U.S.A v. Circle

• Decision Date: 19 January 2010
• Docket Number: Civil Action No. 1:09-CV-1916-BBM.
• Citation: 680 F.Supp.2d 1370
• Parties: UNITED STATES of America, Plaintiff, v. 4323 BELLWOOD CIRCLE, ATLANTA, GEORGIA 30349 a/k/a 5375 Hennessy Circle, Atlanta, Georgia 30349 and All Buildings and Appurtenances Thereon, Defendant.
• Court: U.S. District Court — Northern District of Georgia

680 F.Supp.2d 1370

UNITED STATES of America, Plaintiff,

v.4323 BELLWOOD CIRCLE, ATLANTA, GEORGIA 30349 a/k/a 5375 Hennessy Circle, Atlanta, Georgia 30349 and All Buildings and Appurtenances Thereon, Defendant.

Civil Action No. 1:09-CV-1916-BBM.

United States District Court,

N.D. Georgia,

Atlanta Division.

Decided: Jan. 19, 2010.

Mary Frances Blazek Kruger, U.S. Attorney's Office, Atlanta, GA, for Plaintiff.

Richard A. Rice, Jr., The Rice Law Firm, LLC, Atlanta, GA, for Defendant.

ORDER

BEVERLY B. MARTIN, District Judge.

This matter is before the court on the Motion to Dismiss for Failure to State a Claim ("Motion to Dismiss") [Doc. No. 8] filed by Claimant Larkeit L. Knowlin ("Mr. Knowlin").

I. Factual and Procedural Background ¹

On a motion to dismiss, the court accepts as true all factual allegations set out in the plaintiffs complaint. See Lotierzo v Woman's World Med. Ctr., Inc., 278 F.3d 1180, 1182 (11th Cir.2002). On September 10, 2008, Mr. Knowlin, doing business as 377 Entertainment/Backwoods Records LLC, opened a bank account ending in— 0468 with JP Morgan Chase Bank (the "JPMC Account"). (Compl. ¶9.) From October 31, 2008 through May 22, 2009, at least forty-eight substantial cash deposits were made into this account, in amounts that never individually exceeded $10,000. (Id. ¶ 10.) Five times during this period Mr. Knowlin made more than one $9,000 cash deposit on a single day. (Id.) Additionally, on fifteen occasions, Mr. Knowlin made deposits on consecutive days that again, were individually under $10,000, but together exceeded $10,000. (Id.) The sum total of these cash deposits was approximately $400,840. (Id.) In March 2009, JP Morgan Chase sent Mr. Knowlin a letter informing him that federal law prohibits structuring of transactions so as to cause a domestic financial institution to fail to file a Currency Transaction Report ("CTR") for cash deposits in excess of $10,000. (Id. ¶11.)

On July 7, 2009, a Magistrate Judge found that there was probable cause to believe that the JPMC Account was subject to seizure and issued a warrant to seize all funds in the account. (Id. ¶ 13.) The Internal Revenue Service ("IRS") seized these funds on July 8. (Id. ¶ 14.). During a consensual interview the following day, Mr. Knowlin informed an IRS Special Agent that on June 25, 2009, after JP Morgan Chase Bank sent its letter, Mr. Knowlin used funds from the JPMC Account to purchase a house in Fulton County for $330,000. (Id. ¶¶11, 15-18.) This house is situated on the parcel located at 4323 Bellwood Circle, also known as 5375 Hennessy Circle, Atlanta, Georgia ("4323 Bellwood Circle"). (Id. ¶ 19.)

On July 16, 2009, Plaintiff United States of America (the "Government") filed its Complaint for Forfeiture [Doc. No. 1]. The Complaint alleges that Mr. Knowlin made structured deposits into the JPMC Account with the intention of avoiding the CTR requirement of 31 U.S.C. § 5313. Pursuant to 31 U.S.C. § 5317, it seeks forfeiture of 4323 Bellwood Circle including all buildings and appurtenances on the property (the "Defendant Property") as traceable to a violation of 31 U.S.C. § 5324, or a conspiracy to violate this provision. (Id. ¶ 3.) The Government requests relief in the form of (1) forfeiture of the Defendant Property to the United States, (2) costs of this action, and (3) other relief as the court deems just and proper. (Id. at 8.)

On September 1, 2009, Mr. Knowlin filed a Verified Claim [Doc. No. 6], pursuant to Rule G(5) of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions (the "Supplemental Rules"). On September 18, 2009, Mr. Knowlin filed the Motion to Dismiss presently before the court, claiming that the Government's Complaint fails to state a claim upon which relief may be granted. The Government filed its response on November 24, 2009 [Doc. No. 12], to which Mr. Knowlin has elected not to reply.

