United States of America v $73.947.35 in United States currency from JP Morgan Chase bank account X1558 in the name of American Info Inc et al
Filing
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MEMORANDUM OPINION AND ORDER: The Court DENIES the motions to dismiss with respect to Accel's '1679 account and United IT's '6062 account and GRANTS the motions with respect to Sparkpro's '2342 account and Accel's '5478 account. Because the Government failed to plead facts supporting the reasonable belief that the funds the Government seized from Sparkpro's '2342 account and Accel's '5478 account are traceable to criminal conduct or th at the criminal conduct justifying the seizure of these accounts occurred within one year of the Government's initial complaint in this suit, the Court DISMISSES the Government's claim against the funds it seized from Sparkpro's '2342 account and Accel's '5478 account WITHOUT PREJUDICE. (Ordered by Judge Jane J. Boyle on 8/17/2018) (sss)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
UNITED STATES OF AMERICA,
Plaintiff,
v.
$73,947.35 IN UNITED STATES
CURRENCY FROM JP MORGAN
CHASE BANK ACCOUNT X1558, IN
THE NAME OF AMERICAN INFO,
INC.,
$51,997.87 IN UNITED STATES
CURRENCY FROM JP MORGAN
CHASE BANK ACCOUNT X6975, IN
THE NAME OF AMERICAN INFO,
INC.,
$25,290.00 IN UNITED STATES
CURRENCY FROM JP MORGAN
CHASE BANK ACCOUNT X5478, IN
THE NAME OF ACCEL
INTERNATIONAL, INC.,
$10,088.39 IN UNITED STATES
CURRENCY FROM BBVA
COMPASS BANK ACCOUNT
X1679, IN THE NAME OF ACCEL
INTERNATIONAL, INC.,
$188,218.82 IN UNITED STATES
CURRENCY FROM JP MORGAN
CHASE BANK ACCOUNT X6062, IN
THE NAME OF UNITED IT
SOLUTIONS,
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CIVIL ACTION NO. 3:18-CV-213-B
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$7,598.31 IN UNITED STATES
CURRENCY FROM JP MORGAN
CHASE BANK ACCOUNT X2342, IN
THE NAME OF SPARKPRO
SOLUTIONS, INC.,
Defendants in rem.
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MEMORANDUM OPINION AND ORDER
In this civil-forfeiture case, Sparkpro Solutions, Inc. (Sparkpro), United IT solutions, Inc.
(United IT), and Accel International, Inc. (Accel) (collectively “the claimants”)1 have moved to
dismiss the Government’s amended complaint on the grounds that it lacks the factual detail required
to state a claim.
I.
BACKGROUND2
The Government seized two bank accounts from Accel (the ‘5478 account and the ‘1679
account), one from United IT (the ‘6062 account), and one from Sparkpro (the ‘2342 account).
Doc. 31, Am. Compl., ¶ 3. After seizing the claimants’ bank accounts, the Government filed its
complaint in this case. Doc. 1, Compl. The Court found that the Government’s complaint failed to
allege sufficient factual detail and ordered the Government to file an amended complaint. Doc. 30,
Mem. Op. & Order.
The Government filed its amended complaint and gave the claimants access to an affidavit
providing the facts underlying the Government’s seizure of the claimants’ money. Doc. 31, Am.
1
American Info, Inc. was a party, but the Government dismissed it.
2
The Court has taken this background from the Government’s amended complaint and attached
affidavit and the claimants’ briefing on their motions to dismiss.
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Compl.; Doc. 34, Aff. The Government alleges that it seized the accounts because the claimants
obtained the funds therein in the course of violating various immigration laws by making false
statements in visa-application forms. Doc. 31 Am. Compl., ¶ 6.
The claimants respond in their motions to dismiss that the Government’s amended complaint
insufficiently alleges that the claimants committed a crime and, even if it did, fails to connect the
seized funds to a crime. Doc. 36, United IT’s Mot. to Dismiss; Doc. 37, Sparkpro’s Mot. to Dismiss;
Doc. 38, Accel’s Mot. to Dismiss. The claimants’ motions to dismiss are ripe for review.
