United States District Court, W.D. North Carolina, Statesville Division
Richard L. Voorhees United States District Judge
MATTER IS BEFORE THE COURT on the Government's Motion to
Dismiss the Amended Claimant Petition (“Amended
Petition”) of Mint Holdings, Inc. d/b/a Royal Hawaiian
Mint (Doc. 700) for lack of statutory standing/failure to
state a claim. (Doc. 804). The matter having been fully
briefed (see Docs. 804, 810, 811) and the parties
having declined this Court's offer to hold a hearing on
the Government's Motion, the matter is ripe for
disposition. For the following reasons, the Government's
Motion to Dismiss (Doc. 804) is GRANTED IN PART and DENIED IN
PROCEDURAL & FACTUAL BACKGROUND
1985, Bernard von NotHaus (“von NotHaus”) and
Talena J. Presley (“Presley”) established Royal
Hawaiian Mint, Inc. (“RHM”) to produce jewelry
and medallions commemorating various historical events and
Hawaiian leaders. (Doc. 700 at 1-2). Based on the growth of
its business, RHM contracted with Sunshine Minting, Inc.
(“Sunshine Minting”) to assist in the minting and
storage of precious metals. Id. at 2.
1998, von NotHaus began his own currency side project, which
originated as a paper instrument entitled “American
Patriot Currency” (“Patriot”). Id.
at 2-3. The Patriot issued receipts for the purchase of
silver, which were redeemable for specified amounts of silver
stored in the Sunshine Minting warehouse, thus earning the
name “warehouse receipts.” Id. at 2. In
April 1998, RHM invested $6, 120.00 in Patriot Silver,
providing the original backing for the Patriot. Id. at
3. Later in 1998, von NotHaus, to further his currency
project, created the National Organization for the Repeal of
the Federal Reserve Act and the Internal Revenue Code
(“NORFED”) and Shelter Systems, LLC
(“Shelter Systems”). Id. Around the time
of the formation of NORFED and Shelter Systems, the Patriot
became the “Liberty, ” backed by “Liberty
Silver” and issued through “Liberty
Certificates.” See id.
von NotHaus initiated the venture involving the Patriot and
the Liberty, RHM facilitated the venture by allowing von
NotHaus use of RHM's warehouse connection with Sunshine
Minting to secure Sunshine Minting's services and by
issuing the first editions of the Patriot. Id. at 2.
In August 1998, Shelter Systems and Sunshine Minting entered
into an Exclusive Manufacturing and Warehouse Agreement (the
“Warehouse Agreement”). Id. at 3;
(see also Doc. 700-3). Under the Warehouse Agreement,
Shelter Systems provided Sunshine Minting unissued Liberty
Certificates and Sunshine Minting agreed, for a set fee paid
by Shelter Systems, to mint and store Liberty Silver and to
issue Liberty Certificates to individuals buying into the
currency system. (Doc. 700-3 at 1-2). The Warehouse Agreement
further provided that Hawaiian law controlled the
interpretation of the agreement, but the metal and
certificates were physically located in Sunshine
Minting's warehouse in Idaho. Id. at 1, 7.
Warehouse Agreement did not mention or account for RHM's
$6, 120.00 investment, deposit, and backing in the
Patriot/Liberty. (See Doc. 700-3). In March 2000,
Shelter Systems and Sunshine Minting amended the Warehouse
Agreement to, in part, address RHM's initial investment.
(See Doc. 700 at 3-4). The amendment to the
Warehouse Agreement granted RHM the rights to all deposited
but unclaimed metals remaining in the warehouse after either
the expiration of the twenty-year term of the warehouse
receipts, or within 180 days of the warehouse closing.
Id.; (see also Doc. 700-4 at 3).
November 2007, law enforcement seized metals and related
assets at various entities associated with von NotHaus,
including Sunshine Minting. (Doc. 285 at 2). The Government
filed forfeiture complaints against these seized properties
in May and June 2008. (Doc. 804 at 3). Following the seizure
of the metals and related assets, a grand jury indicted von
NotHaus on charges of conspiracy and counterfeiting stemming
from the minting and production of the Liberty. (Doc. 3).
After von NotHaus's arrest and arraignment, the Court
granted von NotHaus's request for release pending trial
but imposed a condition precluding von NotHaus from
circulating any coins or currency related to the Liberty.
