Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_12-cv-01999/USCOURTS-azd-2_12-cv-01999-2/pdf.json

Nature of Suit Code: 690
Nature of Suit: Other Forfeiture and Penalty Suits
Cause of Action: 28:1355 Petition for Return of Property

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Joshua Bloom, 

Petitioner, 

vs.

United States Department of Treasury, 

Respondent. 

_________________________________

United States of America,

Plaintiff,

vs.

Rolls Royce Phantom Sedan 2004, VIN #

SCA1S68444UX07410,

Defendant.

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No. CV-12-1999-PHX-FJM

No. CV-12-2337-PHX-FJM

ORDER

The court has before it two identical Motions to Set Aside Default, Re-Open Cases

and Unseal Documents in the above two captioned cases. In Bloom v. U.S. Treasury, 12-

CV-1999, we have the motion (doc. 14), response (doc. 18), and reply (doc. 21). In U.S. v.

Rolls Royce Phantom Sedan, 12-CV-2337, we have the motion (doc. 16), response (doc. 20),

and reply (doc. 23). In both motions, petitioner Joshua Bloom seeks to set aside the default

judgments entered against him, and to reopen the cases for an adjudication on the merits.

Case 2:12-cv-01999-FJM Document 22 Filed 09/20/13 Page 1 of 7
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Under the Currency and Foreign Transactions Reporting Act of 1970, and regulations

promulgated by the Department of Treasury, financial institutions are required to file reports

whenever they are involved in cash transactions of more than $10,000. 31 U.S.C. § 5313(a);

31 C.F.R. § 1010.311. 

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I. Background

In March 2010, Bloom purchased the subject 2004 Rolls Royce for $134,843.66 from

a dealer in Texas. He paid for the vehicle in part with 16 money orders issued by Money

Gram, the United States Postal Service, and Western Union. The 16 money orders were

purchased on the same day, at nine separate locations in close proximity, in amounts below

the currency transaction reporting threshold of $10,000.1

 The government alleged that

Bloom knowingly structured the financial transactions in order to avoid the reporting

requirements of 31 U.S.C. § 5313(a), in violation of 31 U.S.C. § 5324(a).

Bloom also financed a portion of the vehicle purchase with a $65,000 loan from Best

Banc. The government asserted that Bloom made a number of suspect and unusual payments

on the car loan, including an October 25, 2010 payment consisting of 16 money orders that

were purchased at two locations in close proximity to each other. Again, government

analysis of the money orders revealed that they were purchased in a manner consistent with

an attempt to evade the currency transaction reporting requirements. 

On May 8, 2012, a Federal Task Force Officer interviewed Bloom regarding the

financial transactions. Bloom stated that he purchased the money orders using money that

he kept in a safe buried in the backyard of his mother’s residence in Delaware. But when the

officer told Bloom that his mother would also be contacted, Bloom changed his story and

admitted that his mother lived in Washington State. The Officer ultimately served Bloom

with a federal seizure warrant and seized the Rolls Royce.

On September 19, 2012, Bloom, through his lawyer Nathan Carr, filed a hardship

petition in this court. See Bloom v. U.S. Treasury, 12-CV-1999 (“IRS Hardship Action”).

The United States responded to the petition asserting that Bloom had purchased the Rolls

Royce through financial transactions that were knowingly structured to avoid the reporting

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requirements of 31 U.S.C. § 5313(a). The government argued that the hardship petition

should be denied because Bloom could not prove any of the four elements set forth in 18

U.S.C. § 983(f)(1). Bloom did not file a reply brief in support of his petition. On January

28, 2013, we entered an order finding that Bloom had not satisfied § 983(f)(1), and denied

the petition (doc. 12). The Clerk entered final judgment (doc. 13).

On October 31, 2012, while the Hardship Action was pending, the United States filed

a civil complaint for forfeiture of the Rolls Royce. U.S. v. Rolls Royce Phantom Sedan, 12-

CV-2337 (the “Forfeiture Action”). Because Bloom’s lawyer, Nathan Carr, was representing

Bloom in the IRS Hardship Action, the United States served the complaint and notice of

forfeiture upon Mr. Carr by certified mail, at his address of record. Carr’s office signed the

certified mail receipt on November 4, 2012. Bloom did not file a claim or answer in the

Forfeiture Action. Therefore, upon motion of the government, the Clerk entered default

judgment on February 13, 2013.

