Colella v. the Republic of Argentina, 20-3031-cv (L)

Consolidated appeals from Colella (04-cv-2710) and Rigueiro (05-cv-3089): plaintiffs claimed ownership of defaulted Argentine bonds (including ISIN US040114AN02) and obtained district-court judgments in 2006–2007 but never collected.
In 2016 Colella entered a settlement with Argentina contingent on delivering the bonds; plaintiffs later submitted bank records (2019) to substantiate ownership when collection issues persisted.
The Republic challenged the authenticity of the bank records; two Italian banks (BCC‑Lavoro and UniCredit) produced records showing the submitted documents were inauthentic.
The district court found, on clear and convincing evidence, that plaintiffs committed fraud upon the court (including submission of falsified bank statements and related doctored documents in a separate Forgione case) and vacated the judgments and dismissed both cases with prejudice under Rule 60(b)(6) and the court’s inherent authority.
The court cited plaintiffs’ shifting explanations, corroborating bank declarations, indicia of fabricated documents, and risk of duplicative recovery as grounds for severe sanctions; plaintiffs contended greater (criminal) procedural protections were required.
The Second Circuit affirmed: it held the fraud finding and the remedial vacatur/dismissal were within the district court’s discretion and that criminal‑style safeguards were not required for dismissal with prejudice.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether plaintiffs obtained judgments by fraud on the court	Submitted bank records and other materials were genuine	Bank records were forged/inauthentic and other documents were falsified	Fraud established by clear and convincing evidence; district court did not abuse discretion
Whether vacatur and dismissal with prejudice were appropriate sanctions	Dismissal is unduly harsh and unwarranted	Vacatur/dismissal required to remedy fraud, prevent prejudice and deter misconduct	Vacatur and dismissal with prejudice were within the court’s remedial discretion
Whether higher (criminal) procedural protections or beyond‑reasonable‑doubt findings were required before dismissal	District court should have applied criminal‑level findings and protections	Civil standards and procedures suffice for dismissal sanction	Not required; clear and convincing standard and notice/opportunity to be heard were adequate
Whether misconduct in Colella justified vacatur/dismissal of Rigueiro as well	Rigueiro is a separate case and should not be dismissed because of Colella conduct	Colella misconduct tainted Rigueiro, risked duplicative recovery, and warranted deterrence	Vacatur/dismissal of Rigueiro affirmed as reasonably related to the misconduct and necessary for deterrence and fairness

Transaero, Inc. v. La Fuerza Area Boliviana, 24 F.3d 457 (2d Cir. 1994) (abuse‑of‑discretion review of fraud‑on‑the‑court determinations)
Enmon v. Prospect Capital Corp., 675 F.3d 138 (2d Cir. 2012) (standard for dismissal as a sanction reviewed for abuse of discretion)
King v. First American Investigations, Inc., 287 F.3d 91 (2d Cir. 2002) (fraud on the court requires clear and convincing proof)
Hazel‑Atlas Glass Co. v. Hartford‑Empire Co., 322 U.S. 238 (1944) (landmark Supreme Court decision recognizing fraud on the court as basis for vacatur)
In re Harris, 464 F.3d 263 (2d Cir. 2006) (dismissal is a harsh sanction but may be appropriate in extraordinary circumstances)
Revson v. Cinque & Cinque, P.C., 221 F.3d 71 (2d Cir. 2000) (courts’ inherent power to manage cases and sanction misconduct)
Aoude v. Mobil Oil Corp., 892 F.2d 1115 (1st Cir. 1989) (fraudulent litigation conduct supports severe sanctions)
Virginia Properties, LLC v. T‑Mobile Northeast LLC, 865 F.3d 110 (2d Cir. 2017) (distinguishing punitive monetary sanctions from other sanctions requiring heightened procedural protections)
Mitchell v. Lyons Professional Services, Inc., 708 F.3d 463 (2d Cir. 2013) (criminal‑style safeguards not required before dismissing a case with prejudice)
Liebowitz v. Bandshell Artist Management, 6 F.4th 267 (2d Cir. 2021) (discussion of standards for procedural protections when imposing sanctions)