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United States v. Funds In The Amount of Approximately $170

United States District Court, N.D. Illinois, Eastern Division

March 12, 2015

UNITED STATES OF AMERICA, Plaintiff,
v.
FUNDS IN THE AMOUNT OF APPROXIMATELY $170, 500 and ASSORTED JEWELRY WITH AN APPROXIMATE VALUE OF $119, 950, Defendants.

MEMORANDUM OPINION AND ORDER

ROBERT M. DOW, Jr., District Judge.

Before the Court is the government's Motion to Strike the Claim of Anthony Carparelli ("Claimant") [21]. For the reasons stated below, the Court grants the government's motion.

I. Background

The amended complaint alleges that on July 23, 2013, law enforcement searched the home of Claimant's brother, locating a safe in one of the crawl spaces. A drug canine alerted law enforcement upon approaching the safe, indicating that controlled substances or items recently in close proximity to controlled substances were or had been inside the safe. Agents opened the safe, at which point the dog again alerted law enforcement to its contents. Inside the safe, agents found funds approximating $170, 500 and jewelry approximately $119, 950 in value. That same day, agents arrested Claimant's brother, and upon searching him, they found cocaine. The amended complaint alleges that Claimant's brother, who had supported himself by selling controlled substances since 2011, lacked sufficient legitimate income to account for the value of the cash and jewelry. Based on these facts, it alleges that there was probable cause to believe that the cash and jewelry were subject to forfeiture under 21 U.S.C. § 881(a)(6).

On January 2, 2014, the government filed this verified forfeiture complaint, and an arrest warrant in rem was issued for the funds and jewelry. The government sent actual notice of the proceeding to Claimant's brother on January 3, 2014, and from January 4 to February 2, 2014, it published notice of the proceeding on www.forfeiture.gov. The notice stated that any person claiming a legal interest in the defendant property must file a verified claim with the court within 60 days from the first day of publication of the notice. Claimant filed a verified claim on October 11, 2014, alleging that he had lent $85, 000 of the seized cash to his brother. The government then filed the instant motion to strike his verified claim, arguing that it was untimely. Claimant's response explains the delay as follows:

Anthony Carparelli's claim is filed a few months late. Anthony Carparelli was shocked by his brother's arrest and indictment. He did not have an attorney and was only concerned about his brother and his brother's family. He did not think about his own interest until after the shock of his brother's arrest had dissipated.

Resp. at 4.

II. Analysis

This civil forfeiture case is governed by 18 U.S.C. §§ 981 et seq. and Supplemental Rule G of the Federal Rules of Civil Procedure. The government moves to strike the claim, arguing that Claimant lacks standing[1] and that his claim is untimely. The Court strikes Claimant's claim on both grounds.

A. Standing

There are two types of standing in a civil forfeiture case: Article III standing and statutory standing. See United States v. U.S. Currency, in the Amount of $103, 387.27, 863 F.2d 555, 561 n. 10 (7th Cir. 1988). For Article III standing to exist, a plaintiff must allege (1) an immediate threat of injury; (2) fairly traceable to the defendant's conduct; that (3) a favorable federal court decision likely would redress or remedy. United States v. 5 S 351 Tuthill Rd., Naperville, Ill., 233 F.3d 1017, 1022 (7th Cir. 2000). The Seventh Circuit has yet to decide whether unsecured creditors have Article III standing in a civil forfeiture case. Numerous other courts have decided that general unsecured creditors lack Article III standing. See United States v. All Funds on Deposit with R.J. O'Brien & Associates, 2012 WL 1032904, at *3 (N.D. Ill. Mar. 27, 2012) (collecting cases). That said, many of these opinions root their reasoning in the civil forfeiture statute and Rule G more than Article III. See id.

Turning to statutory standing, Claimant appears to allege that he has standing as an "innocent owner" of defendant property. Sur-reply at 3; see 18 U.S.C. § 983 ("An innocent owner's interest in property shall not be forfeited under any civil forfeiture statute. The claimant shall have the burden of proving that the claimant is an innocent owner by a preponderance of the evidence."). To have "innocent owner" standing, a claimant must be "a person with an ownership interest in the specific property sought to be forfeited, including a leasehold, lien, mortgage, recorded security interest, or valid assignment of an ownership interest." 18 U.S.C. § 983(d)(6)(A). The claimant may not be "a person with only a general unsecured interest in, or claim against, the property or estate of another." 18 U.S.C.A. § 983(d)(6)(B)(i). Accordingly, courts have held consistently that unsecured creditors do not have statutory standing to contest the forfeiture of their debtor's property. See United States v. One-Sixth Share Of James J. Bulger In All Present And Future Proceeds Of Mass. Millions Lottery Ticket No. M246233, 326 F.3d 36, 44 (1st Cir. 2003); United States v. $20, 193.39 U.S. Currency, 16 F.3d 344, 346 (9th Cir. 1994); All Funds on Deposit with R.J. O'Brien & Associates, 2012 WL 1032904, at *6; 105, 800 Shares of Common Stock of FirstRock Bancorp, Inc., 830 F.Supp. at 1117.

The government argues that Claimant lacks standing as an unsecured creditor without expressly stating whether it means Article III or statutory standing. The Court need not decide whether an unsecured creditor has Article III standing in a civil forfeiture case because it finds that Claimant lacks statutory standing as an unsecured creditor. See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 117 (1998) (noting that courts may address statutory standing before constitutional standing and collecting cases holding the same). Claimant alleges that he lent $85, 000 of the seized cash to his brother, and he alleges no facts indicating that he has a secured interest in this cash. In other words, he alleges no facts indicating that he is "a person with an ownership interest in the specific property sought to be forfeited, including a leasehold, lien, mortgage, recorded security interest, or valid assignment of an ownership interest." 18 U.S.C. § 983(d)(6)(A). Rather, his factual allegations indicate that he is "a person with only a general unsecured interest in, or claim against, the property or estate of another"-a category of people expressly barred from making an "innocent owner" claim to forfeited property. 18 U.S.C. § 983(d)(6)(B)(i). In his sur-reply, Claimant had an opportunity to offer facts indicating standing, and he offered none. Instead, he argued that "[f]actual questions which will determine whether the money was a loan' or collateral' as defined in the Uniform Commercial Code or in various Illinois statutes will be sorted out in the discovery process." Sur-reply at 3. Vague statements that discovery may produce facts creating a basis to allege standing are insufficient. To even reach discovery, Claimant needed to ...


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