United States of America v. 2947 East 1300 South Spanish Fork Utah et al

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH
UNITED STATES OF AMERICA,
Plaintiff,
vs.
REAL PROPERTY LOCATED AT 200
MEADOWOOD TRAIL,
MARTINSVILLE, VIRGINIA, and,
REAL PROPERTY LOCATED AT 2947
EAST 1300 SOUTH, SPANISH FORK,
UTAH,
Defendants in Rem.
_____________________________________
JOHN C. VALDEZ, and JOHN J. WIEST,
Third-Party Claimants.
MEMORANDUM DECISION
AND ORDER
Case No. 2:24-CV-369-DAK-CMR
Judge Dale A. Kimball
Magistrate Judge Cecilia M. Romero
This matter is before the court on United States’ Motion Pursuant to Rule G(8)(c)(ii)(B) to
Strike Claims and Answers [ECF No. 10]; and Third-Party Claimants John Valdez and John
Weist’s Motion to Vacate 1) the Ex Parte Temporary Restraining Order, and 2) the Government’s
Lis Pendens [ECF No. 29]. On February 25, 2026, the court held a hearing on the motions. At the
hearing, the United States was represented by Travis K. Elder, and Third-Party Claimants were
represented by Justin D. Heideman. The court took the motions under advisement. After
considering the parties’ arguments and the law and facts relevant to the pending motion, the court
issues the following Memorandum Decision and Order.
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BACKGROUND
On May 23, 2024, the United States filed this in rem civil forfeiture action against two real
properties—2947 East 1300 South, Spanish Fork, Utah, and 200 Meadowood Trail, Martinsville,
Virginia—that the United States alleges were purchased using proceeds from an investment fraud
scheme Kenny van der Spek and his company, K&K Strategies LLC perpetrated. The Complaint
alleges that the subject real properties located in Virginia and Utah had been purchased via
interstate wire transfer with the proceeds of a fraud scheme perpetrated by van der Spek, in which
van der Spek fraudulently obtained investments by misrepresenting to investors and potential
investors that he was matching their investments. The United States filed this action to safeguard
the value of the properties for eventual equal distribution among victims pending the completion
of a criminal investigation against van der Spek, the filing of criminal charges against him and a
criminal forfeiture of the properties.
That same day, on May 23, 2024, the United States recorded a Lis Pendens with the Utah
County Recorder with respect to the Spanish Fork Property. On May 28, 2024, the United States
posted the Notice of Complaint for Forfeiture physically on the Spanish Fork Property. The United
States also complied with all notice requirements for a civil forfeiture action of this nature. On July
23, 2024, John Valdez and John Wiest filed a Notice of Claim and Answer to Complaint for
Forfeiture In Rem in this action.
Counsel for the United States requested that Claimants withdraw their claims and answers
in this case to allow their compensation to occur with the other victims in the criminal case.
Counsel for Claimants agreed to do so regarding the property in Virginia but would not do so
regarding the Spanish Fork Property in Utah, asserting that Claimants have a “superior right” to
that property. Consequently, on March 27, 2025, the United States filed this motion to strike
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Claimants’ claim and answers so that the United States could proceed with forfeiture in the
criminal case and distribution of the liquidated proceeds equally among the victims.
Just a week before the United States moved to strike Claimants’ claims, on March 19,
2025, the United States filed charges against van der Spek in United States v. Kenny Dirk van der
Spek, No. 2:25-cr-103-HCN (D. Utah), charging him with securities fraud, wire fraud, and money
laundering related to the same fraud scheme alleged in this case. A Felony Information in the
criminal case seeks criminal forfeiture of the subject properties. Van der Spek pled guilty to
Counts I, II, & III of the Felony Information, and the court sentenced him on September 18, 2025.
In that action, the United States obtained an Order of Forfeiture on both properties involved in this
civil forfeiture action. The United States intends to apply the value obtained from liquidating the
subject properties pro rata among victims in the criminal case in satisfaction of the restitution
order.
The United States asserts that proceeding with forfeiture in the criminal case will provide a
simpler method for victims to receive forfeited funds as compensation. In a civil forfeiture,
individual victims would each need to file petitions for remission. In contrast, in a criminal
forfeiture, the U.S. Attorney’s Office will make a restoration request on behalf of all victims,
which will make individual remission petitions unnecessary.
Claimants do not have legal title in the subject properties. They are among several
investors in van der Spek’s fraudulent scheme. On August 25, 2023, John Valdez made a $20,000
investment with van der Spek and K&K, and on October 27, 2023, John Weist made a $5,000
investment with van der Spek and K&K. However, these two investments were made after the
purchase of the subject properties and cannot be traced to the purchase of the properties. On
February 7, 2022, Valdez made a $40,000 investment with van der Spek and K&K. While this
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investment occurred before the purchase of the subject properties, the length of time and/or
intervening deposit and withdrawal activity in van der Spek’s Etrade account ending in 7935 that
received the investment, and from which the funds were transferred for the properties’ purchase,
make it impossible to determine whether this investment contributed to the purchase of the subject
properties. After Valdez’s $40,000 investment was transferred to Etrade 7935, it did not remain in
the cash account available for the purchase of the Spanish Fork Property because it was invested
into holdings after its deposit. Prior to Valdez’s February 7, 2022 investment, thirty nine investor
victims made net investments totaling $1,620,902.97, with van der Spek and K&K. Overall
seventy six victims invested with van der Spek and K&K for a net loss of $4,114,183.
