UNITED STAT ES DIS TRICT COURT F OR THE D ISTRIC T OF CO LU M BIA

) UNITED STAT ES O F AMERICA ) ) P laintif f, )

) v. ) Civil Action No. 08-1345 (RM C) ) 8 GILCREASE LANE, QUINCY ) F LORIDA 32351, et al. ) ) Defendan ts. ) )

M EM OR

AN DU M OP IN ION I n th is c iv il fo rf

e iture c a se , v ari ou s w ou ld- be int e rv e no rs have fi le d M oti on s to I nte rv e ne se e kin g dis mis sa l of the c a se and

the re tur n to the m of

fu nd s se ize d f

ro m ba nk a c c ounts that wer e, bef

ore the ir seizure, under the control of operators of Ad S urf Daily (“A SD”) a nd Golden Panda Ad Builder (“G P”). The Gover nment alleg es that ASD and GP w ere , in a ctuality , I nterne t Ponz i schemes that de fra

uded over 100,000 people. It now opposes the Motions to I nterve ne. I. BACKG ROUND AS D and GP were two investment prog rams that oper ated a s auto-surf adver tising companies pr omising to retur n to the “adve rtisers” 125% of each “purcha se” at a rate of a bout 1% pe r d ay . T he Go ve rnme nt a lle g e s t hat De fe nd ants — c e rt a in r e a l pr op e rt ie s in F lor ida and South Carolina, and $53 milli on in funds from ten Bank of Americ a accounts — are the proceeds of wire fra ud and subjec t to seiz ure a nd civil forfe iture in rem purs ua nt t o 1 8 U .S. C. § 981( a )( 1( C) . ASD fi le d a mot ion fo r r e tur n of the fu

nd s, so that the bu sin e ss c ou ld c on tin ue , a nd a mot ion to d ism iss the complaint. B y

decision ente red on November 19, 2008, this Court denied the motions, holdi ng-2-

t h a t“ A S D h a s f

a i l e d t o d e m o n s t r a t e t h a t i t s a s s e t s ar e n o tp r o c e e d s d e r i v e d f r o mu n l aw f

u l a c t i v i t y” and that the “ motion to di smiss i s without merit.” Memo. Op. [Dkt # 35] at 1.

The Gove rnment filed its Complaint for For feiture in Rem under 18 U.S.C. § 981(a) (1), which authorizes the forf eiture of any proper

ty that constitutes or is de rived fr om proce eds trac eable to “spec ified unlawf ul activit[ ies],” including wir e fr aud, 18 U.S.C. § 1342. Compl. ¶ 1. The Gove rnment seized the funds in the ba nk acc ounts pursuant to warr ants issued by a United States Mag istrate Judge. Id. ¶ 5. On August 15, 2008, Thomas A. (Andy) Bo wd o i n , J r. , and Bow doin/Harris Enter

prises, Inc., filed ve rified c laims for the Def endant r eal pr operties a

nd funds seized by the Gover

nment. See Dkt. # 6. ASD separ ately filed a ve rified c laim for the money from the B ank of A merica

acc ounts. SeeM o t. f

o r Re tu r no f Se iz e d F un d s [D kt. # 7 ]. There afte r, Mr. Bow doin, Bow doin/Harris Enterprises, and A SD filed a Motion for L eave to Wi thdraw Claims, Release of C l ai m s to Seiz ed Proper ty and Consent to For feiture

. See Dkt. # 39. Filed on January 13, 2009, this Moti on stated: 1. Claimants withdraw and r elea se with prejudice the verifie d claims they filed in this civil forfeiture action. 2. Claimants c onsent to the forf eiture of the prope rties for which they have ass ert ed cla ims ( i.e. , th e r e a l p r o p e rty a t 8 G il c r e a s e L an e an d th e b ank acc ount balance s at the B ank of A merica in t h e n am es of Thoma s A. Bow doin J r., sole propr i et or, d/b/a AdSurfD aily ) and e x pressly

announce their intention to not contest the g overnme nt’s forf eiture effor

ts ag ainst the pr op e rt ie s f

or wh ic h th e y

have a sse rt e d c la ims

. Id. a t 2. As a

re su lt, the Go ve rnm ent mo ved the Cou rt to a llo w the Cla ima

nts to w ith dr aw the ir claims and c onsent to forf eiture and to c ance l the I nitial Sche duling Confere nce set of January 30, 2009. S ee Un o p posed Mot. to Cancel Initial Scheduling He aring[Dkt. # 40] . The Gove rnment explained that it was “explor[ ing] mecha nisms to i dentify

