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United States v. Seventy-Nine Thousand Three Hundred Twenty-One Dollars in United States Currency

November 7, 2007


The opinion of the court was delivered by: Reggie B. Walton United States District Judge


On July 6, 2005, the plaintiff, the United States of America ("government"), filed the civil forfeiture in rem complaint in this matter against $79,321 in United States currency that was seized from luggage allegedly belonging to Santos Efrain Flores ("Flores"). Thereafter, on August 30, 2006, the government filed an Amended Complaint for Forfeiture In Rem ("Compl.") against the same property. In its amended complaint, the government alleges that the defendant currency is subject to forfeiture pursuant to: (1) 31 U.S.C. § 5317(c)(2) (2000) because it was the subject of a Report of International Transportation of Currency or Monetary Instruments ("CMIR") that contained a material omission or misstatement of fact in violation of 31 U.S.C. § 5324(c)(2) (2000), Compl. ¶ 21; (2) "31 U.S.C. §5332(c) (2000), as property involved in or traceable to a violation of 31 U.S.C. § 5332(a),"Compl. ¶ 23; and (3) 18 U.S.C. §981(a)(1)(A) (2000) because it was involved in a transaction or attempted transaction in violation of 18 U.S.C. § 1960 (2000), Compl. ¶ 25. On September 8, 2006, Alberto Montoya ("claimant") filed a Verified Statement of Right or Interest alleging that he is the rightful owner of $34,600 of the defendant currency. Verified Statement of Right or Interest. Currently before the Court is the claimant's motion to dismiss the government's complaint for in rem forfeiture pursuant to Federal Rule of Civil Procedure 12(b)(6); Federal Rule of Civil Procedure Supplemental Rule E(2) For Admiralty and Maritime Claims and Asset Forfeiture Actions ("Supplemental Rule E(2)(a)") and Federal Rule of Civil Procedure Supplemental Rule C(2) For Admiralty and Maritime Claims and Asset Forfeiture Actions. Claimant's Motion to Dismiss Government's Verified Complaint for Forfeiture In Rem ("Claimant Mot.").*fn1 Specifically, the claimant alleges that the government's Amended Complaint must be dismissed: (1) for failure to properly allege the basis for forfeiture under 31 U.S.C. §§ 5316, 5317, 5324, 5332 and 18 U.S.C. §§ 981 because the government has not alleged the requisite knowledge and intent to violate such provisions; (2) for failure to properly allege knowledge of the facts underlying a violation of 18 U.S.C. § 1960; (3) on the grounds that the government's reliance on a violation of 18 U.S.C. § 1960(b)(1)(A) as a basis for forfeiture is invalid because such section violates the Equal Protection Clause of the Fifth Amendment and traditional principles of federalism; and (4) because forfeiture in this action is inherently unfair and would amount to a violation of the Excessive Fines Clause of the Eighth Amendment. Claimant Mot. at 2. For the reasons set forth below, the Court must deny the claimant's motion to dismiss.

I. Factual Background

On March 21, 2005, Immigration and Customs Enforcement ("ICE") agents at Hartsfield International Airport in Atlanta, Georgia identified Flores during a routine screening of airline passengers as a person whose travel patterns were suspicious and consistent with that of a "bulk cash smuggler." Compl. ¶¶ 5, 6. On that date, Flores was traveling from Washington, D.C. to San Salvador, El Salvador via Atlanta, Georgia. Id. ¶ 7. When the airplane Flores was traveling on reached Atlanta, Georgia, the ICE agents interviewed Flores and "specifically advised [him] that he was required to declare any currency that he was taking out of the country that exceeded ten thousand ($10,000.00) dollars in value." Id. ¶ 8. Flores allegedly responded that he had $21,910 and confirmed that he had prepared and submitted a CMIR for only that amount of currency. Id. ¶ 9.

