U.S. v. Lazarenko

• Decision Date: 21 November 2006
• Docket Number: No. 06-10273.,06-10273.
• Citation: 476 F.3d 642
• Parties: UNITED STATES of America, Plaintiff-Appellee, Liquidators Appointed by the High Court of Antigua for Eurofed Bank, Ltd., Claimants-Appellants, v. Pavel Ivanovich LAZARENKO, Pavlo Ivanovych Lazarenko, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

476 F.3d 642

UNITED STATES of America, Plaintiff-Appellee Liquidators Appointed by the High Court of Antigua for Eurofed Bank, Ltd., Claimants-Appellants, v. Pavel Ivanovich LAZARENKO, Pavlo Ivanovych Lazarenko, Defendant-Appellee.

No. 06-10273.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted October 18, 2006.

Filed November 21, 2006.

Amended February 7, 2007.

Rory K. Little (argued), Gordon A. Greenberg, Matthew J. Jacobs, and Peter J. Drobac, McDermott Will & Emery LLP, Palo Alto, California, for the claimants-appellants.

Hartley West (argued) and Patricia J. Kenney, Assistant United States Attorneys, San Francisco, California, for the plaintiff-appellee.

Appeal from the United States District Court for the Northern District of California. Martin J. Jenkins, District Judge, Presiding. D.C. No. CR-00-00284-MJJ.

Before SANDRA DAY O'CONNOR, Associate Justice,^* and SUSAN P. GRABER and RICHARD C. TALLMAN, Circuit Judges.

ORDER AMENDING OPINION AND ON PETITIONS FOR REHEARING AND AMENDED OPINION

TALLMAN, Circuit Judge.

ORDER

The Court rules on the pending petitions for rehearing and Liquidators' request to be heard as follows:

(1) The United States' request to amend the opinion is granted in part and denied in part. The opinion filed November 21, 2006, slip opinion 18657, and reported at 469 F.3d 815 (9th Cir.2006), is hereby amended as follows:

At slip opinion 18666, starting at line 2 (469 F.3d at 820), modify the first full sentence to state: "Section 982(b)(1) incorporates the standards and procedures, other than subsection (d), for forfeiting property under the Comprehensive Drug Abuse Prevention and Control Act of 1970, 21 U.S.C. § 853."

At slip opinion 18666, beginning at the second paragraph (469 F.3d at 820), delete: "Property of a person convicted of violating 18 U.S.C. § 1956 is presumed subject to forfeiture if the United States establishes by a preponderance of the evidence that (1) the defendant acquired the property during the period he violated 18 U.S.C. § 1956 or within a reasonable time thereafter, and (2) no likely legitimate source exists for the property other than that traceable to the violation itself. 21 U.S.C § 853(d). The trier of fact may decline to apply the rebuttable presumption if not merited under the facts of the case or if the defendant produces evidence that casts doubt on its validity. See S. REP. No. 98-225, at 212."

With these amendments, the panel has voted to deny the United States' petition for rehearing. The panel has also voted to deny the Liquidators' petition for rehearing, with suggestion for rehearing en banc. The full court has been advised of Liquidators' petition for rehearing en banc and no judge of the court has requested a vote on it. The petitions are DENIED, and no further petitions for rehearing may be filed.

(2) The panel also denies Liquidators' "Request to be Heard in Response to the United States' Petition for Rehearing or For Clarification."

OPINION

This unusual appeal follows the government's seizure of approximately $2.5 million in assets from former Ukrainian Prime Minister Pavel Ivanovich Lazarenko ("Lazarenko"). A jury in the United States District Court for the Northern District of California convicted Lazarenko on several counts of money laundering in violation of 18 U.S.C. § 1956. The United States contends that it seized the funds and bonds lawfully under criminal forfeiture law. See 18 U.S.C. § 982(a)(1); 21 U.S.C. § 853. Lazarenko has been sentenced, but has not yet appealed his conviction. The United States maintains that Lazarenko and a business associate purchased a majority share of an off-shore bank, European Federal Credit Bank ("Eurofed"), to launder the proceeds of illegal activity. Lazarenko and others would deposit the money in a San Francisco bank, which had a correspondent relationship with the off-shore Eurofed bank in Antigua. Third-party claimants include two PricewaterhouseCoopers partners appointed as Liquidators of Eurofed ("Liquidators"). They contend that they own the forfeited funds and bonds pursuant to an order from the High Court of Antigua appointing them to collect and distribute the bank's assets to depositors and creditors.

