Court Opinion

ID: 6498717
Source: CourtListenerOpinion
Date Created: 2022-07-08 15:00:27.447662+00
Date Added: 2024-06-11T08:51:29.307542
License: Public Domain

21-776-cv; 21-777-cr
PacNet Services Ltd, et al. v. U.S. Dep’t of Treasury
United States v. PacNet Services Ltd, et al.

                             UNITED STATES COURT OF APPEALS
                                 FOR THE SECOND CIRCUIT

                                            SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007 IS PERMITTED AND IS GOVERNED BY
FEDERAL RULE OF A PPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1.
WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST
CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
“SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A COPY OF IT ON
ANY PARTY NOT REPRESENTED BY COUNSEL.

        At a stated term of the United States Court of Appeals for the Second Circuit, held at the
Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of New York, on the
8th day of July, two thousand twenty-two.

Present:    DEBRA ANN LIVINGSTON,
                   Chief Judge,
            JOSÉ A CABRANES,
            MICHAEL H. PARK,
                   Circuit Judges.
_______________________________________

PACNET SERVICES, LTD,

                           Plaintiff-Appellant,

INTERNATIONAL PAYOUT SYSTEMS, INC.,

                           Intervenor-Appellant,

                  v.                                               21-776-cv, 21-1069-cv

UNITED STATES DEPARTMENT OF THE TREASURY,
OFFICE OF FOREIGN ASSETS CONTROL AND JOHN
DOES 1–73,

                           Defendants-Appellees.

OTTER MIST TRADING 1096 CC, INTERNATIONAL

                                                        1
MULTI-MEDIA ENTERTAINMENTS LIMITED,
CONTINENTAL MAIL PROCESSING NV, JOHN DOE
#25, JOHN DOE #28, JOHN DOE #57, AND JOHN DOE,

                        Defendants.

_______________________________________

UNITED STATES OF AMERICA,

                        Appellee,

PACNET SERVICES LTD, CHEXX (AMERICAS) INC.,
ACCU-RATE CORP., AND INTERNATIONAL PAYOUT
SYSTEMS, INC.,

                        Interested Party–Appellants,

                v.                                                    21-777-cr, 21-1086-cr

RYAN YOUNG, AKA RICHARD CULLEN,

                        Defendant. 1

_______________________________________

For Plaintiff-Appellant and Interested Party–Appellants:              ALEXANDRA A.E. SHAPIRO
                                                                      (Ted Sampsell-Jones, on the
                                                                      brief), Shapiro Arato Bach
                                                                      LLP, New York, NY.

For Intervenor-Appellant and Interested Party–Appellant:              MARCOS DANIEL JIMÉNEZ,
                                                                      Marcos D. Jiménez, P.A.,
                                                                      Miami, FL.

For Defendants-Appellees:                                             Layaliza Soloveichik and
                                                                      Varuni Nelson, Assistant
                                                                      United States Attorneys, for
                                                                      Breon Peace, United States
                                                                      Attorney, United States
                                                                      Attorney’s Office for the

       1
           The Clerk of Court is directed to amend the official caption as set forth above.

                                                  2
                                                                    Eastern District of New
                                                                    York, Brooklyn, NY.

For Appellee:                                                       TANISHA R. PAYNE, Assistant
                                                                    United States Attorney
                                                                    (Saritha Komatireddy,
                                                                    Assistant United States
                                                                    Attorney, on the brief), for
                                                                    Breon Peace, United States
                                                                    Attorney, United States
                                                                    Attorney’s Office for the
                                                                    Eastern District of New
                                                                    York, Brooklyn, NY.

       Appeal from an order and judgment of the United States District Court for the Eastern

District of New York (Azrack, J.).

       UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND

DECREED that the appeals are DISMISSED and that the matter is REMANDED for further

proceedings.

       In these related cases, Appellants PacNet Services Ltd. (“PacNet”) and International

Payout Systems (“IPS”) appeal the February 24, 2021 order and judgment of the district court

(Azrack, J.), staying the criminal forfeiture ancillary proceedings in United States v. Young, 18-

cr-46 (E.D.N.Y.) (the “Ancillary Proceeding”), and dismissing the statutory civil interpleader

action brought by PacNet in PacNet Services Ltd. v. Office of Foreign Assets Control of the United

States Department of the Treasury, 17-cv-6027 (E.D.N.Y.) (the “Interpleader Action”).           In

addition, Appellants challenge, by virtue of their status as third-party claimants in the Ancillary

Proceeding, the September 11, 2019 preliminary forfeiture order entered by the district court in

Young (the “Preliminary Forfeiture Order”).         We assume the parties’ familiarity with the

                                                3
underlying facts, procedural history, and issues on appeal, which we reference only as necessary

to explain our decision to dismiss the appeals and to remand for further proceedings.

