United States v. All Petroleum-Product Cargo

MEMORANDUM OPINION

JAMES E. BOASBERG UNITED STATES DISTRICT JUDGE

Having seized several ships bearing allegedly contraband Iranian petroleum products, the United States brought this forfeiture action in rem. Defendants are four separate properties: (1) All petroleum-product cargo aboard the Bella with International Maritime Organization number 9208124 (Defendant Property 1); (2) All petroleum-product cargo aboard the Bering with IMO number 9149225 (Defendant Property 2); (3) All petroleum-product cargo aboard the Pandi with IMO number 9105073 (Defendant Property 3); and (4) All petroleum-product cargo aboard the Luna with IMO number 9208100 (Defendant Property 4). The Government alleges that the Defendant Properties are subject to forfeiture pursuant to 18 U.S.C. § 981(a)(1)(G)(i) because they provided certain persons a source of influence over the Islamic Revolutionary Guard Corps (IRGC), a designated foreign terrorist organization. As the only known potential claimants have failed to prosecute their claims, and no one else has claimed an interest or otherwise defended the action, the Clerk of Court entered a default on April 29, 2021. See ECF No. 29 (Clerk's Entry of Default). Plaintiff has now moved for default judgment pursuant to Federal Rule of

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Civil Procedure 55(b)(2). As the United States has sufficiently demonstrated that the allegations in its Complaint warrant such judgment, the Court will grant the Motion.

I. Background

Given the default in this case, the Court accepts the facts alleged in the Government's Complaint as true. The IRGC “‘is a non-traditional instrumentality of Iran,' serving as ‘the military arm of a kind of shadow government answering directly to the Ayatollah and the mullahs who hold power in Iran.'” Christie v. Islamic Republic of Iran, No. 19-1289, 2020 WL 3606273, at *3 (D.D.C. July 2, 2020) (quoting Blais v. Islamic Republic of Iran, 459 F.Supp.2d 40, 47 (D.D.C. 2006)). In 2019, both the President and the Secretary of State designated the IRGC a Foreign Terrorist Organization. See ECF No. 32-1 (Pl. Mot. for DJ) at 4.

The Government contends that Iran's petroleum and petrochemical industries provide “major sources of revenue for the Iranian regime and fund its malign activities throughout the Middle East.” Id. at 5 (citations omitted). Reflecting the link between these industries and the IRGC, the Department of Treasury's Office of Foreign Assets Control, charged with administering and enforcing economic and trade sanctions, described the National Iranian Oil Company (NIOC) as “an agent or affiliate of the IRGC.” Id. OFAC concluded that “[i]n spring 2019 alone, this IRGC-QF [Quds Force]-led network employed more than a dozen vessels to transport nearly 10 million barrels of crude oil, ” which, taken collectively, “sold for more than half a billion dollars.” Id. at 3 (citations omitted).

In January 2020, “Company 1, ” a “U.A.E.-based trading company, ” allegedly “requested that the owner of [a vessel named] the Pandi carry gasoline from Iran to the U.A.E.” Id. at 8. The Government contends that the request was made on behalf of the National Iranian Oil Products Distribution Company (NIOPDC), a subsidiary of the NIOC. Id. Near the end of

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February 2020, Company 1 invoiced the Avantgarde Group for the sale of the gasoline, requesting a $14.9 million cash payment. Id. The Avantgarde Group has connections to the IRGC and “has received payments from Mohammad Saeed Al Aqili and the Al Aqili Group.” Id. Both Al Aqili and the Al Aqili Group were designated by OFAC in 2014 for assisting the Iranian regime in selling oil in evasion of U.S. trade and economic sanctions. Id. at 7.

The Government alleges that Mahmoud Madanipour, “an Iranian national . . . affiliated with the IRGC, ” id. at 6, acted as Company 1's representative in arranging the Pandi shipment. See ECF No. 4-1 (Thomas Tamsi Aff.) at 9. Madanipour later altered shipping documents, substituting a different company, Mobin International Ltd., in place of Company 1 as the party responsible for the shipment. See Pl. Mot. for DJ at 8. A bill of lading onboard the Pandi, however, “indicated that the shipper was NIOC and listed the consignee as ‘To Order of Shipper (NIOPDC) Account of Mobin International Ltd.'” Id. Mobin International was “purportedly organized in the United Arab Emirates, ” but it “previously operated under the name Rahbaran Petro Mobin Kish and described itself as an Iranian petroleum company.” Id. at 6. Given the events of this case, OFAC designated Mobin International as having acted “in support of the NIOPDC” in October 2020. Id. at 7. OFAC designated Madanipour pursuant to Executive Order 13, 224 for his affiliation with Mobin International. Id.

