Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

United States v. Sum of $70

United States District Court, District of Columbia

April 17, 2014

UNITED STATES OF AMERICA, Plaintiff,
v.
SUM OF $70, 990, 605, et al., Defendants.

MEMORANDUM OPINION AND ORDER

RICHARD W. ROBERTS Chief Judge

Plaintiff United States filed this civil in rem forfeiture action, alleging that the defendant funds -- approximately $63 million in three different banks -- are the proceeds of a wire fraud conspiracy and subject to seizure under 18 U.S.C. §§ 981, 983 and 984. The United States moves under 18 U.S.C. § 981(g)(1) to stay the civil forfeiture proceeding, except for any forthcoming government motions to strike under Supplemental Rule G(8)(c), until the conclusion of the related criminal proceedings. Claimants Hikmatullah Shadman, Najibullah, and Rohullah (“Shadman claimants”) and Afghanistan International Bank (“AIB”) also move for leave to file surreplies. Because a protective order can protect the interests of the parties, a complete stay is unjustified and the government’s motion to stay will be denied. Because the proposed surreplies are unnecessary, the claimants’ motions for leave to file surreplies will also be denied.

BACKGROUND

In short, the United States has alleged that the defendant property is subject to forfeiture as the proceeds of a wire fraud conspiracy and that Shadman, as a subcontractor and owner of Hikmat Shadman Logistics Services Company (“HSLSC”), “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. ¶¶ 10, 34. The United States alleges that Shadman paid bribes to TOIFOR Global Life Support Services operations managers Henry Omonobi-Newton and Paul Hele, id. ¶¶ 24, 38, and that Shadman conspired with Hele to “inflate[] and manipulate[]” subcontractors’ bids, id. ¶ 39, to allow Hele “to award TMRs [Transportation Movement Requests] to [HSLSC] at an inflated rate, ” id. ¶¶ 23, 39g. Allegedly because of the bribery and fraud, HSLSC was awarded 5, 421 TMRs, which cost the United States $77, 920, 605. See id. ¶¶ 35, 43.

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 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 account at Emirate National Bank. Id. at 8-12. The Shadman claimants then filed a motion under 18 U.S.C. § 983(f) for immediate release of funds and a motion for preliminary injunctive relief, both of which have been denied. The Shadman claimants also filed a motion to dismiss for failure to state a claim and based on the affirmative defenses of international comity and the act of state doctrine, which was also denied.

On October 16, 2013, AIB filed a verified claim, asserting that it has legal title, ownership, and possessory interest to $4, 330, 287.03 of the defendant funds. AIB’s Verified Claim of Interest in Defendant Property at 2, 4.

The United States now moves under 18 U.S.C. § 981(g)(1) to stay the civil forfeiture proceedings because “the United States has a related criminal investigation and allowing discovery now may jeopardize that investigation.” United States’ Mot. for a Stay Pursuant to 18 U.S.C. § 981(g) (“U.S. Mot.”) at 1. The government requests that the proceeding be stayed until the conclusion of the criminal case, with the exception of any forthcoming government motions to strike a claim or answer under Rule G(8)(c). Id. The government proposes a status report in 180 days to allow assessment of the continuing need for a stay. Id. attach. 1 at 2. Claimants oppose. See Claimants’ Opp’n to United States’ Mot. for a Stay (“Shadman Claimants’ Opp’n”); Claimant AIB’s Opp’n to the United States’ Mot. for a Stay Pursuant to 18 U.S.C. § 981(g) (“AIB’s Opp’n”). Both the Shadman claimants and AIB also filed opposed motions for leave to file a surreply.

DISCUSSION

I. MOTION TO STAY

When the United States moves for a stay, “the court shall stay the civil forfeiture proceeding if the court determines that civil discovery will adversely affect the ability of the Government to conduct a related criminal investigation or the prosecution of a related criminal case.” 18 U.S.C. § 981(g)(1).

