US v. REAL PROP. KNOWN AS 16899 SW GREEBRIER
| Decision Date | 17 September 1991 |
| Docket Number | Civ. No. 91-823-BE to 91-826-BE. |
| Citation | 774 F. Supp. 1267 |
| Parties | UNITED STATES of America, Plaintiff, v. REAL PROPERTY COMMONLY KNOWN AS 16899 S.W. GREENBRIER, LAKE OSWEGO, CLACKAMAS COUNTY, OREGON, in rem, Defendant. UNITED STATES of America, Plaintiff, v. REAL PROPERTY COMMONLY KNOWN AS 801 NORTHSHORE ROAD, LAKE OSWEGO, CLACKAMAS COUNTY, OREGON, in rem, Defendant. UNITED STATES of America, Plaintiff, v. REAL PROPERTY COMMONLY KNOWN AS 16990 ALDER CIRCLE, LAKE OSWEGO, CLACKAMAS COUNTY, OREGON, in rem, Defendant. UNITED STATES of America, Plaintiff, v. REAL PROPERTY COMMONLY KNOWN AS 706 McVEY AVENUE, LAKE OSWEGO, CLACKAMAS COUNTY, OREGON, in rem, Defendant. |
| Court | U.S. District Court — District of Oregon |
Charles H. Turner, U.S. Atty., D. Or., Craig J. Casey, Asst. U.S. Atty., Portland, Or., for plaintiff.
Norman Sepenuk, Douglas Stringer, Portland, Or., for claimants Gurs and Larson.
The claimants in these four consolidated civil forfeiture cases move to dismiss each of the complaints and for the return of the defendant properties. I granted the claimants' request for an expedited hearing, and heard oral argument on September 10, 1991. For the reasons set out below, the motions are denied.
These forfeiture actions arise out of a criminal investigation of George R. Gurs, a Lake Oswego businessman operating a company known as Great American Property Company. The United States contends that Gurs conducted a fraudulent real estate investment scheme, wherein Gurs made false statements to real estate investors from other states, inducing more than 170 investors to invest over $6,000,000 in Oregon real estate. No criminal charges have yet been filed against Gurs, but a grand jury investigation is in progress, and the government has stated that it expects to issue an indictment against Gurs for money laundering, mail fraud, and interstate transportation of monies obtained by fraud.
On August 14, 1991, the United States filed civil forfeiture complaints against four pieces of real property located in Lake Oswego, Oregon, and alleged to be involved in and the proceeds of Gurs' fraudulent scheme: 16899 S.W. Greenbrier Road, 801 Northshore Road, 16990 Alder Circle, and 706 McVey Avenue. Each of the defendants is a single family residence. The Greenbrier Road property is the home of Gurs, his wife Charette Larson, and their two children. Two of the other properties, Northshore and McVey, are rented at present, and Alder Circle was for sale at the time of seizure.
Warrants of arrest were issued for each of the defendant properties, and were executed on August 17, 1991. The government also obtained seizure warrants for three automobiles and two boats owned by Gurs. No forfeiture complaints have been initiated for the five items of personal property, but they were seized on the basis that they are forfeitable as property that was the proceeds of Gurs' scheme. All of the materials related to the forfeiture complaints, the arrest warrants and the seizure warrants were placed under seal, on the representation of the government that secrecy was required until the property was seized, so that Gurs could not remove or dispose of the property.
Most of the materials relating to the four civil forfeiture complaints were unsealed on the application of the United States after the seizures took place. The claimants are Gurs, Larson, the Charette S. Larson Revocable Trust, and the Charette S. Larson Irrevocable Trust. The claimants moved to unseal the affidavit of FBI Special Agent Robert E. Sauter, which provides the factual basis for the forfeiture complaints, and which was the only material item still remaining under seal. I granted that motion after a hearing on September 3, 1991.
Claimants move to dismiss the forfeiture complaints against the four pieces of real property on the grounds that the complaints fail to state a claim upon which relief can be granted. Alternately, the claimants move for a more definite statement on the grounds that the complaints are so lacking in specificity that the claimants cannot reasonably be required to frame a responsive pleading. Claimants further move for the return of the defendant properties under 28 U.S.C. § 2465 and Fed.R.Cr.Proc. 41(e). These motions do not concern the five items of personal property, which are being handled in administrative proceedings, and which are not before this court.
