United States v. Sum of $70,990,605
2017 U.S. Dist. LEXIS 19771
D.D.C.2017Background
- The United States filed an in rem civil forfeiture action seeking funds in U.S. interbank accounts that corresponded to deposits at Afghanistan International Bank (AIB), Emirates NBD, and Bank Alfalah allegedly traceable to fraud by Hikmatullah Shadman and associates. The third amended complaint names five U.S. interbank accounts as defendants.
- Afghanistan initially froze AIB accounts at U.S. request, then its Attorney General ordered release; Afghan courts later held Bank Alfalah not liable after that bank released funds to the claimants. Shadman then transferred funds from AIB to other banks, prompting U.S. seizures under 18 U.S.C. § 981(k).
- Shadman, two brothers, and four companies (the "Shadman Claimants") filed claims to the seized assets; AIB also filed a claim. The United States moved to strike certain claimant claims (for lack of Article III standing and as straw owners). The claimants moved to dismiss under the Bilateral Security Agreement (BSA) and for summary judgment invoking act of state and international comity.
- The court granted the U.S. motion to strike the claimants' claims tied to funds corresponding to deposits at AIB and Bank Alfalah, finding no redressable injury because Afghan authorities had released those deposits to the claimants.
- The court denied without prejudice the U.S. motion to strike a brother (Najibullah/Yaser Elham) as a straw owner as he had a facially colorable ownership claim to one Emirates NBD–related interbank account; other straw-owner strikes were mooted by the earlier dismissal.
- The court denied the claimants' motion to dismiss under the BSA—holding the BSA is not judicially enforceable and its dispute-resolution (diplomatic) mechanism does not oblige courts to dismiss—and denied summary judgment on act-of-state and international-comity grounds.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Shadman Claimants have Article III standing to challenge seizure of interbank funds tied to AIB and Bank Alfalah | U.S.: Claimants lack redressable injury because Afghan authorities ordered those foreign banks to release the corresponding deposits to claimants, so winning here would not redress them | Claimants: They retain colorable ownership under 18 U.S.C. § 981(k), suffered past injury from seizure, reputational harm, and may have set-off/counterclaims | Court: Grant U.S. motion — claimants lack Article III standing for funds corresponding to AIB and Bank Alfalah deposits (no redressable injury) |
| Whether claimants are entitled to relief (dismissal/release) under the Bilateral Security Agreement | Claimants: BSA (Arts.13,24) grants Afghanistan jurisdiction over U.S. contractors and requires disputes be resolved diplomatically, barring U.S. judicial action | U.S.: BSA is not self-executing, creates no private rights, and does not confer exclusive jurisdiction to Afghanistan over this litigation | Court: Deny dismissal — BSA not judicially enforceable here and does not create private rights; diplomatic dispute-resolution precludes judicial enforcement but does not strip courts of jurisdiction to adjudicate plaintiffs' claims |
| Whether certain claimants (brothers/companies) are "straw owners" lacking standing to contest seizure | U.S.: Transfers to brothers/companies were sham transactions to shield Shadman, so those claimants lack genuine ownership and Article III standing | Claimants: They made a facially colorable claim of ownership and submitted verified claims; transfers were legitimate business actions | Court: Deny motion to strike Najibullah (Yaser Elham) without prejudice — he has a facially colorable interest; U.S. may renew later with fuller record |
| Whether act of state doctrine or international comity requires dismissal or deference to Afghan decisions/orders | Claimants: Afghan officials/prosecutors and courts exonerated Shadman and directed release; U.S. enforcement contradicts Afghan sovereign acts and BSA, so U.S. courts should defer | U.S.: This is a U.S. enforcement action; Afghan statements/orders do not preclude U.S. courts from deciding; act of state/comity doctrines are inapplicable or do not bar this suit | Court: Deny summary judgment for claimants — act of state inapplicable because outcome does not require invalidating an Afghan act affecting property within Afghanistan; comity insufficient because record does not show a full, final foreign adjudication precluding U.S. action and Executive has prosecuted the case |
Key Cases Cited
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (Article III standing requirements and burden shifting at successive litigation stages)
- Kirkpatrick & Co., Inc. v. Environmental Tectonics Corp., 493 U.S. 400 (1990) (act of state doctrine applies when outcome depends on validity of foreign official act)
- Medillín v. Texas, 552 U.S. 491 (2008) (international agreements are binding internationally but may not be self-executing or create private rights enforceable in U.S. courts)
- Schlesinger v. Reservists Committee to Stop the War, 418 U.S. 208 (1974) (absence of standing for claimants cannot be cured merely because otherwise no one would have standing)
- Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398 (1964) (act of state doctrine and its foreign-affairs separation rationale)
- Holmes v. Laird, 459 F.2d 1211 (D.C. Cir. 1972) (executive agreements with diplomatic dispute resolution not judicially enforceable)
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (summary judgment burden and requirement for specific facts to create genuine issue)
- Foretich v. United States, 351 F.3d 1198 (D.C. Cir. 2003) (reputational injury tied to otherwise moot claim insufficient for standing)