United States of America v. $4,480,466.16 in funds seized from Bank of America account ending in 2653 et al

Filing 269

MEMORANDUM OPINION AND ORDER: This case is the subject of four memorandum opinions and orders. Here, the government moves under 18 U.S.C. § 981(g)(1) to stay this in rem civil forfeiture action during the pendency of a related, ongoing criminal investigation [Doc. No. 256 ]. The Court GRANTS IN PART the motion and stays the case for a period of 60 days. In view of the stay, the court also DISMISSES AS MOOT the government's motion to modify the scheduling order [Doc. No. 258 ] and STA TISTICALLY TERMINATES the claimants' pending motions to dismiss while the stay is in effect [Doc. Nos. 148 , 151 , 153 , 155 , 157 , 159 and 223 ]. If the government seeks to extend the stay, it must request an extension in a motion, sup ported by an updated sealed affidavit, filed by 3/30/2020. To ensure no unnecessary delays, the claimants' response will be due seven days after the government files its motion. And the government's reply will be due four days after the claimants' file their response. (Ordered by Judge Brantley Starr on 1/30/2020) (ctf)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
UNITED STATES OF AMERICA,

§
§
§
§
§
§
§
§
§
§
§

Plaintiff,
v.
$4,480,466.16 IN FUNDS SEIZED
FROM BANK OF AMERICA
ACCOUNT ENDING IN 2653, et al.,
Defendants in rem.

Civil Action No. 3:17-CV-02989-X

MEMORANDUM OPINION AND ORDER
This case is the subject of four memorandum opinions and orders.1 Here, the
government moves under 18 U.S.C. § 981(g)(1) to stay this in rem civil forfeiture
action during the pendency of a related, ongoing criminal investigation [Doc. No. 256].
This motion is ripe for this Court’s review as of January 27, 2020. To ensure no
unnecessary delay, the Court decides the motion today.
For the following reasons, the Court GRANTS IN PART the motion and stays
the case for a period of 60 days. In view of the stay, the court also DISMISSES AS
MOOT the government’s motion to modify the scheduling order [Doc. No. 258] and

1 See United States v. $4,480,466.16 in Funds Seized from Bank of Am. Account Ending in
2653, 2019 WL 459645 (N.D. Tex. Feb. 6, 2019) (Fitzwater, J.); United States v. $4,480,466.16 in Funds
Seized from Bank of Am. Account Ending in 2653, 2018 WL 4096340 (N.D. Tex. Aug. 28, 2018)
(Fitzwater, J.); United States v. $4,480,466.16 in Funds Seized from Bank of Am. Account Ending in
2653, 2018 WL 2184500 (N.D. Tex. May 11, 2018) (Fitzwater, J.); and United States v. $4,480,466.16
in Funds Seized from Bank of Am. Account Ending in 2653, 2018 WL 1964255 (N.D. Tex. Apr. 26,
2018) (Fitzwater, J.). These four memorandum opinions and orders contain the background facts and
procedural history relevant to this decision, which are unnecessary to detail fully here.

1

STATISTICALLY TERMINATES the claimants’ pending motions to dismiss while
the stay is in effect [Doc. Nos. 148, 151, 153, 155, 157, 159 and 223].2
I.
Section 981(g)(1) of Title 18 provides: “Upon 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.” 3 In deciding
whether to grant a stay, “the court must determine, first, whether a related criminal
investigation or prosecution exists and, second, whether civil discovery will ‘adversely
affect’ the ability of the government to conduct that criminal investigation or
prosecution were the civil forfeiture case allowed to proceed.”4
II.
After careful consideration, the Court grants a stay because the requirements
of Section 981(g)(1) are satisfied.

Specifically, the Court has reviewed the

government’s motion and its sealed “Verification Affidavit in Support of Motion to
Extend Stay,” of Miguel Coias, a Special Agent of the Veterans Affairs Office of
Inspector General–Criminal Investigations Division, and it has considered the
claimants’ objection to the motion. Based on the briefing and sealed affidavit, the
2 Under section 205(a)(5) of the E-Government Act of 2002 and the definition of “written
opinion” adopted by the Judicial Conference of the United States, this is a “written opinion[] issued by
the court” because it “sets forth a reasoned explanation for [the] court’s decision.” It has been written,
however, primarily for the parties, to decide issues presented in this case, and not for publication in
an official reporter, and should be understood accordingly.
3

18 U.S.C. § 981(g)(1).

4 United States v. All Funds ($357,311.68) Contained in N. Tr. Bank of Fla. Account No.
7240001868, 2004 WL 1834589, at *2 (N.D. Tex. 2004) (Fish, C.J.).

2

Court determines that a related criminal investigation exists and that civil discovery,
in the form of disclosures in response to motions for summary judgment, will
adversely affect the related criminal investigation.
To make the latter determination, the Court has also considered the parties
supplemental briefing—ordered by the Court on July 17, 2019—on whether
disclosure of evidence in response to a motion constitutes civil discovery under
Section 981(g).

