United States District Court, D. Columbia
F.Supp.3d 362] For UNITED STATES OF AMERICA, Asset Forfeiture
and Money Laundering Section, Criminal Division, Plaintiff:
Daniel Hocker Claman, Elizabeth Ann Aloi, LEAD ATTORNEYS,
U.S. DEPARTMENT OF JUSTICE, Washington, DC.
NNSKS & ASSOCIATES, Interested Party: Jude C. Ezeala, PRO
HAC VICE, LAW OFFICE OF JUDE C. EZEALA, Baltimore, MD.
AISHA ATIKU BAGUDU, IBRAHIM BAGUDU, IBRAHIM ATIKU BAGUDU, M A
B, M.A.B., a minor, by and through her mother Aisha Atiku
Bagudu, as guardian and/or next friend, I A B, I.A.B., a
minor, by and through her mother Aisha Atiku Bagudu, as
guardian and/or next friend, F A B, F.A.B., a minor, by and
through her mother Aisha Atiku Bagudu, as guardian and/or
next friend, M A B, M.A.B., a minor, by and through his
mother Aisha Atiku Bagudu, as guardian and/or next friend, H
A B, H.A.B., a minor, by and through her mother Aisha Atiku
Bagudu, as guardian and/or next friend, Claimants: Jonathan
R. Barr, LEAD ATTORNEY, BAKER & HOSTETLER, LLP,
Washington, DC; Jonathan B. New, Patrick T. Campbell, PRO HAC
VICE, BAKER & HOSTETLER LLP, New York, NY.
M. NNAKA, Claimant, Pro se, STAFFORD, TX.
FEDERAL REPUBLIC OF NIGERIA, Movant: Charles C. Agwumezie,
LEAD ATTORNEY, CAVA LEGAL GROUP PLLC, Washington, DC; Jude C.
Ezeala, PRO HAC VICE, LAW OFFICE OF JUDE C. EZEALA,
Baltimore, MD; Kenneth A. Nnaka, PRO HAC VICE, LAW OFFICES OF
NNAKA & ASSOCIATES, PLLC, Houston, TX.
F.Supp.3d 363] MEMORANDUM OPINION
BATES, United States District Judge.
United States brings this in rem action pursuant to 18 U.S.C.
§ 981(a)(1)(A), seeking forfeiture of sixteen defendant
properties alleged to have been part of " an
international conspiracy to launder proceeds of corruption in
Nigeria during the military regime of General Sani
Abacha." Compl. [ECF No. 1] ¶ 1. Claimants --all
relatives of an individual alleged to have been involved in
the conspiracy--have moved to dismiss the government's
complaint with respect to four of the defendant properties,
which are investment portfolios located in the United Kingdom
that allegedly contain assets worth many millions of dollars.
Having carefully considered the motion and related
papers, and for the reasons described below,
the Court will deny claimants' motion.
United States initiated this forfeiture action on November
18, 2013, by filing a verified complaint for forfeiture in
rem against five corporations, seven bank accounts, and four
investment portfolios. The government alleges that
Nigeria's former de facto President General Sani Abacha,
his sons Mohammed Sani Abacha and Ibrahim Sani Abacha, their
associate Abubakar Atiku Bagudu, Nigeria's former
National Security Advisor Ismaila Gwarzo, Nigeria's
former Minister of Finance Chief Anthony Ani, and others
" embezzled, misappropriated, defrauded, and extorted
hundreds of millions of dollars from the government of
Nigeria" and then " transported and laundered the
proceeds . . . through conduct in and affecting the United
States." Id. ¶ ¶ 1, 8-15. Defendant investment
portfolios are alleged to contain proceeds from these illegal
claimants --all relatives of Abubakar Atiku Bagudu
(hereinafter " Bagudu" )--have filed verified
claims of interest in the investment portfolios, asserting
that they are beneficiaries of the portfolios. Three
claimants are adults: Ibrahim Bagudu (Bagudu's brother),
Aisha Atiku Bagudu (one of Bagudu's wives), and Ibrahim
Atiku Bagudu (Bagudu's adult child). The remaining five
are minor children of Bagudu and Aisha Atiku Bagudu: M.A.B.,
I.A.B., F.A.B., M.A.B., and H.A.B. I.A.B. is a United States
citizen; the other seven [83 F.Supp.3d 364] claimants are
foreign citizens. All claimants reside in Nigeria and none
are implicated in the government's allegations of
wrongdoing. Claimants have moved to dismiss the complaint as
to the four defendant investment portfolios, but they do not
challenge the complaint as to the other twelve defendant
properties, with respect to which a default judgment has been
Verif ied Complaint
following facts are derived from the verified complaint and
are assumed to be true for the purposes of deciding
claimants' motion to dismiss.
