United States v. Real property at 5383 Stonehurst Dr., Martinez, CA ( 2019 )

11 McGREGOR W. SCOTT United States Attorney 22 ANDRE M. ESPINOZA KEVIN C. KHASIGIAN 33 Assistant U.S. Attorney 501 I Street, Suite 10-100 44 Sacramento, CA 95814 Telephone: (916) 554-2700 55 Attorneys for the United States 66 77 88 IN THE UNITED STATES DISTRICT COURT 99 EASTERN DISTRICT OF CALIFORNIA 1100 1111 UNITED STATES OF AMERICA, 2:19-CV-00636-JAM-DB 1122 Plaintiff, UNITED STATES’ REQUEST TO 1133 v. EXTEND THE DEADLINE TO SUBMIT A JOINT STATUS REPORT 1144 REAL PROPERTY LOCATED AT 5383 FROM SEPTEMBER 12, 2019 TO STONEHURST DRIVE, MARTINEZ, NOVEMBER 12, 2019 1155 CALIFORNIA CONTRA COSTA COUNTY, APN: 367-230-018-7, INCLUDING ALL 1166 APPURTENANCES AND IMPROVEMENTS THERETO, et al., 1177 Defendants. 1188 1199 The United States submits the following Request to Extend the Deadline to file a Joint Status 2200 Report from September 12, 2019 to November 12, 2019. 2211 Introduction 2222 On April 15, 2019, the United States filed a civil forfeiture complaint in rem against fourteen real 2233 properties (“defendant properties”) connected to fraud and money laundering crimes in the Eastern 2244 District of California and other areas. All known potential claimants to the defendant properties were 2255 served in a manner consistent with Dusenbery v. United States, 534 U.S. 161, 168 (2002) and the 2266 applicable statutory authority. Furthermore, public notice on the official internet government forfeiture 2277 site, www.forfeiture.gov, began on May 4, 2019, and ran for thirty consecutive days, as required by Rule 11 See ECF No. 4. A Declaration of Publication was filed on July 12, 2019, which set forth, among other 22 items, that publication on the government’s forfeiture website was complete on June 2, 2019. See Dkt. 33 40. 44 The United States has also lodged the complaint on the bankruptcy docket for DC Solar’s parent 55 company, In re Double Jump Inc., Case 19-bk-50102, a bankruptcy case filed in Reno, Nevada after the 66 United States executed federal search and seizure warrants at DC Solar’s business and other locations in 77 California associated with the company and its founders. The United States’ application for a 88 restraining order, Dkt. 42, describes the United States’ law enforcement action, the subsequent Reno 99 bankruptcy filings, DC Solar’s reorganization efforts, the conversion from a Chapter 11 bankruptcy case 1100 to a Chapter 7, and recent litigation involving the Chapter 7 bankruptcy trustee. 1111 Good Cause 1122 The United States has provided notice to all potential claimants pursuant to law. Specifically, 1133 the defendant properties are collectively owned by Jeffrey and Paulette Carpoff personally and through 1144 several LLCs, Dora Dog Properties, LLC, Dog Blue Properties, LLC, 475 Channel Road, LLC, 2750 1155 Maxwell Way, LLC, Fou Dog, LLC, Antioch Mini Storage, LLC, and 4021 Pike Lane, LLC. The 1166 government served copies of the complaint documents on the above LLCs through their registered agent 1177 for service of process, as listed on the California Secretary of State’s website. Further, the government 1188 served copies of the complaint on the principals of each respective LLC, Jeffrey and Paulette Carpoff. 1199 Lastly, the government has provided notice of this action to the lienholders who are identified on chain- 2200 of-title documents and may have a security interest in the defendant properties. 2211 Five parties have so far appeared in the case. First, the only parties who have asserted an 2222 ownership interest, Jeff and Paulette Carpoff, filed claims as to each property in their personal capacity 2233 and through their LLCs. See Dkt. 27-28. Second, a bank filed claims concerning outstanding loans as 2244 relates to two In Rem Defendants (2750 Maxwell Way and 4021 Pike Lane) currently being sold by the 2255 U.S. Marshals Service, as discussed below. Dkt. 6-7. Third, a construction company filed a claim and 2266 answer associated with labor/materials supplied in connection with retaining walls installed at one of the 2277 In Rem Defendants. Dkt. 37. Fourth, Dish Network, a provider of cable and television services, filed a 11 California Franchise Tax Board (“FTB”) filed a claim to several of the In Rem Defendants based on 22 alleged taxes owed to the FTB by Jeff and Paulette Carpoff. Dkt. 35. The FTB and Daysh Development 33 filed answers. 