MEMORANDUM OPINION (MARCH 29, 2019) [DKT.
#7]
RICHARD J. LEON UNITED STATES DISTRICT JUDGE
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.
BACKGROUND
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].
STANDARD
OF REVIEW
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 ...