government alleges that the funds in defendant investment
portfolios are traceable to two illegal
schemes. The first scheme is referred to as the
" Security Votes Fraud," which began when, between
January 1994 and June 1998, General Abacha, National Security
Advisor Gwarzo, and others " stole more than $2 billion
from Nigeria by fraudulently and falsely representing that
the funds were to be used for national security
purposes." Id. ¶ 25. The theft of funds was
allegedly committed by General Abacha and Gwarzo when they
" executed false national security letters [referred to
as " security votes letters" ] directing the
withdrawal of funds from the [Central Bank of Nigeria]."
Id. Gwarzo, " at General Abacha's
direction," prepared these security votes letters and
addressed them to General Abacha " purporting to request
millions of U.S. dollars, British pounds sterling, and
Nigerian naira to address unidentified 'emergencies'
that threatened Nigeria's national interests."
Id. ¶ 26. General Abacha " endorsed each letter
with his signature" to approve the disbursements.
Id. Over sixty such endorsed security votes letters
were sent to the Central Bank of Nigeria in Abuja, Nigeria,
where the bank disbursed the funds as requested in each
letter, " in cash or traveler's checks, or through
wire transfers." Id. ¶ ¶ 26, 28. Instead of
using the funds for national security purposes, " the
stolen money was transported out of Nigeria and deposited
into accounts controlled by General Abacha's associates,
including [his son] Mohammed Abacha and Bagudu."
Id. ¶ 25. The complaint includes three examples of
these security votes letters. Id. ¶ 28.
process of using security votes letters " to take
[funds] from the [Central Bank of Nigeria] violated what the
[Central Bank of Nigeria] has described as 'accepted
government procedures.'" Id. ¶ 27. "
The proper procedure required the Minister of Finance and the
Accountant-General to each approve disbursements in
accordance with Nigeria's budget." Id. The
security votes letters at issue were not properly approved
" and were also not included in Nigeria's budget for
the relevant fiscal years." Id. After General
Abacha's death, Nigeria established a Special
Investigation Panel, " which found that General Abacha
and his co-conspirators had used the false security votes
letters to steal and defraud more than $2 billion in public
funds, including: (1) at least $1.1 billion and £ 413 million
pounds sterling (GBP) in cash; (2) at least $50,456,450 and £
3,500,000 GBP in traveler's checks; and (3) at least
$386,290,169 through wire transfers." Id. ¶ 29.
the funds were disbursed from the Central Bank of Nigeria,
bank staff and " other individuals known and unknown to
the United States" would deliver the funds to National
Security Advisor Gwarzo at his [83 F.Supp.3d 365] residence.
Id. ¶ 31. " Gwarzo and others acting at his
direction would [the n] repackage the currency in secure bags
and...deliver it to General Abacha at his residence."
Id. " General Abacha, or those acting at his
direction, [then] delivered more than $700 million of these
funds to [General Abacha's son] Mohammed Abacha in bags
or boxes full of cash." Id. ¶ 32. Mohammed
Abacha, in turn, gave that cash to Bagudu, who "
arranged for the money to be transferred to accounts
controlled by Bagudu and Mohammed Abacha in foreign
countries." Id. ¶ 33. " In order to move
the money overseas," Bagudu deposited the money, which
he referred to as his " 'cash swaps,'" in
two local Nigerian banks, and then he " and/or Mohammed
Abacha" instructed those banks to transfer the funds to
accounts overseas owned by Mohammed Abacha and Bagudu.
Id. ¶ 34. " Transfers included deposits into
accounts in the name of [defendant corporations]" under
the control of Bagudu and Mohammed Abacha. Id. ¶ ¶
33-34. " [A]t least $137 million" of these funds
were " transported into and out of the United
States." Id. ¶ 35. The complaint describes
various specific transactions in support of these allegations
. Id. ¶ 35(a)-(f). And as discussed below, the funds
were later pooled with funds from the second scheme and then
laundered and transferred to defendant investment portfolios.
