United States of America v. $225,300.00 in U.S. Funds from FirstBank (Jackson, Tenn) Account #86476002 in the Name of Norene Pumphrey et al

Filing 20

ORDER DENYING 15 CLAIMANTS MOTION TO DISMISS. Signed by Judge J. Daniel Breen on 9/27/12. (Breen, J.)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TENNESSEE
EASTERN DIVISION
UNITED STATES OF AMERICA,
Plaintiff,
v.

No. 1:12-cv-01075-JDB-egb

TWO HUNDRED TWENTY-FIVE THOUSAND
THREE HUNDRED DOLLARS ($225,300.00) IN
U.S. FUNDS FROM FIRSTBANK (JACKSON,
TN) ACCOUNT #86476002 IN THE NAME OF
NORENE PUMPHREY,
Defendant.

ORDER DENYING CLAIMANT’S MOTION TO DISMISS

This is a civil forfeiture proceeding instituted by the Plaintiff, United States of America,
pursuant to 31 U.S.C. § 5317 against funds from a bank account alleged to contain deposits
structured to avoid currency transaction reporting requirements in violation of 31 U.S.C. §
5324(a). Before the Court is Claimant, Norene Pumphrey’s, motion to dismiss pursuant to
Federal Rules of Civil Procedure 12(b)(6). (Docket Entry (“D.E.”) 15.) For the reasons set forth
below, the motion is DENIED.
I.

FACTUAL BACKGROUND

From January 2008 through early 2012, Norene Pumphrey was employed as an
Administrator at the Decatur County General Hospital. Her husband, Edward Pumphrey, is
retired and receives income from a pension plan and an annuity. (Am. Compl. Ex. A ¶ 7, D.E. 4.)
Bank records indicate that the Pumphreys have no outside employment or other legitimate source
of income. (Id.) On October 1, 2008, Norene Pumphrey withdrew $180,322.00 from her
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FirstBank Account #xxxx1123 generating a Currency Transaction Report (“CTR”). (Id. at ¶ 8.)
That CTR indicates that Mrs. Pumphrey provided her driver’s license at the time of the
transaction to verify her identity. (Id.)
Beginning on January 8, 2008, Mrs. Pumphrey began to make a series of cash deposits
into a personal savings account, FirstBank Account #xxxx2005. These transactions are as
follows:
DATE OF DEPOSIT

AMOUNT DEPOSITED

January 8, 2010

$9,900.00

January 13, 2010

$9,800.00

January 22, 2010

$9,800.00

January 28, 2010

$9,800.00

February 8, 2010

$9,900.00

June 15, 2010

$9,800.00

July 2, 2010

$5,300.00

July 12, 2010

$9,900.00

July 19, 2010

$9,900.00

July 27, 2010

$9,800.00

August 4, 2010

$9,900.00

August 12, 2010

$9,500.00

August 23, 2010

$9,900.00

August 30, 2010

$9,800.00

September 7, 2010

$9,800.00

September 13, 2010

$9,500.00

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September 20, 2010

$9,800.00

September 28, 2010

$9,900.00

October 4, 2010

$9,900.00

October 12, 2010

$9,900.00

October 18, 2010

$9,500.00

October 25, 2010

$9,900.00

November 1, 2010

$9,900.00

November 8, 2010

$4,200.00

TOTAL

$225,300.00

(Id. at ¶ 9.) On November 18, 2010, Mrs. Pumphrey withdrew $240,143.33 from FirstBank
Account #xxxx2005 and closed it. (Id. at ¶ 10.) She then deposited these funds into FirstBank
Account #86476002. (Id.) On October 21, 2011, United States Magistrate Judge Tu M. Pham
issued a seizure warrant for FirstBank Account #86476002, and $225,300.00 was resultantly
seized. (Id. at ¶ 21.) Shortly thereafter, Mrs. Pumphrey was interviewed by the Internal Revenue
Service where she explained that she kept cash on hand in order to pay for her husband’s medical
expenses. (Id. at ¶ 22.) She would then deposit the money back into the bank as she determined
that it was not needed. (Id.) Records, however, indicate that the Pumphreys had health insurance
and that most out-of-pocket healthcare expenses were being paid by check from FirstBank
Account #8633616. (Id. at ¶ 23.) On April 23, 2012, Mrs. Pumphrey filed a verified claim
requesting the return of the money. (D.E. 14.)  
II.