                                           *      *       *

       Appellants principally contend that the Government has improperly seized their funds for

criminal forfeiture in Young and that they are unable to vindicate their claims because the district

court has stayed the Ancillary Proceeding pending the resolution of a separate criminal case against

individuals who served as PacNet’s principals, United States v. Day, 19-cr-155 (D. Nev.).          But

on June 7, 2022, after briefing in this appeal was completed, the district court issued an indicative

ruling in response to the Government’s request to lift the stay pursuant to Rule 62.1 of the Federal

Rules of Civil Procedure (the “Indicative Ruling”).     The Indicative Ruling provides:

       If the Second Circuit were to remand the Young forfeiture proceedings, then the
       Court would grant the Government’s request and would lift the stay of the Young
       forfeiture proceedings. The Court’s prior concerns that moving forward with the
       proceedings in Young would adversely affect the Government’s prosecution in Day
       have dissipated and the Court finds that continuation of the stay is no longer
       warranted given the record here.

Indicative Ruling at 2.        Upon timely motion, Rule 62.1 “authorizes a district court whose

jurisdiction has been divested by an appeal to ‘state . . . that it would grant the motion if the court

of appeals remands for that purpose.’”      Ret. Bd. of the Policemen’s Annuity & Benefit Fund of

Chi. v. Bank of N.Y. Mellon, 775 F.3d 154, 159 n.4 (2d Cir. 2014) (quoting

Fed. R. Civ. P. 62.1(a)(3)).     Moreover, under Rule 12.1 of the Federal Rules of Appellate

Procedure, “[i]f the district court states that it would grant the motion,” we “may remand for further

proceedings,” but we “retain[] jurisdiction unless [we] expressly dismiss[] the appeal.”

Fed. R. App. P. 12.1(b).

                                                  4
         Here, dismissal of the appeals and remand are appropriate. In light of the district court’s

indication that it would lift the stay of the Ancillary Proceeding if its jurisdiction were restored,

we need not address Appellants’ arguments as to the propriety of the stay. Nor is it necessary for

us to address in the first instance Appellants’ challenge to the scope of the Preliminary Forfeiture

Order.       Rule 32.2 of the Federal Rules of Criminal Procedure and 21 U.S.C. § 853 set forth a two-

step process for adjudicating forfeiture claims in a criminal case.   “At stage one of that procedural

framework, before entering a preliminary order of forfeiture, the court is directed to adjudicate the

government’s interest vis-à-vis the defendant ‘without regard to any third party’s interest in the

property.’” United States v. Daugerdas, 892 F.3d 545, 549 (2d Cir. 2018) (emphasis added)

(quoting Fed. R. Crim. P. 32.2(b)(2)(A)).       Then, “at stage two, before entering a final order of

forfeiture, the court resolves any third-party petitioner’s interests vis-à-vis the defendant” in a so-

called “ancillary” proceeding.        Id. (citing 21 U.S.C. § 853(n)(6)(A)). 2   Here, the Ancillary

Proceeding has not yet concluded. As third-party claimants to the forfeited property, Appellants’

arguments in this Court are thus premature. Appellants may assert their interests through the

framework for ancillary proceedings in the ordinary course. 3

         2
          Such ancillary proceedings are the exclusive procedure through which a third party may
assert an interest in property that is subject to forfeiture in a criminal case. Daugerdas, 892 F.3d
at 553 (“It is well settled that section 853(n) provides the exclusive means by which a third party
may lay claim to forfeited assets.” (internal citation, quotation marks, and alteration omitted));
Fed. R. Crim. P. 32.2(b)(2)(A) (“Determining whether a third party has such an interest must be
deferred until any third party files a claim in an ancillary proceeding under Rule 32.2(c).”
(emphasis added)).
         3
          The appeal of the district court’s February 24, 2021 order and judgment raised by IPS
must also be dismissed for a separate reason. IPS’s notice of appeal was filed on April 28, 2021,
i.e., more than 60 days after the district court’s February 24, 2021 order and judgment. Because
IPS failed to meet the 60-day deadline set forth in Rule 4(a)(1)(B) of the Federal Rules of Appellate

                                                    5
         Finally, the district court dismissed the Interpleader Action for lack of subject-matter

jurisdiction.   We need not address the propriety of this ruling either, since Appellants seek

reinstatement of the Interpleader Action only if this Court were to vacate the Preliminary Forfeiture

Order.    Because we do not address this preliminary order, but instead remand so that “at stage

two, before entering a final order of forfeiture,” Appellants’ claims to the subject property can be

resolved, id., we decline to reach the propriety of the district court’s jurisdictional ruling.

         We have considered Appellants’ remaining arguments and find them to be without merit.

Accordingly, the appeals are DISMISSED and the matter is REMANDED for further proceedings

consistent with this summary order.

                                                FOR THE COURT:
                                                Catherine O’Hagan Wolfe, Clerk of Court

Procedure, its appeals must be dismissed for want of jurisdiction. See Johnson v. Univ. of
Rochester Med. Ctr., 642 F.3d 121, 124 (2d Cir. 2011) (noting that the Rule 4(a) “[f]iling deadlines
are mandatory and jurisdictional”).

                                                   6