Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_05-cv-00149/USCOURTS-caed-2_05-cv-00149-12/pdf.json

Nature of Suit Code: 690
Nature of Suit: Other Forfeiture and Penalty Suits
Cause of Action: 28:1345 Complaint for Forfeiture

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McGREGOR W. SCOTT

United States Attorney

KRISTIN S. DOOR SBN 84307

Assistant U.S. Attorney

501 I Street, Suite 10-100

Sacramento, California 95814

Telephone: (916) 554-2723

Attorneys for Plaintiff 

United States of America

IN THE UNITED STATES DISTRICT COURT FOR THE

EASTERN DISTRICT OF CALIFORNIA

UNITED STATES OF AMERICA, )

 )

Plaintiff, ) 

 )

 v. )

 )

 )

APPROXIMATELY $1,200,000 IN )

U.S. CURRENCY SEIZED FROM )

FIRST CALIFORNIA BANK ACCT. )

NO. 2005638, ETC. )

 )

 )

 Defendants. )

_____________________________)

2:05-CV–0149 DFL/KJM

STIPULATION TO DISMISS AS TO TWO

DEFENDANTS AND ORDER THEREON

Date: N/A

Time: N/A

Courtroom: N/A

Plaintiff United States of America and claimants Universal

Insurance Exchange ("Universal"), and Bennett Truck Transport,

LLC ("Bennett"), stipulate as follows:

1. Universal is a general unsecured creditor of TriContinental Exchange Ltd. ("TCE"), Combined Services, Ltd.

("CSL") and/or Alternative Market Exchange Ltd. ("AME),

collectively referred to herein as the "Debtors." Bennett

asserts constructive trust and unsecured claims against the

debtors and the forfeiture funds. Bennett also asserts a lien on

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the funds pursuant to California Code of Civil Procedure §

708.410. 

2. The plaintiff has filed a civil forfeiture action

against the defendant currency, alleging that the funds were

involved in, or are traceable to, money laundering violations

committed by Robert L. Brown a.k.a. Matthew Schachter ("Brown) 

through TCE and CSL, and/or constitute or are derived from the

proceeds of mail fraud, or a conspiracy to commit such offense,

committed by Brown through TCE and CSL.

3. Universal filed a Claim to the defendant currency on

March 24, 2006, and filed an Answer to the Verified Complaint for

Forfeiture In Rem (the "Complaint") on April 11, 2006. 

4. Bennett filed a Claim to the defendant currency on

November 23, 2005, filed a Lien on Pending Action on January 10,

2006, and filed an Answer to the Complaint on January 9, 2006.

5. John Hollis filed a Claim to the defendant currency on

or about December 19, 2005. 

6. In a Memorandum of Opinion and Order dated July 19,

2005, (hereafter "District Court Order") this Court granted, in

part, the plaintiff's motion to dismiss Hollis's claim. This

Court ruled that Hollis does not have standing to assert an

interest in the $1.2 million seized from his trust account at

First California Bank Account No. 2005638 (Order, at 16), nor

does he have standing to assert an interest in the $177,695.11

connected to a transfer to the United States from Bullivant

Houser Bailey. 

7. This Court ruled that Hollis does have standing to

assert a claim to the $225,958.84 seized from Hollis' personal

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bank account at Bank of America. 

8. Thereafter, Hollis filed an Answer to the Complaint

(under seal) on September 19, 2006, and filed an Amended Answer

(under seal) on September 26, 2006. 

9. The government and the Liquidators for the debtors (see

¶ 12(a) infra) entered into a stipulation to transfer the

defendant funds, other than the $225,958.84 described in ¶ 7, to

the bankruptcy court for distribution to the debtors' creditors

in accordance with all applicable laws. 

10. The government and claimants Bennett and Universal now

seek to dismiss this forfeiture action without prejudice,

pursuant to Rule 41(a)(2) of the Federal Rules of Civil Procedure

against the approximately $1.2 million seized from First

California Bank Account No. 2005638, and the approximately

$177,695.11 connected to a transfer to the United States from

Bullivant Houser Bailey. This stipulation is based upon the

determination that the defendant funds belong to Brown traceable

to fraudulent activities conducted through TCE and CSL, and that

the funds should be administered in connection with the

insolvency proceedings for TCE and CSL. 

11. The rights of Bennett and Universal, if any, to the

sums described in the preceding paragraph will be determined in

accordance with applicable bankruptcy law, forfeiture law, and/or

state law. Nothing in this stipulation is intended to

adjudicate, hinder, or impair the rights of claimants to the

funds, and such rights, if any, are preserved and will be

addressed in the insolvency proceedings discussed below. 

