United States District Court, D. Columbia
March 19, 2015
UNITED STATES OF AMERICA, Plaintiff,
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
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 property located in
foreign countries." United States v. All Funds in
Account in Banco Español de Credito, Spain, 295
F.3d 23, 27, 353 U.S.App.D.C. 23 (D.C. Cir. 2002).
the government has alleged that defendant properties are
located [83 F.Supp.3d 368] abroad and are subject to
forfeiture, and that hence, this Court has jurisdiction to
hear the forfeiture action under section 1355(b)(2).
Claimants disagree. First, they argue that, because "
there are virtually no contacts between the Claimed Property
and the U.S.," jurisdiction is not proper. Mot. to
Dismiss at 2. Use of the United States banking system,
however, provides sufficient contact between property and the
United States for a civil forfeiture action in rem . See,
e.g., United States v. All Assets Held at Bank Julius
Baer & Co., 571 F.Supp.2d 1, 10 n.8 (D.D.C. 2008). And
here, the government has alleged widespread use of the United
States banking system in the storage and movement of funds
and the liquidation of investment instruments. See, e.g.,
Compl. ¶ 35 (wire transfers of security vote proceeds
passed through ANZ (New York)); ¶ 81 (a wire transfer of
approximately $2.4 million of the Debt Buy-Back scheme
proceeds passed from an account for Mecosta at Credit
Agricole Indosuez (London) to Marine Midland Bank, N.A. (New
York) to ANZ (New York), and then to ANZ (London)); ¶ 85
(the Nigerian Par Bonds were liquidated through Citibank (New
also argue against jurisdiction because they allegedly "
have less than the required minimum contacts with the United
States." Mot. to Dismiss at 2. But whether a court has
personal jurisdiction over claimants is not a valid
jurisdictional consideration in an in rem civil forfeiture
action. Instead, once a court has determined that
jurisdiction exists over an in rem civil forfeiture action,
the court has jurisdiction to adjudicate all claims to the
defendant property. See Tennessee Student Assistance
Corp. v. Hood, 541 U.S. 440, 453, 124 S.Ct. 1905, 158
L.Ed.2d 764 (2004) (" [J]urisdiction over the person is
irrelevant if the court has jurisdiction over the
property." ) (citing 4A C. Wright & A. Miller, Federal
Practice & Procedure § 1070 (3d ed. 2002)). Accordingly,
the Court has jurisdiction over this in rem civil forfeiture
action, regardless of claimants' personal contacts with
the United States.
Timing Of The Complaint
statute of limitations for bringing a civil forfeiture action
is " five years after the time when the alleged offense
was discovered" or " 2 years after the time when
the involvement of the property in the alleged offense was
discovered," whichever is later. 19 U.S.C. § 1621;
18 U.S.C. § 981(d) (adopting 19 U.S.C. § 1602 et
seq.). Pursuant to 19 U.S.C. § 1621(2), however, the
clock is tolled during any " absence of the
property" from the United States. And the D.C. Circuit
has held that, when property is located outside of the United
States, there is an " absence of the property"
because " when property is not here it is absent."
Banco Español, 295 F.3d at 27; see
also id . (" There is no particular reason . . . for
stretching the word 'absence' to mean something other
than not present." ). In that case, the Circuit found
the claimant's argument that " property cannot be
absent unless it was first in this country and then
removed" to be incorrect. Id.; see also id.
(" If Congress had meant what the claimant suggests, we
would expect some reference in the statute to the act of
removal, but there is none." ). The Circuit further
We recognize that our reading tolls the running of the
limitations period indefinitely for bringing actions against
drug [83 F.Supp.3d 369] proceeds located in foreign
countries. But given the uncertainties of foreign
cooperation, Congress may not have wanted to force the
government to bring forfeiture proceedings within five years
to recover such property.
Id. The Circuit was well aware, then, that its
reading of the tolling statute could lead to extended or even
indefinite tolling in certain situations, but reached its
decision none the less.
because defendant properties are investment portfolios
located in the United Kingdom that have been "
absent" from the United States since their creation, the
statute-of-limitations clock has been tolled pursuant to 19
U.S.C. § 1621(2). And because the complaint was filed
during the ongoing " absence of the property" from
the United States, this forfeiture proceeding commenced
within the applicable statute-of-limitations period.
acknowledge that binding precedent provides that the
statute-of-limitations clock is tolled in circumstances like
those here. Nevertheless, they argue that the Court should
decline to toll the time for this particular action. They
contend that the government has bee n " well aware of
the allegations that form the basis of the Complaint in this
action as early as May 2003," yet " inexcusably
decided to wait nearly ten years to file these forfeiture
proceedings." Mot. to Dismiss at 14-15. But nothing
indicates that the government maliciously waited to bring
this action. To the contrary, the government asserts that it
knew about defendant investment portfolios' involvement
in the alleged offenses for less than two years before it
filed this action. See Opp'n at 27 n.8 (" [T]he
United States only identified the specific defendant
assets' involvement in the crime on February 2, 2012,
less than two years before filing the civil forfeiture
complaint [filed on November 18, 2013] and well within the
statute of limitations without resorting to the tolling
provision." ). If this is correct, then the government
file d its complaint within the statutory limit without
tolling. But in any event, tolling does apply to the
government's claims based on the ongoing absence of
defendant properties from the United States, and hence the
complaint was timely filed.
