United States v. $599,930.00 of Funds Associated With Cooperating Company 1
Civil Action No. 2018-2746
| D.D.C. | Apr 19, 2022Background
- FBI investigation alleged that North Korean state banks (notably the Foreign Trade Bank) used front companies and offshore accounts to launder U.S. dollar payments to evade U.S. sanctions and fund WMD programs.
- Government seized two sets of funds: $599,930 associated with Cooperating Company 1 (Defendant Funds 1) and $1,722,723 associated with Yuanye Wood Co. Ltd. (Defendant Funds 3).
- Cooperating Company 1 wired $600,000 to a Front Company 1, which shortly thereafter sent millions to Velmur (an OFAC‑designated SDN); Cooperating Company 1 settled with the Government and waived notice as to the funds.
- Yuanye Wood allegedly made multiple U.S. dollar wires to OFAC‑designated entities (Wee Tiong, Front Company 4, Front Company 7) at the direction of Chilbo (a North Korean operation); the $1,722,723 was seized in December 2018 and held in U.S. banks.
- The Government published notice and sent direct notice under Supplemental Rule G; no claimant filed a claim, the Clerk entered default, and the Government moved for default judgment seeking forfeiture based principally on money‑laundering (18 U.S.C. § 981(a)(1)(A)) and, as to Funds 3, also as IEEPA proceeds.
- The court found notice and service adequate, concluded the verified complaint met Supplemental Rule G pleading requirements, determined the Government showed a reasonable belief it could prove money‑laundering tied to IEEPA violations and that the funds had a "substantial connection" to the offenses, and granted default judgment forfeiting Defendant Funds 1 and 3 to the United States.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Supplemental Rule G notice sufficiency | Government published notice and sent direct FedEx notice to Yuanye; Cooperating Company 1 waived notice | No claimant timely appeared or challenged service | Notice and service satisfied Rule G; publication and direct notice adequate |
| Supplemental Rule G pleading adequacy | Complaint was verified, alleged jurisdiction/venue, described funds, invoked forfeiture statutes, and pleaded facts supporting a reasonable belief of proof at trial | No responsive pleading; Cooperating Company 1 settled and waived contest; Yuanye did not appear | Complaint met Rule G(2) requirements; well‑pleaded allegations accepted for default judgment |
| Forfeiture as funds involved in money laundering (18 U.S.C. § 981(a)(1)(A)) | Funds were used in overseas transfers with intent to promote specified unlawful activity (IEEPA violations and related fraud/bank fraud), and funds have a substantial connection to the scheme | No operative challenge; no claimant defended the funds | Court found sufficient factual allegations to infer intent to promote IEEPA violations and a substantial connection; granted forfeiture on money‑laundering theory |
| Forfeiture as proceeds of IEEPA violations (18 U.S.C. § 981(a)(1)(C)) | Funds 3 were proceeds traceable to IEEPA breaches (transactions supporting North Korean forced‑labor/WMD revenue and SDNs) | Not litigated on the merits due to default | Court declined to decide explicitly because forfeiture was proper under money‑laundering theory; did not resolve proceeds question |
Key Cases Cited
- United States v. All Assets Held in Account No. XXXXXXXX, 330 F. Supp. 3d 150 (D.D.C. 2018) (default procedure and forfeiture practice under Rule G)
- United States v. Twenty-Four Cryptocurrency Accts., 473 F. Supp. 3d 1 (D.D.C. 2020) (effect of clerk's default and necessity for court to assess claim adequacy)
- United States v. Tajideen, 319 F. Supp. 3d 445 (D.D.C. 2018) (money‑laundering requires overseas transfer and intent to promote specified unlawful activity)
- United States v. Piervinanzi, 23 F.3d 670 (2d Cir. 1994) (framework for overseas transfer element in money‑laundering cases)
- United States v. Brown, 186 F.3d 661 (5th Cir. 1999) (intent‑to‑promote requirement under §1956)
- In re 650 Fifth Avenue & Related Props., 830 F.3d 66 (2d Cir. 2016) (IEEPA‑based forfeiture — property derived from executive‑order violations is forfeitable)
- United States v. Aguilar, 782 F.3d 1101 (9th Cir. 2015) (Rule G pleading standard described as not onerous)
- United States v. $6,999,925.00 of Funds Associated with Velmur Mgmt. Pte. Ltd., 368 F. Supp. 3d 10 (D.D.C. 2019) (IEEPA violations and money‑laundering in the context of SDN transactions)
- United States v. All Assets Held at Bank Julius Baer & Co., Ltd., 571 F. Supp. 2d 1 (D.D.C. 2008) (discussion of Supplemental Rule G heightened pleading)
- United States v. $1,071,251.44 of Funds Associated with Mingzheng Int’l Trading Ltd., 324 F. Supp. 3d 38 (D.D.C. 2018) (actual‑notice attempt standard under Rule G)