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United States v. Bank of America Account# Xxxxxxxx4939

United States District Court, N.D. New York

January 15, 2015

UNITED STATES OF AMERICA, Plaintiff,
v.
BANK OF AMERICA ACCOUNT #XXXXXXXX4939, et al., Defendants.

TAMARA THOMSON, Ass't U.S. Att'y, for Plaintiff.

JACEK W. LENTZ, ESQ., for Claimants.

MEMORANDUM-DECISION AND ORDER

ANDREW T. BAXTER, Magistrate Judge.

Currently before this court[1] is the claimants' amended motion to dismiss this civil asset forfeiture action for improper venue or, in the alternative, to transfer the action to the Central District of California. (Dkt. No. 38). The United States has filed a response in opposition to the motion (Dkt. No. 40), and the claimants have replied (Dkt. No. 41). For the reasons stated below, claimants' motion to dismiss this action pursuant to Fed.R.Civ.P. 12(b)(3), or to transfer the action under 28 U.S.C. § 1406(a) is denied with prejudice. Claimants' motion to transfer the action in the interests of justice, pursuant to 28 U.S.C. § 1404(a), is denied without prejudice.

I. BACKGROUND[2]

Through this action, the government seeks to forfeit almost $2 million in bank deposits and a Porsche automobile, all allegedly related to the illegal distribution of synthetic cannabinoids and related money laundering in the Northern District of New York, the Central District of California, and elsewhere. Sheldon A. Lenter, Daniel J. Lenter, and Johnny Charles Alroy have filed claims with respect to all but $39, 652.40 of the seized assets. Related entities, including Eagle Eye Products, Inc. ("Eagle Eye") - associated with Sheldon Lenter - and Canyon Novelty Sales, Inc. ("Canyon") associated with claimant Alroy - are alleged distributors of synthetic marijuana which operate from the Central District of California. The government alleges that these entities sold more than $563, 000 worth of illegal synthetic cannabinoids to several "head shops" located in the Northern District of New York, including Zonen LTD ("Zonen") and Arizona Traders. The amended complaint details hundreds of financial transactions involving the defendant bank accounts, which allegedly relate to the purchase of synthetic marijuana by Zonen, Arizona Traders, and others in the Northern District of New York from the claimants' related businesses; the purchase of such substances by Eagle Eye and Canyon from manufacturers, including Real Feel Products, Inc. ("Real Feel"), which is located in the Central District of California, and ZenBio, LLC ("Zen Bio"); and various transfers of funds among and between the defendant bank accounts associated with the claimants and their related entities.

II. CLAIMANTS' MOTION TO DISMISS OR TRANSFER FOR IMPROPER VENUE

A. Motion to Dismiss Under Fed.R.Civ.P. 12(b)(3)

1. Applicable Law

"On a motion to dismiss a complaint under Rule 12(b)(3) for improper venue, the plaintiff bears the burden of establishing that venue is proper.'" Cold Spring Harbor Laboratory v. Ropes & Gray LLP, 762 F.Supp.2d 543, 551-52 (E.D.N.Y. 2011) (citation omitted). "If the court chooses to rely on pleadings and affidavits, the plaintiff need only make a prima facie showing of [venue].'" Gulf Ins. Co. v. Glasbrenner, 417 F.3d 353, 355 (2d Cir. 2005) (citation omitted). In analyzing a claim of improper venue, a court must view all facts in the light most favorable to the plaintiff. Phillips v. Audio Active Ltd., 494 F.3d 378, 384 (2d Cir. 2007). Whether to dismiss an action for improper venue is in the district court's sound discretion. Cold Spring Harbor Laboratory, 762 F.Supp.2d at 551 (citing Minnette v. Time Warner, 997 F.2d 1023, 1026 (2d Cir. 1993)).