also argue that tolling in this action violates their due
process rights. Specifically, they contend that " [t]he
excessiveness of the Government's delay in pursuing
claims against the Claimed Property runs far afoul of the
protections afforded Claimants by the Fifth Amendment's
Due Process Clause" because the delay " has
severely prejudiced Claimants and puts them in the absurd
position of having to defend against allegations of events
that occurred almost 20 years ago." Mot. to Dismiss at
are several problems with this argument. First, as noted
above, there is a fundamental dispute between claimants and
the government regarding whether tolling is necessary for the
complaint to be timely filed. The government represents that
it knew of the portfolios' involvement in the criminal
conspiracy for less than two years prior to filing the
complaint, which claimants challenge. At this point in the
proceedings, however, the Court is not in a position to
resolve this dispute.
as claimants acknowledge, to succeed on their due process
claim, claimants must " show that the Government's
delay in bringing the action: a) prejudiced [claimants']
ability to defend [themselves], and b) 'was a purposeful
device to gain a tactical advantage over the
accused.'" Mot. to Dismiss at 20 (quoting United
States v. Mahoney, 698 F.Supp. 344, 346 (D.D.C. 1988)).
Claimants must produce evidence to support these assertions.
See, e.g., United States v. Bridgeman, 523 F.2d
1099, 1112, 173 U.S.App.D.C. 150 (D.C. Cir. 1975) [83
F.Supp.3d 370] (explaining that allegation of " a
general dimming of memories and loss of evidence" was
insufficient to show prejudice or tactical advantage);
Mahoney, 698 F.Supp. at 346 (explaining that
defendant's mere assertion that it is difficult to recall
events that occurred eight or more years ago is insufficient
to show prejudice or tactical advantage). Hence,
claimants' assertion that " [t]he excessive length
of the delay [in the filing of the complaint], alone, should
raise an inference that Claimants will be unavoidably
prejudiced," Mot. to Dismiss at 21, is clearly in
sufficient . More is needed to show prejudice, and this
motion to dismiss is not the appropriate vehicle for the
argument. See, e.g., Seventy-Nine Thousand Three Hundred
Twenty-One Dollars, 522 F.Supp.2d at 72 n. 5 (declining
to address claimants' constitutional arguments on a
motion to dismiss because the only question before a court at
that stage is whether the complaint sufficiently describes
" the circumstances that form the basis for the claims
so as to enable the Claimant . . . 'to commence an
investigation of the facts and to frame a responsive
all claimants may not all be entitled to due process
protections. It is possible that I.A.B., the minor child who
is a U.S. citizen, is protected by the due process clause.
See, e.g., Rasul v. Myers, 563 F.3d 527, 529, 385
U.S.App.D.C. 318 (D.C. Cir. 2009) ( " American citizens
abroad can invoke some constitutional protections." )
(citing Reid v. Covert, 354 U.S. 1, 5, 77 S.Ct.
1222, 1 L.Ed.2d 1148 (1957) (plurality)). The other seven
claimants, however, are foreign nationals who are located
outside of the United States. Six of them assert that they
lack minimum contacts with the United States (one
claimant--Ibrahim Bagudu--asserts that he travels to the U.S.
regularly and does not argue that he lacks minimum contacts).
D.C. Circuit has not opined on whether foreign nationals may
assert a due process claim in United States courts in the
context of an in rem civil forfeiture action. See Banco
Español, 295 F.3d at 27 n.* (explaining that,
under the circumstances, the court " need not consider
whether [claimant's] status as a foreign national outside
the United States precludes any constitutional claims"
). The Circuit has decided, however, that foreign entities or
nationals without minimum contacts with the United States
lack due process or other constitutional rights.
People's Mojahedin Org. of Iran v. Dep't of
State, 182 F.3d 17, 22, 337 U.S.App.D.C. 106 (D.C. Cir.
1999) (" A foreign entity without property or presence
in this country has no constitutional rights, under the due
process clause or otherwise." ); Arbelaez v.
Newcomb, 1 Fed.Appx. 1, 1 (D.C. Cir. 2001) (holding that
plaintiffs, who were foreign nationals without a substantial
connection to the United States, could not raise claims under
constitutional provision barring bills of attainder and ex
post facto laws). And in other situations, the Supreme Court
has indicated that foreign nationals can assert
constitutional claims only if they have minimum contacts with
the United States. See, e.g., United States v.
Verdugo-Urquidez, 494 U.S. 259, 271, 110 S.Ct. 1056, 108
L.Ed.2d 222 (1990) (stating, in the context of the Fourth
Amendment, that " aliens receive constitutional
protections when they have come with in the territory of the
United States and developed substantial connections with this
country" ); Johnson v. Eisentrager, 339 U.S.
763, 770-71, 70 S.Ct. 936, 94 L.Ed. 1255 (1950) (holding that
non-resident aliens who have insufficient contacts with the
United States are not entitled to Fifth Amendment habeas
point in the proceedings, it is premature for the Court to
consider claimants' due process argument. Claimants'
[83 F.Supp.3d 371] constitutional argument requires the Court
to consider evidence outside of the pleadings, and hence
cannot be resolved on the current motion to dismiss.