II.
LEGAL STANDARD
Civil-forfeiture claims must comply with the Federal Supplemental Rules for Certain
Admiralty and Maritime Claims (the Supplemental Rules). 18 U.S.C. § 983(a)(3). Supplemental
Rule G governs forfeiture actions in rem, like this one, arising from a federal statute. Fed. R. Civ. P.
Supp. R. G(1). The Federal Rules of Civil Procedure also apply unless they conflict with the
Supplemental Rules.
Although a claimant may move to dismiss a complaint under Federal Rule of Civil Procedure
12(b)(6), Fed. R. Civ. P. Supp. R. G(8)(b), the Court must assess the sufficiency of the Government’s
complaint according to Supplemental Rule G(2), Fed. R. Civ. P. Supp. R. G(2). Under Rule G(2),
the Government’s complaint must, among other things, “be verified” and “state sufficiently detailed
facts to support a reasonable belief that the government will be able to meet its burden of proof at
trial.” At trial, the government must establish by a preponderance of the evidence that property is
subject to forfeiture. 18 U.S.C. § 983(c)(1). So the Government must “‘state[ ] the circumstances
giving rise to the forfeiture claim with sufficient particularity’” to allow a claimant to conduct a
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“‘meaningful investigation of the facts and draft[ ] a responsive pleading.’” United States v.
$4,480,466.16 in U.S. Currency, No. 3:17-CV-2989-D, 2018 WL 1964255, at *4 (N.D. Tex. Apr.
26, 2018) (quoting United States v. Mondragon, 313F.3d 862, 867 (4th Cir. 2002)).3
III.
ANALYSIS
Although the Government pleaded that the claimants obtained the seized funds in the course
of violating multiple statutes, the Government needs only one legal theory satisfying Rule G(2)’s
standard to proceed. United States v. $506,069.09 Seized from First Merit Bank, 664 Fed. App’x 422,
434 (6th Cir. 2016). The Government pleaded that the claimants violated 18 U.S.C. § 1546 by lying
on forms submitted to obtain visas for information-technology workers. Doc. 31, Am. Compl., ¶¶ 6,
8. Section 1546 imposes criminal penalties on anyone who
knowingly makes under oath, or as permitted under penalty of perjury under section
1746 of title 28, United States Code, knowingly subscribes as true, any false
statement with respect to a material fact in any application, affidavit, or other
document required by the immigration laws or regulations prescribed thereunder, or
knowingly presents any such application, affidavit, or other document which contains
any such false statement or which fails to contain any reasonable basis in law or fact.
The Government pleaded also that the claimants violated 18 U.S.C. § 1957, which imposes criminal
penalties on anyone who “knowingly engages or attempts to engage in a monetary transaction in
criminally derived property of a value greater than $10,000 and is derived from specified unlawful
activity.” Thus, the Government could satisfy Rule G(2) by “stat[ing] sufficiently detailed facts to
support a reasonable belief” that the claimants obtained the seized funds in the course of violating
3
Although Mondragon predates the current version of Rule G(2), “[s]ubdivision (2)(f) carries this
forfeiture case law forward without change.” Fed. R. Civ. P. Supp. R. G advisory committee’s note to 2006
Amendments. “[T]his forfeiture case law” includes Mondragon. Id.
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§ 1957—for example, by knowingly engaging in transactions in property derived from the making
of fraudulent statements on visa applications.
When the alleged criminal conduct occurred also is relevant. 18 U.S.C. § 984(a)(1) provides
that, if the seized property consists of funds in a financial institution, the Government need not
identify the specific property involved in the offense justifying forfeiture, and “it shall not be a defense
that the property involved in such an offense has been removed and replaced by identical property.”
But the Government may rely on § 984(a)(1) only if the criminal conduct justifying forfeiture
occurred no more than a year before it commences a forfeiture action. § 984(b).
Although the Fifth Circuit has not determined when the Government commences a
forfeiture action under § 984(b), the Third Circuit has. United States v. $8,221,877.16 in U.S.
