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IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS DALLAS DIVISION __________________________________ UNITED STATES OF AMERICA Plaintiff, v. $229,590.00 in United States Currency Seized from a Safe in the Home of Dallas County Commissioner John Wiley Price $230,763.47 from Dallas County Commissioner John Wiley Prices Sale of 7001 Grady Niblo Road, Dallas, Texas Defendants In Rem.

3:12-CV-893-D

GOVERNMENTS RESPONSE TO MOTIONS TO STAY To gain discovery on a criminal investigation to which they were not otherwise entitled, claimants refused a Government request to stay the filing of these proceedings and forced the filing of the present civil forfeiture case. Claimants John Wiley Price and Dapheny Fain now seek to evade their legal obligations by putting the cart before the horse. They ask that this Court grant their motions to stay these proceedings before they have established their standing to file such motions. Although Price and Fain have filed claims to the property, those claims are vague and have not been followed by Answers to the Amended Complaint which are legally required before claimants will have standing to assert their claims or to file any motion other than a Rule 12 motion. Instead, each has

Governments Response

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filed a motion to stay supported only by a naked claim of ownership wrapped in a blanket invocation of their Fifth Amendment privileges. The Fifth Circuit has condemned such invocations as an abusive conversion of the Fifth Amendment from a defensive shield to an offensive sword. Any civil litigant seeking to invoke the Fifth Amendment must do so on a point-by-point basis and must articulate specific reasons for each invocation so that the Court can determine whether they are proper or abusive. Until that is done, Price and Fains motions are not yet ripe for review. The Court should deny the motions without prejudice to renew and require any claimant still authorized to proceed to amend their claim and file a proper Answer. I. Background After seizure of the above titled property, Price and Fain filed administrative claims to it. Price and Fain coordinated their claims to the cash in the safe, with Price filing first while swearing that Fain would lay claim to almost half of the cash in a claim that came a day later. Exhibits 1 and 2. To support his claim to the cash, Price also submitted 744 pages of certain of the banking business records which evidence the withdrawal of the cash from deposits and from cashing both checks and other receipts as well as evidence of loan proceeds. Exhibit 1.1 As part of her claim, Fain swore that [w]ith this claim or very soon thereafter, I will submit bank records I obtained from my financial institution. Exhibit 2. Further demonstrating the coordination of their claims, the attorney letters accompanying each claim made virtually identical requests for the
1

The actual bank and loan documents are not attached due to their volume and to comply with ECF privacy requirements. If any challenges are made concerning the content of these documents, the Government will be happy to provide the Court with an electronic copy of them.

Governments Response

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return of . . . business and tax records and other property so as to properly document . . . claims of ownership and proof of custodianship. Exhibits 1 and 2. Upon receipt of the claims, the Federal Bureau of Investigation (FBI) ceased all administrative forfeiture and forwarded the matter to the United States Attorneys Office (USAO) to consider filing a civil forfeiture action. Price and Fains attorneys repeated their requests for copies of Price and Fains seized records so that they could support their claims to the property in any future forfeiture proceeding.2 Significant portions of the criminal investigation were then delayed, and personnel at the FBI and USAO were re-tasked to expedite copying of the seized records that Price and Fains attorneys said were necessary for future forfeiture proceedings. Price and Fains attorneys agreed to extend the filing deadline for the forfeiture case so the seized records could be copied. Doc. #5, p. 2. When it became apparent that another extension would be necessary, both refused to stay the proceedings further. Id. at p. 3. Prices attorney eventually relented, but Fains did not and the Government was forced to file the present civil action even though additional extensions were possible. Id. When the action was unsealed, direct notice was sent to Price and Fains attorneys along with instructions on how to properly file the required civil claims to the property and answers to the combined First Amended Complaint and First Amended Verification Affidavit. Doc. # 11 and 11-1, (hereafter collectively referred to as the complaint); See also Exhibits 3 and 4. After filing their claims, Price and Fains attorneys contacted the

The requests were also made so that Price and Fain could make tax filings, county financial disclosures, campaign finance disclosures, and operate Kwanzafest.

Governments Response

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Government to inquire whether it was possible to stay the forfeiture proceedings. This writer directed them to 18 U.S.C. 981(g) which governs stays in civil forfeiture proceedings. The Government agreed to consent to a stay once the claimants filed valid claims and answers. Two weeks before the Answers were due, Fains attorney requested that the Government provide him with records such as Fains personal and business bank records referenced in the complaint. The Government responded that Fain was not entitled to advance discovery and that it expected Fain would already have those records. Fains attorney said that they did not have the records and that without them he would file an Answer with a lot of non-specific responses since he truthfully did not have sufficient information to respond to the complaint. The Government eventually agreed to turn over both Price and Fains personal and business banking records to enable them to file their Answers. Claimants then informed the Government that they would still not file any Answers and would instead seek a stay. Fains attorney also said he would alternatively seek an extension of time to file an Answer to which the Government consented. The Government offered to consent to an extension of time to file for Price, but his attorney declined that offer and only wanted a stay even though the Government warned him that such a gamble could result in Prices claim being struck. Doc. #20, p.4. When it became clear neither claimant would reconsider, the Government served its special interrogatories so that each attorney could also request an extension of time for responding to them.

