Xiong v. United States Department of Treasury
Civil Action No. 2020-1346
| D.D.C. | May 16, 2022Background
- Plaintiffs (including convicted defendant Seng Xiong and individuals identified as victims) sued the U.S. Department of the Treasury seeking return of funds seized and forfeited in United States v. Xiong (D. Minn.), alleging the forfeited assets should be turned over for restitution.
- Xiong was convicted of mail and wire fraud, sentenced to 87 months, ordered to pay over $1.2 million in restitution, and the government obtained a final criminal forfeiture seizing $1,612,451.84 from various accounts. The government posted notice; no third-party petitions were filed in the criminal forfeiture proceedings.
- DOJ counsel informed counsel for some victims that the Attorney General could use a discretionary “restoration” process to transfer forfeited funds to satisfy restitution, but restoration is not automatic.
- Plaintiffs’ counsel died; the Court ordered plaintiffs to obtain new counsel or proceed pro se by a deadline. Plaintiffs did not comply and the case was dismissed for want of prosecution on Sept. 30, 2021.
- Plaintiffs moved to reopen under Rule 60(b). The Court construed the pro se filing as a Rule 60(b)(6) motion but denied relief because plaintiffs failed to show extraordinary circumstances and, critically, no meritorious claim exists to revive.
- The court held replevin is statutorily barred for property seized under the civil forfeiture statute (18 U.S.C. § 981(c)), restoration to victims is discretionary under § 981(e)(6), and Xiong cannot use this suit to collaterally attack the Minnesota forfeiture judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether to grant Rule 60(b) relief to reopen dismissal for want of prosecution | Plaintiffs asked for more time after counsel’s death and requested case reopened to pursue recovery of forfeited funds | Gov’t argued plaintiffs failed to show extraordinary circumstances and no meritorious claim; reopening would be futile | Denied — plaintiffs did not show extraordinary circumstances or a meritorious claim to justify relief |
| Whether victims can recover forfeited funds via replevin against the United States | Victim plaintiffs contend forfeited funds should be returned for restitution; they sought a court order directing deposit/distribution | Gov’t: civil forfeiture statute bars replevin and vests custody in the U.S.; restoration is discretionary | Denied — 18 U.S.C. § 981(c) makes property non-repleviable and courts cannot compel distribution |
| Whether statute mandates restoration of forfeited funds to victims | Plaintiffs contend forfeited funds should be used for restitution as contemplated by DOJ communications | Gov’t: § 981(e)(6) authorizes (but does not obligate) restoration; decision rests with Attorney General | Denied — restoration is discretionary, not a mandatory remedy plaintiffs can enforce in this suit |
| Whether Xiong (convicted defendant) may challenge the forfeiture here | Xiong sought return of funds he claims belong to him and/or to attack victim status | Gov’t: forfeiture was adjudicated in Minnesota; Xiong did not appeal forfeiture and cannot collateral-attack that judgment here | Denied — complaint fails to state a basis for Xiong to overturn the Minnesota forfeiture; reopening would improperly collaterally attack prior judgment |
Key Cases Cited
- Lepkowski v. U.S. Treasury, 804 F.2d 1310 (D.C. Cir. 1986) (movant must show meritorious claim to obtain Rule 60 relief)
- Kramer v. Gates, 481 F.3d 788 (D.C. Cir. 2007) (Rule 60(b)(6) relief should be used sparingly; requires extraordinary circumstances)
- Summers v. Howard Univ., 374 F.3d 1188 (D.C. Cir. 2004) (balance interest in finality against justice when deciding Rule 60 motions)
- Comput. Prof’ls for Soc. Responsibility v. U.S. Secret Serv., 72 F.3d 897 (D.C. Cir. 1996) (district court enjoys broad discretion on Rule 60 motions)
- United States v. Pescatore, 637 F.3d 128 (2d Cir. 2011) (statutory restoration of forfeited property is discretionary)
- United States v. Xiong, 914 F.3d 1154 (8th Cir. 2019) (affirming Xiong’s convictions and underlying criminal proceedings)
- United States v. Adetiloye, 716 F.3d 1030 (8th Cir. 2013) (distinguishing forfeiture (disgorgement) from restitution (compensation))
- Haines v. Kerner, 404 U.S. 519 (1972) (pro se pleadings held to less stringent standards)
- 37 Associates v. REO Constr. Consultants, Inc., 409 F. Supp. 2d 10 (D.D.C. 2006) (describing when a second action constitutes an improper collateral attack)