victims and losses attributable to the-3-

Ad Sur fD a ily

and Go lde n Pa

nd a Ad B uil din g Pon zi op e ratio ns so that pr op e rt y su e d b e c a

us e of its involvement in the fra

ud scheme s . . . may be used to c ompensate the fra uds’ victims.” Id. at 2 . By Orde r issued on January 22, 2009, the Court g rante d the Claimants’ motion and held that “Claimants’ cla ims [ Dkt. # 6] are dee med withdrawn.” Or der [Dkt. # 41] at 2.

T h en t h e C o u rt b ega nt o re ce i v e p l ea d i n gs fr o mv ar i o u s i n d i v i d u al s ; t h e p l ea d i n gs have be en ente red on the docket as motions to intervene

. These individuals appe ar to a lleg e either that they wer e victims of one or

both of th e au t o -s u rf fra uds or victims of the Gover nment’s int e rf e re nc e wi th t

he ir inv e stm e nt pro gram. Th e fi rs t of the se , f ile d o n F e br

ua ry 3, 20 09 , is

re pr e se ntativ e and

se e ms t o b e a

“ fo rm ” c omp la int

ina smu c h a s th e oth e rs are du pli c a te s. I t a sse rt s: The Claimant . . . comes t o this Court t o prese nt [ itself]. An I nnocent Owner Qualified Under 18 U.S.C. 983(e ) For A Motion To S et Aside For fe i ture & Civil Asset For feiture Reform Ac t of 2000 As Fa cts & L aw Wil l Prove. This Court has a Duty & O bligation To Obey

These 2 F eder al Statut e s th a t f

a ll u nd er Ar tic le VI Sup re ma c y

Cla us e of the U. S. Constit ution an d wh er e Any Violation Wi ll Be ACivil Rights Violation a mon g oth e r F e de ra l Statut e Vi olatio ns .

. . . [FOR THE RECORD, UPON THE OAT H OF OFF I CE AND BOND O F THE COURT (CL ERK, J UDGES, AND AL LOTHE R OF FI CERS OF THE COURT] ISTANDI NG I N GOD’ s kingd o m, acc ept for va lue and honor the Judges a

nd Offic ers of

the Court, parti cularly

J udg e Rosemar

y Colly er, U.S. Attorney s Wil liam Crowden and J eff rey Taylor, their Oaths of Office w it

h o u t t h e U N I T E D ST A T E S a

n d e a c ho f y o uan d In o w h a ve a Binding Private Contract “so help m e God” , that eac h of y ou will Protect and De fend A L Lmy

God g iven and Constit utionally Dec lare d Rights. Any vio lat ion of a B indin g C ont r ac t I s Subj e c t T o Le ga l D am ag e s. See Mot. to I nterve ne by Pacific Minis try Of Giving, I nt. at 1-2 [Dkt. # 43]. The g rava men of the motion is t h at al l AS D m em bers ha d a rig ht to contrac t with ASD, none of them committed any

c ri me , a nd the Un ite d St a te s A tto rn e y , in wh os e name the se izur e s w e re pe rf or med , had a du ty

to-4-

return “ all the innocent owne rship interest asse t s t o all ASD members if the y wer e g oing to shut down ASD.” Id. at 3 (lowe r ca se substituted). Se e als o Dkt. ## 44, 45, 46, 61, 63, and 65.

On Fe b ru ary

2 7 , 2 0 0 9 , M r. Bo wd o i n , p ro ce ed i n g pr o s e , filed a “Notice of Rescission and Wit hdraw al of Release of Claims to S eized Property and Consent to For feiture .” See Dkt. # 47. L ist inga se ri e s o f a lle g e d e xam pl es of “ fr a ud , tr ic ke ry

and de c e it, ” that do c ume nt a sse rt s: “THEREF ORE, this resc ission is now l eg ally acc omplished as a matter of law .” Id. at 4. Of c ourse, it is not that simple to overc ome a Court Orde r, but that issue is for anothe r day . Mr. B owdoin filed additional motions of one sort or anothe r, his counsel withdre w f ro m t h e re prese ntation, and, i nformed that corporations cannot be re prese nted by a pr o s e li ti g an t, h e h a s n o w re tained new

