United States v. One Gulfstream G-V Jet Aircraft

• Citation: 941 F.Supp.2d 1
• Decision Date: 19 April 2013
• Docket Number: Civil Action No. 11–1874 (RC).
• Parties: UNITED STATES, Plaintiff, v. ONE GULFSTREAM G–V JET AIRCRAFT, Displaying tail number VPCES, its tools and Appurtenances, Defendant.
• Court: U.S. District Court — District of Columbia

941 F.Supp.2d 1

UNITED STATES, Plaintiff,

v.ONE GULFSTREAM G–V JET AIRCRAFT, Displaying tail number VPCES, its tools and Appurtenances, Defendant.

Civil Action No. 11–1874 (RC).

United States District Court, District of Columbia.

April 19, 2013.

Janet C. Hudson, Woo S. Lee, U.S. Department of Justice, Washington, DC, for Plaintiff.

MEMORANDUM OPINION

Granting the Claimants' Motion to Dismiss Without Prejudice; Granting Leave to Amend

RUDOLPH CONTRERAS, District Judge.

I. INTRODUCTION

The United States brings this forfeiture action against a $38.5 million dollar jet purchased by Teodoro Nguema Obiang Mangue (“Nguema”), Equatorial Guinea's Minister of Forestry and Agriculture ¹ and the son of Equatorial Guinea's president. The government alleges that Nguema purchased the jet with funds derived from extortion, misappropriation, theft, and embezzlement. Although the government describes a disconcerting pattern of corruption in Equatorial Guinea, the complaint does not link the jet to any specific illicit acts. Accordingly, the court grants the claimants' motion to dismiss.

II. LEGAL & FACTUAL BACKGROUND

A. Legal Framework

Forfeiture is an ancient penalty; its origins can be traced to biblical times. See Calero–Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 681 n. 17, 94 S.Ct. 2080, 40 L.Ed.2d 452 (1974) (citing Exodus 21:28) (“If an ox gore a man or a woman, and they die, he shall be stoned and his flesh shall not be eaten”). Based on the legal fiction that “the thing is primarily considered the offender,” Goldsmith–Grant Co. v. United States, 254 U.S. 505, 511, 41 S.Ct. 189, 65 L.Ed. 376 (1921), forfeiture law allows suit to be brought against an inanimate object rather than a person. See, e.g., In re Various Items of Personal Property, 282 U.S. 577, 581, 51 S.Ct. 282, 75 L.Ed. 558 (1931) (“[I]t is the property which is proceeded against, and, by resort to a legal fiction, held guilty and condemned as though it were conscious instead of inanimate and insentient.”). Commentators and judicial decisions have primarily understood the rationale for this peculiar concept to be a means of punishment for a wrongdoer. See, e.g., Austin v. United States, 509 U.S. 602, 611–14, 113 S.Ct. 2801, 125 L.Ed.2d 488 (1993); Calero–Toledo, 416 U.S. at 681, 94 S.Ct. 2080.

The Civil Asset Forfeiture Reform Act of 2000 (“CAFRA”), 18 U.S.C. §§ 981 et seq., establishes several procedural and substantive rules governing forfeiture actions. The government may initiate a suit in rem² by filing a complaint within sixty days of the item's seizure. Id. § 983(a)(1)(A)(i). Any person claiming an interest in the seized property—referred to as a “claimant”—may intervene after the seizure is effected. Id. § 983(a)(2)(A). The claimant may then contest the government's action. United States v. $515,060.42, 152 F.3d 491, 497 (6th Cir.1998).

Here, the government brings suit under two of CAFRA's substantive provisions: 18 U.S.C. § 981(a)(1)(A) and § 981(a)(1)(C). Under 18 U.S.C. § 981(a)(1)(C), “[a]ny property, real or personal, which constitutes or is derived from proceeds traceable to ... any offense constituting ‘specified unlawful activity’ ” is subject to forfeiture to the United States. “Specified unlawful activity” may include offenses against a foreign nation involving “extortion,” or the “misappropriation, theft, or embezzlement of public funds by or for the benefit of a public official.” 18 U.S.C. § 1956(c)(7)(B)(ii), (iv). Under 18 U.S.C. § 981(a)(1)(A), “[a]ny property, real or personal, involved in a transaction or attempted transaction in violation of [18 U.S.C. § 1957], or any property traceable to such property,” is subject to forfeiture to the United States. 18 U.S.C. § 1957 imposes a criminal penalty on any person who “knowingly engages or attempts to engage in a monetary transaction in criminally derived property of a value greater than $10,000 and is derived from specified unlawful activity.” The term “specified unlawful activity” is again defined to include offenses against a foreign nation involving “extortion,” or the “misappropriation, theft, or embezzlement of public funds by or for the benefit of a public official.” 18 U.S.C. § 1956(c)(7)(B)(ii), (iv). To summarize both counts: the government alleges that the Gulfstream Jet is subject to forfeiture because it is either derived from or traceable to extortion, misappropriation, theft, or embezzlement of public funds by a public official.