After Flores allegedly consented to a search of his bags, the ICE agents found an additional $79,321 in United States currency in what was purportedly his carry on bags. Id. ¶ 10. The currency was in "small packages each tagged with a receipt from Hernandez Express," an unlicensed money transmitting business that was not authorized to do business in either Virginia or the District of Columbia during April 2005. Id. ¶¶ 10-11. Neither Flores nor any other individual submitted a CMIR for the additional $79,321. Id. ¶ 10.

Flores allegedly told the ICE Agents that he routinely transported money for Hernandez Express to El Salvador. Id. ¶ 11. According to the government's records, $25,513 in United States currency was seized from Flores at the Houston International Airport in November of 2004 for failing to declare a part of the currency, and at that time, Flores had in his possession cash receipts from Hernandez Express. Id. During his interview on March 21, 2005, Flores allegedly offered conflicting statements regarding the currency he had in his possession. Id. ¶ 12. First, he purportedly stated that he was only transporting out of the United States $21,910.00 and then he later claimed this money was his "personal funds." Id. However, after the ICE agents discovered the additional $79,321.00, Flores allegedly at one point indicated that he had been given the currency "by a confederate who was also traveling on the same itinerary from Washington, D.C. to El Salvador," but later allegedly stated that he had been given the currency at the Atlanta airport. Id.

On July 8, 2005, the United States brought this in rem civil forfeiture action against the $79,321 found in Mr. Flores' possession that had not been declared. Verified Complaint for Forfeiture In Rem. After receiving no verified claims or the filing of any answers, the government requested a default that was thereafter entered by the Clerk of Court on November 22, 2005. Affidavit in Support of Default. Subsequently, on December 20, 2005, the government filed a motion for a default judgment and a Decree of Forfeiture was entered by this Court on December 21, 2005. Motion for Default Judgment as to In Rem Defendant and Decree of Forfeiture by United States of America; Decree of Forfeiture. On January 12, 2006, the claimant claimed an interest in $34,600 of the defendant currency and having failed to lodge any claim with this Court previously, requested that the Court vacate the default judgment and the forfeiture decree. Motion to Vacate Judgment by Default. The court denied without prejudice the claimant's motion to vacate the default judgment at that time, May 22, 2006 Order denying Motion to Vacate, but later granted the claimant's renewed Rule 60(b) motion to vacate the default judgment. August 18, 2006 Order Granting Motion to Set Aside Judgment. Then, on August 30, 2006, the government filed its amended complaint against the $79,321.

II. Standard of Review

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) challenges "the legal sufficiency of a complaint." Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). The Federal Rules of Civil Procedure require that a complaint contain " 'a short and plain statement of the claim showing that the pleader is entitled to relief,' in order to 'give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Bell Atl. Corp. v. Twombly, 550 U.S.___, 127 S.Ct. 1955, 1964 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)); accordErickson v. Pardus, 551 U.S.___, 127 S.Ct. 2197, 2200 (2007) (per curiam). Although "detailed factual allegations" are not necessary to withstand a Rule 12(b)(6) motion to dismiss, to provide the "grounds" of "entitle[ment] to relief," a plaintiff must furnish "more than labels and conclusions" or "a formulaic recitation of the elements of a cause of action." Bell Atl. Corp., 127 S.Ct. at 1964-65 (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)). Instead, the complaint's "[f]actual 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)[.]" Bell Atl. Corp., 127 S.Ct. at 1965 (citations omitted). When the sufficiency of a complaint is challenged by a motion to dismiss under Rule 12(b)(6), the plaintiff's factual allegations must be presumed true and should be liberally construed in his or her favor. Leatherman v. Tarrant County Narcotics & Coordination Unit, 507 U.S. 163, 164 (1993); Phillips v. Bureau of Prisons, 591 F.2d 966, 973 (D.C. Cir. 1979); see also Erickson, 127 S.Ct. at 2200 (citing Bell Atl. Corp., 127 S.Ct. at 1965). The plaintiff must be afforded every favorable inference that may be drawn from the allegations of fact set forth in the complaint. Scheuer, 416 U.S. 232, 236, overruled on other grounds by Davis v. Scherer, 468 U.S. 183 (1984); Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C. Cir.2000). However, "the court need not accept inferences drawn by plaintiffs if such inferences are unsupported by the facts set out in the complaint. Nor must the court accept legal conclusions cast in the form of factual allegations." Kowal v. MCI Commc'n Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994) (citation omitted); see also Domen v. Nat'l Rehab. Hosp., 925 F. Supp. 830, 837 (D.D.C. 1996) (citing Papasan, 478 U.S. at 286). In deciding a Rule 12(b)(6) motion, the Court "may only consider the facts alleged in the complaint, documents attached as exhibits or incorporated by reference in the complaint, and matters about which the court may take judicial notice." Gustave-Schmidt v. Chao, 226 F. Supp. 2d 191, 196 (D.D.C. 2002) (citing EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624-25 (D.C. Cir. 1997)).