Governments Response

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II. Analysis Now that they have forced the United States to file this forfeiture case, Price and Fain are required by law to file both a certified claim and an Answer to the Amended Complaint before they have standing to file any motion other than a Rule 12 motion. See Supplemental Rule G(5)(b)3 and 18 U.S.C. 983(a)(4)(B). Instead, they seek to evade their legal obligations by asking this Court to grant an early stay of the proceedings pursuant to 18 U.S.C. 981(g)(2). That section provides that a Court must stay a civil forfeiture proceeding upon the motion of a claimant if the court determines that each claimant has established that: (A) The claimant is the subject of a related criminal investigation or case; (B) the claimant has standing to assert a claim in the civil forfeiture proceeding; and (C) continuation of the forfeiture proceeding will burden the right of the claimant against self-incrimination in the related investigation or case. The United States does not contest that Price and Fain are the subjects of a related criminal investigation. It does contest that either claimant has established standing to assert a claim in this proceeding, and it disputes that their right against self-incrimination will be burdened in the related criminal investigation if they are required to amend their claims and file a valid Answers to the Amended Complaint. A. Standing As a threshold matter, it is important to recognize the critical role that challenges

Supplemental Rule G of the Federal Rules of Civil Procedures Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions (hereafter Rule G).
3

Governments Response

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to standing play in civil forfeiture cases. The Government is the plaintiff, the property is the defendant, and the claimant is an intervenor seeking to challenge the forfeiture action.4 As an intervenor, the claimant must first establish that he or she has a sufficient interest in the property that the law will recognize in order to invoke the courts jurisdiction.5 If the claimant does not have a real and personal interest in the property that the law will recognize, there is no case or controversy, and consequently no basis for the court to exercise jurisdiction under Article III of the Constitution or the relevant statutes.6 For that reason, a claimants Article III, prudential, and statutory standing are threshold issues in every civil forfeiture case.7 As many courts have recognized, there is a substantial danger in forfeiture cases that claims will be filed by persons with no real interest in the property. 8 Entirely
4

See United States v. All Funds in Account Nos. 747.034/278 Banco Espanol de Credito, 295 F.3d 23, 25 (D.C. Cir. 2002) (Civil forfeiture actions are brought against property, not people. The owner of the property may intervene to protect his interest.).
5

See United States v. $500,000.00 in U.S. Currency, 591 F.3d 402, 404-405 fn. 2 (5th Cir. 2009) (The claimant opposing forfeiture bears the burden of establishing standing and that their interest is within the zone of interests which the statute protects or regulates) and United States v. One 18th Century Colombian Monstrance, 797 F.2d 1370, 1374 (5th Cir. 1986) ([T]he court must consider the standing of any party even if the issue has not been raised by the parties to the action.). See United States v. $9,041,598.68, 163 F.3d 238, 245 (5th Cir. 1998) (a claimant must be able to show at least a facially colorable interest in the proceedings sufficient to satisfy the case-or-controversy requirement and the prudential considerations defining and limiting the role of the court.), quoting One 18th Century Colombian Monstrance, 797 F.2d at 1374-75 and Warth v. Seldin, 422 U.S. 490, 517-18 (1975).
6 7

See United States v. $38,570 in U.S. Currency, 950 F.2d 1108, 1111 (5th Cir. 1992) (standing is a threshold question for entry into a federal court.); United States v. Lazarenko, 476 F.3d 642 (9th Cir. 2007) (prudential standing encompasses the general prohibition on a litigants raising another persons legal rights); $500,000.00, 591 F.3d at 404-405 fn. 2. See, e.g., Mercado v. U.S. Customs Service, 873 F.2d 641, 645 (2d Cir. 1989) (there is a substantial danger of false claims in forfeiture proceedings) and United States v. $138,381 in U.S. Currency, 240 F. Supp. 2d 220, 228 (E.D.N.Y. 2003) (same).
8

Governments Response

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frivolous claims may be filed by people who have no connection to the forfeiture case, except that they read the public notice of forfeiture and decided to try their luck by filing a claim. Other claims may be filed by nominee straw owners, suddenly invented creditors, or other third parties who contest the forfeiture in their name so that someone else may conceal their identity or the extent of their involvement while they manipulate the forfeiture process from behind the scenes. In such cases, pretrial challenges to the claimants standing are a critical stage in the forfeiture case as they present the only opportunity for the court to weed out meritless claimsclaims filed by improper claimantsbefore the Courts time is wasted or the Government is required to respond to motions and unnecessarily expose more of its evidence. Accordingly, a great deal of forfeiture litigation involves the Government challenging a claimants standing to contest the forfeiture. The Governments complaint has alleged that Fain is nothing more than a straw ownera nomineeand Fains claim does not quiet these concerns, as it is nothing more than a bare-bones claim that $114,590.000 [sic] is Fains personal property and she has a right to it. Docs. #18; 18-1; and 11-1, 281. A claimant must come forth with some evidence of [her] ownership interest . . . a bare assertion of ownership of the res, without more, is inadequate to prove an ownership interest sufficient to establish standing. $38,570 U.S. Currency, 950 F.2d at 1112.9 Fains reliance on $38,570 for the proposition
See also, e.g., $138,381, 240 F. Supp. 2d at 231 (where non-possessory claimants only basis for standing is her allegation that she is an owner, proof of ownership is required to establish standing); United States v. $26,620.00 in U.S. Currency, 2006 WL 949938, *6 (N.D. Ga. 2006) (person not in possession of the currency when it was seized, and who claims to be the owner of the currency, must satisfy the definition of owner in section 983(d)(6)); United States v. U.S. Currency, $81,000.00, 189
9

