U.S. v. BCCI Holdings (Luxembourg), S.A.
| Citation | 46 F.3d 1185 |
| Decision Date | 14 February 1995 |
| Docket Number | 93-5299,Nos. 93-5296,s. 93-5296 |
| Parties | UNITED STATES of America, Plaintiff-Appellee, v. BCCI HOLDINGS (LUXEMBOURG), S.A., Bank of Credit and Commerce International, S.A., Bank of Credit and Commerce International (Overseas) Limited, and International Credit and Investment Company (Overseas) Limited, Defendants-Appellees. Shrichand Chawla, Leo D. Curran, Willy Hermans, and Red Circle Investment, Ltd., Jaleh Khorassanchy, Amit Pandya, Soha, Inc., Idriss Devco, Inc., and S & L Gentrade, Inc., Claimants-Appellants. UNITED STATES of America, Plaintiff-Appellee, v. BCCI HOLDINGS (LUXEMBOURG), S.A., Bank of Credit and Commerce International, S.A., Bank of Credit and Commerce International (Overseas) Limited, and International Credit and Investment Company (Overseas) Limited, Defendants-Appellees. Raymond Davies, as Conservator for the Branch in Sierra Leone of Bank of Credit and Commerce International (Overseas) Limited, Claimant-Appellant. |
| Court | United States Courts of Appeals. United States Court of Appeals (District of Columbia) |
Appeal from the United States District Court for the District of Columbia (91cv0655).
William S. Dato argued the cause for appellants Shrichand Chawla, et al. With him on the briefs were Leonard B. Simon and Kevin P. Roddy.
Maurice R. Garber argued the cause, for appellant Raymond Davies.
Stefan D. Cassella, Atty., Dept. of Justice, argued the cause, for appellee U.S. of America. With him on the brief was Eric H. Holder, Jr., U.S. Atty., Dept. of Justice. Robert D. Sharp, entered an appearance.
Michael Nussbaum and Eric L. Lewis filed a brief, for appellees BCCI.
Before: SILBERMAN, HENDERSON, and RANDOLPH, Circuit Judges.
Opinion for the Court filed by Circuit Judge SILBERMAN.
Appellants petitioned the district court to amend various court orders forfeiting assets of the Bank of Credit and Commerce International (BCCI) pursuant to the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. Secs. 1961-1968 (1988 & Supp. V 1993). The petitions were dismissed. We affirm on the grounds that appellants' claims of entitlement to the funds in question are not cognizable under the forfeiture provisions of the RICO Act.
In July, 1991, bank regulators in several countries jointly seized and shut down the operations of the four principal financial institutions that collectively made up the enterprise known as BCCI. 1 These measures, prompted by evidence of insolvency and extensive dealings in criminal affairs, were followed by the appointment of fiduciaries for BCCI by courts in Luxembourg and the Cayman Islands, the jurisdictions in which the principal entities were incorporated. A worldwide effort was then begun to consolidate all BCCI assets wherever located for a general global distribution to creditors and depositors.
BCCI's collapse prompted a flurry of civil and criminal investigations by various state and federal agencies in the United States, and criminal charges were brought against BCCI in several jurisdictions. Negotiations between law-enforcement officials and the court-appointed BCCI fiduciaries ultimately led to a comprehensive plea agreement filed with the federal district court in the District of Columbia. The agreement required BCCI to plead guilty to several state and federal criminal and civil charges, including RICO violations, and to forfeit to the Justice Department all BCCI assets located in the United States. It also provided, pursuant to the RICO statute, that half of all sums recovered by the government would be surrendered to the global liquidation fund; the other half was to be reserved for the Attorney General's discretionary allocation among several enumerated purposes, which included offsetting losses to "the Bank Insurance Fund of the FDIC and United States taxpayers" resulting from BCCI's collapse and making further contributions to the global liquidation fund. The plea agreement, with its forfeiture provision, was approved by supervising courts in Luxembourg and the Cayman Islands.
The agreement was opposed, however, by various third parties with claims against BCCI, who saw that a total forfeiture of BCCI's U.S. assets would undermine their independent efforts at recovery. Dissatisfied with the prospect of a heavily discounted distribution from the global liquidation fund, these parties sought to block the plea agreement. In bankruptcy proceedings in New York, putative tort creditors unsuccessfully tried to have the district court in D.C. enjoined from accepting the agreement. See In re Smouha, 136 B.R. 921, 928 (S.D.N.Y.), appeal dismissed, 979 F.2d 845 (2d Cir.1992). Still other parties contested the agreement directly before the district court. These claims too were rejected, however, and the district court formally accepted the plea agreement in January, 1992.