See id. ¶ ¶ 52-93.
second scheme, referred to as the " Debt Buy-Back
Fraud," began in 1996, when Bagudu and others arranged
for the Nigerian government, with General Abacha's
approval, to repurchase its own debt from Mecosta--a company
owned by Bagudu and Mohammed Abacha--at a price significantly
higher than what Nigeria would have paid on the open market.
Id. ¶ ¶ 36-44. The background of this scheme is as
follows. Nigeria had agreed to pay a Russian company (TPE) in
debt instruments in exchange for the construction of a steel
plant. Id. ¶ 37. A dispute arose, however, and
Nigeria suspended payment and defaulted on the outstanding
debt. Id. ¶ 38. Bagudu learned that another company
(Parnar) " would be willing to sell the debt to one of
Bagudu's companies (in this case, Mecosta)."
Id. ¶ 39. Bagudu approached General Abacha's
other son Ibrahim Abacha and Nigerian Finance Minister
Anthony Ani, who assured Bagudu that if Mecosta bought the
debt, Nigeria would buy it from Mecosta. Id. ¶ 40.
" To guarantee that Nigeria would purchase the debt, Ani
entered into an agreement on behalf of Nigeria to buy the
debt from Mecosta on April 14, 1996, more than four months
before either Parnar or Mecosta actually acquired the
debt." Id. Bagudu then " orchestrated a
series of transactions through which Mecosta received money
in escrow from Nigeria, used that money to purchase the debt
from Parnar, and sold the debt back to Nigeria at a
significant markup." Id. ¶ 41.
Specifically, Bagudu arranged for TPE to sell approximately
1.6 billion [German Deutschemarks (" DM" )] of its
Nigerian debt instruments to Parnar on or about September 30,
1996, for 350 million DM. That same day, Parnar resold the
same debt to Mecosta, raising the price to 486 million DM.
Mecosta immediately marked up the price again and sold it
back to Nigeria for 972 million DM, which the Nigerian
government paid in two installments of 486 million DM.
Id. ¶ 42. General Abacha " personally
approved" Nigeria's purchase of the debt, "
even though Nigeria would have saved hundreds of millions of
dollars by buying the debt on the open market at the price
TPE was willing to sell it, which was nearly two-thirds less
than Niger a ultimately paid for the debt." Id.
¶ 44. " Mohammed Abacha and Bagudu, as the owners
of Mecosta, [83 F.Supp.3d 366] yielded a profit of
approximately 481 million DM or $282,506,664."
Id. ¶ 43.
from the Debt Buy-Back scheme were wired from Nigeria,
through New York, to corporate accounts at Goldman Sachs in
Zurich, Switzerland controlled by Mohammed Abacha and Bagudu.
Id. ¶ 45. Shortly thereafter, " officials
at Goldman Sachs informed Bagudu and Mohammed Abacha that the
bank was ending their relationship over concerns about the
source of the money." Id. ¶ 46. As a
result, Bagudu and Mohammed Abacha moved the funds from the
account at Goldman Sachs to an account for Mecosta at Banque
Baring Brothers in Geneva, Switzerland. Id.
Officials at Banque Baring Brothers then " informed
Bagudu and Mohammed Abacha that the bank was terminating its
relationship with Mecosta over false representations made by
Bagudu and Mohammed Abacha about the source of their
money." Id. ¶ 47. " Bagudu and
Mohammed had falsely represented . . . that the funds came
from the oil and gas industry." Id. Bagudu and
Mohammed Abacha then moved the money from Banque Baring
Brothers to an account for Mecosta at DBIL in Jersey, which
" rel[ied] on false representations of Bagudu and
Mohammed Abacha and false documents purportedly showing
legitimate sources of the Mecosta money." Id.
¶ 48. " For example, Bagudu and Mohammed Abacha
represented to DBIL that the Mecosta funds were the proceeds
of oil, construction, and energy trading." Id.
the funds from the Security Votes scheme and the Debt
Buy-Back scheme were transferred out of Nigeria, they were
laundered through the purchase of money instruments--referred
to as Nigerian Par Bonds--backed by the United States that
were later liquidated. Id. ¶ ¶ 52-93. The
investment portfolios contain funds derived from the
liquidation of the Nigerian Par Bonds. See id.
