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United States v. Eight (8) Counterfeit Watches

United States District Court, S.D. Ohio, Western Division

August 28, 2017

EIGHT (8) COUNTERFEIT WATCHES, et. al, Defendants.


          Stephanie K. Bowman, United States Magistrate Judge.

         On March 17, 2017, the United States filed an in rem forfeiture proceeding against personal property in accordance with Supplemental Rule G(2) of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions ("Supplemental Rules") and the Federal Rules of Civil Procedure. (Doc. 1). This matter has been referred to the undersigned for initial review. (Doc. 9).

         Three motions are currently pending before the Court: (1) a motion to dismiss the complaint filed by Claimant Abdullah Luqman[1] (hereinafter "Claimant" or "Luqman"); (2) Claimant's motion for release of property; and (3) the motion of the United States to strike Luqman's claim. For the reasons that follow, the undersigned recommends that all three pending motions be denied without prejudice to renew. In addition, by separate order filed herewith, the undersigned directs Claimant Luqman to supplement his responses to the Special Interrogatories propounded by the United States, and further directs the United States to supplement its explanation for declining to release additional property seized in this case as to which forfeiture is not being sought.

         I. Background

         The complaint alleges that on September 21, 2016, [2] the United States (hereinafter the "Government") seized pursuant to a warrant certain items of personal property from 777 Jackson Street, in Cincinnati, Ohio, including eight counterfeit watches ("Defendant 1"), and assorted counterfeit articles of clothing, shoes, and accessories ("Defendant 2"). It appears from the context of the pending motions that additional property was seized at the same time, pursuant to the same warrant, that is not the subject of this civil forfeiture proceeding.

         Regardless, the Government alleges that Defendants 1 and 2 are subject to forfeiture under 18 U.S.C. § 2323(a)(1), because all of the listed property either constitutes articles of which the making or trafficking is prohibited under 18 U.S.C. § 2320, or alternatively, constitutes property that was used or intended to be used "in any manner or part to commit or facilitate the commission of an offense referred to in 18 U.S.C. § 2320" (concerning the making or trafficking of counterfeit articles). (Doc. 1 at ¶ 8). The Government alleges that more than three years prior to the execution of the warrant, on July 22, 2013, a confidential source ("CHS") made a controlled purchase of several items from Claimant Luqman at the same address, including watches, jeans, and a counterfeit "Gucci" belt, for the sum of $240.

         Luqman's motion to dismiss asserts that on July 22, 2013, the CHS first attempted unsuccessfully to purchase a firearm from him, prior to engaging in "a story stating that he [had been] a victim of robbery and was in need of clothing." (Doc. 4 at 1). Luqman asserts that Claimant "generously offered to [sell] his personal clothing out of his own closet, " which is how the CHS "ultimately obtained the counterfeit articles." (Id.). Luqman does not dispute that the items listed in the complaint are counterfeit, but argues that "federal law does not prohibit an individual from buying counterfeit products for personal use, even if they do so knowingly." (Id.) Claimant's motion maintains that the seized property was "for his personal use" and was not "made [or]...used for trafficking" in counterfeited goods, and therefore is not subject to forfeiture. (Id.)

         II. Analysis

         For the convenience of the Court, the undersigned first addresses the Government's motion to strike Luqman's claim before turning to the Claimant's motions.

         A. The Government's Motion to Strike (Doc. 15)

         The Civil Asset Forfeiture Reform Act of 2000 (CAFRA) governs civil forfeiture actions. 18 U.S.C. § 981 et seq. Under CAFRA, "any person claiming an interest in the seized property may file a claim...." 18 U.S.C. §983(a)(4)(A). However, in order to contest a civil forfeiture, a claimant must have both statutory standing and Article III standing. United States v. $515, 060.42 in U.S. Currency, 152 F.3d 491, 497 (6th Cir. 1998). While statutory standing is satisfied by filing a claim that complies with the requirements of Rule G(5) of the Supplemental Rules, in order to establish Article III standing, the claimant must have "a colorable ownership, possessory, or security interest in at least a portion of the property." Id. at 497-498.

         The Government has moved to strike Luqman's claim in this case based upon his failure to fully respond to Special Interrogatories served by the Government pursuant to Supplemental Rule G(6) of the Federal Rules of Civil Procedure.[3] The Government asserts that it requires the Claimant's responses in order to establish his identity and standing. Luqman has filed no timely response to the Government's motion.

         Luqman's initial responses to the Special Interrogatories were due on June 2, 2017, but on June 14, 2017, the Government extended his deadline to June 23, 2017. In lieu of any substantive response, Luqman has filed a document captioned "Special Interrogatory No. 1, " which states:

On all Interrogatory request[s] I would like to exercise my Miranda Rights. And avoid the circus of these question[s] which [are] virtually impossible to answer except my name[, ] addresses[, ] previous address, social security no. and other information which is public record and the court has access too! Also in reference to establishing ownership to the property seized. The majority of the property in question was brought from street vendors and given as gifts.

(Doc. 12). Despite being provided with a Declaration for execution, Claimant has failed to make even this limited response under oath, as required by the Federal Rules of Civil Procedure. See Rule 33(b)(3), Fed. R. Civ. P.

         The United States does not dispute that Luqman had physical possession of the subject property at the time that it was seized, but notes that case law supports that simple physical possession is insufficient to establish standing under Article III, and that the claimant must also allege facts "regarding how the claimant came to possess the property, the nature of the claimant's relationship to the property, and/or the story behind the claimant's control of the property. See $515, 060.42 in U.S. Currency, 152 F.3d at 498. Because of the danger of false claims, even Supplemental Rule G(5)(a)(i) requires more than a conclusory statement of ownership. See also $25, 982.28 in U.S. Currency, 2015 WL 410590 at *1 (N.D. Ohio Jan. 29, 2015) (internal citations omitted). Thus, courts have consistently held that claimants in civil forfeiture cases must answer interrogatories regarding their interest in the defendant property where the claimant's ownership interest in the property forms a central issue in the proceeding. See $133, 420.00 in U.S. Currency, 672 F.3d 629, 642-43 (9th Cir. 2012).

         On the other hand, courts have found that in some cases, the Government's own allegations can establish a claimant's standing. See, e.g., $515, 060.42 in U.S. Currency, 152 F.3d at 499-500 (collecting cases). In the instant case, the Government's complaint alleges that all of the defendant property was seized from Claimant Luqman by the Federal Bureau of Investigation ("FBI") on September 21, 2016. The complaint alleges that Luqman operated a snack business out of the front room of 777 Jackson Street in Cincinnati, Ohio, which appears to be the Claimant's residence, though that fact is not entirely clear from the complaint. Unlike a sum of cash in a vehicle, the subject property consists largely of clothing and similar personal property items found in what appears to have been the Claimant's residence. Thus, the allegations of the Government's complaint and the nature of the property seized raise some question, in the undersigned's view, as to the centrality of the information sought and legitimacy of any challenge to Article III standing that the Government claims to be exploring through the Special Interrogatories.

         Still, there is no question that the Special Interrogatories, a copy of which are attached to the Government's motion, all generally relate to the Claimant's identity and to his relationship to the seized property. Although the Government does not allege that anyone else lived in the residence or that it has some other basis for challenging standing, it's argument that it requires the information to more fully determine Luqman's standing remains unopposed by Luqman. The Government has ...

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