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UNITED STATES v. BCCI HOLDINGS

February 23, 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.


GREEN


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

ORDER DISMISSING THE MARCH 18, 1992 AND SEPTEMBER 4, 1992 PETITIONS OF LEE SCARFONE, PATRICIA SCARFONE, ALSA INTERNATIONAL, INC. AND BANDITBALL, INC.

Presently pending are the United States' motions to dismiss the Petitions for Hearing to Adjudicate Right, Title or Interest in Forfeited Property filed by Lee Scarfone, Patricia Scarfone, ALSA International, Inc., and Banditball, Inc. ("the Scarfones") on March 18, 1992 and September 4, 1992. Upon consideration of the motions to dismiss and all filings relating thereto, the motions are granted and the Scarfones' petitions are dismissed.

 BACKGROUND

 On January 24, 1992, this Court, following findings of fact and conclusions of law with supporting reasons made in open court, accepted the pleas of guilty of the four corporate defendants (collectively "BCCI") and the plea agreement between them and the United States of America. Thereupon, and in accordance with 18 U.S.C. § 1963, an Order of Forfeiture was entered. Paragraph 1(e) of the Order provides that the four corporate defendants named in this action shall forfeit to the United States ownership interests in all property located in the United States, including, without limitation, real property and all tangible and intangible personal property, however held, whether subsequently identified, determined or discovered in the course of the ongoing liquidation proceedings described therein or otherwise identified, determined, or discovered in any manner at any time, but not property that may be brought into the United States by or on behalf of court-appointed fiduciaries of BCCI in the course of the management or disbursement of the liquidation estates as described in the plea agreement. Attached to the January 24, 1992 Order as Exhibit A was a list of specific BCCI accounts, with corresponding numbers, names, and approximate balances, which the United States Marshals Service was directed to seize forthwith. Because the government was unable to verify certain information concerning additional forfeitable accounts at the time the Order of Forfeiture was entered, the Court issued a supplemental Order on January 31, 1992 which directed immediate seizure of the specific assets listed therein.

 In satisfaction of 18 U.S.C. § 1963(l)(1), and to inform third parties of potential rights to seek recovery of assets declared forfeited, the United States published notice of the Order of Forfeiture, as amended, during the period between February 13, 1992 and March 27, 1992 in eleven major United States newspapers including the Wall Street Journal, the New York Times, the Chicago Tribune, and the Los Angeles Daily Journal. See Government's Compliance with Order of May 8, 1992, filed May 12, 1992. In addition, personal notice was sent to over 340 persons and entities as late as April 3, 1992. Id.

 On March 18, 1992, the Scarfones filed a petition to amend the January 24, 1992 Order of Forfeiture based on the following allegations. In or about 1985, BCCI issued to Lee Scarfone and ALSA International, Inc. ("ALSA") a $ 1.95 million loan in exchange for $ 250,000 in prepaid interest. The loan was secured by a $ 1.95 million first mortgage on a three acre piece of property ("the property") appraised at $ 5 million and owned by ALSA. ALSA sought the loan to acquire a United States Football League team, the Tampa Bay Bandits, to purchase real estate, and for other business ventures.

 In an attempt to extinguish their debt with BCCI and to secure additional financing for their investments, the petitioners entered into negotiations with Regency Bank of Florida and others. The Scarfones claim that while the negotiations were pending, BCCI breached contractual duties owed to them by conveying to Regency its mortgage interest in the property. Regency soon after commenced foreclosure on the property. The Scarfones contend that as a result of BCCI's breaches and Regency's foreclosure, they lost significant assets and their ability to develop other financial interests. The Scarfones also allege that BCCI's breaches forced them into bankruptcy. They seek to recover:

 
funds ordered forfeited by this court to the extent that the Petitioners' funds either paid directly to BCCI by the Petitioners or by REGENCY BANK pursuant to the assignment of the first mortgage on the Petitioners' property by BCCI to REGENCY BANK, have been commingled with such forfeited funds, and/or to the extent that such funds being the property of BCCI are property subject to claims for compensatory and punitive damages in an amount exceeding $ 5 million for the wrongful acts of BCCI and its officers directed against the Petitioners.

 March 18, 1992 Petition at 4-5. The Scarfones allege no interest in any specific asset ordered forfeited by the Court in this case.

 In accordance with a briefing schedule issued by the Court, the government filed a Motion to Dismiss Petitions of BCCI Tort Petitioners, which addressed the Scarfones' March 18, 1992 petition as well as petitions filed by Banco Central de Reserva del Peru; 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.; and the Republic of Panama. The court-appointed fiduciaries for the four corporate defendants subsequently filed a memorandum of law addressing the same petitions. The Scarfones filed responses to the government's motion and the court-appointed fiduciaries' memorandum, and the government filed a reply.

 On June 24, 1992, the government filed a Motion to Amend Order of Forfeiture to Include Additional Property, seeking forfeiture of assets in newly discovered bank accounts held in the names of the corporate defendants, proceeds from the sale of a condominium purchased with resources provided by a corporate defendant, money remaining in a "BCCI Legal Fund" established by one of the corporate defendants for the defense of its employees' legal interests, a bankruptcy distribution to one of the corporate defendants, and assets held at various New York financial institutions in the name of ICIC Investments Ltd., a sibling corporation of defendant ICIC (Overseas) Ltd. The Court granted the government's motion and issued an Order of Forfeiture on July 29, 1992. The United States subsequently provided notice of the Order to potential claimants.

 The Scarfones filed their second petition on September 4, 1992 which was identical to their first petition except for the fact that it sought to recover funds ordered forfeited on July 29, 1992. On December 28, 1992, the government filed a Motion to Dismiss Round Two Petitions of BCCI Tort Petitioners, which addressed the Scarfones' second petition as well as second petitions filed by Banco Central de Reserva del Peru and 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. Because all three of the second petitions were identical to the corresponding first petitions, the government's round two motion merely incorporated by reference its earlier motion to dismiss. On January 8, 1993, the Scarfones filed an opposition to the government's round two motion which reiterated the arguments made in their earlier response. The government filed a reply on January 27, 1993.

 Although the Court indicated it would grant a request for oral argument on the government's motions to dismiss, ...


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