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UNITED STATES v. BCCI HOLDINGS

January 8, 1993

UNITED STATES OF AMERICA
v.
BCCI HOLDINGS (LUXEMBOURG), S.A., BANK OF CREDIT AND COMMERCE INTERNATIONAL, S.A., BANK OF CREDIT AND COMMERCE INTERNATIONAL (OVERSEAS) LIMITED, INTERNATIONAL CREDIT AND INVESTMENT COMPANY (OVERSEAS) LIMITED, Defendants.



The opinion of the court was delivered by: JOYCE HENS GREEN

 Presently pending before the Court is a motion filed by court-appointed trustee Harry W. Albright, Jr. ("Trustee") for the production by the law firm of Patton, Boggs & Blow ("PBB") of all stock certificates (and instruments of transfer) representing shares of capital stock of First American Corporation ("FAC"). An opposition to the motion, a reply, and a surreply have been filed. Upon consideration of the motion and all filings relating thereto, the Trustee's motion to compel is denied and PBB is directed to deliver possession of the FAC stock certificate to the Court.

 BACKGROUND

 On May 29, 1992, the United States of America, the court-appointed fiduciaries for the four corporate defendants, the District Attorney for New York County, and the Board of Governors of the Federal Reserve System filed a joint motion and a proposed Order for the appointment of a trustee to effect the sale or other disposition of all shares of stock in FAC or its assets, including First American Bankshares, Inc. ("FAB") and FAB's subsidiaries. FAC was wholly-owned by a Netherlands corporation named Credit and Commerce American Investments, B.V. ("CCAI"), which, in turn, was wholly-owned by Credit and Commerce American Holdings N.V. ("CCAH"), a Netherlands Antilles corporation. Because Netherlands Antilles law required authorization of at least 75% of CCAH shareholders before the FAC shares could be transferred to a court-appointed trustee, see Transcript of Motion Hearing, June 16, 1992, at 20-21, the proposed Order and the joint motion for appointment of a trustee had been submitted to the CCAH shareholders for their review and approval prior to being filed with this Court. Over 79% of the CCAH shareholders voted in favor of submitting the proposed Order to the Court. See Id. at 21; Exhibit D to Affidavit in Support of the Trustee's Motion to Compel Patton, Boggs & Blow to Turn Over to the Trustee All Shares of First American Corporation in Their Possession ("Corbin Affidavit"), filed September 2, 1992.

 After considering the joint motion and representations made at the hearing held June 16, 1992, the Court determined that the appointment of a trustee was necessary to execute the portion of the Court's January 24, 1992 Order of Forfeiture condemning "the net proceeds from the future sale or other disposition or transfer of any stock, security or other interest in First American Bankshares, Inc., but not the stock, security or other interest itself." *fn1" In addition, the Court concluded that the appointment of a trustee was necessary to enable the four corporate defendants to comply with their obligation under the Plea Agreement, filed with this Court on December 19, 1991, to divest themselves of any interest they held in CCAH. Consequently, and in accordance with 18 U.S.C. § 1963(e), the Court issued a written Order on June 23, 1992 appointing Harry W. Albright, Jr. as Trustee of FAC.

 The Order Appointing Trustee was, in all material respects, the same as the proposed Order submitted by the joint movants and stated in relevant part:

 
The Trustee shall collect and hold, subject to any existing lien, all the issued and outstanding shares of FAC, and shall sell or otherwise dispose of all assets owned or controlled directly or indirectly by FAC at any given time, including, without limitation, all of the issued and outstanding capital stock of FAB or of the FAB subsidiaries, consistent with the purposes of this Order . . . .

 Order Appointing Trustee at 3. In addition, the Order provided:

 
The Trustee shall exercise all rights, titles, powers, and privileges of a shareholder of FAC, including, to the extent permitted by applicable law of the state of incorporation of the relevant corporation, the right to exercise exclusively any and all voting rights and other rights or benefits attached to, derived from, or otherwise attributable to the FAC shares . . . .

 Id. at 3-4.

 Prior to the Trustee's appointment, a client of PBB, H.H. Sheikh Zayed bin Sultan Al Nahyan acting through the Chairman of his Department of Private Affairs ("Client"), *fn2" acquired and extended the maturity date of a $ 50 million loan previously made by Banque Arabe et Internationale D'Investissement ("BAII") and others to FAC. Pursuant to the acquisition of the loan, the Client obtained a perfected security interest in all FAC shares. *fn3" To maintain the perfected security interest, PBB, as bailee for the Client, has held and continues to hold in its physical possession an FAC stock certificate which represents 100% of the issued and outstanding FAC shares. As of March, 1992, the outstanding balance of the loan was approximately $ 9.7 million. See Opposition to the Trustee's Motion to Compel Patton, Boggs & Blow to Turn Over to the Trustee the First American Corporation Stock Certificate in its Possession ("Opposition"), filed September 30, 1992, at 5.

 One day after the appointment of the Trustee, the sole director of CCAI, Jack W. Beddow, sent a letter to the Trustee which stated, "By this letter, I am transferring control over the FAC stock to you pursuant to past communications with the shareholders of Credit and Commerce American Holdings, N.V. and the June 23 Order." Exhibit H to Corbin Affidavit. About that time, FAC registered the transfer of shares in the name of the Trustee and recorded the transfer on its books. Exhibit J to Corbin Affidavit. In addition, FAC issued a new stock certificate establishing "Harry W. Albright, Jr. as Trustee Appointed by Order of the U.S. District Court for the District of Columbia Dated June 23, 1992" as the registered holder of all capital stock of FAC. Exhibit 10 to Opposition. The new stock certificate, however, was never physically transferred to Mr. Albright. Instead, it was given to PBB as bailee for the Client in exchange for the old certificate, which had been cancelled. Exhibit 11 to Opposition.

 Although the Trustee has demanded possession of the new stock certificate, PBB has refused its transfer, arguing that the Trustee's possession of the certificate would violate the Court's June 23, 1992 Order by destroying the Client's perfected security interest. The Trustee, however, argues through counsel that the June 23, 1992 Order compels physical delivery of the certificate to him and that such transfer would not negate the Client's interest. PBB has offered to settle the dispute without the assistance of the Court by proposing that possession of the certificate be delivered to a third party acceptable to the Trustee. See Opposition at 2-3 n.5 and Exhibit 2 to Opposition. The Trustee has not accepted PBB's offer, believing that such transfer would violate the Order Appointing Trustee. See Reply Memorandum in ...


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