228 F. Supp. 3d 118
D.D.C.2017Background
- This is an in rem civil forfeiture action seeking over $250 million connected to Pavel (Pavlo) Lazarenko; claimants are his three adult children: Alexander, Lecia, and Ekaterina Lazarenko.
- The United States filed an amended complaint (June 30, 2005) adding Credit Suisse (Guernsey) account 41950 (in addition to 41610) and assets in three additional jurisdictions; claimants had earlier filed claims and an answer to the original complaint but never answered the amended complaint.
- Alexander filed verified claims pro se "for himself and as agent" for Lecia and Ekaterina and attached notarized powers of attorney from Lecia and Ekaterina authorizing him to represent their interests in account 41610 (the power forms did not mention 41950).
- The United States moved to strike claimants’ second claim for lack of statutory standing, arguing (1) failure to file an answer to the amended complaint and (2) failure of Lecia and Ekaterina to sign the claim under penalty of perjury as required by Supplemental Rule G.
- Supplemental Rule G took effect December 1, 2006 (after claimants’ July 26, 2005 second claim); earlier Rule C permitted an agent to file a claim stating authority to do so; the court considered whether to apply Rule G’s stricter verification requirement retroactively.
- Court denied the Government’s motion to strike, concluding (a) the Government may move to strike despite the court’s earlier decision on a motion to dismiss, (b) the failure to answer the amended complaint was excused because the Government was not prejudiced, and (c) Rule C governs verification here so the power-of-attorney-based claim sufficed for account 41610 but the claimants must file an amended, fully G-compliant claim (signed by all three) if they wish to assert interest in account 41950.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Supplemental Rule G estops the Government from moving to strike after the court already decided claimants' motion to dismiss | G: Rule G allows the Government to move to strike for lack of standing at any time before trial; motion is timely | Claimants: gov't waived/chose to litigate merits; should be estopped from now raising standing | Court: G ambiguous but structure & Advisory Notes permit gov't to move to strike later; no estoppel — gov't may raise standing issue now |
| Whether claimants' failure to file an answer to the amended complaint warrants striking their claim for lack of statutory standing | G: Failure to answer prejudiced the Government (added account 41950 and new jurisdictions); strike is appropriate | Claimants: counsel oversight; previously answered original complaint; no prejudice to Government | Court: failure to answer ordinarily excusable only for good cause, but here Government not prejudiced because original answer covered most allegations; will allow leave to file answer |
| Whether Lecia and Ekaterina’s power-of-attorney signatures satisfied Rule G’s verification requirement (signed under penalty of perjury) | G: Claim must be signed by claimant under penalty of perjury; power-of-attorney forms do not suffice for G | Claimants: power-of-attorney forms sufficed under prior Rule C; retroactive application is not just/practicable; no risk of false claims | Court: Because claim filed before Rule G effective, Rule C governs; Alexander’s filing as agent complying with Rule C suffices for account 41610, but to assert interest in 41950 claimants must file an amended claim signed by each under Rule G |
| Appropriate remedy/sanction (strike vs. allow cure) | G: Strike for noncompliance with Rule G and failure to answer | Claimants: striking claim is a drastic sanction; permit cure | Court: Denied motion to strike; permitted claimants to seek leave to file answer and ordered an amended, G-compliant claim (signed by all three) by set deadline if they wish to include account 41950 |
Key Cases Cited
- United States v. All Assets Held at Bank Julius Baer & Co., Ltd., 571 F. Supp. 2d 1 (D.D.C. 2008) (prior opinion resolving motion to dismiss in this forfeiture litigation)
- United States v. All Assets Held at Bank Julius Baer & Co., 664 F. Supp. 2d 97 (D.D.C. 2009) (discussing striking claims for procedural noncompliance in forfeiture cases)
- United States v. All Funds in Account Nos. ..., 295 F.3d 23 (D.C. Cir. 2002) (in rem forfeiture suits are against property; owners may intervene)
- Yousuf v. Samantar, 451 F.3d 248 (D.C. Cir. 2006) (apply statutory-interpretation tools to procedural-rule text)
- Robinson v. Shell Oil Co., 519 U.S. 337 (1997) (start interpretive analysis with plain meaning)
- United States v. Cordova, 806 F.3d 1085 (D.C. Cir. 2015) (standing is jurisdictional; courts may address it at any time)
- Yesudian ex rel. U.S. v. Howard Univ., 270 F.3d 969 (D.C. Cir. 2001) (factors for excusing procedural defaults include prejudice, delay, reason, and good faith)
- Pioneer Inv. Servs. Co. v. Brunswick Assocs., 507 U.S. 380 (1993) (excusable neglect factors)
- Casanova v. Marathon Corp., 499 F. Supp. 2d 32 (D.D.C. 2007) (attorney oversight insufficient to show excusable neglect)
- United States v. 8 Gilcrease Lane, Quincy, Fla., 638 F.3d 297 (D.C. Cir. 2011) (verified claim requirement confers statutory standing in forfeiture actions)