STANDARD OF REVIEW

A. Rule 12(b)(6)

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Rule 12(b)(6) of the Federal Rules of Civil Procedure permits dismissal of a lawsuit for
failure to state a claim upon which relief could be granted. See Fed. R. Civ. P. 12(b)(6). Rule
8(a)(2) instructs that a pleading should be “a short and plain statement of the claim showing that
the pleader is entitled to relief.” The purpose of a complaint is to “give the defendant fair notice
of what the plaintiff’s claim is and the grounds upon which it rests.” Conley v. Gibson, 355 U.S.
41, 47, 78 S. Ct. 99, 103, 2 L. Ed. 2d 80 (1957). “While a complaint attacked by a Rule 12(b)(6)
motion to dismiss does not need detailed factual allegations, a plaintiff’s obligation to provide
the ‘grounds’ of [her] ‘entitle[ment] to relief’ requires more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 1964–65, 167 L. Ed. 2d 929 (2007) (internal
citations omitted). “To avoid dismissal under Rule 12(b)(6), a complaint must contain either
direct or inferential allegations with respect to all the material elements of the claim.” Wittstock
v. Mark A. Van Sile, Inc., 330 F.3d 899, 902 (6th Cir. 2003).
In Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009), the United
States Supreme Court explained that analysis under Rule 12(b)(6) requires a two-pronged
approach. First, the reviewing court should determine what allegations within the complaint can
be classified as “legal conclusions” and disregard them for purposes of deciding the motion. Id.
at 678, 129 S. Ct. at 1949. Second, the court should evaluate the remaining portions of the
complaint — i.e. the well-pleaded facts — and ascertain whether it gives rise to a “plausible
claim for relief.” Id. at 679, 129 S. Ct. at 1950. At the second stage, the court “must accept as
true all of the factual allegations contained in the complaint,” Erickson v. Pardus, 551 U.S. 89,
93–94, 127 S. Ct. 2197, 2200, 167 L. Ed. 2d 1081 (2007) (per curiam), and “a well-pleaded
complaint may proceed even if it strikes a savvy judge that actual proof of those facts is

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improbable, and ‘that a recovery is very remote and unlikely.’” Twombly, 550 U.S. at 556, 127
S. Ct. at 1965. “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for
more than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 678, 129
S. Ct. at 1949.
B. Supplemental Rules E(2)(a) and G(2)(f)
In addition to the Federal Rules of Civil Procedure, complaints seeking forfeiture
pursuant to 31 U.S.C. § 5317 are governed by the Supplemental Rules for Admiralty or Maritime
Claims and Asset Forfeiture Actions (“Supplemental Rules”). Supplemental Rule E(2)(a)
requires that the complaint articulate “the circumstances from which the claim arises with such
particularity that the defendant or claimant will be able, without moving for a more definite
statement, to commence an investigation of the facts and to frame a responsive pleading.”
Additionally, the complaint must “state sufficiently detailed facts to support a reasonable belief
that the government will be able to meet its burden of proof at trial.” Fed. R. Civ. P. Supp.
G(2)(f); see also United States v. Mondragon, 313 F.3d 862, 865-66 (4th Cir. 2002) (“[T]he
complaint must at bottom allege facts sufficient to support a reasonable belief that the property is
subject to forfeiture.”).
Under the Civil Asset Forfeiture Reform Act of 2000 (CAFRA), the Government must
establish by a preponderance of the evidence that the property in question is subject to forfeiture.
18 U.S.C. § 983(c)(1). However, CAFRA also states that “[n]o complaint may be dismissed on
the ground that the Government did not have adequate evidence at the time the complaint was
filed to establish the forfeitability of the property.” 18 U.S.C. § 983(a)(3)(D). Other courts have
interpreted this to mean that the “Government's forfeiture claim can advance forward in face of a
12(b)(6) motion to dismiss even if the Government's complaint does not provide all the facts that