II. IRS Hardship Action

Bloom has now moved to set aside the “default” judgments in both the IRS Hardship

Action and the Forfeiture Action, contending that his lawyer, Nathan Carr, had moved his

office in November 2012, and therefore did not receive the notices of the docket filings in

either case. 

First, we reject Bloom’s characterization of the judgment in the IRS Hardship Action

as a “default judgment.” Bloom filed his petition. The government answered.

Notwithstanding that Bloom did not file a reply brief in support of his hardship petition, we

ruled on the merits of the petition and final judgment was entered. This was not a default

judgment. 

Moreover, contrary to Bloom’s current assertion, Attorney Carr does not “avow[] that

he did not receive any pleadings or information in the [IRS Hardship] case.” Motion at 3:18-

22. In fact Carr acknowledges that he “receiv[ed] notice that the petition . . . was denied.”

Carr Affidavit at 1:18-19. More importantly, however, the docket in the IRS Hardship

Action demonstrates that each of the docket entries was electronically sent to Carr. The fact

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that electronic notices were sent renders the relocation of Carr’s physical office irrelevant.

The record demonstrates that Bloom, through his counsel of record, received notices

of every filing in the IRS Hardship Action. Bloom has made no showing to support a motion

for relief from judgment under Rule 60(b), Fed. R. Civ. P. Therefore, petitioner’s motion to

set aside the judgment in the IRS Hardship Action is denied (12-CV-1999, doc. 14).

III. Forfeiture Action

The government asserts that, when it filed the Complaint for Forfeiture of the Rolls

Royce on October 31, 2012, it served the complaint and the notice of forfeiture by certified

mail on Nathan Carr, the same lawyer representing Bloom in the IRS Hardship Action.

Carr’s office signed the certified mail receipt on November 14, 2012. On January 25, 2013,

the United States filed a notice of publication and mailed a copy to Carr. Bloom failed to file

a claim or answer. The United States therefore applied for a default and mailed a copy to

Carr. The government then moved for default judgment, and again mailed a copy to Carr.

On February 13, 2013, the Clerk entered a default judgment. Almost six months later, Bloom

has now moved to set aside the default judgment. 

A default judgment may be set aside pursuant to Rule 60(b), Fed. R. Civ. P. See Fed

R. Civ. P. 55(c). Where a defendant seeks relief under Rule 60(b)(1) based upon “excusable

neglect,” the court applies the same three factors governing a “good cause” analysis under

Rule 55(c). Brandt v. American Bankers Ins. Co., 653 F.3d 1108, 1111 (9th Cir. 2011).

Those factors include: (1) whether the defendant engaged in culpable conduct that led to the

default; (2) whether the defendant lacks a meritorious defense; or (3) whether setting aside

the default judgment would prejudice the plaintiff. Id. These factors are applied so as to

balance the competing interests in assuring substantial justice and in protecting the finality

of judgments. A motion to set aside can be denied “if any of the three factors is true.” Id.

(citation omitted).

A. Notice

Bloom contends that he never received notice and had no knowledge of the Forfeiture

Action until after default judgment was entered. Bloom’s lawyer, Nathan Carr, also avows

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that he did not receive any of the pleadings in the Forfeiture Action and only learned about

the action by chance when reviewing the docket in the IRS Hardship Action. Carr Affidavit

1:19-23. 

This in rem forfeiture action is governed by the Supplemental Rules for Admiralty or

Maritime Claims and Asset Forfeiture Actions (“Supplemental Rules”). Under Supplemental

Rule G(4)(b)(iii)(B), notice of an action “may be sent to the potential claimant or to the

attorney representing the potential claimant with respect to the seizure of the property or in

a related investigation, administrative forfeiture proceeding, or criminal case.” Attorney Carr

was representing Bloom in the IRS Hardship Action. The hardship petition was a challenge

to the seizure of the Rolls Royce. Therefore, for purposes of Supplemental Rule

G(4)(b)(iii)(B), Attorney Carr was “representing the potential claimant with respect to the

seizure of the property.” Id. 

