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United States v. All Assets Held at Bank Julius Baer & Co. Ltd.

United States District Court, District of Columbia

July 29, 2016

UNITED STATES OF AMERICA Plaintiff,
v.
ALL ASSETS HELD AT BANK JULIUS BAER & COMPANY, LTD., GUERNSEY BRANCH, ACCOUNT NUMBER 121128, IN THE NAME OF PAVLO LAZARENKO ETAL. Defendants In Rem.

          MEMORANDUM OPINION

          G. MICHAEL HARVEY JUDGE.

         This case was referred to the undersigned for the management of discovery.. Currently ripe is the United States' motion for protective order relating to Claimant Pavel Lazarenko's discovery requests concerning a failed 2002 plea agreement in Claimant's criminal case and the government's mutual legal assistance treaty ("MLAT") requests to Guernsey and Antigua.[1] After reviewing the entire record, [2] the Court will grant the motion.

         BACKGROUND

         The factual background concerning this in rem asset forfeiture action has been described in multiple opinions by Judge Friedman. See, e.g., United States v. All Assets Held at Bank Julius Baer&Co., Ltd., 772 F.Supp.2d 191, 194 (D.D.C. 2011). This Court will not repeat that lengthy history here. The facts that are pertinent to adjudication of Plaintiffs motion are summarized below.

         In its First Amended Complaint, the United States seeks the forfeiture of more than $250 million deposited in over twenty bank accounts located in Guernsey, Antigua and Barbuda, Switzerland, Lithuania, and Liechtenstein. First Amended Complaint [Dkt. 20] ¶¶ 1, 5. The government alleges that the money in those accounts is traceable to a "variety of acts of fraud, extortion, bribery, misappropriation, and/or embezzlement" committed by Claimant, the former Prime Minister of Ukraine, or by his associates, between 1992 and 1998. Id., ¶¶ 6, 8, 10. The United States asserts its right to the funds pursuant to federal statutes that provide for the forfeiture to the government of funds traceable, or otherwise related to or involved in, criminal activity that occurred at least in part in the United States. Id. ¶ 1.

         A. The Criminal Prosecution and Failed Plea Agreement

         Underlying this action is a criminal prosecution in the Northern District of California. Mot. at 5. In that prosecution, Claimant was charged with the same unlawful conduct that forms the basis of the instant forfeiture. Id._______ The parties thereafter attempted to negotiate a plea agreement. Mot. At 5. _______ One condition of the plea was that Claimant would emigrate to a third country. See Id. at 6-8. During the course of the criminal proceedings, a Department of Justice attorney submitted a declaration stating that plea negotiations derailed after Claimant learned he would be unable to emigrate to his preferred country. Mot. at 6; Declaration of Bruce Ohr [Dkt. 577-5] ¶¶ 2-7. According to the declaration, although the government proposed an alternative country, Claimant refused to accept it. Declaration of Bruce Ohr [Dkt. 577-5] ¶ 6. Claimant takes a different view, alleging that the State Department actively interfered with Claimant's resettlement and pressured his preferred country to refuse him. See Opp. at 4.

         Whoever bore fault for it, the record is clear that plea negotiations eventually fell apart. Mot. at 6; Claimant's Supp. Sentencing Mem. [Dkt. 577-3] at 2. The record contains a draft plea agreement signed by Claimant on November 22, 2002, but the document was not signed by his attorneys or the government. 2002 Plea Agreement [Dkt. 654-4] at 23-24. No plea agreement was ever accepted by the court and Claimant never entered a plea of guilty. See Transcript of Sentencing Hearing [Dkt. 654-4] at 134-35 (noting that the criminal court never received any indication that Claimant wanted to plead guilty and that no plea agreement was ever reached). Claimant went to trial in 2009 and was convicted on several of the charges brought against him.

         B. The MLAT Requests

         Also relevant to the instant motion are the government's MLAT requests to the countries of Guernsey and Antigua'. Mot. at 8-10. After this Court issued an order restraining the defendant assets, including assets held in those two countries, the government requested via their MLATs with Guernsey and Antigua that the authorities in those countries restrain the relevant assets. Id.; see also May 20, 2004 Restraining Order [Dkt. 4] (original restraining order); July 8, 2005 Restraining Order [Dkt. 23] (amended restraining order issued after the government was given leave to file its First Amended Complaint). Both the Guernsey and Antigua authorities issued orders restraining the relevant funds. Mot. at 8-10.[3] In order to secure restraint of his assets in Guernsey, the government was required to make its applications - one under the original restraining order and a second under the amended restraining order - under Guernsey's Proceeds of Crime Act. Opp. at 18. According to Claimant, that law only permits restraint based on foreign criminal convictions. Id. It would not permit restraint merely because a foreign government has charged someone with a crime or suspects a person of having committed a crime. Id. Claimant has generally asserted in this lawsuit that the government misrepresented the nature and scope of his criminal convictions in order to obtain the Guernsey restraint under the Proceeds of Crime Act. Id. at 23-25.

