U.S. v. Dollars

779 F.Supp.2d 696

UNITED STATES of America, Plaintiff,

v.FOUR HUNDRED SIXTY THREE THOUSAND FOUR HUNDRED NINETY SEVEN DOLLARS AND SEVENTY TWO CENTS ($463,497.72) IN U.S. CURRENCY FROM BEST BANK ACCOUNT # XXX2677, Nineteen Thousand Nine Hundred Thirty Six Dollars and Seventy Seven Cents ($19,936.77) in U.S. Currency from Best Bank Account # XXX8558, One Hundred One Thousand Five Hundred Eighty Three Dollars and Ninety Eight Cents ($101,583.98) in U.S. Currency from Countrywide Bank Account # XXX5890, Nineteen Thousand Nine Hundred Eighty Seven Dollars and Seven Cents ($19,987.07) in U.S. Currency from Comerica Bank Account # XXX0766, Best Buy Bank Account # 259207438, One Hundred One Thousand Seven Hundred and Three Dollars and Ten Cents ($101,703.10) in U.S. Currency from Countrywide Bank Account # XXX5890, Nineteen Thousand Nine Hundred Twelve Dollars and Seven Cents ($19,912.07) in U.S. Currency from Comerica Bank Account # XXX0766, Fifty One Thousand Three Hundred Seventeen Dollars and Six Cents ($51,317.06) in U.S. Dollars from Countrywide Bank Account # XXX7528, and Safescript Pharmacy # 19, LLC, Defendants,andStacey Hogan Gianoplos, Ronald G. Carson, and H.D. Smith Wholesale Drug Company, Inc., Claimants.

Case No. 08–11564.

United States District Court, E.D. Michigan, Southern Division.

March 24, 2011.

Tauras N. Ziedas, United States Attorney's Office, Detroit, MI, for Plaintiff.James W. Burdick, Burdick Law, P.C., Bloomfield Hills, MI, Samuel D. Hodson, Barnes & Thornburg, LLP, Indianapolis, IN, Arthur W. Miller, Detroit, MI, William J. Leeder, III, Barnes & Thornburg, Grand Rapids, MI, for Claimants.

OPINION AND ORDER DENYING MOTIONS FOR SUMMARY JUDGMENT AND GRANTING IN PART AND DENYING IN PART GOVERNMENT'S MOTION FOR DISCOVERY OR TO STAY PROCEEDINGS

DAVID M. LAWSON, District Judge.

OPINION AND ORDER DENYING H.D. SMITH'S AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT, RONALD G. CARSON'S MOTION FOR JUDGMENT ON THE PLEADINGS OR SUMMARY JUDGMENT, AND STACEY HOGAN GIANOPLOS'S MOTION FOR JUDGMENT ON THE PLEADINGS OR SUMMARY JUDGMENT, GRANTING IN PART AND DENYING IN PART GOVERNMENT'S MOTION FOR PROTECTIVE ORDER OR TO STAY PROCEEDINGS, ESTABLISHING DISCOVERY DEADLINE, AND ORDERING STATUS CONFERENCE

The government commenced this asset forfeiture case against cash in bank accounts allegedly connected to the Safescript Pharmacy in Farmington Hills, Michigan, contending that it was proceeds from the illegal sale of controlled substances by pharmacy employees. The three claimants—Stacey Hogan Gianoplos, Ronald G. Carson, and H.D. Smith Wholesale Drug Company—contend that some of the money is not connected to the pharmacy operations, and all of them are innocent owners. They have filed motions for summary judgment, which were argued several months ago and have been pending for some time. Although some of the pharmacy employees have been prosecuted, the government sought additional time to develop a criminal case against others, and it argued that allowing the present matter to proceed would interfere with its intentions. No additional indictments have been forthcoming, however, and this matter must proceed. Fact issues that are apparent from the record in the case preclude summary judgment; therefore, the claimants' motions must be denied. The matter will be scheduled for trial. The Court will set a date to complete discovery, and grant in part the government's motion for a protective order.

I. Facts

A. The criminal activity

This in rem civil forfeiture proceeding is directed against five bank account defendants, totaling approximately $650,000.00. The case was filed on April 11, 2008. The FBI seized the funds two days earlier, on April 9, 2008. Previously, on May 10, 2007, Drug Enforcement Administration (DEA) agents executed search warrants at the Safescript Pharmacy in Farmington Hills, Michigan. The search of the pharmacy yielded 18 prescriptions on prescription pads of one Dr. Djamali, who, when questioned about the pads, denied ever writing or signing those prescriptions. The pads contained an unassigned DEA number and the signature and contact information that were not Dr. Djamali's. Investigation revealed that the prescriptions were presented by one George Scott, who would come to the pharmacy three times per week, sometimes twice a day, posing as an employee of a group home, and present various prescriptions for OxyContin or Methadone that were filled by Safescript's pharmacist Richard Riozzi.