Governments Response

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that a Government admission may excuse her duty to produce further evidence of ownership is misplaced. Id. The Governments complaint does not admit Fains ownership of the property or that she has any financial stake in it. Rather, the complaint details how Fains actions were done to create an illusion that she owned the property so that Prices actual ownership could be disguised.10 Nor does $38,570 support Fain using Prices administrative claim as an admission to establish her standing. As noted earlier, Price and Fain coordinated their administrative claims so Price is not a party opponent to Fain. His claim cannot serve as an admission.11 If the $38,570 case helps anyone, it is Price and not Fain. The Governments complaint alleges that he is the true owner of all the money in the safe. The 1992 case of $38,570 also illustrates the care that must be taken in applying older forfeiture cases as precedent. The definition of owner has changed and, as will be
F.3d 28, 35 (1st Cir. 1999) (to establish standing, claimant with legal title to joint bank account must show he was not a nominal or straw owner); and United States v. Contents of Accounts Nos. 3034504504 & 144-07143 at Merrill, Lynch, Pierce, Fenner & Smith, Inc., 971 F.2d 974, 985 (3d Cir. 1992) (Courts have uniformly rejected standing claims put forward by nominal or straw owners. Thus, even possession of legal title to the res may be insufficient to establish standing to contest the forfeiture.). $38,570, 950 F.2d at 1113 (Courts generally look to indicia of dominion and control such as possession, title, and financial stake.) Here, Fain was not in possession of the property when it was seized and the facts in the Governments complaint show that Fain has no financial stake in the property. Fain does state that Claimant Fain regularly deposited and withdrew varying amounts of currency from Claimant Prices safe . . . Doc. #23, p. 6. While that may be true, neither Price nor Fain stated such in either their administrative or civil claims and Fain will have to amend her civil claim if she wishes to rely upon it to establish her standing. Exhibits 1, 2, and Docs. #16, 16-1, 18, and 18-1.
10

Further, administrative claims serve a different function than civil claims, and a claimant cannot rely upon her administrative claim or anothers as a substitute for a civil claim. See e.g., United States v. 27 Assorted Firearms, 2005 WL 2645010, *3 n.1 (W.D. Tex. 2005) (administrative and civil judicial forfeiture are separate proceedings; a claim filed in an administrative forfeiture proceeding does not take the place of the claim required by section 983(a)(4) and Rule C(6)) and United States v. $5,730.00 in U.S. Currency, 109 Fed. Appx. 712, 714 (6th Cir. 2004) (CAFRA did not change the rule that claim filed in administrative forfeiture proceeding does not satisfy the requirement in Rule C(6)).

11

Governments Response

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discussed later, the process for obtaining a stay has been formalized to balance the interests of both the claimants and the Government. In 2000, Congress enacted the Civil Asset Forfeiture Act (CAFRA) and overhauled the civil forfeiture system in order to provide a more just and uniform procedure for Federal civil forfeitures. Pub. L. No. 106-185 pmbl., 114 Stat. 202, 202. United States v. Melrose East Subdivision, 357 F.3d 493, 503 (5th Cir. 2004). Among the numerous changes, CAFRA added 18 U.S.C. 981(g)(2) through (7) and all of 18 U.S.C. 983. Id. Later, on December 1, 2006, Supplemental Rule G replaced the procedures in Supplemental Rules C and E for Certain Admiralty and Maritime Claims that had governed civil forfeiture proceedings for many decades. The combined changes have created a very specific statutory scheme to govern the procedures that must be followed to establish standing in a civil forfeiture case and which balance the amount of the discovery that the Government is permitted before a stay can be granted. For example, the $38,570 courts conclusion that only owners have standing to contest a forfeiture proceeding is still good law. However, the courts directive in footnote four that [t]he term owner should be broadly interpreted has been legislatively overturned through the enactment of 18 U.S.C. 983(d)(6) which now defines owner to exclude nominee owners, unsecured creditors, and bailees who do not meet certain conditions. See, e.g.,$500,000.00, 591 F.3d at 404. To contest the forfeiture of property, a person claiming to be an owner must proceed in the manner set forth in the Supplemental Rules for Certain Admiralty and Maritime Claims [and Asset Forfeiture Actions]. 18 U.S.C. 983(a)(4)(A).

