account losses, misappropriation of funds, unrecorded deposits, the creation and manipulation of fictitious accounts to conceal bank losses, and concealment from regulatory authorities of BCCI's mismanagement and true financial position." Corrigan, Mattingly & Taylor, The Federal Reserve's Views on BCCI, 26 Int'l Law. 963, 970-71 (1992) (based on testimony before the Committee on Banking, Finance and Urban Affairs of the United States House of Representatives on September 3, 1991).
The results of the audit were shared with regulators in other countries, and, on July 5, 1991, banking regulators in the United Kingdom, Luxembourg and the United States, froze assets owned or controlled by BCCI. In New York, the Superintendent of Banks seized BCCI's assets at various New York banks, including those at First American Bank of New York ("FABNY"). By July 6th, eighteen countries had shut down BCCI's operations in their jurisdictions, and, as of July 29, 1991, forty-four countries had closed down BCCI branches.
On November 15, 1991, a three-count Indictment, which included charges of conspiracy, wire fraud and racketeering against BCCI, was filed in this Court. 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 known as BCCI, and the Plea Agreement between them and the United States of America. See Transcript of Guilty Plea Proceedings at 7 (Jan. 24, 1992). In accordance with 18 U.S.C. § 1963, this Court then entered an Order of Forfeiture.
Under paragraph 9 of the Plea Agreement and pursuant to the Order of Forfeiture, BCCI forfeited all of its property interests in the United States. Pursuant to paragraph 1(e) of the Forfeiture Order, the corporate defendants forfeited to the United States their 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 (excluding property 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).
Attached to the First Order of Forfeiture was a listing of 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 First Supplemental Order on January 31, 1992, which directed immediate seizure of the specific assets listed therein. The Court later amended the Order of Forfeiture to include additional assets, including property set forth in Second and Third Supplemental Lists of Forfeited Property. See Order of Forfeiture of July 29, 1992 (Second Order of Forfeiture); Order of Forfeiture of August 19, 1993 (Third Order of Forfeiture). Attached to the Third Order of Forfeiture, which is relevant to the L-Claim presently before the Court, was the Third Supplemental List of Forfeited Property aggregating $ 101,302,465.54.
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 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, but no less compensatory. 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, and which may include claims related to the failure of CenTrust, if any." Id. P12(f). As a result of BCCI's guilty plea and the subsequent criminal forfeiture proceedings, by July 1996, the United States had "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.).
In compliance with 18 U.S.C. § 1963(l)(1) and to inform third parties of their potential rights to seek recovery of assets declared forfeited in the Third Order of Forfeiture, the United States published notice of the Order of Forfeiture, as amended, during the period September 3, 1993, and September 27, 1993 in eleven major newspapers including the Wall Street Journal, the New York Times, the Chicago Tribune, the Los Angeles Daily Journal, the Washington Post, and the International Herald Tribune. See United States' Notice to the Court (filed Sept. 21, 1993). In addition, personal notice was sent to over 523 persons and entities. Id. at Ex. 2, at 11. In response, CGIET timely filed the instant L-Claim.
CGIET claims an interest in a credit in the amount of "$ 420,828 that was in the process of being transmitted on July 5, 1991, but had not been completed at the time that regulatory authorities took action against defendants throughout the world." CGIET L-Claim P4. According to CGIET, it has legal right, title, or interest in such amount credited to account number 11801008 at First American Bank in New York ("FABNY") in the name of BCC Ghana Ltd. ("BCC Ghana). Id. P3; Third Supplemental List of Property at 3, attached to Third Order of Forfeiture.
For the purposes of this motion, the Court assumes the following facts to be true. CGIET is a corporation wholly owned by the People's Republic of China ("PRC"). CGIET P1. In 1991, it was engaged in an economic aid project sponsored by the PRC and referred to as the National Theatre of Ghana. Id. P5. CGIET supervised construction in connection with the project and, accordingly, on or before July 5, 1991, it initiated a wire transfer to pay for material, equipment and employee wages in Ghana through a local BCCI branch, BCC Ghana. Id. PP5-6.
The funds transfer at issue was originated by CGIET when it directed the transfer of US$ 420,828.00 from its bank in China, the Bank of China ("BOC"), Yuexiu Sub-branch of Zhujiang Branch. Id. P6. BOC then executed a payment order to its New York branch. Id. P7. BOC's New York branch, in turn, executed a payment order to FABNY calling for such a credit to BCC Ghana in favor of beneficiary CGIET. Id. P8. While the funds were received by FABNY on July 5, 1991, id. P9, and (at some point) credited to BCC Ghana's account number 11801008, see Third Supplemental List of Forfeited Property at 2, such funds were never credited by BCC Ghana to CGIET's account held at BCC Ghana. Id. P13. CGIET alleges that, "on or after July 5, 1991, FABNY placed the same funds in a freeze account, purportedly under the direction of the Federal Reserve Bank." Id. P11. On July 8, 1991, CGIET attempted to cancel the wire transfer and requested a refund from FABNY, id. P10, but was advised on July 9, 1991, that all assets of BCCI, including those of BCC Ghana at FABNY, were frozen by banking regulatory authorities.
Pursuant to this Court's Order of August 19, 1993, FABNY ultimately transferred the funds to the Court Registry Investment System ("CRIS") account.
The United States has moved to dismiss CGIET's L-Claim, contending that CGIET lacks standing as an unsecured creditor on the ground that it became a general creditor of BCC Ghana once BCCI acquired title to the funds by FABNY's acceptance of BOC's payment order. See Motion to Dismiss at 11-12. CGIET filed a brief in opposition, and both parties later appeared at a hearing before this Court on the government's motion.
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--
(A) the petitioner has a legal right, title, or interest in the property, and such right, title, or interest renders the order of forfeiture invalid in whole or in part because the right, title, or interest was vested in the petitioner rather than the defendant or was superior to any right, title, or interest of the defendant at the time of the commission of the acts which gave rise to the forfeiture of the property under this section; or