         C. Claimant's Discovery Requests

         On September 19, 2014, Claimant served requests for production of documents on the government. Mot. at 10. Claimant requested, among other things, copies of all records obtained via MLAT requests and copies of all incoming and outgoing MLAT requests related to this case. Id. at 11. Claimant's requests also sought communications between the United States and any foreign governments about Claimant and/or the subject matter of the First Amended Complaint. Id.

         After Plaintiff responded to these requests, Claimant moved to compel further responses. See Claimant's Motion to Compel [Dkt. 336]. The Court held several hearings in May 2015 to discuss the disputes surrounding Claimant's requests. See United States v. All Assets Held at Bank Julius Baer & Co., Ltd., 309 F.R.D. 1, 6 (D.D.C. 2015). By the conclusion of the hearings, the government had agreed to produce all documents received in response to MLAT requests but maintained that it would not produce copies of the requests themselves. Id. at 8. In its Memorandum Opinion on Claimant's motion, the Court ordered the parties to continue to meet and confer in an effort to resolve the MLAT dispute and suggested that if Plaintiff was unwilling to produce the requests, it might be able to satisfy Claimant by stipulating to certain facts or statements contained therein. Id. at 8-9. To facilitate this discussion, the Court directed Plaintiff to produce to Claimant a list of all the relevant MLAT requests. Id.

         The Court also held that requiring the United States to search for and produce all of its communications with foreign government representatives about the subject matter of the Amended Complaint and/or Claimant would be "very time-consuming, extremely burdensome, and unlikely to lead to the discovery of admissible, probative evidence." Id. at 11. The Court also found that such communications would be of little value to Claimant as they would largely consist of logistical and other insubstantial communications. Id. The expansive scope of Claimant's requests were a "fishing expedition" that the Court would not condone. Id. at 12. Over Claimant's objections, Judge Friedman affirmed this Court's ruling denying Claimant's motion to compel with respect to these requests. See United States v. All Assets Held at Bank Julius Baer & Co., Ltd., Civil Action No. 04-0798 (PLF/GMH), 2016 WL 1064435, at *1 (D.D.C. Mar. 17, 2016).

         D. Continued (Unsuccessful) Efforts to Resolve Discovery Disputes

         The government produced the MLAT list but the parties did not meet and confer further on the MLAT dispute. Mot. at 11. At some point, Claimant learned that the government planned to file a motion to strike his claims related to assets held in Guernsey and Antigua, arguing that Claimant did not have sufficient interest in or control over the assets and therefore lacked standing to challenge their forfeiture.[4] Claimant sent Plaintiff a letter in September 2015 requesting copies of certain MLAT requests, including the requests sent to Guernsey and Antigua, so that Claimant could attempt to find factual admissions from the government in those documents establishing that Claimant has sufficient interest in the assets to pursue his claims as to those assets. Id. at 12-13; see Mot. Exhs. at 40-42 (Exhibit C, Claimant's September 2015 letter). In essence, Claimant believes that the documents contain concessions that he owns or controls the defendant assets, which in turn confers standing on him here. Mot. at 12-13. Furthermore, Claimant believes that the MLAT requests contain misinformation regarding his criminal conviction which, if corrected, would undermine the validity of the restraints in Guernsey and Antigua. Id. Later that month, the government responded, stating that it would not produce the requests but that it would meet and confer further on the MLAT dispute. Id. at 13; Mot. Exhs. at 44-45 (Exhibit D, Plaintiffs September 2015 letter). The parties did not confer beyond the exchange of these two letters. Mot. at 13.

         On January 6, 2016, Claimant served the government with a further request for production, seeking records related to Claimant's failed plea negotiations and communications between the United States and foreign governments regarding his potential resettlement to other countries. Id. . at 16. Additionally, Claimant sent a letter to the Court on January 7, 2016, requesting that the Court order Plaintiff to produce the Guernsey and Antigua MLAT requests. See Claimant's Jan. 7, 2016 Letter [Dkt. 545-3]. At a hearing on January 7, 2016, Claimant notified the Court of his request for documents related to his failed plea negotiations and asked the Court to order Plaintiff to produce those records. The Court ...


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