United States v. $25,846.96

• Decision Date: 06 March 2013
• Docket Number: No. 6:12–CV–1837–LSC.,6:12–CV–1837–LSC.
• Parties: UNITED STATES of America, Plaintiff, v. $25,846.96 AND $6,000.00 SEIZED FROM BANK OF VERNON ACCOUNT NO. XXX–XX–6206, Defendant.
• Court: U.S. District Court — Northern District of Alabama

928 F.Supp.2d 1296

UNITED STATES of America, Plaintiff,

v.$25,846.96 AND $6,000.00 SEIZED FROM BANK OF VERNON ACCOUNT NO. XXX–XX–6206, Defendant.

No. 6:12–CV–1837–LSC.

United States District Court,

N.D. Alabama,

Jasper Division.

March 6, 2013.

Amanda Schlager Wick, Joyce White Vance, U.S. Attorney, Jennifer Smith Murnahan, U.S. Attorney's Office, Birmingham, AL, for Plaintiff.

ORDER

L. SCOTT COOGLER, District Judge.

I. Introduction

Before the Court is Claimant Randall Keith Colburn's (“Claimant”) Motion to Dismiss and for Return of Seized Funds, filed on July 11, 2012. (Doc. 6.) Claimant's brief in support of the motion was contemporaneously filed. (Doc. 7.) Pursuant to this Court's Order (Doc. 9), Plaintiff the United States of America (the “Government”) filed a responsive brief in opposition to the motion on August 13, 2012 (Doc. 10), and Claimant filed a reply brief in support of the motion on August 20, 2012. (Doc. 11.) The motion has been fully briefed and is ripe for decision. Upon due consideration after reviewing the parties' submissions, the Motion to Dismiss and for Return of Seized Funds is DENIED.

II. Factual and Procedural Background

Between January 5, 2011, and October 24, 2011, one hundred fourteen cash withdrawals were conducted from the Bank of Vernon account number XXXXX6206 (the “Bank Account”), held in the name of Claimant or Besty Lee Colburn. These withdrawals occurred at regular intervals, usually between one and three days apart. The vast majority of the cash withdrawals were for exactly $9,000.00, but all one hundred fourteen were less than $10,000.01. Twenty-seven of the cash withdrawals were facilitated by receiving cash back from a deposit. The only time a withdrawal was made for a value not divisible by one thousand was when it was cash back from a deposit. The withdrawals generally followed a pattern: (1) A withdrawal was made by receiving cash back from a deposit in an amount not divisible by one thousand, (2) several withdrawals were made by check in an amount divisible by one thousand, usually $9,000.00, and (3) the process repeated. Although records indicate that Claimant owns a scrap metal business in Vernon, Alabama, the Alabama Secretary of State's website contains no record of a business registered by or to Claimant.

On December 6, 2011, agents of the Internal Revenue Service, Criminal Investigations (“IRS–CI”) seized $25,846.96 and $6,000.00 (collectively, the “Defendant Funds”) from the Bank Account. The seizure of the Defendant Funds was pursuant to 31 U.S.C. § 5317, as property involved in or traceable to a structuring offense in violation of 31 U.S.C. § 5324.

After the Government filed the Verified Complaint for Forfeiture In Rem on May 11, 2012 (Doc. 1), Claimant timely filed a verified claim June 21, 2012, contesting the forfeiture action in accordance with Supplemental Rule G(5)(a). (Doc. 5.) Claimant next filed the motion to dismiss at issue here.

III. Standard

A claimant may move to dismiss a complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) if the plaintiff has failed to state a claim upon which relief may be granted. “When considering a motion to dismiss, all facts set forth in the plaintiff's complaint ‘are to be accepted as true and the court limits its consideration to the pleadings and exhibits attached thereto.’ ” Grossman v. Nationsbank, N.A., 225 F.3d 1228, 1231 (11th Cir.2000) (quoting GSW, Inc. v. Long County, 999 F.2d 1508, 1510 (11th Cir.1993)). All “reasonable inferences” are drawn in favor of the plaintiff. St. George v. Pinellas County, 285 F.3d 1334, 1337 (11th Cir.2002).

To survive a 12(b)(6) motion to dismiss for failure to state a claim, the complaint “does not need detailed factual allegations;” however, the “plaintiff's obligation to provide the ‘grounds' of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 545, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (internal citations omitted). Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Id.¹ The plaintiff must plead “enough facts to state a claim that is plausible on its face.” Id. at 570, 127 S.Ct. 1955. Unless a plaintiff has “nudged [his] claims across the line from conceivable to plausible,” the complaint “must be dismissed.” Id.