B. Factual Allegations and Procedural History

Teodoro Nguema Obiang Mangue is the son of Equatorial Guinea's President. Id. ¶ 14. At the time the government filed suit, he was Equatorial Guinea's Minister of Forestry and Agriculture. Id. Despite his modest government salary, id. ¶ 34, Nguema has managed to acquire many of life's luxuries. Some of his recent purchases include a $6.5 million Bel Air mansion, id. ¶ 33, nearly $10 million in luxury cars (including eight Ferraris, seven Rolls Royces, five Bentleys, two Lamborghinis, and other top-notch acquisitions), id. ¶ 37, $3.2 million worth of Michael Jackson memorabilia, id. ¶ 42, a $30 million dollar Malibu mansion, id. ¶ 40, and the aircraft at the heart of this case—a $38.5 million Gulfstream Jet. Id. The government claims these lavish purchases were made possible by a number of illicit and lucrative schemes. Id. ¶ 48.

The government alleges that Nguema is a member of Equatorial Guinea's “Inner Circle,” a coterie of powerful individuals who have ties to Equatorial Guinea's ruling family. The government alleges that members of the Inner Circle demand extortionate payments from oil companies seeking to do business in the country. Id. ¶ 49 (“For example, Nguema, as Minister of Forestry, is responsible for approving the export of timber logged in E.G., and refuses to sign such approvals until the exporter first pays a ‘tax’ for Nguema's personal benefit.”). The government also alleges that members of the Inner Circle misappropriate government funds into a slush fund created for their personal use. Id. ¶¶ 58–62 (“Riggs Bank records show that money paid by oil companies to the government of E.G. was misappropriated by E.G. government officials and their family members.”). Members of the Inner Circle allegedly steer government contracts to companies in which they have a financial interest. Id. ¶ 66 (“Because government contracts are awarded to companies owned by or associated with members of the Inner Circle without true competition, those companies are able to charge the E.G. Government fees that bear little, if any, rational relationship to the actual economic value of the services or products tendered to the E.G. Government. The bids from such companies include built-in mark-ups of from 50 percent to 400 percent or more, so that members of the Inner Circle can obtain the difference.”). Finally, members of the Inner Circle have allegedly misappropriated valuable state-owned land. Id. ¶¶ 68–69 (“[I]n the early 1990s, members of the Inner Circle began to transfer and register large amounts of state-owned land into their own names.... At the same time, the foreign oil and gas companies that were becoming active in E.G. in the 1990s needed to lease land for their operations. Because the lands formerly owned by the state now were owned in the name of members of the Inner Circle, the oil companies' lease payments went to benefit the Inner Circle rather than the state.”). The government alleges that these schemes provided the funds with which Nguema bought the Gulfstream Jet.

After some initial difficulties, Nguema purchased the jet from a private party via a nominal buyer known as Ebony Shine International, Ltd., a British Virgin Islands company. Id. ¶ 77. After the government initiated this case, Nguema and Ebony Shine International, Ltd., filed claims to the defendant jet, and they subsequently filed a motion to dismiss. The court will now grant their motion without prejudice to the government's ability to file an amended complaint.

III. ANALYSIS

A. The Court Denies the Claimants' Motion to Dismiss for Lack of Jurisdiction

1. Legal Standard for a Motion to Dismiss for Lack of Jurisdiction³

Federal courts are courts of limited jurisdiction and the law presumes that “a cause lies outside this limited jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994). Accordingly, a federal court should first determine that it has jurisdiction over a case before ruling on the merits. Al–Zahrani v. Rodriguez, 669 F.3d 315, 317–18 (D.C.Cir.2012). On a motion to dismiss for lack of jurisdiction under Rule 12(b)(1), the plaintiff bears the burden of establishing jurisdiction by a preponderance of the evidence. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). When considering a motion under Rule 12(b)(1), the court may look beyond the allegations set forth in the complaint and “may consider materials outside the pleadings.” Jerome Stevens Pharm., Inc. v. FDA, 402 F.3d 1249, 1253 (D.C.Cir.2005).

2. The Court Has Jurisdiction Notwithstanding the Equatoguinean Government's Avowed Refusal to Comply With This Court's Orders

The claimants argue that the government lacks Article III standing because its alleged injury cannot be redressed. Claimants' Mot. at 15. The claimants note that the jet is currently located in Equatorial Guinea, and the Equatoguinean government has emphatically stated that it will not comply with a forfeiture order issued by this court. Opp'n at 16. Due to Equatorial Guinea's intransigence, the claimants conclude that the government's claim cannot be redressed. Id.⁴ The government maintains that the claimants put the cart before the horse, arguing that the Equatoguinean government's decision to comply does not impair the court's jurisdiction to issue the order in the first place. Govt.'s Opp'n at 8–11.

The language of 28 U.S.C. § 1355(b)(2) makes clear: “Wherever property subject to...