United States v. 149 G St.
| Decision Date | 11 June 2013 |
| Docket Number | No. 2:12-cv-0705-TLN-DAD,2:12-cv-0705-TLN-DAD |
| Court | U.S. District Court — Eastern District of California |
| Parties | UNITED STATES OF AMERICA, Plaintiffs, v. REAL PROPERTY LOCATED AT 149 G STREET, LINCOLN, CALIFORNIA, PLACER COUNTY, APN 008-266-015-000, INCLUDING ALL APPURTENANCES AND IMPROVEMENTS THERETO, et al., Defendants. |
This matter is before the Court on the United States' ("Plaintiff") Motion to Stay Forfeiture Action (ECF No. 63) until the conclusion of the currently pending federal criminal prosecution of United States v. Bart Volen, et al., Case No. 2:12-CR-00294-MCE, pursuant to 18 U.S.C. § 981(g). Mechanic Bank ("Claimant") has filed an Opposition to Plaintiff's Motion contending that the stay is unnecessary and that such a delay would prejudice Claimant. (ECF No. 71) The Court has carefully considered Plaintiff's motion as well as the arguments setforth in Claimant's opposition. For the reasons set forth below, this Court grants Plaintiff's Motion to Stay.1
On March 20, 2012, the Government filed its civil forfeiture complaint against eleven defendant real properties, including the Claimed Properties belonging to Bart Volen ("Mr. Volen") or his business entities. (Complaint, ECF No. 1.) The Complaint alleges that Mr. Volen defrauded the United Auburn Indian Community (the "UAIC") out of millions of dollars from late 2006 to early 2008 by submitting inflated and false change order invoices in connection with Mr. Volen's duties as a construction manager for four separate construction contracts between Mr. Volen and the UAIC. Further, the Complaint alleges that the Defendant Properties are subject to forfeiture under 18 U.S.C. § 981 because (1) the Defendant Properties were involved in a transaction or attempted transaction in violation of 18 U.S.C. § 1956(a)(1)(B), and (2) the Defendant Properties are derived from proceeds traceable to a "specified unlawful activity" as defined in 18 U.S.C. § 1956(c)(7).
On April 13, 2012, Claimant filed claims to the three of the Defendant Properties (ECF No. 5) and Claimant filed an Answer to the Complaint (ECF No. 6) asserting that it is an innocent owner under 18 U.S.C. § 983(d) and that its interests in the Claimed Properties are not subject to forfeiture.
Claimant alleges that in 2007, it established a banking relationship with Mr. Volen and at that time he was known in the community as an experienced real estate investor in the Sacramento area, with a history of favorable earnings, acceptable liquid assets, and an exemplary repayment history in his business dealings. (Claimant's Opp'n to Pl.'s Mot. To Stay, ECF No. 71 at 4.) Throughout 2009, Claimant made three separate real property secured loans to Mr. Volen, his wife, and two of his single-purpose entities. (ECF No. 71 at 4.) The repayment of each loan was secured by a separate deed of trust against each of the Claimed Properties. (ECF No. 71 at 4.) Claimant alleges that it exercised due diligence and that nothingindicated that the Claimed Properties, Mr. Volen, or any of the borrowers were involved in criminal activities or that the Claimed Properties were purchased with any funds that were derived from criminal activities. (ECF No. 6 at 7; ECF No. 71 at 4.)
On June 13, 2012, Mr. Volen filed a Motion to Dismiss Plaintiff's Complaint (ECF No. 36).2 On October 10, 2012, Plaintiff filed a Motion to Stay (ECF No. 63). On November 11, 2013, Claimant filed a Motion for Summary Judgment (ECF No. 68).
Pursuant to Title 18, United States Code, section 981(g):
Thus, for a civil forfeiture to be stayed the court must determine that: (1) the civil forfeiture is related to a criminal case or investigation, and (2) civil discovery will adversely affect the ability of the Government to conduct a related criminal investigation or the prosecution of the related criminal case.
