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United States v. Real Prop. Located at 9144 Burnett Rd.

United States District Court, W.D. Washington

May 13, 2015

UNITED STATES OF AMERICA, Plaintiff,
v.
REAL PROPERTY LOCATED AT 9144 BURNETT ROAD, SE, YELM, WASHINGTON, et al., Defendants

For United States of America, Plaintiff: Norman McIntosh Barbosa, Richard Edward Cohen, LEAD ATTORNEYS, U.S. ATTORNEY'S OFFICE (SEA), SEATTLE, WA; Matthew H Thomas, U.S. ATTORNEY'S OFFICE (TACOMA), TACOMA, WA.

For Real Property Located at 9144 Burnett Road, SE, Yelm, Washington, Defendant: Kevin Lyon, LEAD ATTORNEY, LYON MEDIATION PLLC, OLYMPIA, WA; Martha A. Boersch, PRO HAC VICE, BOERSCH SHAPIRO LLP, OAKLAND, CA; Michael Steven Clark, KRUPA & CLARK, TACOMA, WA; Neil Martin Fox, LAW OFFICE OF NEIL FOX, SEATTLE, WA.

For Real Property Located at 16621 Deer Ridge Lane, SE, Yelm, Washington, Defendant: Martha A. Boersch, PRO HAC VICE, BOERSCH SHAPIRO LLP, OAKLAND, CA; Neil Martin Fox, LAW OFFICE OF NEIL FOX, SEATTLE, WA.

For Real Property Located at 16549 Vail Road SE, Yelm, Washington, Real Property Located at 16545 Vail Road, SE, Yelm, Washington, Defendants: Jon Emmett Cushman, CUSHMAN LAW OFFICES PS, OLYMPIA, WA; Martha A. Boersch, PRO HAC VICE, BOERSCH SHAPIRO LLP, OAKLAND, CA; Neil Martin Fox, LAW OFFICE OF NEIL FOX, SEATTLE, WA.

For A Sixty Seven Percent (67%) Interest in Eagleview, LLC, Defendant: Neil Martin Fox, LAW OFFICE OF NEIL FOX; Thomas Jay Westbrook, Rodgers, Kee & Card, OLYMPIA, WA.

For Real Property Located at 320 and 340 N. Cushman Ridge, Dr., Shelton, Washington, Defendant: Clark Reed Nichols, PERKINS COIE (SEA), SEATTLE, WA.

For James Capezio, Individual, Claimant: Kevin Lyon, LEAD ATTORNEY, LYON MEDIATION PLLC, OLYMPIA, WA.

For Jon Diluzio, Isabelle Diluzio, Katharine Suessman, Claimants: Jon Emmett Cushman, CUSHMAN LAW OFFICES PS, OLYMPIA, WA.

For Kim McCrea, Eagleview Hill, LLC, Claimants: Thomas Jay Westbrook, LEAD ATTORNEY, Rodgers, Kee & Card, OLYMPIA, WA.

For Diana Nemes, Claimant: Neil Martin Fox, LAW OFFICE OF NEIL FOX, SEATTLE, WA; Martha A. Boersch, PRO HAC VICE, BOERSCH SHAPIRO LLP, OAKLAND, CA.

For Gregory Simmons, Claimant: Michael Steven Clark, LEAD ATTORNEY, KRUPA & CLARK, TACOMA, WA.

For David Pool, Teri Pool, Claimants: Clark Reed Nichols, LEAD ATTORNEY, PERKINS COIE (SEA), SEATTLE, WA.

For Kim McCrea, Douglas J. McCrea, Eagleview Hill, LLC, Cross Claimants: Thomas Jay Westbrook, LEAD ATTORNEY, Rodgers, Kee & Card, OLYMPIA, WA.

For Diana Nemes, Cross Defendant: Neil Martin Fox, LAW OFFICE OF NEIL FOX, SEATTLE, WA; Martha A. Boersch, PRO HAC VICE, BOERSCH SHAPIRO LLP, OAKLAND, CA.

ORDER DENYING MOTION TO DISMISS

HONORABLE RONALD B. LEIGHTON, UNITED STATES DISTRICT JUDGE.