II. Legal Standard

Under Federal Rule of Civil Procedure 12(b)(6), a court may grant a motion to dismiss when a complaint fails to state a claim upon which relief can be granted. To withstand a motion to dismiss, a complaint must " 'give the defendant fair notice of what the... claim is and the grounds upon which it rests.'" Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). The court construes the complaint in the plaintiffs favor, and accepts the facts it alleges as true. M.T.V. v. DeKalb County Sch. Dist, 446 F.3d 1153, 1156 (11th Cir.2006). However, "a formulaic recitation of the elements of a cause of action will not do, " Twombly, 550 U.S. at 555, 127 S.Ct. 1955, as "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions." Ashcroft v. Iqbal, — U.S. —,

129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). Thus, a wholly conclusory statement of a claim cannot, without more, survive a motion to dismiss. See Weissman v. Nat'l Ass'n of Sec. Dealers, Inc., 500 F.3d 1293, 1303 (11th Cir.2007) (citing Twombly, 550 U.S. at 561-62, 127 S.Ct. 1955).

In this matter, the traditional pleading rules are modified by the Supplemental Rules, which, along with the Civil Asset Forfeiture Reform Act of 2000 ("CAFRA"), Pub.L. No. 106-185, 114 Stat. 202 (codified primarily at 18 U.S.C. § 983), set out requirements specific to civil "forfeiture action[s] in rem arising from a federal statute." Supp. R. G(l). Courts are to evaluate the sufficiency of a complaint under standards established by Supplemental Rule G(2). Id. G(8)(b)(ii). Accordingly, the Government's 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." Id. G(2)(f).²

"Structuring" occurs when individuals arrange their financial transactions to avoid having them reported to the Government. Section 5313 of Title 31 of the United States Code and related regulations require financial institutions to report to the IRS any deposits that exceed $10,000. See 31 U.S.C. § 5313(a); 31 C.F.R. § 103.22(b)(1). Section 5324, in turn, forbids individuals from "attempt[ing] to cause a domestic financial institution to fail to file a report required under section 5313(a)" and criminalizes "structur[ing]... or attempt[ing] to structure... any transaction with one or more domestic financial institutions." 31 U.S.C. § 5324(a)(1), (3).

Pursuant to § 5317, the Government may file a civil forfeiture action to seize certain property related to a structuring violation:

Any property involved in a violation of section 5313, 5316, or 5324 of this title, or any conspiracy to commit any such violation, and any property traceable to any such violation or conspiracy, may be seized and forfeited to the United States in accordance with the procedures governing civil forfeitures in money laundering cases pursuant to section 981(a)(1)(A) of title 18, United States Code.

Id. § 5317(c)(2) (emphasis added). Furthermore, case law interpreting the civil forfeiture provision of 18 U.S.C. § 981(a)(1)³ and the nearly identical criminal forfeiture provision of 18 U.S.C. § 982(a)(1)⁴ can afford some guidance when evaluating the "involved in" and "traceable to" language of § 5317. See United States v. Seher, 562 F.3d 1344, 1369 (11th Cir.2009) (holding that because § 5317(c)(1)(A)⁵ and 18 U.S.C. § 982(a)(1) "essentially mirror each other, it seems incongruous to interpret those provisions as covering different arrays of property, " adding that there is "no policy basis for distinguishing between the two [statutes]"); see also United States v. McGauley, 279 F.3d 62, 76 n. 13 (1st Cir.2002).⁶

III. Analysis

Mr. Knowlin argues that the Government's only basis for its forfeiture action is either that the Defendant Property is a substitute asset, as defined by 18 U.S.C § 984, or that the parcel is "traceable to" a statutory violation. (Mot. to Dismiss 5 ("Since the residence was not involved in the alleged structuring, the residence is subject to seizure and forfeiture only if it constituted] a substitute asset or if it is traceable to the alleged structuring.").) Neither basis, contends Mr. Knowlin, is legally sufficient to support the Government's Complaint for Forfeiture.

A. Inapplicability of 18 U.S.C. § 984

Mr. Knowlin argues that because "[t]he residence clearly is not 'identical property' and is not in the 'same place or account' as the JPMC Account," § 984 is inapplicable in this case. (Id. at 6 (quoting 18 U.S.C. § 984(a)(2)).) The Government responds that Mr. Knowlin's characterization of its claims "categorically misconstruefs] the nature of this forfeiture by confusing distinct concepts of forfeiture law." (PL's Resp. in Opp'n to Claimant's Mot. to Dismiss the Forfeiture Compl. 12 [hereinafter Opp'n].) The Government argues that § 984 is "merely an evidentiary rule that relaxes the usual tracing requirement at the time of trial." (Id. at 11-12.) As such, "[t]he applicability of Section 984 should have no bearing on a motion to dismiss." (Id. at 13 (citation omitted).)

Section 984 facilitates Government efforts to seek forfeiture of fungible property "deposited in an account in a financial institution," by freeing the Government from the burden of "identifying] the specific property involved in the offense that is the basis for the forfeiture." 18 U.S.C. § 984(a)(1)(A). However, the Government has not yet sought the assistance of § 984's relaxed standard to make its case here. In fact, it agrees with Mr. Knowlin that, at least at this stage in the proceedings, § 984 is inapplicable.

Because Mr. Knowlin's assertion of § 984's inapplicability is superfluous at this stage and because, as is discussed below, the court finds that the Defendant Property is properly traceable to a statutory violation, this Order need not address whether § 984 may, at some point, prove applicable to the facts of this case.

B. ...