United States v. All Funds on Deposit At
Civil Action No. 2004-0798
| D.D.C. | Sep 7, 2021Background:
- This is a long-running in rem civil forfeiture action seeking the Balford Trust assets alleged to derive from Pavlo (Pavel) Lazarenko’s corrupt acts; trustee is Samante Limited (Guernsey), accounts in Guernsey.
- The Balford Trust (governed by Guernsey law) is irrevocable, discretionary, grants trustees "absolute and uncontrolled" discretion over distributions, includes a Protector (Pavel Lazarenko) with consent rights for key powers, and has a 100-year term.
- Alexander, Lecia, and Ekaterina Lazarenko filed claims as discretionary beneficiaries; Alexander’s claim was later dismissed for discovery misconduct and Pavel’s claim was struck—leaving Lecia and Ekaterina as the remaining claimants to the Trust.
- The United States moved to strike Lecia’s and Ekaterina’s claims arguing they lack Article III standing because discretionary beneficiaries hold only contingent, expectant interests (not present proprietary rights) and any injury is speculative and not redressable.
- The daughters argued (1) Guernsey-law rights (access to information, letters of wishes, statutory causes of action) create a cognizable interest, and (2) alternative bases to litigate (derivative suit on behalf of trustees; next-friend standing for family members) and asked to modify the restraining order to permit litigation in Guernsey.
- The Court held the daughters’ interests are too remote/contingent to confer Article III standing, denied derivative and next-friend theories, and granted the United States’ motion to strike (and denied the daughters’ cross-motion to modify the restraining order).
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Lecia and Ekaterina have Article III standing to contest forfeiture of Balford Trust assets | Their beneficiary interests are only contingent expectancies under Guernsey law and too speculative to be an Article III injury | As discretionary beneficiaries they have a legally cognizable interest (right to be considered, information rights, statutory remedies) that suffices as a colorable claim | No standing: interests are contingent/remote; claimants cannot show imminent, redressable injury, so claims are struck |
| Nature of beneficiaries’ rights under Guernsey law (proprietary vs. expectancy) | N/A (Government argues Guernsey law yields mere expectancy) | Daughters: Guernsey statutory rights (information, letters of wishes, right to sue) create substantive interests in the trust assets | Court: Guernsey law gives only an expectancy/right to be considered; statutory access and letters of wishes do not create a present proprietary interest |
| Whether daughters may bring a derivative claim on behalf of the trustees | N/A (United States: trustees were not precluded from claiming earlier; no Guernsey derivative procedure shown) | Daughters: beneficiaries may vindicate trust interests if trustees refuse, and trustees were allegedly precluded by Credit Suisse plea | Denied: trustees were not shown to be precluded from filing earlier; no Guernsey law basis established to permit derivative suit in this forum |
| Whether daughters have next friend standing for Alexander or Tamara or may litigate in Guernsey / modify restraining order | N/A (US opposed) | Daughters: family members lack access to U.S. courts; daughters can litigate on their behalf; or court should allow Guernsey declaratory action by lifting restraints | Denied: daughters failed Whitmore prerequisites (no showing real parties are incapable or that daughters act in their best interests); motion to modify restraining order denied |
Key Cases Cited
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (standing requires injury-in-fact, causation, redressability)
- Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (injury must be concrete and particularized)
- Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment standard)
- Whitmore v. Arkansas, 495 U.S. 149 (requirements for next-friend standing)
- Clapper v. Amnesty Int'l USA, 568 U.S. 398 (threatened injury must be certainly impending)
- United States v. Emor, 785 F.3d 671 (D.C. Cir. 2015) (civil-forfeiture standing focuses on whether claimant has a colorable, cognizable interest)
- United States v. $17,900 in U.S. Currency, 859 F.3d 1085 (D.C. Cir. 2017) (claimant must satisfy both Article III and statutory standing; standing inquiry is forgiving but requires colorable interest)
- United States v. Doraville Properties, 299 F. Supp. 3d 121 (D.D.C. 2018) (discretionary beneficiaries held to lack standing to contest forfeiture)
- United States v. All Assets Held at Bank Julius Baer & Co., Ltd., 480 F. Supp. 3d 1 (D.D.C. 2020) (court’s prior ruling striking Pavel Lazarenko’s claim and framing issues about beneficiaries and Guernsey trust law)