Claimants contend that: 1) the use of civil forfeiture to seize assets in aid of a criminal prosecution violates due process; 2) the seizure of the properties without prior notice and hearing violates due process; 3) the sole purpose for these forfeiture actions was to freeze assets in aid of a planned criminal prosecution without affording due process; 4) the complaints for forfeiture lack sufficient particularity; 5) the complaints fail to state a cause of action for money laundering forfeiture because neither transportation of stolen property nor mail fraud is a "specified unlawful activity" within the terms of 18 U.S.C. § 1956; 6) due to the constitutional violations, the complaints should be dismissed without leave to amend, and the property should be returned.
The government responds that: 1) claimants' motion for a more definite statement and their arguments regarding lack of particularity are without merit because the Sauter affidavit, which is incorporated in the complaints, is sufficiently particular; 2) the motions should be denied as premature because they concern matters outside the complaint which should be handled through a motion for summary judgment; 3) it was not necessary to conduct an adversary hearing before seizure because the arrest warrant procedure satisfies the requirements of due process; 4) the claimants misinterpret the statutes defining the offenses which may be the basis for a money laundering civil forfeiture; 5) the motion for return should be denied because 28 U.S.C. § 2465 mandates return only when there is no forfeitable interest, and Rule 41(e) is not applicable in civil forfeiture actions.
The government contends that these motions are premature, since they rely on disputed matters outside of the pleadings which should be dealt with in a motion for summary judgment. While it is true that claimants have submitted affidavits which refer to the merits, much of the factual matter relates to the request for an expedited hearing, and to suggestions of bad faith by the government which are not tied to any particular legal theory. The constitutional, statutory and pleading issues raised by the claimants can be determined under Fed.R.Civ.P. 12 without going beyond the pleadings, and are appropriate for an early decision on a motion to dismiss. In deciding these motions I will consider only the matters incorporated in the pleadings.
Claimants argue that despite the incorporation of the lengthy affidavit of Special Agent Sauter, the complaints lack the particularity required by the Supplemental Rules for Certain Admiralty and Maritime Claims. Rule E(2)(a) of the Supplemental Rules requires that a forfeiture complaint "shall state the circumstances from which the claim arises with such particularity that the defendant or claimant will be able, without moving for a more definite statement, to commence an investigation of the facts and to frame a responsive pleading." Where the complaint incorporates an affidavit, the facts in the affidavit may be used to meet the particularity requirement. United States v. One Parcel of Real Property, 900 F.2d 470 (1st Cir.1990).
The complaints set out the alleged fraudulent scheme in fairly conclusory terms, tracking the language of the money laundering statute, 18 U.S.C. § 1956, and alleging that Gurs committed the following violations which are covered by the money laundering statute: interstate transportation of stolen property in violation of 18 U.S.C. § 2314; mail fraud in violation of 18 U.S.C. § 1341; and money laundering in violation of 18 U.S.C. § 1956. The complaints allege that Gurs knew that his transactions were designed in whole or in part to conceal or disguise the nature, source, ownership or control of the proceeds of his unlawful activities.
The 75 page Sauter affidavit provides a great deal of factual detail regarding the basis for forfeiture, including the details of the fraudulent scheme which Gurs is alleged to have carried out, the sources of Gurs' funds, the use of fraudulently obtained funds to obtain the defendant properties, and the role of the defendant properties in the fraudulent scheme.
The claimants allege that even with the incorporation of the Sauter affidavit the complaint is inadequate because it fails to disclose the identity of each investor and property involved, and how each investor and property was affected by the fraudulent scheme. Although the Sauter affidavit is lengthy, it does not identify each of the 170 investors and 140 properties allegedly involved in the scheme.
However, the complaints and affidavit, taken together, are adequate to permit the claimants to investigate and frame a responsive pleading. The complaints indicate the nature of the fraudulent scheme alleged, and trace the funds that went into the defendant properties, providing the essential basis for forfeiture of these properties if the allegations of the fraudulent scheme are proved. In contrast, the complaint which was disapproved in United States v. $39,000 in Canadian Currency, 801 F.2d 1210, 1221-22 (10th Cir.1986), made only very vague references to a connection with narcotics transactions.
I find that the complaints meet the particularity requirement of Supplemental Rule E(2)(a).
Claimants contend that the seizure of the four properties violated their constitutional right to due process. This argument has two prongs. First, claimants...
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