The government argues that to fully respond to the claimants’

motions for summary judgment, the government would have to provide the claimants
with discovery and with information it has compiled during the related criminal
investigation—specifically regarding the identity and testimony of its witnesses.
Therefore, the government concludes that summary-judgment motions practice
constitutes civil discovery under Section 981(g). In support of this argument, the
government cites examples of federal district courts staying similar cases, or refusing
to lift stays, because of how summary judgment responses would harm the
government’s related criminal investigation.5 The claimants do not address any of
this case law in their supplemental brief or in their response to the government’s

5 See, e.g., United States v. 2009 Dodge Challenger, VIN 2B3LJ44V49H561559, 2011 WL
6000790 at *2 (D. Or. Nov. 30, 2011) (concluding “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”); United States v. $166,450.48 in U.S.
Currency, 2013 WL 6623176, at *3 (D. Or. Dec. 16, 2013) (concluding “that the government would be
compelled to engage in discovery and/or reveal information and evidence previously collected in the
course of its criminal investigation in order to effectively respond to claimants' assertions that they
are innocent owners and/or bona fide purchasers entitled to the return of their property”); United
States v. $247,052.54, 2007 WL 2009799, at *1–3 (N.D. Cal. July 6, 2007) (declining to lift a stay to
allow a claimant to file a summary judgment motion because the government would be required to
seek written discovery and subject witnesses to depositions, cross-examination, and pre-trial
declarations).

3

motion to extend the stay, other than to claim that “two district court judges have
arguably made that erroneous connection” between summary-judgment motions
practice and civil discovery.6
In addition to being persuaded by the government’s briefing on this question,
the Court upholds its previous conclusion regarding this question already offered in
this case:
The purpose of a stay under § 981(g)(1) is to prevent the
target of a criminal investigation from using the broad
scope of civil discovery to obtain information that would not
otherwise be available to that person in a parallel criminal
prosecution. In light of this purpose, the court can discern
no relevant distinction between the forced disclosure of this
information through traditional civil discovery procedures
and compelling the government to disclose this same
information for the purpose pertinent here: opposing
claimants’ summary judgment motions.7
The statute does not include a limiting definition of civil discovery. And giving the
undefined term the restricted meaning claimants propose would allow claimants to
instantly file a no-evidence motion for summary judgment to make the government
disclose their evidence. This is precisely what the statute was written to guard
against, and the Court declines to change its position to give the undefined term a
more restrictive meaning than its text and context indicate it should have.
While determining that a temporary stay is necessary, the Court is mindful of
and sympathetic to the claimants’ concerns regarding the government’s timeliness

Claimants’ Response in Opposition to United States’ Renewed Motion to “Extend” Stay,
Objections to Purported Evidence, and Brief in Support, at 19 [Doc. No. 263].
6

7 United States v. $4,480,466.16 in Funds Seized from Bank of Am. Account Ending in 2653,
2019 WL 459645 at *3 (internal citations omitted).

4

and transparency in conducting its related criminal investigation.

The Court

reminds the parties of the three stages of the government’s power in in rem actions
like this. First, before filing its civil action, the government’s power is very limited,
and even delays of a short duration can be problematic. Second, after initiating its
civil case, the government’s power increases but a delay of a significant magnitude
can be a constitutional problem. Third, after obtaining indictments, the government’s
power is at its highest, and it almost assuredly can obtain civil stays pending the
outcome of the criminal case. Here, the government is at the second stage—it has
initiated a civil action, and it is seeking to obtain indictments. Its power is strong
but certainly not absolute.
III.
The Court has reviewed the briefing and affidavit carefully, and it is satisfied—
at this time—with the government’s position. But because the government’s power
at this stage is far from absolute, the Court believes a 120-day stay is too lengthy.
Therefore, the Court GRANTS IN PART THE MOTION TO STAY and ORDERS
a 60-day stay, which will begin immediately and expire on March 30, 2020. . In view
of the stay, the court also DISMISSES AS MOOT the government’s motion to modify
the scheduling order [Doc. No. 258] and STATISTICALLY TERMINATES the
claimants’ pending motions to dismiss while the stay is in effect [Doc. Nos. 148, 151,
153, 155, 157, 159 and 223].
If the government seeks to extend the stay, it must request an extension in a
motion, supported by an updated sealed affidavit, filed by March 30, 2020. To ensure

5

no unnecessary delays, the claimants’ response will be due seven days after the
government files its motion. And the government’s reply will be due four days after
the claimants’ file their response.

IT IS SO ORDERED this 30th day of January 2020.

_________________________________
BRANTLEY STARR
UNITED STATES DISTRICT JUDGE

6