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United States v. Two Hundred Seventy-Two Thousand Dollars and No Cents $272

United States District Court, E.D. New York

February 16, 2018



          ANN M. DONNELLY, United States District Judge


         On November 23, 2017, the United States government filed a verified complaint for civil forfeiture in rem against $272, 000 in funds. On June 6, 2016, the government seized the funds from claimant Yuhua Zhu's residence pursuant to a warrant issued by this Court. Zhu contests the forfeiture, and now moves to dismiss the complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure and Rules G(5)(b) and G(8)(b)(i) of the Supplemental Rules for Certain Admiralty and Maritime Claims (the "Supplemental Rules"). For the reasons that follow, the motion is denied.


         1. Factual Background

         On September 26, 2014, the claimant, Yuhua Zhu, was convicted in New York State Supreme Court, Nassau County, of Attempted Reckless Endangerment in the First Degree, Assault in the Third Degree, and Driving While Intoxicated. (Compl., ECF No. 1, ¶¶ 6-7.) She was sentenced to six months in jail, followed by five years' probation. (Id.) Conditions of her probation included that she abstain from alcohol, install a breathalyzer on any car she used, and submit to warrantless searches by probation officers of her person, property, residence, or any vehicle under her control. (Id. ¶¶ 8, 10.)

         On June 3, 2016, Nassau County probation officers received a signal from the breathalyzer in the claimant's car, which indicated that she attempted to start the car while under the influence of alcohol. (Id. ¶ 12.) The officers went to the claimant's residence at 14 Wimbledon Court in Jericho, New York. (Id. ¶ 13.) During the search that followed, the officers found approximately $300, 000 in U.S. currency in the claimant's bedroom; the cash-in denominations of $50 and $100 bills-was bundled together in plastic bags, which were on top of the nightstand, as well as in the drawers. (Id. ¶ 14.) The officers also found check books and bank records showing wire transfers of substantial amounts of money from banks in the United States to financial institutions in China, federal tax returns indicating a reported loss of $8, 219 in 2014 and $5, 322 in income in 2015, and a closing statement for the claimant's house at 14 Wimbledon Court that showed the house was purchased from a third party for $650, 000. (Id. ¶¶ 14-18.)

         The claimant told the officers that the cash belonged to her friend, Wayne Zhou. ((Id. ¶ 19.) According to the claimant, Zhou told her to travel to Flushing, New York, to meet a man whom she had never met and whose name she did not know. (Id.) The man gave her the money, and the claimant took it back to her house. (Id. ¶ 22.)[1]

         The probation officers reported their findings to the United States Drug Enforcement Administration and the Nassau County Asset Forfeiture Unit. (Id. ¶ 23.) Three days later, on June 6, 2016, a team of probation officers, Nassau County Asset Forfeiture Unit officers, and DEA agents searched the claimant's house. (Id. ¶¶ 24, 32.) During the search, the officers found the bundles of cash; some of the bundles were in the claimant's nightstand, and the others were concealed in a light fixture in the bathroom ceiling. (Id. ¶¶ 26-28.) The DEA's drug-sniffing dog reacted to the cash and the nightstand where the money was stored, indicating the presence of narcotics. (Id. ¶ 33.) The claimant told the officers that she was holding the money for her friend, Wayne Zhou, who she believed was in China. (Id. ¶¶ 29, 31.) She did not know Zhou's address, telephone number, or any other identifying information about him. (Id. ¶ 29.) The DEA agents seized the money but did not arrest the claimant. (Id. ¶ 34.)

         2. Procedural History

         On November 23, 2016, the United States government filed a verified complaint in rem, alleging that the cash-the Defendant Funds-was subject to forfeiture pursuant to 18 U.S.C. § 981(a)(1)(A), as property involved in a transaction or attempted transaction in violation of 18 U.S.C. § 1956(a)(1), and 21 U.S.C. § 881(a)(6), as money furnished or intended to be furnished in exchange for a controlled substance, proceeds traceable to such an exchange, and/or monies used or intended to be used to facilitate a violation of the Controlled Substances Act. (Id. ¶¶ 38, 43.) The claimant filed a Statement of Claim to the Defendant Funds on January 25, 2017, alleging that she "possessed $250, 000 of the Defendant Property as a bailee to Wayne Zhou, whom [she] understands] earned these monies legitimately and entrusted them to [her] to help him purchase local real estate." (ECF No. 10, ¶¶ 1, 4.) She also alleged, for the first time, that she "owned the remaining $22, 000, which [she] kept in cash without any intent to break any laws of the United States whatsoever." (Id.) The claimant contends that she and Zhou are "innocent owners" of the Defendant Funds pursuant to 18 U.S.C § 983(d). (Id. ¶ 5.)[2]

         On December 21, 2017, pursuant to Rule G(6) of the Supplemental Rules, the government served the claimant with Special Interrogatories. (ECF No. 16-1.) The claimant served her responses to the Special Interrogatories on or about February 15, 2017. (ECF No. 16-2.)

         On March 14, 2017, the claimant filed this Rule 12(b)(6) motion to dismiss. (ECF Nos. 15, 15-1.) While this motion was pending, the government moved to compel further responses to its Special Interrogatories, and for permission to hold the claimant's motion to dismiss in abeyance until after the motion to compel was decided. (ECF No. 16.) On October 26, 2017, 1 granted the government's motion to compel in part and denied it in part, and granted the government's request to stay its response to the claimant's motion until after she responded to the Special Interrogatories. (ECF No. 20.) The claimant served the government with supplemental responses on November 30, 2017. (ECF No. 23-4.) The government filed its opposition to the motion to dismiss on January 9, 2018, and the claimant filed her reply on January 23, 2018. (ECF Nos. 23, 24.)


         Forfeiture actions are subject to a slightly different pleading standard than typical lawsuits. Motions to dismiss in such actions are governed by the Supplemental Rules and also by the Federal Rules of Civil Procedure to the extent they do not conflict with the Supplemental Rules. See In re 650 Fifth Ave. and Related Properties,777 F.Supp.2d 529, ...

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