Civil Forfeiture Claim.default Judgement

Case 2:09-cv-00461-FCD-KJM

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1 LAWRENCE G. BROWN Acting United States Attorney 2 SARALYN M. ANG-OLSON, SBN 197404 Special Assistant United States Attorney 3 501 I Street, Suite 10-100 Sacramento, CA 95814 4 Telephone: (916)554-2700 5 Attorneys for Plaintiff United States of America 6 7 8

IN THE UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

10 11 UNITED STATES OF AMERICA,

2:09-CV-00461-FCD-KJM

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JOINT STATUS REPORT, STIPULATION FOR FURTHER JOINT STATUS REPORT, AND ORDER

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) ) Plaintiff, ) ) v. ) ) APPROXIMATELY $133,803.53 IN U.S. ) CURRENCY SEIZED FROM WASHINGTON ) MUTUAL BANK, N.A., ACCOUNT ) #4420842802, HELD IN THE NAME OF ) ADVANTAGE FINANCIAL GROUP HOLDINGS ) MANAGEMENT LLC, and ) ) APPROXIMATELY $328,495.75 IN U.S. ) CURRENCY SEIZED FROM WASHINGTON ) MUTUAL BANK, N.A., ACCOUNT ) #4412174338, HELD IN THE NAME OF ) LOOMIS WEALTH SOLUTIONS LLC, ) ) Defendants. ) )

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Plaintiff United States of America (“Plaintiff”) and

23 Flagstar Bank (“Claimant” or “Flagstar”) (collectively, the 24 “Parties”) submit the following Joint Status Report and Proposed 25 Order in accordance with the Court’s Order Requiring Joint Status 26 Report, as filed on February 18, 2009 in this action. 27 // 28 //

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1 (a)

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Brief summary of the claims and legal theories under which recovery is sought or liability is denied:

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The United States alleges in the Verified Complaint for

4 Forfeiture In Rem (“Verified Complaint”) that defendants 5 Approximately $133,803.53 in U.S. Currency seized from Washington 6 Mutual Bank and Approximately $328,495.75 in U.S. Currency seized 7 from Washington Mutual Bank (collectively, the “Defendant Funds”) 8 are forfeitable to the United States because they are proceeds 9 traceable to violations of 18 U.S.C. § 1014 (loan and credit 10 fraud), 18 U.S.C. § 1028(a)(7) (identification document fraud), 11 18 U.S.C. § 1341 (mail fraud), 18 U.S.C. § 1343 (wire fraud), 12 and/or 18 U.S.C. § 1344 (bank fraud), and because they are 13 properties involved in a transaction or attempted transaction in 14 violation of 18 U.S.C. §§ 1956 (money laundering) and 1957(a) 15 (illegal money transaction), or are traceable to such properties. 16

Flagstar Bank contends it is the beneficiary of a

17 constructive trust in the Defendant Funds as victim of the fraud 18 described in the Declaration of Kathleen Nicolls attached to and 19 incorporated in the Verified Complaint.

As a result of the fraud

20 described therein, Flagstar contends that it has an ownership 21 interest in the Defendant Funds which were wrongfully detained, 22 and that the United States acquired the Defendant Funds impressed 23 with a constructive trust. 24 (b)

Status of service upon all defendants and cross-defendants:

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The Warrant for Arrest of Article In Rem was issued in this

26 action on February 17, 2009 and was served on defendant funds on 27 February 19, 2009. 28 //

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In addition, Plaintiff published notice of this forfeiture

2 action on the official government site, www.forfeiture.gov, for 3 at least 30 consecutive days, beginning February 26, 2009. 4

Lawrence Leland (“Lee”) Loomis (“Loomis”) was served in this

5 action but has filed no claim.

Accordingly, on May 1, 2009, a

6 clerk’s entry of default as to Loomis was filed in this action. 7

Flagstar filed a claim on April 22, 2009.

Flagstar

8 requested, and counsel for the United States granted, a 30-day 9 extension of time for Flagstar to file its answer, which is 10 expected to be filed on June 11, 2009.

The United States is in

11 the process of evaluating Flagstar’s claim. 12

The United States is in the process of identifying potential

13 claimants to the Defendant Funds.

As to those that have been

14 identified recently, the United States believes it may need to 15 serve those potential claimants with notice of the instant 16 action. 17

Furthermore, there may be individuals affected as victims of

18 the underlying fraud.

To the extent that such victims have not

19 been given notice, the United States may move the Court for 20 relief from any notice requirements under Rule G of the 21 Supplemental Rules for Admiralty or Maritime Claims and Asset 22 Forfeiture Actions (“Supplemental Rule G”) as to those victims. 23 (c)

Possible joinder of additional parties:

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The United States may provide notice to additional potential

25 claimants, as explained above.