On January 29, 2009, Riozzi was indicted, along with four other individuals—Sohrab Shafinia, D.O., Stuart Stein, Randell McDaniel, and Gerald Richards—on charges of distributing, controlled substances, including the Schedule II drug OxyContin. The government alleged that Stein, McDaniel, and Richards paid Dr. Shafinia from $100 to $300 per occasion for prescribing a mixture of drugs containing OxyContin (the mixture that would later become known as the “Shafinia Cocktail”) without examining or sometimes even seeing the patients. George Scott (who was charged with conspiracy to distribute controlled substance in a separate indictment) would then present these prescriptions to Richard Riozzi at the Safescript Pharmacy, and Riozzi would fill them without the patients being present. Riozzi was paid around $400 per occasion.

Shafinia, Stein, Riozzi, McDaniel, and Scott eventually pleaded guilty to one or more counts of their respective indictments.

B. Allegations regarding Safescript, Gianoplos, and Carson

The Safescript Pharmacy in Farmington Hills is owned by Safescript Pharmacy # 19, LLC. Stacey Gianoplos is the resident agent. She is also the wife of Ronald G. Carson, the resident agent of Safescript Pharmacies of Michigan, LLC, which is now defunct. The government alleges that the seized assets belong either to Safescript Pharmacy, Gianoplos, or Carson and constitute or are derived from proceeds traceable to illegal distribution of controlled substances in violation of 21 U.S.C. § 841; use of a fictitious registration number in the distribution of controlled substances in violation of 21 U.S.C. § 843; or money laundering in violation of 18 U.S.C. § 1956. Therefore, the government reasons, the assets are forfeitable under 21 U.S.C. § 881(a)(6) and 18 U.S.C. § 981(a)(1)(A).

The government makes the following specific allegations with respect to each of the defendant accounts:

(1) BestBank account ending in 2677 ($463, 497.72)—Safescript's interest-bearing money market account (and its predecessor account ending in 0160, in the names of Safescript Pharmacy, Gianoplos, and Carson, closed on August 21, 2007). The government alleges that of the $703,210 deposited into this account, at least $400,000 represents proceeds from illegal sales of controlled substances. As one example of the account's tie to illegal proceeds, the government contends that this account absorbed part of the cash Safescript earned in the illegal sale of controlled substances on May 9 and 11, 2007. The deposits of cash from fraudulent prescriptions continued into the account after the predecessor account was closed. During this same period, Scott paid cash for illegal prescriptions. For example, on May 9 and May 11, 2007, Scott purchased 28 illegal prescriptions for approximately $39,200. On May 12, 2007, a cash deposit of $19,500 was made to Account Number *0160. Bank records show similar transactions occurring frequently between February and May 2007.

The Michigan Automated Prescription Service (MAPS) data shows that on 29 separate days, approximately 333 prescriptions were filled using unassigned DEA number BD9374911; the government attributes the frequency to Scott's presentation fraudulent prescriptions filled by Riozzi. “Scott paid approximately $1,400 for each prescription or approximately $466,200 for 333 prescriptions.” Am. Compl. ¶ 9(m). Safescript Pharmacy BestBank Account Number *0160 records show cash deposits made on or near the day of each transaction involving illegal prescriptions. “In total, the cash deposited into the accounts amounts to $330,910.” Ibid. During that same three month time period, Safescript's money market account number *2677 received cash deposits totaling $51,150.

(2) BestBank account ending in 8558 ($19,936.77)—Safescript's checking account out of which payroll is paid. The government alleges that this account “received high dollar transfers from Best Bank Account Number *0160. Since August 2007, this account received between 33% and 95% of its funds from transfers from Safescript Pharmacy BestBank Account Number *0160 and Safescript Pharmacy BestBank Account Number *2677. The use of proceeds in the payroll account ..., funded with [proceeds from unlawful drug sales], constitutes transactions involved in money laundering intended to promote the continued violations of the Controlled Substances Act.” Am. Compl. ¶ 9(n).

(3) Countrywide Bank account ending in 5890 ($101, 703.10)—Carson's interest-bearing savings account. The government alleges: “Investigation reveals that there was an internet transfer of $100,000.00 from Best Bank Account Number *2677 to BestBank Account Number *8558. On October 16, 2007, a check made payable to Ronald G. Carson for $100,000.00 from BestBank Account Number *8558 was endorsed by Carson and deposited into BestBank Account Number *7438 on October 16, 2007. On or about October 19, 2007, Carson transferred $100,000.00 via wire transfer from BestBank Account Number *7438 to Countrywide Bank Account Number *5890. These transactions involved [illegal drug sales] proceeds and were intended to disguise and conceal the true nature and source of the [illegal drug sales] proceeds, and thus constituted money laundering.” Am. Compl. ¶ 9( o ).

(4) Comerica Bank account ending in 0766 ($19,912.07)—Carson's personal checking account. The government alleges: “Comerica Bank Account Number *0766 received deposits made payable to Carson amounting to $62,197.39 from BestBank Account...