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.
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
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 ...