GANG LUAN, et al., Appellants v. UNITED STATES of America, Appellee.
No. 12-5142.
United States Court of Appeals, District of Columbia Circuit.
Argued Oct. 16, 2012. Decided July 9, 2013.
388
Vijay Shanker, Attorney, U.S. Department of Justice, argued the cause for appellee. With him on the brief was Lanny A. Breuer, Assistant Attorney General. Kirby A. Heller and Linda M. Samuel, Attorneys, entered appearances.
Before: GARLAND, Chief Judge, HENDERSON, Circuit Judge, and EDWARDS, Senior Circuit Judge.
Opinion for the Court filed by Chief Judge GARLAND.
GARLAND, Chief Judge:
In 2010, a Hong Kong magistrate issued a warrant for the arrest of appellant Gang Luan on charges of smuggling, evasion of
I
Gang Luan was the sole owner and director of Offtech International Ltd. and Bluewhale Offshore Engineering Technology Co. Ltd., two companies purportedly involved in oilfield and ocean engineering and services. Luan‘s sister was the financial director of Bluewhale. According to Hong Kong authorities and the United States Department of Justice, Offtech and Bluewhale netted over $186 million by smuggling vessels and equipment into China, submitting false documents to customs officers, making bribes to win favorable contracts, and artificially inflating the prices of their goods through fraudulent agreements. See Affirmation of Inspector Chow Wai Tong Dennis ¶¶ 3-4; Application of the United States to Enforce and Register Foreign Restraining Order (DOJ Application), at 4-5. Luan and his sister then allegedly laundered the proceeds to bank accounts in the United States and Mainland China. Smuggling, evasion of customs duties, bribery, conspiracy to defraud, and money laundering are crimes under Hong Kong law, and any proceeds stemming therefrom are subject to forfeiture. See Chow Aff. ¶ 25; DOJ Application at 11-12.
In late 2010, Hong Kong authorities moved to arrest Luan and his sister. By the time a magistrate issued an arrest warrant, however, Luan had fled Hong Kong for the United States. Luan‘s sister was arrested while attempting to travel to the United States from Hong Kong, but she too absconded to the United States after being released on bail.
In March 2011, Hong Kong prosecutors applied to the Court of First Instance of the High Court of Hong Kong for a restraining order to prevent the dissipation of assets controlled by Luan and his alleged co-conspirators. See In re Male Luan Gang et al., [Mar. 15, 2011] Misc. Proceeding No. 409, at 2 (C.F.I.) (H.K.) (J.A. 58). The prosecutors supported their application with an affirmation from a Hong Kong customs inspector enumerating the allegations against Luan and the others. See Chow Aff.; In re Male Luan Gang et al., [Mar. 15, 2011] Misc. Proceeding No. 409, at 11 (C.F.I.) (H.K.) (J.A. 67) (citing affirmation). The affirmation stated that, at Luan‘s direction, Bluewhale submitted false documents to customs officials regarding six vessels and a dredger in order to avoid customs import tax and value-added tax. It further stated that, to obtain the contracts under which Bluewhale rented the vessels and dredger, Luan paid bribes to various persons. The Hong Kong investigation revealed that Offtech and Bluewhale had no actual business operations in Hong Kong, and that their registered business addresses were occupied by accounting firms that furthered
The Court of First Instance granted the prosecutors’ application, barring Luan, his sister, and other alleged coconspirators from dealing with their property located within or outside Hong Kong, including specified bank accounts in the United States. See In re Male Luan Gang et al., [Mar. 15, 2011] Misc. Proceeding No. 409, at 2-6 (C.F.I.) (H.K.) (J.A. 58-62). The order notified Luan and the others that they could apply to the Court at any time to vary or discharge this Order. Id. at 10 (J.A. 66). Several months later, the court held a hearing to determine whether the order should be continued. Neither Luan nor his counsel attended, and the restraining order was continued pending further order of the court. See In re Male Luan Gang et al., [Aug. 15, 2011] Misc. Proceeding No. 409 (C.F.I.) (H.K.) (J.A. 126); Gov‘t Br. 24 n. 4.
