United States v. James Larkin ( 2019 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS JUL 30 2019
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
In re: ANY AND ALL FUNDS HELD IN No. 18-56455
REPUBLIC BANK OF ARIZONA
ACCOUNTS XXXX1889, XXXX2592, D.C. No.
XXXX1938, XXXX2912, AND 2:18-cv-06742-RGK-PJW
XXXX2500,
______________________________
MEMORANDUM*
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
JAMES LARKIN, Real Party in Interest
Defendant; et al.,
Movants-Appellants.
Appeal from the United States District Court
for the Central District of California
R. Gary Klausner, District Judge, Presiding
Argued and Submitted July 9, 2019
Pasadena, California
Before: M. SMITH and FRIEDLAND, Circuit Judges, and AMON,** District
Judge.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable Carol Bagley Amon, United States District Judge for
the Eastern District of New York, sitting by designation.
The Government obtained ex parte civil seizure warrants in the Central
District of California authorizing the pre-trial seizure of approximately 89 bank
accounts belonging to Backpage.com’s corporate parent’s owners (Appellants)
containing proceeds of alleged crimes. After the Government carried out the
seizures, Appellants filed a motion to vacate or modify the seizure warrants
alleging that the seizures violated their constitutional rights. Without responding
to the motion, the district court stayed proceedings pursuant to 18 U.S.C.
§ 981(g)(1), pending the related criminal matter in the District of Arizona.
Appellants now appeal the Stay Order arguing that the district court erred in
imposing the stay by failing to first address the constitutional challenges to the
pretrial seizures. We have jurisdiction pursuant to 28 U.S.C. § 1292(a)(1) because
the stay amounts to a preliminary injunction that keeps the seizures in place, cf.
United States v. Roth, 912 F.2d 1131, 1133 (9th Cir. 1990), and we vacate and
remand.
While 18 U.S.C. § 981(g) permits a court to stay a civil forfeiture
proceeding when “civil discovery will adversely affect . . . the prosecution of a
related criminal case,” it still requires some minimal showing by the Government
of such effect. Here, the Government alleged concerns regarding the impact of the
disclosure of privileged materials on its strategy in the criminal case, but the court
made no actual findings about the materials, nor does the record reflect any type of
2 18-56455
in-camera review to verify that those allegations have any merit. Thus, we find no
basis outside of conclusory allegations in the record for such a stay.
In briefing and at oral argument, the Government also agreed that Appellants
were entitled to some review of their claims prior to the imposition of the stay.
Since both parties agree that Appellants’ motion should have been adjudicated
prior to issuance of the stay, we vacate the Stay Order and remand to the district
court to conduct further proceedings.
VACATED AND REMANDED.
3 18-56455