Civil Asset Forfeiture Reform Act of 2000 (" CAFRA"
), 18 U.S.C. § 981 et seq., established the procedural
and substantive rules to govern forfeiture actions. The
government brings this forfeiture action under one of
CAFRA's substantive provisions: section 981(a)(1)(A).
Hence, the pleading requirements for this action are governed
by the Supplemental Rules for Admiralty or Maritime Claims
and Asset Forfeiture Actions; specifically, Rule G of the
Supplemental Rules, which " governs a forfeiture action
in rem arising from a federal statute." Fed.R.Civ.P.
Supp. R. A(1); G(1). The Federal Rules of Civil Procedure
also apply, except to the extent that they are inconsistent
with the Supplemental Rules. Fed.R.Civ.P. Supp. R. A(2).
Supplemental Rule G(2) requires that the government's
complaint for forfeiture in rem " state sufficiently
detailed facts to support a reasonable belief that the
government will be able to meet its burden of proof at
trial." Fed.R.Civ.P. Supp. R G(2)(f). The
government's burden of proof at trial is " to
establish, by a preponderance of the evidence, that the
property is subject to forfeiture." 18 U.S.C. §
983(c)(1). In other words, at the pleading stage, the
complaint is only required to " state the circumstances
from which the claim arises with such particularity that the
defendant or claimant will be able, without moving for a more
definite statement, to commence an investigation of the facts
and to frame a responsive pleading." Fed.R.Civ.P. Supp.
R. E(2)(a); Fed.R.Civ.P. Supp. R.G, Advisory Committee Notes
(noting that the " reasonable belief" standard in
Rule G(2)(f) mirrors the sufficiency standard in Rule
E(2)(a)); [83 F.Supp.3d 367] see also United States v.
One Gulfstream, G-V Jet Aircraft, 941 F.Supp.2d 1, 14
(D.D.C. 2013) ( " At the pleading stage, it suffices for
the government to simply allege enough facts so that the
claimant may understand the theory of forfeiture, file a
responsive pleading, and undertake an adequate
investigation." ). Notably, a civil forfeiture complaint
may not be dismissed because the government lacked sufficient
evidence of forfeitability at the time of filing, see 18
U.S.C. § 983(a)(3)(D), and the government may use
evidence gathered after filing to meet its burden of proof at
trial, see id . § 983(c)(2).
claimant in an in rem proceeding may move to dismiss under
Rule 12(b). Fed.R.Civ.P. Supp. R. G(8)(b)(i). When
considering a Rule 12(b)(6) motion to dismiss, the court
construes the complaint in the light most favorable to the
plaintiff and " must assume the truth of all
well-pleaded allegations." Warren v. District of
Columbia, 353 F.3d 36, 39, 359 U.S.App.D.C. 179 (D.C.
Cir. 2004). " The plaintiff must be afforded every
favorable inference that may be drawn from the allegations of
fact set forth in the complaint." United States v.
Seventy-Nine Thousand Three Hundred Twenty-One Dollars,
522 F.Supp.2d 64, 68 (D.D.C. 2007). Moreover, factual
challenges are not permitted under Rule 12(b)(6), and the
court may " consider only the facts alleged in the
complaint, any documents either attached to or incorporated
in the complaint and matters of which [it] may take judicial
notice."  EEOC v. St. Francis Xavier
Parochial Sch., 117 F.3d 621, 624, 326 U.S.App.D.C. 67
(D.C. Cir. 1997).
put forth four main arguments in their motion to dismiss: (1)
this Court lacks jurisdiction over this case; (2) the timing
of the complaint exceeds the applicable statute of
limitations and violates claimants' due process rights;
(3) the doctrines of international comity and act of state
necessitate dismissal; and (4) the complaint fails to allege
that defendant investment portfolios are subject to
forfeiture. None of these arguments are successful.
has provided that, " [w]henever property subject to
forfeiture under the laws of the United States is located in
a foreign country, or has been detained or seized pursuant to
legal process or competent authority of a foreign government,
an action or proceeding for forfeiture may be brought . . .
in the United States District court for the District of
Columbia." 28 U.S.C. § 1355(b)(2). Subsection (d)
of the same statute refers to " [a]ny court with
jurisdiction over a forfeiture action pursuant to subsection
(b) . . . ." Id. § 1355(d). Upon
consideration of these provisions, the D.C. Circuit has
explained that " Congress intended the District Court
for the District of Columbia, among others, to have
jurisdiction to order the forfeiture of ...