Shortly after the Hong Kong court issued its restraining order, the government of Hong Kong submitted a formal request for assistance under the Agreement Between the Government of the United States of America and the Government of Hong Kong on Mutual Legal Assistance in Criminal Matters, U.S.-H.K., Apr. 15, 1997, S. Treaty Doc. No. 105-6.2 Hong Kong asked the United States to restrain $23.7 million of criminal proceeds that it said Luan had transferred to specific bank accounts and companies located in Texas. DOJ Application at 2-3, 5-6. The Justice Department certified that the Hong Kong restraining order was in the interest of justice to register and enforce, and it filed an ex parte application to enforce the order pursuant to
In October 2011, Luan filed a motion to dissolve the district court‘s order on the ground that it did not comply with the requirements of
II
We begin by describing the statutory framework for issuing restraining orders to preserve property subject to forfeiture under foreign law.
The central statute at issue is
(A) Restraining orders.—
(i) In general.—To preserve the availability of property subject to civil or criminal forfeiture under foreign law, the Government may apply for, and the court may issue, a restraining order at any time before or after the initiation of forfeiture proceedings by a foreign nation.
(ii) Procedures.—
(I) In general.—A restraining order under this subparagraph shall be issued in a manner consistent with subparagraphs (A), (C), and (E) of paragraph (1) and the procedural due process protections for a restraining order under
section 983(j) of title 18 .(II) Application.—For purposes of applying such
section 983(j) —(aa) references in such
section 983(j) to civil forfeiture or the filing of a complaint shall be deemed to refer to the applicable foreign criminal or forfeiture proceedings; and(bb) the reference in paragraph (l)(B)(i) of such
section 983(j) to the United States shall be deemed to refer to the foreign nation.(B) Evidence.—The court, in issuing a restraining order under subparagraph (A)—
(i) may rely on information set forth in an affidavit describing the nature of the proceeding or investigation underway in the foreign country, and setting forth a reasonable basis to believe that the property to be restrained will be named in a judgment of forfeiture at the conclusion of such proceeding; or
(ii) may register and enforce a restraining order that has been issued by a court of competent jurisdiction in the foreign country and certified by the Attorney General pursuant to subsection (b)(2).
(C) Limit on grounds for objection.—No person may object to a restraining order under subparagraph (A) on any ground that is the subject of parallel litigation involving the same property that is pending in a foreign court.
Three years ago, this Circuit read a previous version of
Pursuant to the current version of
First, the order must be issued in a manner consistent with subparagraphs (A), (C), and (E) of paragraph (1) of
Second, the restraining order must be issued in a manner consistent with ... the procedural due process protections for a restraining order under
Accordingly, our attention must now turn to
In sum, a court may issue restraining orders of progressively longer duration as the property‘s owner is accorded progressively greater procedural protections. Because the restraining order against Luan‘s property has lasted far longer than 90 days, both parties agree that it remains valid only if it was issued in a manner consistent with the procedural due process protections of
III
Luan contends that the district court‘s order violated
A
As noted above,
The flaw in this argument is that it ignores
Indeed, were the filing of a civil forfeiture complaint required,
Accordingly, the fact that the government of Hong Kong did not file a civil forfeiture complaint against Luan‘s property does not bar the issuance of a restraining order against it. Instead, following the statutory admonition, we must determine which (if any) Hong Kong proceedings constitute the applicable foreign criminal or forfeiture proceedings necessary to satisfy
B
The problem with making the direct substitution the Justice Department suggests is that
Another way to construe the relevant portion of
A third possible construction, which Luan presses in the event that we reject his contention that the filing of an actual civil forfeiture complaint is required, is that the word applicable directs us to identify the foreign proceeding that is the functional equivalent of the filing of a civil forfeiture complaint. Luan Br. 36. Luan cites nothing to support the contention that
We need not decide precisely which of these three constructions of
C
In order to determine whether Luan received procedural due process protections consistent with those afforded by the filing of a civil forfeiture complaint, we begin by cataloguing the procedural protections that a civil forfeiture complaint provides in the United States.10 Rule G of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions governs a forfeiture action in rem arising from a federal statute. Supp. R. G(l). That rule requires (inter alia) that notice be provided to known potential
(a) be verified;
(b) state the grounds for subject-matter jurisdiction, in rem jurisdiction over the defendant property, and venue;
(c) describe the property with reasonable particularity;
(d) if the property is tangible, state its location when any seizure occurred and—if different—its location when the action is filed;
(e) identify the statute under which the forfeiture action is brought; and
(f) state sufficiently detailed facts to support a reasonable belief that the government will be able to meet its burden of proof at trial.
