United States v. Real Property At 725 Main Street, Martinez, California

          McGREGOR W. SCOTT United States Attorney ANDRE M. ESPINOSA KEVIN C. KHASIGIAN Assistant U.S. Attorney Attorneys for the United States

          UNITED STATES' REQUEST TO EXTEND THE DEADLINE TO SUBMIT A JOINT STATUS REPORT FROM JANUARY 9, 2020 TO MARCH 11, 2020

          JOHN A. MENDEZ UNITED STATES DISTRICT COURT JUDGE

         The United States submits the following Request to Extend the Deadline to file a Joint Status Report from January 9, 2020 to March 11, 2020.

         Introduction

         On February 8, 2019, the United States filed a forfeiture complaint in rem against twenty-five real properties (“In Rem Defendants”) connected to fraud and money laundering crimes in the Eastern District of California and other areas. All known potential claimants to the In Rem Defendants were served in a manner consistent with Dusenbery v. United States, 534 U.S. 161, 168 (2002) and the applicable statutory authority. Furthermore, public notice on the official internet government forfeiture site, www.forfeiture.gov, began on February 26, 2019, and ran for thirty consecutive days, as required by Rule G(4)(a)(iv)(C) of Supplemental Rules for Forfeiture Actions. See Dkt. 4. A Declaration of Publication was filed on April 11, 2019, which set forth, among other items, that publication on the government's forfeiture website was complete on March 27, 2019. Dkt 36. Additionally, the United States has posted copies of the complaint on many of the properties and filed the restraint of a lis pendens against each of the In Rem Defendants. See Dkt. 5-35.

         This case is related to four other cases filed in the Eastern District of California: two civil cases, United States v. 5383 Stonehurst Drive, Martinez, California, et al., Case 2:19-cv-00636-JAM-DB and United States v. Approximately $6, 567, 897.50 Seized From CTBC Bank, Account No. 3800191916, et al., Case 2:19-cv-00485-JAM-DB; and two recently filed criminal cases, United States v. Ronald Roach, et al., 2:19-cr-00182-JAM and United States v. Robert Karmann, 2:19-cr-00222-JAM. A notice of related case was also filed this week in another criminal case involving the DC Solar fraud, United States v. Ryan Guidry, 2:20-cr-00003-KJM.^[1]

         The United States has also lodged the complaint on the bankruptcy docket for DC Solar's parent company, In re Double Jump Inc., Case 19-bk-50102, a bankruptcy case filed in Reno, Nevada after the United States executed federal search and seizure warrants at DC Solar's business and other locations in California associated with the company and its founders. The United States and the Chapter 7 Trustees for the entities related to DC Solar and its principals have since entered a Coordination Agreement concerning the In Rem Defendants and other assets connected to DC Solar and its principals. An order approving the Coordination Agreement was entered in late November 2019, resulting in the dismissal of six In Rem Defendants from this case.^[2] See Dkt. 59-60.

         Good Cause The United States has provided notice to all potential claimants pursuant to law. Specifically, the defendant properties are collectively owned by five California LLCs, Dora Dog Properties, LLC, Dog Blue Properties, LLC, Brandy Boy Properties, LLC, 140 Mason Circle, LLC, and Park Road, LLC. The government served copies of the complaint documents on the above LLCs through their registered agent for service of process, as listed on the California Secretary of State's website. Further, the government served copies of the complaint on the principals of each respective LLC, Jeffrey and Paulette Carpoff. Lastly, the government has provided notice of this action to the lienholders who are identified on chain-of-title documents and may have a security interest in the defendant properties.

         Several parties have so far appeared in the case. First, the only parties to assert an ownership interest, Jeff and Paulette Carpoff, filed claims as to each property, but have since agreed to forfeit their interests and signed stipulations for final judgments of forfeiture. See Dkt. 42-3. Second, two banks (CTBC and Heritage Bank) filed claims concerning outstanding loans as relates to two In Rem Defendants (4901 Park Road [CTBC] and 140 Mason Circle [Heritage Bank]) currently being sold by the U.S. Marshals Service, as discussed below. Dkt. 39, 43. Third, AMAC Construction filed a claim associated with labor/materials supplied in connection with improvements at three In Rem Defendants. Dkt. 48. Fourth, Cemcon, Inc. and Legacy Framers, Inc. filed claims associated with labor/materials supplied in connection with improvements at In Rem Defendants located in El Sobrante, California. Dkt. 53-54. Lastly, a few days ago, a Tahoe-based Homeowners Association filed a claim and answer to collect unpaid HOA fees connected to the two cabins located in South Lake Tahoe. Dkt. 69-70.

         No other claimant has filed an answer. No. other party has filed an answer in this case. However, based on the claimants' requests for additional time to review the allegations-in the civil complaint as well as the four recently filed criminal informations and plea agreements-and potential privilege issues and other defenses, and given the lengthy facts and complicated issues in this case, the United States has agreed to their requests for more time. The answers are currently due on January 15, 2020. As discussed below, the United States anticipates the two banks (CTBC and Heritage Bank) will withdraw their claims given their loans will be paid off when the escrows are finalized.

         Furthermore, several potential tax equity investor-victims and those associated with the transactions have requested extensions of time to file claims in this case. For similar reasons underlying the agreement to extend the time to file answers, the United States granted each request for an extension and those entities currently have until January 15, 2020 to file a claim.

         To allow the above individuals, entities and investors sufficient time to file a claim, and the claimants to file their answers, the United States seeks to continue the deadline to file a Joint Status Report from January 9, 2020 to March 11, 2020, or to a date the Court deems appropriate.

         U.S. Marshalls Efforts to Manage and Sell In Rem Defendants 4901 Park Road and 140 Mason Circle

         As explained in the United States' application for a restraining order, 4901 Park Road and 140 Mason Circle were purchased using a combination of alleged fraud proceeds and millions of dollars in bank loans, which went into default following the search warrants at DC Solar. To preserve the availability equity, the Court ordered the U.S. ...