Governments Response

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Supplemental Rule G sets out detailed procedural requirements for each step that a person seeking to challenge the forfeiture of property must follow. First, one must file a claim. Rule G (5)(a)(i); 18 U.S.C. 983(a)(4)(A). Then, one must file an Answer to the Governments complaint in order to assert that claim. Rule G(5)(b); 18 U.S.C. 983(a)(4)(B). The detailed rules for each step are designed to ferret out both frivolous claimants and those statutorily excluded from ownership. Beginning with step one, Price and Fain have failed to establish their standing to contest any of the money in the safe. Rule G(5)(a)(i) mandates that a claim must (1) identify the specific property claimed; (2) identify the claimant and state the claimants interest in the property; and (3) be signed by the claimant under penalty of perjury. (emphasis added). Both Price and Fain have failed to identify the specific money in the safe they are claiming.12 In its complaint, the United States took care to describe in detail the groupings of money within the safe so that Price and Fain could properly specify the exact money they are claiming. This is not nitpicking as the Courts jurisdiction in this case is based upon an in rem action against specific property and not the more general in personam action against a person or group of people. Consequently, Price and Fain cannot simply specify an amount of money they are seeking as they would for a money judgment in an in personam case. For an in rem case, Price and Fain must specify the exact groupings of cash that they are seeking to claim from the safe in order
12

Docs. #16; 16-1; 18; and 18-1. Technically, Fain also has failed to state her interest in the property as well. She only refers to it as her personal property and that she has a right to it, but she does not specify that right or directly claim an ownership interest. Docs. #18 and 18-1. Presumably this is an oversight, as Fains administrative claim to the property was more specific. Exhibit 2. However, Fain is not permitted to rely on her administrative claim for her civil claim. See footnote 11.

Governments Response

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to have standing. The same problem does not exist for the $230,763.47 from the sale of 7001 Grady Niblo Road because Price has claimed all of that property. However, since Price and Fain have decided that each will claim only part of the money they will need to explain which money belongs to whom or how they arrived at the split between themselves. None of the paperwork or envelopes in the safe had Fains name on them. The money does not naturally divide up into the near 50-50 split to which Price and Fain have sworn. Moreover, as Ms. Fains legal representative, Mr. Mills has publically stated that the money was not tracked.13 If true, Fains claim to the money would appear to be in the nature of an unsecured I owe you. She is basically saying that she gave money to Price which was mixed in with other money in the safe and he owes her a debt that neither she nor he have been tracking. This demonstrates how the detailed rules in 983 and Rule G disclose improper claims. Without laying claim to specific cash, Fain is not claiming any of the specific property in this case. Rather, she is only claiming a number or amount of money that Price owes heran unsecured I owe youwhich makes her only an unsecured creditor.14 If that is the case then Fain does not have standing in the forfeiture case

13

CBS Channel 11 Report on or about June 5, 2012 while interviewing Thomas W. Mills, Jr. as the legal representative of Dapheny Fain: Fain claims $115,000 of that is legitimate money belonging to her business, MMS. She claims she took that money back in cash when deposit checks for the t-shirt and mugs specialty business. She almost always pulls out cash, Mills said. And usually puts it in his (Prices) safe. He says its emergency cash in case she ever needs a quick electronic transfer for an overnight business purchase. She did not have a ledger for every time it went out and every time it went in; she doesnt have a ledger, Mills said. See http://dfw.cbslocal.com/2012/06/05/attorney-priceassociate-dapheny-fain-will-be-indicted/. Fains administrative claim also supports the conclusion that she is only claiming an amount of money that represents a debt because she states the portion of the money she is claiming represents the
14

Governments Response

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because the standing of unsecured creditors is barred by 18 U.S.C. 983(d)(6)(B)(i).15 Her remedy is to file an in personam action against Price to obtain a money judgment against him for the money. The only way that Fain might have standing in this forfeiture proceeding is if Price was storing the exact same money that Fain gave him to put in his safe. See $500,000.00, 591 F.3d at 404. She could then seek to claim that money if she could present prima facie evidence that she is not a nominee owner. Fain would either have to amend her claim to state that she personally put a specific grouping of money in the safe and then claim that specific money or Price and Fain would have to amend their claims with Price designating a specific grouping of money as money he received to hold as Fains bailee and Fain could then try to claim that specific money.

proceeds of her business instead of saying the money is the proceeds of her business. Exhibit 2. It may be that this was simply a poor choice of words, but if it is, it must be corrected.
15

See, e.g., United States v. $61,483.00 in United States Currency, 2003 WL 1566553 *3 (W.D. Tex. February 18, 2003) (Under Texas law, giving money to another, even as a loan, does not establish standing in specific forfeitable property absent a signed agreement in writing giving claimant rights to the money as collateral); $500,000.00, 591 F.3d at 404 (to establish prudential standing, the party must show that his interest in the property is arguably within the zone of interests to be protected or regulated by the statute; in forfeiture cases, that means the claimant must establish that he is an owner in terms of 983(d)(6)). See also United States v. 8 Gilcrease Lane, 641 F. Supp.2d 1, 5 (D.D.C. 2009) (to establish statutory standing, claimant must comply with Rule G(5) and establish a legal interest in the property in terms of 18 U.S.C. 983(d)(6); unsecured creditors cannot satisfy the latter requirement); United States v. 74.05 Acres of Land, 428 F. Supp. 2d 57, 65 (D. Conn. 2006) (finding claimant who had an equitable interest in real property had Article III standing but did not have statutory standing because equitable interests are excluded from the definition of owner in section 983(d)(6)); and United States v. All Funds on Deposit with R.J. OBrien & Assoc., 2012 WL 10332904, *5-6 (N.D. Ill. Mar. 27, 2012) (unsecured creditor lacks both prudential standing - because he falls outside the definition of owner in 983(d)(6) and statutory standing because he cannot comply with the requirement in Rule G(5) that he allege an interest in specific property).

