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United States of America v. Proceeds of Drug Trafficking Transferred To Certain Foreign Bank Accounts

December 30, 2010


The opinion of the court was delivered by: Ricardo M. Urbina United States District Judge

Re Document No.: 28



This is a civil forfeiture action brought against funds held in several Colombian bank accounts. The government seeks to have the money in the defendant accounts forfeited to the government pursuant to 18 U.S.C. § 981(a)(1)(A) and 21 U.S.C. § 881(a)(6). This matter comes before the court on the government's motion for entry of default judgment and decree of forfeiture in rem. Because the government has met its evidentiary burden, the court grants the government's motion.


In May 1999, the United States Drug Enforcement Agency ("DEA") began an undercover investigation of a money laundering organization ("DEA Operation"), which provided services to drug traffickers. Compl. ¶¶ 7, 8.a. United States Internal Revenue Service Special Agent Timothy Kunsman worked with the DEA Operation. Id. ¶ 7. Between June 1999 and April 2003, conspirators in the money laundering organization delivered U.S. currency to undercover operatives whom they believed were professional money launderers. Id. ¶ 8.c. Several of these transactions included the transfer of monies to bank accounts in Colombia, South America. Id. ¶ 26.

On May 15, 2003, the government filed a verified complaint seeking forfeiture of monies held in thirty-eight Colombian bank accounts. See generally id. The government alleges that the funds in the accounts represent drug proceeds and were involved in money laundering. Id. ¶ 1. On November 3, 2003, Enrique Ramirez Ordonez, the purported owner of the funds in one of the accounts, filed a reply to the complaint disavowing any knowledge of the defendants named in the related criminal complaint and asserting that the money in the account was derived from a legitimate exporting business. Reply to Compl. ¶¶ 1-2. The court subsequently struck his reply and dismissed his claim pursuant to Federal Rule of Civil Procedure 37 for failure to comply with court orders and to participate in discovery. See generally Mem. Op. (Sept. 16, 2008).

The government has dismissed all but five of the claims on accounts originally listed in the complaint after a review of documents provided by the Colombian government revealing that prior to the execution of a warrant in rem, the funds in most of the specified accounts were removed or the accounts were closed, thereby preventing the government from bringing the defendant properties within the jurisdiction of the court. See Notice of Partial Dismissal (Mar. 11, 2008); 2d Notice of Partial Dismissal (July 12, 2004); 3d Notice of Partial Dismissal (Oct. 22, 2004). On April 27, 2010, the Clerk of the Court declared in default claimants with a potential interest in the five remaining accounts for their failure to plead or otherwise defend against this action. See Entry of Default (Apr. 29, 2010). The government now seeks a default judgment and a decree of forfeiture for the funds contained in the remaining defendant accounts.


A. Legal Standard for Default Judgment

A court has the power to enter default judgment when a defendant fails to defend its case appropriately or otherwise engages in dilatory tactics. Keegel v. Key W. & Caribbean Trading Co., 627 F.2d 372, 375 n.5 (D.C. Cir. 1980). Rule 55(a) of the Federal Rules of Civil Procedure provides for entry of default "[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend as provided by these rules." FED. R. CIV. P. 55(a).

Upon request of the party entitled to default, Rule 55(b)(2) authorizes the court to enter against the defendant a default judgment for the amount claimed and costs. Id. 55(b)(2).

Because courts strongly favor resolution of disputes on their merits, and because "it seems inherently unfair" to use the court's power to enter judgment as a penalty for filing delays, modern courts do not favor default judgments. Jackson v. Beech, 636 F.2d 831, 835 (D.C. Cir. 1980). Accordingly, default judgment usually is available "only when the adversary process has been halted because of an essentially unresponsive party . . . [as] the diligent party must be protected lest he be faced with interminable delay and continued uncertainty as to his rights." Id. at 836 (quoting H. F. Livermore Corp. v. Aktiengesellschaft Gebruder Loepfe, 432 F.2d 689, 691 (D.C. Cir. 1970)).

Default establishes the defaulting party's liability for the well-pleaded allegations of the complaint. Adkins v. Teseo, 180 F. Supp. 2d 15, 17 (D.D.C. 2001); Avianca, Inc. v. Corriea, 1992 WL 102999, at *1 (D.D.C. Apr. 13, 1992); see also Brock v. Unique Racquetball & Health Clubs, Inc., 786 F.2d 61, 65 (2d Cir. 1986) (noting that "default concludes the liability phase of the trial"). Default does not, however, establish liability for the amount of damage that the plaintiff claims. Shepherd v. Am. Broad. Cos., Inc., 862 F. Supp. 486, 491 (D.D.C. 1994), vacated on other grounds, 62 F.3d 1469 (D.C. Cir. 1995). Instead, "unless the amount of damages is certain, the court is required to make an independent determination of the sum to be awarded." Adkins, 180 F. Supp. 2d at 17; ...

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