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United States v. Real Property Located in Nevada County

March 2, 2010

UNITED STATES OF AMERICA, PLAINTIFF,
v.
REAL PROPERTY LOCATED IN NEVADA COUNTY, CALIFORNIA, APN: 61-070-08, INCLUDING ALL APPURTENANCES AND IMPROVEMENTS THERETO, REAL PROPERTY LOCATED IN NEVADA COUNTY, CALIFORNIA, APN: 61-140-37, INCLUDING ALL APPURTENANCE AND IMPROVEMENTS THERETO, REAL PROPERTY LOCATED IN NEVADA COUNTY, CALIFORNIA, ORIGINAL APN: 61-070-09, CURRENTLY KNOWN AS APN: 61-070-25, INCLUDING ALL APPURTENANCES AND IMPROVEMENTS THERETO, REAL PROPERTY LOCATED IN NEVADA COUNTY, CALIFORNIA, ORIGINAL APN: 61-150-08, CURRENTLY KNOWN AS APN: 61-151-08, INCLUDING ALL APPURTENANCES AND IMPROVEMENTS THERETO, AND REAL PROPERTY LOCATED IN NEVADA COUNTY, CALIFORNIA, ORIGINAL APN: 61-140-43, CURRENTLY KNOWN AS AND INCLUDING APN: 61-140-52, APN: 61-140-58, APN: 61-140-63, APN: 61-140-69, APN: 61-140-70, APN: 61-140-72, APN: 61-140-74, APN: 61-140-76, APN: 61-140-77, APN: 61-140-78, AND APN: 61-140-79, INCLUDING ALL APPURTENANCE AND IMPROVEMENTS THERETO, DEFENDANTS.



The opinion of the court was delivered by: Frank C. Damrell, Jr. United States District Judge

JOINT STATUS REPORT AND STIPULATION FOR STAY OF FURTHER PROCEEDINGS AND ORDER THEREON

Pursuant to this Court's Order Requiring Joint Status Report the plaintiff United States of America and claimants Charles M. Hilkey, Kenneth W. Hermiston, Doug G. Giffin, and Carol Cator as Trustee of the Nathan Hilkey Trust ("Claimants"), submit the following report.

(a) Brief summary of the claims and legal theories under which recovery is sought or liability denied:

Plaintiff has filed a total of four civil in rem forfeiture complaints against real property owned by Charles M. Hilkey. This status report applies only to the fourth case filed: U.S. v. Real Property in Nevada County, 61-070-08, et al., hereafter referred to as "Hilkey #1-Cherokee/Callahan.*fn1 All known potential claimants in this case have been served, or reasonable attempts to serve them have been made, and the time for these potential claimants to file a claim, and the time for filing answers, in these cases, has expired.

In addition, publication of the forfeiture on the government's website is not yet complete. Under Rule G (5)(a)(ii)(B) a person who did not receive direct notice of the forfeiture (e.g. by certified mail or personal service), but who sees the notice of forfeiture on the website, can file a claim as late as 60 days after the first day of publication on the government website. The first day of publication will be March 2, 2010; accordingly, other potential claimants have until May 3, 2010, to file claims in this action.

The facts are complicated, but the legal theories in this case are straightforward: Plaintiff United States of America contends the Charles M. Hilkey structured the proceeds of drug trafficking (marijuana) into various bank accounts and then used those funds to purchase the defendant property; and/or used the funds to reduce the principal balance due on a mortgage encumbering the defendant property. The property is therefore forfeitable to the United States under one or more forfeiture statutes: 18 U.S.C. § 981(a)(1)(A) which provides for the forfeiture of property involved in a money laundering transaction in violation of 18 U.S.C. § 1956(a)(1)(B)(i); under 18 U.S.C. § 981(a)(1)(A) which provides for the forfeiture of property involved in another kind of money laundering transaction in violation of 18 U.S.C. § 1957; 31 U.S.C. § 5317(c)(2) which provides for the forfeiture of property involved in structuring transactions in violation of 31 U.S.C. § 5324 (a)(3); and 21 U.S.C. § 881(a)(6) which provides for the forfeiture of property derived from the proceeds of drug trafficking.

Claimants deny the allegations. Claimant Hermiston claims to be the owner of the parcel identified by Nevada County APN 61-140-77. Claimant Giffin claims to be the owner of a parcel identified by Nevada County APN 61-070-26 but no parcel with this number is listed in the government's forfeiture complaint. The parties are investigating this discrepancy. If the government listed an incorrect parcel number, the government will file an amended complaint to reflect that it intends to forfeit APN 61-070-26 rather than parcel 61-070-25 as is currently listed in the complaint. In the alternative, if the government correctly listed parcel 61-070-25, Giffin will determine whether he has a claim to that parcel and will file an amended claim if necessary. Carol Cator, as Trustee of the Nathan Hilkey Trust, claims to be the owner of the parcel identified as Nevada County APN 61-140-52. Claimant Hilkey claims to be the owner of the remaining parcels.

(b) Status of service upon all defendants and cross-defendants and claimants:

All potential claimants to the real property have been served, and the time for filing claims has expired.

(c) Possible joinder of additional parties:

Plaintiff does not anticipate that there will be any additional parties, but it is possible that a person who sees the notice of forfeiture on the government website will file a claim and answer and will therefore become a party.

(d) Contemplated amendments to the pleadings:

The parties do not contemplate amending the pleadings. In light of the requested stay (see below) plaintiff does not object if the parties to this stipulation file their Answers after the stay is lifted.

(e) Statutory basis for jurisdiction and venue: Jurisdiction is based on 28 U.S.C. §§ 1345 and 1355(a). Venue is based on 28 U.S.C. §§ 1355(b) and 1395, and 21 U.S.C. § 881(j).

(f) Anticipated discovery and the scheduling of discovery, including:

(1) what changes, if any, should be made in the timing, form, or requirement for disclosure under Rule 26(a), including a statement as to when disclosures ...


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