United States v. $37,564,565.25 in Account Number Xxxxxxxx9515 at Morgan Stanley, in the Name of Anicorn LLC ( 2020 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA
Plaintiff,
v.
$37,564,565.25 in ACCOUNT NUMBER
XXXXXXXX9515 AT MORGAN
STANLEY, IN THE NAME OF ANICORN,
LLC;
$21,113.21 in ACCOUNT NUMBER
XXXXXX9537 AT WELLS FARGO, N.A.,
IN THE NAME OF ARTEMUS GROUP, Civil Action No. 18-cv-02795 (CKK)
LLC;
$25,002,568.63 in ACCOUNT NUMBER
XXXXXX1078 AT CITIBANK, IN THE
NAME OF HIGGINBOTHAM LAW P.C.;
and
$11,314,205.00 in ACCOUNT NUMBER
XXXXXX9974 AT CITIBANK, IN THE
NAME OF HIGGINBOTHAM LAW P.C.;
Defendants in rem.
MEMORANDUM OPINION & ORDER
(January 21, 2020)
The Court is in receipt of Plaintiff the United States’ [34] Motion to Stay the Case.
Defendant claimants oppose the request for a stay. In requesting a stay, the United States relies on
18 U.S.C. § 981(g)(1), which states “[u]pon the motion of the United States, the court shall stay
the civil forfeiture proceedings if the court determines that civil discovery will adversely affect the
ability of the Government to conduct a related criminal investigation or the prosecution of a related
criminal case.” 18 U.S.C. § 981(g)(1). Claimants have two primary arguments as to why a stay is
not warranted pursuant to the statute. First, claimants argue that the United States has not
established that civil discovery will adversely affect a pending criminal investigation. Second,
claimants contend that the United States has failed to establish that the criminal investigations
which will be adversely affected are related to this civil forfeiture case. Addressing both arguments,
the Court ultimately finds that a stay is warranted in this case pursuant to § 981(g)(1).
First, the Court finds that the United States has produced evidence that “civil discovery
will affect” a criminal investigation. 18 U.S.C. § 981(g)(1) (emphasis added). The parties disagree
about the standard of proof required to meet the statutory burden. The United States argues that it
is sufficient to show that civil discovery will likely prejudice the criminal proceeding, while
claimants contend that the United States must show that civil discovery will prejudice the criminal
proceeding. The Court need not resolve this dispute because, assuming for purposes of this
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Memorandum Opinion & Order that claimants state the correct standard, the Court finds that the
United States has shown that civil discovery will prejudice a pending criminal proceeding.
As evidence that civil discovery in this case will adversely affect a pending criminal
investigation, the United States submitted an ex parte affidavit, as is anticipated by § 981(g)(1).
See 18 U.S.C. § 981(g)(5). Without discussing the substance of the ex parte affidavit, the affidavit
explains the multiple ways in which proceeding with civil discovery would jeopardize pending
criminal investigations “by causing the targets of those investigations to destroy or conceal
evidence or alter their traceable channels for moving illicit funds.” Pl.’s Reply, ECF No. 37, 3.
While some of the subjects of investigation are aware of the pending investigations, some are not
aware of the scope of the investigations. Disclosure of such information would make continued
investigations more difficult for law enforcement. Ex Parte Affidavit of Robert B. Heuchling in
Support of Plaintiff United States’ Motion to Stay Case, ECF No. 35. Moreover, some of the
pending criminal investigations remain in a pre-charging stage, exempting those investigations
from discovery requirements. “Where civil discovery would subject the government’s criminal
investigation to ‘early and broader civil discovery than would otherwise be possible in the context
of the criminal proceeding,’ a stay should be granted.” United States v. All Funds on Deposit in
Suntrust Account No. XXXXXXXXX8359, 456 F. Supp. 2d 64, 65 (D.D.C. 2006) (quoting U.S. v.
One Assortment of Seventy–Three Firearms, 352 F. Supp. 2d 2, 4 (D. Me. 2005)). As such, the
Court concludes that the United States has met its burden to show that proceeding with civil
discovery would adversely affect pending criminal investigations.
Second, the Court finds that the United States has produced evidence that this civil
forfeiture matter is related to the pending criminal investigations which would be affected. “In
determining whether a criminal case or investigation is ‘related’ to a civil forfeiture proceeding,
the court shall consider the degree of similarity between the parties, witnesses, facts, and
circumstances involved in the two proceedings, without requiring an identity with respect to any
one or more factors.” 18 U.S.C. § 981(g)(4). As an initial matter, claimants argue that the United
States waived the argument that this matter is related to the pending criminal investigations by
making the argument only in the ex parte affidavit. The Court disagrees. In its Motion, the United
States stated that “there are several open U.S. criminal investigations related to the allegations in
this civil forfeiture case.” Pl.’s Mot., ECF No. 34, 4. As the statute anticipates, the details of the
relatedness were provided in the ex parte affidavit “in order to avoid disclosing any matter that
may adversely affect an ongoing criminal investigation or pending criminal trial.” 18 U.S.C. §
981(g)(5). As such, the Court finds that the United States has not waived this argument.
And, in the ex parte affidavit, the United States provided evidence that this civil forfeiture
matter is related to pending criminal matters which would be affected by discovery. This case
involves allegations that Pras Michel and others made false statements to banks and concealed the
source of funds in order to move money belonging to Jho Low into United States banks. See
generally Compl., ECF No. 1. Without revealing the substance of the ex parte affidavit, the United
States has produced evidence that pending criminal investigations involve similar “parties,
witnesses, facts, and circumstances.” 18 U.S.C. § 981(g)(4). The parties disagree as to whether or
not the United States may rely on the relatedness of foreign investigations to stay this case.
However, the Court need not resolve this argument because the United States has introduced
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sufficient evidence of domestic investigations related to this matter which would be adversely
affected by civil discovery.
Accordingly, the Court finds that the United States has met the requirements of § 981(g)(1)
and that a stay is merited. The Untied States requests a 180-day stay while claimants argue that
any stay should be no longer than 90 days. The Court finds that a stay of 135 days is reasonable.
If the United States requires a stay past the 135 days, on or before JUNE 4, 2020, the United States
is ordered to file an ex parte status report specifically explaining why a stay is still merited under
§ 981(g)(1). If after 135 days, or during the pendency of the 135 days, a stay is no longer needed,
the parties shall file a Joint Status Report setting forth proposed next steps. The Court further notes
that the United States has indicated its willingness to meet and confer with claimants about whether
or not certain aspects of this case may be exempted from this stay. Pl.’s Reply, ECF No. 37, 6-7.
SO ORDERED.
/s/
COLLEEN KOLLAR-KOTELLY
United States District Judge
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