Doctrines Of International Comity And Act Of State
argue that principles of comity and act of state support
dismissal because, they allege, a " 2003 Settlement
Agreement between Mr. Bagudu and Nigeria constitutes a formal
decision and act by Nigeria to fully and finally resolve the
disputes regarding Mr. Bagudu's alleged participation in
misappropriating funds from Nigeria." Mot. to Dismiss at
49. The government responds that " [n]either principles
of international comity, nor the act of state doctrine,
warrant dismissal of a civil forfeiture action when, as here,
the Executive Branch has brought a forfeiture action against
defendant assets involved in violations of U.S. criminal
laws." Opp'n at 36.
International comity " is the recognition which one
nation allows within its territory to the legislative,
executive or judicial acts of another nation."
Hilton v. Guyot, 159 U.S. 113, 164, 16 S.Ct. 139, 40
L.Ed. 95 (1895); see also Laker Airways Ltd. v. Sabena,
Belgian World Airlines, 731 F.2d 909, 937, 235
U.S.App.D.C. 207 (D.C. Cir. 1984) (explaining that " the
central precept of comity teaches that, when possible, the
decisions of foreign tribunals should be given effect in
domestic courts" ). " [C]ourts in this country have
long recognized the principles of international comity . . .
in order to promote cooperation and reciprocity with foreign
lands." Pravin Banker Assocs. v. Banco Popular
DelPeru, 109 F.3d 850, 854 (2d Cir. 1997). Nevertheless,
dismissing a case because of international comity concerns is
inappropriate when doing so " 'would be contrary to
the policies or prejudicial to the interests of the United
States.'" One Gulfstream, 941 F.Supp.2d at 10
(quoting Pravin Banker, 109 F.3d at 854); see also
United States v. Portrait of Wally, A Painting By Egon
Schiele, No. 99-cv-9940, 2002 WL 553532, at *10
(S.D.N.Y. Apr. 12, 2002) (" Even when there is true
conflict with the laws of a foreign nation, United States
courts will not yield in the name of comity if doing so
conflicts with the law or policy of the United States."
similar lines, " [t]he act of state doctrine precludes
the courts of this country from inquiring into the validity
of the public acts a recognized foreign sovereign power
committed within its own territory." McKesson Corp.
v. Islamic Rep. of Iran, 539 F.3d 485, 491, 383
U.S.App.D.C. 168 (D.C. Cir. 2008) (internal quotation marks
omitted). Hence, the act of state doctrine " is
applicable when 'the relief sought or the defense
interposed would [require] a court in the United States to
declare invalid the official act of a foreign sovereign
performed within' its boundaries." World Wide
Minerals, Ltd. v. Rep. of Kazakhstan, 296 F.3d 1154,
1164-65, 353 U.S.App.D.C. 147 (D.C. Cir. 2002) (quoting
W. S. Kirkpatrick & Co. v. Envtl. Tectonics Corp.,
493 U.S. 400, 405, 110 S.Ct. 701, 107 L.Ed.2d 816 (1990)).
" One of the major concerns underlying the act of state
doctrine is 'the strong sense of the judicial branch that
its engagement in the task of passing on the validity of
foreign acts of a state may hinder rather than further this
country's pursuit of goals both for itself and for the
community of nations as a whole in the international
sphere.'" One Gulfstream, 941 F.Supp.2d at
11-12 (quoting Banco Nacional de Cuba v. Sabbatino,
376 U.S. 398, 423, 84 S.Ct. 923, 11 L.Ed.2d 804 (1964)).
the Executive Branch, through the Department of Justice, has
brought this forfeiture action against defendant properties
involved in alleged violations [83 F.Supp.3d 372] of United
States criminal laws. And as in One Gulfstream, "
[b]ecause the Executive has already done the balancing in
deciding to bring the case in the first place, the doctrine
of international comity does not bar this lawsuit." 941
F.Supp.2d at 10-11 (internal quotation marks and citation
omitted); see also United States v. All Assets Held at
Bank Julius Baer & Co., 772 F.Supp.2d 205, 210 n.3
(D.D.C. 2011) ( " [A] case in which the United States is
the plaintiff would seem a particularly unsuitable candidate
for abstention on international comity grounds. Where, as
here, the executive branch has decided that a forfeiture
action is in the interests of the United States, declining
jurisdiction out of deference to the interests of a foreign
nation would be inappropriate." ). Likewise, the act of
state doc trine does not weigh against this Court's
exercise of jurisdiction. Because this action is brought on
behalf of the United States to enforce United States laws,
there is little concern that the Court's decision "
may hinder rather than further this country's pursuit of
goals both for itself and for the community of nations as a
whole." Banco Nacional de Cuba, 376 U.S. at
423; see also United States v. Giffen, 326 F.Supp.2d
497, 502 (S.D.N.Y. 2004) (" The major underpinning of
the act of state doctrine is the policy of foreclosing court
adjudications involving the legality of acts of foreign
states on their own soil that might embarrass the Executive
Branch . . . in the conduct of our foreign relations . . . .