Bloom incorrectly argues that at the time Attorney Carr was served with the Forfeiture

Action, there was no “administrative forfeiture proceeding.” Motion at 6 (emphasis in

original). Carr was served with the Forfeiture Action on November 14, 2012 (12-CV-2337,

doc. 7-1). Judgment was not entered in the IRS Hardship Action until January 28, 2013 (12-

CV-1999, doc. 13). Therefore, at the time the government served Carr, he was still

representing Bloom with respect to seizure of the Rolls Royce. Therefore, service on Carr

satisfied the government’s notice obligation under Rule G(4)(b)(iii)(B). 

We note in reaching this conclusion that, although Carr was moving his office during

November 2012, he kept an office and staff at the old address through November. See

Affidavit of Jana Darling ¶ 3. The complaint in the Forfeiture Action was served to that

address on November 14, 2012, and was signed for by office staff. There is no explanation

as to why Carr did not receive the notice immediately upon service given that he still had an

office and staff in place. The alleged failure to receive notice of the Forfeiture Action does

not constitute good cause to set aside the default judgment.

B. Meritorious Defense

Bloom argues that the default judgment must be set aside because he has a meritorious

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defense to the forfeiture. He generally asserts that the funds he used to purchase the Rolls

Royce were not proceeds of illegal drug activity. Motion at 7-8. He contends that he is

unable to provide more information unless the affidavit in the IRS Hardship Action (doc. 8)

is unsealed. 

Although the burden on a party seeking to vacate a default judgment on the basis of

a meritorious defense “is not extraordinarily heavy,” TCI Group Life Ins. Plan v. Knoebber,

244 F.3d 691, 700 (9th Cir. 2001), the movant must present “specific facts that would

constitute a defense,” Franchise Holding II, LLC v. Huntington Rests. Group, Inc., 375 F.3d

922, 926 (9th Cir. 2004). 

Bloom has not satisfied this burden. Instead, he offers only conclusory statements

denying that the funds used to purchase the Rolls Royce were not proceeds of illegal drug

activity. Other than this bare assertion, he has provided no facts to support this contention.

“A mere general denial without facts to support it is not enough to justify vacating a default

or default judgment.” Id. (quoting Madsen v. Bumb, 419 F.2d 4, 6 (9th Cir. 1969)). 

More importantly, however, Bloom does not challenge the government’s claim that,

in purchasing the Rolls Royce, he structured numerous payments to avoid the currency

transaction reporting requirements in violation of 31 U.S.C. § 5324(a). The government is

entitled to seek civil forfeiture of funds that were the subject of illegal structured banking

transactions. 31 U.S.C. § 5317(c)(2).

Bloom was alleged to have repeatedly violated 31 U.S.C. § 5324 by structuring

financial transactions to avoid the reporting requirements in the purchase of the Rolls Royce.

Therefore, the Rolls Royce is subject to forfeiture. Bloom presents no facts that would

constitute a defense to these charges. Unsealing the affidavit in the IRS Hardship Action

would not assist in presenting this defense. The facts surrounding the structured transactions

are not under seal. Therefore, we conclude that Bloom has not demonstrated that he can

present a meritorious defense to the forfeiture of the Rolls Royce. Bloom’s motion to set

aside the default judgment is accordingly denied (doc. 16). 

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IV. Conclusion

IT IS ORDERED DENYING Bloom’s Motion to Set Aside Default, Re-Open Cases

and Unseal Documents in the IRS Hardship Action (12-CV-1999, doc. 14).

IT IS FURTHER ORDERED DENYING Bloom’s Motion to Set Aside Default,

Re-Open Cases and Unseal Documents in the Forfeiture Action (12-CV-2337, doc. 16). 

DATED this 19th day of September, 2013.

Case 2:12-cv-01999-FJM Document 22 Filed 09/20/13 Page 7 of 7