United States v. $1,707,197.13 From Fidelity Investment Bank Funds Account Number 6516
8:21-cv-01310
| C.D. Cal. | Dec 2, 2021Background
- The United States filed a verified civil-forfeiture complaint seeking $1,707,197.13 in Account 6516 and $1,953.93 in Account 3501, traced from PPP loans obtained by William Nicoloff for several entities.
- The complaint alleges Nicoloff submitted fraudulent PPP loan applications and altered IRS forms to obtain over $1.5 million, then diverted proceeds to personal securities trading rather than the businesses’ payrolls.
- The Government posted public notice and mailed certified notice to known potential claimants (W. Nicoloff, M. Nicoloff, Coastridge, Bentley, David, Stonecreek); no claims or answers were filed.
- The Clerk entered default against all potential claimants; the Government moved for default judgment and no opposition was filed.
- The district court evaluated procedural rules, Local Rule 55-1, and the seven Eitel factors and granted the Government’s motion, ordering forfeiture of the defendant funds.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Procedural adequacy of notice/service for default judgment | Government: notice posted and mailed to known claimants; local and federal rules satisfied | No appearance or opposition from claimants | Satisfied: service and notice requirements met; default entry proper |
| Sufficiency of pleadings to support forfeiture | Government: verified complaint alleges funds are proceeds/traceable to mail, wire, and bank fraud and money laundering, making funds forfeitable | No responsive challenge | Sufficient: allegations taken as true on default; forfeiture pleaded under applicable statutes |
| Applicability of Eitel factors for default judgment | Government: most Eitel factors favor default (prejudice, merits, sufficiency, no factual dispute, no excusable neglect); only merits-on-the-merits factor disfavors | No argument | Court: weighed factors; all but the preference for merits favored default; default judgment appropriate |
| Amount/quantification of funds and evidentiary weight | Government: verified complaint traces PPP loan proceeds into the two accounts and alleges amounts; verification gives allegations evidentiary weight | No challenge to amounts | Court: accepted verified allegations as carrying evidentiary weight for purposes of default; sum-of-money factor favors judgment |
Key Cases Cited
- Eitel v. McCool, 782 F.2d 1470 (9th Cir. 1986) (sets seven-factor test for default judgments)
- Geddes v. United Fin. Grp., 559 F.2d 557 (9th Cir. 1977) (complaint allegations deemed true on default except damages)
- Pope v. United States, 323 U.S. 1 (1944) (treating factual allegations as true on default proceedings)
- Cripps v. Life Ins. Co., 980 F.2d 1261 (9th Cir. 1992) (default does not establish facts not plead or legally insufficient claims)
- PepsiCo, Inc. v. California Sec. Cans, 238 F. Supp. 2d 1172 (C.D. Cal. 2002) (discusses taking well-pleaded allegations as true after default)
- Philip Morris USA, Inc. v. Castworld Prods., Inc., 219 F.R.D. 494 (C.D. Cal. 2003) (addresses adequacy of pleadings in default-judgment context)
- Landstar Ranger, Inc. v. Parth Enters., Inc., 725 F. Supp. 2d 916 (C.D. Cal. 2010) (consideration of sum-at-issue factor in Eitel analysis)