United States v. Sum of $70,990,605

• Decision Date: 05 November 2013
• Docket Number: Civil Action No. 12–1905 (RWR)
• Parties: United States of America, Plaintiff, v. Sum of $70,990,605, et al., Defendants.
• Court: U.S. District Court — District of Columbia

991 F.Supp.2d 144

United States of America, Plaintiff,

v.Sum of $70,990,605, et al., Defendants.

Civil Action No. 12–1905 (RWR)

United States District Court, District of Columbia.

November 5, 2013

Elizabeth Ann Aloi, U.S. Department of Justice, Washington, DC, for Plaintiff.

Bryant S. Banes, Neel, Hooper & Banes P.C., Houston, TX, James Wallace Porter, III, Bradley Arant Boult Cummings LLP, Andrew C. Bernasconi, Reed Smith LLP, Washington, DC, for Defendants.

MEMORANDUM OPINION AND ORDER

RICHARD W. ROBERTS, Chief Judge

Plaintiff United States brings this civil forfeiture in rem action alleging that the defendant funds—approximately $61.3 million in three different banks—are the proceeds of a wire fraud and subject to seizure under 18 U.S.C. §§ 983 and 984. Claimants Hikmat Shadman Logistics Services Co., Hikmat Shadman General Trading, LLC, Faizy Elham Brothers, Ltd., Everest Faizy Logistics Services, Hikmatullah Shadman, Najibullah, and Rohullah move under § 983(f) for immediate release of the seized funds and additional properties. The United States also moves for leave to file a surreply. Because the claimants have failed to demonstrate that they are entitled in this action to release of their seized funds or additional properties, their motion will be denied. Because a surreply is unjustified, the United States' motion also will be denied.

BACKGROUND

The following facts are alleged by the government in its Second Amended Verified Complaint (“Second Amended Complaint”), unless otherwise noted.

The United States filed this civil forfeiture action and secured seizure warrants upon a finding of probable cause that the defendant funds were the proceeds of a fraud. The United States alleges that Hikmatullah Shadman, as a subcontractor and owner of Hikmat Shadman Logistics Services Company, “conspired to obtain payments from the United States for the transportation of military supplies in Afghanistan through the illegal and fraudulent use of the wires ... [by making] bribe payments, fraudulently inflat[ing] prices, and caus [ing] the United States to be invoiced for and to make payments of $77,920,605 to two bank accounts in Afghanistan.” 2d Am. Compl. at 6. After the proceeds of the contracts were deposited into an account at Afghanistan International Bank held by Hikmat Shadman LogisticsServices Company, the funds were transferred in and out of various accounts in the names of Shadman's brothers—Najibullah (also known as Yaser Elham) and Rohullah, see Claimants' Mem. for Immediate Release of Seized Property Pursuant to 18 U.S.C. § 983(f) ( “Claimants' Mem.”) at 5—as well as accounts in the name of their companies, Hikmat Shadman Logistics Services, Hekmat Shadman General Trading LLC, Faizy Elham Brothers, Ltd., Everest Faizy Logistics Services, and Yaser Elham at Afghanistan International Bank, Bank Alfalah, and Emirates NBD Bank. In total, the United States has restrained $63,049,141, with $52,949,141 coming from accounts in Bank Alfalah and Emirates NBD Bank, and $10.1 million coming from Afghanistan International Bank under the seizure warrants.

On August 27, 2013, Shadman, Najibullah, and Rohullah filed a verified claim and statement of interest in the seized property, asserting that they are the owners of the seized funds. Verified Claim and Statement of Interest or Right in Property Subject to Forfeiture In Rem (“Verified Claim”) at 8. They made these claims both individually and on behalf of their companies. Id. at 14–16. It appears that all the accounts are held in the name of the companies, rather than the individuals, except for one of the Emirates NBD Bank accounts. Id. at 8–12.

The claimants now move under 18 U.S.C. § 983(f) to have the funds released. They argue that the funds should be released because the “improper seizure” has caused “extreme and substantial hardships” which “outweigh any risk to the Government of the dissipation of the seized property.” ¹ Claimants' Mem. at 24. The United States argues that the claimants are not entitled have the seized currency released under § 983(f)(1)(E) and § 983(f)(8), provisions governing assets of a business which has been seized, since this action did not seize a business. United States' Opp'n to Claimants' Mot. for Immediate Release of Seized Property Pursuant to 18 U.S.C. § 983(f) (“Opp'n”) at 1. Additionally, the United States argues that the claimants have not established the conditions outlined in § 983(f)(1)(A)-(E) entitling claimants to release, such as “sufficient contacts with the community to ensure that the property will be available at trial as required for release of seized assets,” and “hardship by the continued restraint of the funds.” Id. at 2. Finally, the United States argues that the claimants failed to show “that such purported hardship outweighs the risk to the United States during the pendency of the forfeiture proceedings.” Id. Claimants filed a reply, Reply to the U.S.'s Opp'n to Claimants' Mot. for Immediate Release of Seized Property Pursuant to 18 U.S.C. § 983(f) (“Claimants' Reply”) to which the United States seeks leave to file a surreply to “respond[ ] to two of the material omissions and misstatements” made by the claimants. United States' Motion for Leave to File Surreply (“United States' Mot.”) at 1. The claimants contend that leave should not be granted because they raised the issues to which the United States wants to reply in their original petition. Claimants Opposition to United States' Motion for Leave to File Surreply (“Claimants' Opp'n”) at 7.

