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U.S. v. ONE 1997 E35 FORD VAN

May 12, 1999

UNITED STATES OF AMERICA, PLAINTIFF,
v.
ONE 1997 E35 FORD VAN, VIN 1FBJS31L3VHB70844, ALL FUNDS IN FIRST NATIONAL BANK OF CHICAGO ACCOUNT NO. 12310153, ALL FUNDS IN MIDLAND FEDERAL SAVINGS & LOAN ACCOUNT NO. 001093002113, ALL FUNDS IN FIRST NATIONAL BANK OF EVERGREEN PARK ACCOUNT NO. 1412446, ALL FUNDS IN STANDARD BANK & TRUST ACCOUNT NO. 5580349268, ALL FUNDS IN STANDARD BANK & TRUST ACCOUNT NO. 239328806, ALL FUNDS IN STANDARD BANK & TRUST SAFE DEPOSIT BOX NO. 207, ALL FUNDS IN STANDARD BANK & TRUST SAFE DEPOSIT BOX NO. 4019, ALL FUNDS IN FIRST NATIONAL BANK OF CHICAGO ACCOUNT NO. 8060700, ALL FUNDS IN LASALLE BANK, F.S.B. ACCOUNT NO. 022034532, REAL PROPERTY KNOWN AS 9229 SOUTH THOMAS, BRIDGEVIEW, ILLINOIS, DEFENDANTS.



The opinion of the court was delivered by: Andersen, District Judge.

    MEMORANDUM OPINION AND ORDER

The United States government filed this civil forfeiture action seeking to forfeit all funds contained in seven bank accounts and two safe deposit boxes on the theory that these funds were transferred to financial institutions within the United States from abroad with the intent to support the international terrorist activities of the HAMAS organization in violation of the Money Laundering Control Act of 1986, 18 U.S.C. § 1956. These activities allegedly include acts of extortion, kidnaping, and murder against the State of Israel and its citizens as part of HAMAS' alleged campaign to force Israel to cede physical and political control over the lands comprising Israel and the occupied territories of the West Bank and Gaza Strip. The government also seeks to forfeit a residence and one Ford Van because they were allegedly purchased with the illicit funds. The government alleges that the property is forfeitable pursuant to 18 U.S.C. § 981(a)(1)(A) which authorizes it to forfeit any property "involved in a transaction or attempted transaction in violation of section 1956 or 1957 . . . or any property traceable to such property."

Muhammad Salah, his wife Maryam Azita Salah (on behalf of herself and that of her children), and the Quranic Literacy Institute ("QLI") have each filed verified claims to the defendant property. Salah and his wife direct their claims to Standard Bank & Trust account nos. 5580349268 and 2393228806, and safe deposit box nos. 207 and 4019; First National Bank of Chicago account no. 8060700; LaSalle bank, F.S.B. account no. 022034532; and their residence at 9229 South Thomas, Bridgeview Illinois. The assets seized from QLI include the funds contained in First National Bank of Chicago account no. 12310153; Midland Federal Savings & Loan account no. 0010930021133; First National Bank of Evergreen Park account no. 1412446; and one 1997 E35 Ford Van, VIN No. 1FBJS31L3VHB70844. The claimants have each moved to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(6).

For the following reasons, we find that the complaint alleges a reasonable basis for the government's belief that the funds are tainted because they were transferred in violation of Section 1956(a)(2). We also find that the complaint establishes a reasonable basis for the government's belief that the Ford Van and residence are forfeitable because they are traceable to funds that are forfeitable pursuant to Section 1956(a)(2) and Section 981. The motions are granted to the extent the complaint seeks to forfeit the Ford Van and residence based on a violation of Section 1957 because the complaint does not allege that the funds used to purchase these assets were derived from "specified unlawful activity." See United States v. Lovett, 964 West Page 793 F.2d 1029, 1041 (10th Cir.) (holding that property forfeitable pursuant to Section 1957 and Section 981 must, in fact, be derived from "specified unlawful activity."), cert. denied, 506 U.S. 857, 113 S.Ct. 169, 121 L.Ed.2d 117 (1992).

