Opinion
2:19-CV-00485-JAM-DB
03-11-2020
UNITED STATES OF AMERICA, Plaintiff, v. APPROXIMATELY $6,567,897.50 SEIZED FROM CTBC BANK, ACCOUNT NUMBER 3800191916, et al., Defendants.
McGREGOR W. SCOTT United States Attorney ANDRE M. ESPINOZA KEVIN C. KHASIGIAN Assistant U.S. Attorney 501 I Street, Suite 10-100 Sacramento, CA 95814 Telephone: (916) 554-2700 Attorneys for the United States
McGREGOR W. SCOTT
United States Attorney
ANDRE M. ESPINOZA
KEVIN C. KHASIGIAN
Assistant U.S. Attorney
501 I Street, Suite 10-100
Sacramento, CA 95814
Telephone: (916) 554-2700 Attorneys for the United States UNITED STATES' REQUEST TO EXTEND THE DEADLINE TO SUBMIT A JOINT STATUS REPORT FROM MARCH 11, 2020 TO JUNE 10, 2020
The United States submits the following Request to Extend the Deadline to file a Joint Status Report from March 11, 2020 to June 10, 2020. The United States has moved for final judgment of forfeiture as to eighty-three In Rem Defendants, reserving four In Rem Defendants for future proceedings in this Court. No party opposed the United States' motion.
Introduction
On March 18, 2019, the United States filed a civil forfeiture complaint in rem against more than sixty bank accounts, over $1.8 million in U.S. currency, prepaid flight hours with a private jet company, a luxury box with a professional sports team, and various items of jewelry ("defendant assets" or "In Rem Defendants") connected to fraud and money laundering crimes in the Eastern District of California and other areas. As described below, the bank accounts are associated with DC Solar and its related investment funds, which the United States alleges are involved in, and contained proceeds of, a Ponzi scheme orchestrated through a tax equity investment fraud. All known potential claimants to the defendant assets were served in a manner consistent with Dusenbery v. United States, 534 U.S. 161, 168 (2002) and the applicable statutory authority. Furthermore, public notice on the official internet government forfeiture site, www.forfeiture.gov, began on May 4, 2019, and ran for thirty consecutive days, as required by Rule G(4)(a)(iv)(C) of Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions. Dkt. 4. A Declaration of Publication was filed on June 6, 2019, which set forth, among other items, that publication on the government's forfeiture website was complete on June 2, 2019. Dkt. 9.
This case is related to four other cases filed in the Eastern District of California: two civil cases, United States v. 725 Main Street, Martinez, California, et al., Case 2:19-CV-00247-JAM-DB and United States v. 5383 Stonehurst Drive, Martinez, California, et al., Case 2:19-cv-00636-JAM-DB; and two recently filed criminal cases, United States v. Ronald Roach, et al., 2:19-cr-00182-JAM and United States v. Robert Karmann, 2:19-cr-00222-JAM. A notice of related case was also filed this week in another criminal case involving the DC Solar fraud, United States v. Ryan Guidry, 2:20-cr-00003-KJM.
Good Cause
The United States has provided notice to all potential claimants pursuant to law. The United States served copies of the complaint documents on all interested parties, including financial institutions, a professional sports franchise, a private jet operator, investors in the tax equity funds, and the LLCs and individuals listed as signors on the seized bank accounts. The United States specifically served copies of the complaint documents on the LLCs through their registered agent for service of process, as listed on the California Secretary of State's website. Further, the government served copies of the complaint on the principals of DC Solar, Jeffrey and Paulette Carpoff. Lastly, the government has provided notice of this action to any entities or individuals that may have a security interest in the accounts, such as a certificate of deposit required as part of a larger financial loan package extended to DC Solar.
A few parties have so far appeared in the case. First, the principals of DC Solar and the LLCs associated with many of the In Rem Defendants, Jeff and Paulette Carpoff, filed claims as to each of the eighty-seven In Rem Defendants. See Dkt. 6-7. The Carpoffs have since agreed to forfeit their interests in each of the In Rem Defendants. Dkt. 46. Second, NetJets, through their wholly-owned subsidiaries, filed claims concerning the prepaid flight shares purchased by the Carpoffs with alleged fraud proceeds. Dkt. 12-14. The United States and NetJets are currently working with the Federal Aviation Administration and others to liquidate the partial interests held by the Carpoffs in three planes, deposit the net equity with the Court as the substitute res, and allow NetJets to withdraw its claim. While this process is finalized, NetJets has requested an extension to file an answer, and the United States agreed. Third, East West Bank and Solar Eclipse Investment Fund XXXV, LLC filed claims to In Rem Defendant Approximately $9,004,531.62, which was seized from the Investment Fund's bank account during the government's law enforcement operation on December 18, 2018. Dkt. 15-16. East West Bank states that it was an investor in Solar Eclipse Investment Fund XXXV, LLC. Dkt. 15.
The NetJets subsidiaries are: (1) NetJets Sales, Inc., (2) NetJets Aviation, Inc., and (3) Marquis Jet Partners, Inc. Dkt 12-14.
The Solar Eclipse Fund and East West Bank filed answers. No other party has filed an answer in this case. --------
Furthermore, one financial institutions and one sports franchise have requested extensions of time to file answers and/or claims in this case. Based on the claimants' requests for additional time to review the allegations—in the civil complaint as well as in companion criminal cases—and potential privilege issues, other defenses, and logistical concerns with complicated assets, and given the lengthy facts and complicated issues in this case, the United States has agreed to their requests for more time. Those filings currently due on April 30, 2020. Lastly, a ruling on the pending motion will determine who and what assets remain in the case, allowing for coordinated future proceedings.
Accordingly, there is good cause to extend the deadline to file a joint status report in this case from March 11, 2020 to June 10, 2020, or to a date the Court deems appropriate. Dated: 3/11/2020
McGREGOR W. SCOTT
United States Attorney
/s/ Kevin C. Khasigian
ANDRE M. ESPINOZA
KEVIN C. KHASIGIAN
Assistant U.S. Attorney /// ///
[PROPOSED] ORDER
Pursuant to the United States' request and good cause appearing, the Court makes the following order:
The deadline to file a Joint Status Report currently due on March 11, 2020, is extended to June 10, 2020.
IT IS SO ORDERED. Dated: 3/11/2020
/s/ John A. Mendez
JOHN A. MENDEZ
United States District Court Judge