Claimants claim to have a superior interest to the other victims because they filed a state
court action against van der Spek and K&K, on January 31, 2024, approximately four months
before the United States filed this in rem civil forfeiture action against the subject properties.
Claimants’ state court action was an in personam civil action against van der Spek and K&K for
breach of contract, breach of the implied duty of good faith and fair dealing, unjust enrichment,
and breach of Utah Code Ann. § 61-1-1 et seq. in Third District Court for Salt Lake County, State
of Utah.1
Five days before the United States filed this civil forfeiture action, on May 17, 2024, Utah
State District Judge Heather Brereton granted Claimants’ motion for a prejudgment writ of
attachment against van der Spek and K&K in the amount of the damages stemming from their
breach of contract claim, totaling $108,154.75. But the Prejudgment Writ of Attachment makes no
mention of the Spanish Fork Property. The state court docket indicates that the court granted the
motion for prejudgment writ of attachment, but there is no prejudgment writ attaching the specific
1 Claimants filed the state civil action with Allen Bickmore, but Allen Bickmore did not file a
claim in this action.
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Spanish Fork Property. Claimants did not record a Prejudgment Writ of Attachment against the
Spanish Fork Property and did not physically post a Prejudgment Writ of Attachment on the
Spanish Fork Property. The state court docket also does not reflect that a writ was posted on the
Spanish Fork Property.
As stated above, On May 23, 2024, the United States filed its Verified Complaint in
Forfeiture in Rem in this action, filed a lis pendens on the Spanish Fork Property in the Utah
County Recorder’s Office, and had the Complaint physically posted on the Spanish Fork Property.
On July 25, 2024, Claimants filed their Notice of Claim and Answer to Complaint for Forfeiture in
Rem. Claimants base their claim in the subject properties on an allegation that some or all their
investments were “used in acquiring one or both” of the subject properties. On September 5, 2024,
Claimants submitted their individual responses to the United States’ Special Interrogatories. In the
responses, each Claimant claimed an interest in the subject properties from a potential equitable
title arising out of the prejudgment writ of attachment or some additional form of title arising
because their funds were used to purchase the subject properties. The United States filed its
Motion to Strike the claims on March 27, 2025, and the matter was fully briefed by April 23, 2025.
While the parties were briefing the United State’s Motion to Strike Claimants’ claims to
the Spanish Fork Property, Claimants obtained a default judgment against van der Spek and K&K
in the state court action. On April 3, 2025, a week after the United States filed its Motion to Strike,
the state court entered default judgment against van der Spek and K&K jointly and severally for
failure to respond in the action, awarding Valdez $154,538.15, and Wiest $21,217.38. The state
court judgment includes treble damages, attorneys’ fees, costs, and 12% pre- and post-judgment
interest under Utah Code Ann. § 61-1-22, less Valdez’s $13,000 withdrawal.
Claimants then sought a Writ of Execution based on the Default Judgment. On May 14,
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2025, the state court issued a Writ of Execution that identified the Spanish Fork Property for the
first time in the state court action. The Writ of Execution also list the United States as claiming an
interest in the property. At that point, this civil forfeiture action had been pending for almost a
year. The United States received notice of the Writ of Execution on June 26, 2025. On June 26,
2025, Claimants served the United States with the Writ of Execution and a Notice of Constable
Sale. The Notice of Constable Sale scheduled a sale of the Spanish Fork Property on July 16, 2025.
Counsel for the United States emailed counsel for Claimants seeking an agreement to postpone
any sale of the Spanish Fork Property until the resolution of the civil forfeiture proceedings. At the
time, the United States’ Motion to Strike Claimants’ claim to the Spanish Fork Property was
pending. Counsel for Claimants did not respond. The United States asked this court to enter a
restraining order to prevent the Spanish Fork Property from being sold pending the resolution of
this action. This Court entered a Post-Complaint Restraining Order under 18 U.S.C. § 983(j)(1)(A)
on July 1, 2025.
Claimants filed an objection to the court’s restraining order. Claimants’ Objection stated,
among other arguments, that the state court’s in rem jurisdiction over the Spanish Fork Property,
“established by the default judgment, precludes federal interference under the ‘prior exclusive
jurisdiction’ doctrine.’” That Objection was Claimants’ first challenge to this court’s exercise of
jurisdiction over the Spanish Fork Property in this civil forfeiture action. At that time, this action
had been pending for over a year.
DISCUSSION
The United States filed its Motion to Strike Claims and Answers in this matter almost a
year ago. After several delays in hearing that motion, the Third-Party Claimants filed their motion
challenging whether the matter should go forward in this court and the parties agreed to brief that
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issue before hearing the motion to strike. The court, therefore, will address Third-Party Claimants’
motion to vacate first.
Third-Party Claimants John Valdez and John Wiest’s Motion to Vacate 1) the Ex Parte
Temporary Restraining Order, and 2) the Government’s Lis Pendens
Claimants contend that the Prior Exclusive Jurisdiction Doctrine (“PEJD”) prohibits this
court from exercising control over the Spanish Fork Property. Under this doctrine, when a
court—state or federal—has assumed jurisdiction over property, requiring control of that property
to grant relief, no other court may exercise jurisdiction over the same res in a manner that interferes
with the first court’s control. Penn Gen. Cas. Co. v. Pennsylvania, 294 U.S. 189, 195-96 (1935).