Governments Response

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In his original administrative claim, Price stated that he was a custodian, which would be a bailee for a forfeiture claim.16 However, if Price claimed he was a bailee of Fains money, he would have to state the colorable legitimate interest he has in specific groups of money that he stored for Fain, identify Fain as the bailor, and state his authority to file a claim as a bailee. 17 Apparently this issue was recognized before Price filed his civil claim because Price dropped his sworn statement that he was the custodian of funds for Fain. Yet, this artful omission does not allow Fain or Price to evade the directives in Rule G(5)(A)(iii) and 18 U.S.C. 983(d)(6)(B)(ii). Price and Fain must give some explanation of their relationship to the money and how their claims should be divided or they will not have standing to contest the forfeiture of the money in the safe. That should not be a problem as Prices attorney has publically assured everyone that, If there was money in his house, Im telling you we can account for it.18 There is an absolute explanation for it. I think we can explain every penny of it.19 The claimants are simply required to do a minimal amount of that accounting now.

I am owner in part and give notice contesting seizure as custodian in part of the $229,590.00 U.S. Currency. I assert claim of ownership to $115,000.00 of the funds seized, and assert interest as custodian for Dapheny E. Fain of the balance of the funds seized, or $114,590.00. Exhibit 1.
16

See Rule G(5)(A)(iii); 18 U.S.C. 983(d)(6)(B)(ii). As to stating his legal authority, Texas defines a bailment as (1) the delivery of personal property from one person to another for a specific purpose; (2) acceptance by the transferee of the delivery; (3) an agreement that the purpose will be fulfilled; and (4) an understanding that the property will be returned to the transferor. $500,000.00 in U.S. Currency, 591 F.3d at 405 and $61,483.00, 2003 WL 1566553 *3 (same).
17 18

Public statement of William M. Ravkind as the legal representative of Commissioner John Wiley Price to WFAA channel 8 reporter on or about June 29, 2011. See http://www.wfaa.com/news/politics/PriceAttorney-Denies-Reports-of-Cash-Found-Asks-FBI-for-Search-Warrant-124752609.html.
19

Id. to NBC channel 5 reporter on or about June 29, 2011. See http://www.nbcdfw.com/news/local/FBI-Found-100K-Cash-In-Prices-House-Lawyer.html .

Governments Response

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The second step in the process is that Price and Fain must serve and file Answers to the complaint in order to have standing to assert the claims they filed.20 Once a claim is filed, the filing of an answer is mandatory. See 18 U.S.C. 983(a)(4)(B); Rule G(5)(b). Answering the complaint further defines ownership issues and enables the plaintiff and the court to determine whether there is a case and controversy for Article III purposes because the claimant is required to admit, deny, or invoke the Fifth Amendment for each paragraph in the complaint.21 If all the facts are admitted or even a select group of key facts are admitted, there may be no controversy for Article III standing. A mere desire to litigate does not alone establish standing. The claimants protest that they do not want to answer the amended complaint because it is like an indictment, and they accuse the Government of improperly seeking to use the civil forfeiture case to gain discovery for the criminal investigation.22 That would appear to be a revisionist version of history. The claimants have (1) requested the return of . . . business and tax records and other property so as to properly document . . . claims of ownership and proof of custodianship (Exhibits 1 and 2); (2) forced the filing of the civil forfeiture case to gain partial discovery on the criminal investigation; and (3) Fains attorney claimed to be unable to answer the complaint with specificity unless he
20

See, e.g., $138,381, 240 F. Supp. 2d at 229 (claimant lacked statutory standing based on her failure to file a timely answer to the complaint).
21

See Rule G(1); Fed. R. Civ. Proc. 8(b), 10(b) and (c). See also United States v. $6,357.00 in U.S. Currency, 2011 WL 4713224, *2 (W.D.N.C. Oct. 6, 2011) (admonishing pro se claimant to respond to each of the factual allegations in numbered paragraphs). Doc. # 20, p. 2-3; Doc. #23, p. 4. Prices attorney also seems to complain about the length of the complaints verification affidavit. Doc. 20, p. 3. Counsel is essentially complaining about the length and scope of his own clients actions. If the Government had filed a shorter complaint, counsel would have complained of the complaints insufficiency.
22

