United States v. 246 Main St., Dansville, Livingston Cnty.

• Citation: 118 F.Supp.3d 1310
• Decision Date: 13 July 2015
• Docket Number: Case No. 3:13–cv–1210–J–39PDB.
• Parties: UNITED STATES of America, Plaintiff, v. REAL PROPERTY, INCLUDING ALL IMPROVEMENTS THEREON AND APPURTENANCES THERETO, LOCATED AT 246 MAIN STREET, DANSVILLE, LIVINGSTON COUNTY, NEW YORK, et al., Defendants.
• Court: U.S. District Court — Middle District of Florida

118 F.Supp.3d 1310

UNITED STATES of America, Plaintiff,

v.REAL PROPERTY, INCLUDING ALL IMPROVEMENTS THEREON AND APPURTENANCES THERETO, LOCATED AT 246 MAIN STREET, DANSVILLE, LIVINGSTON COUNTY, NEW YORK, et al., Defendants.

Case No. 3:13–cv–1210–J–39PDB.

United States District Court, M.D. Florida, Jacksonville Division.

Signed July 13, 2015.

Bonnie Ames Glober, US Attorney's Office, Jacksonville, FL, for Plaintiff.

ORDER

BRIAN J. DAVIS, District Judge.

This is a civil forfeiture action in which the United States seeks to forfeit three pieces of real property that it contends were purchased with proceeds traceable to wire fraud and because they were involved in a wire fraud transaction.¹ The case arises out of a criminal investigation into Daniel Williams² who, the Government alleges, defrauded a number of investors through an elaborate embezzlement scheme lasting from at least July 2011 through about February 2013. See generally (Declaration of Agent J. Douglas Mathews, Doc. 1–1). The Government maintains that Mr. Williams purchased the three Defendant properties, in whole or in part, with funds traceable to the illicit scheme.

The Court has entered Final Judgments of Forfeiture as to two of the three Defendant properties. First, on March 5, 2015, the Court granted the United States' motion for final judgment of forfeiture as to Defendant "Real Property, including all improvements thereon and appurtenances thereto, located at 246 Main Street, Dansville, Livingston County, New York" (hereinafter, "Main Street Property"). See (Judgment of Forfeiture, Doc. 43). Second, on March 18, 2015, the Court granted the United States' motion for final judgment of forfeiture as to Defendant "Real Property, including all improvements thereon and appurtenances thereto, located at Section 148 Block 1 Lot 20.212, Parker Hill Road, Sparta, Livingston County, New York" (hereinafter, "Parker Hill Property"). See (Judgment of Forfeiture, Doc. 50). The only remaining Defendant is "Real Property, including all improvements thereon and appurtenances thereto, located at 26 Health Street, Dansville, Livingston County, New York" (hereinafter, "Health Street Property").

Claimant Scott Stern, an interested party, has filed an Answer and Affirmative Defenses, alleging, in pertinent part, that he is an innocent owner of the Health Street Property within the meaning of 18 U.S.C. § 983(d)(1). See (Answer, Doc. 13 at 3). Attached to Claimant Stern's Answer and Affirmative Defenses is the Verified Claim of Scott Stern ("Claim"), wherein he claims that he acquired fee simple title to the Health Street Property by way of quit claim deed executed by Daniel Williams on August 23, 2013. See (Claim, Doc. 13–1). Attached to Mr. Stern's Claim is the quit claim deed at issue.

The case is now before the Court on cross-motions for summary judgment as to Claimant Stern's status as an innocent owner of the Health Street Property. See (Claimant Scott Stern's Motion for Summary Judgment, Doc. 37); (United States' Motion for Summary Judgment, Doc. 39). Both parties have responded in opposition to each other's motions. See (United States' Response to Scott Stern's Motion for Summary Judgment, Doc. 47); (Claimant Scott Stern's Response to the United States' Motion for Summary Judgment, Doc. 51). As such, the matters are now ripe for adjudication.

I. FACTUAL BACKGROUND

The relevant facts are undisputed. This civil forfeiture action arises out of an ongoing criminal investigation into the defrauding of individual investors in connection with an elaborate scheme allegedly perpetrated by Daniel Williams through his management position in American Pine and Rosin Derivatives, LLC d/b/a Global Pine ("Global Pine"). (J. Douglas Mathews Decl., Doc. 1–1 ¶ 2). More specifically, the United States alleges that, from at least July 2011 through about February 2013, Williams used fake vendor invoices to trick corporate investors into believing that the invoices submitted to Global Pine were for legitimate business expenses when, in reality, they paid for Williams' personal expenses and extravagant lifestyle. (Id. ¶¶ 2, 4). The United States contends that the properties to be forfeited were purchased, in whole or in part, with funds embezzled from Global Pine. (Id. ¶¶ 3, 21–25).

Stern met Williams on a train from Philadelphia to New York in December of 2009. (Stern Decl., Doc. 37–1 ¶ 4). At that time, Williams represented to Stern that he was an entrepreneur and venture capitalist. (Id. ¶ 5). Approximately six months after this encounter, Williams called Stem to propose that Stern invest in a company in which Williams was involved called MediTalk Devices, LLC ("MediTalk"). (Id. ¶ 6). During the call, Williams informed Stern that, in 2002, Williams had sold a company in England for $110 million, and that he owned 25% of the company at the time of the sale. (Id. ¶ 7). Based on Williams' representations, Stern believed that Williams was a wealthy businessman. (Id. ¶ 8).

