The opinion
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
IN RE: CIVIL ACTION
IN THE MATTER OF
$120,000.00 FORMERLY IN
NEIGHBORS FEDERAL CREDIT
UNION ACCT # 2000102626485 IN
THE NAME OF SOLITA SCOTT;
AND $92,742.63 FORMERLY IN
NEIGHBORS FEDERAL CREDIT
UNION ACCT # 2000102614668 IN
THE NAME OF KAT OLIVIER NO. 21-00086-BAJ-RLB
RULING AND ORDER
This action seeks civil forfeiture of certain property derived from false loan
applications. Now before the Court is the United States’ Motion For Entry Of
Default Judgment And For Order Of Forfeiture (Doc. 8), seeking a fina! default
judgment forfeiting the two Defendant Properties to the United States, namely the
$120,000.00 formerly in Neighbors Federal Credit Union Account Number ‘
2000102626485 in the name of Solita Scott and the $92,742.63 formerly in Neighbors
Federal Credit Union Account Number 2000102614668 in the name of Kai Olivier.
No party has appeared before the Court to claim an interest in these remaining
Defendant Properties and there are no objections to the Government’s motion. For
reasons to follow, the Government’s motion will be granted.
I. FACTUAL AND PROCEDURAL BACKGROUND
On February 8, 2021, the United States filed its verified complaint for
forfeiture in rem, seeking forfeiture to the United States of two properties allegedly
traceable to violations of theft of government funds and wire fraud, pursuant to 18
U.S.C. § 981(a)(1)(C): namely (1) the $120,000.00 formerly in Neighbors Federal
Credit Union Account Number 2000102626485 in the name of Solita Scott and (2) the
$92,742.63 formerly in Neighbors Federal Credit Union Account Number
2000102614668 in the name of Kai Olivier. (collectively, the “Defendant Properties”).
(Doc. 1, the “Verified Complaint”). The Defendant Properties were seized from
potential claimants Solita Scott's and Kai Olivier’s bank accounts and are currently
in the possession of the United States Treasury. (Doc. 1, p. 2). The seizure followed
federal agents’ investigation into the allegedly fraudulent applications for Economic
Injury Disaster Loans (“EIDL’) filed by Ms. Scott and Ms. Olivier on behalf of
separate businesses. (Doc. 1, pp. 2-6).
The Verified Complaint alleges that Ms. Scott and Ms. Olivier—through a
“friend’—provided false domiciliary addresses to the Louisiana Secretary of State:
gave false employee numbers to the Small Business Administration, who administers
EIDLs; and wrongfully applied for EIDLs by applying for businesses that were
registered after the EIDL loan deadline of February 1, 2020. (Doc. 1, pp. 2-6). The
Verified Complaint further alleges that the Defendant Properties stem from the EIDL
payments transferred to the two Neighbors Federal Credit Union accounts following
the fraudulent EIDLs.
On March 22, 2021, the United States sent written notice of the Verified
Complaint by certified U.S. Mail to Ms. Scott and Ms. Olivier pursuant to Rule
G(4)(b)G) of the Supplemental Rules for Admiralty or Maritime Claims and Asset
Forfeiture Actions, Federal Rules of Civil Procedure (“Supplemental Rule G”). (Docs.
8-2, 8-3, 8-4, 8-5). Consistent with Supplemental Rules G(4)(b)(i)(B) and G(5)(a)(ii),
the United States’ March 22 notice letter advised that any claimant to the Defendant
Properties was required to “file a verified claim by April 29, 2021, which is ‘at least
35 days after the notice 1s sent.” (Doc. 8-2, { 8).
On March 20, 2021, the United States posted notice of the Verified Complaint
regarding the $120,000.00 formerly in Neighbors Federal Credit Union Account
Number 2000102626485 in the name of Solita Scott to http://www.forfeiture.gov, a
U.S. Department of Justice forfeiture website, pursuant to Supplemental Rule
G(4)(a)(iv)(C). (Doc. 8-6). This internet notice ran for 30 consecutive days and advised
that any claimant to the Defendant Properties was required to file a verified claim
within 60 days from the first day of publication—i.e., not later than May 19, 2021.
(See Doc. 8, p. 2).
Additionally, on August 26, 2021, the United States posted notice of the
Verified Complaint regarding the $92,742.63 formerly in Neighbors Federal Credit
Union Account Number 2000102614668 in the name of Kai Olivier to
http://www.forfeiture.gov, pursuant to Supplemental Rule G(4)(a)(iv)(C). (Doc. 8-7).
This internet notice ran for 30 consecutive days and advised that any claimant to the
Defendant Properties was required to file a verified claim within 60 days from the
first day of publication—z.e., not later than October 25, 2021. (See Doc. 8-7).
In an abundance of caution, on January 7, 2022, the United States again posted
notice of the Verified Complaint regarding the $92,742.63 formerly in Neighbors
Federal Credit Union Account Number 2000102614668 in the name of Kai Olivier to
http://www.forfeiture.gov. (Doc. 8-8). The original notice incorrectly listed the amount
as $92,742,62 and did not specifically list the financial institution and account
number. (See Doc. 8-1, pp. 2-3). This additional internet notice ran for 30 consecutive
days and advised that any claimant to the Defendant Properties was required to file
a verified claim within 60 days from the first day of publication—i.e., not later than
March 8, 2022. (See Doc. 8-8).