12. The facts in support of this stipulation and request

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for an Order are as follows:

a. Foreign insolvency proceedings have been

commenced against the Debtors in St. Vincent

and the Grenadines before the Eastern

Caribbean Supreme Court (the “SVG

Proceedings”). A three-person Foreign

Representative was duly appointed in the SVG

Proceedings to serve as the Joint Liquidators

(hereafter "the Liquidators") of the Debtors.

b. The U.S. Bankruptcy Court in the Eastern

District of California has granted the

Liquidator's Petition seeking recognition as

the Foreign Representative of the Debtors in

a procedure authorized pursuant to Chapter 15

of the United States Bankruptcy Code, 11

U.S.C. § 1501 et seq. Attached to this

stipulation as Ex. 1 is a copy of Judge

Klein's Memorandum Decision Regarding

Recognition of Foreign Main Proceeding filed

September 11, 2006. 

c. In addition, the government and the

Liquidators entered into a stipulation in

which the government agreed that it would

seek dismissal of this forfeiture action so

that the funds could be transferred to the

Bankruptcy Court for administration. A copy

of that stipulation is attached as Ex. A to

Judge Klein's Order Approving Modified

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Stipulation Between the United States of

America, the Debtors, and John W. Hollis,

[hereafter "Order"] attached hereto as Ex.

2. 

13. In addition, the government, claimant John Hollis, and

the Liquidators entered into a separate stipulation in which the

parties agreed that the defendant currency identified as the

approximately $225,958.84 seized from Bank of America account No.

004653665607 would remain under the jurisdiction of the district

court pending completion of the resolution of the competing

claims to the $225,958.84. A copy of that stipulation is

attached as Ex. B to Judge Klein's Order (Ex. 2).

14. As noted above, the Order (Ex. 2) incorporates the

stipulation between the United States and the Liquidators on

behalf of the debtor, and the stipulation between claimant

Hollis, the United States, and the Liquidators. 

15. In light of this Court's determination that Hollis has

no standing to challenge the forfeiture of the $1.2 million

seized from an attorney trust account and the $177,695.11 seized

from Bullivant because they belong to Brown, (District Court

Order, at 13-16; 17-19), the parties to this stipulation agree

that these funds should be administered in the Chapter 15 cases

of TCE and CSL under the supervision of the Bankruptcy Court.

16. Plaintiff also contends that the funds that were

seized from claimant Hollis' personal account at Bank of America

(approximately $225,958.84) also belong to TCE and CSL and should

be administered in the Chapter 15 case under the supervision of

the Bankruptcy Court. However, claimant Hollis has advised the

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plaintiff that he objects to the transfer of these funds to the

Bankruptcy Court, and will oppose any effort to do so. 

Accordingly, at this time the plaintiff, Universal, and Bennett

only seek the dismissal of the forfeiture action as to the

defendants identified as the $1.2 million seized from the

attorney trust account, and the $177,695.11 Bullivant funds to

the Bankruptcy Court. 

17. Upon dismissal of this action as to the $1.2 million

and the $177,695.11, the plaintiff will take all steps necessary

to transfer these funds from the U.S. Treasury-Customs Suspense

Account to the Liquidators identified in the September 11, 2006,

Memorandum Decision Regarding Recognition of Foreign Main

Proceedings (Ex. 1).

18. The parties to this stipulation agree that there was

reasonable cause for the seizure and arrest of the defendant

currency and that the Court may enter a Certificate of Reasonable

Cause pursuant to 28 U.S.C. § 2465.

19. The parties further stipulate that even if they receive

any distribution of funds in the bankruptcy proceedings, that

distribution is not to be considered as a "judgment for the

claimant" within the meaning of 28 U.S.C. § 2465(a), nor will

that claimant be considered a "prevailing party" within the

meaning of 28 U.S.C. § 2465(b). 

20. Any claimant's entitlement to costs or attorney fees

will be determined solely in accordance with applicable law. 

Under no circumstances will the United States be liable for costs

//

//

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or attorney fees incurred by claimants in this forfeiture action

or in the bankruptcy proceedings. 

DATED: November 30, 2006 McGREGOR W. SCOTT

United States Attorney

By: /s/ Kristin S. Door 

KRISTIN S. DOOR

Assistant U.S. Attorney

DATED: December 7, 2006 PARKINSON PHINNEY

By: /s/ Thomas R. Phinney

THOMAS R. PHINNEY

Attorneys for Claimant Bennett

Truck Transport, LLC

DATED: November 30, 2006 HUGHES & PRITCHARD

By: /s/ Gregory J. Hughes

GREGORY J. HUGHES

Attorneys for Universal 

Insurance Exchange

(Original signatures retained by attorney)

 

IT IS SO ORDERED.

Dated: December 12, 2006 /s/ David F. Levi 

DAVID F. LEVI

United States District Judge

CERTIFICATE OF REASONABLE CAUSE

Pursuant to the Stipulation for Dismissal and the

allegations set forth in the Complaint for Forfeiture In Rem

filed January 24, 2005, the Court enters this Certificate of

Reasonable Cause pursuant to 28 U.S.C. § 2465, that there was

reasonable cause for the seizure of the currency identified as

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the $1.2 million seized from the First California Bank Account

No. 2005638 and the $177,695.11 connected to a transfer to the

United State from Bullivant House Bailey.

Dated: December 12, 2006

/s/ David F. Levi 

DAVID F. LEVI

United States District Judge

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