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would allow the Government to ultimately succeed in the forfeiture proceeding.” United States v.
630 Ardmore Drive, City of Durham, Parkwood Tp., Durham County, N.C., 178 F.Supp.2d 572,
581 (M.D.N.C. 2001). Therefore, “the particularity requirements for a forfeiture complaint set
out in Supplemental Rule E(2) must also be viewed in a more relaxed manner on a case by case
basis, particularly in face of the savings clause reference to ‘adequate evidence’ in 18 U.S.C. §
983(a)(3)(D).” Id. at 581-82.
III. LEGAL ANALYSIS
This civil forfeiture action brought under 31 U.S.C. § 5317 allows for the seizure and
forfeiture to the federal government of “[a]ny property involved in a violation of section 5313,
5316, or 5324 of this title, or any conspiracy to commit any such violation, and any property
traceable to any such violation or conspiracy.” 31 U.S.C. § 5317(c)(2). Sections 5313, 5316 and
5324 are provisions of the Bank Secrecy Act that impose reporting requirements on financial
institutions for certain currency transactions. Section 5313 mandates that
[w]hen a domestic financial institution is involved in a transaction for the
payment, receipt, or transfer of United States coins or currency . . . , in an amount,
denomination, or amount and denomination, or under circumstances the Secretary
prescribes by regulation, the institution and any other participant in the transaction
the Secretary may prescribe shall file a report on the transaction at the time and in
the way the Secretary prescribes.
31 U.S.C. § 5313(a). Under regulations promulgated by the Treasury Department, financial
institutions must make a “report of each deposit, withdrawal, exchange of currency or other
payment or transfer, by, through, or to such financial institution which involves a transaction in
currency of more than $10,000 . . . .” 31 C.F.R. § 1010.311;1 United States v. Van Allen, 524
F.3d 814, 819 (7th Cir. 2008). This report, known as a Currency Transaction Report (“CTR”), is
filed with the Internal Revenue Service.

1

This section was formerly located at 31 C.F.R. § 103.22(b)(1).

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The government contends that Claimant “structured” her currency transactions in
amounts of $10,000 or less to avoid CTR filings. Section 5324(a)(3) makes it unlawful for a
person to “structure or assist in structuring, or attempt to structure or assist in structuring, any
transaction with one or more domestic financial institutions” for the purpose of evading § 5313’s
reporting requirement. Treasury Department regulations define structuring as follows:
[A] person structures a transaction if that person . . . conducts or attempts to
conduct one or more transactions in currency, in any amount, at one or more
financial institutions, on one or more days, in any manner, for the purpose of
evading the reporting requirements . . . . “In any manner” includes, but is not
limited to, the breaking down of a single sum of currency exceeding $10,000 into
smaller sums, including sums at or below $10,000, or the conduct of a transaction,
or series of currency transactions at or below $10,000. The transaction or
transactions need not exceed the $10,000 reporting threshold at any single
financial institution on any single day in order to constitute structuring within the
meaning of this definition.
31 C.F.R. § 1010.100. To prove a violation of § 5324(a)(3), the government must present
evidence of three elements:
(1) the defendant must, in fact, have engaged in acts of structuring; (2) he must
have done so with knowledge that the financial institutions involved were legally
obligated to report currency transactions in excess of $10,000; and (3) he must
have acted with the intent to evade this reporting requirement.
United States v. Sutton, 387 F. App’x 595, 599 (6th Cir. 2010) (quoting United States v.
MacPherson, 424 F.3d 183, 189 (2d Cir. 2005)); see also United States v. One Million Seven
Hundred Thousand Dollars ($1,700,000.00) in U.S. Currency, 545 F. Supp. 2d 645, 651-52 (E.D.
Mich. 2008) (applying these elements in a civil forfeiture action).
Here, Claimant contends that the Government has failed to plead specific facts reflecting
the requisite intent to evade or violate 31 U.S.C. § 5313. Specifically, she argues that she had no
knowledge of the Treasury Department’s regulations and that the Government fails to present
any facts alleging that her cash deposits were structured to avoid them. Accordingly, she asserts

