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United States v. All Funds on Deposit in Lee Munder Wealth Planning Res. Account No. ***-**1080

United States District Court, D. Massachusetts

January 22, 2016

UNITED STATES OF AMERICA, Plaintiff,
v.
ALL FUNDS ON DEPOSIT IN LEE MUNDER WEALTH PLANNING RESOURCE ACCOUNT NUMBER ***-**1080, HELD IN THE NAME OF BARRY J. CADDEN IRREVOCABLE TRUST, UP TO THE AMOUNT OF $1,482,200.26 AS OF DECEMBER 17, 2014, AND ALL INTEREST ACCURED THEREAFTER, ET AL., [1] Defendants

          For United States of America, Plaintiff: Christopher R. Donato, LEAD ATTORNEY, United States Attorney's Office, Boston, MA; Christine J. Wichers, United States Attorney's Office MA, Boston, MA.

         For ALL FUNDS ON DEPOSIT IN THE LEE MUNDER WEALTH PLANNING RESOURCE ACCOUNT, All Funds on Deposit in Middlesex Savings Bank Account Number 0416, All Funds on Deposit in Middlesex Savings Bank Account Number 0424, Defendants: Bruce A. Singal, LEAD ATTORNEY, Damien C. Powell, Michelle R. Peirce, Donoghue, Barrett & Singal, PC, Boston, MA; John J. Monaghan, Holland & Knight, LLP, Boston, MA.

         For All Funds on Deposit in Merrill Lynch Account Number 0393, All Funds on Deposit in Merrill Lynch Account Number 0443, All Funds on Deposit in Merrill Lynch Account Number 0491, All Funds on Deposit in Merrill Lynch Account Number 0498, All Funds on Deposit in Merrill Lynch Account Number 1147, All Funds on Deposit in USAA Financial Advisors Account Number 0378, All Funds on Deposit in Middlesex Savings Bank Account Number 9537, All Funds on Deposit in Seaside Bank Account Number 9192, All Funds on Deposit in Florida Community Bank Account Number 4002, All Funds on Deposit in Florida Community Bank Account Number 6800, All Funds on Deposit in Suntrust Bank Account Number 8186, All Funds on Deposit in Suntrust Bank Account Number 1652, All Funds on Deposit in Wells Fargo Account Number 9675, All Funds on Deposit in Wells Fargo Account Number 6897, All Funds on Deposit in JP Morgan Chase Private Client Checking Account Number 3167, All Funds on Deposit in JP Morgan Chase Private Client Savings Account Number 1939, All Funds on Deposit in Florida Bank of Commerce Account Number 8659, All Funds on Deposit in Seacoast National Bank Account Number 0206, All funds on Deposit in Seacoast National Bank Account Number 0476, All Funds on Deposit in Seacoast National Bank Account Number 0396, All Funds on Deposit in Fifth Third Bank Account Number 5847, Defendants: David E. Meier, Melinda L. Thompson, Todd & Weld, Boston, MA; John J. Monaghan, Holland & Knight, LLP, Boston, MA; Paul A. Trifiletti, Todd & Weld LLP, Boston, MA.

         For M.B. Cadden, E.M. Cadden, Claimants: Bruce A. Singal, LEAD ATTORNEY, Donoghue, Barrett & Singal, PC, Boston, MA.

Page 126

         MEMORANDUM & ORDER

         WILLIAM G. YOUNG, DISTRICT JUDGE.

         I. INTRODUCTION

         The Government filed its original Complaint in this in rem action in May 2015. See Verified Compl. Forfeiture In Rem, ECF No. 1. It filed its First Amended Complaint the next month. See First Am. Verified Compl. Forfeiture In Rem, ECF No. 9. Currently before the Court are two motions. One is a motion to dismiss the Government's First Amended Complaint,[2] filed by the Conigliaro Claimants,[3] regarding

Page 127

certain of the properties in this in rem action (collectively, the " Defendant Conigliaro Property" ).[4] See Claimants' Mot. Dismiss First Am. Verified Compl. Forfeiture In Rem (" Mot. Dismiss First Am. Compl." ), ECF No. 39. The other is the Government's motion for leave to file its Second Amended Complaint. See United States' Mot. Leave File Second Am. Compl. Forfeiture In Rem, ECF No.[5]