Id. G(2). Supplemental Rule E, which applies to the extent that [Rule G] does not address an issue, id. G(l), provides that the complaint shall state the circumstances from which the claim arises with such particularity that the defendant or claimant will be able, without moving for a more definite statement, to commence an investigation of the facts and to frame a responsive pleading. Id. E(2)(a).
Luan does not dispute that the Hong Kong proceedings collectively gave him many of the same procedural protections that a U.S. civil forfeiture complaint would provide.12 But he maintains that there were still other important protections that he did not receive.
First, Luan suggests that the Hong Kong proceedings failed to describe the property to be forfeited with reasonable particularity, as required by Supplemental Rule G(2)(C). That is simply incorrect. In their application for a restraining order against Luan, Hong Kong authorities enumerated $23.7 million in suspected criminal proceeds that they sought to restrain. Chow Aff. ¶¶ 8-14. They further identified specific U.S. bank accounts to which the funds had been sent. See id. ¶¶ 11-12. So, too, did the restraining order issued by the Hong Kong court. See In re Male Luan Gang et al., [Mar. 15, 2011] Misc. Proceeding No. 409, at 3-6 (C.F.I.) (H.K.) (J.A. 59-62). Under Hong Kong law, those criminal proceeds were the assets that would be subject to forfeiture upon Luan‘s conviction. See Organized and Serious Crimes Ordinance, (2003) Cap. 455, 12, § 8(6)-(7) (H.K.).13
Second, Luan maintains that the proceedings failed to allege sufficiently detailed facts to support a reasonable belief that his property is subject to forfeiture, as required by Supplemental Rules E(2)(a) and G(2)(f). See United States v. Mondragon, 313 F.3d 862, 865 (4th Cir. 2002) (explaining pleading standard).14 This claim is also incorrect. The affirmation of the Hong Kong customs inspector made numerous particularized allegations, describing in detail the unlawful transactions in which Luan engaged, the bank accounts into which he deposited the proceeds, and the incriminating manner in which he transferred $23.7 million from those bank accounts to the United States. See supra Part I; Chow Aff. ¶¶ 3-5; id. ¶¶ 6-12 (describing financial transactions and listing specific bank accounts). The order of the Hong Kong court continuing the restraining order added further particulars. In re Male Luan Gang et al., [Mar. 15, 2011] Misc. Proceeding No. 409, at 3-6 (C.F.I.) (H.K.) (J.A. 59-62). These allegations were sufficiently particularized to satisfy Luan‘s only objection regarding compliance with Supplemental Rules E(2)(a) and G(2)(f).
Moreover, the Hong Kong proceedings, which culminated in the issuance and continuation of the restraining order, offered additional procedural protections in this respect that the mere filing of a civil forfeiture complaint in the U.S. would not. No judicial approval of any kind is required before the government may file such a complaint in the United States. See Oral Arg. Recording at 10:40-11:00 (acknowledgment by Luan‘s counsel). And while presumably no approval is required for a customs inspector to file an affirmation in Hong Kong either, there was more here: namely, the issuance of both an arrest warrant and a restraining order. In order to secure the arrest warrant, Hong Kong authorities were required to present evidence to a magistrate, under oath, that Luan had committed an indictable offense. See Magistrates Ordinance, (1997) Cap. 227, 8, 29-30, §§ 10, 72, 75 (H.K.). And in order to secure a restraining order, the Hong Kong government had to show (and the court had to find) that there was reasonable cause to believe that [the defendant] has benefited from that specified offence. Organized and Serious Crimes Ordinance, (2003) Cap. 455, 20, § 14(2)(b) (H.K.).
