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UNITED STATES v. ALL FUNDS ON DEPOSIT & TO BE DEPO

July 26, 1996

UNITED STATES OF AMERICA, Plaintiff, against ALL FUNDS ON DEPOSIT AND TO BE DEPOSITED, THROUGH AND INCLUDING JUNE 25, 1996, IN ACCOUNT NUMBER 590018256 AT CHEMICAL BANK IN THE NAME OF PERUSA INC. UP TO AND INCLUDING THE AMOUNT OF $ 1,282,322, AND ALL PROCEEDS TRACEABLE THERETO, et al., Defendants.


The opinion of the court was delivered by: MISHLER

 July 26, 1996

 MISHLER, District Judge

 The United States, pursuant to 18 U.S.C. §§ 981 and 984, and 21 U.S.C. § 881, seeks the forfeiture of (i) approximately $ 1,282,322 in account number 590018256 at Chemical Bank in the name of Perusa Inc. ("the Perusa account"); (ii) approximately $ 778,000.00 in account number 0191001247 at Ponce de Leon Federal Saving Bank in the name of Pan American Express, Inc. ("the Pan American Express Account at Ponce de Leon"); and (iii) approximately $ 82,000.00 in account number 69643928 at Citibank in the name of Pan American Express ("the Pan American Express Account at Citibank").

 Both claimants, Perusa Inc. ("Perusa") and Pan American Money Transfer Corp. (formerly known as Pan American Express, Inc.) ("Pan American"), seek to vacate the warrant of arrest for the defendant properties and to dismiss the complaint pursuant to 12(b)(6) of the Federal Rules of Civil Procedure and Rule 12 of the local Rules of Admiralty and Maritime Claims. In addition, Perusa seeks an order granting summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure dismissing the complaint. The Court will also consider both claimants' motions under Rule 56 because both submitted affidavits in support of their motions.

 On or about June 20, 1996, the government filed a verified complaint, with attachments, seeking the forfeiture of the defendant funds pursuant to 18 U.S.C. §§ 981, 984 and 21 U.S.C. § 881. On that same day, based upon the verified complaint, this Court signed a warrant for arrest for articles in rem. On or about June 24, 1996, the warrant of arrest was served upon Chemical Bank and Ponce de Leon Savings Bank and the defendant funds named in the warrant were seized. On or about June 27, 1996, the government filed an amended verified complaint in rem, which added as defendants certain funds contained in the Pan American Express Account at Citibank. On that same day, this Court signed an amended warrant of arrest for articles in rem. Soon thereafter, pursuant to the amended warrant, certain funds on deposit at Citibank were seized.

 On or about July 2, 1996, Perusa filed a claim for arrested property in the Perusa account. On or about July 3, 1996, Pan American filed a notice of claim asserting its rights to the Pan American Express Account at Ponce de Leon and the Pan American Express Account at Citibank. On or about July 9, 1996, pursuant to Rule 12 of the Local Rules for Admiralty and Maritime Claims, Perusa moved by order to show cause for summary release of the seized funds in the above mentioned account. On or about July 10, 1996, Pan American moved by order to show cause for summary release of the seized funds in the above mentioned accounts. The Court heard oral argument on the orders to show cause on July 19, 1996.

 Both claimants are licensed money transmitters under New York law. Neither claimant is a bank. A money transmitter receives money from customers to remit or send to the place designated by the customer. Remittance refers to the transfer itself. Claimants, similar to almost all licensed money transmitters in the New York City Area, operate through a network of independent statutory agents who receive money from the general public for transmission abroad. Funds received by the agent from the public are third-party funds. New York Banking Law § 651-a requires that upon an agent's acceptance of money for transmittal, the agent shall remit the face amount of the money to such licensee by either direct payment of such funds to the licensee or through the deposit of such funds in a banking organization account in the name of the licensee specifically established for the purpose of receiving such funds. N.Y. Banking Law § 651-a (McKinney Supp. 1996). The defendant accounts are such accounts.

 DISCUSSION

 Standing

 As a threshold issue, the claimants' standing to challenge the forfeiture must be determined. "To establish standing, [the claimants] must demonstrate a possessory or ownership interest in the contents of the accounts, which may be proven by actual possession, dominion, control, title, or financial stake." United States v. Contents of Account Number 208-06070, 847 F. Supp. 329, 333 (S.D.N.Y. 1994). Perusa asserts standing "[not] as the owner of these funds, but as a party who has a right to possess them." (Perusa Reply Mem. at 6). Perusa also states that it makes "this claim on behalf of the beneficial owners of this property, which consists of money given to Persusa for transmittal to their designated beneficiaries." (Tatarian Aff. at P 2). Pan American asserts that it "is the holder of a possessory interest in all funds seized in account number 0191001247 at Ponce de Leon Federal Savings Bank and account number 69643928 at Citibank NA." (Diaz Aff. P 8; Merle Mem. at 5). The government argues that they should be allowed to conduct discovery regarding standing and that the claimants should demonstrate that they in fact have standing before the Court release any funds to the claimants. (Boal Letter Brief dated July 22, 1996 at 1).

 The question is whether this Circuit requires a claimant to come forth with some evidence of his ownership interest in order to establish standing to contest a forfeiture or whether a claimant's mere assertion of ownership is sufficient. The Fifth Circuit has held that "a bare assertion of ownership of the res, without more, is inadequate to prove an ownership interest sufficient to establish standing." United States v. $ 38,570 in U.S. Currency, 950 F.2d 1108 (5th Cir. 1992). Ownership can be evidenced in a variety of ways including by the government's assertion in its complaint that the claimant exercised some form of dominion over the currency. Perusa's General Manager, Gaspar Tatarian, in his claim for arrested property, asserts that Perusa's rights are based upon the fact that it "has title to the arrested account, which holds funds entrusted to Perusa, a money remitter, by individuals for transmittal to their designated beneficiaries."

 The parties did not submit and this Court did not find any authority for or against the proposition that a remitter or transmitter of funds has standing merely by holding funds of others in its bank account name. This Court remains undecided whether claimants assertion of possessory rights to the defendant funds justifies standing to contest their forfeiture. The dominion and control of transmitters such as Perusa and Pan American is solely for the purpose of turning the funds over to the owners of the funds.

 Perusa and Pan American assert their claims on behalf of the beneficial owners of this property. Nevertheless, at this stage in the proceedings and for the purpose of the motions before us, the Court assumes Perusa and Pan American have standing. The Court denies the government's request to conduct further pre-trial discovery. The government may ...


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