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United States v. $194

United States District Court, W.D. Louisiana, Monroe Division

October 22, 2019

UNITED STATES OF AMERICA
v.
$194, 073.14 IN UNITED STATES CURRENCY

          MARK L. HORNSBY MAG. JUDGE

          RULING

          TERRY A. DOUGHTY UNITED STATES DISTRICT JUDGE

         Plaintiff 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].

         The motion is fully briefed, and the Court is prepared to rule.

         I. FACTS AND PROCEDURAL BACKGROUND

         On 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.

         In 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.

         In each 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 id.

         The 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.

         However, 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

         Special 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.

         On 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. § 981 (a)(1)(A)(i).

         On 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 9, ...


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