United States District Court, E.D. 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. ...