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United States v. $37

United States District Court, District of Columbia

October 17, 2019

UNITED STATES OF AMERICA Plaintiff,
v.
$37, 564, 565.25 in ACCOUNT NUMBER XXXXXXXX9515 AT MORGAN STANLEY, IN THE NAME OF ANICORN, LLC; $21, 113.21 in ACCOUNT NUMBER XXXXXX9537 AT WELLS FARGO, N.A., IN THE NAME OF ARTEMUS GROUP, LLC; $25, 002, 568.63 in ACCOUNT NUMBER XXXXXX1078 AT CITIBANK, IN THE NAME OF HIGGINBOTHAM LAW P.C.; and $11, 314, 205.00 in ACCOUNT NUMBER XXXXXX9974 AT CITIBANK, IN THE NAME OF HIGGINBOTHAM LAW P.C.; Defendants in rem.

          MEMORANDUM OPINION

          COLLEEN KOLLAR-KOTELLY UNITED STATES DISTRICT JUDGE

         The United States of America brings this civil forfeiture action against the named defendants in rem-funds held at Morgan Stanley, Wells Fargo, and Citibank-and asserts that the funds are subject to forfeiture under 18 U.S.C. §§ 981(a)(1)(A) and 981(a)(1)(C) as property constituting, derived from, or traceable to proceeds of bank fraud, false statements, and conspiracy.

         The Court's prior Order for Default Judgment declared the defendant funds held at Citibank forfeited to the United States. ECF No. 23. Now before the Court is Claimants' Motion to Dismiss Government's Verified Complaint as to the remaining defendant funds of $37, 564, 565.25 held at Morgan Stanley in the name of Anicorn, LLC and $21, 113.21 held at Wells Fargo in the name of Artemus Group, LLC. ECF No. 15. Anicorn, LLC, Artemus Group, LLC, and Prakazrel Michel (collectively, “Claimants”) argue that “[b]ecause the Complaint's factual allegations do not state either the offense of bank fraud or false statements to a financial institution, each forfeiture count should be dismissed for failure to state a claim for which relief can be granted.” Mot., ECF No. 15, 1. Upon consideration of the pleadings, [1] relevant legal authority, and the record as it currently exists, the Court DENIES WITHOUT PREJUDICE Claimants' Motion to Dismiss. The Government's Complaint “state[s] sufficiently detailed facts to support a reasonable belief that the government will be able to meet its burden of proof at trial.” Fed.R.Civ.P. Supp. R. G(2)(f). The Government has made sufficient allegations, which taken as true, state the triggering offenses of bank fraud, false statement, and conspiracy, and allow the Court to infer that the remaining defendant funds are forfeitable as property constituting, derived from, or traceable to proceeds of those offenses.

         I. BACKGROUND

         For purposes of the Motion before the Court, the Court accepts as true the well-pled allegations in the Government's Complaint. The Court does “not accept as true, however, any legal conclusions or inferences that are unsupported by the facts alleged.” Ralls Corp. v. Comm. on Foreign Inv. in the United States, 758 F.3d 296, 315 (D.C. Cir. 2014).

         The Complaint's overarching narrative is that a Malaysian businessman named Jho Low, the target of an ongoing Department of Justice investigation and related civil forfeiture proceedings, funneled millions of dollars into the United States with help from his associates, Prakazrel Michel and George Higginbotham. The Complaint alleges that the conspirators concealed the money's connection to Jho Low and his legal troubles so they could open several accounts at American financial institutions that served as receptacles for funds transferred from Jho Low in Asia. Compl., ECF No. 1, ¶ 48. The Complaint claims that, after the transfers from Asia were executed, money was frequently withdrawn from the American bank accounts to be disbursed among various individuals and entities engaged in a lobbying campaign that would influence the DOJ's investigation of Jho Low. Id. at ¶ 7. In accordance with federal seizure warrants issued by the U.S. District Court for the District of Columbia, accounts at Citibank, Morgan Stanley, and Wells Fargo were seized in 2018. Id. at ¶ 3. This civil action seeks forfeiture of the seized accounts. Because the Court has already granted default judgment against the assets held at one of the banks, Citibank, the Court here recounts only the factual allegations that are relevant to the instant Motion to Dismiss concerning the remaining assets at Morgan Stanley and Wells Fargo.

         The Complaint states that on March 20, 2017, Michel's financial advisor established two new companies in Delaware: Anicorn, LLC (“Anicorn”) and Artemus Group, LLC (“Artemus”). Id. at ¶ 17. On March 30, 2017, bank accounts for these companies were opened at City National Bank in California. Id. On May 8, 2017, the Anicorn account received a $2.8 million wire transfer from an entity in Hong Kong called Lucky Mark (HK) Trading Limited (“Lucky Mark”). Id. at ¶ 24. The Government asserts that Jho Low uses the Lucky Mark entity to shift his money. Id. Between May 17 and August 9, 2017, the Anicorn account received three additional transfers from Lucky Mark, totaling approximately $18.5 million. Id. at ¶¶ 26, 28, 31. On August 24, 2017, the Artemus account received a $10 million transfer from Lucky Mark. Id. at ¶ 32. On September 19, 2017, City National Bank requested documents and information related to the Lucky Mark transfers to Anicorn. Id. at ¶ 42. Higginbotham responded with a letter that characterized the transfers as coming from a legitimate company and omitted all information that might connect the money to Jho Low. Id. On September 20, 2017, the Anicorn account received a $30 million transfer from Lucky Mark. Id. at ¶ 36. On or about September 29, 2017, City National Bank ended its relationship with Anicorn and Artemus and issued cashier's checks to Michel for the remaining balance in each account. Id. at ¶ 44. These cashier's checks were then used to open new accounts for Anicorn and Artemus at Morgan Stanley. Id. The Complaint alleges that:

