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UNITED STATES v. BCCI HOLDINGS

August 26, 1997

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, AND INTERNATIONAL CREDIT AND INVESTMENT COMPANY (OVERSEAS) LIMITED, Defendants.



The opinion of the court was delivered by: GREEN

 MEMORANDUM OPINION AND ORDER

 Presently before the Court are the United States' motions to dismiss the First and Second Round Petitions of the Hubei Provincial International Trust & Investment Corporation ("Hubei"), which were filed pursuant to 18 U.S.C. § 1963(l) (1994). *fn1" For the reasons stated below, the motions to dismiss will be granted.

 Background

 The facts surrounding BCCI's collapse are well known in the financial and legal communities, but certain facts bear repeating to set the stage for resolving the instant motions to dismiss Hubei's L-Claims. *fn2" In early 1991, the Bank of England received troubling information about BCCI's financial condition and integrity. In response, it commissioned a special audit, which "disclosed evidence of a complex and massive fraud at BCCI, including substantial loan and treasury 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).

 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, 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 (filed January 24, 1992), as amended, was a list of BCCI accounts, with corresponding numbers, names, and approximate balances, which the United States Marshals Service was directed to seize forthwith. Included among the assets seized was an account in the name of BCCI (Overseas) Ltd. ("BCCI(O)"), Shenzhen branch, at the New York office of SPIB, which account was numbered 04031016 and had a credit balance of US$ 589,044.22. In a later amendment to the First Order of Forfeiture, the Court issued the Second Supplemental Order of Forfeiture ("Second Order of Forfeiture") on July 29, 1992, directing the seizure of additional BCCI assets. In contrast to the First Order of Forfeiture, the Second Order of Forfeiture included no assets of BCCI(O)'s Shenzhen branch among those seized at SPIB or elsewhere.

 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 Cen Trust, 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.). *fn3"

 Because this matter is before the Court on the government's motion to dismiss, the facts alleged by the petitioner are assumed true and the petitioner receives all reasonable inferences. Hubei, a corporation organized under the laws of the People's Republic of China, maintained US$ 1,940,782.12 in an interest-bearing time deposit account with BCCI(O) which matured on July 5, 1991. *fn4" On July 3, 1991, Hubei directed BCCI(O) to transfer, for value on July 5, 1991, $ 1,031,913.19 of the amount then on deposit with BCCI(O) to the Bank of America, San Francisco, for credit to an account held by the Agricultural Bank of China ("Agricultural Bank"). See Verified Pet. P5 & Ex. B. On July 4th, BCCI(O) confirmed Hubei's instruction of July 3rd and debited Hubei's account accordingly. See id. P7 & Ex. D. On July 5th, pursuant to Hubei's instructions, BCCI(O) issued a payment order to SPIB in the amount of $ 1,031,913.19, payable from Hubei's BCCI(O) Shenzhen branch account to SPIB in the favor of the Bank of America for further credit to the account of the Agricultural Bank. See id. P4 & Ex. C. Although SPIB received BCCI(O)'s payment order, it never issued a payment order to the Bank of America due to the regulatory intervention on July 5, 1991, in which all of BCCI's assets in the United States, including those at SPIB, were frozen. See id. PP 7-8 & Ex. E. *fn5"

 On January 24, 1992, this Court entered the First Order of Forfeiture, which included $ 589,044.22 held in the BCCI(O) Shenzhen branch account # 04031016. On January 31, 1992, the Court amended the First Order of Forfeiture, and, on July 29, 1992, the Second Order of Forfeiture was entered. Neither the amendment to the First Order nor the Second Order of Forfeiture included any assets of BCCI(O) Shenzhen branch.

 Through a timely filed Verified Petition, Hubei has asserted a claim to " the assets of BCCI Shenzhen that have been so forfeited, to the extent of $ 1,031,913.19, plus interest thereon from July 5, 1991." First L-Claim P10. After the Court entered the Second Order of Forfeiture, Hubei timely filed a second Verified Petition, identical in material respects, asserting a second claim to BCCI(O)'s assets in the same amount, US$ 1,031,913.19. Second L-Claim P10. Although Hubei did not identify specific assets seized pursuant to the Second Order of Forfeiture in which it had an interest, it contends that

 
Upon information and belief, pursuant to one or more Orders issued by the United States District Court for the District of Columbia, the assets of BCCI Shenzhen and of BCCI Overseas were condemned and forfeited subject to the rights of persons ...

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