I. Introduction

THIS MATTER is before the Court on Claimant Diana Nemes' Motion to Dismiss Amended Verified Complaint for Forfeiture In Rem. Claimant Diana Nemes and her husband[1] were extradited to their home country of Romania for alleged tax evasion and setting up an organized criminal group. The United States filed a civil forfeiture complaint against Nemes' real property located in Yelm, Washington. The United States filed an amended complaint adding more defendant properties. Nemes sought dismissal, arguing that the government was erroneously relying on a bi lateral treaty, not the required multi lateral treaty, known as UNTOC[2]. After Oral argument, this Court granted the government leave to amend to rely on the correct treaty, which it did.

Nemes again seeks dismissal under Fed.R.Civ.P. 12(b)(6). She argues that the government's reliance on UNTOC to justify forfeiture is still insufficient. She claims that UNTOC was not intended to apply to garden variety domestic criminal offenses such as tax evasion, or the uncharged crime of money laundering. She also argues that even if UNTOC is a potentially viable forfeiture vehicle, the government's amended complaint still fails to allege sufficient facts, and that it should be dismissed.

The United States argues that the crime of setting up an organized criminal group for the purpose of tax evasion is, by itself, a " transnational" offense extraditable under UNTOC. It claims that the money from Nemes' specified unlawful activity was laundered to the United States, and therefore, the Yelm properties purchased with those illegal funds are forfeitable. Because the United States' complaint alleges facts that state a claim for relief that is plausible on its face, Claimant's Motion to Dismiss the Amended Verified Complaint for Forfeiture In Rem is DENIED.

II. Background

The FBI's Seattle Division conducted a joint investigation with the FBI Legal Attaché office in Bucharest, Romania and the Romanian Directiei Nationale Anticoruptie (DNA) involving the Nemes and their associates. The multiple foreign accounts, and into the United States, where they ultimately purchased the properties at issue. When the scheme was discovered, the Nemes were extradited to Romania, where they were indicted for tax evasion and setting up an organized criminal group. The offenses are punishable up to eight and five years, respectively, not counting aggravating circumstances.

The United States commenced this action to forfeit the real property the Nemes left behind, claiming it was used to conceal money laundering, international money laundering, and conspiracy to commit money laundering. These activities support forfeiture under this country's criminal code. See 18 U.S.C. § 981(a)(1)(A).

The United States initially relied on a different, bilateral treaty to justify this action. The Nemes filed a motion to dismiss, arguing that the complaint was improperly based on the allegation that she had committed an offense extraditable under a bilateral treaty between the United States and Romania. She argued that only multilateral treaty offenses give rise to forfeiture. This Court agreed, but, because the defect was curable, granted the United States leave to amend. The United States filed an amended forfeiture complaint relying instead on UNTOC--a multilateral treaty.

Nemes argues that forfeiture statutes must be strictly construed against the government, and that the money laundering statute upon which the United States relies does not apply to foreign tax evasion offenses. She claims that UNTOC applies only to " transnational" offenses--crimes committed in or affecting more than one State--and that none of the crimes Romania charged her with are transnational in nature. Nemes also claims that even if the amended complaint asserted a cognizable legal theory, it consists largely of conclusory legal allegations that are insufficient to show a " specified unlawful activity," her involvement in the scheme, and a variety of other elements. She argues that the United States has not pled sufficient facts to state a claim for forfeiture.

The United States argues that the crime of setting up an organized criminal group is a transnational offense, extraditable under UNTOC. And, it claims, it has amply supported its legal theory with factual allegations that, if proven, would support forfeiture.

III. Discussion

A. Fed.R.Civ.P. § 12(b)(6) Standard

Dismissal under Rule 12(b)(6) may be based on either the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). A plaintiff's complaint must allege facts to state a claim for relief that is plausible on its face. See Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). A claim has " facial plausibility" when the party seeking relief " pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. Although the Court must accept as true the Complaint's well-pled facts, conclusory allegations of law and unwarranted inferences will not defeat a Rule 12(c) motion. Vasquez v. L.A. County, 487 F.3d 1246, 1249 (9th Cir. 2007); Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). " [A] plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level." Bell A. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citations and footnotes omitted). This requires a plaintiff to plead " more than an unadorned, the-defendant-unlawfully-harmed-me-accusation." Iqbal, 129 S.Ct. at 1949 (citing Twombly ).

