United States v. $6, 999, 925.00 of Funds Associated With Velmur Mgmt. Pte LTD
368 F. Supp. 3d 10
| D.C. Cir. | 2019Background
- The United States sued Singapore-registered Velmur Management Pte. Ltd. (Velmur) seeking forfeiture of $4,999,925 in blocked U.S. dollar funds and in-personam civil penalties for alleged IEEPA and money‑laundering violations; Velmur failed to appear and the government moved for default judgment.
- OFAC blocked five May 2017 wire transfers into Velmur’s U.S. account (totaling $4,999,925) as prepayments for gasoil, and later designated Velmur (and others, including IPC) as SDNs for facilitating shipments to North Korea.
- The FBI and Treasury investigations (FinCEN/OFAC) allege Velmur received additional U.S. dollar wires from companies identified as front entities for North Korea’s Foreign Trade Bank (FTB) and wired approximately $6,853,000 to JSC Independent Petroleum Company (IPC) for gasoil.
- Government alleges these transfers used U.S. correspondent banks to evade sanctions, violating the IEEPA (via OFAC licensing prohibitions) and the federal anti‑money‑laundering statute, 18 U.S.C. § 1956, which also authorizes civil penalties equal to the value of involved funds.
- Court found the government satisfied Supplemental Rule G notice and pleading requirements for in rem forfeiture and that the complaint sufficiently pleaded facts to support forfeiture under 18 U.S.C. §§ 981(a)(1)(A) and (C).
- On civil penalties, the court awarded penalties only for specific, factually supported transactions (totaling $13,022,905) rather than the full $21,691,187.30 sought, because many alleged transfers lacked adequate factual detail.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of notice for in rem forfeiture | Government: satisfied Supplemental Rule G public and direct notice (publication and international service) | Velmur: did not appear to contest service | Court: notice adequate under Rule G (publication + direct notice attempts sufficient) |
| Pleading sufficiency for forfeiture | Government: verified complaint alleges funds were proceeds of IEEPA and §1956 violations and thus forfeitable under §981 | Velmur: defaulted (no contest) | Court: complaint meets Rule G(2) standard; forfeiture of $4,999,925 granted |
| Forfeiture legal basis (IEEPA vs. §1956) | Government: funds traceable to transactions on behalf of SDNs without OFAC licenses; alternatively involved in money‑laundering transactions | Velmur: defaulted (no contest) | Court: funds forfeitable as proceeds traceable to IEEPA violations and as property involved in §1956 violations |
| Amount of civil money penalties | Government: seeks penalties equal to value of all alleged illicit transfers ($21,691,187.30) | Velmur: defaulted (no contest) | Court: awarded penalties only for transactions sufficiently pleaded (specified OFAC‑blocked transfers, IPC payments, and four identified inbound wires) totaling $13,022,905; denied penalty for unspecified additional transfers |
Key Cases Cited
- In re 650 Fifth Avenue & Related Props., 830 F.3d 66 (2d Cir. 2016) (property traceable to IEEPA violations is forfeitable)
- Jackson v. Beech, 636 F.2d 831 (D.C. Cir. 1980) (default judgment appropriate when adversary process halted by unresponsive party)
- H.F. Livermore Corp. v. Gebruder Loepfe, 432 F.2d 689 (D.C. Cir. 1970) (default judgment principles)
- Gilmore v. Palestinian Interim Self‑Gov’t Auth., 843 F.3d 958 (D.C. Cir. 2016) (default judgment considerations)
- Consarc Corp. v. Iraqi Ministry, 27 F.3d 695 (D.C. Cir. 1994) (deference to OFAC determinations)
- 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) (Supplemental Rule G notice sufficiency)
- United States v. All Assets Held at Bank Julius Baer & Co., Ltd., 571 F. Supp. 2d 1 (D.D.C. 2008) (forfeiture complaint standards under Rule G)
- United States v. $22,173.00 in U.S. Currency, 716 F. Supp. 2d 245 (S.D.N.Y. 2010) (Rule G and Rule 8 pleading interplay)
- United States v. $396,589 in U.S. Funds, 349 F. Supp. 3d 13 (D.D.C. 2018) (funds used to evade sanctions subject to forfeiture)
- Commodity Futures Trading Comm’n v. GIGFX, LLC, 844 F. Supp. 2d 58 (D.D.C. 2012) (plaintiff must prove damages when seeking default judgment)