Where the Executive Branch files an action, however, courts
are reluctant to invoke the act of state doctrine on this
rationale." (internal quotation marks omitted)). Hence,
neither the principles of act of state nor those of
international comity support dismissal of this forfeiture
Factual Allegations In The Complaint
previously mentioned, this forfeiture action is brought under
18 U.S.C. § 981(a)(1)(A), which provides that "
[a]ny property, real or personal, involved in a transaction
or attempted transaction in violation of section [1956 or
1957] of this title, or any property traceable to such
property," is subject to forfeiture to the United
States. Section 1956 provides a criminal penalty for money
laundering. Section 1957 provides a criminal penalty for the
knowing engagement or attempted engagement in a monetary
transaction derived from " specified unlawful
activity," which includes violations of sections 2314
and 2315 (the transportation of stolen property in interstate
or foreign commerce) and section 1956(c)(7)(B)(iv) (the
misappropriation, theft, or embezzlement of public funds by
or for the benefit of a public official) . See 18 U.S.C.
§ § 1957(f)(3), 1956(c)(7)(A)-(B), 1961(1).
Claimants challenge the sufficiency of the government's
factual allegations in support of its first three claims for
forfeiture, which rely on the provisions recounted
above. Each of these claims provides an
independent basis for the forfeiture of defendant investment
The government's first claim for forfeiture
government's first claim for forfeiture alleges that
defendant properties were involved in or traceable to money
laundering or attempted money laundering in violation of
section 1957, as a result of " specified unlawful
activity" penalized by sections 2314 and 2315. These
sections define " specified unlawful activity" as
[83 F.Supp.3d 373] when someone " transports, transmits,
or transfers in interstate or foreign commerce any . . .
securities or money, of the value of $5,000 or more, knowing
the same to have been stolen, converted or taken by
fraud," 18 U.S.C. § 2314, or " receives,
possesses, conceals, stores, . . . sells, or disposes of any
. . . securities, or money of the value of $5,000 or more . .
. which have crossed a State or United States boundary . . .
knowing the same to have been stolen, unlawfully converted,
or taken," 18 U.S.C. § 2315. In other words, to
make out a claim under sections 2314 and 2315, the government
must allege that the property was stolen, converted, or taken
by fraud that the property was transported in
interstate or foreign commerce; and that someone who moved
the property into interstate or foreign commerce knew the
property was stolen, converted, or taken by fraud.
argue that the government's first claim should be
dismissed because (1) the complaint fails to show that the
Debt Buy-Back scheme was fraudulent and thus the government
has failed to show that proceeds from the scheme were stolen,
converted, or taken by fraud; and (2) the complaint fails to
allege facts showing that, in the course of both the Security
Votes scheme and the Debt Buy-Back scheme, someone who
transported the funds in foreign commerce knew that the funds
were stolen, converted, or taken by fraud.
Whether the complaint sufficiently alleges
facts showing that the Debt Buy-Back scheme constituted
to the complaint, in the Debt Buy-Back scheme, General
Abacha, his two sons, their associate Bagudu, the Nigerian
Minister of Finance, and others caused the government of
Nigeria to purchase non-performing government debt at an
inflated price from a company controlled by Bagudu and
Mohammed Abacha. Once the proceeds from the Debt Buy-Back
scheme were transferred out of Nigeria, they were laundered
through the purchase of Nigerian Par Bonds and deposited into
the defendant investment portfolios. See Compl. ¶ 53.
argue that the complaint " provides no basis to conclude
[the Debt Buy-Back] [t]ransaction was fraudulent and thus
[provides] no basis for the forfeiture of any Debt
Buy-Back-derived property as proceeds of crime." Mot. to
Dismiss at 31. Specifically, claimants contend that the
complaint " does not sufficiently allege that the
profits from the transaction were 'stolen, converted, or
taken by fraud' as would be required for a violation of
either 18 U.S.C. § 2314 or 2315." Id. at
response, the government asserts that specific allegations
about the fraudulent nature of the Debt Buy-Back scheme are
included in the complaint. Opp'n at 12-13 (citing Compl.
¶ ¶ 2, 36, 41). Indeed, the government's
allegation that " Mohammed Abacha, Bagudu, and others
defrauded Nigeria of more than $282 million by causing the
government of Nigeria to repurchase Nigeria's own debt
from one of their companies for more than double what Nigeria
would have paid to repurchase the debt on the open
market," Compl. ¶ 36, provides a basis to conclude
[83 F.Supp.3d 374] that the funds were proceeds of fraud,
see, e.g., United States v. A 10th Century Cambodian
Sandstone Sculpture, No. 12 Civ. 2600(GBD), 2013 WL 1290515,
at *6 n.5 (S.D.N.Y. Mar. 28, 2013) (explaining that the
government's allegations that defendant property was
" stolen" via an organized " looting
network" and ultimately delivered to a dealer in Bangkok
were sufficient to support a reasonable belief that the
government would be able to meet its burden of proof at trial
to demonstrate that the property was stolen).
argue, however, that " [a]lthough the Complaint labels
this transaction as a 'fraud' . . . there are simply
no factual allegations to back up the Complaint's naked
assertions of wrongdoing." Mot. to Dismiss at 32.
Claimants direct the Court's attention to One Gulfstream,
where a forfeiture complaint was dismissed for failing to
link the defendant jet to any specific illicit acts despite a
" disconcerting pattern of corruption." 941
F.Supp.2d at 4. There, the government had alleged that the
defendant jet was subject to forfeiture because it was either
derived from or traceable to extortion, misappropriation,
theft, or embezzlement of public funds by a public official.