On a 12(b)(6) motion, " a district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts." Cook, Perkiss & Liehe v. N. Cal. Collection Serv., 911 F.2d 242, 247 (9th Cir. 1990). However, where the facts are not in dispute, and the sole issue is whether there is liability as a matter of substantive law, the court may deny leave to amend. Albrecht v. Lund, 845 F.2d 193, 195--96 (9th Cir. 1988). The purpose of the rule is to encourage decisions on the merits rather than on the precision (or imprecision, as the case may be) of the pleadings. See Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000).

B. Extradition under UNTOC is a cognizable legal theory and sufficient facts have been pled to support forfeiture

The United States can forfeit real property that is involved in money laundering. 18 U.S.C. § 981(a)(1)(A). The money laundering statute prohibits financial transactions that involve the proceeds of a " specified unlawful activity," given that a variety of other factors are met. See 18 U.S.C. § 1956(a)(1). The money laundering statute defines " specified unlawful activity" as an " offense with respect to which the United States would be obligated by a multilateral treaty...to extradite the alleged offender." 18 U.S.C. § 1956(c)(7)(B)(vi). It is important to highlight the use of the language " would be." Even if an individual was initially extradited for criminal activity under another statute or treaty, the relevant provisions of an extraditable multilateral treaty are still applicable.

The United States argues that it would be obligated to extradite Nemes under UNTOC. Under UNTOC, any violation of a listed offense is extraditable, if it is transnational in nature and involves an organized criminal group. Art. 3 § 1. The United States argues that the offense of setting up an organized criminal group with the purpose of engaging in a massive tax evasion conspiracy is a crime worthy of extradition under UNTOC. This Court agrees. UNTOC Article 5 specifically criminalizes participation in an organized criminal group. Article 2 defines an " organized criminal group" as a structured group of three or more persons that acts in concert to commit one or more serious crimes in order to obtain a financial or other material benefit. Art. 2 § (a). A " serious crime" is one punishable by a maximum of at least four years of imprisonment. Art. 2 § (b).

The United States has pled facts sufficiently alleging that tax evasion is a serious crime in Romania as violators can be subject to 8 years of imprisonment. The U.S. has also alleged facts making it plausible that the Nemes were part of an organized criminal group. Accordingly, if the alleged crime of participating in an organized criminal group is " transnational," UNTOC applies. Art. 3 § 1.

Nemes argues that the charged crimes of tax evasion and the setting up of an organized criminal group occurred solely within the borders of Romania, and therefore, are not transnational in nature. The United States, however, does present a cognizable theory that the crime of " setting up an organized criminal group" is, by itself, a transnational offense. An offense is transnational if " it is committed in one State but involves an organized criminal group that engages in criminal activities in more than one State." As plausibly alleged in the United States' complaint, Nemes and her criminal organization illegally laundered the proceeds of the tax evasion scheme across national borders and into the United States. The fact that Nemes was not actually charged with money laundering in Romania is not the end of the inquiry. A criminal conviction is not required to proceed with a statutory in rem forfeiture. United States v. Liquidators of European Fed. Credit Bank, 630 F.3d 1139, 1150 (9th Cir. 2011) (quoting United States v. One Assortment of 89 Firearms, 465 U.S. 354, 362, 104 S.Ct. 1099, 79 L.Ed.2d 361 (1984)).

Furthermore, the allegation of money laundering is, by itself, an extraditable offense under UNTOC. Under UNTOC, it is plausible for the United States to extradite Nemes for the alleged crime of money laundering if the predicate offense is a serious crime, and the relevant conduct is a criminal offense in both States involved. Art. 6 § 2. Based on the facts alleged by the United States, the predicate offense of setting up an organized criminal group with the purpose of engaging in tax evasion would be considered a serious crime, and that same offense is considered criminal under the domestic laws of both the United States and Romania. Thus, extradition under Article 6 is also plausible.

The alleged crimes of setting up an organized criminal group and money laundering are both extraditable under UNTOC. Forfeiture of the defendant properties is plausibly pled. The United States has pled sufficient facts in its second amended complaint to raise a right to relief above the speculative level. Diana Nemes' Fed.R.Civ.P. 12(b)(6) Motion to Dismiss is DENIED.

IT IS SO ORDERED.


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