III. Legal Analysis

A. Does the Government's Complaint Meet the Heightened Pleading Standard of Federal Rule of Civil Procedure Supplemental E(2)(a)?

The claimant contends that the government's complaint should be dismissed because it fails to allege the requisite intent required by 31 U.S.C. §§ 5316, 5317, 5324, and 5332 necessary to satisfy the heightened pleading standard requirement by Supplemental Rule E(2)(a). Claimant Mem. at 2. Specifically, the claimant asserts that the government's complaint fails to: (1) state that "either the claimant or Mr. Flores knowingly and/or intentionally violated the statutes on which forfeiture was based," id., (2) allege specific facts sufficient to support an inference that the defendant currency is subject to forfeiture under the asserted statutes because the complaint does not allege facts to support an inference of the requisite intent to evade 31 U.S.C. §§ 5316, 5317, 5324, and 5332,*fn2 id., and (3) allege the requisite knowledge element of 18 U.S.C. § 1960.*fn3

In opposition, the government responds that the claimant's arguments regarding the requirements of a forfeiture complaint are misguided because he relies on case law "decided before the enactment of the Civil Asset Forfeiture Reform Act (CAFRA) of 2000, Pub. L. No. 106-185, 114 Stat. 202 (2000) [18 U.S.C. § 983 et seq. (2000)], which took effect August 23, 2000, and which substantially revised civil forfeiture law in the United States." Gov't Mem. at 3. Notwithstanding the claimant's alleged misunderstanding of the requirements of a forfeiture complaint, the government further asserts that it has satisfied the requirements of a forfeiture complaint because its complaint "sets forth the legal grounds supporting forfeiture and provides, in detail, the circumstances surrounding the seizure of the defendant currency, including the date, location, name of the courier, and admissions made by Mr. Flores to Government officials." Id. at 4. Therefore, the government contends that its complaint advises the claimant of the government's allegations and demonstrates that the government has a legitimate legal basis for forfeiting the defendant currency. Id. For the reasons set for below, the Court finds that the government's complaint satisfies the heightened pleading standard requirement of Supplemental Rule E(2)(a).

Supplemental Rule E(2)(a) requires the complaint to "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." Fed. R. Civ. P. Supp. E(2)(a)*fn4 . To satisfy this Rule, the government must "allege facts sufficient to support a reasonable belief that the property is subject to forfeiture." United States v. Mondragon, 313 F.3d 862, 865-66 (4th Cir. 2002) (finding that Rule E(2)(a) requires the Government to "allege sufficient facts to support a reasonable belief that the property is subject to forfeiture."); see also United States v. $49,000 Currency, 330 F.3d 371, 376 n.8 (5th Cir. 2003) (adopting general standard that under Rule E(2)(a), the Government must allege facts supporting a reasonable belief that it will be able to bear its burden at trial); United States v. Funds in the Amount of $40,000, 2004 WL 2191576, *2 (N.D. Ill. 2004) (noting that "[m]ost courts have agreed ...

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