United States v. All Assets Held at Bank Julius
244 F. Supp. 3d 188
| D.D.C. | 2017Background
- The United States filed an in rem civil forfeiture action (2004) seeking over $250 million in assets linked to Pavel (Pavlo) Lazarenko held in multiple foreign jurisdictions; a restraining order was entered (July 8, 2005) to preserve the res.
- The Restraining Order bars Lazarenko, his children, and others from, without prior court approval and notice to the United States, taking actions that would affect availability or value of the defendants in rem (e.g., withdrawing, transferring, disposing of, or otherwise diminishing the res).
- In December 2015 Lazarenko filed an application in the Royal Court of Guernsey seeking variation of a Guernsey freeze so a portion of funds could be used to pay his U.S. criminal forfeiture judgment; he did not notify the U.S. until ~6 weeks later.
- Lazarenko also engaged in negotiations and litigation activity in Antigua, where the Antiguan High Court ordered funds paid into Antigua’s Government Forfeiture Fund (Dec. 24, 2015); Antigua may have disbursed some funds.
- Lazarenko moved for an order clarifying that (1) his Guernsey filing and foreign litigation do not violate the Restraining Order, and (2) he and agents may litigate abroad to challenge restraints but may not dissipate funds without this Court’s approval.
- The United States opposed; the district court heard briefing and oral argument and issued a decision (Mar. 23, 2017) granting the motion in part and denying it in part.
Issues
| Issue | Plaintiff's Argument (United States) | Defendant's Argument (Lazarenko) | Held |
|---|---|---|---|
| Whether Lazarenko’s Guernsey application violated the 2005 Restraining Order | The Restraining Order prohibits actions that would affect availability/value of the res; Guernsey application attempts to obtain funds and thus violates order | Guernsey filing merely initiates foreign litigation; the restraining order does not expressly bar initiating foreign litigation and Guernsey law permits seeking variation | Court held Guernsey application violated the Restraining Order; foreign litigation that would affect the res is barred without prior court approval |
| Whether initiating foreign litigation generally is prohibited by the Restraining Order | Opposes permitting foreign suits that seek to alter or obtain the res because they affect availability/value | Argues the restraining order does not reference foreign litigation and foreign courts control release under local law | Court held foreign litigation by Lazarenko or his agents to challenge restraints on foreign assets violates the Restraining Order |
| Whether Lazarenko may negotiate with Antigua re: funds already transferred to Antigua’s Government Forfeiture Fund | United States contends any proceeds or settlements connected to this action remain subject to the Restraining Order | Lazarenko seeks permission to negotiate and settle to recover or preserve funds | Court permitted good-faith negotiations in Antigua so long as they preserve or maintain value; any proceeds remain subject to Restraining Order and must be deposited per the Court’s May 19, 2016 minute order |
| Remedies and procedures for any proceeds obtained in Antigua | U.S. seeks protective steps to prevent dissipation and preserve assets for potential forfeiture | Lazarenko accepts negotiation but wants clarity on allowed actions | Court ordered: any settlement/proceeds from Antigua remain subject to the Restraining Order; Lazarenko must deposit proceeds within 7 days into an account controlled by the Registrar of the High Court of Antigua and Barbuda and then file documentary proof on the public record within 7 days of deposit |
Key Cases Cited
- United States v. All Funds in Account Nos. 747.034/278, 747.009/278, & 747.714/278 in Banco Espanol de Credito, Spain, 295 F.3d 23 (D.C. Cir.) (foreign possession affects effectiveness, not jurisdiction, of U.S. forfeiture orders)
- United States v. Lazarenko, 564 F.3d 1026 (9th Cir.) (appellate disposition relevant to scope of criminal convictions asserted in foreign proceedings)
- United States v. All Assets Held at Bank Julius Baer & Co., Ltd., 772 F. Supp. 2d 205 (D.D.C.) (discussion of MLAT freezes and interplay with foreign courts)
- SEC v. Bilzerian, 613 F. Supp. 2d 66 (D.D.C.) (example of restraining order language barring commencement of proceedings)
- United States v. All Assets Held at Bank Julius Baer & Co., Ltd., 959 F. Supp. 2d 81 (D.D.C.) (background on Lazarenko’s alleged illicit conduct and prior case history)