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In re Any and All Funds or Other Assets in Brown Brothers Harriman & Co. Account #8870792

March 9, 2009

IN RE: ANY AND ALL FUNDS OR OTHER ASSETS IN BROWN BROTHERS HARRIMAN & CO. ACCOUNT #8870792 IN THE NAME OF TIGER EYE INVESTMENTS LTD.;
ANY AND ALL FUNDS OR OTHER ASSETS IN ANY AND ALL ACCOUNTS HELD AT UBS AG AND UBS SECURITIES LLC, STAMFORD, CT, BY OR CONTAINING ANY INTEREST HELD BY OR CONTROLLED BY DANIEL VALENTE DANTAS AND/OR VERONICA VALENTE DANTAS, OPPORTUNITY GROUP, OPPORTUNITY FUND, OPPORTUNITY UNIQUE FUND, INCLUDING BUT NOT LIMITED TO ACCOUNT #WA359025 AND WA628069 IN THE NAME OF OPPORTUNITY FUND;
ANY AND ALL FUNDS OR OTHER ASSETS IN THE FOLLOWING ACCOUNTS AT BROWN BROTHERS HARRIMAN (LUXEMBOURG) S.C.A.: ACCOUNT #6459648 IN THE NAME OF BROWN BROTHERS HARRIMAN (LUXEMBOURG) S.C.A. AS CUSTODIAN FOR OPPORTUNITY FUND; ACCOUNT #6459747 IN THE NAME OF BROWN BROTHERS HARRIMAN (LUXEMBOURG) S.C.A. AS CUSTODIAN FOR OPPORTUNITY FUND FBO OPPORTUNITY FUND-RESERVE; ACCOUNT #6459606 IN THE NAME OF BROWN BROTHERS HARRIMAN (LUXEMBOURG) S.C.A. AS CUSTODIAN FOR OPPORTUNITY UNIQUE FUND, INC.; ACCOUNT #6450209 IN THE NAME OF TPSA INVESTMENT CORPORATION.



The opinion of the court was delivered by: John D. Bates United States District Court

MEMORANDUM OPINION

Before the Court is the government's application for a 10-day temporary restraining order.*fn1 To rule on that application, the Court must resolve a matter of first impression: the interpretation of a statute that gives federal courts jurisdiction to restrain property "subject to a foreign forfeiture or confiscation judgment." 28 U.S.C. § 2467(d)(3). The Opportunity Fund ("Fund"), a target of the restraining order sought here, has objected to the government's application. The Fund is restrained by three orders currently in place and would also be affected were the Court to grant the government's application for a new 10-day temporary restraining order. The Fund objects on several grounds, including an argument that, given the relevant facts, the Court lacks jurisdiction under § 2467(d)(3) to issue a restraining order. As described in the analysis below, the Court agrees. Although the government makes strong policy arguments for the authority it seeks, ultimately it is asking this Court to provide what Congress -- for whatever reason -- failed to provide in the statute. Hence, the government's application for a 10-day temporary restraining order is denied and the restraining orders now in place will again be dissolved.

BACKGROUND

The government's application arises out of criminal proceedings pending in Brazil. A general familiarity with those proceedings is helpful. On July 4, 2008, several individuals, including Daniel Valente Dantas, were arrested in Brazil. Affidavit of Ricardo Andrade Saadi ¶ 55. The arrests triggered a far-reaching Brazilian investigation into various financial crimes allegedly committed by the arrested individuals and the entities they control. Id. ¶¶ 55-56. According to the Brazilian investigators, Mr. Dantas had created three funds -- including the Opportunity Fund -- to purchase several public companies being privatized in Brazil. Id. ¶ 31. One of those funds is located in Brazil and the other two, including the Opportunity Fund, are located "offshore." Id. ¶ 33. The investigation apparently uncovered facts suggesting that the Opportunity Fund violated a host of Brazilian securities laws. See id. ¶¶ 34-53. The investigation -- which appears to be ongoing -- has caused the Brazilian courts to issue three restraining orders. The first was issued in July 2008, while the other two were issued in late February 2009. None of those orders are final. Nonetheless, on February 26, 2009, Rita M. Glavin, the Acting Assistant Attorney General ("AAAG"), found "that it is in the interest of justice to CERTIFY the request of the Government of the Federative Republic of Brazil for enforcement of [those] three restraining orders." See Memorandum in Support of United States's Application for a Restraining Order ("Gov't App. Mem."), Exhibit 1.

