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United States v. All Assets Held at Bank Julius

United States District Court, District of Columbia

January 6, 2017

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 et al., Defendants In Rem.

          OPINION

          PAUL L. FRIEDMAN United States District Judge

         This matter is before the Court on the United States' Motion to Strike the Claim of Alexander Lazarenko for Himself and as Agent for Lecia Lazarenko and Ekaterina Lazarenko. Alexander, Lecia, and Ekarterina Lazarenko oppose the motion. Upon consideration of the parties' written submissions, the relevant case law, and the entire record in this case, the Court will deny the motion.[1]

         I. BACKGROUND

         This is a civil in rem action in which the United Sates seeks forfeiture of over $250 million dollars scattered throughout bank accounts located in Antigua, Barbuda, Guernsey, Liechtenstein, Lithuania, and Switzerland. See Am. Compl. ¶ 1. This Court's prior opinions summarize the procedural history of this case, starting with the criminal prosecution of Pavel Lazarenko, a.k.a. Pavlo Lazarenko, and continuing through this civil forfeiture proceeding. See, e.g., United States v. All Assets Held at Bank Julius Baer & Co., Ltd., 571 F.Supp.2d 1, 3-6 (D.D.C. 2008) (“All Assets I”); United States v. All Assets Held at Bank Julius Baer & Co., Ltd., 959 F.Supp.2d 81, 84-94 (D.D.C. 2013) (“All Assets V”); United States v. All Assets Held at Bank Julius Baer & Co., Ltd., 307 F.R.D. 249, 250-51 (D.D.C. 2014) (“All Assets VI”). In brief, Pavel Lazarenko is “a prominent Ukrainian politician who, with the aid of various associates, was ‘able to acquire hundreds of millions of United States dollars through a variety of acts of fraud, extortion, bribery, misappropriation and/or embezzlement' committed during the 1990s.” All Assets V, 959 F.Supp.2d at 85 (quoting Am. Compl. ¶¶ 1, 10).

         As relevant to the present motion to strike, the United States filed its initial complaint on May 14, 2004 seeking forfeiture of, inter alia, “[a]ll funds on deposit at Credit Suisse (Guernsey) Limited, in account number 41610 in the name of Samante Limited as Trustees of the Balford Trust.” Compl. ¶ 5(b). Alexander, Lecia, and Ekaterina Lazarenko (collectively, “claimants”) are “the three adult children of Pavel Lazarenko.” See Mot. at 4 n.2. On June 29, 2004, Alexander Lazarenko, “for himself and as agent and attorney-in-fact for Lecia Lazarenko and Ekaterina Lazareko, ” filed a pro se verified claim stating their interest in “defendant funds in Credit Suisse (Guernsey) Limited account number 41610” because they “are the beneficiaries of the Balford Trust . . . and thereby have a present beneficial interest in and right to all said currency.” First Claim at 1. Alexander Lazarenko attached signed and notarized power of attorney forms to the claim, indicating that Lecia and Ekaterina Lazarenko each empower him “[t]o represent all [of their] right, title and interest in the Balford Trust in United States v. All Funds on Deposit at Credit Suisse (Guernsey) Limited, account number 41610, in the name of Samante Limited as Trustees of the Balford Trust . . . .” Id. at 5, 9. In addition to their claim, claimants - with the assistance of counsel - also filed a verified answer to the complaint, which stated:

[c]laimant admits the allegation that he is the Settlor and Protector of the Balford Trust maintained in account 41610 at Credit Suisse (Guernsey) and that the beneficiaries of the trust are members of his family, specifically the Balford claimants. Claimant denies the further allegation that he and the other claiming members of his family are “nominal” beneficiaries.

Answer ¶ 73.

