United States v. Oil Tanker Bearing Int'l Mar. Org. (IMO) No. 9116512

• Decision Date: 07 August 2020
• Docket Number: Civil Action No. 19-1989 (JEB)
• Citation: 480 F.Supp.3d 39
• Parties: UNITED STATES of America, Plaintiff, v. OIL TANKER BEARING INTERNATIONAL MARITIME ORGANIZATION (IMO) NUMBER 9116512, a/k/a "Adrian Darya 1," f/k/a "Grace 1," et al., Defendants.
• Court: U.S. District Court — District of Columbia

480 F.Supp.3d 39

UNITED STATES of America, Plaintiff,

v.OIL TANKER BEARING INTERNATIONAL MARITIME ORGANIZATION (IMO) NUMBER 9116512, a/k/a "Adrian Darya 1," f/k/a "Grace 1," et al., Defendants.

Civil Action No. 19-1989 (JEB)

United States District Court, District of Columbia.

Signed August 7, 2020

Zia Mustafa Faruqui, U.S. Attorney's Office for the District of Columbia, Washington, DC, for Plaintiff.

MEMORANDUM OPINION

JAMES E. BOASBERG, United States District Judge

The United States brought this forfeiture action in rem against three separate properties: (1) Oil Tanker Bearing International Maritime Organization Number 9116412 (Defendant Property 1); (2) All Petroleum Which Is or Was Onboard Said Oil Tanker (Defendant Property 2); and (3) $999,950.00 at U.S. Bank 1 Associated with Paradise Global Trading LLC (Defendant Property 3). The Government alleges that "the Defendant Properties are foreign assets or sources of influence for the [Islamic Revolutionary Guard Corps], a designated terrorist organization, which has engaged in planning and perpetrating federal crimes of terrorism as defined in 18 U.S.C. § 2332b(g)(5), and are therefore subject to seizure and forfeiture under 18 U.S.C. § 981(a)(1)(G)(i)." ECF No. 28-1 (Pl. Mot. for Default Judgment) at 15. As the only known potential claimants have withdrawn their claim, and no one else has claimed an interest or otherwise defended the action, the Clerk of Court entered a default on May 22, 2020. See ECF No. 27 (Clerk's Entry of Default). Plaintiff has now moved for default judgment pursuant to Federal Rule of Civil Procedure 55(b)(2). As the United States has sufficiently demonstrated that the allegations in its Complaint warrant such judgment, the Court will grant the Motion.

I. Background

The IRGC " ‘is a non-traditional instrumentality of Iran’ serving as ‘the military arm of a kind of shadow government answering directly to the Ayatollah and the mullahs who hold power in Iran.’ " Christie v. Islamic Republic of Iran, No. 19-1289, 2020 WL 3606273, at *3 (D.D.C. July 2, 2020) (quoting Blais v. Islamic Republic of Iran, 459 F. Supp. 2d 40, 47 (D.D.C. 2006) ).

In 2007, the Department of State and the Department of the Treasury designated the IRGC pursuant to Executive Order No. 13382, see ECF No. 14 (Second Amended Complaint), ¶ 20, which authorizes relevant agencies to designate "any individual or entity as having engaged ‘in activities or transactions that have materially contributed to, or pose a risk of materially contributing to, the proliferation of weapons of mass destruction or their means of delivery.’ " In re Grand Jury Investigation of Possible Violations of 18 U.S.C. § 1956 and 50 U.S.C. § 1705, 381 F. Supp. 3d 37, 46 (D.D.C. 2019) (quoting Blocking Property of Weapons of Mass Destruction Proliferators and Their Supporters, Exec. Order 13382, 70 Fed. Reg. 38567 (July 1, 2005) ). Later in 2019, both the President and the Secretary of State designated the IRGC a Foreign Terrorist Organization. See Pl. Mot. for DJ at 2.

The Government contends that petroleum serves as a major source of influence for the IRGC. It allegedly "maintain[s] extensive economic interests in the oil industry[,] and the profits from these activities support ... the proliferation of WMD and their means of delivery, support for terrorism, and a variety of human rights abuses." Id. at 3. Reflecting the IRGC's influence over this industry, the Department of Treasury's Office of Foreign Assets Control (OFAC), charged with administering and enforcing economic and trade sanctions, described the National Iranian Oil Company (NIOC) as "an agent or affiliate of the IRGC." Id. OFAC concluded that in spring 2019 alone, one IRGC-led network employed more than a dozen vessels to transport nearly 10 million barrels of crude oil, which, taken collectively, sold for more than half a billion dollars. Id. at 4.

In July 2019, Defendant Property 1, a large oil tanker capable of carrying approximately 290,000 metric tons of crude oil, and Defendant Property 2, approximately 2.1 million barrels of crude oil aboard, were detained by Gibraltarian authorities for sanctions violations, which led to intelligence revealing that the properties were destined for Port Banias, Syria. Id. at 4, 6. After the property was seized, the IRGC's Deputy Commander, as well as the head of the IRGC's navy, both publicly admitted that they belonged to the IRGC, and in August, OFAC identified them as "blocked properties[ ] because of their nexus to IRGC-[Qods Force]." Id. at 6, 20.

