United States v. One 2014 Black Porsche Cayman Coupe Bearing Vehicle Identification No. (Vin) WP0ab2a85ek191487 (In re Rem)

UNITED STATES OF AMERICA, Plaintiff, v. ONE 2014 BLACK PORSCHE CAYMAN COUPE BEARING VEHICLE IDENTIFICATION

NUMBER (VIN) WP0AB2A85EK191487;

THE REAL PROPERTY KNOWN

AS 10212 DENTON DRIVE, DALLAS, TEXAS; AND

A TOTAL OF APPROXIMATELY $5.453,011.81 COMPRISED OF

$2,845,428.41 PREVIOUSLY DUE AND PAYABLE BY

THE UNITED STATES MINT TO AMERICA NAHA, INC.;

$2,388,091.18 PREVIOUSLY DUE AND PAYABLE BY THE UNITED STATES

MINT TO WEALTHY MAX LIMITED; AND $219,492.22 PREVIOUSLY

DUE AND PAYABLE BY THE UNITED STATES MINT TO XRACER SPORTS CO. LTD.,

Defendants in Rem.

Civil Action No.: 15-2036 (JLL)

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY

October 20, 2015

NOT FOR PUBLICATION

OPINION

LINARES, District Judge.

This matter comes before the Court by way of America Naha, Inc., Kei Yi Loung, also known as Kenneth E. ("Kenny") Loung, Chien Chieng Loung, Harry Kenneth Loung, Lisa MarieLoung, and Mary Robin Loung (collectively "Moving Claimants")'s Motion to Dismiss the Amended Verified Complaint for Forfeiture In Rem ("Amended Complaint") pursuant to Federal Rules of Civil Procedure 12(b)(3) and 12(b)(6) and, in the alternative, to sever the claims against Moving Claimants' property pursuant to Federal Rule of Civil Procedure 21. (ECF No. 41.) The Court has considered the parties' submissions and decides this matter without oral argument pursuant to Rule 78 of the Federal Rules of Civil Procedure. For the reasons set forth below, the Court denies Moving Claimants' Motion to Dismiss under Rule 12(b)(3), but sua sponte transfers the case to the Eastern District of Pennsylvania.

BACKGROUND¹

The Government commenced this action on March 20, 2015, by filing a two-count complaint for civil forfeiture of Moving Claimants' property, in connection with an alleged conspiracy to defraud the United States Mint with counterfeit currency. (See ECF No. 1.) The Government filed an amended complaint on August 10, 2015. (ECF No. 35 ("Am. Compl.").)

The Government alleges that the Moving Claimants submitted counterfeit mutilated coins to the United States Mint, in connection with the Mint's Mutilated Coin Program ("Program"). (Am. Compl. ¶¶ 19, 40.) According to the Amended Complaint, under the Program, the Mint accepts, melts down, and converts into new currency "chipped, fused, discolored, burned, or distorted and not machine countable" coins, and then redeems the face value of the mutilated coins. (Id. ¶¶ 19-27.) The Program operates at a loss, the Government alleges, because the metallic content in each mutilated coin is worth less than each coin's face value. (Id.) Redeemers sendsmall shipments of mutilated coins to the United States Mint in Philadelphia, and larger shipments directly to one of the Mint's two foundries, PMX Industries Incorporated ("PMX") in Iowa or Olin Brass in Illinois, where the coins are melted down. (Id. ¶¶ 22-23.) Upon completion of the melting process for large shipments, the Mint either tenders a United States Treasury Check to the redeemer, or wires a payment to the redeemer's bank account, which is processed through an Automated Clearing House ("ACH") in East Rutherford, New Jersey. (Id. ¶ 27.)

The Amended Complaint notes that since 1999, the Mint has experienced a sharp increase in shipments of mutilated coins from China, specifically from Chinese scrap metal importers that purport to collect mutilated coins from old automobiles. (Am. Compl. ¶¶ 28-39.) The Amended Complaint details ongoing government analysis from 2009 that shows that many of the Chinese shipments are fraudulent. (Id.) Specifically, the analysis points to a lack of a concomitant increase in mutilated coin shipments from India, the largest importer of American scrap metal; analysis of the mutilated coins, which showed mechanical and uniform deformation; and the Mint's receiving of more mutilated half dollars in the past ten years than the Mint had ever manufactured.² (Id. ¶¶ 32-33, 36-37.) The Amended Complaint also speculates that the Chinese shipments almost never contained pennies and nickels because of the relative expense to reverse engineer those coins vis-à-vis dimes, quarters, and half dollars. (See id. ¶¶ 34-35, 38-39.)

The Government alleges that beginning the week of June 23, 2014, the Moving Claimants sent a large shipment of counterfeited mutilated coins, which testing showed to contain elements "not found in genuine United States coins," "insufficient amounts of certain types of metalstypically found in United States coins," and mutilated "in a uniform manner," to PMX for melting. (Am. Compl. ¶¶ 40-42.) Despite the evidence of fraud, the Government contends that it still owed the Moving Claimants $5,453,011.81, and accordingly acquired a seizure warrant for those funds on September 4, 2014 from the Honorable Cathy L. Waldor in the District of New Jersey. (Id. ¶¶ 43-44.) Because the ACH in New Jersey processed the funds "as on prior occasions," the United States Attorney's Office for the District of New Jersey intercepted the funds prior to the wire transfer, in accordance with the seizure warrant. (Id. ¶ 44.)