“Shortly after the Anicorn and Artemus funds were moved to Morgan Stanley, and in connection with the opening of accounts in the names of Anicorn and Artemus at Morgan Stanley, HIGGINBOTHAM met with a Morgan Stanley employee in the District of Columbia to discuss the opening of these accounts. HIGGINBOTHAM and MICHEL also participated in a conference call with a Morgan Stanley representative.” Id. at ¶ 45. According to the Complaint, Michel and Higginbotham told Morgan Stanley that the money came from a legitimate business; they did not mention the money's connection to Jho Low.

Id. On November 29, 2017, approximately $1.25 million was transferred from the Artemus account at Morgan Stanley to an Artemus account at Wells Fargo. Id. at ¶ 32. At the time of seizure in 2018, the Anicorn account at Morgan Stanley was worth approximately $37.6 million and the Artemus account at Wells Fargo was worth approximately $21 thousand. The Government seeks forfeiture of these assets.

         II. LEGAL STANDARD

         Claimants argue that “[b]ecause the Complaint's factual allegations do not state either the offense of bank fraud or false statements to a financial institution, each forfeiture count should be dismissed for failure to state a claim for which relief can be granted.” Mot., ECF. No. 1, 1. Accordingly, this Court must determine whether or not the Complaint sufficiently states the claimed offenses. “[A] complaint [does not] suffice if it tenders ‘naked assertion[s]' devoid of ‘further factual enhancement.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007)). Rather, a complaint must contain sufficient factual allegations that, if accepted as true, “state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678.

         In addition to the basic plausibility requirements of Twombly and Iqbal, Supplemental Rule G of the Federal Rules of Civil Procedure imposes a heightened pleading standard in civil forfeiture cases such as this. The Government's Complaint must “state sufficiently detailed facts to support a reasonable belief that the government will be able to meet its burden of proof at trial.” Fed.R.Civ.P. Supp. R. G(2)(f). A complaint must “allege enough facts so that the claimant may understand the theory of forfeiture, file a responsive pleading, and undertake an adequate investigation.” United States v. One Gulfstream G-V Jet Aircraft, 941 F.Supp.2d 1, 14 (D.D.C. 2013). A complaint must also “allege enough facts such that the court may infer that the property is subject to forfeiture.” Id.

         III. DISCUSSION

         In its Verified Complaint for Forfeiture In Rem, the Government argues that the Anicorn account at Morgan Stanley and the Artemus account at Wells Fargo are subject to forfeiture as property constituting, derived from, or traceable to proceeds of unlawful activity. The Government advances four independent Counts.

         Count One asserts that the Anicorn and Artemus accounts are subject to forfeiture under 18 U.S.C. § 981(a)(1)(C). Pursuant to § 981(a)(1)(C), forfeiture is permitted for “[a]ny property, real or personal, which constitutes or is derived from proceeds traceable to a violation of” one of its enumerated offenses. The enumerated offenses include: bank fraud as defined in 18 U.S.C. § 1344, false statements as defined in 18 U.S.C. § 1014, and a conspiracy to commit any of the enumerated offenses. The Government alleges that each of these enumerated offenses occurred and that the accounts qualify as proceeds of these offenses.

         Counts Two, Three, and Four assert that the Anicorn and Artemus accounts are subject to forfeiture under 18 U.S.C. § 981(a)(1)(A). Pursuant to § 981(a)(1)(A), forfeiture is permitted for “[a]ny property, real or personal, involved in a transaction or attempted transaction in violation of section 1956, 1957, or 1960.” Count Two alleges a violation of § 1957. Section 1957 proscribes knowingly engaging in or attempting to engage in “a monetary transaction in criminally derived property.” “Criminally derived property” is defined as “property constituting, or derived from, proceeds obtained from a criminal offense.” The Government alleges that Claimants and other actors violated § 1957 when they engaged in a monetary transaction in property criminally derived from § 1344 bank fraud, § 1014 false statements, and conspiracy. Count Three alleges a violation of § 1956(a)(1)(B)(i). This section proscribes knowingly effecting or conspiring to effect “a financial transaction” that is designed “to conceal or disguise the nature, the location, the source, the ownership, or the control of the proceeds of specified unlawful activity.” “Specified unlawful activity” is defined by § 1956(c)(7) as including § 1344 bank fraud, § 1014 false statements. The Government alleges that Claimants and other actors entered into a conspiracy to effect-and did effect-such a transaction. Finally, Count Four alleges a violation of § 1956(a)(2)(B)(i). This section criminalizes any scheme that “transports, transmits, or transfers . . . funds . . . to a place in the United States from or through a place outside the ...


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