United States v. All Assets Held at Bank Julius Baer & Co.
| Docket Number | Civil Action 04-0798 (PLF) |
| Decision Date | 04 August 2023 |
| 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 et al., Defendants In Rem. |
| Court | U.S. District Court — District of Columbia |
This matter is before the Court on the motion of the United States for summary judgment to strike the claim of Pavel Lazarenko also known as Pavlo Lazarenko, to the defendant assets held in correspondent bank accounts in the name of European Federal Credit Bank Limited (“Eurofed”) in Switzerland and Lithuania, and all assets traceable thereto (collectively, “Correspondent Assets”). See United States' Motion for Summary Judgment to Strike Pavel Lazarenko's Claims to All Defendant Assets Held in Switzerland and Lithuania [Dkt. No 1317].[1] Mr. Lazarenko has also filed a cross-motion to dismiss the Correspondent Assets or, in the alternative, for partial summary judgment. See Claimant Pavel Lazarenko's Cross-Motion to Dismiss the Lithuanian and Swiss Res or, in the Alternative, for Partial Summary Judgment [Dkt. No. 1356].
Upon consideration of the parties' written submissions, the relevant legal authorities, and the entire record in this case, the Court will grant the United States' motion for summary judgment and deny Mr. Lazarenko's cross-motions to dismiss and for partial summary judgment.[2]
The Court's prior opinions summarize the factual and procedural history of this case, starting with the criminal prosecution of Mr. Lazarenko in 2004 and continuing through this long-running in rem civil forfeiture proceeding. See United States v. All Assets Held at Bank Julius Baer & Co., Ltd. (“All Assets XI”), Civil Action No. 04-0798, 2020 WL 7640213, at *2 (D.D.C. Dec. 23, 2020) (collecting prior opinions). In brief, Mr. Lazarenko was “a prominent 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.” United States v. All Assets Held at Bank Julius Baer & Co., Ltd. (“All Assets IV”), 959 F.Supp.2d 81, 85 (D.D.C. 2013) (quoting Amended Complaint ¶¶ 1, 10).
In May 2004, the United States filed an in rem forfeiture complaint seeking forfeiture of various funds on deposit in foreign bank accounts in Guernsey and Antigua and Barbuda. See Verified Complaint for Forfeiture In Rem [Dkt. No. 1] ¶ 1. The following year, in June 2005, the United States filed an Amended Complaint identifying additional accounts for forfeiture, including the following accounts in Switzerland and Lithuania:
Amended Complaint ¶ 5(f)-(h).[3] The Amended Complaint also names as defendants “all assets traceable to the above-mentioned proceeds and property, including but not limited to, any interest accrued or assets held in related sub-accounts or escrow accounts.” Id. ¶ 5(j).
The Amended Complaint alleges that Mr. Lazarenko sought to conceal and layer criminal proceeds by “creating and causing the creation of various shell corporations and trusts and through the opening of numerous bank accounts,” into which Mr. Lazarenko “and his associates would deposit or direct the deposit of money from individuals and businesses in Ukraine, and transfer or direct the transfer of money to Lazarenko or to entities he and his associates controlled.” Amended Complaint ¶ 55. The Swiss and Lithuanian accounts are among those into which Mr. Lazarenko “transferred the proceeds of [his] criminal conduct.” Id. ¶ 77. The complaint goes on to explain the timeline of various transfers of funds into the Swiss and Lithuanian accounts. See Id. ¶¶ 102-13.
In 2004, shortly after the plaintiff filed the original complaint in this action, this Court granted the plaintiff s ex parte motion for a restraining order covering all of the in rem assets named as defendants in the complaint. See Restraining Order [Dkt. No. 3].[4] After the plaintiff filed an amended complaint in 2005, the Court issued an amended restraining order, which remains in force today. See Amended Restraining Order [Dkt. No. 23], That order prohibits certain enumerated parties from taking “any action that would affect the availability or value of the Defendants In Rem including, but not limited to, withdrawing, transferring, assigning, pledging, distributing, encumbering, wasting, secreting or otherwise disposing of or diminishing the value of, by any means, all or any part of the Defendants In Rem.” Id. at 7. The order further directs that any financial institutions holding any assets subject to the order must “maintain such assets so as to continue to preserve their value and, for such purposes, are authorized to invest them for purposes of capital appreciation and accrual of interest in the normal course of business and in accordance with generally accepted practices for the management of such assets.” Id.
