United States v. All Assets Held at Bank Julius Baer & Co.
772 F. Supp. 2d 191
D.D.C.2011Background
- This is a civil in rem forfeiture action under 18 U.S.C. §981 and Supplemental Rule G, targeting funds traceable to alleged criminal activity by Pavlo Lazarenko and associates across multiple jurisdictions.
- Plaintiff United States moves for judgment on the pleadings against Universal Trading & Investment Co. (UTICo), which seeks to amend its claim to assert an interest.
- UTICo asserts standing based on (a) an UESU judgment (Massachusetts) and (b) theories such as a constructive trust arising from transfers to Lazarenko, including post-2010 actions to attach Balford Trust assets.
- UTICo later seeks to add claims based on actions after March 2010 (registering judgments, obtaining a writ of attachment, and filing UCC-1 forms).
- The court applies standing rules under 18 U.S.C. §983 and Rule G, holds constructive trusts cannot confer standing in this context, and grants judgment for the United States while denying UTICo’s proposed amendments and related motions.
- The court also declines to examine Guernsey law on foreign-law grounds and denies additional motions to supplement evidence or obtain surreply, ruling these are improper under the posture of a Rule 12/Rule G motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether UTICo has standing to challenge forfeiture as to specific assets. | UTICo’s asserted interest traces to a Massachusetts judgment, not to specific property. | UTICo contends it holds a constructive-trust interest enabling standing. | UTICo lacks standing; no cognizable interest in specific property. |
| Whether a constructive trust can confer standing in a federal in rem forfeiture action. | Governmentic trust vests back to the government; constructive trust not cognizable. | Constructive trust could confer an equitable interest in assets. | Constructive trust cannot confer standing under these statutes; not cognizable. |
| Whether post–initiation actions (after March 2010) can create cognizable interests in defendant assets. | Interest could be acquired later via attached judgments or liens. | Post-initiative acts create new, valid property interests. | Post-initiation interests do not cure standing; no cognizable interest. |
| Whether recording of the UESU judgment or a writ of attachment creates a lien on the Balford Trust assets. | Recording/writs should support UTICo’s asserted lien. | No valid lien or interest in Balford Trust assets was established. | No lien or interest in the Balford Trust assets; no standing. |
Key Cases Cited
- United States v. BCCI Holdings (Luxembourg), S.A., 46 F.3d 1185 (D.C.Cir.1995) (constructive trust claims cannot confer standing in forfeiture)
- United States v. One-Sixth Share of James Bulger, 326 F.3d 36 (1st Cir.2003) (standing in forfeiture depends on property interests at issue)
- United States v. One Lincoln Navigator, 328 F.3d 1011 (8th Cir.2003) (standing to challenge forfeiture requires a cognizable interest in specific property)
- United States v. 475 Martin Lane, 545 F.3d 1134 (9th Cir.2008) (standing for interest required in forfeiture proceedings)
- United States v. Funds From Prudential Securities, 300 F.Supp.2d 99 (D.D.C.2004) (restricts standing to those with a sufficient interest; unsecured creditors lack standing)
- Torres v. $36,256.80, 25 F.3d 1154 (2d Cir.1994) (recognizes standing based on equitable interests in property)