United States District Court, D. New Jersey
L. COOPER, United States District Judge
a civil forfeiture action brought by the United States
Government in rem against real property located in
New York City. Tomer Yosef is a claimant of the property at
issue and has moved to stay these proceedings under the rules
applicable to forfeiture actions. For the reasons cited
below, we will grant the stay requested by Mr. Yosef. We
resolve this motion without oral argument. See
United States of America filed a criminal complaint in this
court in August 2016 against Tomer Yosef, a native and
citizen of Israel. The substance of the allegations against
Mr. Yosef are recounted in the Complaint in this case. (Dkt.
Briefly, the Government alleges that Mr. Yosef committed wire
fraud in violation of 18 U.S.C. § 1343 by defrauding two
investors in connection with a technology startup company.
(Id. at 3-4.) Mr. Yosef allegedly made various
misrepresentations to the investors about the operation and
progress of the company while taking much of the
“investment” money for himself. (Id. at
purposes of this action, the key allegation is that Mr. Yosef
used these ill-gotten funds to purchase a condominium
apartment located at 212 East 47th Street, Apartment 14E, New
York, New York (the “Property”). (Id. at
21-24.) The Complaint describes the various bank accounts
that Mr. Yosef allegedly used to purchase the Property.
(Id. at 18-21.) Technically, the Property was
purchased by YG Property Holdings LLC (“YG
Holdings”), a New York Limited Liability Company formed
by Mr. Yosef. (Id. at 22.) Mr. Yosef is the sole
member of YG Holdings. (Id.)
Government contends that Mr. Yosef's actions violated the
wire fraud statute, 18 U.S.C. § 1343, and brought this
case in November 2016 under 18 U.S.C. § 981, which
provides that “[a]ny property, real or personal, which
constitutes or is derived from proceeds traceable to . . .
‘specified unlawful activity' (as defined in
section 1956(c)(7) of this title)” is subject to
forfeiture. 18 U.S.C. § 981(a)(1)(C). Mr. Yosef filed a
Notice of Claim of his ownership of the Property in December
2016. (Dkt. 5.) Despite receiving several stipulations by the
parties extending the deadlines to respond to the Complaint
(see dkt. 6; dkt. 7; dkt. 9), Mr. Yosef has not yet
filed an answer. Mr. Yosef now moves to stay this case
pursuant to 18 U.S.C. § 981(g)(2). (Dkt. 11.)
involved in parallel criminal and civil proceedings may face
the “difficult choice between being prejudiced in the
civil litigation, if the defendant asserts his or her Fifth
Amendment privilege, or from being prejudiced in the criminal
litigation if he or she waives that privilege in the civil
litigation.” Louis Vuitton Malletier S.A. v. LY
USA, Inc., 676 F.3d 83, 97 (2d Cir. 2012). On one hand,
asserting the Fifth Amendment in a civil case “may give
rise to an adverse inference against the party claiming its
benefits.” Adkins v. Sogliuzzo, 625 F.
App'x 565, 571 (3d Cir. 2015) (quoting SEC v.
Graystone Nash, Inc., 25 F.3d 187, 190 (3d Cir. 1994));
see also McMullen v. Bay Ship Mgmt., 335 F.3d 215,
218 (3d Cir. 2003) (noting judicial discretion to tailor
equitable remedy to balance civil litigant's Fifth
Amendment rights and potential prejudice to adversary). On
the other hand, a civil litigant may face the risk of waiving
his Fifth Amendment protections or providing evidence that
could be used against him in a criminal case. See
Graystone Nash, 25 F.3d at 193 (noting that affidavit
filed in civil case “raise[d] serious questions about
whether defendants waived their privilege”).
U.S.C. § 981(g)(2) enables a claimant to sidestep that
dilemma by moving for a stay in a civil forfeiture action
when there are related criminal proceedings. If a claimant so
moves, the statute requires us to stay the civil proceeding
if we determine that: (1) the claimant is the subject of a
related criminal investigation or case; (2) the claimant has
standing to assert a claim in the civil forfeiture
proceeding; and (3) continuation of the forfeiture proceeding
will burden the right of the claimant against
self-incrimination in the related investigation or case. 18
U.S.C. § 981(g)(2).
the first inquiry, the statute defines “related
criminal investigation or case” as “an actual
prosecution or investigation in progress at the time at which
the request for the stay, or any subsequent motion to lift
the stay is made.” Id. § 981(g)(4).