According to the Government, Madanipour, now acting through Mobin International, proceeded to arrange transport of the Defendant Properties aboard the Pandi, the Bella, the Bering, and the Luna. Id. at 8. Satellite images reveal that “the Pandi visited the Sirus Oil Terminal in Iran” in March 2020. Id. at 9. Images show that, in mid-April, “the Pandi engaged in a ship-to-ship transfer” of “approximately 302, 502 barrels” to the Bella. Id. Those barrels constitute Defendant Property 1. Id. Around the same time, the Bering and the Luna each

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agreed to carry shipments of Iranian gasoline for Mobin International. Id. Barrels were subsequently loaded onto those vessels through similar ship-to-ship transfers. Id. The approximately 302, 522 barrels on board the Bering constitute Defendant Property 2, and the approximately 259, 700 barrels on board the Luna constitute Defendant Property 4. Id. The Pandi again agreed to carry gasoline for Mobin International in mid-May. Id. The approximately 298, 484 barrels loaded to the Pandi via another ship-to-ship transfer constitute Defendant Property 3. Id. All barrels were “ultimately destined for Venezuela.” Id.

The Government requested a warrant to seize the Defendant Properties on July 1, 2020. See ECF No. 4 (Pl. Mot. for Issuance of Warrant of Arrest); see also Tamsi Aff. at 9 (citing intelligence from “confidential reliable source” linking shipments to IRGC). Finding probable cause, this Court issued the warrant on the following day. See ECF No. 5 (Notice of Issuance of Arrest Warrant). The Government publicly announced that it had seized Defendant Properties on August 14, 2020. See ECF No. 9 (Pl. Mot. for Interlocutory Sale) at 2.

Mobin International, along with two other related entities (collectively, Mobin Claimants), filed a joint claim for the Defendant Properties on September 1, 2020. See ECF No. 11 (Verified Claim). They subsequently failed to prosecute their claim, however, and the Clerk of Court entered default against the Defendant Properties on April 29, 2021. See Entry of Default.

The Government now moves for default judgment and seeks forfeiture of Defendant Properties.

II. Legal Standard

“The determination of whether a default judgment is appropriate is ‘committed to the sound discretion of the trial court.'” Lu v. Lezell, No. 11-1815, 2013 WL 12183952, at *1

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(D.D.C. July 19, 2013) (quoting Jackson v. Beech, 636 F.2d 831, 835 (D.C. Cir. 1980)). A court may enter default judgment when the “party against whom a judgment . . . is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise.” Fed.R.Civ.P. 55(a). “This form of relief is no less appropriate when the defendant in question is property, ” and, “unless a claimant properly intervenes to raise defenses to its forfeiture, the defendant property is deemed to have ‘failed to plead or otherwise defend' against the allegations, and the Clerk of Court must enter default.” United States v. All Assets Held in Account Number XXXXXXXX, 330 F.Supp.3d 150, 156 (D.D.C. 2018) (quoting Fed.R.Civ.P. 55(a)).

Once default is entered, the defendant “is deemed to admit every well-pleaded allegation in the complaint.” Adkins v. Teseo, 180 F.Supp.2d 15, 17 (D.D.C. 2001); see Trans World Airlines, Inc. v. Hughes, 449 F.2d 51, 63 (2d Cir. 1971), rev'd on other grounds sub nom. Hughes Tool Co. v. Trans World Airlines, Inc., 409 U.S. 363 (1973); see also 10A Wright & Miller, Fed. Prac. & Proc. Civ. § 2688.1 (4th ed. 2021) (defaulting “defendant has no further standing to contest the factual allegations of plaintiff's claim for relief”). Nevertheless, “[m]odern courts are . . . reluctant to enter and enforce judgments unwarranted by the facts, ” Jackson, 636 F.2d at 835, and “a district court may still deny an application for default judgment where the allegations of the complaint, even if true, are legally insufficient to make out a claim.” Gutierrez v. Berg Contracting, Inc., No. 99-3044, 2000 WL 331721, at *2 (D.D.C. Mar. 20, 2000); see also United States v. $1, 0171, 251.44 of Funds Associated with Mingzheng Int'l Trading Ltd., 324 F.Supp.3d 38, 45 (D.D.C. 2018) (“[T]he defendant['s] default notwithstanding, the plaintiff is entitled to a default judgement only if the complaint states a claim for relief.”) (second alteration in original) (quoting Jackson v....