Penn Gen explains that where the judgment sought is in personam, “both a state court and a federal
court having concurrent jurisdiction may proceed with the litigation.” Id. “But if the two suits are
in rem or quasi in rem, requiring that the court or its officer have possession or control of the
property which is the subject of the suit in order to proceed with the cause and to grant the relief
sought, the jurisdiction of one court must of necessity yield to that of the other.” Id. To avoid
conflicts between the two court systems, “ the court first assuming jurisdiction over the property
may maintain and exercise that jurisdiction to the exclusion of the other.” Id.
Claimants assert that the PEJD applies whenever “to give effect to its jurisdiction, the court
must control the property.” United States v. Bank of N.Y. & Trust Co., 296 U.S. 463, 477 (1936).
Claimants argue that the state court’s prejudgment writ initiated a quasi in rem proceeding and was
issued a week before this in rem action began. But the state court’s order granting the issuance of
a prejudgment writ of attachment did not identify the Spanish Fork Property.
The United States knew of the state court’s actions. However, the United States did not
intervene, remove, or seek to set aside the state court’s writ. By taking no action, Claimants assert
that the United States waived the right to do so. The property in both actions is the same, it is
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required to make Claimants whole, and the state action was filed before this action. Therefore,
Claimants assert that by preventing enforcement of the state court’s Prejudgment Writ of
Attachment and subsequent Default Judgment and Writ of Execution, this court is directly
interfering with the state court’s possession and administration of the res in violation of the PEJD.
The United States argues that the Claimants have waived any challenge to this court’s
jurisdiction and, even if the court addresses the merits, Claimants motion fails. Under Supplement
Rule G(5)(B), a “claimant waives an objection to in rem jurisdiction or to venue if the objection is
not made by motion or stated in the answer,” “within 21 days after filing the claim.” Claimants
filed their claim on July 23, 2024. Therefore, under the rule, Claimants had until August 13, 2024,
to challenge the court’s in rem jurisdiction. Claimants made no such challenge within the
timeframe. Instead, Claimants admitted to the court’s in rem jurisdiction in their Answer, filed
with their claim on July 23, 2024. Claimants did not raise the PEJD and challenge this court’s
exercise of jurisdiction over the property until its objection to the restraining order in this case on
July 11, 2025, almost a year after Claimant’s filed their claim and answer. Claimants did not file
this motion challenging the court’s in rem jurisdiction until January 20, 2026, approximately a
year and a half after filing their claim. These challenges to the court’s in rem jurisdiction are
untimely under the rule and Claimants have waived any right they had to challenge the court’s
jurisdiction.
The notes to Rule G provide that “[f]ailure to present an objection to in rem jurisdiction or
to venue by timely motion or answer waives the objection.” Supp. Rule G Notes Subdivision (5), ¶
(b). A party may move to amend its answer, and the “amendment should be permitted only if it is
permitted as a matter of course under Rule 15(a).” Id. Under Rule 15(a), “ a party may amend its
pleading once as a matter of course no later than: (A) 21 days after serving it, or (B) if the pleading
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is one to which a responsive pleading is required, 21 days after service of a responsive pleading or
21 days after service of a motion under Rule 12(b), (e), or (f), whichever is earlier.” Fed. R. Civ. P.
15(a). In this case, the 21-day deadline under Rule 15(a) for Claimants to amend their answer has
long since passed. Unlike subject matter jurisdiction, challenging in rem jurisdiction is a waivable
defense.
Numerous other courts have declined to consider in rem jurisdiction challenges made
outside the proscribed timelines of Rule G. In United States v. $10,160.00 in U.S. Currency, the
court found that the Claimant had waived an objection to in rem jurisdiction based on untimeliness
because the answer objecting to the complaint was filed 135 days after the complaint’s filing. No.
3:11-CV-1612-VLB, 2012 WL 3608578, at *2 (D. Conn. Aug. 22, 2012) (unpublished). In United
States v. Real Prop., No. 6:18-CV-315-REW, 2021 WL 144245, *12 (E.D. Ky. Jan. 15, 2021)
(unpublished), the court recognized that, unlike subject matter jurisdiction, objecting to in rem
jurisdiction is a waivable defense.
Even if the court was to consider the merits of the argument, the factual circumstances in
this case do not support Claimants’ position. In response to some of the Claimants factual
allegations, the United States asserts that it is unaware of any action by Claimants prior to the filing
of this civil forfeiture complaint to attach the Spanish Fork Property utilizing a Prejudgment Writ
of Attachment. The docket in the state court action does not reflect that the Prejudgment Writ was
attached to the Spanish Fork Property in any way. The Prejudgment Writ makes no mention of the
Spanish Fork Property, and the Claimants did not follow the rules for having the writ properly
issued or attached to the subject property. Claimants also failed to record the writ in the property
records or post a copy of the writ on the Spanish Fork Property prior to the filing of the civil
forfeiture complaint. Recent documents recorded in Utah County property records do not reflect
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the recording of any writ by the Claimants.