         On June 30, 2005, the United States filed an amended complaint seeing forfeiture of “[a]ll assets held at Credit Suisse (Guernsey) Limited, in account numbers 41610 and 41950 in the name of Samante Limited as Trustees of the Balford Trust” (hereafter, the “Samante assets”). Am. Compl. ¶ 5(b) (emphasis added). The amended complaint also added new forfeiture theories for funds in three additional jurisdictions. Am. Compl. ¶¶ 44, 71-75, 82, 85-86. On July 26, 2005, claimants filed a second pro se verified claim as well as a motion to dismiss, which their father, Pavel Lazarenko, joined and for which they had the assistance of counsel. The claim stated their interest in “defendant funds in Credit Suisse (Guernsey) Limited account number [sic] 41610 and 41950” because it alleged that they “are the beneficiaries of the Balford Trust . . . and thereby have a present beneficial interest in and right to all said currency.” Second Claim at 3. Alexander Lazarenko attached to the second claim the same signed and notarized power of attorney forms from the initial claim, which empower him “[t]o represent” Lecia and Ekaterina Lazarenko's “right, title and interest” in the funds in “account number 41610”; the forms made no mention of account number 41950, the account that the United States added in its amended complaint. Id. at 5, 9. Claimants' filed their motion to dismiss the amended complaint together with their father and claimant, Pavel Lazarenko. See Dkt. 27. The Court denied the motion to dismiss in an Order dated March 29, 2007, see Dkt. 63, and an Opinion dated July 9, 2008. See All Assets I, 571 F.Supp.2d at 17. Claimants have never filed an answer to the amended complaint.

         On October 31, 2011, the United States wrote to claimants' attorney and stated that “if your clients do not file an appropriate Answer to the First Amended Complaint by November 14, 2011, the United States will move to strike their Claims.” Mot. at Ex. B. Claimants' attorney replied to this letter, thanking the United States for its “courtesy in permitting” the late filing, id. at Ex. C, but, as noted, he never filed an answer to the amended complaint.

         The United States now moves to strike claimants' second claim for a lack of statutory standing because (1) claimants failed to file an answer to the amended complaint, and (2) Lecia and Ekaterina Lazarenko failed to “verify” their claim under penalty of perjury because the notarized power of attorney forms that they signed did not cause them to swear to the underlying truthfulness of the claim and did not place them “at risk of a false statement.” Mot. at 3; Reply at 6.

         II. DISCUSSION

         “Civil forfeiture actions are governed by the procedures set forth in 18 U.S.C. § 983 and the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions (‘Supplemental Rules'), a subset of the Federal Rules of Civil Procedure.” All Funds V, 959 F.Supp.2d at 91. Such actions “‘are brought against property, not people[, ]'” and thus “‘[t]he owner of the property may intervene to protect his interest.'” Id. at 94-95 (quoting United States v. All Funds in Account Nos. 747.034/278, 747.009/278, & 747.714/278 in Banco Espanol de Credito, Spain, 295 F.3d 23, 25 (D.C. Cir. 2002)). Such intervening owners, known as “claimants” must “assert[] an interest” in “specific property” that is named as a defendant. Supp. R. G(5)(a)(i)(A); see 18 U.S.C. § 983(a)(4)(A) (“[A]ny person claiming an interest in the seized property may file a claim asserting such person's interest in the property[.]”). The Court has previously explained that in order to assert such an “interest, ” a claimant “must demonstrate Article III standing in addition to the separate, though partly overlapping, requirements of statutory standing.” All Funds V, 959 F.Supp.2d at 96 n.10. The statutory standing requirement is grounded in 18 U.S.C. § 983, which limits intervention in civil forfeiture actions to “any person claiming an interest in the seized property” who “file[s] a claim asserting such person's interest in the property in the manner set forth in the Supplemental Rules.” Id. at § 983(a)(4)(A). Here, the Court addresses only statutory standing because the United States does not argue that claimants lack Article III standing.

         “Because the procedures prescribed by the Supplemental Rules play an important role in structuring forfeiture suits and ensuring that they proceed efficiently, a court is authorized to strike the claim and/or answer of any claimant who fails to follow the Rules' procedural dictates.” United States v. All Assets Held at Bank Julius Baer & Co., 664 F.Supp.2d 97, 101 (D.D.C. 2009) (“All Assets II”) (citing Supp. R. G(8)(c)(i)(A)). The Supplemental Rules empower the United States to move to strike a claim for either “failing to comply with [Supplemental] Rule G(5) or (6), or because the claimant lacks standing.” Supp. R. G(8)(c)(i)(A)-(B). When the United States moves to strike, the claimant is required to “carry the burden of establishing standing by a preponderance of the evidence.” Supp. R. G(8)(c)(ii)(B).

         Before addressing claimants' statutory standing, the Court must address the procedural matter of whether the Supplemental Rules permit the United States to move to strike at ...


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