Governments Response

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received bank records in the Government possession even though Fain swore in her administrative petition that she would be obtaining bank records from her financial institution (Exhibit 2). After obtaining all of that material, the claimants filed bare-bones claims and suddenly decide they must invoke the Fifth Amendment in place of their Answers. The Government respectfully suggests that it is not the party trying to use this civil case as a vehicle for improper discovery. While Fains analogy of the complaint to an indictment is not perfect, it does clarify the role that the complaint plays in a civil case and why it is not discovery. Just as a criminal defendant must plead guilty or not guilty to each count in a criminal indictment, a civil claimant must admit or deny each allegation in a civil complaint. Neither pleading is discovery; they are a procedure for the Court to determine what issues will and will not be contested. Price and Fain will not be disclosing anything new if they admit, deny, or invoke the Fifth Amendment in responding to those facts. The Government already knows the facts listed in the complaint. Price and Fain will simply be telling the Court whether those facts are to be contested.23 B. 18 U.S.C. 981(g) does not authorize a stay before Answers are filed The fact that an Answer is a pleading and not part of discovery clarifies why 18 U.S.C. 981(g)(2) does not permit claimants to seek a stay at this time. The focus of section 981(g)(2) is on delaying discovery, not pleadings. Otherwise, 18 U.S.C.
Facts in this context do not refer to the summary paragraphs in the amended verification affidavit. No one expects the claimants to admit the conclusions contained in those paragraphs. Also, while Fed. R. Civ. Proc. 8(c) requires claimants to state any avoidance or affirmative defense in their answer, that does not implicate the 5th Amendment as defendants in criminal cases are also required to give notice of affirmative defenses. See e.g., Fed. R. Crim. Proc. 12.1 to 12.3.
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Governments Response

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981(g)(3) would not say [w]ith respect to the impact of civil discovery described in paragraphs (1) and (2) . . . Section 981(g)(2) is designed to balance the Governments interest in challenging standing and a claimants concerns about discovery. The claimant cannot just file a claim but must also establish standing to assert that claim. 18 U.S.C. 981(g)(2)(B). The Court then must make a preliminary determination on standing before the Government is given full access to the discovery process. Id. To prevent a claimant from using the stay as a sword instead of a shield, 18 U.S.C. 981(g)(7) mandates that the Courts preliminary determination of standing does not become the law of the case and the Government can still challenge a claimants standing once the stay is lifted and it has had full access to the discovery process. If an Answer were discovery as the claimants maintain, section 981(g) was not intended to permit them to use the civil process to gain large amounts of information in the Governments complaint without disclosing anything in return. On the related topic of protective orders, 18 U.S.C. 981(g)(3) cautions that [i]n no case, however, shall the court impose a protective order as an alternative to a stay if the effect of such protective order would be to allow one party to pursue discovery while the other party is substantially unable to do so. Except for invoking the Fifth Amendment, Price and Fain offer no legal support for staying the mandate that they file Answersa mandate so important that it is both statutory and procedural. See 18 U.S.C. 983(a)(4)(B) and Rule G(5)(b). Even the claimants in the sole case they cite filed an Answer before they moved for a stay. $38,570, 950 F.2d at 1110. Moreover, CAFRA has formalized the way claimants obtain

Governments Response

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a stay in forfeiture proceedings. While courts generally have the power to stay a pending matter, that inherent discretion has been circumscribed in forfeiture cases by the plain language of 18 U.S.C. 981(g). $9,041,598.68, 163 F.3d at 251. Courts must first find that the necessary elements for a stay have been established and make express findings of fact and conclusions of law concerning the existence of the statutory prerequisites.24 C. Claimants cannot use the Fifth Amendment to avoid their burden of production on standing. The Fifth Amendment contains important rights that must be protected, and the claimants are free to invoke its protections at any time in these proceedings. However, the Courtnot Price or Fainis the ultimate judge of whether they have invoked the Fifth Amendment for protection or abuse.25 That is why the claimants must file a paragraph-by-paragraph response to the complaint. Fed. R. Civ. Proc. 10(b). Each time they wish to invoke the Fifth Amendment, they need to give a general explanation for the invocation that is sufficient for the court to decide whether invocation is proper. At present, Price and Fains generic invocations do not give sufficient reasons for the Court
Id. See also, United States v. $410,000.00 in U.S. Currency, 2007 WL 4557647, *5 (D.N.J. 2007) (under section 981(g)(2), the claimant cannot request a stay without first demonstrating both statutory and Article III standing to contest the forfeiture; merely asserting ownership of the property in a verified claim is not sufficient; the claimant must offer evidence of his interest in the property); United States v. $1,026,781.61 in Funds from Florida Capital Bank, 2011 WL 1591812, *2 (C.D. Cal. Apr. 25, 2011) (under 981(g)(2), claimant must show that he has standing to contest the civil forfeiture, that there is a related criminal case, and that proceeding with the civil case would burden claimants Fifth Amendment rights); and United States v. $153,968.16 Seized From Bank of America, 2007 WL 879422, *4 (N.D. Ga. 2007) (denying request for stay where Claimants Fifth Amendment argument was speculative; claimant cant request a stay based on Fifth Amendment without explaining how his rights would be impacted). SEC v. First Financial Group of Texas, Inc., 659 F.2d 660, 668 (5th Cir. 1981) (A party is not entitled to decide for himself whether he is protected by the Fifth Amendment privilege. Rather, this question is for the court to decide after conducting a particularized inquiry, deciding, in connection with each specific area that the questioning party seeks to explore, whether or not the privilege is well-founded.).
25 24