Third, Luan objects that the Hong Kong proceedings, unlike the filing of a civil forfeiture complaint, were not adversary proceeding[s]. Oral Arg. Recording at 6:43-57. As Luan‘s counsel concedes, however, the filing of a civil forfeiture complaint is not itself an adversary proceeding. Rather, it begins adversary proceedings of finite duration, in the sense that they end when the court resolves the complaint. Id. at 11:28-48.
But the same is true in Hong Kong. The proceedings against Luan set in motion multiple adversarial proceedings in which he will be able to contest the prospect of forfeiture. The issuance of an arrest warrant began criminal proceedings under Hong Kong law. See Organized and Serious Crimes Ordinance, (2007) Cap. 455, 4, § 2(15)(a) (H.K.). As a consequence, Hong Kong courts now must hold a preliminary inquiry, in which Luan will be able to challenge the government‘s evi-
All of these proceedings are finite. If they are not instituted within a reasonable time, or if Luan is acquitted, the Court of First Inquiry must discharge the restraining order against Luan. See Organized and Serious Crimes Ordinance, (2003) Cap. 455, 20-21, § 14(1), (4). Moreover, Hong Kong law requires the court to regularly consider whether to extend or discharge an extant restraining order. Id. at 20, § 14(lA)-(2); see In re Male Luan Gang et al., [Aug. 15, 2011] Misc. Proceeding No. 409 (C.F.I.) (H.K.) (J.A. 127). And, of course, if the Hong Kong restraining order is discharged, the U.S. restraining order must be discharged as well. See
Moreover, Luan has already been given the opportunity to challenge his restraint in an adversarial hearing. As noted above, the Hong Kong Court of First Instance notified Luan that he could request a hearing in which to argue that the restraining order against him should be discharged. See In re Male Luan Gang et al., [Mar. 15, 2011] Misc. Proceeding No. 409, at 10 (C.F.I.) (H.K.) (J.A. 66). The court subsequently held such a hearing, during which it heard argument from one of his alleged co-conspirators before concluding that discharge was unwarranted. See In re Male Luan Gang et al., [Aug. 15, 2011] Misc. Proceeding No. 409, at 2 (C.F.I.) (H.K.) (J.A. 127). Luan could have appeared at that proceeding and argued that the evidence against him was insufficient. See Organized and Serious Crimes Ordinance, (2003) Cap. 455, 20, § 14(2)(b) (H.K.); Sec‘y for Justice v. Wu Lihui & Ors., [2008] H.K.C. 1446 (C.A.) (H.K.) (decision by the Court of Appeal of the High Court of Hong Kong discharging a restraining order because it was based entirely on speculation). Again, his failure to take advantage of that proceeding does not alter the protections it afforded.
Finally, Luan observes that the Hong Kong court issued an in personam order restraining him (and his co-defendants) from dealing with assets that he owned or controlled. He argues that an in personam order cannot supply procedural due process protections consistent with
Criminal forfeiture (at least in the United States) is in personam. See Alexander v. United States, 509 U.S. 544, 558 (1993); United States v. One Assortment of 89 Firearms, 465 U.S. 354, 363 (1984) (In contrast to the in personam nature of criminal actions, actions in rem have traditionally been viewed as civil proceedings.... ). Moreover, as noted above, many countries do not have provisions for civil forfeiture at all. See supra Part III.A. Accordingly, Luan‘s insistence that the forfeiture order must be in rem essentially restates his contention—which we have rejected above—that
In a footnote, Luan contends that the plain language of
Other than objecting that
D
In sum, we conclude that the district court‘s restraining order was issued in a manner consistent with ... the procedural due process protections of
For the foregoing reasons, the district court‘s order denying Luan‘s motion to dissolve the restraining order is
Affirmed.