The Government alleges that Defendant Properties were involved in a scheme "to support the IRGC's sanction-evading petroleum shipments to destinations including Syria, the profits of which support the IRGC's full range of nefarious activities." Id. at 17. Conspiring in the scheme was Iships Management, the manager of the tanker. Id. at 4–5. Iships was part of an assembly of companies named the Avantgarde Group. Id. at 5. That entity received payments from Mohammad Saeed Al Aqili and the Al Aqili Group, both designated by OFAC in 2014 for assisting the Iranian regime in selling oil in evasion of U.S. trade and economic sanctions. Id. OFAC noted in the designation that the Al Aqili Group arranged oil sales for the IRGC and that Iships was affiliated with the NIOC. Id. In addition, a Brigadier General in the IRGC, who was also acting as the Minister of Petroleum, facilitated payments involving the Defendant Properties. Id.

The Government further contends that the Al Aqili and Avantgarde Group used Paradise Global, a U.A.E.-based front company, as a payment intermediary to launder money as part of the above-described scheme. Id. at 6–7. For support, it points to the fact that Paradise Global is partially owned by a member of the Al Aqili Group, as well as to several instances of Paradise Global's coordinating payments with other Avantgarde Group companies, including for the tanker. Id. at 7. Two such instances occurred in February 2015, when an Oman-based front company wired $699,975 to Paradise Global, plus an additional $299,975 the following day. Id. at 7. OFAC blocked these funds while they transited through a U.S. correspondent bank account. Id. Together they compose Defendant Property 3. Id.

In light of these allegations, the Government now seeks forfeiture of Defendant Properties and moves for default judgment.

II. Legal Standard

"The determination of whether a default judgment is appropriate is ‘committed to the sound discretion of the trial court.’ " Lu v. Lezell, No. 11-1815, 2013 WL 12183952, at *1 (D.D.C. July 19, 2013) (quoting Jackson v. Beech, 636 F.2d 831, 835 (D.C. Cir. 1980) ). A court may enter default judgment when the "party against whom a judgment ... is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise." Fed. R. Civ. P. 55(a). "This form of relief is no less appropriate when the defendant in question is property," and "unless a claimant properly intervenes to raise defenses to its forfeiture, the defendant property is deemed to have ‘failed to plead or otherwise defend’ against the allegations, and the Clerk of Court must enter default." United States v. All Assets, 330 F. Supp. 3d 150, 156 (D.D.C. 2018) (quoting Fed. R. Civ. P. 55(a) ).

Once default is entered, the defendant "is deemed to admit every well-pleaded allegation in the complaint." Adkins v. Teseo, 180 F. Supp. 2d 15, 17 (D.D.C. 2001) ; see Trans World Airlines, Inc. v. Hughes, 449 F.2d 51, 63 (2d Cir. 1971), rev'd on other grounds sub nom. Hughes Tool Co. v. Trans World Airlines, Inc., 409 U.S. 363, 93 S.Ct. 647, 34 L.Ed.2d 577 (1973) ; see also 10A Wright & Miller, Fed. Prac. & Proc. Civ. § 2688.1 (4th ed.) (defaulting "defendant has no further standing to contest the factual allegations of plaintiff's claim for relief"). Nevertheless, "[m]odern courts are ... reluctant to enter and enforce judgments unwarranted by the facts," Jackson, 636 F.2d at 835, and "a district court may still deny an application for default judgment where the allegations of the complaint, even if true, are legally insufficient to make out a claim." Gutierrez v. Berg Contracting, Inc., No. 19-3044, 2000 WL 331721, at *2 (D.D.C. Mar. 20, 2000) ; see also United States v. $1,0171,251.44 of Funds Associated with Mingzheng Int'l Trading Ltd., No. 17-1166, 2018 WL 3949962, at *3 (D.D.C. June 29, 2018) ("the defendant[’s] default notwithstanding, the plaintiff is entitled to a default judgement only if the complaint states a claim for relief") (alteration in original) (quoting Jackson v. Corr. Corp. of Am., 564 F. Supp. 2d 22, 26–27 (D.D.C. 2008) ).

III. Analysis

Before looking at the allegations in the Complaint, the Court examines its jurisdiction and the sufficiency of notice to potential claimants.

A. Jurisdiction

As a threshold matter, this Court has subject-matter jurisdiction pursuant to 28 U.S.C. § 1355(a), which provides that district courts "have original jurisdiction ... of any action or proceeding for ... forfeiture, pecuniary or otherwise, incurred under any Act of Congress." It also has jurisdiction under 28 U.S.C. § 1345, which provides the district courts with jurisdiction over proceedings commenced by the United States.

This Court, furthermore, does not need constructive or actual possession in order to have in rem jurisdiction over Defendant Property 1 and Defendant Property 2, which are located overseas. See United States v. All Funds In Acct. in Banco Espanol de Credito, 295 F.3d 23, 27 (D.C. Cir. 2002) ("Congress intended the District Court for the District of Columbia ... to have jurisdiction to order the forfeiture of property located in foreign countries"); see also United States v. Approximately $1.67 Million In Cash, 513 F.3d 991, 998 (9th Cir. 2008) ("We find ourselves in agreement with the analysis of the D.C. and Third Circuits[ ] ... that Congress intended § 1355 to lodge jurisdiction in the district courts without...