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United States v. All Assets Held in Account No. 80020796

United States District Court, D. Columbia

March 19, 2015

UNITED STATES OF AMERICA, Plaintiff,
v.
ALL ASSETS HELD IN ACCOUNT NUMBER 80020796, IN THE NAME OF DORAVILLE PROPERTIES CORP., AT DEUTSCHE BANK INTERNATIONAL, LTD. IN JERSEY, CHANNEL ISLANDS, AND ALL INTEREST, BENEFITS OR ASSETS TRACEABLE THERETO, et al., Defendants

         [83 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.

         For NNSKS & ASSOCIATES, Interested Party: Jude C. Ezeala, PRO HAC VICE, LAW OFFICE OF JUDE C. EZEALA, Baltimore, MD.

         For 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.

         GODSON M. NNAKA, Claimant, Pro se, STAFFORD, TX.

         For 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.

         [83 F.Supp.3d 363] MEMORANDUM OPINION

         JOHN D. BATES, United States District Judge.

         The 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,[1] and for the reasons described below, the Court will deny claimants' motion.

         BACKGROUND

         I. Procedural History

         The 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 activities.

         Eight 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.[2] 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 entered.

         II. Verif ied Complaint

         The following facts are derived from the verified complaint and are assumed to be true for the purposes of deciding claimants' motion to dismiss.

         The government alleges that the funds in defendant investment portfolios are traceable to two illegal schemes.[3] 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.

         The 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.

         After 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.

         The 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.

         Proceeds 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.

         Once 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.

         PLEADING STANDARDS

          The 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).

          A 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." [4] EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624, 326 U.S.App.D.C. 67 (D.C. Cir. 1997).

         DISCUSSION

         Claimants 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.

         I. Jurisdiction

         Congress 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 ...


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