Opinion
Case No.: SACV 17–00954–CJC(JCGx)
01-04-2018
UNITED STATES of America, Plaintiff, v. $295,726.42 IN ACCOUNT FUNDS SEIZED, et al., Defendant.
Frank D. Kortum, AUSA—Office of U.S. Attorney Asset Forfeiture Section, Los Angeles, CA, for Plaintiff.
Frank D. Kortum, AUSA—Office of U.S. Attorney Asset Forfeiture Section, Los Angeles, CA, for Plaintiff.
ORDER GRANTING THE GOVERNMENT's MOTION TO STRIKE CLAIM FOR FAILURE TO SUFFICIENTLY RESPOND TO SPECIAL INTERROGATORY NO. 3
CORMAC J. CARNEY, UNITED STATES DISTRICT JUDGE
I. INTRODUCTION AND BACKGROUND
Before the Court is the Government's motion to strike claim based on claimant's incomplete and evasive response to Special Interrogatory Number 3. (Dkt. 26 [hereinafter, "Mot."].) For the following reasons, the motion is GRANTED.
Having read and considered the papers presented by the parties, the Court finds this matter appropriate for disposition without a hearing. See Fed. R. Civ. P. 78 ; Local Rule 7–15. Accordingly, the hearing set for January 8, 2018, at 1:30 p.m. is hereby vacated and off calendar.
The Government initiated this civil forfeiture action against the defendant currency on June 2, 2017, (Dkt. 1), and Solomon Jalloh filed a motion to claim the defendant currency on September 11, 2017, (Dkt. 20). On September 19, 2017, the Government served Mr. Jalloh with Special Interrogatories pursuant to Rule G(6) of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions. (Mot. at 5, Ex. A.) The Special Interrogatories include questions regarding the claimant's identity, criminal history, and the relationship between the claimant and the claimed asset. (Mot. Ex. A.) On October 6, 2017, the Government filed an opposition to Mr. Jalloh's motion. (Dkt. 22.) In its opposition, the Government argued, inter alia , that Mr. Jalloh's motion was premature because he had not yet responded to the Government's Special Interrogatories. (Id. at 4.) On October 11, 2017, the Court received Mr. Jalloh's responses to the Government's Special Interrogatories. (Dkt. 23.) Special Interrogatory Number 3 asked the claimant to:
State the extent and describe with particularity the nature of your interest in the defendant assets claimed by you in this action, and describe in detail how you acquired that interest, including (but not limited to), the following information:
a. The date(s), time, place and manner in which the defendant assets (or any portion thereof) claimed by you were obtained, including the names, address and telephone numbers of the person(s) from whom the defendant assets were obtained.
b. A detailed description of the circumstances of each transaction by which you acquired or obtained any interest in the defendant assets.
c. The reason(s) the defendant assets were obtained, and witnesses, including the names, addresses, and telephone numbers of such witnesses, to each and every transaction by which the defendant assets were obtained.
d. A description of each and every document evidencing, recording, facilitating, or otherwise relating to any transaction identified in response to Interrogatory No. 3(a) through (c) above.
(Mot. Ex. A at 27–28.) In his response to Special Interrogatory Number 3, Mr. Jalloh stated that:
The Claimant is the Owner, Account Signatory, Principal of the Entity in which the account was held under, the subject Account Beneficiary/ Custodian and Guarantor of the Defendant and the accounts thereof. The Claimant established the Defendant accounts in the name of ZION CAPITAL VENTURES, LLP at Interactive Brokers with account number ending in '6871 and Citibank with account number ending in '0256.
a. The Account of Defendant as it relates to Interactive Brokers was established by Claimant on or around November 1, 2012 with SOLOMON JALLOH as the signatory for the account. The Account of Defendant as it relates to Citibank was established by Claimant on or around May 14, 2012 with SOLOMON JALLOH as the signatory for the account. Claimant is the trustee of ZION CAPITAL VENTURES, LLP.
