United States v. Real property at 725 Main Street, Martinez, CA ( 2020 )

11 McGREGOR W. SCOTT United States Attorney 22 ANDRE M. ESPINOSA 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-00247-JAM-DB 1122 Plaintiff, UNITED STATES’ REQUEST TO 1133 v. EXTEND THE DEADLINE TO SUBMIT A JOINT STATUS REPORT 1144 REAL PROPERTY LOCATED AT 725 MAIN FROM JANUARY 9, 2020 TO MARCH STREET, MARTINEZ, CALIFORNIA, 11, 2020 1155 CONTRA COSTA COUNTY, APN: 373-192- 007-4, INCLUDING ALL APPURTENANCES 1166 AND IMPROVEMENTS THERETO, et al., 1177 Defendants. 1188 The United States submits the following Request to Extend the Deadline to file a Joint Status 1199 Report from January 9, 2020 to March 11, 2020. 2200 Introduction 2211 On February 8, 2019, the United States filed a forfeiture complaint in rem against twenty-five 2222 real properties (“In Rem Defendants”) connected to fraud and money laundering crimes in the Eastern 2233 District of California and other areas. All known potential claimants to the In Rem Defendants were 2244 served in a manner consistent with Dusenbery v. United States, 534 U.S. 161, 168 (2002) and the 2255 applicable statutory authority. Furthermore, public notice on the official internet government forfeiture 2266 site, www.forfeiture.gov, began on February 26, 2019, and ran for thirty consecutive days, as required 2277 by Rule G(4)(a)(iv)(C) of Supplemental Rules for Forfeiture Actions. See Dkt. 4. A Declaration of 11 government’s forfeiture website was complete on March 27, 2019. Dkt 36. Additionally, the United 22 States has posted copies of the complaint on many of the properties and filed the restraint of a lis 33 pendens against each of the In Rem Defendants. See Dkt. 5-35. 44 This case is related to four other cases filed in the Eastern District of California: two civil cases, 55 United States v. 5383 Stonehurst Drive, Martinez, California, et al., Case 2:19-cv-00636-JAM-DB and 66 United States v. Approximately $6,567,897.50 Seized From CTBC Bank, Account Number 3800191916, 77 et al., Case 2:19-cv-00485-JAM-DB; and two recently filed criminal cases, United States v. Ronald 88 Roach, et al., 2:19-cr-00182-JAM and United States v. Robert Karmann, 2:19-cr-00222-JAM. A notice 99 of related case was also filed this week in another criminal case involving the DC Solar fraud, United 1100 States v. Ryan Guidry, 2:20-cr-00003-KJM.1 1111 The United States has also lodged the complaint on the bankruptcy docket for DC Solar’s parent 1122 company, In re Double Jump Inc., Case 19-bk-50102, a bankruptcy case filed in Reno, Nevada after the 1133 United States executed federal search and seizure warrants at DC Solar’s business and other locations in 1144 California associated with the company and its founders. The United States and the Chapter 7 Trustees 1155 for the entities related to DC Solar and its principals have since entered a Coordination Agreement 1166 concerning the In Rem Defendants and other assets connected to DC Solar and its principals. An order 1177 approving the Coordination Agreement was entered in late November 2019, resulting in the dismissal of 1188 six In Rem Defendants from this case.2 See Dkt. 59-60. 1199 Good Cause 2200 The United States has provided notice to all potential claimants pursuant to law. Specifically, 2211 the defendant properties are collectively owned by five California LLCs, Dora Dog Properties, LLC, 2222 Dog Blue Properties, LLC, Brandy Boy Properties, LLC, 140 Mason Circle, LLC, and Park Road, LLC. 2233 The government served copies of the complaint documents on the above LLCs through their registered 2244 agent for service of process, as listed on the California Secretary of State’s website. Further, the 2255 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- 2140-MCE-AC. 2277 11 government served copies of the complaint on the principals of each respective LLC, Jeffrey and 22 Paulette Carpoff. Lastly, the government has provided notice of this action to the lienholders who are 33 identified on chain-of-title documents and may have a security interest in the defendant properties. 