See id. at 5. The complaint alleged that the jet was
purchased by Equatorial Guinea's Minister of Forestry and
Agriculture, who was a member of " a coterie of powerful
individuals . . . [who] demand[ed] extortionate payments from
oil companies seeking to do business in the country . . .
[and] misappropriate[d] government funds into a slush fund
created for their personal use." Id. The
government's only alleged connection between the jet and
the illegal activity was its allegation that, because the
Minister of Forestry and Agriculture's level of spending
was inconsistent with his government salary, the defendant
jet must have been derived from or traceable to extortion,
misappropriation, theft, or embezzlement of public funds by a
public official. Id. at 5, 14-15. The court
explained, however, that, " [w]hen viewed in tandem with
other details suggesting illegal behavior, [the Minister of
Forestry and Agriculture's] wealth might allow an
inference of illegal activity --but standing alone, it does
not." Id. at 16; see also id. at 15 ("
[T]he government does not provide enough detail for the court
to infer the contours of the illicit scheme." ). "
Faced with this complaint," the court concluded, "
the claimants would find it difficult to know where to begin
their investigation, what individuals to interview, or what
documents to review. . . . The government cannot proceed by
casting general allegations of lawlessness in the country in
which the relevant transactions took place."
Id. at 16.
contrast, the court in United States v. Sum of
$70,990,605, denied a motion to dismiss a forfeiture
action in which the complaint named an individual
subcontractor engaged in a " scheme to defraud,"
involving the payment of bribes and kickbacks to officials
who, in turn, fraudulently inflated the price of contracts. 4
F.Supp.3d 189, 199 (D.D.C. 2014). The complaint there
included specific examples of bribery that did more than
" 'describe a disconcerting pattern of
corruption,'" because it identified the victim of
the scheme, members of the conspiracy, the goal of the
conspiracy, the means of effectuating the conspiracy, and
which members of the conspiracy were responsible for which
acts. Id. at 200 (quoting One Gulfstream,
941 F.Supp.2d at 4). Additionally, the court noted that the
individual subcontractor received most of the contracts, even
when his company did not bid, and concluded that "
[t]hese signals of fraud [i.e., being awarded contracts
without bidding], [w]hen viewed in tandem with other details
suggesting illegal behavior, such as the [83 F.Supp.3d 375]
money paid . . . as bribes, suffice to describe the contours
of the illegal scheme." Id. at 201 (internal
quotation marks omitted); see also United States v.
$ 22,173.00 in U.S. Currency, No. 09 Civ.
7386(SAS), 2010 WL 1328953, at *3 (S.D.N.Y. Apr. 5,
2010) (explaining that a large amount of cash kept in a
safe-deposit box, rather than an interest-bearing account,
" [i]n tandem with the factual allegations suggesting a
pattern of drug trafficking--e.g., the allegations indicating
[that the owner of the safe-deposit box] was in possession of
a half ounce of cocaine on the night the NYPD executed the
first search warrant and the multiple prior arrests for
possession with intent to sell" --was sufficient to
support the government's claim that the safe-de posit
money is subject to forfeiture ).
complaint here, like that in Sum of $70,990,605, " does
not suffer from mere conclusory and broad-brushed
allegations." 4 F.Supp.3d at 199. Instead, the
government has specified the victim of the alleged fraud
(Nigeria); the perpetrators of the alleged fraud (Bagudu,
Abacha, Abacha's sons, and the Minister of Finance); the
goal of the fraud (to defraud Nigeria by orchestrating its
purchase of debt at a vastly inflated price); the means of
effectuating the fraud (the agreement between Bagudu, Ani,
and Ibrahim Abacha, Mecosta's purchase of the debt with
money loaned by Nigeria, the sale of the debt from Mecosta to
Nigeria, and the various transactions afterward moving the
proceeds of the sale overseas and depositing them into
accounts controlled by Bagudu and Mohammed Abacha); and which
members of the fraud were responsible for which acts. This
information is certainly sufficient for claimants to commence
an investigation of the facts and frame a responsive
pleading. See One Gulfstream, 941 F.Supp.2d at 14.
allegations are also sufficient to support an inference of
illegal activity well beyond " general allegations of
lawlessness in the country in which the relevant transactions
took place." One Gulfstream, 941 F.Supp.2d at
16. For example, the complaint includes allegations that a
deal was struck between Bagudu and General Abacha's son
and Nigeria's Minister of Finance to cause Nigeria to buy
its own non-performing debt from a company owned by Bagudu
and another son of General Abacha at more than double what
Nigeria would have paid on the open market that General
Abacha personally approved this deal at the inflated price;
and that the proceeds from the deal were moved overseas to
accounts controlled by Bagudu and one of General Abacha's
sons. These facts support an inference that the Debt Buy-Back
scheme was fraudulent and therefore that the proceeds of the
scheme were stolen, converted, or taken by fraud.
Whether the complaint sufficiently alleges facts showing that
whoever transported the subject funds into foreign commerce
knew that the funds were stolen, converted, or taken by
Sections 2314 and 2315 have a criminal-knowledge element: one
involved in the transportation of property in interstate or
foreign commerce must have known that the property was
stolen, converted, or taken by fraud. For the purposes of the
sufficiency of a complaint, such knowledge [83 F.Supp.3d 376]
can be inferred from the factual allegations. See, e.g.,
United States v. One Tyrannosaurus Bataar Skeleton, No.