This Court became involved with this matter in late December 2008. On December 23, 2008 and December 29, 2008, the government filed emergency applications for restraining orders against the above-captioned entities. The Court issued those restraining orders on December 30, 2008. The government sought a third restraining order on January 9, 2009, which the Court entered on January 15, 2009. The applications, each of which relied on the Saadi Affidavit, were filed ex parte by the government. Each application assured the Court of its jurisdiction to enter such orders under 28 U.S.C. § 2467(d)(3) and pursuant to 18 U.S.C. § 983(j)(1)(A). But on February 9, 2009, the Opportunity Fund filed an emergency motion to dissolve the restraining orders. The Fund argued that the Court lacked jurisdiction under § 2467(d)(3) to enter those orders in the first place. Moreover, even if the Court did have jurisdiction, the Fund contended, the government and the Court did not follow the procedures set out in § 983(j) in issuing those orders, as they were statutorily required to do. And the Fund objected to the Court relying on ex parte affidavits to which it had no way to respond. The issues were fully briefed and the Court held a motions hearing on February 18, 2009. On February 24, 2009, the Court dissolved those orders -- effective at 1:00 p.m. on February 27, 2009 -- because they were not issued in accordance with the procedures set out in § 983(j). See Feb. 24, 2009 Order (dkt ent. #25). The Court did not reach the Fund's other arguments at that time.

On February 27, 2009 -- but before the restraining orders dissolved -- the government filed a motion for a 10-day temporary restraining order pursuant to § 983(j)(3). At the same time, the government filed an application for a longer-term restraining order pursuant to § 983(j)(1)(B). The government no longer relies on the Saadi Affidavit to justify the restraining orders; instead, it relies on the Brazilian restraining orders and the AAAG's certification of them. Also on February 27, 2009, the Court stayed the dissolution of its previous three restraining orders and ordered the Fund to respond by March 2, 2009. The Court held a hearing on March 3, 2009 and provided each party with a final opportunity to submit briefs and to supplement the record by March 4, 2009, which they did. Each party then also submitted additional information on March 5, 2009. The record -- albeit hastily and somewhat sporadically compiled -- is now complete.

ANALYSIS

I. Statutory Framework

The principal statute at issue is 28 U.S.C. § 2467. It provides federal district courts with jurisdiction to consider applications filed by the United States on behalf of a foreign nation "seeking to enforce [a] foreign forfeiture or confiscation judgment as if the judgment had been entered by a court in the United States." § 2467(c)(1). The statute defines "foreign forfeiture or confiscation judgment" as "a final order of a foreign nation compelling a person or entity... to pay a sum of money representing the proceeds of an offense... or [] to forfeit property involved in or traceable to the commission of such offense." § 2467(a)(2).

Section 2467(d)(3) was added as part of the U.S.A. Patriot Act in 2001. See Pub. L. No. 107-56, § 323, 115 Stat. 392 (Oct. 26, 2001). The text follows:

(3) Preservation of property.--(A) In general.--To preserve the availability of property subject to a foreign forfeiture or confiscation judgment, the Government may apply for, and the court may issue, a restraining order pursuant to section 983(j) of title 18, at any time before or after an application is filed pursuant to subsection (c)(1) of this section.

(B) Evidence.--The court, in issuing a restraining order under subparagraph (A)--

(i)may rely on information set forth in an affidavit describing the nature of the proceeding or investigation underway in the foreign country, and setting forth a reasonable basis to believe that the property to be restrained will be named in a judgment of forfeiture at the conclusion of such proceeding; or

(ii)may register and enforce a restraining order that has been issued by a court of competent jurisdiction in the foreign country and certified by the ...


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