CHIEF Judge Ramona V. Manglona of the District Court for the NMI is inclined to grant the motion of Marianas Consultancy Services and its sole member, Alfred Yue, to dismiss the verified complaint for forfeiture in rem regarding funds seized from two Bank of Saipan accounts in 2019.
Marianas Consultancy Services and Alfred Yue, represented by attorney Mark Hanson, have claimed ownership of the seized funds totaling $310,276.26.
After hearing the arguments from the parties Thursday, Judge Manglona said, “My inclination is to grant the motion to dismiss and give [the U.S government] leave to amend.”
According to the minutes of the proceedings, the court “took the matter under submission. Order to be issued.”
In January, District Court for the NMI Magistrate Judge Heather Kennedy issued the warrant of arrest in rem following a complaint from the U.S. Attorney’s Office for Guam and the NMI that sought to forfeit funds seized from two Bank of Saipan accounts in 2019 for wire fraud and money laundering totaling $310,276.26.
A warrant of arrest in rem is a legal document issued by a court that authorizes the arrest of a specific property or asset rather than an individual.
The U.S. government’s complaint was a civil forfeiture action and did not provide the names of defendants but referred to two bank accounts of “MCS” in Bank of Saipan.
According to the complaint, $271,087.88 was seized from “MCS account 1,” and $39,188.38 was seized from “MCS account 2.”
A resident of the CNMI, “A.Y.” is the sole owner and operator of MCS, the complaint added.
The seized funds are currently in the custody of the U.S. Department of the Treasury.
The complaint arises out of an investigation of the Federal Bureau of Investigation and the U.S. Internal Revenue Service of a suspected conspiracy by foreign entities and entities and individuals in the CNMI to commit wire fraud and money laundering.
“The suspected conspiracy involved the transfer of funds, including by international wire transfer, for the purpose of promoting two schemes to defraud: first, to promote the misrepresentation of material facts to, and the concealment of material information from CNMI regulatory authorities, in violation of Title 18, United States Code, Section 1343; and second, to illegally influence government officials in exchange for preferential treatment, thereby depriving the citizens of the CNMI of their intangible right to honest services of those CNMI government officials, in violation of Title 18, United States Code, Sections 1343 and 1346,” the complaint stated.
The suspected conspiracy involved a third scheme: “to evade the payment of the proper amount of income taxes owed to the CNMI government, in violation of Title 18, United States Code, Section 1343.”
In the case of the first two schemes, the U.S. government said the “conspirators used international wire transfers made with the intent to promote the carrying on of any one or more of these wire fraud schemes, each of which constituted specified unlawful activity.”
“The wire transfers therefore constituted acts of international promotional money laundering,” the U.S. government added.
But Hanson, in his motion to dismiss, stated, “The complaint fails to allege any viable predicate criminal offense that would provide grounds to forfeit the defendant property (funds), in whole or in part, as either proceeds of any specified unlawful activity or as an instrument of international promotional money laundering.”
Hanson said the “allegations of Scheme 1 (defrauding the Commonwealth Casino Commission) do not constitute wire fraud nor otherwise constitute international promotional money laundering.”
He said the U.S. government alleges that “claimants’ deceitful conduct ‘avoided’ annual license fees and had ‘the effect of depriving the CCC of fees to which it was entitled.’ [But] there are no allegations that the object of the alleged scheme to defraud was to avoid the payment of licensing fees.”
Likewise, Hanson said the complaint failed to allege a quid pro quo related to its allegations of honest services fraud.
He said the complaint does not allege that any particular “official acts” were undertaken by any particular public official that was the direct or indirect beneficiary of any illicit payments for any particular purpose.
Instead, Hanson said, “the complaint avers in broad, conclusory terms a scheme to provide ‘a stream of benefits to, for, or on behalf of CNMI public officials for the purpose of gaining preferential treatment’ for the casino licensee,” referring to Imperial Pacific International.
“While the complaint piles on more conclusory, non-specific allegations and never actually names a single public official (even the ‘Doe’ individuals of the complaint are identified only as two ‘political figures’), Hanson said none of the allegations of the complaint satisfy the United States’ obligation to plead non-conclusory, ‘sufficiently detailed facts to support a reasonable belief that the government will be able to meet its burden of proof at trial.’ ”
Hanson said “none of the allegations of the complaint plausibly plead the requisite ‘clear and unambiguous’ quid pro quo between claimants and any particular public official with a fiduciary duty to the CNMI government that was in a position to influence an official act and that explicitly promised to do so in exchange for an illicit payment: none of the allegations of the facts support a reasonable belief that the government will be able to meet its burden of proof at trial.”
Essentially, Hanson added, the complaint is devoid of any specific allegations of the terms of an illicit bargain.
“There are simply no plausible allegations in the complaint identifying any public officials, nor their positions, nor their receipt of influence money, nor of any agreement by a specific public official to take or to influence any ‘official act’ in exchange for campaign contributions and ‘unethical gifts’ to the public official, his or her family, associates, campaign or political party. It is not enough for the United States to plead only that several unnamed public officials, directly or indirectly, received illegal contributions and gifts and that these unnamed public officials may or may not have had some unspecified influence over some unidentified public agency in a position to provide non-specific ‘preferential treatment.’ ”
As for the wire fraud allegations, Hanson said: “It cannot be proven that any of the defendant funds are the proceeds of any fraudulent avoidance of CNMI taxation on funds allegedly spent and later reimbursed with separate funds from one foreign account to another foreign account.”
He said the U.S. government “cannot make out a claim for forfeiture grounded on the allegations of Scheme 3 with wire fraud as the predicate offense because: (1) there was no wire communication in interstate or foreign commerce, (2) no part of the defendant funds are ‘proceeds’ of or otherwise traceable to Scheme 3, and (3) the civil forfeiture proceeding to collect claimants’ alleged tax liability to the CNMI is barred by the common-law revenue rule.”
At the hearing, the U.S. government was represented by Assistant U.S. Attorneys Eric O’Malley and Ashley Kost.
