U.S. v. All Assets Held at Bank Julius Bank Julius Baer & Co., Civil Action No. 04-0798.

• Decision Date: 20 October 2009
• Docket Number: Civil Action No. 04-0798.
• Parties: UNITED STATES of America, Plaintiff, v. ALL ASSETS HELD AT BANK JULIUS BAER & COMPANY, LTD., Guernsey Branch, Account Number 121128, in the name of Pavlo Lazarenko, last valued at approximately $2 million in United States dollars, et al., Defendants in rem.
• Court: U.S. District Court — District of Columbia

664 F.Supp.2d 97

UNITED STATES of America, Plaintiff, v. ALL ASSETS HELD AT BANK JULIUS BAER & COMPANY, LTD., Guernsey Branch, Account Number 121128, in the name of Pavlo Lazarenko, last valued at approximately $2 million in United States dollars, et al., Defendants in rem.

Civil Action No. 04-0798.

United States District Court, District of Columbia.

October 20, 2009.

Daniel Hocker Claman, U.S. Department of Justice, Eileen Callahan Mayer, United States Attorney's Office for the District of Col., Judith A. Kidwell, William Rakestraw Cowden, Linda Otani McKinney, U.S. Attorney's Office, Washington, DC, for Plaintiff.

Bryant Everett Gardner, Winston & Strawn LLP, Washington, DC, Doron Weinberg, Weinberg & Wilder, San Francisco, CA, for Defendants in rem.

OPINION

PAUL L. FRIEDMAN, District Judge.

In this civil forfeiture action in rem, individuals Maria de Los Angeles Collazo Garcia, Allan Ronald Munro, Mervin Michaelson Onyshko, Alan Mark Postles and Jacqueline Postles (collectively, "the individual claimants") have filed claims to the defendant assets sought by the United States.¹ The United States has requested the Court to strike those claims or enter judgment against the claimants. See Plaintiff's Motion to Strike the Claims Filed by [the Individual Claimants], or, in the Alternative, Motion for Summary Judgment ("Mot."). By Order of September 30, 2009, the Court granted the motion filed by the United States and struck the claims in question. As an alternative disposition, the Court also rendered judgment in favor of the United States on all claims except that of Ms. Collazo. This Opinion explains the reasoning behind that Order.²

I. BACKGROUND

At issue for the purposes of the present motion is a large amount of money—tens of millions of dollars—traceable to an Antiguan bank, Eurofed Bank Limited. See Mot. at 2-3. The United States alleges that those funds were generated by the criminal activities of Pavlo Ivanovich Lazarenko, a Ukrainian politician who, with the aid of various associates, was "able to acquire hundreds of millions of United States dollars through a variety of acts of fraud, extortion, bribery, misappropriation and/or embezzlement" committed during the 1990s. Plaintiff's Amended Complaint ("Am. Compl.") ¶ 10. The United States alleges that in 1997 Lazarenko and an associate, Peter Kiritchenko, obtained control of Eurofed, id. ¶ 66, and then proceeded to cycle almost $100 million through various Eurofed accounts in order to launder the funds, which were proceeds of Lazarenko's criminal activities. Plaintiff's Statement of Facts ("Pl.'s Statement") ¶ 1. Lazarenko's funds constituted the bulk of Eurofed's deposits, id. ¶ 2, although the bank did hold the assets of some depositors who were not affiliated with Lazarenko or his associates ("third-party depositors"). See id. ¶ 6.

In 1999 Eurofed was placed in receivership and subsequently entered liquidation. Pl.'s Statement ¶ 5. A large amount of money held for Eurofed in offshore accounts, including approximately $85 million held in United States financial institutions, was returned to Antigua. Mot. at 3; Am. Compl. ¶ 76. The bank's liquidators then proceeded to set aside approximately $20 million of the bank's collected assets for distribution among "third party depositors and creditors" of the bank. Pl.'s Statement ¶ 6. Approximately $14 million of that money has since been disbursed to parties whose claims against the bank have been validated by Eurofed's liquidators. Id. ¶ 7. While around $3 million thus remains to satisfy any still-outstanding claims of third-party depositors and creditors, Eurofed's liquidators estimate that the amount still owed to those parties is greater than $11 million. Mot., Ex. 2 at 16. Of the other Eurofed assets held in Antigua, all those "designated to Pavlo Lazarenko and associated companies" have been frozen by the Antiguan High Court. Mot. at 3.