Plaintiff contends that the forfeiture is related to the criminal prosecution of United States v. Bart Volen, et al., Case No. 2:12-CR-00294-MCE, and that a stay is necessary to protect the integrity of the criminal prosecution and to prevent undue prejudice to all parties. If Plaintiff meets its burden of showing that the forfeiture case is related to a criminal proceeding and that civil discovery will adversely affect its abilities concerning that related proceeding, the Court is obligated by the plain language of the statute to grant the Government's request for a stay. See United States v. Real Prop. Located at 6415 N. Harrison Ave., Fresno Cnty., No. 1:11-CV-00304-BAM, 2012 WL 4364076, at *3 (E.D. Cal. Sept. 21, 2012); see also United States v. All Funds on Deposit in Suntrust Account Number XXXXXXXXX8359, In the Name of Gold and Silver Reserve, Inc., 456 F. Supp. 2d 64, 65 (D.D.C. 2006) () the Government must satisfy the court that civil discovery would adversely affect the criminal case; if so, then 2) the court must grant the stay.").
First, this Court finds that the forfeiture is related to the criminal prosecution of Mr. Volen. Where common facts, similar criminal offenses, and common parties exist, the criminal and civil cases are considered to be "related." See United States v. One 2008 Audi R8 Coupe Quattro, 866 F. Supp. 2d 1180, 1183 (C.D. Cal. 2011); United States v. GAF Fin. Services, Inc., 335 F. Supp. 2d 1371, 1373 (S.D. Fla. 2004). Here, the criminal investigation and this civil forfeiture case arise out of the same facts and circumstances and both cases involve many of the same parties. Claimant Bart Volen is a criminal defendant in Case No. 2:12-CR-00294-MCE. Likewise, in the civil case the defendant assets are alleged to have been "involved in" or "traceable to" the criminal schemes. As such, all, or nearly all, of the facts alleged in the civil complaint as the basis for forfeiture of the defendant properties are similar to the facts alleged in the Indictment and will be relied upon by the Government in the criminal prosecution. Moreover, nearly all of the facts, witnesses, and evidence offered by the Government in the forfeiture action will overlap with the criminal prosecution. Thus, the cases are obviously related and Plaintiff has satisfied the first prong.
Second, the Court finds that Plaintiff has shown that civil discovery will adversely affect the ability of the Government to conduct a related criminal investigation or prosecution of the related criminal case. The language employed by Section 981(g)(1) reflects an amendment by the Civil Asset Forfeiture Act of 2000 that "broadened the stay relief significantly" and removed the requirement that the Government show good cause. See U.S. v. $1,026,781.61 in Funds from Florida Capital Bank, No. CV 09-04381, 2009 WL 3458189, at *2 (N.D. Cal. Oct. 21, 2009) (quoting United States v. All Funds Deposited in Account No. 200008524845, 162 F. Supp. 2d 1325, 1330 (D. Wyo. 2001)). As such, Section 981(g)(1) does not require a particular showing but does instead require the court to determine whether the civil discovery will interfere with the criminal investigation. Id.
Plaintiff contends that the "adverse impact of full civil discovery during the pendency of a related criminal proceeding arises from the ability to seek the identity and take the depositions of prosecution witnesses, including case investigators and agents, and the obtaining of grand jury and other investigative material not permitted under Fed. R. Crim. P. 16." (ECF No. 63-1 at 10.) Courts have long stayed civil forfeiture cases based upon anticipatory discovery issues. See One 2008 Audi R8 Coupe Quattro, 866 F. Supp. 2d at 1184; United States v. Approximately $69,577 in United States Currency, No. C09-0674, 2009 WL 1404690, at *3 (N.D. Cal. May 19, 2009); United States v. Assorted Firearms-Motorcycles & other Pers. Prop., 677 F. Supp. 2d 1214, 1216 (CD. Cal. 2009). "Where civil discovery would subject the government's criminal investigation to 'early and broader civil discovery than would otherwise be possible in the context of the criminal proceeding,' a stay should be granted." All Funds on Deposit in Suntrust Account No. XXXXXXXXX8359, 456 F. Supp. 2d at 65-66 (quoting U.S. v. One Assortment of Seventy-Three Firearms, 352 F. Supp. 2d 2, 4 (D. Me. 2005)).
Claimant contends that a stay is not necessary because its summary judgment claim can be decided without the need of further discovery. (ECF No. 71 at 2.) In response to Claimant's argument, Plaintiff has moved this Court to deny Claimant's Motion for Summary Judgment pursuant to Fed. R. of Civ. P. 56(d...
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