12 Civ. 4760(PKC), 2012 WL 5834899, at *10 (S.D.N.Y. Nov. 14,
2012) (finding that government alleged sufficient facts to
show that paleontologist who moved defendant skeleton in
interstate commerce knew that the skeleton was stolen where
complaint alleged that paleontologist attempted to obscure
its country of origin on importation paperwork);
Seventy-Nine Thousand Three Hundred Twenty-One
Dollars, 522 F.Supp.2d at 72 (finding that government
had sufficiently alleged scienter for the illegal transport
of money in interstate commerce where complaint alleged that
individual had misrepresented the amount of money he was
carrying over the border by filling out a customs form for
only a portion of the funds in his possession).
argue that, for both schemes, the complaint fails to
adequately allege that Bagudu knew the funds were stolen at
the time he moved them into foreign commerce. Instead,
claimants contend, " [a]t most, the Complaint alleges
that Mr. Bagudu, a private citizen, transferred large sums of
money he received from Mohammed Abacha, who is not alleged to
be a public official, to accounts in foreign countries."
Reply at 9. The government responds that Bagudu's
knowledge can be inferred from the fraudulent conduct alleged
in the complaint and that " [i]t is reasonable to draw
such inferences" where " Bagudu, a private citizen,
moved hundreds of millions of dollars of Nigerian public
funds overseas." Opp'n at 16.
that the complaint alleges that, after the funds from the
Security Votes scheme were fraudulently disbursed from the
Central Bank of Nigeria, bank staff and others delivered the
funds to National Security Advisor Gwarzo at his residence;
Gwarzo and others then repackaged the currency in secure bags
and delivered it to General Abacha at his residence; and
Abacha and others then delivered these funds to Abacha's
son Mohammed Abacha " in bags or boxes full of
cash." Compl. ¶ 32. Mohamed Abacha subsequently
gave the cash he received to Bagudu, who arranged to move the
money--approximately $700 million--out of Nigeria and into
overseas accounts controlled by Bagudu and Mohammed Abacha.
Id. ¶ 33. Moreover, it is also alleged that, in
the Debt Buy-Back scheme, Bagudu struck a deal with General
Abacha's other son Ibrahim Abacha and Nigeria's
Finance Minister so that Nigeria would buy non-performing
debt at a significant markup from Mecosta (a foreign company
owned by Bagudu and Mohammed Abacha). Id. ¶
¶ 39-40. This markup was quite significant--from 350
million DM to 972 million DM. Id. ¶ 42. General
Abacha " personally approved" Nigeria's
purchase of the debt, id. ¶ 44, and Mohammed Abacha and
Bagudu " yielded a profit of approximately 481 million
DM or $282,506,664." Id. ¶ 43. Afterward,
two banks where Bagudu and Mohammed Abacha moved the proceeds
cancelled their services " over concerns about the
source of the money," and " over false
representations made by Bagudu and Mohammed Abacha about the
source of their money." Id. ¶ ¶
46-47. Finally, a third bank accepted the money, but that
acceptance was based on the " false representations of
Bagudu and Mohammed Abacha and false documents purportedly
showing legitimate sources of the Mecosta money."
Id. ¶ 48.
to the complaint, then, Bagudu, with Mohammed Abacha's
involvement, repeatedly moved millions of dollars of
suspiciously packaged funds (boxes and bags of millions of
dollars from the Security Votes scheme) and millions of
dollars of money he knew was from Nigeria's public funds
(from the Debt Buy-Back scheme) [83 F.Supp.3d 377] overseas
to bank accounts controlled by him and one of General
Abacha's sons. Bagudu and Mohammed Abacha subsequently
lied about the source of some of the funds to several sets of
bank officials. Accepting all of these facts as true for the
purpose of resolving claimants' motion, as the Court
must, gives rise to a reasonable inference that Bagudu and
Mohammed Abacha knew that the funds were " stolen,
converted or taken by fraud" when the funds were
transported into foreign commerce. And certainly, there are
sufficient facts alleged for the claimants to "
understand the theory of forfeiture, file a responsive
pleading, and undertake an adequate investigation."
One Gulfstream, 941 F.Supp.2d at 14.
The government's second claim for
government's second claim for forfeiture alleges that
defendant properties were involved in or traceable to money
laundering or attempted money laundering in violation of
section 1957, as a result of " specified unlawful
activity" penalized by section 1956(c)(7)(B)(iv). "
Specified unlawful activity," in this statutory
provision, is defined as " an offense against a foreign
nation involving . . . bribery of a public official, or the
misappropriation, theft, or embezzlement of public funds by
or for the benefit of a public official." 18 U.S.C.