Claimants argue that the requirements under Utah Rule of Civil Procedure 64(a) and (d) do
not apply to its Prejudgment Writ of Attachment under Utah Rule of Civil Procedure 64C, but Rule
64 specifically states that it applies to Rule 64C. Rule 64C also states that all the provisions in Rule
64A apply to a Writ of Attachment. Under these rules, a writ is effective “upon service.” Utah. R.
Civ. P. 64(d)(3)(A). Moreover, the writ is issued by the clerk of court and must contain a detailed
description of the property. Id. 64(d)(1), (2).
The state court docket also does not reflect that the writ was posted on the property. The
docket notes the granting of prejudgment writ on May 17, 2024, but no entry after that verifying
the posting of the writ on the Property. In contrast, the federal complaint was posted on the
property on May 28, 2024, and the United States filed a lis pendens regarding the federal forfeiture
action in the Utah County property records.
The state court action, though filed first in time on December 22, 2023, was an in personam
proceeding seeking damages against van der Spek and his company. The damages sought in the
state action did not implicate any exercise of in rem jurisdiction. See Derma Pen LLC v.
4EverYoung Ltd., No. 2:13-CV-00729-DN-EJF, 2015 WL 791595, at *3 (D. Utah Feb. 25, 2015)
(unpublished) (courts look to the judgment sought to determine whether a court has assumed
jurisdiction and money damages are in personam). In general, “the pendency of a prior suit does
not bar another suit for the same cause of action in a different court having concurrent
jurisdiction.” United States v. One Parcel Prop. Located at Lot 85, Cnty. Ridge, 100 F.3d 740, 742
(10th Cir. 1996). In the case of in rem jurisdiction, the first court to exercise in rem jurisdiction
“over the property has the power to decide the case without interference from other courts.” Id.
While the state court granted a motion for a prejudgment writ of attachment in an in
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personam action against van der Spek and K&K six days before the filing of the federal civil
forfeiture action, the writ did not mention the Spanish Fork Property and was not issued or served
on anyone in connection with the Spanish Fork Property. That general writ did not give the state
court in rem jurisdiction over the Spanish Fork Property or be considered an exercise of in rem
jurisdiction over the Spanish Fork Property. The United States’ jurisdiction over the Spanish
Fork Property is superior to any state court jurisdiction over the Spanish Fork Property because the
federal court was the first court to exercise in rem jurisdiction over the Spanish Fork Property.
In this case, the state court that originated the prejudgment writ of execution was not
simultaneously exercising in rem jurisdiction over the Property at the time this court obtained its in
rem jurisdiction. Under 18 U.S.C. § 985(c), in rem jurisdiction is conclusively established by a
federal court once a notice of the civil forfeiture complaint is posted on the property. The U.S.
Marshals Service posted a copy of the Complaint on the Subject Property on May 28, 2024.
Claimants argue that under the PEJD, the state court acquired exclusive control over the
Property when it issued a prejudgment writ of attachment in the state court action. But Claimants
reliance on PEJD is misplaced. Claimants entire motion is predicated on the assertion that their
state court lawsuit constitutes a “quasi in rem” action. But they fail to cite a single statute or case
that supports this characterization of what is a standard breach of contract and fraud suit, which is
an in personam, not an in rem, action. Claimants fail to explain how an action seeking money
damages against defendants for wrongdoing transforms into an action against the property itself.
They also fail to explain how a prejudgment writ issued in such context conveyed in rem
jurisdiction over the Property to the state court.
Even if a prejudgment writ of attachment could create in rem jurisdiction, Claimants
failure to comply with the codes governing attachment prevented the state court from obtaining in
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rem jurisdiction over the Spanish Fork Property. Claimants did not serve, post, or record the writ in
general or in connection with the Spanish Fork Property. The Utah Supreme Court has offered its
own skepticism that a prejudgment writ of attachment could be used as a basis for in rem
jurisdiction. Aequitas Enters., LLC v. Interstate Inv. Grp., LLC, 2011 UT 82, ¶ 22, 267 P.3d
929-30 (characterizing a prejudgment writ as a proceeding sought “as prejudgment relief in a
breach of contract action—one that cannot be characterized as an action in rem”). The
prejudgment writ provisions do not mention anything about in rem jurisdiction. Savely v. Utah
Highway Patrol, 2018 UT 44, ¶ 19, 427 P.3d 1174, 1178 (in rem jurisdiction requires exclusive
possession or control over the property; a state statutory scheme is one source for determining
whether a state court has in rem jurisdiction including whether state law expressly provides for in
rem jurisdiction). In contrast, the federal statute underlying this civil forfeiture action, 18 U.S.C. §
985(c)(3), specifically conveys in rem jurisdiction upon the posting of the complaint.
Whether a court can exercise quasi in rem jurisdiction over property is entirely dependent
upon whether the court exercises actual or constructive control over the property. See Penn. Gen.
Cas. Co. v. Pennsylvania, 294 U.S. 189, 195 (1935) (claim of quasi in rem jurisdiction requires
court to “have possession or control of the property which is the subject of the suit”). Without such
possession or control, a court cannot claim the exclusive jurisdiction necessary to oust another
court from proceeding. Id.