Shortly thereafter, the district court issued the first of three orders forfeiting all identified BCCI property located within the United States. The two later orders were issued in response to the discovery of additional assets. The forfeited amount--in aggregate approximately $552 million--largely came from bank accounts maintained at various U.S. banks in the names of specific overseas branches of BCCI. Following the district court's issuance of the three orders, numerous third parties, appellants among them, filed petitions claiming legal interests in the BCCI assets forfeited to the government.
Under the RICO Act, third parties are given an opportunity to challenge a forfeiture order if they can assert that they have a "legal interest in property which has been ordered forfeited." 18 U.S.C. Sec. 1963(l )(2). A party who files a petition alleging a "legal interest" that, if established, would compel amendment of the forfeiture is then entitled to a hearing. Id. Section 1963(l )(6) sets forth the grounds upon which the court may grant relief.
If, after the hearing, the court determines that the petitioner has established by a preponderance of the evidence that--
(A) the petitioner has a legal right, title, or interest in the property, and such right, title, or interest was vested in the petitioner rather than the defendant or was superior to any right, title, or interest of the defendant at the time of the commission of the acts which gave rise to the forfeiture of the property under this section; or
(B) the petitioner is a bona fide purchaser for value of the right, title, or interest in the property and was at the time of purchase reasonably without cause to believe that the property was subject to forfeiture under this section;
the court shall amend the order of forfeiture in accordance with its determination.
18 U.S.C. Sec. 1963(l )(6).
Two of the petitions at issue in this appeal were filed by persons claiming to represent a class of worldwide depositors in BCCI. These "class petitioners" had previously initiated a massive civil RICO action against the founders, officers, and directors of BCCI as well as against numerous allegedly blameworthy "related" third parties. See Hamid v. Price Waterhouse & Co., 15 RICO Law Rep. 1234, 1242-43, 1251 (C.D.Cal.1992) (). The class representatives' petitions merely asserted that the class members had an interest in the forfeited property. The nature and extent of that interest, they stated, could be found in an appended copy of the RICO complaint, 482 pages in length, filed in the Hamid case.
Raymond Davies, the other petitioner in this case, was appointed by a Sierra Leone court as conservator over BCCI's affairs in that country. As representative of the Sierra Leone branch depositors, Davies filed a petition challenging the forfeiture of $2 million held in the name of BCCI (Overseas) Sierra Leone at a New York bank. Davies alleged that the Sierra Leone depositors were entitled to a constructive trust over the funds because the alternative--pooling the Sierra Leone branch funds with those of the bank as a whole--would unjustly enrich BCCI; once recognized, such a trust would constitute a "superior" interest under Sec. 1963(l )(6)(A). Alternatively, he argued that the depositors qualified as "bona fide purchasers" entitled to amendment of the order under Sec. 1963(l )(6)(B).
The government moved to dismiss both parties' petitions on the ground that they had failed to state claims entitling them to relief under the statute. The class petitioners urged the district court to view their petitions as presenting the same legal theories Davies had advanced on behalf of the Sierra Leone depositors. The district court somewhat skeptically granted this request and, further, assumed that a constructive trust could qualify as a "legal interest" under the RICO Act. United States v. BCCI Holdings (Luxembourg), S.A., 833 F.Supp. 9, 13-14 (D.D.C.1993). It nevertheless dismissed the class petitioners' claims. Their allegations, the court held, did not entitle them to the equitable remedy of a constructive trust; that relief would be fundamentally inequitable to the other depositors worldwide, who would not have the benefit of contributions from the forfeited assets to the global liquidation fund. Id. The court also dismissed the class petitioners' alternative claim, based on their asserted status as general creditors, for failure to satisfy Sec. 1963(l )(2)'s requirement that third parties claim an interest "in property" subject to forfeiture. Id. at 14-16. The Davies petition was dismissed on similar grounds in a separate ruling. United States v. BCCI Holdings (Luxembourg), S.A., 833 F.Supp. 32, 39-40 (D.D.C.1993). The appeals were consolidated.
Appellants argue that the district court improperly ruled on the merits of their constructive trust allegations under Sec. 1963(l )(6)(A) without granting them the benefit of an evidentiary hearing. They also assert that the district court incorrectly held that their alternative claims as...
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U.S. v. BCCI Holdings, Crim. Action No. 91-0655 (D. D.C. 7/12/1999), Crim. Action No. 91-0655.
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