Moreover, “[i]n determining whether a criminal case or
investigation is ‘related' to a civil forfeiture
proceeding, the court shall consider the degree of similarity
between the parties, witnesses, facts, and circumstances
involved in the two proceedings, without requiring an
identity with respect to any one or more factors.”
second inquiry, standing, is designed to ensure that a
claimant is properly before the court. To contest a
forfeiture, a claimant must have both Article III and
statutory standing. United States v. $8, 221, 877.16 in
U.S. Currency, 330 F.3d 141, 150 n. 9 (3d Cir. 2003).
“Article III standing requires the claimant to show an
interest in the property sufficient to create a ‘case
or controversy, ' while statutory standing requires
claimants to comply with certain procedures.”
Id. (quoting United States v. Contents of
Accounts Numbers 3034504504 & 144-07143 at Merrill Lynch,
Pierce, Fenner & Smith, Inc., 971 F.2d 974, 984 (3d
Cir. 1992). To establish statutory standing, claimants must
comply with the requirements of 18 U.S.C. §
983(a)(4)(A). United States v. $487, 825.000 in U.S.
Currency, 484 F.3d 662, 664 (3d Cir. 2007), as amended
(May 14, 2007). That statute in turn requires would-be
claimants to file a claim asserting interest in the property
in accordance with the Supplemental Rules for Admiralty or
Maritime Claims and Asset Forfeiture Actions
(“Supplemental Rules”). 18 U.S.C. §
983(a)(4)(A). Supplemental Rule G(5)(a)(i) governs the filing
of a claim, and requires that the claim: (1) identify the
specific property claimed; (2) identify the claimant and
state the claimant's interest in the property; (3) be
signed by the claimant under penalty of perjury; and (4) be
served on the applicable government attorney. Supplemental
Rule G(5)(a)(ii) sets out certain deadlines for the filing of
the verified claim. Supplemental Rule G(5)(b) requires
claimants to serve and file an answer to the complaint or a
motion under Rule 12 of the Federal Rules of Civil Procedure
within 21 days after the filing of the claim.
Third Circuit has explained that the “most significant
requirement” is that the claimant file a verified
claim. See $487, 825.000, 484 F.3d at
Requiring a timely claim ensures that claimants “come
forward as quickly as possible after the initiation of
forfeiture proceedings, so that the court may hear all
interested parties and resolve the dispute without
delay.” Id. (quoting $8, 221, 877.16,
330 F.3d at 150 n. 9). And requiring a verified
claim “minimize[s] the danger of false claims by
requiring claims to be verified or solemnly affirmed.”
Id. Consequently, a “claimant who fails to
file a verified statement has no standing to contest a
forfeiture.” Id.; see also United States
v. 8136 S. Dobson Street, 125 F.3d 1076, 1082 (7th Cir.
1997) (“If no claim is filed, a putative claimant lacks
standing to contest a forfeiture.”).
the Third Circuit has emphasized that claimants must
carefully adhere to the procedural requirements for filing a
claim, it has also cautioned against overly-rigid application
of the rules when assessing standing. Consequently, we are
mindful that our analysis of a claimant's compliance with
procedural requirements “should not be so strict in
interpreting those requirements that the outcome defies
‘old-fashioned common sense.'” See United
States v. $263, 327.95, 936 F.Supp.2d 468, 472 (D.N.J.
2013) (quoting United States v. Various Computers &
Computer Equip., 82 F.3d 582, 585 (3d Cir.1996)).
Indeed, to assert statutory standing, the “burden is
minimal and does not require that defendants explain in any
detail the nature of their interest.” United States
v. $410, 000.00 In U.S. Currency, No. 07-0598, 2007 WL
4557647, at *5 (D.N.J. Dec. 21, 2007).
final inquiry in connection with securing a stay under
Section 981(g)(2) is whether continuation of the forfeiture
proceeding will burden the right of the claimant against
self-incrimination in the related investigation or case.
See 18 U.S.C. § 981(g)(2).
Yosef contends that a stay in this case is appropriate
because each of the required conditions in Section 981(g)(2)
is present here. First, he asserts the existence of an open
criminal investigation against him. (Dkt. 11-1 at 9-10.)
Second, he claims to have the requisite Article III and
statutory standing by means of filing a timely verified claim
and his allegedly undisputed ownership interest in the
Property. (Id. at 12.) Finally, he submits that his
Fifth Amendment right against self-incrimination in the
related criminal case would be burdened absent a stay.
(Id. at 13-14.) Mr. Yosef observes that the
allegations in the civil forfeiture complaint here
“reads like a criminal prosecution” and
“explicitly alleges that [Mr. Yosef] committed wire
fraud. (Id. at 13.) Consequently, he ...