THE ALLEGATIONS

The government has set forth the events relevant to this litigation in its verified complaint and the accompanying affidavit of Robert Wright, a Special Agent of the Federal Bureau of Investigation ("FBI"). Wright is assigned to the Chicago Division Counter-Terrorism Task Force and, in that capacity, has become familiar with the techniques international terrorist organizations use to launder money in and out of the United States in support of extortionate terrorist and paramilitary activities and operations in the United States and abroad. The Chicago Task Force has been conducting an investigation involving the transfer of money from Europe and the Middle East to a network of individuals and organizations in the United States, including Muhammad Salah, Maryam Azita Salah, and QLI. The allegations of facts allegedly uncovered by this investigation are set forth in the Wright Affidavit. We briefly summarize these allegations below.

First, an opening caveat. The events detailed in the Wright Affidavit are merely assertions of what the government believes the evidence at trial will establish. The Wright Affidavit, to be sure, contains serious allegations of criminal wrongdoing on the part of both HAMAS and Salah. We acknowledge and remind the reader that they are nothing more than allegations. The government has yet to produce any evidence in support of these allegations and Salah has steadfastly denied their truth. While the law requires this court to presume that these allegations are true and to view them in a light most favorable to the government for purposes of the instant motions, none of the statements set forth in this opinion should be construed as a factual finding of this court. With this in mind, we now turn to the allegations of the forfeiture complaint.

On January 25, 1993, Mohamad Salah ("Salah"), a naturalized American citizen and Chicago area resident, was arrested by the Israeli government while in Israel allegedly to promote the activities of the HAMAS organization. In January 1995, Salah pled guilty in an Israeli military court to being a member of HAMAS and to channeling funds to HAMAS, including funds transferred through one of the subject bank accounts that he held jointly with his wife, Maryam Azita Salah. Salah was sentenced to a term of five years imprisonment. On February 10, 1995, the United States Treasury Department's Office of Foreign Asset Control, having reason to believe that Salah acted on behalf of HAMAS, which President Clinton has designated in Executive Order 12947 as a terrorist organization threatening to disrupt the Middle East Peace Process, froze all known Salah bank accounts but on a monthly basis licensed Mrs. Salah to withdraw a living stipend. Also, on July 27, 1995, the Department added Salah to the list of Specially Designated Terrorists because of his alleged participation in terrorist activities in the Middle East.

The government claims that after his arrest Salah made a series of statements to Israeli authorities detailing his activities in the United States and abroad as a HAMAS military operative. These statements comprise a significant portion of the allegations set forth against Salah in the Wright Affidavit. Salah allegedly stated that his involvement with HAMAS began approximately in 1988. He divulged that he recruited and trained, domestically and abroad, new candidates for membership in HAMAS military cells that performed terrorist acts in Israel and the Occupied Territories. These recruiting activities allegedly included, among other things, conducting interviews and background checks and identifying and classifying prospective candidates on the basis of expertise and knowledge in chemicals, explosives, and the construction of terrorist devices that might be used in HAMAS military operations in Israel and elsewhere. Salah allegedly admitted that these training activities included mixing poisons, developing chemical weapons, and preparing remote control explosive devices. The government alleges that Salah also admitted acting as a financial conduit and directly financing domestic and international travel and terrorism training for new HAMAS members.

Further, Salah allegedly stated that he took extended trips within the United States and abroad on behalf of HAMAS. For example, in August and September 1992, Salah went on a sixteen day trip to Israel and the Occupied Territories. During this trip, Salah funneled approximately $100,000 to an alleged HAMAS operative, Salah Al-Arouri, which, according to both Salah and Al-Arouri, was used to purchase weapons. Al-Arouri allegedly admitted to Israeli officials that he gave an individual named Musa Dudin approximately $45,000 of the money he received from Salah so that Dudin could purchase weapons in September 1992. Al-Arouri further related that Dudin purchased the weapons as planned and that these weapons were subsequently used in terrorist attacks, including a suicide attack resulting in the murder of an Israeli soldier in Hebron in October 1992. The government alleges that at least half of the funds Salah gave to Al-Arouri originated from the Salahs' LaSalle Bank account no. 022034532.