The United States initiated this proceeding on May 14, 2004, seeking the civil forfeiture of various Lazarenko assets pursuant to federal statutes that provide for the forfeiture to the government of funds traceable or otherwise related to criminal activity that occurred at least in part in the United States. See Am. Compl. ¶ 1. Among the Lazarenko assets sought is approximately $85.5 million currently held in Antigua under the control of the Eurofed liquidators and Antigua's High Court Registrar. Id. ¶ 5(d). Those funds derive from various now-liquidated accounts that were allegedly opened at Eurofed for Lazarenko's benefit, either in his own name or that of one or more associates or affiliated organizations. Id. ¶¶ 5(d)-(e). In addition to those Eurofed funds held in Antigua, the United States has named as defendants in rem the contents of still-existing accounts opened in the name of Eurofed at a variety of offshore financial institutions, including Banque SCS Alliance S.A. (Geneva), Vilniaus Bankas, and several banks in Liechtenstein. See id. ¶¶ 5(f)-(i).³

In February 2008, the United States mailed to third-party depositors of Eurofed a letter listing the assets named as defendants in this action and informing the depositors that to intervene in the pending forfeiture action, they would need to file a claim and an answer pursuant to the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions ("Supplemental Rules"), which are a subset of the Federal Rules of Civil Procedure. See Mot., Ex. 4. Between March 3, 2008, and July 17, 2008, four documents purporting to contain claims to portions of the defendant funds were filed by the five individual claimants, all of whom are proceeding pro se.⁴ The United States filed the pending motion to strike those claims on December 9, 2008. Although the Court warned the claimants, through an Order issued on May 22, 2009, that any failure on their part to oppose the United States' motion could result in the striking of their claims, only one claimant, Mr. Onyshko, submitted any kind of response. None of the claimants has filed an answer to the complaint.

II. DISCUSSION

The United States maintains that the claimants have failed to meet their obligations under Rule G of the Supplemental Rules because they have neither established statutory standing nor complied with the Rule's procedural requirements. See Mot. at 1-2.⁵ A third potential ground for ruling against the claimants arose after the United States filed its motion: none of the individual claimants filed a proper response to the motion. The Court will discuss the consequences of this procedural default before turning to the other arguments.

A. Failure to Respond

Under the Local Rules of this Court, a party's failure to oppose a motion in a timely manner by submitting "a memorandum of points and authorities" authorizes the Court to deem that motion conceded. See L. Civ. R. 7(b); see also Fox v. Am. Airlines, Inc., 389 F.3d 1291, 1294 (D.C.Cir.2004); Bell v. Library of Congress, 539 F.Supp.2d 411, 413 (D.D.C. 2008). In this case, pursuant to Fox v. Strickland, 837 F.2d 507 (D.C.Cir.1988), and Neal v. Kelly, 963 F.2d 453, 456 (D.C.Cir.1992), the Court issued an Order on May 22, 2009, in which it warned the individual claimants, all proceeding pro se, that their failure to respond to the pending motion could lead to the dismissal of their claims. It also instructed the claimants to file an opposition to the motion on or before July 15, 2009.

Despite this Order, and the many months that have passed since the United States initially filed its motion to strike, the individual claimants have failed to submit a proper opposition. Only Mr. Onyshko has filed any response whatsoever, and that response consists only of an affidavit in which Mr. Onyshko sets forth no facts, but states his personal belief that he has a "good and valid claim against Paulo Ivonovich Lazarenko and Associates." See Affidavit of Mervin Michaelson Onyshko ¶ 3. In the absence of any direct answer by the claimants to the legal and factual arguments made by the United States, this Court has the discretion under Rule 7 of the Local Civil Rules to grant the motion. Because the parties here are individuals proceeding pro se, however, and because the practical outcome will be the same whether the motion is adjudicated on the merits or deemed conceded, the Court will address the arguments presented by the United States and explain why the claims of the individuals in question cannot succeed.

B. Procedural Omissions

To contest the forfeiture of property that has been named as a defendant in a civil forfeiture action, a claimant must proceed "in the manner set forth in the Supplemental Rules for Certain Admiralty and Maritime Claims [and Asset Forfeiture Actions]," which are themselves a subset of the Federal Rules of Civil Procedure. 18 U.S.C. § 983(a)(4)(A). Rule G of the Supplemental Rules, which governs forfeiture actions in rem brought pursuant to federal statutes, sets out detailed procedural requirements to be followed by a person or entity seeking to challenge the government's attempt to seize defendant assets. See SUPP. R. G(5), (6). Within the amount of time prescribed by Supplemental Rule G(5)(a)(ii), a would-be claimant must file with the court presiding over the forfeiture action a claim that (1) "identif[ies] the specific property claimed," (2) "identif[ies] the claimant and state[s] the claimant's interest in the property," and (3) is "signed by the claimant under penalty of perjury." SUPP. R. G(5)(a)(i)(A)(C). She or he must also file either a motion to dismiss the government's complaint or an answer to that complaint no more than 20 days after first filing her verified claim. SUPP. R. G(5)(b). In requiring a claimant to follow these procedures, the Supplemental Rules "ensur[e] that putative claimants come forward as quickly as possible after the initiation of forfeiture proceedings so that the court may hear all interested parties and resolve the dispute without...