44 Several parties have so far appeared in the case. First, the only parties to assert an ownership 55 interest, Jeff and Paulette Carpoff, filed claims as to each property, but have since agreed to forfeit their 66 interests and signed stipulations for final judgments of forfeiture. See Dkt. 42-3. Second, two banks 77 (CTBC and Heritage Bank) filed claims concerning outstanding loans as relates to two In Rem 88 Defendants (4901 Park Road [CTBC] and 140 Mason Circle [Heritage Bank]) currently being sold by 99 the U.S. Marshals Service, as discussed below. Dkt. 39, 43. Third, AMAC Construction filed a claim 1100 associated with labor/materials supplied in connection with improvements at three In Rem Defendants. 1111 Dkt. 48. Fourth, Cemcon, Inc. and Legacy Framers, Inc. filed claims associated with labor/materials 1122 supplied in connection with improvements at In Rem Defendants located in El Sobrante, California. 1133 Dkt. 53-54. Lastly, a few days ago, a Tahoe-based Homeowners Association filed a claim and answer to 1144 collect unpaid HOA fees connected to the two cabins located in South Lake Tahoe. Dkt. 69-70. 1155 No other claimant has filed an answer. No other party has filed an answer in this case. 1166 However, based on the claimants’ requests for additional time to review the allegations—in the civil 1177 complaint as well as the four recently filed criminal informations and plea agreements—and potential 1188 privilege issues and other defenses, and given the lengthy facts and complicated issues in this case, the 1199 United States has agreed to their requests for more time. The answers are currently due on January 15, 2200 2020. As discussed below, the United States anticipates the two banks (CTBC and Heritage Bank) will 2211 withdraw their claims given their loans will be paid off when the escrows are finalized. 2222 Furthermore, several potential tax equity investor-victims and those associated with the 2233 transactions have requested extensions of time to file claims in this case. For similar reasons underlying 2244 the agreement to extend the time to file answers, the United States granted each request for an extension 2255 and those entities currently have until January 15, 2020 to file a claim. 2266 To allow the above individuals, entities and investors sufficient time to file a claim, and the 2277 claimants to file their answers, the United States seeks to continue the deadline to file a Joint Status 11 U.S. Marshalls Efforts to Manage and Sell In Rem Defendants 22 4901 Park Road and 140 Mason Circle 33 As explained in the United States’ application for a restraining order, 4901 Park Road and 140 44 Mason Circle were purchased using a combination of alleged fraud proceeds and millions of dollars in 55 bank loans, which went into default following the search warrants at DC Solar. To preserve the 66 availability equity, the Court ordered the U.S. Marshals to maintain and sell each property, and the U.S. 77 Marshals started those efforts in May 2019. 88 The U.S. Marshals secured each property, changed the locks and alarm codes, entered occupancy 99 agreements with existing tenants, and taken other actions to ensure the properties are safe and properly 1100 monitored by professional custodians. The U.S. Marshals obtained appraisals and title reports for each 1111 property and engaged an experienced commercial broker to market and sell the properties. As to 4901 1122 Park Road, several offers were submitted and the strongest offer was accepted after a subsequent “best 1133 and final” round. That buyer ultimately pulled out of the transaction and the backup offer was accepted. 1144 The 4901 Park Road property recently sold for approximately $12,500,000. As to 140 Mason Circle, a 1155 “best and final” offer was accepted in August 2019 and the transaction closed in December 2019 for 1166 approx. $5,000,000. Thus, the efforts of the U.S. Marshals have achieved total sales of $17,500,000, a 1177 figure exceeding the appraised values. 1188 1199 Dated: 1/8/2020 McGREGOR W. SCOTT United States Attorney 2200 2211 /s/ Kevin C. Khasigian 2222 ANDRE M. ESPINOSA KEVIN C. KHASIGIAN 2233 Assistant U.S. Attorney 2244 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 is extended from January 9, 2020 to March 11, 2020. 55 IT IS SO ORDERED. 66 Dated: 1/8/2020 /s/ John A. Mendez___________ 77 JOHN A. MENDEZ United States District Court Judge 88 99 1100 1111 1122 1133 1144 1155 1166 1177 1188 1199 2200 2211 2222 2233 2244 2255 2266 2277