The government also alleges that, in January 1993, at the request of Mousa Abu Marzook, the leader of HAMAS, Salah traveled to Israel on behalf of HAMAS. This trip allegedly was designed to help reorganize and restaff several military cells throughout Israel after a series of terrorist acts for which HAMAS claimed credit prompted the Israeli government to deport 415 HAMAS operatives from Israel and the Occupied Territories in December 1992. To that end, Abu Marzook allegedly instructed Salah to distribute a specified sum of money to each military cell, to meet with other HAMAS operatives to coordinate responsive terrorist attacks against Israel, and to restaff the decimated military infrastructure by placing certain individuals into leadership positions in various mosques and units. This trip was unexpectedly cut short when Israeli authorities arrested Salah on January 25, 1993. At the time of his arrest, Israeli authorities recovered from Salah $97,400 and extensive notes he had compiled from his meetings with over forty HAMAS operatives and contacts in Israel and the Occupied Territories during the preceding eleven days.

As funding for this trip, Salah allegedly admitted to Israeli authorities that he provided Abu Marzook with the account number to his LaSalle account so that Abu Marzook could wire him the funds to be distributed to the HAMAS operatives in the Middle East. Bank records also reveal that on December 29, 1992, Ismail Selim Elbarasse, an alleged HAMAS operative in the United States, wire transferred $300,000 to the LaSalle account. The Elbarasse wire transfer originated from an account at the First American Bank of McLean, Virginia, which Elbarasse held jointly with Abu Marzook. Bank records also indicate that in early January 1993 Salah withdrew a significant portion of the $300,000 that Elbarasse had wired into his account. Within days of this withdrawal, Elbarasse wire transferred $135,000 into the LaSalle Bank account and, five days later, wire transferred an additional $300,000. During this same period, Nassar Al-Khatib, an alleged supporter and financial backer of HAMAS and a close associate of Abu Marzook, wire transferred $50,000 into the LaSalle account and $200,000 into Standard Bank & Trust account no. 2393228806.

The government also alleges that QLI and individuals and entities related to QLI likely financed Salah's HAMAS-related expenditures since 1991 through structured transactions designed to conceal QLI as the source. For example, in October 1991, QLI President Ahmad Zaki Hameed transferred $18,000 to Salah through three $6,000 checks drawn from his personal bank account. Salah also received $40,500 in the form of five cashier's checks each in the amount of $8,100 from Linda Abusharif, the sister of QLI Treasurer Abraham Abusharif. Bank records reflect that Salah countersigned these checks and deposited them in his LaSalle Bank account. The government further alleges that QLI entered into a business transaction involving the purchase, lease, and sale of real property in Woodridge, Illinois. The government claims that the money used to finance this transaction was transferred to the United States for the purpose of supporting the terrorist activities of HAMAS. This land deal, which was structured so as to conceal QLI, yielded in the first year $110,000, a sum nearly equal to the amount an overseas entity, Faisal Financial, transmitted to Salah in 1992.

In November 1997, Salah was released from an Israeli prison and returned to the United States. On June 9, 1998, the government filed a verified complaint of forfeiture and resulting warrants of seizure and monition were executed for seven bank accounts, two bank safe deposit boxes, and one 1997 E35 Ford Van variously owned or controlled by the Salahs or QLI. The bank accounts and safe deposit boxes include Standard Bank & Trust account nos. 5580349268 and 2393228806, and safe deposit box nos. 207 and 4019; First National Bank of Chicago account nos. 8660700 and 12310153; LaSalle Bank, F.S.B. account no. 022034532; Midland Federal Savings and Loan account no. 0010930021133; and First National Bank of Evergreen account no. 1412446. Also, a warrant for arrest in rem was executed for the Salahs' residence located at 9229 South Thomas, Bridgeview, Illinois. Salah, Mrs. Salah (on behalf of herself and her children), and QLI then each filed verified claims to the property. On October 19, 1998, each claimant moved to dismiss the complaint.

LEGAL STANDARD

A motion to dismiss pursuant to Fed. R.Civ.P. 12(b)(6) does not test whether the plaintiff will prevail on the merits but instead whether the claimant has properly stated a claim. See Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974). In deciding a motion to dismiss, the court must assume all facts in the complaint to be true, construe the allegations liberally, and view the allegations in a light most favorable to the plaintiff. Caremark, Inc. v. Coram Healthcare Corp. 113 F.3d 645, 648 (7th Cir. 1997). At the same time, the court should not ignore any facts set forth in the complaint that undermine the plaintiff's claim or assign any weight to unsupported conclusions of law. LeBlang Motors, Ltd. v. Subaru, 148 F.3d 680, 690 (7th Cir. 1998). The court may dismiss a complaint for failure to state a claim under Rule 12(b)(6) only if "it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 2232, 81 L.Ed.2d 59 (1984).