2. Analysis

Claimants incorrectly suggest that the only statutory provision supporting venue in this civil forfeiture action is 28 U.S.C. § 1395(a)'s provision allowing a forfeiture to be prosecuted "in the district where it accrues." (Claimants' Mem. of Law at 9, Dkt. No. 38). However, 28 U.S.C. § 1355(b)(1)(A), also authorizes a civil forfeiture action to be brought in "the district court for the district in which any of the acts or omissions giving rise to the forfeiture occurred...." Section 1355(b)(1) "confers both jurisdiction and venue in civil forfeiture cases." U.S. v. $198, 573.85 in U.S. Currency, No. 5:13-CV-1180 (DNH), 2014 WL 859137, at *3 (N.D.N.Y. Mar. 5, 2014) (citing United States v. Contents of Account No. 2033301 in the Name of Freixas, 831 F.Supp. 337, 339-40 (S.D.N.Y. 1993) (under the 1992 amendments to § 1355(b) & (d), "a civil forfeiture action now may be brought in the district where the underlying criminal activity occurred.").

The United States has clearly alleged that substantial criminal activity supporting the forfeiture in this action occurred in the Northern District of New York.[3] The amended complaint alleges that "[t]he defendant properties are subject to forfeiture pursuant to 21 U.S.C. § 881(a)(6), pertaining to all moneys, ... or other things of value furnished or intended to be furnished by any person in exchange for a controlled substance or listed chemical in violation of 21 U.S.C. §§ 801 et seq., all proceeds traceable to such an exchange, and all moneys, negotiable instruments, and securities used or intended to be used to facilitate any violation of 21 U.S.C. §§ 801 et seq." (Am. Compl. ¶ 23, Dkt. No. 31). The amended complaint includes multiple charts, documenting that the claimants' businesses accepted hundreds of thousands of dollars for selling and shipping allegedly illegal synthetic cannabinoids to "head shops" in the Northern District of New York. (Am. Compl. ¶¶ 36, 40, 54, 57, 64, 66, 68, 75-79). Those allegations clearly support the plaintiff's contention that the claimants conducted substantial activities in the Northern District of New York in furtherance of a conspiracy to distribute controlled substances under 21 U.S.C. § 846, which, in turn, would support a prima facie showing of venue for this civil forfeiture action in this district. See, e.g., U.S. v. $198, 573.85 in U.S. Currency, 2014 WL 859137, at *3-4 (the government successfully alleged that "any of the acts or omissions giving rise to the forfeiture action" occurred in this district by stating that the defendant currency is traceable, at least in part, to drug sales in this district, which are overt acts in furtherance of a multi-jurisdiction drug conspiracy).

The United States also contends that "[t]he defendant properties are subject to forfeiture pursuant to 18 U.S.C. § 981(a)(1)(A) pertaining to any property, real or personal, involved in a transaction or attempted transaction in violation of 18 U.S.C. §§ 1956, 1957 or 1960, or any property traceable to such property." (Am. Compl. ¶ 24). The government details how hundreds of thousands of dollars in proceeds from the sale of synthetic cannabinoids in the Northern District of New York were deposited in the claimants' bank accounts in order to fund the purchase by claimants of more synthetic cannabinoids, from suppliers such as Real Feel and ZenBio, for resale in this district and elsewhere. (Am. Compl. ¶¶ 29, 34, 36, 40, 54, 57, 59, 64-66, 68-69, 75-79; Pl.'s Mem. of Law at 10-11). These allegations support the plaintiff's contention that substantial activity furthering a conspiracy to conduct "promotional" money laundering under 18 U.S.C. § 1956(a)(1)(A)(I) occurred in this district, [4] which provides the basis for the proposed forfeitures under section 981(a)(1)(A). See, e.g., U.S. v. $198, 573.85 in U.S. Currency, 2014 WL 859137, at *3-4 (allegations that Armstrong agreed to ship synthetic drugs to Doe in the Northern District of New York on at least two separate occasions and that Doe ...


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