The Plea Agreement also established the Worldwide Victims Fund and the U.S. Fund. Under the terms of the Plea Agreement, forfeited assets were to be disbursed in equal amounts to the Worldwide Victims Fund and the U.S. Fund. See Plea Agreement, at P11(c). The broad purpose of the Worldwide Victims Fund, operated by the Court-Appointed Fiduciaries, is to distribute funds "only to innocent depositors, creditors and other victims of BCCI whose claims are not derived directly or indirectly through violations of United States or other laws concerning narcotics, terrorism, money laundering, crimes of violence, or other acts generally recognized as felonies or similar crimes under the law of countries subscribing to recognized norms of international justice." Id. P14.
The purpose of the U.S. Fund is more specific. In addition to allowing for reimbursement of the costs of investigation and prosecution of BCCI, bank insurance and other matters, the U.S. Fund is also available to provide "restitution to victims of BCCI, which may include remission to the Court Appointed Fiduciaries in accordance with 18 U.S.C. § 1963(g) for the purpose of facilitating an increase in assets available for distribution by the Court-Appointed Fiduciaries to innocent worldwide victims of BCCI." Id. P12(f). As a result of BCCI's guilty plea and the subsequent criminal forfeiture proceedings the United States has "recovered nearly $ 800 million, virtually all of which has been, or will be, distributed to the victims of the fraud." Testimony of Stefan Cassella before the Judiciary Committee of the House of Representatives (July 22, 1996), 1996 WL 410099, *5 (F.D.C.H.).
On February 14, 1992, pursuant to the amended Order of Forfeiture, American Express Bank transferred over $ 119 million to the United States Marshals Service. This amount represented what American Express Bank contended was the balance (or net) in BCCI's account after the bank set off $ 23,537,303 for debts that it claimed BCCI owed. After withholding the set off amount, American Express Bank filed a motion for a temporary restraining order and requested a pre-seizure hearing.
The Court granted American Express Bank's request for a hearing, but rejected its arguments. Thereafter, American Express Bank transferred the remaining amount of $ 23,537,303 to the United States Marshal on March 10, 1992. Through the instant L-Claim, American Express Bank claims title to, and seeks the return of $ 23,537,303, contending that it owned this sum pursuant to lawful set offs taken against BCCI before the Order of Forfeiture was entered.
The set offs arise from a series of foreign currency exchange transactions between American Express Bank and BCCI between July 2-5, 1991, and from an uncollateralized loan that American Express Bank made to BCCI on April 25, 1991. The currency transactions were to be accomplished on or before July 5, 1991,
but before they were completed, banking regulators froze BCCI's assets, including those at American Express Bank. At the time of the seizure, BCCI owed American Express Bank approximately $ 13,000,000 as a result of the foreign currency transactions. In addition, on July 8, 1991, BCCI's obligation came due to pay $ 10,052,743 on the uncollateralized loan of April 25, 1991. When BCCI failed to pay the amounts owed on July 8th, American Express Bank "exercised its right of set off as to the $ 22,848,928 in obligations owed to [American Express Bank] by BCCI." Affidavit of Farhad Subjally, P4 (July 21, 1992). On July 15, 1991, American Express Bank set off $ 500,000 arising from foreign currency obligations, and on July 23, 1991, the bank set off $ 188,375 "arising from the need to secure cover in the open market." Id.; see L-Claim, supra, at P24.
American Express Bank now petitions the Court to amend the Order of Forfeiture to exclude the $ 23,537,303 set off amount, and the United States has moved to dismiss the petition. The parties have fully briefed the issues underlying the petition, and they have submitted multiple memoranda debating the application of supplemental authority.
Oral argument has been held, and the pending motion is ripe for resolution.
BCCI's assets were forfeited pursuant to 18 U.S.C. § 1963,
which sets forth an orderly procedure by which third parties seeking to recover interests in forfeited property may obtain judicial resolution of their claims.
It permits any person, other than the defendant, claiming a legal interest in forfeited property to petition the Court for a hearing to adjudicate the validity of that interest. 18 U.S.C. § 1963(l)(2).
Section 1963(l)(6) sets forth the substantive elements that a third party must establish to obtain amendment of an order of forfeiture:
If, after the hearing, the court determines that the petitioner has established by a preponderance of the evidence that--