On March 9, 2022, the United States submitted its Motion For Clerk’s Entry
Of Default as to the Defendant Properties, pursuant to Federal Rule of Civil
Procedure 55(a), on the basis that “[nJo parties, including Solita Scott and Kai Oliver,
filed a claim or an answer” within the time periods set forth at Supplemental Rule
G(5)(a)Gi)(A) and (B). (Doe. 6-1, p. 3). The United States supports its motion with the
declaration of Assistant U.S. Attorney J. Brady Casey. (Doc. 6-1). On March 11, 2022,
the Clerk granted this motion, and entered default against the Defendant Properties.
(Doc. 7).
Since the Clerk’s entry of default, no party has filed a claim or an answer for
the Defendant Properties, namely the $120,000.00 formerly in Neighbors Federal
Credit Union Account Number 2000102626485 in the name of Ms. Solita Scott and
the $92,742.63 formerly in Neighbors Federal Credit Union Account Number
2000102614668 in the name of Ms. Kai Olivier.
Now before the Court is the United States’ Motion For Entry Of Default
Judgment And For Order Of Forfeiture (Doc. 8), seeking confirmation of the Clerk’s
entry of default, and a finaljudgment forfeiting the Defendant Currency to the United
States. (Doc. 8).
Tl. ANALYSIS
A. Standard
The U.S. Court of Appeals for the Fifth Circuit has adopted a three-step process
to obtain a default judgment. See New York Life Ins. Co, v. Brown, 84 F.3d 137, 141
(5th Cir. 1996). First, a default occurs when a party “has failed to plead or otherwise
defend” against an action. Fed. R. Civ. P. 55(a). Next, an entry of default must be
entered by the Clerk when the default is shown “by affidavit or otherwise.” See id.
Third, a party may apply for a default judgment after an entry of default. Fed. R. Civ.
P. 55(b); New York Life, 84 F.3d at 141.
After a party files for a default judgment, the Court applies a two-part analysis
to determine whether a final default judgment should be entered. First, the Court
considers whether the entry of default judgment is appropriate based on the factors
set forth in Lindsey v. Prive Corp., 161 F.8d 886, 893 (5th Cir. 1998). These factors
are: (1) whether there are material issues of fact at issue, (2) whether there has been
substantial prejudice, (3) whether the grounds for default have been clearly
established, (4) whether the default was caused by excusable neglect or good faith
mistake, (5) the harshness of the default judgment, and (6) whether the court would
think itself obliged to set aside the default on a motion for relief from the judgment.
Id.
Second, the Court assesses the merits of the action to determine whether the
plaintiff has a claim for relief. Nishimatsu Constr. Co. v. Houston Nat'l Bank, 515 F.
2d 1200, 1206 (5th Cir. 1975); Reyes v. VH Acoustic Ceilings, LLC, No. 18-cv-00790,
2020 WL 504659, at *2 (M.D. La. Jan. 31, 2020) (Jackson, J.).
B. Discussion
“Default judgments are a drastic remedy, not favored by the Federal Rules and
resorted to by courts only in extreme situations.” Reyes, 2020 WL 504659, at *2 (citing
Lindsey, 161 F.3d at 898). Here, however, the United States’ Verified Complaint
remains unanswered, the Clerk of Court has entered default, and the United Sistas
has filed a motion for default judgment. Thus, the procedural requirements for
default judgment have been satisfied, New York Life, 84 F.3d at 141, and the Court
may turn to the merits of the Government’s request.
i, Lindsey Factors
Ali Lindsey factors plainly favor entry of default judgment in the United States’
favor.
First, there are no material facts in dispute because no person or entity filed a
timely claim to the remaining Defendant Properties, namely the $120,000.00
formerly in Neighbors Federal Credit Union Account Number 2000102626485 in the
name of Ms. Solita Scott and the $92,742.63 formerly in Neighbors Federal Credit
Union Account Number 2000102614668 in the name of Ms. Kai Olivier.
Second, any putative claimants would not be unduly prejudiced by a default
judgment because the United States has provided ample opportunity to respond
under the requisite procedures.
Third, the grounds for granting a default judgment against any potential
claimants are clearly established by this action’s factual and procedural history and
the Clerk’s entry of default.
Fourth, there is no evidence that default was caused by excusable neglect or
good faith mistake.
Fifth, an entry of default would not be unduly harsh to any putative claimants
because any and all such claimants were provided sufficient notice and opportunity
to file a claim to the Defendant Properties based on the direct mailings and the
publication on the DOJ website.
Finally, there has been no showing of any facts that would lead the Court to
anticipate that it may set aside a default judgment if a claimant appears and contests
it.
ii. Sufficiency of the Pleadings
The merits of the United States’ case are strong. Title 21 U.S.C. § 881 (a)(6)
provides that “[a]ll moneys ... or other things of value furnished or intended to be
furnished by any person in exchange for a controlled substance . . . [and] all proceeds
traceable to such an exchange” are “subject to forfeiture to the United States and no
property right shall exist in them.” Here, the Verified Complaint sets forth that the
Defendant Properties consist of moneys traceable to fraudulent EIDL applications.
Such moneys are unquestionably subject to forfeiture.
Moreover, upon entry of a default judgment in this matter, no one will have an
interest in, or claim to, the Defendant Currency. 21 U.S.C. § 881(a)(6). As such, a
forfeiture judgment vesting all interests in, claims to, and title to, the Defendant
Properties with the United States is warranted.
II. CONCLUSION
Accordingly,
IT IS ORDERED that the United States’ Motion For Entry Of Default
Judgment And For Order Of Forfeiture (Doe. 8) be and is hereby GRANTED.
Judgment shall be issued separately. ahs
a, hole
Baton Rouge, Louisiana, this □□ Yay of December, 2022
Bia.
JUDGE BRIAN A. JAgKSON
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA