and Asset
Forfeiture Actions, moves to strike the verified claim asserted by Arthur J.
Maurello, Graf Werner Stamphaus (GWS), and J.J.F. Fine Arts Corp. (JJF). The
government alleges that the claimants do not have statutory standing to
challenge the forfeiture action. Docket 92. Alternatively, the government moves
to strike the verified claim asserted by JJF on the basis that it lacks Article III
standing. Id. The claimants resist the motion as it pertains to statutory
standing. For the following reasons, the government’s motion is granted in part
and denied in part.
On October 26, 2012, the government filed a complaint seeking civil
forfeiture of the following property: real property located in Lake Preston, South
Dakota, a 2005 Mercury Marquis, and $147,594.22 in gold coins. Docket 1.
The government seeks forfeiture under 31 U.S.C. § 5317(c)(2) because the
property was allegedly “involved in structuring transactions to evade reporting
requirements, involved in a conspiracy to evade reporting requirements, or is
property traceable to violations of Section 5324 of title 31[.]” Docket 1 at ¶ 31.
On December 13, 2012, Maurello filed a verified claim to contest the forfeiture
action. Docket 25. In the verified claim, Maurello asserts ownership of the
property individually, as principal of GWS, and as a corporate officer of JJF. 1
Id. Maurello filed the verified claim, pro se, while serving a term of incarceration
stemming from an unrelated criminal conviction.
The government seeks to strike the claimants’ verified claim under Rule
G(8)(c)(i)(A) and (B), which provide the following:
At any time before trial, the government may move to strike a claim or
(A) for failing to comply with Rule G(5) or (6), or
(B) because the claimant lacks standing.
Fed. R. Civ. P. Supp. R. G(8)(c)(i)(A)-(B). The government first argues that the
claimants have failed to comply with Rule G(5).
For purposes of clarity, the court will refer to Maurello, GWS, and JJF as
“claimants” when referring to the verified claim.
Rule G(5) details the requirements necessary to file a verified claim in
opposition to a forfeiture action instituted by the government. A claimant can
contest a forfeiture action by asserting a verified claim in the following manner:
A person who asserts an interest in the defendant property may
contest the forfeiture by filing a claim in the court where the action is
pending. The claim must:
(A) identify the specific property claimed;
(B) identify the claimant and state the claimant’s interest in the
(C) be signed by the claimant under penalty of perjury; and
(D) be served on the government attorney[.]
Fed. R. Civ. P. Supp. R. G(5)(a)(i)(A)-(D). Courts often refer to the Rule G(5)
analysis as statutory standing while Rule G(8)(C)(i)(B) analysis pertains to
Article III standing. See United States v. ADT Sec. Serv., Inc., 522 F. App’x 480,
489 (11th Cir. 2013). “A forfeiture claimant must satisfy both constitutional
and statutory standing requirements to file a verified claim properly.” United
States v. Eleven Million Seventy-One Thousand One Hundred & Eighty-Eight
Dollar & Sixty Four Cents ($11,071,188.64) in U.S. Currency, No. 4:12-CV-1559,
2014 WL 301014, at *1 (E.D. Mo. Jan. 28, 2014).
The verified claims satisfy the requirements of Rule G(5).
“To establish statutory standing under Rule G(5) . . . a ‘person who
asserts an interest in the defendant property’ must ‘state the claimant’s
interest in the property.’ ” Id. (quoting Fed. R. Civ. P. Supp. R. G(5)(a)(i)(B)). The
“claimant’s interest in the property must be stated with some level of
specificity.” United States v. $154,853.00 in U.S. Currency, 744 F.3d 559, 562
(8th Cir. 2014). The Eighth Circuit Court of Appeals has “repeatedly held that
district courts may require claimants in forfeiture proceedings to comply
strictly with Rule [G(5)] in presenting their claims to the court.” United States v.
Three Parcels of Real Prop., 43 F.3d 388, 391 (8th Cir. 1994).
“The filing of a verified claim, as required by the Supplemental Rules, ‘is
no mere procedural technicality.’ ” United States v. Cashier’s Check in Amount
of Five Hundred Nineteen Thousand Four Hundred Eighty-Six Dollars & Twelve
Cents, No. C07-00009-LRR, 2007 WL 4570067, at *4 (N.D. Iowa Dec. 24, 2007)
(quoting United States v. $23,000 in United States Currency, 356 F.3d 157, 163
(1st Cir. 2004)). “In requiring a claimant to follow these procedures, the
Supplemental Rules ‘ensure that putative 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.’ ” United
States v. $5,548.00 in U.S. Currency, No. 4:14-CV-3038, 2014 WL 4072096, at
*2 (D. Neb. Aug. 14, 2014) (quoting United States v. All Assets Held at Bank
Julius Baer & Co., Ltd., 664 F. Supp. 2d 97, 101 (D.D.C. 2009)). Additionally,
“[i]t forces claimants to assert their alleged ownership under oath, creating a
deterrent against filing false claims.” Cashier’s Check, 2007 WL 4570067, at *4.