Currency, 330 F.3d 141, 159 (3d Cir. 2003). The Third Circuit recognized that although
“commence” has a broad meaning in everyday usage, § 984(b) uses the word in a specialized way:
to refer to the initiation of a civil action. Id. Highlighting that Federal Rule of Civil Procedure 3 uses
“commence” to refer to the initiation of a civil action by filing a complaint and noting that other
courts had defined “commence” to refer to the filing of a complaint in a civil action, the Third
Circuit held that the Government commences a forfeiture action under § 984(b) only when it
initiates a civil action by filing a complaint. Id. The Court finds the Third Circuit’s reasoning
persuasive and therefore agrees that the Government commences a forfeiture action under § 984(b)
only when it files a complaint in court.
Here, the Government attached to its amended complaint an affidavit executed by an
Immigration and Customs Enforcement agent describing the Government’s investigation of the
claimants and, although the affidavit is sealed, agreed to let the claimants view the affidavit. Doc.
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34, Aff.; Doc. 44, Protective Order. To resolve the claimants’ motion to dismiss, the Court considers
the affidavit together with the complaint. United States v. 2121 Kirby Drive, Civil Action No. H-063335, 2007 WL 3378353, at *3 n.1 (S.D. Tex. Nov. 13, 2007). The claimants argue that the
Government’s amended complaint, even if considered with the affidavit, is too vague to satisfy Rule
G(2).
The Government has met its Rule G(2) burden of pleading with respect to Accel’s ‘1679
account and United IT’s ‘6062 account. The Government pleaded that each claimant stated on visaapplication forms that the applicant would be working for a company pursuant to an agreement
between the company and the claimant even though no such agreements actually existed between
the companies specified on the forms and the claimants. Doc. 31, Am. Compl., ¶¶ 8–11; Doc. 34,
Aff., ¶¶ 21–34, 41–45, 83–89. The Government pleaded also that the claimants forged company
officials’ signatures and submitted letters purporting to be from those companies that were in fact
not. Id. Taken as true, these pleadings “support a reasonable belief” that the claimants violated
§ 1546 by making false statements on visa-application forms.
The Government’s pleadings “support the reasonable belief” also that the claimants violated
§ 1957 by transacting in funds derived from making fraudulent statements on visa-application forms.
The Government pleaded that each claimant received sums of money corresponding to work
performed by beneficiaries of fraudulent visa applications and that each claimant paid beneficiaries
of fraudulent applications from the seized accounts. Doc. 31, Am. Compl., ¶¶ 13–19. And the
Government pleaded that United IT and Accel received money in return for work performed by
beneficiaries of fraudulent visa forms United IT and Accel filled out into 2017. Doc. 34, Aff., ¶¶ 131,
153. Because the Government pleaded that United IT and Accel violated § 1957 within one year
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of its commencement of this proceeding on January 26, 2018, and violating § 1957 gives rise to
forfeiture, the Government did not need to plead that the seized funds were traceable to the
violation. § 984(a), (b). And given the large amounts of money the Government says were moving
through these account, Doc. 34, Aff., ¶¶ 130, 133, 152, the Government’s pleadings support the
reasonable belief that the transactions were above § 1957’s $10,000 threshold. Thus, the
Government has met its Rule G(2) burden with respect to Accel’s ‘1679 account and United IT’s
‘6062 account.
The same is not true of Sparkpro’s ‘2342 account. The Government did not plead that
Sparkpro received funds as a result of fraudulent visa applications in 2017,4 and it pleaded no facts
indicating that the funds seized were traceable to fraudulent visa applications. Nor does the affidavit
contain such allegations. Nonetheless, the Government argues that it “provided detailed allegations”
tying the funds seized from Sparkpro to criminal activity that allegedly occurred “within a year of the
seizures.” Doc. 51, Surreply, 9.