c ouns e l f or him se lf and the tw o c or

po ratio ns . T he Court

me nti on s the se oth e r ac tiv iti e s o nly be c a us e the y be ar o n th e Go ve rnme nt’ s a bil ity to “ c omp e ns a te the fr a

ud s’ vic tim s” a s it

int e nd s. II. LEGAL STANDARDS An applicant may intervene as of rig ht when the applicant (1) makes a timely motion; (2 ) h a s an inte re st r e latin g to t he pr op e rt

y or tr ans a c tio n w hic h is th e su bje c t of the a c tio n; ( 3) is s o situated that the disposition of the action may as a pr actica l matter impair or impede the applica nt’s ability to protect that intere st; a

nd (4) wher e the applicant’ s interests are not adequately repr esente d by the exist ing pa

rties. See F e d. R. C iv. P. 2 4( a ); se e als o Sie rra Clu b v . V an An twe rp , 523 F. Supp. 2d 5, 6 (D.D.C. 2007). Acourt, in its discretion, also may permit intervention whe re the applicant (1) make s a timely

motion; (2) has a c laim or defe nse; and (3) that claim or de fense share s with the main action a common question of l aw or fac t. See F e d. R. C iv. P. 2 4( b) ; see also EE OC v. Nat’l Chi ldr e n’ s Ct r ., 146 F.3d 1042, 1046 ( D.C. Cir. 1998). “[B]eca use an inter

venor pa rticipates on e qual footing with the original parties to a-5-

suit, a movant for leave to intervene under Rule 24(a) (2) must satisfy the s ame Article I I Istanding

re q u i re m ents as orig inal parties.” Building & Constr. T rades Dep’ t v. Reic h , 4 0 F

. 3 d 1 2 7 5 , 1282 (D .C. Cir . 1 99 4) . It is le ss c le ar t hat st and ingis r e qu ir e d f or perm is si ve in terve nti on

un de r R ule 24(b). In re Vitamins Antitrust C lass Actions , 215 F.3d 26, 31 (D .C. Cir. 2000). Where standing i s r e qui r e d, a pl a i nt i f

f mus t e s t a bl i s h: “ ( 1) i t ha s s uf f e r e d a n ‘ i nj ur y i n f

a c t ’ t ha t i s ( a ) c onc r e t e a nd p arti cu lari zed an d ( b ) actu al or im m ine n t, n o t con jectu ral o r h y p o the ti c a l; (2) the inju ry is f airl y tr ace ab le t o the ch allen ged action o f the d e f en d an t; an d ( 3 ) it is l ike ly , as o p p o sed to m erely specu l at i ve, t hat t he inj ury w i l l be r edressed by a f avo r able deci si on . ” Friend s of t he E arth, I

nc. v. La i dlaw En vt l

. Servs. , 528 U. S. 167, 180- 81 ( 2000 ) ( c i t i ng Lu jan v. D efen d ers o

f W il d li fe , 504 U. S. 5 5 5 , 5 6 0 -61 ( 1 9 9 2 ))

. III . A NA LY SIS

“Civil forf

eiture a ctions are broug ht ag ainst proper ty , not people. The owner of the proper ty may interv ene to pr otect his interest.” United States v. All Funds in Acc ounts ( Banco E s p a n o l d e Cr e dito) , 2 9 5 F.3d 23, 25 ( D.C. Cir. 2002). “B eca use civil forf

eiture is an in rem proce eding , the prope rty

subject to forf

eiture is the de fenda

nt. Thus defe nses ag ainst the forf eiture can be broug ht only

by third parties, who must interve ne.” Un i t ed S t a t es v. One -Sixth Share of J am es J. B ulge r in [Lo tte ry Pr oc e e ds ] , 326 F.3d 36, 40 ( 1st Cir. 2003). These Motions repr esent an ef fort to ac complish such intervention.