If those entities file claims and

26 answers as to the Defendant Funds, those entities would become 27 parties to the action. 28 //

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1 (d)

Contemplated amendments to the pleadings:

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None contemplated at this time.

3 (e)

Statutory basis for jurisdiction and venue:

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This Court has jurisdiction in this matter pursuant to

5 28 U.S.C. §§ 1345 and 1355(a).

This Court has venue in this

6 matter pursuant to 28 U.S.C. §§ 1355(b) and 1395(a). 7 (f)

Anticipated discovery and the scheduling of discovery, including:

8 (1)

what changes, if any, should be made in the timing, form, or requirement for disclosures under Rule 26(a), including a statement as to when disclosures under Rule 26(a)(1) were made or will be made;

(2)

the subjects on which discovery may be needed; when discovery should be completed, and whether discovery should be conducted in phases;

(3)

what changes, if any, should be made in the limitations on discovery imposed under the Civil Rules and what other limitation, if any, should be imposed;

(4)

the timing of the disclosure of expert witnesses and information required by Rule 26(a)(2); and

(5)

proposed dates for discovery cut-off.

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Based on the December 1, 2006, amendments to Rule 26 of the

19 Federal Rules of Civil Procedure, civil forfeiture actions are 20 now exempt from the initial disclosure requirements applicable to 21 most other civil actions. 22

See Fed. R. Civ. P. 26(a)(1)(E)(ii).

This action is based on a complex criminal investigation of

23 the underlying fraud involving Defendant Funds, Loomis, and other 24 individuals and entities identified in the Verified Complaint. 25 Because of that ongoing investigation, the United States may move 26 for a stay of the action pursuant to 18 U.S.C. §§ 981(g)(1) and 27 981(g)(2) and 21 U.S.C. § 881(i). 28 favor of a protective order.

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Flagstar may oppose a stay in

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At the present time, however, the United States believes it

2 may need to provide notice to additional potential claimants 3 recently identified, as explained above.

The Parties accordingly

4 agree, and thereby request the Court to order, that a further 5 Joint Status Report be prepared and filed by July 30, 2009. 6 (Under Supplemental Rule G, any potential claimant served with 7 notice of this action will have 35 days to file a claim and 20 8 days thereafter to file an answer. 9 (g)

See Supplemental Rule G(5)).

Contemplated dispositive motions and proposed date by which all non-discovery motions shall be heard:

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The Parties agree that this information is more

12 appropriately addressed in the Joint Status Report proposed to be 13 filed with the Court on July 30, 2009. 14 (h)

Proposed date for final pretrial conference:

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The Parties agree that this information is more

16 appropriately addressed in the Joint Status Report proposed to be 17 filed with the Court on July 30, 2009. 18 (I)

Proposed date for trial, estimate of days of trial, and whether any party has demanded a jury:

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The Parties agree that this information is more

21 appropriately addressed in the Joint Status Report proposed to be 22 filed with the Court on July 30, 2009. 23 (j) 24

Appropriateness of special procedures such as reference to a special master or agreement to try the matter before a magistrate judge pursuant to 28 U.S.C. [§] 636(c):

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The Parties agree that this information is more

26 appropriately addressed in the Joint Status Report proposed to be 27 filed with the Court on July 30, 2009. 28 //

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1 (k)

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Proposed modification of standard pretrial procedures because of the simplicity or complexity of the case:

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None.

4 (l) 5

Whether the case is related to any other case pending in this district, including the bankruptcy courts of this district:

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Although there is no related case currently pending, an

7 ongoing, complex criminal investigation of Defendant Funds, 8 Loomis and other entities or individuals underlies the instant 9 action. 10 (m) 11

Prospects for settlement, including whether a settlement conference should be scheduled and whether, in the case of a jury trial, the parties will stipulate to the trial judge acting as settlement judge:

12 The Parties agree that this information is more

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14 appropriately addressed in the Joint Status Report proposed to be 15 filed with the Court on July 30, 2009. 16 (n)

Any other matters that may be conducive to the just and expedit[ious] disposition of the case:

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The Parties agree that this information is more

19 appropriately addressed in the Joint Status Report proposed to be 20 filed with the Court on July 30, 2009. 21 Date: May 20, 2009

LAWRENCE G. BROWN Acting United States Attorney

22 23 /s/ Saralyn M. Ang-Olson SARALYN M. ANG-OLSON Special Assistant U.S. Attorney

24 25 Date: May 20, 2009 26 27 28

/s/ Janet Sherman JANET SHERMAN Attorney for Claimant Flagstar Bank (Attorney signature retained on file) 6

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ORDER

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For the reasons set forth above, the parties shall submit a

3 further Joint Status Report on or before July 30, 2009. 4 IT IS SO ORDERED. 5 6 Dated: May 21, 2009 7

_______________________________________ FRANK C. DAMRELL, JR. UNITED STATES DISTRICT JUDGE

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