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United States v. $148, Co., Ltd.

United States District Court, District of Columbia

March 29, 2019


          MEMORANDUM OPINION (MARCH 29, 2019) [DKT. #7]


         Plaintiff the United States of America ("Government") brings this civil forfeiture action against $148, 500 (the "Defendant Funds") in a blocked funds account at the Bank of New York Mellon ("Bank Mellon")-the alleged proceeds of Claimant Tsai Hsien-Tai's ("Claimant") business operations that were run through a U.S. bank account both in violation of the International Emergency Economic Powers Act ("IEEPA"), 50 U.S.C. § 1705, and the Weapons of Mass. Destruction Proliferators Sanctions Regulations, 31 C.F.R. § 544.201, et seq. Currently before the Court is the Government's Motion for Summary Judgment ("Govt. Mot.") [Dkt. # 7], pursuant to Fed.R.Civ.P. 56. Upon review of the evidence in the record and the relevant casleaw, the Government's motion for summary judgment [Dkt. # 7], for the following reasons, will be GRANTED.


         On January 16, 2009, the U.S. Department of Treasury Office of Foreign Asset Control ("OFAC") designated Claimant, his wife, and two companies he controlled- Trans Merits Company Limited ("Trans Merits"), and Global Interface Company Limited ("Global Interface")-as Specially Designated Nationals ("SDNs") under Executive Order 13382, "Blocking Property of Weapons of Mass. Destruction Proliferators and Their Supporters" for Claimant's dealings with a designated North Korean proliferator. Govt. Mot., Ex. C, Affidavit of FBI Special Agent Christopher Wong ("Wong Aff") [Dkt. #7-6], ¶¶ 8, 19; see also Govt. Mot., Exs. 2, 6 [Dkt. ## 7-8, 7-12]. OF AC subsequently designated Trans Multi Mechanics-in whose name Defendant Funds were transferred in this case-in May 2013. Wong Aff. ¶ 25.

         Between April and June of 2012, [1] the OF AC blocked $148, 500 ("Defendant Funds") transferred from an account in Hong Kong in the name of Trans Multi Mechanics through a correspondent bank in the United States to a Taiwan account in the name of Claimant's daughter. Wong. Aff. ¶ 5, Govt. Mot., Ex. 1 [Dkt. # 7-7]. Notably, Claimant does not dispute that he "set up" both of these bank accounts, [2] and caused the transfer of Defendant Funds. See Claimant Tsai Hsien Tsai's Verified Claim of Interest ("Verified Claim") [Dkt. # 3]; Claimant Opposition to Motion for Summary Judgment ("Cl. Opp.") [Dkt. # 9] ¶¶ 5, 6.[3] He does not dispute that he "ran" Trans Multi Mechanics, Cl. Opp. ¶ 13, and that the Defendant Funds are his money, Cl. Opp. Aff. Def. 5. Nor does Claimant dispute that he neither applied for, nor procured, an OFAC license to transfer these funds into or out of the United States. See Cl. Ans. Supp. Spec. Interr. ¶¶ 28-29.[4]

         On May 1, 2013, Claimant was arrested in Estonia and subsequently extradited to the United States, where he was charged on multiple counts in the Northern District of Illinois. Wong. Aff. ¶¶ 35-36. On October 10, 2014, he pled guilty to one count of conspiracy to defraud the Government by interfering with or obstructing a lawful government function, 18 U.S.C. § 371-in this case the enforcement of Executive Order No. 13382 and the Weapons of Mass. Destruction Proliferation Sanctions Regulations. See generally Govt. Mot., Ex. 3, Plea Agreement ("Plea Agmt.") [Dkt. # 7-9].[5]

         Pursuant to the plea agreement, Claimant agreed to the following relevant facts underlying his criminal conduct: First, that "[b]eginning no later than in or about August 2009 and continuing until in or about August 2010, defendant [Tsai] and co-defendant Yueh-Hsun Tsai knowingly conspired with each other and with others to defraud...the United States government by interfering with and obstructing a lawful government function, that is, the enforcement of Executive Order 13382 and the WMD proliferators sanction regulations, by deceit, craft, trickery, and dishonest means." Id. at 7.

