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 ...