Bcci Holdings (Luxembourg) Societe Anon. v. Khalil, Civ.A. 95-1252(JHG).

CourtUnited States District Courts. United States District Court (Columbia)
Citation56 F.Supp.2d 14
Docket NumberNo. Civ.A. 95-1252(JHG).,Civ.A. 95-1252(JHG).
PartiesBCCI HOLDINGS (LUXEMBOURG), SOCIETE ANONYME, et al., Plaintiffs, v. Abdul Raouf Hasan KHALIL, et al., Defendants.
Decision Date23 June 1999
56 F.Supp.2d 14
Abdul Raouf Hasan KHALIL, et al., Defendants.
No. Civ.A. 95-1252(JHG).
United States District Court, District of Columbia.
June 23, 1999.

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Michael Nussbaum, Ropes & Gray, Washington, DC, Jeffrey David Robinson, Eric Leslie Lewis, Anne Katherine Toomey, Stacy Allison Feuer, Baach, Robinson & Lewis, Washington, DC, for plaintiffs.

James P. Linn, Stephen R. Johnson, Linn & Neville, Oklahoma City, OK, for Abdul Raouf Khalil, defendant.


JOYCE HENS GREEN, District Judge.

In July 1991, banking regulators around the world seized the corporations collectively known as the Bank of Credit and Commerce International ("BCCI"), uncovering the largest international bank failure in history. Eight years later, the effort to determine how the BCCI debacle happened and who is responsible for the fraud remains ongoing. This lawsuit, brought by the court-appointed Liquidators of the BCCI Group emerged out of that process.1

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The defendants are two individuals, Abdul Raouf Hasan Khalil ("Khalil") and Syed Ziauddin Ali Akbar ("Akbar"), and two companies owned and controlled by Khalil and Akbar — Capcom Financial Services Limited ("Capcom UK"), and Capcom Futures Inc. ("Capcom US"). Only Khalil contested this suit; Akbar and the corporations have defaulted.

Khalil is extremely wealthy, and was perhaps the largest depositor in BCCI. In 1987, Khalil withdrew nearly $100 million in deposits and interest from BCCI. The Liquidators did not contest Khalil's right to the deposited funds. What the Liquidators do claim is that in the late 1970s and early 1980s, BCCI's former management approached Khalil, offering to pay him handsomely for the use of his name and prestige to disguise three fraudulent schemes. According to the Liquidators, Khalil agreed to:

(1) act as a nominee shareholder of the parent corporation of First American Bank — once the largest bank in Washington, D.C. — to disguise the fact that BCCI had illegally acquired an American bank without proper regulatory approval;

(2) act as a nominee shareholder of BCCI Holdings to disguise the fact that BCCI had considerably less capital and support than was represented to depositors, regulators, and the public; and

(3) allow his name, and that of his companies, to be used by BCCI's investment arm to disguise BCCI's risky investments and to give the appearance that certain sizable loans were being serviced when, in truth, they were in default.

The Liquidators further alleged that BCCI directly paid Khalil nearly $30 million for this use of his name and that he reaped substantially more by less direct means. The Liquidators alleged that if Khalil had not allowed his name and prestige to be used to disguise BCCI's true financial condition, the bank would have been closed down much sooner, preventing significant financial losses to thousands of creditors and depositors.

Separately, the Liquidators also alleged that Khalil conspired with Akbar — a BCCI insider who managed the bulk of BCCI's assets until 1986 — to create a commodities brokerage, Capcom, through which Khalil and Akbar further siphoned substantial BCCI assets.2

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Shortly after the complaint was filed, Khalil moved for dismissal. That motion was denied. See BCCI Holdings (Luxembourg) S.A. v. Khalil, 20 F.Supp.2d 1, 7 (D.D.C.1997). After lengthy discovery this case was set down for a bench trial. Khalil moved for trial by jury under Rule 39(b) of the Federal Rules of Civil Procedure. That motion also was denied. See BCCI Holdings (Luxembourg) S.A. v. Khalil, 182 F.R.D. 335, 340 (D.D.C.1998). Trial to the Court commenced on January 25, 1999 and continued on January 27, January 28, February 1 and February 11, 1999.

This Opinion and Order constitute the Court's findings of fact and conclusions of law as required by Rule 52(a) of the Federal Rules of Civil Procedure.3 Any conclusions of law that constitute findings of fact or findings of fact that constitute conclusions of law shall be considered as having been determined accordingly. Having considered all the evidence, arguments, the parties' proposed findings of fact and conclusions of law, and the entire record in this matter, the Court will enter judgment in the amount of $388,402,534, not including attorneys' fees or costs, in favor of the Liquidators on Counts I, II, III, V, VI, and VII. The Liquidators did not meet their burden on Count IV. Pursuant to 18 U.S.C. § 1964(c), the damages are trebled to $1,165,207,602.


