United States v. All Assets Held at Bank Julius
229 F. Supp. 3d 62
| D.D.C. | 2017Background
- Civil in rem forfeiture by the United States seeking roughly $250 million in foreign bank accounts tied to Pavel (Pavlo) Lazarenko, who was criminally convicted of fraud, money laundering and related offenses.
- First Amended Complaint alleges Lazarenko is Settlor/Protector and beneficial owner of assets in certain Credit Suisse (Guernsey) accounts and that family members are "nominal" beneficiaries.
- Lazarenko filed a verified answer admitting some trust-role allegations but denying that family members are "nominal" beneficiaries and asserting a due process affirmative defense among others.
- Lazarenko moved to amend his answer to: (1) change a denial to an admission regarding "nominal" beneficiaries (¶81); (2) supplement his due process defense (¶160); (3) add five new affirmative defenses (excessive fine, judicial estoppel, undue delay, collateral estoppel, estoppel/unclean hands); and (4) supplement response to ¶62 about Guernsey accounts.
- The Government opposed adding the five new affirmative defenses and changing ¶81; it did not oppose supplementing the due process defense or ¶62.
- Court granted leave to amend ¶62, ¶81 (change denial to admission), and to supplement the due process defense, but denied leave to add the five new affirmative defenses as futile.
Issues
| Issue | Plaintiff's Argument (U.S.) | Defendant's Argument (Lazarenko) | Held |
|---|---|---|---|
| Leave to change denial to admission in ¶81 | Amendment is waived, prejudicial and futile because it effectively concedes beneficial ownership and would broaden litigation | Seeks to admit family members are "nominal" beneficiaries; does not concede beneficial ownership of the Balford Trust; delay not prejudicial | Grant — amendment allowed; not a concession of beneficial ownership; delay does not cause undue prejudice |
| Supplement due process affirmative defense (¶160) | Contends Lazarenko has no facts to make it plausible | Seeks to add that due process violations stem from involvement of Ukrainian GPO in evidence collection | Grant — government did not oppose; supplementation permissible and may reduce vulnerability to motion to strike |
| Add excessive fines defense (Eighth Amendment) | Forfeiture is proportional and supported by criminal findings | Argues forfeiture is excessive relative to offense gravity | Deny — futile as a matter of law; forfeiture amount not grossly disproportional given convictions and proceeds obtained |
| Add judicial estoppel and collateral estoppel defenses | Estoppel doctrines may bar government from inconsistent positions or relitigation | Asserts government took inconsistent positions between criminal case and this action; cites examples in briefing | Deny — futile; pleadings are barebones, examples not alleged in the answer, and no clear inconsistent or precluded issues identified |
| Add undue delay defense | Government delayed filing amended complaint and commencing discovery | Contends delay in filing/amending discovery prejudiced him | Deny — futile; court finds no actionable undue delay by the government and no prejudice shown |
| Add estoppel/unclean hands defense tied to plea negotiations | Government is bound by promises in failed plea discussions limiting forfeiture | Argues representations during plea talks estop government from seeking amounts beyond draft plea | Deny — futile; no executed plea agreement or binding promises; representations during failed negotiations are nullities |
Key Cases Cited
- Foman v. Davis, 371 U.S. 178 (1962) (factors for denying leave to amend: undue delay, bad faith, prejudice, futility)
- United States v. Bajakajian, 524 U.S. 321 (1998) (Excessive Fines Clause proportionality inquiry)
- New Hampshire v. Maine, 532 U.S. 742 (2001) (judicial estoppel doctrine and non‑exhaustive factors)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (pleading standard for plausibility)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (application of plausibility standard)
- Hettinga v. United States, 677 F.3d 471 (D.C. Cir. 2012) (denial of leave to amend as futile if claim would not survive motion to dismiss)