Stern invested in MediTalk, and later in other companies that Williams proposed, including Career Lynx, LLC ("CareerLynx"), Red Lion Holdings, LLC ("Red Lion"), and Danz, LLC ("Danz"). (Id. ¶¶ 9–10). Nevertheless, this business relationship soon fell apart. In March of 2013, one of Williams' other investors contacted Stern and informed Stern that he suspected that Williams was defrauding his investors. (Id. ¶ 11). Subsequent to this conversation, Williams admitted to Stern that he had defrauded Stern out of his investment in each of the above entities. (Id. ¶ 12).

Stern and Williams decided to attempt to unwind any wrongdoing. In order to settle any possible claims for fraud, Stern and Williams executed three settlement agreements. (Id. ¶ 13). One of the agreements, referred to as the MediTalk Settlement Agreement, required Williams to pay to Stern $160,800 in return for an assignment of Stern's interest in MediTalk to Williams and Stern's full and complete release of claims. (Id. ¶ 14); (MediTalk Settlement Agreement, Doc. 37–1 at 5–7). The MediTalk Settlement Agreement provided that, for payment of the $160,800 due, in whole or in part, Williams would quit claim his interest in the Health Street Property to Stern. (Stern Decl., Doc. 37–1 ¶ 15). Williams executed the MediTalk Settlement Agreement on May 17, 2013. (MediTalk Settlement Agreement, Doc. 37–1 at 5–7).

On July 12, 2013, Stern filed suit against Williams in the United States District Court, Eastern District of Missouri, alleging inter alia that Williams failed to fulfill his obligations under each of the settlement agreements. (Order Taking Judicial Notice of Certain Facts, Doc. 27 at 2; Docket, Doc. 24–1). While the suit was pending, on August 23, 2013, Williams executed a quit claim deed to Stern for the Health Street Property, consistent with his obligations under the MediTalk Settlement Agreement. (Quit Claim Deed, Doc. 37–1 at 8–10); (Stern Decl., Doc. 37–1 ¶ 17). Williams mailed the quit claim deed shortly after executing it, and it was received by Stern's counsel in St. Louis on September 3, 2013. (Stern Aff. In Support of Default Judgment, Doc. 37–2 ¶ 32). Williams, however, did not provided to Stern signed copies of all of the required tax documents necessary to record the quit claim deed. (Id. ¶ 33).

On April 17, 2014, Stern obtained a final default judgment in his favor in his case against Williams in the Eastern District of Missouri. (Order Taking Judicial Notice of Certain Facts, Doc. 27 at 2; Default Judgment, Doc. 24–2). In the Final Judgment, the court found that Williams had executed a quit claim deed for the Health Street Property, but that he failed to execute other necessary documents to finalize the transaction. (Order Taking Judicial Notice of Certain Facts, Doc. 27 at 2; Default Judgment, Doc. 24–2 at 4). Accordingly, the court ordered Williams to execute the tax documents so that the quit claim deed could be recorded. (Order Taking Judicial Notice of Certain Facts, Doc. 27 at 2; Default Judgment, Doc. 24–2 at 4).

Stern has attempted to contact Williams on multiple occasions and has requested that Williams sign the necessary tax documentation, but to no avail. (Stern Aff. In Support of Default Judgment, Doc. 37–2 ¶¶ 37–38). The necessary tax documents remain unexecuted, and the Livingston County Recorder of Deeds has refused to accept the quit claim deed for recording without executed copies of the necessary tax documents from Williams. (Id. ¶ 40).

At the time he entered into the Settlement Agreements and obtained the quit claim deed, Stern believed that Williams' ownership of the Health Street Property was entirely legitimate and completely unrelated to any of Williams' fraudulent activities. (Stern Decl. ¶ 19). Stern did not believe or know that Williams had used money from any of his frauds to purchase the Health Street Property. (Id. ¶ 20). Rather, Stern understood that Williams was a wealthy man who had other funds available and that Williams used those other funds to purchase the Health Street Property. (Id. ¶ 21). Although Williams admitted to Stern that he had defrauded Stern, Williams never told Stern that he had used funds from Stern or his other investors to purchase the Health Street Property. (Id. ¶ 22).

The United States filed the instant action on October 7, 2013, a little more than a month after Williams delivered to Stern the quit claim deed for the Health Street Property. (Verified Complaint for Forfeiture In Rem. Doc. 1); (Stern Decl., Doc. 37–1 ¶ 17); (Stern Aff. In Support of Default Judgment, Doc. 37–2 ¶ 32). The first indication that Stern had that Williams purchased the Health Street Property with funds tainted by fraud was after Stern learned that the Government had initiated this civil forfeiture action. (Stern Decl., Doc. 37–1 ¶ 23).

II. STANDARD OF REVIEW

Under Federal Rule of Civil Procedure 56, "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the...