DISCUSSION

Under § 983(f), a claimant may request release of the seized property by filing a petition that sets forth “the basis on which the requirements” for release are met. 18 U.S.C. § 983(f)(3)(B)(i). “[I]f a claimant fails to establish any one of the five criteria, its motion for the release of property must be denied.” United States v. Value of Certain E–Metal Accounts at E–Gold Ltd., No. ELH–11–01530, 2013 WL 5664678, at *2 (D.Md. Oct. 17, 2013) (citing United States v. Undetermined Amount of U.S. Currency, 376 F.3d 260, 264 (4th Cir.2004)). A court is authorized to release the property only if the claimant proves that

(A) the claimant has a possessory interest in the property;

(B) the claimant has sufficient ties to the community to provide assurance that the property will be available at the time of the trial;

(C) the continued possession by the Government pending the final disposition of forfeiture proceedings will cause substantial hardship to the claimant, such as preventing the functioning of a business, preventing an individual from working, or leaving an individual homeless;

(D) the claimant's likely hardship from the continued possession by the Government of the seized property outweighs the risk that the property will be destroyed, damaged, lost, concealed, or transferred if it is returned to the claimant during the pendency of the proceeding; and

(E) none of the conditions set forth in paragraph (8) applies.

18 U.S.C. § 983(f)(1)(A)—(E). In turn, paragraph (8) prohibits release of the seized property if it “is contraband, currency, or other monetary instrument, or electronic funds unless such currency or other monetary instrument or electronic funds constitutes the assets of a legitimate business which has been seized.” 18 U.S.C. § 983(f)(8).

I. PARAGRAPH (8) CONDITIONS

Under § 983(f)(8), the court cannot release electronic funds unless they are “the assets of a legitimate business which has been seized.” Id. Seizure of electronic fund assets of a business that has not itself been seized in a forfeiture action does not trigger the provision permitting a court to release the electronic funds; rather, the prerequisite under paragraph (8) is the seizure of the business itself in the forfeiture action and not seizure of the assets of the business. See United States v. $159,040.00 in U.S. Currency, Civil Action No. 05–2404(RBW), slip op. at 5 (D.D.C. Aug. 1, 2006) (unpublished order denying the motion for the return of seized property) (“The plain language of the statute would seem to suggest that currency may only be recovered when a legitimate business has been seized.”) ²; see also United States v. Contents of Account No. 4000393243, No. C–1–01–729, 2010 WL 3398142, at *1 (S.D.Ohio Jan. 2, 2010) (“In this exception, a legitimate business is singular, assets is plural, and has been seized is singular; therefore, has been seized grammatically must refer to a legitimate business, not assets.”). Furthermore, courts have rejected the notion that seizure of the assets of a business is synonymous with the seizure of the business. See, e.g., United States v. 8 Gilcrease Lane, Quincy Fla. 32351, 587 F.Supp.2d 133, 140–41 (D.D.C. 2008) (“Seizure of currency is not the same as seizure of a business.”); In re Seizure Warrants Issued March 27, 2008, and April 23, 2008, 593 F.Supp.2d 892, 894 (N.D.W.Va.2008) (finding that, despite petitioner's request that the court decide that “seizure of the currency is tantamount to the seizure of the business,” “[t]here appear to be no reported cases in which such a doctrine was applied”).

Here, no business has been seized. All the defendant properties are funds within bank accounts. See, e.g., Contents of Account No. 4000393243, 2010 WL 3398142, at *1 (“[T]he government has not sought to seize any business, legitimate or otherwise. The Defendants are all bank accounts. By its plain language, then, § 983(f) is inapplicable.”).

In addition to the funds seized under the warrants in rem, the claimants seek release of property “not identified in the Government's Second Amended Verified Complaint,” Claimants' Mot. at 8, and argue that “the United States Government ..., regardless of which agency within the Government, has seized the entire business assets and records (not just funds) of Claimants Hikmat Shadman Logistics Services Company ... and has seized over $61 Million of Claimants' monetary funds.” Claimants'...