When, as here, the government files a verified complaint for forfeiture in rem, the pleading standard is more exacting. The government must go beyond the simple notice pleading required in ordinary civil cases under Federal Rule of Civil Procedure 8(a) and state with specificity the factual basis of its claim. Rule E(2)(a) of the Supplemental Rules for Certain Admiralty and Maritime Claims provides that a civil forfeiture complaint must "state the circumstances from which the claim arises with such particularity that the defendant or claimant will be able, without moving for a more definite statement, to commence an investigation of the facts and to frame a responsive pleading." Fed. R.Civ.P. Supplemental Rule E(2)(a). By requiring that the complaint set forth in detail the circumstances supporting the government's forfeiture of the property, Rule E(2)(a) ensures that the claimants will be able "to commence an investigation of the facts and to respond with more than a general denial to the averments in the complaint." United States v. Funds in the Amount of $9,800, 952 F. Supp. 1254, 1259 (N.D.Ill. 1996).

The particularity requirement "is not merely a procedural technicality, but is, instead, a significant legal rule designed to curb excesses of government power and afford property owners some protection from the harshness of a forfeiture's attendant sanctions." United States v. 384-390 West Broadway, 964 F.2d 1244, 1248 (1st Cir. 1992) (internal quotations and citation omitted). Civil forfeiture has withstood a recent chorus of criticism, see Henry Hyde, Forfeiting Our Property Rights: Is Your Property Safe From Seizure? (1995); Eric Blumenson & Eva Nilsen, Policing for Profit: The Drug War's Hidden Economic Agenda, 65 U.Chi.L.Rev. 35 (1998); Stephen H. McClain, Note, Running the Gauntlet: An Assessment of the Double Jeopardy Implications of Criminally Prosecuting Drug Offenders and Pursuing Civil Forfeiture of Related Assets Under 21 U.S.C. § 881(A)(4), (6) and (7), 70 Notre Dame L.Rev. 941 (1995), and Rule E(2)(a) is designed in part to avoid the due process problems associated with the government holding property to which it has no legitimate claim. United States v. Daccarett 6 F.3d 37, 47 (2d Cir. 1993), cert. denied, 510 U.S. 1191, 114 S.Ct. 1294, 127 L.Ed.2d 648 (1994).

The heightened pleading standard of Rule E(2)(a) requires the government to do more than make "wholly conclusory allegations" that the assets are tainted. United States v. $9,800, 952 F. Supp. at 1259. The government must plead facts sufficient to support a reasonable belief that the government can demonstrate probable cause for finding the property tainted. United States v. $87,060.00, 23 F.3d 1352, 1353 (8th Cir. 1994) (complaint "simply must establish a reasonable belief that the government can show probable cause for forfeiture at trial."). The government is not required to meet its ultimate burden of establishing probable cause for forfeiture at the pleading stage. "While the probable cause which the government must show at trial is a reasonable ground for belief of guilt, supported by less than prima facie proof but more than mere suspicion, for purposes of the complaint the allegations need only set forth a reasonable basis for believing that the property is subject to forfeiture." United States v. $9,800, 952 F. Supp. at 1260 (internal quotations omitted).

The district court must necessarily assess the sufficiency of the forfeiture complaint with an eye toward the probable cause standard that the government must satisfy at trial. The government has the initial burden of establishing probable cause to believe that the property is subject to forfeiture. United States v. All Assets and Equip. of West Side Bldg. Corp., 58 F.3d 1181, 1188 (7th Cir. 1995). The government must show under the totality of the circumstances "a nexus," as compared to a "substantial connection," between the property and the illegal activity that is more than incidental or fortuitous. Id. at 1189 n. 13. The government need not establish a criminal violation because probable cause requires only a probability or substantial chance of such activity. United States v. 6250 Ledge Rd., 943 F.2d 721, 725 (7th Cir. 1991). If the government establishes probable cause, the burden then shifts to the claimant to show by a preponderance of the evidence that the property is not subject to forfeiture. All Assets, 58 F.3d at 1189. If the claimant fails, the government's probable cause showing alone will support a judgment of forfeiture. Id.

DISCUSSION

The government seeks to forfeit the defendant funds because they were involved in a violation of the money laundering statute, 18 U.S.C. ยง 1956(a)(2), and to forfeit the residence and Ford Van as assets ...


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