United States v. $1,071,251.44 of Funds Associated With Mingzheng Int'l Trading Ltd.
324 F. Supp. 3d 38
D.C. Cir.2018Background
- The United States filed an in rem civil forfeiture action against $1,902,975.69 held in U.S. bank accounts, alleging the funds belonged to Mingzheng International Trading Ltd., a front company laundering funds for North Korea's Foreign Trade Bank (FTB).
- OFAC and FinCEN had designated North Korean financial institutions (including the FTB) as sanctioned and money-laundering concerns; OFAC blocked the identified wire transfers as involving an SDN.
- The complaint alleged twenty U.S.-dollar wire transfers (Oct–Nov 2015) tied to Mingzheng and to the FTB or related front companies, and invoked forfeiture under 18 U.S.C. § 981 (money laundering and proceeds of IEEPA violations).
- Mingzheng did not appear or file a claim; the Clerk entered default and the government moved for default judgment and forfeiture under Fed. R. Civ. P. 55 and Supplemental Rule G.
- Magistrate Judge Harvey recommended granting default judgment after finding jurisdiction and venue proper, notice (publication and direct notice abroad) adequate, and the verified complaint met Supplemental Rule G’s substantive pleading requirement (facts supporting a reasonable belief the government could prove forfeitability at trial).
- The District Court adopted the R&R in full and ordered forfeiture of $1,902,975.69.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Jurisdiction & venue | D.C. venue proper because failure to procure OFAC licenses (located in D.C.) gave rise to the forfeiture | (No contest; no claimant appeared) | Venue and subject-matter jurisdiction proper in D.D.C. |
| Notice to potential claimants | Publication on forfeiture.gov for 30 days and direct notice via U.S. embassies / MLAT satisfied Rule G(4) requirements | (No contest; no claimant appeared) | Notice satisfied Supplemental Rule G(4) (publication + reasonable direct notice abroad) |
| Adequacy of forfeiture complaint under Supp. R. G(2) | Complaint (verified) and supplemental affidavit allege detailed facts tying 20 wires to FTB/front companies, supporting a reasonable belief government could prove forfeitability at trial | (Government argued notice + default alone justified judgment; some authorities differ) | Complaint met Rule G(2)’s substantive requirement: plausibly supports a reasonable belief government could meet its preponderance burden at trial; default judgment appropriate |
| Standard of review at default stage | Court should review pleadings for facts supporting a reasonable belief government can prove forfeiture at trial (Supplemental Rule G standard); not require full preponderance now | Some argued courts apply preponderance at default or default could rest solely on notice compliance | Court rejects requiring proof by preponderance at default; applies Rule G(2)(f) "reasonable belief" pleading standard and finds it satisfied |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for pleadings)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading must contain factual content permitting reasonable inference of liability)
- Jackson v. Beech, 636 F.2d 831 (D.C. Cir.) (default judgment appropriate when adversary process halted)
- Mwani v. bin Laden, 417 F.3d 1 (D.C. Cir.) (greater flexibility in assessing allegations on default)
- United States v. All Assets Held at Bank Julius Baer & Co., Ltd., 571 F. Supp. 2d 1 (D.D.C.) (higher pleading standard in forfeiture context; discussion of Rule G)
- United States v. $22,173.00 in U.S. Currency, 716 F. Supp. 2d 245 (S.D.N.Y.) (Supplemental Rule G pleading discussion)