The power of attachment is strictly circumscribed by the legislative grants found in Utah
Code Title 78B and the procedural mechanisms in Rule 64, 64A, 64C, and 69A of the Utah Rules
of Civil Procedure. Nonnie & Hyde, Inc. v. Lynch, 2013 UT App 153, ¶ 35, 305 P.3d 196, 206. The
statutory basis of prejudgment writs dictates that the court’s power over the property is only
conditional; it exists only so long as the strict procedural requirements of the law are met. See Bank
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of Ephraim v. Davis, 581 P.2d 1001, 1006 (Utah Sup. Ct. 1978) (attachment did not occur because
the plaintiff failed to comply with Utah Rule 64C(h)).
These rules and statutes reinforce the principle that a court’s control over property—and
thus its ability to exercise jurisdiction over it—is inextricably linked to the act of seizure. Utah R.
Civ. P. 64(a)(9). By defining property specifically in the context of its availability for seizure, the
rules contemplate that a court’s authority over that property under a writ is only realized when the
property is specifically described and actually brought under the court’s dominion. For
prejudgment writs, seizure and control of the property is obtained by “recording the writ and a
description of the property with the county recorder and leaving the writ and description with an
occupant of the property.” Utah R. Civ. P. 69A(b).
In this case, Claimants’ prejudgment writ did not describe the Spanish Fork Property in the
written court order, and it was not recorded in Utah County or left with an occupant of the
Property. Because prejudgment writs require strict compliance with their authorizing statutes to
affect property, Claimants failure to comply with these requirements prevented the state court
having dominion over this specific property. Therefore, the state court did not have in rem
jurisdiction over the Property before this court acquired in rem jurisdiction over the Property. It is
not true that the state and federal actions involved the same property. Claimants’ state court action
was an in personam action seeking a personal judgment against van der Spek and his company for
breach of contract and fraud. In this case, the civil forfeiture action is against the Property.
Claimants contend that the United States acknowledged that they had a judgment against
van der Spek in an email on July 18, 2024. However, it is undisputed that Claimants did not obtain
a judgment in the state court action until April 3, 2025. The United States asserts that the reference
to “judgment” in the email is a mistaken conflation with other potential claimants counsel was
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aware of and working with at the same time as Claimants. Unlike Claimants, those potential
claimants did have a judgment against van der Spek and his company, which they had obtained on
May 21, 2024, before the filing of the civil forfeiture complaint. These potential claimants had also
obtained a writ of execution, to execute their judgment, and had taken steps to execute the writ on
the Property. Based on the case law and authorities the United States’ counsel shared with their
attorney, those potential claimants elected to stand down on their writ of execution, forgo the filing
of a pointless claim in this civil forfeiture case, and to instead share in the proceeds from the sale of
the defendants in rem pro rata with other victims. Claimants did not obtain their judgment until
almost a year later, on April 3, 2025, and counsel’s characterization or mischaracterization of the
status of the state court action has no legal relevance to the determination of which court first had
in rem jurisdiction over the Spanish Fork Property.
The United States shared the same case law and authorities it shared with the other counsel
with Claimants’ counsel. But Claimants did not agree to relinquish their rights to make claims and
in fact made claims in this action. The Claim and Answer admit that this court has jurisdiction. The
United States, therefore, filed its Motion to Strike Claim and Answer. Claimants did not raise any
issue regarding this court’s jurisdiction in any of their pleadings until July 11, 2025, when they
filed their opposition to the restraining order, 14 months after the Complaint was filed. The United
States promptly responded to those objections on July 22, 2025. Claimants filed no reply.
Claimants’ first action alleging a jurisdictional issue properly occurred on January 20, 2026,
almost 20 months after the complaint’s filing, when they sought to vacate the restraining order and
lis pendens. Meanwhile, the United States’ ability to compensate over 70 victims using the only
known assets available to compensate them has been delayed.
The court concludes that the PEJD does not prevent this court from exercising jurisdiction
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over the Spanish Fork Property. The state court action was an in personam action against van der
Speck and K&K. It was not an in rem action against the Spanish Fork Property. This action against
the Spanish Fork Property had been filed for a year before Claimants identified the Spanish Fork
Property in their Writ of Execution after they obtained Default Judgment in the state court action,
which was after the United States had already moved to strike their claim against the Spanish Fork
Property in this action. Claimants’’ Prejudgment Writ of Attachment in the state court action never
mentioned the Spanish Fork Property and Claimants never sought to properly serve or act upon the
state court’s order granting a prejudgment writ. Therefore, the court denies Claimants’ Motion to
Vacate the court’s restraining order and the United States’ lis pendens.
United States’ Motion Pursuant to Rule G(8)(c)(ii)(B) to Strike Claims and Answers
Pursuant to Rule G(8)(c)(ii)(B) of Supplemental Rules for Admiralty or Maritime Claims
and Asset Forfeiture Actions, the United States moves the court to strike Claimants’ claims and
answers because they lack Article III standing and do not have the right to contest this civil
forfeiture action. Rule G(8)(c)(ii) provides three alternative ways for the United States to
challenge a claimant’s standing to intervene in a civil forfeiture action: (1) by filing a motion for
judgment on the pleadings: (2) by requesting an evidentiary hearing at which the claimant must
establish his standing by a preponderance of the admissible evidence; or (3) by filing a motion for
summary judgment.