b. The Defendant assets are the equivalent of Claimant, as the Claimant is the original owner and account signatory for which the assets were established in November 1, 2012 through August 26, 2013 within Citibank and Interactive Brokers. Any and all interest related to the subject Interactive Brokers and Citibank accounts are predicated on its origin of the Claimant who is the owner of the assets and accounts of the assets.
c. The reason the Defendant assets were obtained by Claimant because the Claimant is the owner and account signatory from which the assets were seized. Citibank and Interactive Brokers are the witnesses to the fact that the accounts were established and the assets were obtained through legal assets held by Claimant.
d. Interactive Brokers and Citibank Account opening application and documents, Activity statements, securities sold thereof are evidence, records, and facilitation relating to any transaction identified in response to Interrogatory No. 3(a) through (c) above.
(Dkt. 23 at 4.)
The Government sent Mr. Jalloh a letter on October 12, 2017 to request in writing that Mr. Jalloh provide an adequate answer to Special Interrogatory Number 3. (Mot. Ex. B; Dkt. 26–1 [Declaration of Frank D. Kortum, hereinafter "Kortum Decl."] ¶ 3.) On October 16, 2017, the Court directed the Government to file a supplemental opposition to Mr. Jalloh's motion in light of his responses. (Dkt. 25.) The Government sent Mr. Jalloh another letter on October 17, 2017, to again request in writing that Mr. Jalloh provide an adequate answer to Special Interrogatory Number 3. (Mot. Ex. C; Kortum Decl. ¶ 3.) As of October 25, 2017, Mr. Jalloh had not responded to either letter. (Kortum Decl. ¶ 3.) The Government then filed this motion on October 30, 2017. (Mot.)
II. DISCUSSION
In order to contest a forfeiture, a claimant must demonstrate both statutory and Article III standing. United States v. $1,181,895.00 in U.S. Currency , No. CV 14-03973-CBM, 2015 WL 631394, at *2 (C.D. Cal. Feb. 12, 2015). "A claimant bears the burden of establishing Article III standing, the threshold function of which is to ensure that the Government is put to its proof only where someone acting with a legitimate interest contests the forfeiture .... A claimant must therefore demonstrate that he has a sufficient interest in the property to create a case or controversy." United States v. $41,475.00 in U.S. Currency , No. CV 15-00696-R(SHSX), 2016 WL 337380, at *1 (C.D. Cal. Jan. 6, 2016) ; United States v. Real Property Located at 5208 Los Franciscos Way , 385 F.3d 1187, 1191 (9th Cir. 2004). To collect evidence on the issue of standing, Rule G(6) "broadly allows the government to collect information regarding the claimant's ‘relationship to the defendant property’ " through the use of special interrogatories. United States v. $133,420.00 in U.S. Currency , 672 F.3d 629, 642 (9th Cir. 2012) (concluding that claimants in civil forfeiture actions have standing when they have a "colorable interest in the property"); see also Supp. R. G(6). At any time before trial, the Government may move to strike the claimant's claim or answer if the claimant has not responded to special interrogatories propounded pursuant to Rule G(6)(a), or if the claimant lacks standing. $133,420.00 in U.S. Currency , 672 F.3d at 635 (citing Supp. R. G(8)(c)).
"Rule G(8)(c)(i) provides that the government may move to strike a claim: (A) for failing to comply with Rule G(5) or (6), or (B) because the claimant lacks standing." United States v. Real Prop. Located at 17 Coon Creek Rd., Hawkins Bar California, Trinity Cty. ("17 Coon Creek Rd.") , 787 F.3d 968, 973 (9th Cir. 2015) ; see United States v. $333,806.93 in Proceeds , No. CV 05-2556 DOC ANX, 2010 WL 3733932, at *1 (C.D. Cal. Aug. 30, 2010) (striking claim under "strict compliance" standard for failure to respond to Special Interrogatories served pursuant to Supplemental Rule G(6)); (citing Supp. R. G(8)(c)(i)(A)). "The Advisory Committee Notes to the Supplemental Rules provide that the sufficiency of a claimant's responses to special interrogatories under Rule G(6) should be evaluated using a ‘more demanding’ standard than that employed to determine eligibility for discovery sanctions under Rule 37 of the Federal Rules of Civil Procedure." Id. (citing Adv. Comm. Note to Supp. R. G(8)(c)(i)(A). Rule 37 states that "evasive or incomplete disclosure, answer, or response must be treated as a failure to disclose, answer, or respond." Fed. R. Civ. P. 37(a)(4).