Notwithstanding the Rule 12(b)(6) standard, Supplemental Rule G(2) also governs the sufficiency of the complaint in civil forfeiture cases. Fed. Supp. R. G(8)(b)(ii).² Supplemental Rule G(2) requires a verified complaint stating the grounds for subject matter jurisdiction, in rem jurisdiction, and venue. Fed. Supp. R. G(2)(a) & (b). The complaint must also describe the property with reasonable particularity; if the property is tangible, allege its current location and its location when seizure occurred; and identify the statute enabling forfeiture. Fed. Supp. R. G(2)(c)-(e). Finally, the 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.” Fed. Supp. R. G(2)(f). “No complaint may be dismissed on the ground that the Government did not have adequate evidence at the time the complaint was filed to establish the forfeitability of the property.” 18 U.S.C. § 983(a)(3)(D); Fed. Supp. R. G(8)(b)(ii).

IV. Discussion

In moving to dismiss the verified complaint, Claimant makes three arguments. First, he contends that the Defendant Funds are not forfeitable because they are not the property involved in the offense of structuring. Second, he contends that the seizure of $6,000.00 from the Bank Account was executed without a warrant and those funds should be returned. Third, he contends that the complaint does not allege sufficient facts for the Government to prove by a preponderance of the evidence that the Defendant Funds are forfeitable.

Federal law requires domestic financial institutions to file a currency transaction report (“CTR”) for any cash transaction—or multiple cash transactions occurring during one business day—exceeding ten thousand dollars. 31 U.S.C. § 5313(a); 31 C.F.R. § 1010.311; 31 C.F.R. § 1010.313. Structuring is the act of conducting, or attempting to conduct, “one or more transactions in currency, in any amount, at one or more financial institutions, on one or more days, in any manner, for the purpose of evading the reporting requirements....” 31 C.F.R. § 1010.100(xx). Structuring, or attempting to structure, any transaction with a domestic financial institutions is prohibited. 31 U.S.C. § 5324(a)(3). “Any property involved in a violation of section 5313 ... or 5324 [of title 31, United States Code], and any property traceable to any such violation ... 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).

Section 981(a)(1)(A) of title 18, United States Code, applicable through section 5317 of title 31, United States Code, provides that “[a]ny property, real or personal, involved in a transaction or attempted transaction in violation of [section 5313 or 5324 of title 31, United States Code], or any property traceable to such property” is subject to forfeiture to the United States. Section 984(b) of title 18, United States Code, provides that “any identical property found in the same place or account as the property involved in the offense that is the basis for the forfeiture shall be subject to forfeiture under this section.” 18 U.S.C. § 984(b). This provision applies to any action for forfeiture brought by the Government in connection with any offense under section 5324 of title 31, United States Code. Id. § 984(a).

A. Forfeitability of the Defendant Funds

Claimant argues that—with structured withdrawals—the alleged structuring violation only involves the cash that is withdrawn from the Bank Account; thus, any funds remaining in the Bank Account, such as the Defendant Funds, are separate and distinct from any property involved in the offense of structuring and are not forfeitable under § 981. Furthermore, Claimant alleges that the Defendant Funds in the Bank Account are never found in the same account as the property involved in the offense of structuring, and are not forfeitable under § 984.

Assuming, arguendo, that funds remaining in an account after several structured withdrawals are not otherwise subject to forfeiture, this would not be dispositive of whether the Defendant Funds are forfeitable in this case. The Government is also alleging that Claimant continuously deposited funds into the Bank Account that were traceable under § 981 to the structurally withdrawn funds. Anything purchased with funds that are subject to forfeiture is also subject to forfeiture because it is traceable to those funds. See United States v. $125,938.62, 537 F.3d 1287, 1293 n. 2 (11th Cir.2008) (certificates of deposit subject to forfeiture when Government can demonstrate that the funds used to purchase them were derived from or were traceable to any proceeds obtained directly or indirectly from the violationtriggering forfeiture). See also United States v. $4,255,625.39, 762 F.2d 895, 905 (11th Cir.1985) (in finding that funds obtained through narcotics transactions but then exchanged for pesos are still forfeitable as traceable proceeds of narcotics transactions, court noted that pesos would likewise be subject to forfeiture as traceable to the narcotics transactions).

According to the Government, the Defendant Funds were recycled in this manner: (1) Claimant would deposit a check from a scrap metal company into the Bank Account for an amount over the $10,000.01 reporting threshold; (2) at the same time, Cla...