Congr ess has re quired a

would-be inter

vener to establish, by filing a timely verifie d claim to some or all of t he defenda nt proper ty , that the claimant has an inter est in some portion of, or all o f, t h e p ar t icular de fenda nt property

. See Supp. R. Adm. or Mar. Cl. & Asse t Forf eiture“A p er s o nwh o as s er t s an i n t er es ti nt h e d ef en d an tp ro p er t y

m ay co n t es t t h e fo rf

ei tu re b y fi l i n g a 1 c la im i n th e c ourt

wh e re the a c tio n is pe nd ing

. Th e c la im mus t: ( A) ide nti fy the sp e c if

ic pr op e rt y claimed; (B ) . . . state the c laimant’s intere st in the property ; [ and] (C) be si gn ed by the claimant u n d e r p e n a lt y o f p e r ju r y [. ]” Th e same st and in g rule ha s b e e n a pp lie d in anc ill ary pr oc e e din g s in

c ri min a l f

or fe iture c a se s. 2 Un ite d S tates v . B CCI

Ho ldi ng s ( Lux e mb ou rg

) S. A. ( Fi na l O rd

e r o f F or fe itu rean d D isb ur

se me nt) , 69 F. Supp. 2d 26, 59 (D.D.C. 1999) (per son who voluntarily transfe rre d his pr operty to defe ndant is n o lo ng e r ow ne r o f t

ha t pr op e rt y ; hi s a bil ity to t ra c e his pr op e rt

y to d e fe nd ant’ s a sse ts i s ir

re le va nt; there fore , victims who transfe rre d their proper ty to de fenda

nt w ere mere ly

unsecur ed cr editors, not owner s of forf

eited prope rty

). -6- Ac tio ns G( 5) ; 18 U. S.C. § 9 83 (a )( 4)( A). Com pli anc e wi th t

he se re qu ir e me nts g ive s r ise to 1 “statutory standing .” See U

n i t ed S t a tes v. Prope rty Identified as $88,260.00 in United States Currency , 925 F. Supp. 838, 841 (D.D .C. 1996) (“Averified cl ai m i n a for efe iture ac tion in rem

mus t be fi le d b y

the c la ima

nt i n o rd e r f

or th e cla ima

nt t o a c qu ir e ‘s tatut or

y sta nd ing .’ ” ); United Sta te s v . O ne19 90Me rc e de

s B e nz 30 0CE , 926 F. Supp. 1, 3 (D.D .C. 1996). I t is not clear from the plea dings whether the individuals filing the Motions made timely claims ag ainst t h e d efe ndant monies. Moreove r, cla imants have fa iled to demonstrate that they have a cog nizable interest in the monies to be for feited. F raud vic tims who volunt arily transfe r the ir pr op e rt y to t he ir wr on g do e rs do no t r e ta in a le g a l in te re st i n th e ir

pr op e rt y ; in ste a d, su c h v ic tim s acquir e a de bt ag ainst their wrong doers. See U n i t e d S ta t es v . A gn e llo , 3 44 F. Supp. 2d 360, 372 (E .D .N .Y . 2 00 3) (f

ind ing that stand ing in a ci vil fo rf e iture a c tio n r e qu ir e s a

sh ow ingof

an o wn e rs hip interest in the for feited pr operty , not merely a rig ht to pay

ment); Un ite d States v. $3, 00 0 in Cas h , 906 F. Supp. 1061, 1065 (E.D. Va. 1995) (c laimant/victim could trace his money to seized bank ac count but title to th e mo n e y

p a s s e d to p e r p e tr a to r , ma

k in g c la im an t a

nu n s e c u r e d

c r e d it o r w ithout sta nd ing ). Th e g e ne ra lize d leg a l inte re st mov ants may have in t he a sse ts o f A SD d oe s n ot e qu a te 2 to the nece ssary

particula rized int erest in any

specific asset of A SD require d for standing

. See 18-7-

U.S.C. § 983(d)( 6)(B )(I ) (“the term ‘owne r’ does not inc lude (i) a person with only a gen era l

unsecur ed intere st in, or claim ag ainst, the proper ty or estate of anothe r . . . .”) . To the extent they have n o t satisfied these ba sic requir ements — that is, timeliness and a showingof intere st in the defe ndant prope rty

— movants lack statutory standingto submit any

claim her e. The proposed intervenor s also need constituti onal standing to proce ed; that is, there must be a live ca se or controve rsy betwee n the par ties. Fr ie nd

s o f th e Ea rth , I

nc . v . La idl

aw E nv tl. Se rv s. , 528 U.S. 167, 180-81 (2000) ( citing Luj an v . D e fe nd e rs o f W ild lif e , 504 U.S. 555, 560-61 (1992)) . “The term ‘statutory standing ’ relates to a claimant’s a bility to show that he has satisfied wh a te ve r s tatutory req