To determine if the criminal case is related, “the court shall consider the degree of similarity between the parties, witnesses, facts, and circumstances involved in the two proceedings, without requiring an identity with respect to any one or more factors.” 18 U.S.C. § 981(g)(4). The United States “may, in appropriate cases, submit evidence ex parte in order to avoid disclosing any matter that may adversely affect an ongoing criminal investigation or pending criminal trial.” 18 U.S.C. § 981(g)(5).[1]

Here, the government states that a United States Attorney’s Office, the Fraud Section of the United States Department of Justice, and the Office of the Special Inspector General for Afghanistan Reconstruction are all “investigating whether Mr. Shadman and others violated U.S. criminal laws in connection with the award and receipt of lucrative contracts and payments for the transportation of U.S. military supplies in Afghanistan . . . .” U.S. Mot. at 5. Because the United States’ criminal investigation stems, at least in part, from the same conduct that gives rise to this forfeiture action, the facts and circumstances involved in both the criminal and civil proceedings are similar. Id. at 5-6. The identity of facts and circumstances also means that the witnesses -- such as the - 6 -confidential informants and others that either witnessed or were involved in the alleged fraud and bribery -- will be similar since the operative events in both cases are the same. Id. at 5-7. Finally, while the parties are not identical, the parties are similar as Shadman is one of the claimants in the civil proceeding and Shadman is being investigated criminally. Id. at 5. Thus, where, as here, “a criminal investigation and a civil forfeiture action have common facts, similar alleged violations and some common parties, the actions are clearly related.” United States v. All Funds on Deposit in Suntrust Account No. XXXXXXXXX8359 in the Name of Gold and Silver Reserve, Inc., 456 F.Supp.2d 64, 65 (D.D.C. 2006).

In addition to being related, civil discovery must adversely affect the related criminal investigation to merit a stay. For example, civil discovery will adversely affect the related criminal investigation when “civil discovery would subject the Government’s criminal investigation to ‘early and broader civil discovery than would otherwise be possible in the context of the criminal proceeding.’” Suntrust, 456 F.Supp.2d at 65 (quoting United States v. One Assortment of Seventy-Three Firearms, 352 F.Supp.2d 2, 4 (D. Me. 2005)). This is because “civil discovery may not be used to subvert limitations on discovery in criminal cases, by either the government or by private parties.” McSurely v. McClellan, 426 F.2d 664, 671-72 (D.C. Cir. 1970) (footnotes omitted). However, if the government fails to show that civil discovery will in fact adversely affect its criminal investigation, a stay should be denied. See Suntrust, 456 F.Supp.2d at 65; United States v. All Funds ($357, 311.68) Contained in Northern Trust Bank of Fla. Account No. 7240001868, No. Civ.A.3:04-CV-1476-G, 2004 WL 1834589, at *2 (N.D. Tex. 2004) (“There is no presumption that civil discovery, in itself, automatically creates an adverse affect on the government’s related criminal proceeding.”).

The government asserts that civil discovery “will subject the United States to broader and earlier discovery than would occur in the criminal proceeding[, ]” U.S. Mot. at 6, because the claimants have requested access to “any evidence in [the government’s] possession relating to the facts alleged in this case[, ]” id. (quoting Shadman Claimants’ Request for Status Conference and Motion for Protective and Preservation Orders at 9), which may “require the United States prematurely to disclose to the Claimants the identities of confidential informants, ” id. at 7. The United States contends that, if it were to disclose the identities of the confidential informants, then witnesses may be put “at risk and [the disclosure could] interfere with the Government’s ability to obtain confidential information from others in the criminal investigation.” Id. Exposing confidential informants can justify a stay. See, e.g., Suntrust, 456 F.Supp.2d at 66 (“Such discovery could compromise any existing confidential informants and/or interfere with the Government’s ability to obtain confidential information from others.”); United States ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.