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to determine that their Fifth Amendment rights are in jeopardy. The mere existence of a parallel criminal investigation does not violate claimants constitutional rights.26 Admitting or denying the facts in the complaint will not tell the Government anything it does not already know and the vast majority of facts in it are from bank records. Those records have been provided to the claimants for their review and they should not be in dispute. If the claimants do want to dispute these facts, they will need to explain why they cannot dispute them using information from other bank records or witnesses which do not implicate the Fifth Amendment.27 After all, the Fifth Amendment is a personal right that only protects Price and Fain and does not from responding based upon nonprivileged information from documents not solely in their control, such as bank records, or witnesses.28 In fact, Price already submitted 744 pages of banking business records and loan proceeds in the administrative forfeiture proceedings which purportedly detail the withdrawals, deposits, and cashed checks that led to the cash in the safe. Exhibit 1. While the Government obtained its records separately, it is difficult to understand why
Little Al, 712 F.2d at 136 (The very fact of a parallel criminal proceeding, however, d[oes] not alone undercut [a claimant's] privilege against self-incrimination, even though the pendency of the criminal action forced [her] to choose between preserving [her] privilege against self-incrimination and losing the civil suit.). See also $153,968.16 Seized From Bank Of America Account, 2007 WL 879422, *3 (denying request for stay where Claimants Fifth Amendment argument was speculative; claimant cant request a stay based on Fifth Amendment without explaining how his rights would be impacted).
26 27

Id. See also United States v. Lot 5, Fox Grove, Alachua County, Florida, 23 F.3d 359, 364 (11th Cir.

1994); United States v. Twelve Pieces of Real Property, 54 Fed. Appx. 461, 462 (9th Cir. 2003) (defendant is not required to testify in the civil case and can defend his property through other witnesses and documents); $1,026,781.61 in Funds from Florida Capital Bank, 2011 WL 1591812, *2 (under 981(g)(2), claimant must show that proceeding with the civil case would burden claimants Fifth Amendment rights).
28

See United States v. Goodwin, 470 F.2d 893, 902 (5th Cir. 1972) (the right is personal to the witness and assertable only by the witness) and United States v. Fisher, 425, U.S. 391, 397-398 (1976) (compelling documents not in a defendants personal control does not violate the Fifth Amendment).

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Price suddenly needs to invoke the Fifth Amendment regarding the same type of facts he has already voluntarily submitted. A claimants decision to invoke the Fifth Amendment does not decrease their burden to establish standing. The assertion of the Fifth Amendment may be a valid reason for a party not to answer a question, but it is not a substitute for evidence to meet their own burden of production. United States v. Rylander, 460 U.S. 752, 761 (1983). See also United States v. Little Al, 712 F.2d 133, 135-136 (5th Cir. 1983). [T]he claim of privilege is not a substitute for relevant evidence. Id. Allowing a party to substitute a Fifth Amendment claim for their burden of production would convert the privilege from a shield against compulsory self-incrimination which it was intended to be into a sword whereby a claimant asserting the privilege would be free from adducing proof in support of a burden which would otherwise have been his. Id. at 758. The Fifth Circuit has directly applied this reasoning to civil forfeiture. Little Al, 712 F.2d at 135-136; DavisLynch v. Moreno, 667 F.3d 539, 549 (5th Cir. 2012). Price and Fains present invocations appear to be more in the nature of a sword than a shield. They forced the Government to file the present case to gain information and then made blanket Fifth Amendment invocations to avoid filing their Answers. Their sudden need to remain silent also rings hollow due to the many public statements they have made about the same matters.29 Several statements from Prices attorney,30 Fains

29

See footnotes 13, 18, and 19. See also http://www.myfoxdfw.com/story/18698757/lawyer-defendsjohn-wiley-price?clienttype=printable and http://www.wfaa.com/news/politics/Prices-attorney--Pricewill-testify-the-jury-will-believe-him-157948665.html.

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Attorney,31 and even Price32 himself, have crossed the line into those calculated to prejudice any future jury pool against the Government and its case. In short, the claimants have been making statements in every forum except the one where they shouldin court. If they cannot bear to have the truth of their statements tested in court; then they should not be making them in public. D. The Special Interrogatories are not presently an issue. The only form of discovery the claimants have been served with are the special interrogatories. Special interrogatories are issued pursuant to Rule G(6) and they are not subject to 18 U.S.C. 981(g)(2) because they directly relate to questions about the claimants standing which must be decided before the Court is authorized to issue a stay.

