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 JUNE 10, 2020 TO FROM CTBC BANK, ACCOUNT NUMBER SEPTEMBER 16, 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 June 10, 2020 to September 16, 2020. Of the eighty-seven In Rem Defendants identified in 1199 the Complaint, the Court has entered final judgment of forfeiture as to all but three of the In Rem 2200 Defendants. Accordingly, this request is limited to those three In Rem Defendants remaining in the case. 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 several cases filed in the Eastern District of California: two now closed 99 civil cases, United States v. 725 Main Street, Martinez, California, et al., Case 2:19−CV−00247-JAM- 1100 DB and United States v. 5383 Stonehurst Drive, Martinez, California, et al., Case 2:19-cv-00636-JAM- 1111 DB; and at least five active criminal cases, including United States v. Ronald Roach, et al., 2:19-cr- 1122 00182-JAM and United States v. Jeff Carpoff, 2:20-cr-00017-JAM. 1133 Good Cause 1144 The United States has provided notice to all potential claimants pursuant to law. The United 1155 States served copies of the complaint documents on all interested parties, including financial institutions, 1166 a professional sports franchise, a private jet operator, investors in the tax equity funds, and the LLCs and 1177 individuals listed as signors on the seized accounts. The United States specifically served copies of the 1188 complaint documents on the LLCs through their registered agent for service of process, as listed on the 1199 California Secretary of State’s website. Further, the government served copies of the complaint on the 2200 principals of DC Solar, Jeff and Paulette Carpoff. Lastly, the government provided notice of this action 2211 to any entities or individuals that may have a security interest in the accounts, such as a certificate of 2222 deposit required as part of a larger financial loan package extended to DC Solar. 2233 A few parties have so far appeared in the case. First, the principals of DC Solar and the LLCs 2244 associated with many of the In Rem Defendants, Jeff and Paulette Carpoff, filed claims as to each of the 2255 eighty-seven In Rem Defendants. See Dkt. 6-7. The Carpoffs have since agreed to forfeit their interests 2266 in each of the In Rem Defendants. Dkt. 46. Second, NetJets, through their wholly-owned subsidiaries,1 2277 filed claims concerning the prepaid flight shares purchased by the Carpoffs with alleged fraud proceeds. 11 Dkt. 12-14. Netjets and the United States have since agreed to a settlement that forfeits the Carpoff’s 22 airplane shares and resolves Netjets’ claim in this case. See Dkt. 52. Third, East West Bank and Solar 33 Eclipse Investment Fund XXXV, LLC filed claims to In Rem Defendant Approximately $9,004,531.62, 44 which was seized from the Investment Fund’s bank account during the government’s law enforcement 55 operation on December 18, 2018. Dkt. 15-16. East West Bank was an investor in Solar Eclipse 66 Investment Fund XXXV, LLC. Dkt. 15. 77 On March 24, 2020, the Court entered a final order of forfeiture as to eighty-three In Rem 88 Defendants connected to the DC Solar fraud. See Dkt. 52. The assets forfeited pursuant to that order 99 included cash seized from DC Solar, related investment and bank accounts, and jewelry purchased by 1100 the Carpoffs, among other fraud-tainted items. Id. On April 13, 2020, the Court ordered the Carpoff’s 1111 airplane shares, valued at $3,900,000, forfeited to the United States and Netjets’ claim was withdrawn. 1122 Dkt. 52. 1133 As to the remaining three In Rem Defendants, one financial institution and one sports franchise 1144 have requested extensions of time to file claims and/or answers in this case. Based on the claimants’ 1155 requests for additional time to review the allegations—as set forth by pleadings in the civil and criminal 1166 cases—and potential privilege issues, other defenses, and given the lengthy facts and complicated issues 1177 in this case, the United States has agreed to their requests for more time. Those filings currently due on 1188 July 15, 2020. Lastly, the United States notes the continued impacts of the COVID-19 pandemic on this 1199 case and others, including and specifically, logistical difficulties of reviewing large financial sets and 2200 documents and meeting with the various counsel and clients located in cities across the country, 2211 especially in cases with complicated assets secured by fraudsters over nearly a decade of crime. 2222 Accordingly, there is good cause to extend the deadline to file a joint status report in this case 2233 from June 10, 2020 to September 16, 2020, or to a date the Court deems appropriate. 2244 Dated: 6/9/2020 McGREGOR W. SCOTT United States Attorney 2255 /s/ Kevin C. Khasigian 2266 ANDRE M. ESPINOZA KEVIN C. KHASIGIAN 2277 Assistant U.S. Attorney 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 June 10, 2020, is extended to 55 September 16, 2020. 66 IT IS SO ORDERED. 77 Dated: June 9, 2020 /s/ John A. Mendez____________ 88 JOHN A. MENDEZ United States District Court Judge 99 1100 1111 1122 1133 1144 1155 1166 1177 1188 1199 2200 2211 2222 2233 2244 2255 2266 2277