In July 2005, Mr. Lazarenko filed a verified claim in response to the United States' Amended Complaint. See Verified Claim and Statement of Interest or Right in Property Subject to Forfeiture In Rem [Dkt. No. 29]. In his claim, Mr. Lazarenko asserts that he is the “beneficial owner” of the Swiss and Lithuanian funds. See Id. at 5. In addition, in July 2005, Mr. Lazarenko also filed a motion to dismiss the Amended Complaint, which this Court denied in March 2007. See United States v. All Assets Held at Bank Julius Baer & Co., Ltd. (“All Assets I”), 571 F.Supp.2d 1, 3 (2008).
The United States alleges that Mr. Lazarenko and an associate, Peter Kiritchenko, obtained a controlling interest in Eurofed in 1997, becoming majority shareholders of the bank and placing Mr. Lazarenko in control of its investment decisions. See Plaintiffs Statement of Facts in Support of its Motion for Summary Judgment to Strike the Claim of Eurofed Bank (“Pl.'s Stmnt.”) [Dkt. No. 282] ¶¶ 1, 4. Mr. Lazarenko and his criminal associates were both the bank's primary owners, the United States alleges, and also its primary depositors. See Id. ¶¶ 2-4. According to the United States, the funds held by Euro fed on Mr. Lazarenko's behalf were spread across a number of bank accounts - one in Mr. Lazarenko's own name and six in the names of corporate entities that he allegedly controlled: Lady Lake Investments; Fairmont Group, Ltd.; Firststar Securities, Ltd.; Guardian Investment Group, Ltd.; Nemuro Industrial Group; and Orby International, Ltd. See Amended Complaint ¶ 5(d).
According to the United States, by the end of 1997, Euro fed held over $100 million of Mr. Lazarenko's money in these accounts. See Pl.'s Stmnt. ¶ 4. The funds of the six corporations allegedly affiliated with Mr. Lazarenko make up the bulk of the money at issue here: Mr. Lazarenko's personal bank account appears to have held only approximately $150,000 by 1999, while the combined value of the six companies' accounts exceeded $93 million. Eurofed apparently maintained few of its deposits in Antigua itself. Instead, it established “correspondent” bank accounts in its own name at various other financial institutions around the world, in which it stored the bulk of the money deposited by its customers. See Declaration of Andrew Lewczyk in Support of Plaintiff s Motion for Summary Judgment to Strike the Claim of Eurofed Bank [Dkt. No. 286], Ex. P at 5. “These correspondent bank accounts were not held for the benefit of any particular depositor,” according to Euro fed's appointed liquidators (the “Liquidators”). Id. at 8. “As a result, a customer's deposits were not located in any particular location or correspondent account.” Id. In other words, if hypothetical Euro fed customers Sally, Sam, and Sue each deposited $40 with Eurofed in Antigua, the bank may well have divided that $120 among four of its own correspondent bank accounts in Switzerland, Lithuania, Liechtenstein, and the United States (placing, say, $30 into each account), making it impossible to trace Sally's $40 deposit to any of Eurofed's four correspondent accounts.
On October 29, 1999, the High Court of Justice of Antigua and Barbuda granted Antigua's Office of Drug and Money Laundering Control Policy's (“ONDCP”) request for an order freezing all Eurofed assets linked to Mr Lazarenko. The apparent basis for the Antiguan freeze order was Mr. Lazarenko's criminal prosecution in Switzerland on money laundering charges, for which he was later convicted, and the...
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