         The issues have been extensively briefed. See Claimants' Mem. Law. Supp. Mot. Dismiss First Am. Verified Compl. Forfeiture In Rem, ECF No. 40; United States' Opp'n Conigliaro Claimants' Mot. Dismiss Compl. in Part, ECF No. 57; Claimants' Reply Mem. Law. Further Supp. Mot. Dismiss First Am. Verified Compl. Forfeiture In Rem, ECF No. 69; United States' Sur-Reply Br. Opp'n Conigliaro Claimants' Mot. Dismiss Compl. in Part, ECF No. 80; Mem. Supp. United States' Mot. Leave File Second Am. Compl. Forfeiture In Rem, ECF No. 83; Claimants' Mem. Supp. Opp'n United States' Mot. Leave Amend First Am. Compl. Forfeiture In Rem (" Claimants' Mem." ), ECF No. 85; Reply Brief Supp. United States' Mot. Leave File Second Am. Compl. Forfeiture In Rem (" United States' Reply" ), ECF No. 89. The Court held hearings[6] on both motions, see Elec. Clerk's Notes October 23, 2015, ECF No. 81; Elec. Clerk's Notes Dec. 18, 2015, ECF No. 90, and took the matters under advisement. It now decides them.

         II. ANALYSIS

         The Conigliaro Claimants oppose the Government's motion for leave to file its Second Amended Complaint because, they argue, such amendment would be futile. See Claimants' Mem. 2-3. While the action is one in rem, the Conigliaro Claimants' motion to dismiss is formally brought under Federal Rule of Civil Procedure 12(b). See Supp. R. G(8)(b)(i) (" A claimant who establishes standing to contest forfeiture may move to dismiss the action under Rule 12(b)." ). " There is no practical difference . . . between a denial of a motion to amend based on futility and the grant of a motion to dismiss for failure to state a claim." Glassman v. Computervision Corp., 90 F.3d 617, 623 (1st Cir. 1996).

         The Second Amended Complaint contains more detailed factual allegations than does the First Amended Complaint. Since the Court holds that even the Second Amended Complaint is insufficiently detailed

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under the relevant pleading standard, there is no need to analyze whether the First Amended Complaint would survive a motion to dismiss.

         A. Standard of Review

         The Conigliaro Claimants argue, in effect, that the Second Amended Complaint would fail as matter of law, thus the Court ought deny the Government's motion. The Court proceeds, then, by determining if " the complaint, as amended, would fail to state a claim upon which relief could be granted." Id. (internal citations omitted).

         This is not a typical motion to dismiss analysis, however, because civil forfeiture is at issue, and thus, the parties agree, Supplemental Rule G(2)(f) provides the relevant pleading standard. See United States' Reply 5; Claimants' Mem. 3; accord, e.g., United States v. $134,972.34 Seized from FNB Bank, Account No.-5351, 94 F.Supp.3d 1224, 1229 (N.D. Ala. 2015) (applying " the heightened pleading standard of Supplemental Rule G(2)(f)" to evaluate civil asset forfeiture claim); United States v. One Gulfstream G-V Jet Aircraft, 941 F.Supp.2d 1, 13 (D.D.C. 2013) (applying Supplemental Rule G(2)(f) to a civil forfeiture action) (internal citation omitted).

         Supplemental Rule G(2)(f) requires that complaints for forfeiture actions in rem " state sufficiently detailed facts to support a reasonable belief that the government will be able to meet its burden of proof at trial." Supp. R. G(2)(f). At trial, the Government's burden is " to establish, by a preponderance of the evidence, that the property is subject to forfeiture[.]" 18 U.S.C. § 983(c)(1).

         The Court must take the Government's factual allegations as true and " liberally construe[]" the Second Amended Complaint in its favor.[7] See One Gulfstream G-V Jet Aircraft, 941 F.Supp.2d at 14 (stating that " [a] claimant in an in rem proceeding may move to dismiss in the same form provided by Rule 12(b)" and that the same standards apply) (internal citations omitted).

         B. Failure to Satisfy the Heightened Pleading Standards of the Supplemental Rules

         The Conigliaro Claimants argue that the Court ought deny the Government's motion for leave to file its Second Amended Complaint because it fails to meet the heightened pleading standards applicable to civil forfeiture cases. See Claimants' Mem. 10-17.[8]

         The Government's Second Amended Complaint alleges that the Defendant Conigliaro Property " constitute[s] or [is] derived from proceeds traceable to the transfer or concealment of assets in connection with a [bankruptcy] case . . . in violation of 18 U.S.C. § 152(7)[,]" and is thus subject to forfeiture. Second Am. Verified Compl. Forfeiture In Rem (" Second Am. Compl." ), Ex. A, ...


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