A. Agha Hasan Abedi

BCCI was the brainchild of Agha Hasan Abedi ("Abedi"), who, in 1972, established what he hoped would become an international Islamic bank. Initially, BCCI grew according to plan. Until taken under control by authorities around the world on

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July 5, 1991, the BCCI Group operated a coordinated international banking network, which at its peak had more than 400 branches in approximately 70 countries. The BCCI Group consisted of a number of corporate entities, including the corporate plaintiffs enumerated herein.4 The BCCI Group's international banking network included offices in several of the United States, including the State of New York. Abedi served as the top corporate officer of the BCCI Group from 1973 until 1988, when he suffered a heart attack. Abedi did not testify in this trial. Indeed, the Court heard evidence that Abedi is deceased. See Trial Transcript ("Tr.") (Testimony of Christopher Morris, UK-appointed Liquidator) at 136-37.5

B. Swaleh Naqvi

Abedi's chief lieutenant in the bank was Saiyid Mohammad Swaleh Naqvi ("Naqvi"), who succeeded Abedi in 1988. Naqvi remained in the senior executive position in the BCCI Group until 1990, when control of the BCCI Group formally passed to the sovereigns of Abu Dhabi. Naqvi served time in prison in Abu Dhabi before coming to the United States to plead guilty to charges here. He presently is incarcerated in FCI Allenwood, Pennsylvania. As part of his plea agreement, Naqvi agreed to cooperate with regulatory and law enforcement authorities attempting to unravel the intricacies of the rise and fall of BCCI. As with most of the fact witnesses in this case, Naqvi testified by deposition. See Fed.R.Civ.P. 32(a)(3) (listing circumstances in which deposition testimony may substitute for live testimony at trial).6 Naqvi was deposed in this case and in the First American case willingly; he did not understand that his plea agreement required him to testify in either case.

C. Imran Imam

Scrivener to the fraud was Imran Mohammed Ahmad Imam ("Imam"). Imam was a BCCI officer who assisted Naqvi from 1977 to 1991. Imam's principal assignment was to maintain records of transactions. For example, BCCI extended loans to the individuals who became the record shareholders of First American's parent corporation. Some of these loans were genuine extensions of credit, secured only by the shares; other "loans" were created to disguise BCCI's direct equity investment in First American. Imam kept detailed records of these transactions. Financing for the record shareholders of BCCI Holdings was done in similar fashion, and Imam kept records concerning the holdings of both the genuine investors and the nominees. Imam testified through deposition in this case. Khalil's counsel declined the opportunity to attend and cross-examine him.

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D. Ziauddin Akbar

Defendant Akbar was a BCCI officer from approximately 1976 to 1986 and was in charge of BCCI's Treasury Division from 1982 to 1986. As head of the Treasury Division, Akbar was responsible for managing and investing BCCI's funds. Additionally, Akbar was the account officer for certain major customers of BCCI, including Khalil. At trial, Khalil and the Liquidators agreed that Akbar was central to most of the schemes alleged in the complaint, a rogue extraordinaire principally responsible for establishing shell corporations to engage in sham transactions so as to misrepresent BCCI's economic situation to the world, gambling BCCI's assets in the commodities markets and disguising losses therefrom, transferring large sums of money in and out of shell corporations in which he had an undisclosed interest, and other illegal activities. After huge losses in the Treasury operations came to light internally, Akbar left BCCI in 1986. He continued to receive a salary for some time thereafter.

After leaving BCCI, Akbar engaged principally in managing investment and financial trading businesses, acting as both the behind-the-scenes manager of Capcom — his joint venture with Khalil — as well as manager of his own London-based Futures Advisory Services ("FAS").

In 1988, authorities in the United States arrested Akbar in connection with allegations that General Manuel Noriega's drug money was being laundered through BCCI and Capcom. Although other BCCI employees were convicted in connection with those allegations, it appears that Akbar and Capcom U.S. were cleared. However, in September 1993, after BCCI had been seized, Akbar pled guilty to 16 counts of false accounting in the United Kingdom.

Akbar was released from prison in the United Kingdom during the pendency of this litigation and returned to Pakistan. Akbar was deposed in Pakistan in both this case and in First American. Those deposition transcripts were introduced at trial.7

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E. Abdul Khalil

Defendant Khalil is a citizen and resident of Saudi Arabia. He has been married for 36 years to Taheya Badeeb, with whom he lives in Jeddah, Saudi Arabia along with their two sons, daughter, and grandchildren. Khalil was educated in Saudi Arabia and Cairo, Egypt, where he studied history. Khalil developed a passion for museums and antiquities which he has pursued throughout...

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