United States v. $263,327.95
BANKING AND FINANCIAL INSTITUTIONS
United States v. $263,327.95, No. 2:12-cv-01914; U.S. District Court (DNJ); opinion by Martini, U.S.D.J.; filed March 27, 2013. DDS No. 06-7-xxxx [8 pp.]
Plaintiff United States (the government) brings this civil forfeiture action to forfeit and condemn a total of $263,327.95. The government alleges that this was the remaining balance of more than $658,000 that was structured into three separate bank accounts in violation of 31 U.S.C. § 5324(a).
Under federal law, U.S. financial institutions are required to file a currency transaction report (CTR) for each deposit, withdrawal, or exchange of currency of more than $10,000. Title 31 U.S.C. § 5324(a) prohibits people from structuring their transactions to avoid the $10,000 reporting requirement.
The complaint alleges that the Internal Revenue Service, Criminal Investigation (IRS-CI) conducted an investigation of bank accounts held in the name and/or for the benefit of Steve Chan. The complaint alleges that Chan deposited a total of $658,277.08 in U.S. currency into various bank accounts without making a single deposit of more than the $10,000 CTR threshold.
Seizure warrants were executed and the government filed its complaint. Subsequently, the government filed a notice of forfeiture, stating that any claims to the property must be filed by May 25, 2012. On May 25, 2012, Chan filed a verified claim of interest.
Chan moves to dismiss the complaint, arguing that the government failed to plead that Chan acted with the intent to evade the reporting requirement. The government opposes the motion, arguing that intent can be inferred from the allegations in the complaint. The government also argues that Chan lacks standing to bring the motion.
Held: Chan's claim of ownership is sufficient to establish standing to challenge this civil forfeiture. Further, it is reasonable to infer that Chan knew about the reporting requirements of 31 U.S.C. § 5324(a) and acted with the intent to evade those requirements.
Because standing is a threshold issue, the court addresses the government's standing argument, followed by the merits of Chan's motion to dismiss.
Because the only initial parties to a civil forfeiture action are the government, as the plaintiff, and the property the government seeks to forfeit, as the defendant, forfeiture cases present unique standing issues. Any individual or entity that wishes to assert a claim to the property can do so only by intervening in the action as a claimant.
The government filed this action pursuant to Supplemental Rule G, which governs forfeiture in rem actions arising from a federal statute. The government's sole argument with respect to standing is that Chan's claim does not describe Chan's interest in the property with sufficient detail. In this case, all of the other statutory requirements have been met. The government's complaint in this case contains allegation after allegation describing Chan's interest in the property. It is eminently clear to the government and the court that the claimant has an interest in the property. Furthermore, in cases where the complaint describes the claimant's interest in the property in detail, the goals of the rules have been met because the government is on notice of the claimant's interest in the property, and there is very little risk that the claimant is filing a false claim.
Accordingly, the court finds that a simple description of a claimant's interest in the property is sufficient where, as here: (1) the claim meets all the other statutory requirements and (2) there is no real dispute that the claimant has an interest in the property. Because Chan's simple claim of ownership is sufficient to satisfy the requirements of Rule G(5)(a)(i)(B), the court finds that Chan has standing to challenge the forfeiture.
Chan moves to dismiss the complaint because the government failed to allege intent to evade the reporting requirements, as required by 31 U.S.C. § 5324. Chan argues that the government was required to allege sufficient facts to support the inference that (1) Chan knew about the reporting requirements, and that (2) Chan acted with the intent to evade those requirements. Chan is correct that the complaint does not include a single allegation of knowledge or intent. However, the complaint does state sufficiently detailed facts to support a reasonable belief that the government will be able to meet its burden of proving intent at trial.
The complaint sets forth numerous factual allegations that support the inference that Chan intended to evade the reporting requirements. First, the complaint alleges that Chan managed to deposit more than $658,000 in a 12-month period without making a single deposit of more than $10,000. The complaint alleges that there were dozens of deposits that were close to the $10,000 threshold, but not one that crossed it. Second, the complaint and supporting documents allege that Chan frequently deposited cash at different banks on the same day, and kept all the transactions below $10,000. Third, the complaint and supporting documents allege that Chan made numerous "split deposits," meaning that he made two deposits at the same bank on the same day, but made the deposits at different times.
On the basis of these allegations, it is reasonable to infer that Chan knew about the reporting requirements and acted with the intent to evade those requirements. It is reasonable to infer that Chan could not have spent an entire year depositing large sums of money without making a single deposit of more than $10,000, unless he did so intentionally. Similarly, it is reasonable to infer that Chan would not have gone to the extraordinary effort of regularly visiting multiple banks multiple times a day, unless he was doing so with the intent to evade the reporting requirements. Accordingly, the complaint states sufficiently detailed facts to support a reasonable belief that the government will be able to meet its burden of proving intent at trial.
Because the complaint satisfies the pleading standards set forth in supplemental Rule G(2)(f), Chan's motion to dismiss is denied.
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