I think theyd like to get every important black man they can. Prices attorney William M. Ravkind to a Dallas Morning News Reporter on or about June 23, 2012. See http://www.dallasnews.com/news/localnews/20120623-constables-case-price-inquiry-and-others-share-many-players.ece?action=reregister.
30

There seems to be a real effortwith no rulesto get rid of John Wiley Price. Id. to CBS Channel 11 Reporter on or about June 4, 2012. See http://dfw.cbslocal.com/2012/06/04/prices-lawyer-expectingfederal-indictment/. Look at whos being investigated, Mills said. I dont know what else to think but that its racially motivated. Fains attorney Thomas W. Mills, Jr. to Dallas Morning News reporter on or about January 2, 2012. See http://www.dallasnews.com/news/community-news/dallas/headlines/20120102-john-wileyprice-investigation-renews-concerns-about-feds-targeting-black-politicians.ece.
31

[FBI Special Agent Sherman] presumes criminal conduct and then goes about trying to find it. . . . I dont think hes the only one in the case, on the prosecution side, that does that. . . . Practically anything involving the county, they start out presuming that Commissioner Price is doing something illegal. Id. to Dallas Morning News reporter on or about October 8, 2011. See http://www.dallasnews.com/news/community-news/dallas/headlines/20111008-veteran-fbi-specialagent-reviled-revered-for-role-in-dallas-corruption-cases.ece?action=reregister.
32

Statement of Commissioner John Wiley Price in YouTube video while pictures related to the federal investigation flash behind him: Now as I am currently under siege by a plethora of political and social adversaries, ask yourself Who are these people really after? What are they after? What are their motives? What have they done for us? And, what have they done for you? See http://www.youtube.com/watch?v=hl7BM-Z6RPA.

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Rule G(6) represents another balance between the Governments interest in challenging standing and a claimants concerns about discovery. At the same time that the drafters promulgated Rule G, they also amended Fed. R. Civ. Proc. 26(a) to exempt forfeiture cases from the initial disclosure provisions of Rule 26(a)(1). See the 2006 Commentary for Rule G(6). Claimants are now protected from being served with full discovery interrogatories at the time that Government served them with notice of the forfeiture and a copy of the complaint. Id. However, Rule G(6) preserves the Governments right to conduct pretrial discovery regarding a claimants standing to contest the forfeiture and protects the Government from having to respond to any motion, except a Rule 12 motion, until the claimant has fully responded to the interrogatories. Id. The Government had intended to wait until claimants filed their answers so that it could determine whether the special interrogatories were necessary and to tailor and possibly eliminate some of the questions. They were served early so that Price and Fain could request an extension of time to respond to them as well as to file their Answers. They are not yet ripe for review because neither claimant has filed objections to them pursuant to Rule G(6)(b). While Fain sought and obtained a 90 day extension from the Court, Price did not. Therefore, if the motion to stay is denied, the Court will need to determine whether it will convert Prices request for a stay into a request for an extension of time to respond to the special interrogatories. E. Prices failure to ask for an Extension to File an Answer Price also failed to request an extension of time to file his Answer. However, this appears to have been a strategic decision. Counsel for the Government told Prices

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attorney that he would consent to an extension of time for Price to file his Answer and specifically directed counsels attention to Fed. R. Civ. Proc. 6(b). See Doc. #20, Certificate of Conference. Governments counsel also warned Prices attorney that if a stay were not granted and he did not obtain an extension to file Prices Answer, then Price could be struck from these proceedings and unable to contest the forfeiture. Id. Price appears to have gambled that limiting his request to a stay would force the Court to grant it. As Price did request an extension before his time to file an Answer expired, he should only be able to obtain an extension now if he can show that he failed to act due to excusable neglect. Fed. R. Civ. Proc. 6(b)(1)(B). That will be hard to do since the Government directed counsels attention to Rule 6(b) and specifically warned of the consequences for a failure to obtain an extension. See, United States v. One 2002 Harley Davidson FXDX Super Glide Sport Motorcycle, 2004 WL 377552, *3 (W.D.Tex. 2004) (summary judgment after intervenor failed to file a claim because the Fifth Circuit requires strict compliance for meeting deadlines under Supplemental Rule C(6)which is the predecessor to Supplemental Rule G(5) for filing claims and answers). Therefore, in the event that the Court denies claimants motion for a stay, the Government requests that the Courts final order specifically state whether or not it is granting Price an extension of time to file his Answer to the complaint.

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III. Conclusion Because the complaints motions for a stay are not yet ripe for review, the Government requests that they be denied without prejudice. Claimant Fains motion for an extension of time to file her Answer should be granted. The Government will rely on the Courts discretion to determine whether a similar extension should be given for Price to file his answer and respond to the special interrogatories. Respectfully submitted,

SARAH R. SALDAA UNITED STATES ATTORNEY s/ Walt M. Junker Assistant United States Attorney Texas State Bar Number 24038115 1100 Commerce Street, Suite 300 Dallas, Texas 75242 Telephone: (214) 659-8630 Facsimile: (214) 659-8805 walt.junker@usdoj.gov CERTIFICATE OF SERVICE I hereby certify that on August 14, 2011, correct copies of this document were served on counsel of record by electronically filing the document with the clerk of court for the U.S. District Court, Northern District of Texas using the ECF system. s/ Walt M. Junker Assistant United States Attorney

Walt M. Junker

Walt M. Junker

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