A claimant in a civil forfeiture action has the burden at all stages of the proceedings to
prove by a preponderance of the evidence that he has Article III standing to make a claim to the
property sought for forfeiture. To establish Article III standing “at the summary judgment stage, a
claimant must prove by a preponderance of the evidence that he has a facially colorable interest in
the res such that he would be injured if the property were forfeited to the United States; otherwise,
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no case or controversy exists capable of federal court adjudication.” United States v. $148,840.00
in United States Currency, 521 F.3d 1268, 1273 (10th Cir. 2008). If Claimants lack standing, then
the court has no jurisdiction to address their claims. City of Colorado Springs v. Climax
Molybdenum Co., 587 F.3d 1071, 1078-79 (10th Cir. 2009).
The law excepts from forfeiture the ownership interest of two types of innocent owners.
The first is an owner who, as relevant here, acquired its interest in the property subject to forfeiture
at the time of the illegal conduct and who “did not know of the conduct giving rise to forfeiture.”
18 U.S.C. § 983(d)(2). The second is an owner who, as relevant for this motion, acquired his
interest in the property subject to forfeiture “after the conduct giving rise to the forfeiture” and who
was a bona fide purchaser for value that “did not know and was reasonably without cause to
believe that the property was subject to forfeiture.” Id. § 983(d)(3)(A).
An “owner” under Section 983 means: “a person with an ownership interest in the specific
property sought to be forfeited, including a leasehold, lien, mortgage, recorded security interest, or
valid assignment of an ownership interest.” An “owner” under Section 983 does not include: “(i) a
person with only a general unsecured interest in, or claim against, the property or estate of another;
(ii) a bailee unless the bailor is identified and the bailee shows a colorable legitimate interest in the
property seized; or (iii) a nominee who exercises no dominion or control or control over the
property.”
1. 	Standing
The United States argues that Claimants lack Article III standing to make a superior
interest claim in the subject properties under 18 U.S.C. § 983(d)(2)(A) because they have neither
legal nor equitable title under state law that would give them a superior interest in the subject
properties. Under 18 U.S.C. § 981(f), commonly referred to as the relation-back doctrine, the
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United States’ interest in the proceeds of van der Spek’s fraud scheme vested upon the commission
of van der Spek’s scheme, including the $1,620,902.97 of fraudulently induced investments from
39 victims prior to Valdez’s February 7, 2022 investment. The United States’ interest arose in
those proceeds under Section 981(f). Consequently, the United States already had an interest in the
funds used to purchase the subject properties at the time those properties were purchased.
In determining the ownership interest of claimants, state law applies. United States v.
Andrews, 530 F.3d 1232, 1238 (10th Cir. 2008) (“We recognize that in federal forfeiture
proceedings, ownership interests (including constructive trusts) are defined by state law.”). 	If a
claimant has an interest under state law, federal law determines whether the interest under state
law is sufficient for the claimant to prevail under the innocent owner provisions in 18 U.S.C. §
983(d).
Here, state law does not give Claimants a superior interest in the subject properties through
either legal or equitable title. Claimants do not have legal title to the property, but they suggest that
because their funds were used to purchase the subject properties that they possess some “additional
forms of title ownership in the subject property.” Utah courts have granted victims of fraud
equitable title through constructive trusts to prevent unjust enrichment. Under Utah law, a court
may impose an equitable constructive trust when “there has been (1) a wrongful act, (2) unjust
enrichment, and (3) specific property that can be traced to the wrongful behavior.” Wilcox v.
Anchor Wate, Co., 164 P.3d 353, 362 (Utah 2007).
According to the Utah Supreme Court, “[s]uch trusts are usually imposed where injustice
would result if a party were able to keep money or property that rightfully belonged to another.” Id.
Aside from Claimants not qualifying for a constructive trust because they cannot trace their
specific investments into the purchase of the subject properties, van der Spek will not be unjustly
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enriched if a constructive trust is not imposed. Criminal forfeiture of the subject properties has
been ordered in the criminal case against Van der Spek. Accordingly, Utah law’s primary rationale
for imposing a constructive trust—prevention of the wrongdoer’s unjust enrichment—is absent.
Furthermore, there is no possibility of injustice resulting because the United States has secured the
subject properties through its civil and criminal forfeiture actions to compensate all the victims of
van der Spek’s criminal scheme, including the Claimants, on a pro rata basis in the
restoration/remission process.
Claimants’ standing cannot be based on a constructive trust because that would violate the
system Congress has put in place for the Attorney General to distribute property pro rata pursuant
to petitions for remission. Claimants assert that they will be punished if the court does not
recognize their constructive trust. But this argument ignores the longstanding procedures Congress
put in place to compensate all victims. In United States v. Approximately $133,803.53 in U.S.
Currency (Flagstar), 683 F. Supp. 2d 1090 (E.D. Cal. 2010), a district court rejected the standing
of an investment fraud victim (Flagstar) based on a constructive trust claim for reasons this court
should also rely on to reject Claimant’s constructive trust claims in this case.
In that case, Flagstar loaned funds through a line of credit for supposed real estate
transactions. Id. at 1092. Because of misrepresentations by bad actors, the mortgage company who
obtained the funds from Flagstar released funds for the fake real property transactions not realizing
the funds were caught up in a large, multi-tiered Ponzi investment scheme. Id. at 1092-93. The
United States seized funds from two bank accounts related to the investment fraud, including the
account into which Flagstar’s funds were deposited. Id. at 1092. Flagstar claimed an interest in the
seized funds as a constructive trust beneficiary. Id. at 1093. However, the court found that Flagstar
lacked prudential standing and granted the government’s motion to strike Flagstar’s claim. Id. at
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1094-97.