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that the complaint provides no evidence supporting elements (2) and (3) of the § 5324 analysis
and, consequently, does not establish a reasonable belief that the property at issue is subject to
forfeiture. This Court disagrees with Claimant’s assertions, and finds that the Government has
satisfied its pleading burden for the reasons set below.
First, the complaint is sufficiently specific to allow the claimant to answer with more than
a general denial. It provides the precise “date and location of the seizure, the nature of the
property seized, and the claimant’s actions on the date of seizure.” United States v. Funds in the
Amount of $29,266.00, 96 F. Supp. 2d 806, 810 (N.D.Ill. 2001). This information is enough to
allow the claimant to begin an investigation into the alleged facts and to frame a responsive
pleading. Id. Mrs. Pumphrey argues that the Government provides only speculations and
assumptions in averring that she had knowledge of the CTR requirements. While the
Government does not allege direct facts to support its charge that she knew of the reporting
regulations, it provides ample circumstantial evidence in support of this contention. In its
complaint, the Government references twenty-four deposits over a period of eleven months into a
single bank account, twenty-two of which were in sums ranging from $9,500 to $9,900. (Am.
Compl. Ex. A ¶ 9.) Other courts have held that this alone is enough for a jury to infer that a party
knew of the CTR requirements and was attempting to avoid them. See, e.g., MacPherson, 424
F.3d at 191 (“[T]he jury that convicted [defendant] could have reasonably inferred from the fact
that the defendant chose to deposit a quarter-million dollars through a series of thirty-two small
transactions all under $10,000 that he knew of the reporting requirements applicable to cash
transactions over $10,000 and was intent on avoiding them.”); United States v. Nersesian, 824
F.2d 1294, 1314-15 (2nd Cir. 1987) (“The jury could have inferred from the fact that [defendant]
chose to carry out his currency exchanges in a series of small transactions over a number of days,

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rather than in a single transaction or several larger transactions, that he knew of the reporting
requirements and was attempting to avoid them.”).
Additionally, the complaint makes specific reference to a prior CTR generating
transaction made by the Claimant. (Am. Compl. Ex. A ¶ 8.) According to the Government’s
position, Mrs. Pumphrey provided her driver’s license for identification purposes at the time the
CTR was filled out. (Id.) The Government contends that these facts support the inference that the
Claimant was present when the CTR was completed and through her presence, became aware of
its requirements. (Id.) This Court agrees, noting that other courts have been willing to accept
proof of prior transactions involving CTR filings as evidence that a person may have known of
the filing requirements. See MacPherson, 424 F.3d at 190 (“[T]he jury could have reasonably
inferred from the pattern of [defendant’s] structuring, as well as from the record of his earlier
cash withdrawals that did generate CTR filings, that [defendant] knew of and, in connection with
the charged deposits, intended to evade currency reporting requirements.”) (emphasis added);
United States v. Ozbay, 2007 WL 656049, at *2. (N.D.N.Y. Feb. 27, 2007) (“Where there is
evidence . . . of other transactions which generated CTR filings, it is permissible to infer that a
person knows of and intends to evade currency reporting requirements.”).
Accordingly, by pleading facts concerning the numerosity and amounts of the deposits
made by the Claimant, coupled with the allegation of Claimant’s prior transaction generating a
CTR, the Government has met its pleading burden in accordance with Rule 12(b)(6) and
Supplemental Rules E(2)(a) and G(2)(f). It has provided sufficient facts to support its position
that the Claimant may have violated § 5324, thereby subjecting the funds to forfeiture under §
5317. Therefore, Claimant’s motion to dismiss is not well taken.
IV.

CONCLUSION

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The Court finds that United States has satisfied the pleading requirements for this case. 

For the reasons discussed herein, Claimant’s motion to dismiss (D.E. 15) is DENIED.
IT IS SO ORDERED this 27th day of September, 2012.

s/ J. DANIEL BREEN
UNITED STATES DISTRICT JUDGE 

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