United States v. Approx. $6,567,897.50 ( 2020 )

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 MARCH 11, 2020 TO JUNE 10, FROM CTBC BANK, ACCOUNT NUMBER 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 March 11, 2020 to June 10, 2020. The United States has moved for final judgment of 1199 forfeiture as to eighty-three In Rem Defendants, reserving four In Rem Defendants for future 2200 proceedings in this Court. No party opposed the United States’ motion. 2211 Introduction 2222 On March 18, 2019, the United States filed a civil forfeiture complaint in rem against more than 2233 sixty bank accounts, over $1.8 million in U.S. currency, prepaid flight hours with a private jet company, 2244 a luxury box with a professional sports team, and various items of jewelry (“defendant assets” or “In 2255 Rem Defendants”) connected to fraud and money laundering crimes in the Eastern District of California 2266 and other areas. As described below, the bank accounts are associated with DC Solar and its related 2277 investment funds, which the United States alleges are involved in, and contained proceeds of, a Ponzi 11 defendant assets were served in a manner consistent with Dusenbery v. United States, 534 U.S. 161, 168 22 (2002) and the applicable statutory authority. Furthermore, public notice on the official internet 33 government forfeiture site, www.forfeiture.gov, began on May 4, 2019, and ran for thirty consecutive 44 days, as required by Rule G(4)(a)(iv)(C) of Supplemental Rules for Admiralty or Maritime Claims and 55 Asset Forfeiture Actions. Dkt. 4. A Declaration of Publication was filed on June 6, 2019, which set 66 forth, among other items, that publication on the government’s forfeiture website was complete on June 77 2, 2019. Dkt. 9. 88 This case is related to four other cases filed in the Eastern District of California: two civil cases, 99 United States v. 725 Main Street, Martinez, California, et al., Case 2:19−CV−00247-JAM-DB and 1100 United States v. 5383 Stonehurst Drive, Martinez, California, et al., Case 2:19-cv-00636-JAM-DB; and 1111 two recently filed criminal cases, United States v. Ronald Roach, et al., 2:19-cr-00182-JAM and United 1122 States v. Robert Karmann, 2:19-cr-00222-JAM. A notice of related case was also filed this week in 1133 another criminal case involving the DC Solar fraud, United States v. Ryan Guidry, 2:20-cr-00003-KJM. 1144 Good Cause 1155 The United States has provided notice to all potential claimants pursuant to law. The United 1166 States served copies of the complaint documents on all interested parties, including financial institutions, 1177 a professional sports franchise, a private jet operator, investors in the tax equity funds, and the LLCs and 1188 individuals listed as signors on the seized bank accounts. The United States specifically served copies 1199 of the complaint documents on the LLCs through their registered agent for service of process, as listed 2200 on the California Secretary of State’s website. Further, the government served copies of the complaint 2211 on the principals of DC Solar, Jeffrey and Paulette Carpoff. Lastly, the government has provided notice 2222 of this action to any entities or individuals that may have a security interest in the accounts, such as a 2233 certificate of deposit required as part of a larger financial loan package extended to DC Solar. 2244 A few parties have so far appeared in the case. First, the principals of DC Solar and the LLCs 2255 associated with many of the In Rem Defendants, Jeff and Paulette Carpoff, filed claims as to each of the 2266 eighty-seven In Rem Defendants. See Dkt. 6-7. The Carpoffs have since agreed to forfeit their interests 2277 in each of the In Rem Defendants. Dkt. 46. Second, NetJets, through their wholly-owned subsidiaries,1 11 filed claims concerning the prepaid flight shares purchased by the Carpoffs with alleged fraud proceeds. 22 Dkt. 12-14. The United States and NetJets are currently working with the Federal Aviation 33 Administration and others to liquidate the partial interests held by the Carpoffs in three planes, deposit 44 the net equity with the Court as the substitute res, and allow NetJets to withdraw its claim. While this 55 process is finalized, NetJets has requested an extension to file an answer, and the United States agreed. 66 Third, East West Bank and Solar Eclipse Investment Fund XXXV, LLC filed claims to In Rem 77 Defendant Approximately $9,004,531.62, which was seized from the Investment Fund’s bank account 88 during the government’s law enforcement operation on December 18, 2018. Dkt. 15-16. East West 99 Bank states that it was an investor in Solar Eclipse Investment Fund XXXV, LLC.2 Dkt. 15. 1100 Furthermore, one financial institutions and one sports franchise have requested extensions of 1111 time to file answers and/or claims in this case. Based on the claimants’ requests for additional time to 1122 review the allegations—in the civil complaint as well as in companion criminal cases—and potential 1133 privilege issues, other defenses, and logistical concerns with complicated assets, and given the lengthy 1144 facts and complicated issues in this case, the United States has agreed to their requests for more time. 1155 Those filings currently due on April 30, 2020. Lastly, a ruling on the pending motion will determine 1166 who and what assets remain in the case, allowing for coordinated future proceedings. 1177 Accordingly, there is good cause to extend the deadline to file a joint status report in this case 1188 from March 11, 2020 to June 10, 2020, or to a date the Court deems appropriate. 1199 2200 Dated: 3/11/2020 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 22 [PROPOSED] ORDER 33 Pursuant to the United States’ request and good cause appearing, the Court makes the following 44 order: 55 The deadline to file a Joint Status Report currently due on March 11, 2020, is extended to June 66 10, 2020. 77 IT IS SO ORDERED. 88 Dated: 3/11/2020 /s/ John A. Mendez____________ 99 JOHN A. MENDEZ United States District Court Judge 1100 1111 1122 1133 1144 1155 1166 1177 1188 1199 2200 2211 2222 2233 2244 2255 2266 2277