"Although Rule G(8) authorizes the government to bring a motion to strike on these bases, the Advisory Committee Notes to Rule G(8) caution courts that when a motion to strike is brought pursuant to Rule G(8)(c)(i)(A), ‘the court should strike a claim or answer only if satisfied that an opportunity should not be afforded to cure the defects under Rule 15. Not every failure to respond to subdivision (6) interrogatories warrants an order striking the claim.’ " 17 Coon Creek Rd. , 787 F.3d at 973. "Accordingly, courts typically afford claimants one or even several opportunities to cure defective Rule G(6) responses, except where the circumstances indicate that it would be futile to do so or reflect persistent discovery abuses." Id. (citations omitted).
Special Interrogatory Number 3 is relevant to the issue of standing because it seeks information concerning Mr. Jalloh's interest in the seized assets and documentation supporting Mr. Jalloh's potential interest, the identification of sources from which Mr. Jalloh claims the assets were derived and of all persons having knowledge of the interest, and the identification of any facts establishing Mr. Jalloh's ownership or any other person's interest in the assets. The Government argues that Mr. Jalloh has not provided a complete and full answer to Special Interrogatory Number 3. The Court agrees.
To the extent that Mr. Jalloh argues that the Court should dismiss the Government's forfeiture complaint, (Dkt. 29 at 6, 12), this request is premature as the Court must determine whether Mr. Jalloh has standing before it can address Mr. Jalloh's request to dismiss the complaint. See United States v. Real Prop. Located at 5208 Los Franciscos Way, Los Angeles, Cal. , 385 F.3d 1187, 1193 (9th Cir. 2004) (party who lacked standing had "no legal basis upon which to object to the forfeiture").
In his response to Special Interrogatory Number 3, Mr. Jalloh merely states that he is the owner of the defendant assets. "This terse, conclusory response does not qualify as a description of the ‘full circumstances’ under which [his] claim in the assets arose." $ 333,806.93 in Proceeds , 2010 WL 3733932 at *3 ; see also United States v. $41,475.00 in U.S. Currency , No. CV 15-00696-R(SHSX), 2016 WL 337380, at *2 (C.D. Cal. Jan. 6, 2016) (holding that the "[c]laimant's conclusory statements are not sufficient to establish his standing"). "[A] claimant seeking to establish standing on the basis of a possessory interest must explain the circumstances of that possession." $133,420.00 in U.S. Currency , 672 F.3d at 643. Mr. Jalloh provides no information regarding how he came into possession of these assets. Additionally, Mr. Jalloh's identification of "Citibank and Interactive Brokers" as "witnesses" evaded his obligation to identify who or what were the source of his funds. This is particularly striking given Mr. Jalloh did not mention the witnesses who testified at his related criminal trial that they had invested money with him. (Mot. at 15.) See generally Klein–Becker USA, LLC v. Englert , No. 206CV00378-TS-DON, 2007 WL 677707 at *3 (D. Utah Feb. 28, 2007) (response that "restat[ed] the scope of the interrogatory" was "not responsive"); E.E.O.C. v. Bok Financial Corp. , No. 11-1132 RB/LFG, 2013 WL 12047029 at *13 (D.N.M. Jan. 25, 2013) (party "evade[d]" question by providing a response that could be construed as an answer to "some other question"). Mr. Jalloh's responses to Special Interrogatory Number 3 add "nothing new or different" to what is already set forth in his claim. See United States v. Funds in the Amount of $574,840 , No. 11-cv-07803, 2015 WL 1537577 at *5 (N.D. Ill. March 31, 2015). Mr. Jalloh's responses are therefore evasive and incomplete.