The Flagstar court found that Flagstar lacked prudential standing because its claim did not
fall within the zone of interest protected by the law it invoked. Id. The court based this conclusion
on the forfeiture/remission framework Congress established in April 2000. “In April 2000,
Congress amended 18 U.S.C. § 981 to provide that forfeited assets could be restored to crime
victims of the offense giving rise to forfeiture. See 18 U.S.C. § 981(e)(6) (“The Attorney General .
. . is authorized to retain property forfeited pursuant to this section, or to transfer such property on
such terms and conditions as he may determine as restoration to any victim of the offense giving
rise to forfeiture.”) In adopting this forfeiture/victim remission model, Congress granted the
Attorney General sole discretion to address claims by victims through a remission process that
occurs after the successful prosecution of the forfeiture case. See 18 U.S.C. § 981(d).” Flagstar,
683 F. Supp. 2d at 1094-95. The court found that “Congress’s creation of a remission process for
crime victims and explicit delegation of responsibility to the Attorney General over petitions filed
pursuant to that process, combined with the absence of statutory language negating the application
of the prudential standing doctrine to potential claims of victims, compels the conclusion that the
claimant in this case lacks prudential standing.” Id. The Flagstar court further reasoned that
recognizing Flagstar’s constructive trust claim would convert the case into a “trust administration”
that disregarded the procedures put in place by Congress. Id. at 1095. Such a conversion was not
necessary “to protect the individual rights of victims/investors nor judicially efficient.” Id. at
1095-96.
The Flagstar court’s reasoning and decision is on all fours with this case. The Flagstar
court made its decision even though it appeared that Flagstar could directly trace its funds to the
funds the United States seized. Here, Claimants claim of tracing is entirely speculative. Claimants
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propose a system where the first victim to claim a fraudster’s property would be the victor of the
whole pie, but the system put in place by Congress allows the Attorney General to divide that pie
among all the victims equally or proportionally. Claimants assert that they should be rewarded for
their diligence, but the result of their diligence is an unnecessary duplicative and inefficient
“pay-for-play” legal approach. Claimants ask for an equitable constructive trust that would give
rise to inequity between the victims. The court rejects Claimants’ approach in favor of Congress’
established remission procedures, which are designed to provide a recovery for all victims.
Whether the court gives effect to the Congressional system through prudential standing as the
Flagstar court did, or under Article III standing because applying an equitable constructive trust
would give rise to inequity, the result is the same: the Claimants lack standing.
Even if Claimants could meet the constructive trust elements, the equities do not favor the
creation of such a trust. Constructive trusts are legal fictions created by courts to avoid unjust
enrichment “and compel restitution of property that in equity and good conscience does not belong
to the Defendant.” Andrews, 530 F.3d at 1237. Such a remedy is proper when a recipient has
defrauded a claimant. Id. In the case of an insolvent recipient, a constructive trust gives claimants
priority over other creditors. Id. However, “a court should not employ an equitable fiction ‘to
elevate [one] claim over the claims of other creditors if those creditors are similarly situated.’” Id.
at 1238. The ability to trace losses to specific property is irrelevant in imposing a constructive trust
if imposing such a trust gives rise to inequitable results. United States v. Ramunno, 599 F.3d 1269,
1275 (11th Cir. 2010).
Valdez’s and Weist’s claims should not be elevated over the claims of other similarly
situated investor victims of van der Spek’s fraud. Instead, the equities favor the pro rata
distribution of recovered funds to all victims, including Valdez and Weist, that the United States
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intends to do through the restoration process. Consequently, Claimants have no viable claim of
either legal or equitable title that would give them standing to claim a superior interest in the
subject properties under 18 U.S.C. § 983(d)(2)(A).
Furthermore, Claimants’ assertion that they have a lien on the Utah property is not
supported by the facts. Claimants cite a non-existent rule—Utah R. Civ. P. 64C(e)—for the
proposition that Utah law treats a writ of attachment as a lien from issuance. On the contrary, Utah
R. Civ. P. 69A(b) provides that “[r]eal property must be seized by recording the writ and a
description of the property with the county recorder.” 	Additionally, a judgment lien on real
property only arises under Utah law when the judgment is recorded in the county recorder’s office.
Utah Code Ann. §§ 78B-5-201(3)(a) and 78B-5-202(7)(a). Consequently, Claimants have no lien
interest in the Utah property that would give them standing.
Even if Claimants had a lien in the Utah property, it would be subject to the bona fide
purchaser requirements of 18 U.S.C. §983(d)(3). Regardless of the interpretation of the relation
back doctrine in 18 U.S.C. § 981(f), the timing for determining which innocent owner provision
applies to Claimants’ lien interest is based on when the lien interest arose, not when the conduct
giving rise to the lien occurred. United States v. One 2004 Land Rover Range Rover,
VIN:SALME11464A175730 seized from Douglas Turnage, No. 07-CV-818S, 2009 WL 909669, at
*10 (W.D.N.Y. Mar. 31, 2009), aff’d sub nom. United States v. One 2004 Land Rover Range
Rover, 369 F. App’x 208 (2d Cir. 2010).
