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 NOVEMBER 25, 2020 TO FROM CTBC BANK, ACCOUNT NUMBER JANUARY 25, 2021 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 25, 2020 to January 25, 2021. Of the eighty-seven In Rem Defendants 1199 identified in the Complaint, the Court has entered final judgment of forfeiture as to all but two of the In 2200 Rem Defendants. Additionally, the United States recently sought to dismiss one defendant asset from 2211 this case, and the Court approved that stipulation today. Accordingly, this request is limited to the two 2222 In Rem Defendants remaining in the case. 2233 Introduction 2244 On March 18, 2019, the United States filed a civil forfeiture complaint in rem against more than 2255 sixty bank accounts, over $1.8 million in U.S. currency, prepaid flight hours with a private jet company, 2266 a luxury box with a professional sports team, and various items of jewelry (“defendant assets” or “In 2277 Rem Defendants”) connected to fraud and money laundering crimes in the Eastern District of California 11 investment funds, which the United States alleges are involved in, and contained proceeds of, a Ponzi 22 scheme orchestrated through a tax equity investment fraud. All known potential claimants to the 33 defendant assets were served in a manner consistent with Dusenbery v. United States, 534 U.S. 161, 168 44 (2002) and the applicable statutory authority. Furthermore, public notice on the official internet 55 government forfeiture site, www.forfeiture.gov, began on May 4, 2019, and ran for thirty consecutive 66 days, as required by Rule G(4)(a)(iv)(C) of Supplemental Rules for Admiralty or Maritime Claims and 77 Asset Forfeiture Actions. Dkt. 4. A Declaration of Publication was filed on June 6, 2019, which set 88 forth, among other items, that publication on the government’s forfeiture website was complete on June 99 2, 2019. Dkt. 9. 1100 This case is related to several cases filed in the Eastern District of California: two now closed 1111 civil cases, United States v. 725 Main Street, Martinez, California, et al., Case 2:19−CV−00247-JAM- 1122 DB and United States v. 5383 Stonehurst Drive, Martinez, California, et al., Case 2:19-cv-00636-JAM- 1133 DB; and at least five active criminal cases, including United States v. Ronald Roach, et al., 2:19-cr- 1144 00182-JAM and United States v. Jeff Carpoff, 2:20-cr-00017-JAM. 1155 Good Cause 1166 The United States has provided notice to all potential claimants pursuant to law. The United 1177 States served copies of the complaint documents on all interested parties, including financial institutions, 1188 a professional sports franchise, a private jet operator, investors in the tax equity funds, and the LLCs and 1199 individuals listed as signors on the seized accounts. The United States specifically served copies of the 2200 complaint documents on the LLCs through their registered agent for service of process, as listed on the 2211 California Secretary of State’s website. Further, the government served copies of the complaint on the 2222 principals of DC Solar, Jeff and Paulette Carpoff. Lastly, the government provided notice of this action 2233 to any entities or individuals that may have a security interest in the accounts, such as a certificate of 2244 deposit required as part of a larger financial loan package extended to DC Solar. 2255 A few parties have so far appeared in the case. First, the principals of DC Solar and the LLCs 2266 associated with many of the In Rem Defendants, Jeff and Paulette Carpoff, filed claims as to each of the 2277 eighty-seven In Rem Defendants. See Dkt. 6-7. The Carpoffs have since agreed to forfeit their interests 11 filed claims concerning the prepaid flight shares purchased by the Carpoffs with alleged fraud proceeds. 22 Dkt. 12-14. Netjets and the United States have since agreed to a settlement that forfeits the Carpoff’s 33 airplane shares and resolves Netjets’ claim in this case. See Dkt. 52. Third, East West Bank and Solar 44 Eclipse Investment Fund XXXV, LLC filed claims to In Rem Defendant Approximately $9,004,531.62, 55 which was seized from the Investment Fund’s bank account during the government’s law enforcement 66 operation on December 18, 2018. Dkt. 15-16. The United States and East West Bank recently filed a 77 stipulation that would dismiss this asset from this case. 88 On March 24, 2020, the Court entered a final order of forfeiture as to eighty-three In Rem 99 Defendants. See Dkt. 52. The assets forfeited pursuant to that order included cash seized from DC 1100 Solar, related investment and bank accounts, and jewelry purchased by the Carpoffs, among other fraud- 1111 tainted items. Id. On April 13, 2020, the Court ordered the Carpoff’s airplane shares, valued at 1122 $3,900,000, forfeited to the United States and Netjets’ claim was withdrawn. Dkt. 52. 1133 As to the remaining two 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 overlapping issues with the DC Solar 1177 bankruptcy in the District of Nevada, and given the lengthy facts and complicated issues in this case, the 1188 United States has agreed to their requests for more time. Those filings currently due on January 15, 1199 2021. Lastly, the United States notes the continued impacts of the COVID-19 pandemic on this case 2200 and others, including and specifically, logistical difficulties of reviewing large financial sets and 2211 documents and meeting with the various counsel and clients located in cities across the country, 2222 especially in cases with complicated assets secured by fraudsters over nearly a decade of crime. 2233 /// 2244 /// 2255 /// 2266 /// 2277 /// 11 Accordingly, there is good cause to extend the deadline to file a joint status report in this case 22 from November 25, 2020 to January 25, 2021, or to a date the Court deems appropriate. 33 Dated: 11/25/2020 McGREGOR W. SCOTT United States Attorney 44 /s/ Kevin C. Khasigian 55 ANDRE M. ESPINOZA KEVIN C. KHASIGIAN 66 Assistant U.S. Attorney 77 ORDER 88 Pursuant to the United States’ request and good cause appearing, the Court makes the following 99 order: 1100 The deadline to file a Joint Status Report currently due on November 25, 2020, is extended to 1111 January 25, 2021. 1122 IT IS SO ORDERED. 1133 1144 1155 DATED: November 30, 2020 /s/ John A. Mendez 1166 THE HONORABLE JOHN A. MENDEZ UNITED STATES DISTRICT COURT JUDGE 1177 1188 1199 2200 2211 2222 2233 2244 2255 2266 2277