         Second, "[a]fter learning of the OF AC designations, defendant... and others continued to conduct business through the U.S. financial and commercial systems for the benefit of defendant and Trans Merits." Id. at 7. That behavior included "knowingly and willfully evad[ing] the ban and prohibitions imposed on defendant and Trans Merits" by both exporting and importing goods to the United States and "concealing the involvement of defendant and Trans Merits in [such] transactions." Id. at 7-8. It also included "knowingly and willfully evad[ing] the U.S. government's efforts to block defendant and Trans Merits from accessing the U.S. financial and commercial systems [by] us[ing] the account of a third party to wire transfer funds that [defendant] owned and controlled to accounts that co-defendant Yueh-Hsun Tsai owned and controlled in the United States." Id. at 9-10.

         The Government agreed not to use Claimant's statements against him in a criminal prosecution. Id. at 17 (noting that the plea agreement "concern[ed] criminal liability only"). However, the Government reserved its right to pursue "any administrative or judicial civil claim, demand, or cause of action it may have against defendant or any other person or entity." Id. It is undisputed that nothing in the plea agreement waived the Government's right to seek civil forfeiture of assets.[6]

         After serving his two-year sentence, Claimant was deported back to Taiwan, where he remains today. Wong. Aff. ¶ 55. Plaintiff the United States brought this action for civil forfeiture in rem against the Defendant Funds-$148, 500 held in the name of Trans Multi Mechanics, Co., Ltd at Bank Mellon in New York-on June 1, 2016. See Complaint ("Compl.") [Dkt. #1]. The Government alleges that these funds were transferred from a Trans Multi Mechanics account in Hong Kong through the United States on June 4, 2012, without an OFAC license. Govt. Mot. at 4, n. 2 (citing wire transfer records in Wong Aff. ¶¶ 4, 96-98). As such, the Government argues they are subject to seizure and forfeiture as properties constituted or derived from proceeds traceable to violations of IEEPA, in violation of 18 U.S.C. § 981 (a)(1)(C), or as property involved in, and traceable to violations of the money laundering statute, in violation of 18 U.S.C. 981(a)(1)(A). See Id. at 3.

         Claimant entered a Verified Claim of Interest on July 15, 2016 [Dkt. # 3], and the parties thereafter engaged in two years of discovery on the source and nature of Defendant Funds. Claimant challenges the Government's civil forfeiture claim on the grounds that he was an "innocent businessman" who "did not know, or have reason to know, that he was designated by OF AC under E.O. 13382" at the time the Defendant Funds were transferred. See Cl. Opp. Aff. Def. 4. For the following reasons, I find that Claimant fails to raise any issue of material fact, and will therefore GRANT the Government's Motion for Summary Judgment [Dkt. # 7].


         Pursuant to Federal Rule of Civil Procedure 56(c), a court may grant summary judgment where there exists no genuine issue of material fact such that the moving party is entitled to judgment as a matter of law. Anderson v. Liberty Lobby, Inc.,477 U.S. 242, 248 (1986). Material facts are those "that might affect the outcome of the suit under the governing law." Id. And a dispute about a material fact is "genuine" only "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. While a Court must draw all justifiable inferences in the nonmoving party's favor, a nonmoving party must nevertheless establish more than "the mere existence of a scintilla of evidence in support of [its] position." Id. at 252. As such, '"[c]onclusory allegations' and 'unsubstantiated speculation' do not create genuine issues of material fact." Bonieskie v. Mukasey,540 F.Supp.2d 190, 195 (D.D.C. 2008) (quoting Fujitsu Ltd. v. Fed. Express Corp.,247 F.3d 424, 428 (2d Cir. 2001)); see also Greene v. Dalton,164 F.3d 671, 675 (D.C. Cir. 1999) ("Accepting such conclusory allegations as true, therefore, would defeat the central purpose of the summary judgment device, which is to weed out those cases insufficiently meritorious to warrant the expense of a jury trial."). If the ...

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