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U.S. v. ALL FUNDS ON DEPOSIT IN DIME SAV. BANK

February 19, 2003

UNITED STATES OF AMERICA, PLAINTIFF,
v.
ALL FUNDS ON DEPOSIT IN DIME SAVINGS BANK OF WILLIAMSBURG ACCOUNT NO. 58-400738-1 IN THE NAME OF ISHAR ABDI AND BARBARA ABDI, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Robert Levy, Magistrate Judge.

MEMORANDUM AND ORDER

This matter appears before me on consent of the parties, pursuant to 28 U.S.C. § 636. Presently pending are claimant Barbara Abdi's motions for judgment on the pleadings and for leave to amend her answer to assert a statute of limitations defense, and plaintiff's cross-motion for leave to amend the complaint. For the reasons set forth below, claimant's motion for judgment on the pleadings is denied, the government's cross-motion for leave to amend the complaint is granted, and claimant's motion to amend the answer to assert a statute of limitations defense is granted.

PROCEDURAL BACKGROUND

The United States commenced this civil forfeiture action on April 2, 2001. According to the United States, the defendant properties are subject to forfeiture because they constitute the proceeds of a health care fraud and mail fraud scheme perpetrated by Ishar Abdi, M.D. ("Dr. Abdi"), the husband of claimant Barbara Abdi ("claimant" or "Barbara Abdi"), and because they were involved in or are traceable to monetary transactions made in violation of 18 U.S.C. § 1957. On April 23, 2001, Dr. Abdi pleaded guilty to health care fraud, in violation of 18 U.S.C. § 1347.*fn1 As part of his plea, he agreed to forfeit $1.49 million, including his interest in all of the defendant properties. By order dated May 5, 2001, the court ordered his interest in these properties to be forfeited (see Declaration of Michael J. Goldberger, Esq., dated Nov. 12, 2002 ("Goldberger Decl."), Exs. 1, 4), and it ordered Dr. Abdi to pay $710,000 in settlement of his civil liabilities under the False Claims Act. (Id., Ex. 5.)

The United States alleges that the fraud proceeds were all initially deposited into the defendant Dime Savings Bank of Williamsburg Account (the "Dime Savings Bank Account"), a joint account with title held in the names of both Ishar Abdi and Barbara Abdi, and that both Ishar and Barbara Abdi made transfers from that account to the other defendant properties. According to the complaint, approximately $430,000 was transferred from the Dime Savings Bank Account to the defendant investment account at Charles Schwab & Co. (the "Schwab Account"), held in the names of Ishar and Barbara Abdi. In addition, from January 1995 to April 2000, the Abdis allegedly paid the mortgage on their home at 1 Trusdale Drive in Old Westbury, New York (the "Old Westbury House"), approximately $10,385 per month, from the Dime Savings Bank Account. (Verified Complaint in Rem, dated March 30, 2002 ("Compl."), ¶ 46.) The Abdis also paid their mortgage on a condominium located at 207-23 Darren Drive in Bayside, New York (the "Bayside Condominium"), and purchased two cooperative apartments at 59 Pineapple Street in Brooklyn, New York (the "Pineapple Street Apartments") using the funds in the Dime Savings Bank Account. (Id. ¶¶ 47, 49.) The cooperative shares associated with one of those apartments, Apartment 5K, were purchased in the names of Ishar and Barbara Abdi for $110,000. (Id. ¶ 49.) The cooperative shares associated with the other apartment, Apartment 4J, were purchased solely in the name of Ishar Abdi for $70,000. (Id.) Finally, on or about September 26, 2000, the Abdis took a new mortgage on the Old Westbury House in the approximate amount of $425,000, the proceeds of which they deposited into the Dime Savings Bank Account. (Id. ¶ 48.) The defendant properties in rem therefore consist of: (a) the funds on deposit in the Dime Savings Bank Account, (b) the Schwab Account, (c) the proceeds of the sale of the Old Westbury House,*fn2 (d) the two cooperative apartments at 59 Pineapple Street, and (e) the Bayside Condominium.*fn3

In her Verified Claim, Barbara Abdi claims an ownership interest in all of the defendant properties, and she asserts among her affirmative defenses that she did not have knowledge of her husband's criminal conduct. As to the funds in the Dime Savings Bank Account and in the Schwab Account, she claims to be a "joint tenant with right of survivorship or tenant in common." (Verified Claim, dated June 12, 200, ¶¶ 1, 2.)*fn4 She also claims to be a "tenant by the entirety" with respect to the Old Westbury House and the Bayside Condominium. (Id. ¶¶ 3, 4.) Finally, as to the Pineapple Street Apartments, she claims to be the "beneficiary of a constructive trust," and/or that the property was purchased and the interest acquired "by payment of marital property." (Id. ¶¶ 5, 6.)

DISCUSSION

A. Claimant's Motion for Judgment on the Pleadings

1. Claims brought under CAFRA

Claimant argues that the first, third, fifth, seventh, and ninth claims, which seek forfeiture of proceeds traceable to a federal health care or mail fraud offense under 18 U.S.C. § 981, fail to state claims upon which relief can be granted. (Memorandum of Law in Support of Claimant's Motion for Judgment on the Pleadings, dated Aug. 20, 2002 ("Claimant's Mem."), at 5.) These claims rely in material respects on the Civil Asset Forfeiture Reform Act of 2000 ("CAFRA"), which became effective on August 23, 2000 and amended 18 U.S.C. § 981(a)(1)(C) to provide for civil forfeiture of proceeds traceable to any offense constituting "specified fraudulent activity," which includes federal health care fraud and mail fraud. See 18 U.S.C. § 1956(c)(7). According to claimant, CAFRA cannot apply to the defendant properties because the acts that constituted Dr. Abdi's fraud offenses occurred prior to the effective date of CAFRA, which, claimant argues, cannot apply retroactively. (Claimant's Mem. at 5-12.)

Claimant's argument relies in large part on Landgraf v. USI Film Prods., 511 U.S. 244, 114 S.Ct. 1483, 128 L.Ed.2d 229 (1994), in which the Supreme Court set forth standards for determining whether a newly enacted statute may be applied retroactively to cases pending at the time of enactment. The Court explained that the first step of the inquiry is to determine whether the statute itself contains a clear expression of Congressional intent as to its temporal reach. Id. at 280, 114 S.Ct. 1483. If the statute does not contain an "express command," then the court

must determine whether the new statute would have retroactive effect, i.e., whether it would impair rights a party possessed when he acted, increase a party's liability for past conduct, or impose new ...

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