uir e me nts Con g re ss h a s im po se d f or c on te sti nga

c ivi l f or fe iture a c tio n in fede ral c ourt, whil e “Ar

ticle I I Istanding ’ [or ‘constitutional standing’ ] relates to the cla imant’s

a bil ity to s ho w that he ha s a

su ff ic ie nt i nte re st i n the p rope rt y to s a tis fy the c a se -o r- c on tr ov e rs y require ment of Article I I I of t he Constituti on.” Cassella, Stefa n D., Asset Forfeiture in theUnited States: A Treatise on Forfeiture Law , § 0-4 at 22-23 ( 2006). In other wor ds, in a civil forfe iture ca se, a cla imant’s constitutional standing “tur ns upon whether

the claimant has a suff

icient intere st in the p roper ty to cre ate a

case or controve rsy .” U n ite d S ta te s v . R e a l P r o

p e r ty Lo c a te d a t 5208 Los Franciscos W

ay , 385 F.3d 1187, 1191 (9th Cir. 2004)

. A claimant also must de monstrate an injury by establishing e ither an ow nership or le sser possessory interest in th e p ro p er t y . United States v. $114,031.00 in U.S. Currency , 284 Fe d. Appx. 754, 756 (11th C ir. 2008) (unpublished) . Showing

a re al or imminent injury

is essential to establish constitutional st anding

. Un ite d S tates v . Ca mb io Exac to, S.A. , 66 F.3d 522, 527 ( 2nd Cir. 1999).

As e xpla ine d w ithre sp e c t to statut or y sta nd ing , the mov ants do no t ha ve a c og niza ble interest in the def

endant pr operty . They

alleg e in the Motions that they hav e an i n tere st in the-8-

proper ty as “innoc ent owner s” under 18 U.S.C. § 983; how ever , the statute spec ifically define s an

owner as “a person with an o wn er s h i p interest in the spec ific prope rty soug ht to be forf

eited, inc lud inga

le a se ho ld, lie n, mor

tg a g e , r e c or de d s e c ur ity

int e re st, or

va lid a ssi g nme nt of

an o wn e rs hip int e re st; and

(B ) d oe s n ot i nc lud e . . . a pe rs on wi th o nly

a g e ne ra l un se c ur e d interest in, or c la im ag ainst, the proper

ty or estate of anothe r.” 18 U .S.C. § 983(d)(6). Thus, movants lack constitutional standing beca

use they have n o i ntere st sufficient to cr eate a cla im or controver sy and, thus, they cannot inter

vene in this matter as of rig ht. Sim ilarly , they have not de monstrated that they have a claim or de fense available to them such that the Court should allow permissive intervention pursua nt to Rule 24(b). Finally , it should be noted t hat t o the ex tent movants wer e the victims of fr aud, they

are not without remedy . Under the Civil Asset Forfe itu re R ef o rm Act of 2000 ( “CAF RA”), 18 U.S.C. 981 et seq ., the Go ve rnme nt may us e the fo rf e iture laws to r e c ov e r p ro pe rt y fo r t he be ne fi t of cr ime victims. S pecif

ically , the Att orney Gene ral has the authority under 18 U.S.C. § 981(e) (6) to restore forf

eited prope rty

“to any victim of the o ffense g iving r ise to the forf eiture.” As the Gover nment notes in its brief: I f per sons with civil causes of action ag ainst wrong doers had the rig ht to liti g ate their

claims in forfe iture proc eed i ng s, forfe iture ca ses would become foru m s for g ener al civil litigation of a ll manner of claims involving wr ong doers. F orfe iture would ce ase to be an eff ective tool of fede ral law enfor ceme nt; f eder al prosec utors would, in ever y case , have to we igh the benef its of pursuing a ssets and se e kin g the ir

fo rf e iture a g a ins t th e pr os pe c t of b e ingdr a g g e d into potentially

u n l i m i ted civil litigation over torts, contrac ts, and other the or ie s o f l ia

bil ity be y on d th e ke n o f f

e de ra l la w e nf or c e me nt. Pl.’s Opp’n at 6. The r emedies a vailable unde r CAFRA a re de signed t o p revent this by compensating c rime victims without added burde ns on the civil liti g ation sy stem.-9- IV . C ON CL USI ON The movants lac k the standing require d to inter vene of rig ht in this matter a nd have

no available claim or defe nse such that the C ourt will allow di scre tionary intervention. The motions to intervene must be denied. An me morializi ng Orde r ac companies this Memora ndum Opinion.

Date : July

16 , 2 00 9 /s/ ROSEMARY M. COL L YER Un i t edS t at es Di s t ri ct J u d ge