United States v. Approx. $6,567,897.50 ( 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-00485-JAM-DB 1122 Plaintiff, UNITED STATES’ REQUEST TO 1133 v. EXTEND THE DEADLINE TO SUBMIT A JOINT STATUS REPORT 1144 APPROXIMATELY $6,567,897.50 SEIZED FROM NOVEMBER 12, 2019 TO FROM CTBC BANK, ACCOUNT NUMBER JANUARY 9, 2020 1155 3800191916, et al., 1166 Defendants. 1177 The United States submits the following Request to Extend the Deadline to file a Joint Status 1188 Report from November 12, 2019 to January 9, 2020. 1199 Introduction 2200 On March 18, 2019, the United States filed a civil forfeiture complaint in rem against more than 2211 sixty bank accounts, over $1.8 million in U.S. currency, prepaid flight hours with a private jet company, 2222 a luxury box with a professional sports team, and various items of jewelry (“defendant assets” or “In 2233 Rem Defendants”) connected to fraud and money laundering crimes in the Eastern District of California 2244 and other areas. As described below, the bank accounts are associated with DC Solar and its related 2255 investment funds, which the United States alleges are involved in, and contained proceeds of, a Ponzi 2266 scheme orchestrated through a tax equity investment fraud. All known potential claimants to the 2277 defendant assets were served in a manner consistent with Dusenbery v. United States, 534 U.S. 161, 168 11 government forfeiture site, www.forfeiture.gov, began on May 4, 2019, and ran for thirty consecutive 22 days, as required by Rule G(4)(a)(iv)(C) of Supplemental Rules for Admiralty or Maritime Claims and 33 Asset Forfeiture Actions. See Dkt. 4. A Declaration of Publication was filed on June 6, 2019, which set 44 forth, among other items, that publication on the government’s forfeiture website was complete on June 55 2, 2019. See Dkt. 9. 66 This case is related to three other cases filed in the Eastern District of California: two civil cases, 77 United States v. 725 Main Street, Martinez, California, et al., Case 2:19−CV−00247-JAM-DB and 88 United States v. 5383 Stonehurst Drive, Martinez, California, et al., Case 2:19-cv-00636-JAM-DB; and 99 one recently filed criminal case, United States v. Ronald Roach, et al., 2:19-cr-00182-JAM.1 1100 Good Cause 1111 The United States has provided notice to all potential claimants pursuant to law. The United 1122 States served copies of the complaint documents on all interested parties, including financial institutions, 1133 a professional sports franchise, a private jet operator, investors in the tax equity funds, and the LLCs and 1144 individuals listed as signors on the seized bank accounts. The United States specifically served copies 1155 of the complaint documents on the LLCs through their registered agent for service of process, as listed 1166 on the California Secretary of State’s website. Further, the government served copies of the complaint 1177 on the principals of DC Solar, Jeffrey and Paulette Carpoff. Lastly, the government has provided notice 1188 of this action to any entities or individuals that may have a security interest in the accounts, such as a 1199 certificate of deposit required as part of a larger financial loan package extended to DC Solar. 2200 Five parties have so far appeared in the case. First, the principals of DC Solar and the LLCs 2211 associated with many of the In Rem Defendants, Jeff and Paulette Carpoff, filed claims as to each of the 2222 eighty-seven In Rem Defendants. See Dkt. 6-7. Second, NetJets, through their wholly-owned 2233 subsidiaries,2 filed claims concerning the prepaid flight shares purchased by the Carpoffs with alleged 2244 fraud proceeds. Dkt. 12-14. Third, East West Bank and Solar Eclipse Investment Fund XXXV, LLC 2255 filed claims to In Rem Defendant Approximately $9,004,531.62, which was seized from the Investment 2266 1 The Securities and Exchange Commission (“SEC”) has filed a notice of related cases to relate this case (and others) with their civil enforcement against criminal defendants Ronald Roach and Joe Bayliss, SEC v. Bayliss, et al., Case No. 2:19-CV- 2277 2140-MCE-AC. 11 Fund’s bank account during the government’s law enforcement operation on December 18, 2018. Dkt. 22 15-16. East West Bank states that it was an investor in Solar Eclipse Investment Fund XXXV, LLC. 33 Dkt. 15. The Solar Eclipse Fund and East West Bank filed answers. 44 No other party has filed an answer in this case. However, based on the claimants’ requests for 55 additional time to review the allegations—in the civil complaint as well as the criminal information and 66 plea agreements—and potential privilege issues and other defenses, and given the lengthy facts and 77 complicated issues in this case, the United States has agreed to their requests for more time. The 88 answers are currently due on December 10, 2019. 99 Furthermore, several potential tax equity investor-victims and financial institutions have 1100 requested extensions of time to file claims in this case since the filing of the criminal action against 1111 defendants Ronald Roach and Joe Bayliss. For similar reasons underlying the agreement to extend the 1122 time to file an answer, the United States granted each request for an extension of time and those entities 1133 and institutions currently have until December 9, 2019 to file a claim in the case. 1144 To allow the above individuals, entities, and investors sufficient time to file claims and/or 1155 answers, as well as to research the issues raised by the facts alleged in the Complaint and recently filed 1166 criminal pleadings, the United States seeks to continue the deadline to file a Joint Status Report from 1177 November 12, 2019 to January 9, 2020 (or to another date the Court deems appropriate). 1188 Accordingly, there is good cause to extend the deadline to file a joint status report in this case 1199 from November 12, 2019 to January 9, 2020, or to a date the Court deems appropriate. 2200 Dated: 11/6/2019 McGREGOR W. SCOTT United States Attorney 2211 2222 /s/ Kevin C. Khasigian 2233 ANDRE M. ESPINOZA KEVIN C. KHASIGIAN 2244 Assistant U.S. Attorney 2255 2266 2277 11 ORDER 22 Pursuant to the United States’ request and good cause appearing, the Court makes the following 33 order: 44 The deadline to file a Joint Status Report currently due on November 12, 2019, is extended to 55 January 9, 2020. 66 IT IS SO ORDERED. 77 88 Dated: November 7, 2019 /s/ John A. Mendez__________ JOHN A. MENDEZ 99 United States District Court Judge 1100 1111 1122 1133 1144 1155 1166 1177 1188 1199 2200 2211 2222 2233 2244 2255 2266 2277