But alleging that criminal activity occurred within a year of the seizures does not absolve the
Government of its obligation to plead facts supporting the reasonable belief that the seized funds are
traceable to criminal activity. Section 984(a) absolves the Government of its obligation to plead
tracing only when the criminal activity occurred within one year of the commencement of a civil-
4
The Government’s affidavit contains a typo. The affidavit says Sparkpro paid a beneficiary of a
fraudulent visa application into 2015. And it continues, “It is believed that SparkPro Solutions, LLC receive
payments on behalf of other individuals for which SparkPro, LLC fraudulently petitioned.” Doc. 34, Aff., ¶
179. The problem is with the word “receive.” It should say “received” or “receives” or something else that is
grammatically correct. The rest of the verbs in the paragraph are past tense, so the Court’s best guess is that
the Government meant “received.” But the Court cannot tell from the paragraph when Sparkpro received
the funds. Obviously, the sentence would have a materially different meaning if the Government meant
“receives” rather than “received.”
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forfeiture proceeding. § 984(b). And the Government commences a civil-forfeiture proceeding only
when it files its complaint in court, not by seizing property. See supra at 5.
The criminal activity allegedly justifying the seizure of Sparkpro’s funds occurred more than
a year before the Government filed its complaint. The Goverment filed its complaint on January 26,
2018. Doc.1, Compl. But it alleges that Sparkpro engaged in criminal conduct justifying civil
forfeiture only as late as 2016. Doc. 34, Aff., ¶ 180. Thus, the Government must plead facts
supporting the reasonable belief that the funds it seized from Sparkpro in June of 2017 are traceable
to criminal conduct. But the Government makes no such allegations. The Court therefore finds that
the Government has failed to meet Rule G(2)’s standard with respect to the funds it seized from
Sparkpro.5
The Government’s complaint fails with respect to Accel’s ‘5478 account for the same reason.
The Government’s affidavit discusses conduct occurring only as late as August 2016, Doc. 34, Aff.
¶ 156, and the Government has not alleged how the money it seized from the account is traceable
to any criminal conduct. The Court therefore dismisses the Government’s complaint with respect
to Accel’s ‘5478 account.
The Court will now address the claimants’ remaining arguments in favor of dismissing the
Government’s complaint. First, the claimants argue that the Government had no basis to seize their
property when it seized their property because the Government did not timely file its civil-forfeiture
complaint. Doc. 49, United IT’s Reply, 5. But the Court has already explained that the
5
Sparkpro argues also that the Government violated its due-process rights, Doc. 45, Sparkpro’s Reply,
3, but because the Court finds that the Government failed to carry its Rule G(2) burden with respect to
Sparkpro, the Court need not consider Sparkpro’s due-process argument.
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Government’s initial complaint was timely. Doc. 30, Mem. Op. & Order, 4. Second, United IT
argues that the conduct the Government challenges—which United IT seems to think is the
claimants’ sending of the visa applicants to work for other companies—is actually legal such that the
Government should not have seized its funds. Doc. 49, United IT’s Reply, 3. But the Court has found
that the Government’s allegations that the claimants made fraudulent statements on visa forms and
received money as a result supports its civil-forfeiture claim. See supra at 6. And the Government
need only plead one legal theory that satisfies Rule G(2) to survive a motion to dismiss. $506,069.09
Seized from First Merit Bank, 664 Fed. App’x at 434. Thus, the possibility that sending visa applicants
to work for other companies was legal is no grounds for dismissing the Government’s complaint.
IV.
CONCLUSION
The Court DENIES the motions to dismiss with respect to Accel’s ‘1679 account and United
IT’s ‘6062 account and GRANTS the motions with respect to Sparkpro’s ‘2342 account and Accel’s
‘5478 account. Because the Government failed to plead facts supporting the reasonable belief that
the funds the Government seized from Sparkpro’s ‘2342 account and Accel’s ‘5478 account are
traceable to criminal conduct or that the criminal conduct justifying the seizure of these accounts
occurred within one year of the Government’s initial complaint in this suit, the Court DISMISSES
the Government’s claim against the funds it seized from Sparkpro’s ‘2342 account and Accel’s ‘5478
account WITHOUT PREJUDICE. If the Government wishes to maintain a claim against those
bank accounts, it must file a new complaint curing the aforementioned defect within fourteen days
of this order.
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SO ORDERED.
SIGNED: August 17, 2018.
_________________________________
JANE J. BOYLE
UNITED STATES DISTRICT JUDGE
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