While the Ninth Circuit held in $133,420.00 in U.S. Currency that "[a]t the motion to dismiss stage, a claimant's unequivocal assertion of an ownership interest in the property is sufficient by itself to establish standing," it also held in that same case that the claimant "impaired the truth-seeking function of the judicial process" by failing to provide a Special Interrogatory response that addressed the "claimant's identity and relationship to the defendant property." $133,420.00 in U.S. Currency , 672 F.3d 629, 638, 642. The Ninth Circuit affirmed the district court's decision to strike the claimant's Special Interrogatory response. Id. at 642. The court reasoned that the claimant's assertion of his ownership interest without providing the circumstances under which he obtained any interest in the defendant asset "frustrate[ed] the government's attempts to test the veracity of his claim of ownership" through the Special Interrogatories. Id. Moreover, the court rejected the argument Mr. Jalloh makes here–that Supplemental Rule G(6)(a) "does not allow the government to pose any questions about the circumstances in which the claimant obtained an interest in the property." Id. The court rejected this narrow interpretation and reaffirmed that Rule G(6)(a) "broadly allows the government to collect information regarding the claimant's ‘relationship to the defendant property.’ " Id.
Mr. Jalloh cites United States v. $154,853 , 744 F.3d 559 (8th Cir. 2014) for the proposition that if a claimant has standing to contest the forfeiture, "then special interrogatories [are] unnecessary to determine [the claimant's] standing as to that currency. Thus the district court abused its discretion in striking [the claimant's verified claim]... for failure to adequately respond to the special interrogatories when no special interrogatories were necessary to determine standing." 744 F.3d at 564. However, the Ninth Circuit rejected this theory. See $133,420.00 in U.S. Currency , 672 F.3d at 642–43 ; United States v. $209,815 in U.S. Currency , No. C 14-0780 SC, 2015 WL 537805, at *2 (N.D. Cal. Feb. 9, 2015) (recognizing the Ninth Circuit's contrary view to the Eighth Circuit in $209,815 in U.S. Currency ).
Mr. Jalloh argues that a Court order requiring him to provide further responses to the Special Interrogatories would violate his Fifth Amendment right against self-incrimination. (Dkt. 29 at 2–3.) The Government argues that Mr. Jalloh has waived his Fifth Amendment privilege. (Dkt. 32 at 4.) The Court agrees. While "[t]he privilege against self-incrimination protects an individual from being forced to provide information that might establish a direct link in a chain of evidence leading to his conviction [citation omitted] ... [i]t may be waived if it is not affirmatively invoked." United States v. Stringer , 535 F.3d 929, 938 (9th Cir. 2008). Mr. Jalloh's "failure to invoke the privilege against self-incrimination" when he provided his initial responses to the Special Interrogatories, which constitutes evidence in the form of a sworn statement, "waive[d] [his] later claim of privilege." Id. (citing United States v. Unruh , 855 F.2d 1363, 1374 (9th Cir. 1987) (holding that a defendant waived the privilege when, after being advised of his right not to answer questions, he proceeded to testify in a civil deposition).
The Government requests that the Court issue a conditional order that would give Mr. Jalloh an additional thirty days after the issuance of this order to provide a full and complete response Special Interrogatory Number 3. (Mot. at 16–19.) The Court finds this a fair and reasonable request.
III. CONCLUSION
For the foregoing reasons, the Government's motion to strike claim based on claimant's incomplete and evasive response to Special Interrogatory Number 3 is GRANTED . The Court hereby issues a conditional order that Mr. Jalloh's claim be stricken unless within thirty days of this order Mr. Jalloh serves full and complete narrative answers to the Government's Special Interrogatory Number 3 . Mr. Jalloh's deadline to respond is February 5, 2018 . The Government is DIRECTED to file a Notice of Compliance with the Court if and when Mr. Jalloh serves his responses or if Mr. Jalloh fails to do so, a notice of his failure. If Mr. Jalloh fails to comply within thirty days, his claim will be stricken automatically on February 5, 2018, or as soon as the Government notifies the Court of his failure thereafter.
Mr. Jalloh requests that the Government's motion to strike be "denied or suspended until the final outcome of the Evidentiary Record and Hearing." (Dkt. 29.) As this hearing was held on November 16, 2017, this request is DENIED as moot.
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