United States v. All Assets Held in Account Number XXXXXXXX
83 F. Supp. 3d 360
D.D.C.2015Background
- The United States filed an in rem civil forfeiture complaint under 18 U.S.C. § 981(a)(1)(A) against sixteen defendant properties (five corporations, seven bank accounts, and four UK-based investment portfolios) alleging proceeds of an international scheme to launder funds stolen from Nigeria during General Sani Abacha’s regime.
- Two principal illicit schemes are alleged: (1) the “Security Votes Fraud” (1994–1998) in which false security letters enabled diversion of >$2 billion from Nigeria; (2) the “Debt Buy-Back Fraud” (1996) in which Bagudu and associates caused Nigeria to repurchase its own debt at a marked-up price, generating hundreds of millions in profit.
- Proceeds from both schemes allegedly were moved through international banks (including transfers that passed through New York banks), pooled, laundered via Nigerian Par Bonds and ultimately ended up (after liquidation) in the four UK investment portfolios at issue.
- Eight claimants (relatives of Bagudu; seven foreign nationals and one U.S. citizen minor) filed verified claims in the portfolios and moved to dismiss the complaint as to those four portfolios only. Claimants do not contest forfeiture of the other twelve properties.
- Claimants argued dismissal on four grounds: lack of jurisdiction, statute-of-limitations and due process delay, international comity/act of state (citing a 2003 settlement with Nigeria), and insufficiency of the complaint to show forfeitability/traceability of the portfolios.
- The Court assumed the complaint’s allegations true for the 12(b)(6) posture and denied claimants’ motion to dismiss.
Issues
| Issue | Plaintiff's Argument (U.S.) | Defendant's Argument (Claimants) | Held |
|---|---|---|---|
| Jurisdiction over foreign-located property under 28 U.S.C. § 1355(b)(2) | Jurisdiction is proper because property is located abroad and alleged laundering involved U.S. banking contacts | Claimants argued insufficient contacts and lack of personal jurisdiction over claimants | Court: In rem jurisdiction proper; use of U.S. banking system and statute grants D.C. courts power; personal jurisdiction over claimants is irrelevant in in rem forfeiture |
| Timeliness / statute of limitations and due process | Complaint timely; tolling applies while property absent (19 U.S.C. § 1621); govt. also asserts discovery within two years before filing | Claimants argued government unreasonably delayed (~10 years), causing prejudice and violating due process | Court: Tolling applies given foreign location; due process claim premature on 12(b)(6) and requires factual showing of prejudice/tactical delay |
| Comity and act of state (effect of a 2003 settlement with Nigeria) | Executive Branch has balanced foreign interests by bringing suit; comity/act of state do not bar suit by U.S. | Claimants invoked Nigerian settlement and urged dismissal on international comity/act-of-state grounds | Court: Doctrines do not preclude litigation where U.S. Executive elected to pursue forfeiture; dismissal inappropriate |
| Pleading sufficiency: predicate offenses, scienter, conspiracy, and traceability to portfolios | Complaint alleges concrete facts: victims, perpetrators, scheme details, bank transfers, banks’ concerns about source of funds, pooling and purchase/liquidation of Par Bonds tracing funds to portfolios | Claimants contended complaint is conclusory, fails to allege fraud, knowledge of transporters, conspiracy, or traceability to the specific portfolios | Court: Allegations sufficient under Supplemental Rule G; facts permit reasonable inference of fraud, knowledge, tacit agreement to launder, and traceability at pleading stage; motion denied |
Key Cases Cited
- United States v. All Funds in Account in Banco Espanol de Credito, Spain, 295 F.3d 23 (D.C. Cir. 2002) (D.C. Circuit holds D.C. courts have jurisdiction over property located abroad and tolling applies while property is absent)
- One Gulfstream, G-V Jet Aircraft v. United States, 941 F. Supp. 2d 1 (D.D.C. 2013) (pleading sufficiency in civil forfeiture; comity/act-of-state analysis where Executive pursues forfeiture)
- United States v. Seventy-Nine Thousand Three Hundred Twenty-One Dollars, 522 F. Supp. 2d 64 (D.D.C. 2007) (pleading-stage standard: accept well-pleaded allegations; due process dismissal at pleading stage requires more than generalized prejudice)
- United States v. Sum of $70,990,605, 4 F. Supp. 3d 189 (D.D.C. 2014) (forfeiture pleading adequate where complaint specifies victim, conspirators, means, and concrete examples of fraud)
- United States v. Braxtonbrown-Smith, 278 F.3d 1348 (D.C. Cir. 2002) (tracing at pleading stage does not require full accounting of all account activity)
- Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398 (U.S. 1964) (act-of-state doctrine underlying principles restricting U.S. courts from invalidating foreign sovereign acts)
- Halberstam v. Welch, 705 F.2d 472 (D.C. Cir. 1983) (tacit agreement and conspiracy standards)