Liquidators seek interlocutory appeal from two orders arising from the United States' efforts to seize the funds and bonds: (1) an order denying Liquidators' motion to set an immediate hearing on their earlier filed "Motion for Return of Illegally Seized Funds" ("seizure motion"), and (2) a preliminary order of forfeiture the district court entered after Lazarenko's guilty verdict. Liquidators challenge both orders on numerous grounds. We must first determine, however, whether Liquidators have standing to invoke the jurisdiction of this Court before the district court concludes ancillary proceedings. We hold that they do not. We further conclude that the controversy is not yet ripe for judicial review. We therefore dismiss this appeal for lack of appellate jurisdiction.

I

In July 2001, a federal grand jury for the Northern District of California returned a second superseding indictment charging Lazarenko with conspiracy to commit money laundering (count 1), 18 U.S.C. § 1956(h); money laundering (counts 2-5 and 6-8), id. § 1956; wire fraud (counts 9-30), id. § 1343; and transportation of stolen property (counts 31-53), id. § 2314.

A conviction under 18 U.S.C. § 1956 subjects a defendant to forfeiture of any property, real or personal, involved in or traceable to the offense. Id. § 982(a)(1). Accordingly, the indictment included a criminal forfeiture allegation under 18 U.S.C. § 982(a)(1). The indictment advised Lazarenko that, as a result of Counts 1-8, the United States would seek forfeiture of all property connected to his money laundering offenses, including, but not limited to, specified assets.

On June 3, 2004, a petit jury convicted Lazarenko of conspiracy to commit money laundering (count 1), several counts of money laundering (counts 2-8), wire fraud (counts 20-29), and transportation of stolen property (counts 31 and 43-52). The jury found that Lazarenko conspired to launder and laundered the proceeds of specified unlawful activity—foreign extortion, wire fraud, and transportation of stolen property. He did so through various banks in the United States, Switzerland, Antigua, and elsewhere. Lazarenko waived a jury determination on special findings related to the forfeiture allegations and proceeded to trial on the substantive criminal counts of the indictment. Following Lazarenko's conviction, but before the district court sentenced Lazarenko, the government initiated separate civil forfeiture proceedings by filing a complaint against the res, No. C 05-946 MJJ. The Clerk of Court for the Northern District of California reassigned the civil action to the Honorable Martin J. Jenkins, as related to the underlying criminal action already pending before Judge Jenkins, No. CR 00-0284 MJJ.

In January 2005, the government obtained a civil seizure warrant for the assets at issue here—U.S. $2.5 million in funds and Ukrainian bonds on deposit with Bank of America. The funds and bonds comprise two accounts containing $1,379,879 and $327,544.09, respectively, and an account containing 923,000 Ukrainian bonds. The government filed its civil complaint against the funds and bonds under 18 U.S.C. § 981 in March 2005. Liquidators answered because the complaint named assets held in the name of Eurofed as defendant.

In September 2005, Liquidators moved for summary judgment. The district court granted that motion and dismissed the civil forfeiture action on October 26, 2005, as barred by the applicable statute of limitation, 19 U.S.C. § 1621. That same day, the government obtained a criminal seizure warrant for the same res under 21 U.S.C. § 853(f).

Liquidators contend the seized funds and bonds belong to Eurofed because, in December 1999, the High Court of Antigua appointed Liquidators to collect and distribute Eurofed's assets to its depositors and creditors (who include Lazarenko and his associates). As a result, in January 2006, Liquidators moved the district court to vacate the criminal seizure warrant and immediately return the funds and bonds to the Antiguan liquidation proceedings, so they may distribute the funds and bonds as directed by the Antiguan High Court. Liquidators challenge the United States' probable cause to seize the assets, and they invoke the doctrines of res judicata, the statute of limitation, the act of state doctrine, and Eurofed's superior claim to ownership as grounds to vacate the seizure warrant. In March 2006, Liquidators applied ex parte to Judge Jenkins for an immediate hearing on their motion for return of the illegally seized funds. N.D. Cal.Crim. R. 47-1 & 47-3. Liquidators claimed that United States v. Crozier, 777 F.2d 1376 (9th Cir.1985), afforded them the right to a constitutionally mandated and immediate hearing. They reasoned that waiting to commence the ancillary proceedings contemplated by 21 U.S.C. § 853(n) until the district court sentenced Lazarenko would not sufficiently protect their due process rights to a reasonably prompt opportunity to contest the seized property to which they claim ownership. Liquidators press these same arguments on appeal.

After holding a telephonic conference with all interested parties, the district court denied Liquidators' ex parte application. The district court found that setting a hearing on Liquidators' motion after sentencing Lazarenko comported with due process, as Congress has provided for ancillary proceedings on the heels of a sentence imposed upon conviction of a particular crime, 21 U.S.C. § 853(n). Soon thereafter, the district court granted the United States' application for a preliminary order of forfeiture under 18 U.S.C. § 982(a)(1) and Federal Rule of Criminal Procedure 32.2(b). Liquidators now seek to appeal both orders and seek a writ of mandamus compelling the...