§ 1956(c)(7)(B)(iv). Claimants argue that the
government's claim should be dismissed because the
complaint does not allege that the Debt-Buy Back scheme was a
specific " offense against a foreign nation"
involving misconduct " by or for the benefit of a public
the involvement of a public official, the government's
allegations state that the Debt Buy-Back scheme was conducted
with the assistance of Finance Minister Ani and the approval
of General Abacha. See Compl. ¶ 40 (" Ani entered
into an a gree me nt on be ha lf of Nigeria to buy the debt
from Mecosta . . . ." ); ¶ 44 (" Nigeria's
purchase of the debt was personally approved by General
Abacha . . . ." ). These allegations are more than
" conclusory and unadorned allegation[s] that the
[foreign public official at issue] was involved" in the
alleged misconduct. United States v. 2291 Ferndown Lane,
Keswick VA 22947-9195, No. 3:10-CV-0037, 2011
WL 2441254, at *4 (W.D. Va. June 14, 2011) (dismissing claim
where complaint failed to allege any specific acts of a
former public official in furtherance of money laundering).
Hence, the complaint sufficiently alleges actions taken by a
public official involved in the Debt Buy-Back scheme.
regarding " an offense against a foreign nation,"
the complaint presents sufficient factual support.
Specifically, the complaint alleges that
At all times relevant to this complaint, conduct constituting
theft; conversion; fraud; extortion; and the
misappropriation, theft, or embezzlement of public funds by
or for the benefit of a public official were criminal
offenses under Nigerian law, as enumerated in the Nigerian
Criminal and Penal Codes, including but not limited to
Nigerian Criminal Code Act . . . and the Nigerian Penal Code
Law. . . . Copies of relevant provisions are set forth in
Compl. ¶ 101. Attachment A contains various provisions
of law from the Nigerian Criminal Code and the Nigerian Penal
Code, including prohibitions on the corruption and abuse of
political office, theft, the corruption of public servants,
misappropriation, breach of trust, and the receipt of stolen
property. See Att. A [ECF No. 7-1].
argue that the government's allegations are insufficient
to show a foreign [83 F.Supp.3d 378] offense because the
Nigerian Criminal Code does not apply to the region of
Nigeria where the alleged corruption took place. Even
supposing that this is true, the complaint still alleges
offenses of the Nigerian Penal Code, which appears to apply
to the whole country. Assuming the government's facts to
be true, and drawing all reasonable inferences in the
government's favor, then, the government has sufficiently
alleged that a foreign offense occurred in the course of the
Debt Buy-Back scheme.
The government's third claim for
government's third claim for forfeiture alleges that
defendant properties are subject to forfeiture because they
were involved in or traceable to a conspiracy to commit money
laundering in violation of sections 1956(h) and 1957. Section
1957 describes money laundering as when a person "
knowingly engages or attempts to engage in a monetary
transaction in criminally derived property." 18 U.S.C.
§ 1957(a). And section 1956(h) criminalizes any
conspiracy to commit an offense defined in section 1956 or
section 1957. Claimants argue that the complaint fails
sufficiently to allege both that someone who laundered the
funds knew they were proceeds of a crime, and that there was
a conspiracy to launder money.
Court has already concluded that the complaint alleged
sufficient facts to infer that Bagudu and Mohammed Abacha
knew that the funds from the Debt Buy-Back scheme and the
Security Vote scheme were stolen when they moved the funds
into foreign commerce. These same funds were subsequently
laundered through the purchase of Nigerian Par Bonds. It
stands to reason that if Bagudu and Mohammed Abacha were
aware that the funds were derived from illegal activity when
they moved them into foreign commerce, then they also knew
that those same funds were derived from illegal activity when
they subsequently laundered them through the purchase of
Nigerian Par Bonds.
whether the complaint alleges a conspiracy to launder money,
" [t]he government does not need to allege facts that
demonstrate an explicit agreement; rather '[p]roof of a
tacit, as opposed to explicit, understanding is sufficient to
show agreement.'" Sum of $70,990,605, 4 F.Supp.3d at
198 (quoting Halberstam v. Welch, 705 F.2d 472, 477,
227 U.S.App.D.C. 167 (D.C. Cir. 1983)). Here, the government
cites multiple allegations in the complaint that, it argues,
demonstrate a tacit agreement to launder the funds, such as
allegations " describing Bagudu and Mohammed
Abacha's joint investment of the Nigerian Par Bonds;
their use of shell companies; and [their] collaboration
moving the criminal proceeds from the 'Security Votes
Fraud' overseas." Opp'n at 18 (citing Compl.
¶ ¶ 52-53, 58, 65, 70).
the facts alleged, if true, would confirm that both men
played key roles in the two schemes and were in control of
the bank accounts where the proceeds from these schemes were
deposited. The complaint also alleges that both men were
responsible for the laundering of the proceeds through
Nigerian Par Bonds. See, e.g., Compl. ¶ 53 ("
Bagudu and Mohammed Abacha pooled proceeds of the Security
Votes Fraud [and] the Debt Buy-Back Fraud . . . into the
purchase of [Nigerian Par Bonds] . . . through a complex
series of transactions in or affecting the United
States." ). The complaint describes the Nigerian Par
Bond transactions--and Bagudu's and Mohammed Abacha's
involvement--at length and in detail. See id . ¶ ¶
54-93. Accepting all the allegations as true and drawing all
inferences in [83 F.Supp.3d 379] the light most favorable to
the government, these concerted actions support the existence
of a tacit agreement to launder funds.
claimants argue that all three claims at issue must be
dismissed because the complaint " fails to allege
sufficient facts connecting the Claimed Property [i.e., the
four defendant investment portfolios] to the alleged criminal
activity, fails to support an inference that the [Nigerian
Par Bonds] are traceable proceeds of money laundering, and
fails to allege that any co[-]mingling occurred in order to
conceal the source of the funds at issue." Mot. to
Dismiss at 47.
pleading standard for tracing funds in a civil forfeiture
complaint is not exacting--even claimants concede that "
the D.C. Circuit has held that the Government is not required
to demonstrate full tracing of all account activity to prove
money laundering under 18 U.S.C. § 1956." Mot. to
Dismiss at 39 (citing United States v.