The Government now seeks to seize $5,453,011.81 in funds, as well as two pieces of property in connection with the Moving Claimants' ongoing scheme to defraud the United States Mint. (Am. Compl. ¶¶ 45-65.) First, it seeks Claimant Loung's 10212 Denton Drive Property in Dallas, Texas ("Texas Property"), which is a warehouse facility purchased by one of Loung's companies, Phoenix 10212 LLC ("Phoenix"), in January 2009 for $1,072,500. (Id. ¶ 45.) Second, the Government seeks Claimant Loung's 2014 Black Porsche Cayman Coupe ("Porsche"), which Loung purchased in October 2013 for $81,000. (Id. ¶¶ 55, 57.) The Government alleges that Loung previously received $6.4 million in payments from the Mint through the Program, in three separate transactions, each wired from the ACH in New Jersey, which included: (1) $1,517,794.41 on February 13, 2013, (2) $3,230,389.26 on October 7, 2013, and $1,692,898.01 on February 27, 2014. (Am. Compl. ¶ 49.) After receiving the first payment, the Government contends that, one week later, Loung wired $744,956 to Phoenix's account and had Phoenix pay off his mortgage for the Texas Property in full. (Id. ¶¶ 45-54.) In a similar fashion, the Government alleges that after Loung received the second payment, he purchased the Porsche nine days later. (Id. ¶¶ 55-57.)

On August 27, 2015, Moving Claimants filed the instant Motion to Dismiss the Complaint.(ECF No. 41 ("Mov. Br.").) On September 25, 2015, the Government filed opposition. (ECF No. 44 ("Opp. Br.").) Moving Claimants filed a reply on October 13, 2013. (ECF No. 59 ("Rep. Br.").) The motion is now ripe for resolution.

LEGAL STANDARDS

A. Motion to Dismiss for Improper Venue

Federal Rule of Civil Procedure 12(b)(3) permits a party to file a motion to dismiss for improper venue in response to a pleading. Fed. R. Civ. P. 12(b)(3). A party moving for dismissal bears the burden of showing that venue does not lie. Myers v. Am. Dental Ass'n, 695 F.2d 716, 724-25 (3d Cir. 1982). For in rem civil forfeiture proceedings, the Third Circuit has held that 28 U.S.C. § 1355(b) governs venue. See Contents of Account Number 03001288 v. United States, 344 F.3d 399, 403 (3d Cir. 2003). Section 1355(b) provides, in pertinent part:

A forfeiture action or proceeding may be brought in--

(A) the district court for the district in which any of the acts or omissions giving rise to the forfeiture occurred, or

(B) any other district where venue for the forfeiture action or proceeding is specifically provided for in section 1395 of this title or any other statute.

28 U.S.C. § 1355(b)(1).

B. Motion to Transfer Venue

Section 1404(a) provides that "[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented." 28 U.S.C. § 1404(a). Motions to transfer can be brought by the plaintiff, the defendant, or made sua sponte. See Amica Mut. Ins. Co. v. Fogel, 656 F.3d 167, 171 (3d Cir. 2011); Keating Fibre Int'l,Inc. v. Weyerhaeuser Co., 416 F. Supp. 2d 1048, 1051 (E.D. Pa. 2006). However, transferee courts must apply the choice-of-law analysis of the state of the transferor court. Lafferty v. St. Riel, 495 F.3d 72, 76-77 (3d Cir. 2007) (citing Van Dusen v. Barrack, 376 U.S. 612, 639 (1964)).

The primary purpose of Section 1404(a) is "to protect litigants, witnesses and the public against unnecessary inconvenience and expense." Van Dusen, 376 U.S. at 616. Courts should consider "all relevant factors to determine whether on balance the litigation would more conveniently proceed and the interest of justice be better served by transfer to a different forum." Murphy v. Zajac, No. 13-cv-04981, 2014 WL 3845830, at *3 (D.N.J. June 4, 2010) (quoting Jumara v. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir. 1995)). Relevant factors include the private and public interest factors, which the Third Circuit has stated as:

The private interests have included: plaintiff's forum preference as manifested in the original choice; the defendant's preference; whether the claim arose elsewhere; the convenience of the parties as indicated by their relative physical and financial condition; the convenience of the witnesses—but only to the extent that the witnesses may actually be unavailable for trial in one of the fora; and the location of books and records (similarly limited to the extent that the files could not be produced in the alternative forum).

The public interests have included: the enforceability of the judgment; practical considerations that could make the trial easy, expeditious, or inexpensive; the relative administrative difficulty in the two fora resulting from court congestion; the local interest in deciding local controversies at home; the public policies of the fora; and the familiarity of the trial judge with the applicable

...