(oral order July 6, 2009). The Court subsequently modified
von NotHaus's conditions of release to permit him to
reside in Hawaii pending trial. (Doc. 60).
von NotHaus's return to Hawaii, von NotHaus's son,
Random von NotHaus (“Random”), and Presley
established Mint Holdings Inc. (“Mint Holdings”),
with Random as the sole owner and Presley as the Chief
Executive Officer. (Doc. 700 at 5; see also Docs.
700-6, 700- 7). Shortly thereafter, von NotHaus and Presley
transferred complete ownership of RHM to Mint Holdings,
completing the formation of the corporation presently
referred to as Mint Holdings, Inc. d/b/a Royal Hawaiian Mint.
convicted von NotHaus of conspiracy to defraud the United
States by making, uttering, and passing counterfeit coins in
violation of 18 U.S.C. § 371 (2006), falsely making and
forging counterfeit coins in violation of 18 U.S.C.
§§ 485, 2 (2006), and uttering and making coins of
silver intended for use as current money, in violation of 18
U.S.C. §§ 486, 2 (2006). (Doc 287 at 1; Doc. 291).
Based on the Superseding Bill of Indictment and the offenses
of conviction, this Court determined that certain properties,
including coins and bars of precious metals, were subject to
forfeiture. (Doc. 297 at 1-2). To protect the rights of third
parties with interests in the properties subject to
forfeiture, the Court commenced an ancillary proceeding
wherein third parties could file petitions instituting claims
for the properties. Id. at 2-4. However, the Court
determined that some of the seized property, including 1,
000.5 troy Ounces of Silver Coins, 1, 000.5 troy Ounces of
Silver Coins, and certain dies for making Liberty silver
pieces, were contraband per se and not subject to
ancillary forfeiture proceedings under 21 U.S.C. §
853(n) (2012). (Doc. 296 at 2-4).
Holdings petitioned this court for the remission of items
seized from RHM's account at Sunshine Minting. (Doc. 700
at 6-7). In an effort to establish its right over
the seized property identified in its Amended Petition, Mint
Holdings asserts that, as successor of RHM, it, rather than
von NotHaus, has an interest in the property and that von
NotHaus did not possess legal title to the property.
Id. at 6. The Government filed a Motion to Dismiss
Mint Holdings' Amended Petition, arguing that Mint
Holdings lacks statutory standing to challenge the
forfeiture-i.e., the Amended Petition fails to state a claim
upon which relief may be granted. (Doc. 804). Specifically,
the Government argues that Mint Holdings' Amended
Petition fails to allege a sufficient preexisting, vested
interest for purposes of 21 U.S.C. § 853(n)(6)(A)
because Mint Holdings did not exist at the time von NotHaus
engaged in the conduct giving rise to his conviction and the
forfeiture. (Doc. 804 at 8-11). Therefore, the Government
urges, Mint Holdings is precluded from establishing a legal
interest or right in the property prior to the commission of
the offense. Id. Moreover, the Government maintains
that the property at issue constitutes contraband per
se, precluding Mint Holdings from lawfully possessing
the property. Id. at 15-17. In response, Mint Holdings
contends its Amended Petition pleads the requisite legal
interest required by 21 U.S.C. § 853(n)(6)(A). (Doc. 810
at 4-9). Mint Holdings also argues that the Government fails
to establish that all of the property it seeks to recover is
contraband per se. Id. at 11. After
reviewing the parties' submissions, the Court contacted
the parties regarding holding a hearing to permit arguments
and the presentation of evidence on the Government's
Motion to Dismiss and on Mint Holdings' Amended Petition.
Both parties, standing on their pleadings and briefs,
declined the opportunity for a hearing.
Procedures & Standard of Review Governing Forfeiture
Rule of Criminal Procedure 32.2 governs criminal forfeiture
and sets out the procedures the Government and the Court must
follow before the Court may enter a final order of
forfeiture. See United States v. Oregon, 671 F.3d
484, 487-88 (4th Cir. 2012). Where a court enters a
preliminary order of forfeiture, “any third party who
claims an interest in the property to be forfeited may file a
petition with the district court contesting the
forfeiture.” Id. at 488 (citing Fed. R. Crim.
P. 32.2(c)(1)). If a third party comes forward and files a
claim petition, a court must conduct an ancillary forfeiture
proceeding. Id. The first step in an ancillary
forfeiture proceedings is for a court to ...