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U.S. v. $8

May 24, 2001

UNITED STATES OF AMERICA,
V.
$8,221,877.16 IN UNITED STATES CURRENCY, ET AL.



The opinion of the court was delivered by: Politan, District Judge.

This matter comes before the Court on a Motion to Dismiss the Complaint Pursuant to Federal Rule of Civil Procedure 12(b)(6) by Claimants, Turist-Cambio Viagens e Turismo Ltda ("Turist-Cambio") and Kesten Development Corporation ("Kesten") (collectively "Claimants"), and on the Government's Cross-Motion to Compel Claimants to File an Answer in Accordance with Supplemental Rule C(6). On January 30, 2001, Magistrate Judge Ronald J. Hedges stayed Claimant's Motion for Partial Summary Judgment and Motion for Return of the Seized Funds pending the Court's resolution of the motion to dismiss and cross-motion to compel an answer.

The Court heard oral argument on March 26, 2001. Subsequent to oral argument, the parties filed supplemental briefs on a threshold standing issue. Those briefs have also been considered by the Court in rendering this opinion.

STATEMENT OF FACTS & PROCEDURAL HISTORY

This is a civil forfeiture in rem action filed on June 2, 2000 by the United States of America ("the Government") against previously seized funds totaling over eight million dollars. In rem proceedings are governed by the Supplemental Rules for Certain Maritime and Admiralty Claims. Supplemental Rule A for Certain Maritime and Admiralty Claims ("Supp.Rule"). The impact and scope of these Supplemental Rules are at the heart of the dispute before the Court.

The Claimants to the defendant funds are a Brazilian money exchange company called Turist-Cambio and a related company called Kesten Development Corporation. Turist-Cambio incorporated Kesten in November 1994. In July 1995, Kesten opened a bank account at MTB Bank in Manhattan which MTB named the "Venus" account.

In 1997, Turist-Cambio opened another account in Manhattan at Foreign Exchange Trade Associates, Inc. ("Forex").*fn1 Forex, in turn, opened a sub-account on Turist Cambio's behalf at European American Bank ("EAB") which was named the "Tadeland" account. Thus, when Turist Cambio sent checks to Forex for clearance, Forex deposited them into the Tadeland account at EAB. The accumulated balance would then periodically be wired into the Kesten Venus account at MTB.

Prior to the commencement of this in rem action, the Government obtained a warrant to seize all funds in Claimants' bank accounts described above.*fn2 After the warrant was issued, the Government seized approximately $7.4 million dollars from the two bank accounts. Thereafter, the Government continued to seize all funds deposited into the two accounts. In the motion to dismiss, Claimants assert that the seizure of these "after-deposited" funds were beyond the scope of the warrant and therefore, no probable cause existed for the continuing seizure. On that basis, Claimants argue that the Government's Complaint must be dismissed as against the "after-deposited" funds, totaling approximately $800,000.00. Claimants also urge that the initial $7.4 million must be returned because the warrant was not based on probable cause.

The impetus for the Government seizure of the funds at issue here arose out of a criminal investigation into an alleged drug ring. The government alleges that the seized funds were proceeds from drug transactions and a related money laundering scheme in violation of 18 U.S.C. § 1956(a)(1), 1956(a)(2) and 1957, and are therefore subject to forfeiture under 18 U.S.C. § 981(a)(1)(A). Compl., ¶ 1. One of Turist Cambio's couriers, Marcos Glikas, whom Turist-Cambio used to deposit checks into their New York bank accounts, was indicted and convicted of conspiracy to commit money laundering on March 19, 1999.

The present Complaint, along with a set of interrogatories, was served on Claimants' counsel on June 13, 2000. Claimants asserted an interest in the seized funds by filing, through an agent named Antonio Pires De Almeida ("Pires"), a claim pursuant to Supplemental Rule C(6) on July 21, 2000 (after the Government had consented to two requests for extensions of time).

Supplemental Rule C(6) provides:

(6) Claim and Answer; Interrogatories. The claimant of property that is the subject of an action in rem shall file a claim within 10 days after process has been executed, or within such additional time as may be allowed by the court, and shall serve an answer within 20 days after the filing of the claim. The claim shall be verified on oath or solemn affirmation, and shall state the interest in the property by virtue of which the claimant demands its restitution and the right to defend this action. If the claim is made on behalf of the person entitled to possession by an agent, bailee, or attorney, it shall state that the agent, bailee, or attorney is duly authorized to make the claim. At the time of answering the claimant shall also serve answers to any interrogatories served with the complaint. In actions in rem interrogatories may be so served without leave of the court.

Supp. Rule C(6)(West 2000) (emphasis added).*fn3 The rule therefore contemplates two separate actions by a person or entity asserting an interest in seized property. The claimant must first file a claim, and then twenty days later, that claimant must serve an answer to the complaint. Additionally, the rule provides that an answer to any interrogatories must be served when the answer to the complaint is served.

Here, instead of filing an "answer" to the Complaint and a response to the interrogatories, Claimants filed a motion to dismiss the Complaint, a motion for partial summary judgment, and a motion for the return of the seized funds. The Government contends that failure to file an answer and failure to answer the interrogatories is a failure to comply with Rule C(6). The Government therefore cross-moves to compel compliance with Rule C(6), arguing that this Court should not hear Claimants' motion to dismiss until. Claimants file an answer and a response to the interrogatories.

Claimants argue that they are entitled to file a motion to dismiss under Rule 12(b) of the general Federal Rules of Civil Procedure in lieu of an "answer" under Rule C(6). Thus, the interplay between the general ...


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