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United States v. $795

United States District Court, D. South Carolina, Columbia Division

December 1, 2014

United States of America, Plaintiff,
v.
$795, 652.33 in funds seized from Account xxxxxx1607 with East West Bank, in the name of LC Lucky, Inc., In Rem Defendant #1; $12, 096.84 in funds seized from Account xxxx2821 with East West Bank, in the name of SDW USA, Inc., d/b/a SDW USA Lease Car, Inc., In Rem Defendant #2; $23, 230.28 in funds seized from Account xxxxxx1881 with East West Bank, in the name of JHC Trading, Inc., In Rem Defendant #3; and, $1, 590, 230.66 in funds seized from Account xxxxxx1344 with Capitol One Bank, in the name of ABC Motorsports, LLC, In Rem Defendant #4, Defendants

For United States of America, Plaintiff: Stanley D Ragsdale, LEAD ATTORNEY, U.S. Attorneys Office, Columbia, SC.

For David Stagnoli, Claimant: Alexandra Marie Benevento, John Randall Alphin, LEAD ATTORNEYS, Strom Law Firm, Columbia, SC.

James Ho Chen, doing business as JHC Trading Inc, Claimant, Pro se, Brea, CA.

Jie Hu, doing business as LC Lucky, Inc., Claimant, Pro se, San Gabriel, CA.

OPINION AND ORDER

CAMERON MCGOWAN CURRIE, SENIOR UNITED STATES DISTRICT JUDGE.

This matter is before the court on the verified in rem Amended Complaint (" Complaint") of the United States seeking civil forfeiture of seized assets in four (4) bank accounts. 18 U.S.C. § § 981(a)(1)(A) and (a)(1)(C).

Verified Claims have been filed by David Stagnoli, LC Lucky, Inc. and JHC Trading, Inc. claiming ownership interests in Defendants In Rem Nos. 1, 3, and 4.[1] Claimants LC Lucky, Inc. and JHC Trading, Inc. (" Claimants") have filed a motion to dismiss, arguing, inter alia, that the Government's allegations of mail and wire fraud and money laundering fail as a matter of law because the Complaint omits essential elements of these offenses and the Complaint does not allege with sufficient particularity how the bank accounts at issue facilitated the allegedly unlawful activities. See ECF No. 92. The motion seeks dismissal of the Complaint and release of the funds.

I. Standards

A. Complaint -- Forfeiture In Rem

The Federal Rules of Civil Procedure and the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions (" Supp. R.") are applicable to in rem forfeiture actions. The Federal Rules of Civil Procedure (" FRCP") apply so long as they are not " inconsistent with" the Supplemental Rules. Supp. R. A(2). Supplemental Rule G(2)(f) provides that a civil in rem forfeiture 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." The Government must " state[ ] the circumstances giving rise to the forfeiture claim with sufficient particularity" to allow a claimant to conduct a " meaningful investigation of the facts and draft[ ] a responsive pleading." United States v. Mondragon, 313 F.3d 862, 866 (4th Cir. 2002). " [T]he Government's forfeiture claim can advance forward in the face of a . . . motion to dismiss even if the Government's complaint does not provide all the facts that would allow the Government to ultimately succeed in the forfeiture proceeding." United States v. 630 Ardmore Drive, 178 F.Supp.2d 572, 581 (M.D. N.C. 2001). In assessing whether the Government has provided sufficient allegations to support a nexus between the alleged criminal offense and the Defendants In Rem, the court must look to the totality of the circumstances. Mondragon, 313 F.3d at 866.

Although the pleading standard under Supp. R. G(8)(b) is higher than the standard for FRCP 8(a), the pleading requirements are satisfied if the Government pleads enough facts to support a " reasonable belief" that the Government will be able to meet its burden of proof at trial. See United States v. Real Property Located at 5208 Los Franciscos Way, 385 F.3d 1187, 1193 (9th Cir. 2004) (noting that the Government " is not required to prove its case simply to get in the courthouse door").

To meet its ultimate burden of proof, the Government must prove by a preponderance of the evidence a " substantial connection between the property and the offense." 18 U.S.C. § 983(c)(3). However, the Government initially need not produce all evidence that will be introduced at trial and may instead " gather [ ] evidence after the filing of a Complaint for forfeiture to establish, by a preponderance of the evidence, that [the] property is subject to forfeiture." 18 U.S.C. § 983(c)(2).

B. Motion to Dismiss

" A claimant who establishes standing to contest forfeiture may move to dismiss the action under Rule 12(b)." Supp. R. G(8)(b)(i). In assessing a motion to dismiss, a court " must accept as true all well-pleaded allegations and must construe the factual allegations in the light most favorable to the plaintiff." Hall v. Virginia, 385 F.3d 421, 427 (4th Cir. 2004) (internal quotations and citation omitted). See also Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993) (same). " A motion to dismiss under Rule 12(b)(6) tests the sufficiency of a complaint; importantly, it does not resolve contests surrounding the facts, the merits of ...


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