Braxtonbrown-Smith, 278 F.3d 1348, 1354, 349
U.S.App.D.C. 399 (D.C. Cir. 2002)). Moreover, " since
the issue on this motion is one of pleading, not proof at
trial, it is not necessary to pass on the government's
ultimate burden of proof regarding traceability of the
defendants-in-rem." United States v. All Funds, No.
CV-05-3971(SJF), 2007 WL 2114670, at *7 (E.D.N.Y. July
16, 2007) (internal quotation marks omitted). Here, the
government has sufficiently alleged that the two schemes
constituted unlawful activity under sections 1956 and 1957, a
predicate to establishing that defendant properties are
subject to forfeiture. The government has also alleged that
the proceeds from the two schemes were laundered through the
purchase of Nigerian Par Bonds, and that defendant properties
contain proceeds obtained from the liquidation of the
Nigerian Par Bonds. Accordingly, the government has alleged
sufficiently detailed facts in the complaint to demonstrate
that defendant properties contain assets traceable to
specified unlawful activity. See United States v.
Approximately $ 25,829,681.80 in Funds, No. 98 Civ.
2682(LMM), 1999 WL 1080370, at *7 (S.D.N.Y. Nov. 30, 1999)
(holding that, as long as the government alleges specific
facts supporting an inference that the funds are traceable to
wire fraud and mail fraud, it has met its burden at the
pleadings stage). To the extent claimants argue that there
are innocent funds in defendant properties, that is an issue
of fact for later resolution; for purposes of this motion to
dismiss, the Court must accept the government's factual
allegations as true.
the government has alleged sufficiently detailed facts to
support a reasonable belief that it will be able to establish
by a preponderance of the evidence that defendant investment
portfolios are subject to forfeiture. Fed.R.Civ.P. Supp. R.
G(2)(f). And the government has pled the circumstances from
which the claims arise with such particularity that the
claimants should be able to commence an investigation of the
facts and frame a responsive pleading. No more is needed at
foregoing reasons, claimants' motion to dismiss will be
denied. A separate Order accompanies this Memorandum Opinion.
consideration of  claimants' motion to dismiss and
the parties' memoranda, and for the reasons stated in the
Memorandum Opinion issued on this date, it is hereby
that  claimants' motion to dismiss is DENIED.
Claimants' Mot. to Dismiss [ECF No. 55]
(" Mot. to Dismiss" ); Gov't's Opp'n to
Mot. to Dismiss [ECF No. 73] (" Opp'n" );
Claimants' Reply to Opp'n [ECF No. 74] ("
Initially, there were ten claimants, but
two (a wife and a minor child of Bagudu) withdrew their
claims. See Unopposed Mot. to Withdraw Verified Claims of
Zainab Shinkafi Bagudu and R.A.B. [ECF No. 66]; Aug. 19, 2014
Minute Order Granting Mot. to Withdraw Verified Claims of
Zainab Shinkafi Bagudu and R.A.B.
There is a third scheme alleged in the
complaint, see Compl. ¶ ¶ 94-100, but defendant
properties are not alleged to be derived from it and
claimants do not contest the sufficiency of the
government's factual allegations related to it.
In support of their motion, claimants
submit various attachments. Certainly, " the facts
alleged in the complaint, documents attached as exhibits or
incorporated by reference in the complaint," as well as
" documents upon which the plaintiff's complaint
necessarily relies," may be considered by the Court in
assessing a motion to dismiss. Ward v. D.C. Dep't of
Youth Rehab. Servs., 768 F.Supp.2d 117, 119 (D.D.C.
2011) (internal quotation marks omitted). Anything else is
extraneous and cannot be considered at this stage.
If it were otherwise, then United
States' forfeiture actions against property located
outside of the United States would always be dismissed
whenever a foreign national without minimum contacts entered
a claim to the property and raised personal jurisdiction as
an issue. It is unlikely that this is what Congress
Claimants do not challenge the sufficiency
of the government's fourth and fifth claims, which do not
apply to defendant investment portfolios.
Sections 2314 and 2315, when examined
together, have been interpreted to apply to property
transported, sold, or received in interstate or foreign
commerce known to have been " stolen, converted or taken
by fraud." See, e.g., United States v. Mask of
Ka-Nefer-Nefer, 752 F.3d 737, 741 (8th Cir. 2014);
United States v. Lazarenko, 564 F.3d 1026, 1032 (9th
Cir. 2009); United States v. Cotoia, 785 F.2d 497,
502 (4th Cir. 1986).
Claimants argue that, because there was a
dispute between Nigeria and the Russian company that
originally owned the debt, " it is implausible that
Nigeria could have negotiated a deal directly with TPE [to
buy the debt] at a significantly better price." Mot. to
Dismiss at 32. This is a factual challenge, not a legal one;
it is therefore not an argument for the Court's
consideration at this stage of the proceedings.