United States District Court, W.D. Louisiana, Monroe Division
L. HORNSBY MAG. JUDGE
A. DOUGHTY UNITED STATES DISTRICT JUDGE
United States of America (the “United States”)
brings this action in rem in its own right to
forfeit and condemn $194, 073.14, in United States currency
(referred to herein as “Defendant Property”).
Pending here is a Motion for Partial Summary Judgment filed
by the United States [Doc. No. 4] seeking a final judgment
that Defendant Property be forfeited and condemned for the
use of the United States. Claimant Randall B. Lord
(“Randall Lord”) has filed an opposition [Doc.
No. 6]. The United States has filed a reply [Doc. No. 7].
motion is fully briefed, and the Court is prepared to rule.
FACTS AND PROCEDURAL BACKGROUND
November 18, 2015, an Indictment issued against Randall Lord
and Michael A. Lord (“Michael Lord”), a father
and son tandem (hereinafter referred to together as the
“Lords”), for multiple counts of conspiracy to
operate an unlicensed money transmitting or servicing
business (“MSB”) in violation of 18 U.S.C.
§1960, money laundering in violation of 18 U.S.C. §
1956, failure to file Currency Transaction Reports
(“CTRs”) in violation of 31 U.S.C. §§
5313 and 5322, wire fraud in violation of 18 U.S.C.
§1343, and drug conspiracy in violation of 21 U.S.C.
§846 with criminal forfeiture allegations under 18
U.S.C. § 982 and 31 U.S.C. § 5317.
April of 2016, the Lords pled guilty to conspiracy to operate
an unlicensed MSB, namely a bitcoin exchange business, under
18 U.S.C. § 371, and Randall Lord agreed to forfeiture
of all interests he owns or over which he exercises control,
directly or indirectly, in any asset that is subject to
forfeiture to the United States. Although the Lords were
sentenced to prison and are currently incarcerated, on July
7, 2017, Judge S. Maurice Hicks, Jr., denied the
Government's Motion for Preliminary Order of Forfeiture
in the criminal case because the Lords did not specifically
plead guilty to a forfeitable offense. Judge Hicks found that
forfeiture under 18 U.S.C. § 982(a)(1) is only available
when there is a conviction for a substantive violation of 18
U.S.C. §§ 1956, 1957, or 1960, but forfeiture is
not available when there is a conviction for a
conspiracy to violate one or more of those statutes.
Therefore, no final order of forfeiture was ever entered
related to the criminal prosecution.
of their respective pleas, however, the Lords explicitly
agreed to forfeit all interest in any asset subject to
forfeiture directly, or as a substitute asset under 21 U.S.C.
§ 853(p). See [Doc. Nos. 1-1, 1-2, Plea
Agreements of the Lords]. Therein, the Lords waived any
constitutional and statutory challenges to any forfeiture
carried out in accordance with their plea agreements. See
Lords also agreed to disclose the existence, nature and
location of all assets forfeitable to the United States from
2013 through the date of the plea agreement, April 19, 2016.
See id. ¶ E. 2. The Lords further agreed that
the United States may institute civil judicial forfeiture
proceedings against all forfeitable assets and that they
would not contest any such proceedings. See id. p.
6. ¶ E. 4.
the Lords did not disclose the Defendant Property. Instead,
in 2018, one of the credit card processors used in the
Lords' activities, Total System Services, Inc. (TSYS),
contacted Special Agent Darrin Heusel of the Internal Revenue
Service. TSYS notified him that it was holding $194, 073.14
at its member bank, First National Bank of Omaha, on behalf
of its merchant account with Randall Lord d/b/a Quantum
Health, LLC. In 2014, Randall Lord had opened a merchant
account with TSYS for credit card processing through Quantum
Health, LLC - a shell entity created solely for the purpose
of operating the Lords' unlicensed bitcoin exchange. TSYS
initially held the funds because a large amount of
chargebacks suggested or indicated fraudulent activity. No.
further action had been taken
Agent Heusel executed a Declaration (the “Heusel
Declaration”) in support of the Seizure Warrant
pursuant to 18 U.S.C. § 981(b), [Doc. No. 1-3] averring
there is probable cause that Defendant Property was involved
in transactions laundering monetary instruments through an
unlicensed MSB in violation of 18 U.S.C. §§ 1956
and 1960. He further averred these transactions also
represent or are traceable to gross receipts obtained,
directly or indirectly, from wire fraud in violation of 18
U.S.C. § 1343.
December 11, 2018, the United States filed an Application for
Seizure Warrant pursuant to 18 U.S.C. § 981(b), which
the Magistrate Judge of this Court signed the same day.
Following First National Bank of Omaha's issuance of the
December 14, 2018 cashier's check to the U.S. Department
of Treasury in response to the Seizure Warrant, the United
States provided Randall Lord written notice to file an
administrative claim within 60 days under 18 U.S.C. §
April 2, 2019, Randall Lord submitted a Claim of Ownership
under 18 U.S.C. § 983(a)(2). [Doc. No. 1-4]. On June 28,
2019, the United States filed a complaint for civil
forfeiture pursuant to 18 U.S.C. § 983(a)(3) [Doc. No.
1]. On September 5, 2019, Randall Lord filed an Answer [Doc.
No. 2]. On September 19, 2019, the United States filed the
pending motion for summary judgment [Doc. No. 4]. On October