In this case, Claimants’ lien interest would have arisen at the earliest on May 17, 2024 upon
the state court’s entry of the prejudgment writ of attachment or on April 3, 2025 when the state
court entered judgment, (if they had been recorded). But both dates are long after van der Spek’s
crimes were complete. Claimants admit that a judgment lien does not attach until entry and
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recording of the judgment.
As explained in Asset Forfeiture Law in the United States, Congress “divid[ed] the
innocent owner defense into two parts: pre-existing interests are governed by Section 983(d)(2)
and after-acquired interests are governed by Section 983(d)(3). Stephan D. Cassella, Asset
Forfeiture Law in the United States, 1048 (3rd ed. 2022). To be a pre-existing innocent owner, one
must be “an owner of the property at the time the crime occurred.” Id. To have an after-acquired
interest, the claimant must have “acquired the property in an arms-length transaction as a bona fide
purchaser for value and was unaware that the property was subject to forfeiture. Id. In this case,
Claimants’ lien interest arose long after the Utah property became a proceed of van der Spek’s
fraud. But, even if their lien interest arose simultaneously with the purchase of the Utah property,
Claimants’ interest would still be subject to the after-acquired interest provision because the
pre-existing interest provision does not apply to criminal proceeds. Consequently, Claimants can
only prevail if their judgment lien is a “purchase” under the bona fide purchaser provision of 18
U.S.C. § 983(d)(3). Under Utah law, a judgment creditor is not a bona fide purchaser. Garland v.
Fleischmann, 831 P.2d 107, 112 (Utah 1992).
Claimants lack Article III standing to claim the subject property as bona fide purchasers
under 18 U.S.C. § 983(d)(3)(A) because judgment creditors cannot qualify as bona fide
purchasers. Claimants’ prejudgment writ of attachment cannot give Claimants an interest in the
subject properties. Because the writ was obtained after the United States’ interest in the criminal
proceeds arose and purchase of the subject properties with those proceeds, Claimants can only
prevail if the writ qualifies them as bona fide purchasers for value under 18 U.S.C. § 983(d)(3)(A).
Because a prejudgment writ of attachment does not entail a conveyance of property in exchange
for valuable consideration, the prejudgment writ does not make Claimants bona fide purchasers
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under Section 983(d)(3)(A). Numerous federal courts have held in both civil and criminal
forfeiture cases considering a similar bona fide purchaser provision that judgment creditors do not
qualify as bona fide purchasers;
Claimants argue that the United States’ equity argument misapplies Utah law. But Utah
law determines what kind of an interest Claimants have, and federal law determines whether that
interest is sufficient. See United States v. U.S. Currency, $81,000, 189 F.3d 28, 33 (1st Cir. 1999)
(“state law determines [the claimant’s] ownership interest in the joint account, but then federal law
determines the effect of his ownership interest on his right to bring a claim).
Claimants make no attempt to show how their funds trace to the purchase of the Virginia
property. As undisputedly shown by the motion, Claimants have not traced any of their
investments to the purchase of the Virginia property, nor do they have any writ, judgment, or lien
that has attached to the Virginia property. Therefore, the court grants the United States’ motion as
to that property.
With respect to the Spanish Fork property, Claimants must establish their standing by
submitting evidence that proves they have standing. They cannot simply rely on their pleadings.
Forfeiture proceedings are intended to proceed more expeditiously than typical civil proceedings.
Rule G(6) allows the government to issue special interrogatories as soon as a claim is filed to
scrutinize whether the claimant has a relationship to the property. The rules also allow discovery to
proceed immediately. The provision the United States proceeds under in this motion, Rule
G(8)(c)(ii)(B), allows for expeditious resolution by creating a procedure for testing a claimant’s
standing through summary proceedings. Because the United States has propounded evidence that
contradicts Claimants’ claim that they can trace their funds into the acquisition of the subject
property, Rule G(8)(c)(ii)(B) obligates Claimants to submit evidence showing the existence of a
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material dispute of facts.
Claimant Wiest does not refute in his response the United States’ evidence that he cannot
trace his funds to the purchase of the subject property. Instead, Wiest makes the unsupported
allegation in his opposition that his funds supported the properties’ acquisition or upkeep. Wiest’s
conclusory and unsupported allegation does not raise a dispute of material fact. Valdez’s tracing
claim is speculative at best and does not raise material disputes of facts. Valdez’s tracing argument
hinges on speculation that after his funds were invested into holdings, some of them could have
funded the Utah property that was purchased six weeks later. Valdez claims that the proximity of
his investment supports a plausible link. But these conclusory arguments are contradicted by the
evidence the United states submitted and are not supported by any evidence. By not including any
evidence in his filing, Valdez has not raised a disputed material fact on the issue of tracing.
Therefore, the court does not need to hold a hearing on the constructive trust theory. Because
Claimants have failed to provide any evidence to create a material dispute of fact warranting a
hearing, the United States’ motion to strike is granted.
CONCLUSION
Based on the above reasoning, United States’ Motion Pursuant to Rule G(8)(c)(ii)(B) to
Strike Claims and Answers [ECF No. 10] is GRANTED, and Third-Party Claimants John Valdez
and John Wiest’s Motion to Vacate 1) the Ex Parte Temporary Restraining Order, and 2) the
Government’s Lis Pendens [ECF No. 29] is DENIED.
DATED this 5th day of March 2026.
BY THE COURT:
___________________________________
DALE A. KIMBALL
UNITED STATES DISTRICT JUDGE
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