United States District Court, W.D. Tennessee, Western Division
OPINION AND ORDER DENYING RESPONDENT'S MOTION TO DISMISS
ROBERT H. CLELAND, District Judge.
This is an ancillary proceeding to United States v. Michael Lusk , No. 09-20314. Petitioner Frankie Hunter seeks to recover $77, 488.69 in funds that the government seized from Regions Bank Account # xxxxxx2011 ("the Bank Account"). (Dkt. 8, Pg. ID 36.) On March 31, 2014, the government moved to dismiss his petition. The matter is fully briefed, and no hearing is necessary. See W.D. Tenn. Local R. 7.2(d). For the following reasons, the court will deny the government's motion to dismiss.
On August 19, 2009, a grand jury indicted Michael Lusk for conspiracy to commit mail, wire, and bank fraud, and for engaging in monetary transactions in criminally derived property. The indictment alleged that the conspiracy began "sometime on or before February 12, 2003" and continued through at least March6> 2008. In mid-May 2012, Lusk entered into a plea agreement. Pursuant to the plea agreement, Lusk (hereinafter, "Lusk, Sr.") quitclaimed his interest in a parcel of real property located at 4919 Rosebrook, Southaven, Mississippi, ("the Property") to his son, Michael Lusk, Jr. ("Lusk, Jr."). On September 18, 2012, the court sentenced Lusk to the statutory maximum of 60 months' imprisonment.
On April 29, 2013, Lusk, Jr. transferred the Property to Hunter via a warranty deed. Hunter claims that in consideration for this transfer, he agreed to prevlent the Property from going to a tax sale, and to provide financial support for the children of Lusk, Sr. (Dkt. # 8-1, Pg. ID 40.) The day after this transfer, Lusk, Sr. gave Hunter power of attorney to care for Lusk, Sr.'s children. ( Id. ) Hunter sold the Property on July 15, 2013, and deposited the proceeds of the sale into the Bank Account. ( Id. )
On August 16, 2013, the court entered its preliminary order of forfeiture. Approximately one month later, the government moved to amend the preliminary order of forfeiture after it learned that Lusk, Jr. was no longer living at the Property and that the proceeds from the sale were being held in the Bank Account controlled by Hunter. After considering the evidence submitted in the government's motion, which included transcripts of telephone conversations held between Hunter and Lusk, Sr., the court amended the preliminary order of forfeiture to authorize the government's seizure of the Bank Account as substitute assets subject to forfeiture. The government seized the Bank Account on5> September 13, 2013.
Federal Rule of Criminal Procedure 32.2(c) allows third parties to file a petition asserting an interest in property that is identified as subject to forfeiture in a preliminary order of forfeiture. The court may dismiss a petition "for lack of standing, for failure to state a claim, or any other lawful reason." Fed. R. Crim. P. 32.2(c)(1)(A). "[A] motion to dismiss a third-party petition in a forfeiture proceeding prior to discovery or a hearing should be treated like a motion to dismiss a civil complaint under Federal Rule of Civil Procedure 12(b)." United States v. Salti , 579 F.3d 656, 667 (6th Cir. 2009). "For the purposes of the motion, the facts set forth in the petition are assumed to be true." Fed. R. Crim. P. 32.2(c)(1)(A).
Title 21, section 853 allows only two avenues of relief, requiring that the petitioner show by a preponderance of the evidence that either:
(A) the petitioner has a legal right, title, or interest in the property, and such right, title, or interest renders the order of forfeiture invalid in whole or in part because the right, title, or interest was vested in the petitioner rather than the defendant or was superior to any right, title, or interest of the defendant at the time of the commission of the acts which gave rise to the forfeiture of the property under this section; or
(B) the petitioner is a bona fide purchaser for value of the right, title, or interest in the property and was at the time of purchase reasonably without cause to believe that the property was subject to forfeiture under this section.
21 U.S.C. § 853(n)(6); United States v. Monea Family Trust I , 626 F.3d 271, 2775> (6th Cir. 2010). "[A] third party has no right to challenge the preliminary order's finding of forfeitability; rather, the third party is given an opportunity during the ancillary proceeding to assert any ownership interest that would require amendment of the order." United States v. Andrews , 530 F.3d 1232, 1236-37 (10th Cir. 2008). "If the property really belongs to the third party, he will prevail and recover his property whether there were defects in the criminal trial or the forfeiture process or not; and if the property does not belong to the third party, such defects in the finding of forfeitability are no concern of his." Id. at 1237 (brackets, ellipsis, and citation omitted).
A. Constitutional ...