The government urges the court to hold that the claimants’ verified claim
fails to provide the detail necessary to satisfy Rule G(5). The government relies
upon a line of cases where courts struck verified claims due to insufficient
specificity regarding the claimants’ interest in defendant property and
insufficient specificity regarding the means in which the claimants acquired
such property. See Docket 94 at 8-10. According to the government, the
claimant’s “bald assertion of ownership is not sufficient to satisfy the
requirement of Rule G(5)[.]” Docket 94 at 8.
The claimants offer a variety of arguments in response to the
government’s motion. First, the claimants argue that they complied with the
requirements of Rule G(5) by alleging, under oath, that they are bona fide
owners of the defendant property. Second, the claimants argue that the
majority of precedent cited by the government is inapplicable to the case at bar.
Specifically, the claimants assert that there is no dispute regarding ownership
of the defendant property because the government’s complaint includes
exhibits that provide great detail regarding the claimants’ ownership of, as well
as the alleged source of funds utilized to purchase, the defendant property.
Third, the claimants urge the court to consider Maurello’s incarcerated status
at the time of filing. According to the claimants, Maurello’s incarceration
created significant complications in obtaining information associated with the
ownership interests of each claimant. Finally, the claimants argue that the
court should grant leave to amend the verified claim if it lacks the specificity
required to satisfy Rule G(5). Docket 104 at 13 (citing United States v. 1982
Yukon Delta Houseboat, 774 F.2d 1432, 1436 (9th Cir. 1985) (stating that
amendments should be liberally permitted to add verification to claims
originally lacking them, particularly when the government’s complaint asserts
that the claimant owns the property)).
The court agrees with the claimants’ characterization regarding the
validity of the verified claim. The claimants have identified the specific property
claimed. See Fed. R. Civ. P. Supp. R. G(5)(a)(i)(A). They have identified their
interest in the property as “bona fide” owners. See id. at G(5)(a)(i)(B). Also, the
verified claim was signed under penalty of perjury and served upon the
government attorney. See id. at G(5)(a)(i)(C)-(D). As such, the claimants have
complied with the text of Rule G(5).
While the government cites a valid line of cases that required claimants
to state their interest in defendant property with heightened specificity, the
court finds that the reasoning behind those holdings is not relevant here. For
example, in $154,853.00 in U.S. Currency, a case cited by the government, the
defendant property was cash seized from a car carrying narcotics where the
owner of the vehicle initially denied ownership of the money. Docket 94 at 8
(citing $154,853.00 in U.S. Currency, 744 F.3d at 561-62); See also Docket 94
at 9 (citing United States v. Approximately $189,040.00 in U.S. Currency, No.
2:13-CV-0643, 2013 WL 4714177 (E.D. Cal. Aug. 9, 2013) (striking claim for
money seized from a Lincoln Navigator in connection with violation of federal
drug laws noting the danger of false claims in civil forfeiture claims)); and
(citing United States v. $29,540.00 in U.S. Currency, No. CIV. A 11-12172-GAO,
2013 WL 783052 (D. Mass. Feb. 28, 2013) (striking claim for money found in
airport security screening that was connected to drug transaction because
claimant only asserted a possessory interest in the money)). Much of the
precedent relied upon by the government stems from scenarios where the
defendant property is currency seized in connection with illegal activity. In
these situations, sound reasoning supports heightened requirements when
asserting ownership of the currency.
In the case at bar, concerns associated with the validity of the verified
claim are simply not present. As the claimants note, the government attached
exhibits to its complaint that detail the alleged source of funds that the
claimants utilized to purchase the defendant property. Therefore, rigid
application of Rule G(5) is not necessary as it pertains to the specificity needed
when stating the claimants’ interest in the property.
Additionally, the court finds that the Maurello’s incarceration at the time
of the pro se filing is relevant in this analysis. Without any documentation to
confirm details regarding acquisition of the defendant property, the verified
claim asserted that Maurello, or the entities that he owned, was the bona fide
owner of the defendant property. Under these circumstances, the level of
specificity provided in the verified claim satisfies Rule G(5). The government’s
motion to strike the verified claim as it pertains to statutory standing is denied.
J.J.F. Fine Arts Corporation’s verified claim does not satisfy
the standing requirements of Article III.
Second, the government argues that the court should strike JJF’s
verified claim because Maurello is not a licensed attorney and cannot file a
claim on behalf of the corporation. The claimants do not dispute the
government’s argument as it pertains to JJF and further allege that JJF does
not own the defendant property. See Docket 102 at ¶ 10. Thus, the
government’s motion to strike JJF’s claim is granted.
The claimants’ verified claim to the defendant property satisfies the
statutory standing requirements of Rule G(5) of the Supplemental Rules for
Certain Admiralty or Maritime Claims and Asset Forfeiture Actions. Conversely,
JJF does not have Article III standing to challenge the forfeiture action because
Maurello is not a licensed attorney. Accordingly, it is
ORDERED that the government’s motion to strike the verified claims of
Arthur Maurello and Graf Werner Stamphaus is denied.
IT IS FURTHER ORDERED that the government’s motion to strike the
claim of J.J.F. Fine Arts Corporation is granted.
IT IS FURTHER ORDERED that the deadline to file substantive motions
is March 28, 2016.
Dated January 26, 2016.
BY THE COURT:
/s/ Karen E. Schreier
KAREN E. SCHREIER
UNITED STATES DISTRICT JUDGE
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