44 No other party has filed an answer. However, based on the claimants’ requests for additional 55 time to review the allegations and potential privilege issues and other defenses, and given the lengthy 66 facts and complicated issues in this case, the United States has agreed to their requests for more time. 77 The answers are currently due on October 15, 2019. 88 Furthermore, several potential tax equity investor-victims and the Chapter 7 and 11 bankruptcy 99 trustees have requested extensions of time to file claims in this case. The United States granted each 1100 request and they currently have until October 7, 2019 to file a claim in the case. 1111 To allow the above individuals, entities, investors, and trustees sufficient time to file a claim and 1122 research the issues raised by the facts alleged in the Complaint, the United States seeks to continue the 1133 deadline to file a Joint Status Report from September 12, 2019 to November 12, 2019 (or to another date 1144 the Court deems appropriate). 1155 Accordingly, there is good cause to extend the deadline to file a joint status report in this case 1166 from September 12, 2019 to November 12, 2019, or to a date the Court deems appropriate. 1177 U.S. Marshals’ Efforts to Manage and Sell In Rem Defendants 1188 2750 Maxwell Way and 4021 Pike Lane 1199 As explained in the United States’ application for a restraining order, 2750 Maxwell Way and 2200 4021 Pike Lane were purchased using a combination of alleged fraud proceeds and millions of dollars in 2211 bank loans, the latter which went into default status some months ago. To preserve the availability 2222 equity, the United States requested and this Court ordered, the U.S. Marshals to maintain and sell each 2233 property, and the U.S. Marshals started those efforts in earnest immediately following the entry of the 2244 sale order in May 2019. 2255 Particularly, the U.S. Marshals have secured each property, changed the locks and alarm codes, 2266 entered occupancy agreements with existing tenants, and taken other actions to ensure the properties are 2277 safe and properly monitored by professional custodians. The U.S. Marshals have also obtained 11 appraisals and title reports for each property, designated a point person for any property issues that arise 22 from tenants and/or other interested parties, and engaged an experienced commercial broker to market 33 and sell the properties. The broker listed the properties for sale in late May 2019 and reports significant 44 interest from local and institutional buyers. As to 4021 Pike Lane, several offers were submitted and the 55 strongest offer was accepted after a subsequent “best and final” round. The successful bidder has 66 waived all due diligence and the sale is expected to close any day, if it has not closed already. 77 According to the broker and U.S. Marshals, the anticipated sales figure for that property will likely 88 surpass its appraised value. As to 2750 Maxwell Way, an offer was accepted in July 2019, but that 99 buyer pulled out of escrow prior to waiving due diligence. The property has returned to the market and 1100 the U.S. Marshals represent that there has been strong interest from local owner-users. 1111 1122 Dated: 9/11/2019 McGREGOR W. SCOTT United States Attorney 1133 1144 /s/ Kevin C. Khasigian 1155 ANDRE M. ESPINOZA KEVIN C. KHASIGIAN 1166 Assistant U.S. Attorney 1177 1188 ORDER 1199 Pursuant to the United States’ request and good cause appearing, the Court makes the following 2200 order: 2211 The deadline to file a Joint Status Report is extended from September 12, 2019 to November 12, 2222 2019. 2233 IT IS SO ORDERED. 2244 2255 Dated: 9/11/2019 /s/ John A. Mendez____________ 2266 JOHN A. MENDEZ United States District Court Judge 2277