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

United States District Court, District of Columbia

January 17, 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.

          MEMORANDUM OPINION AND ORDER

          PAUL L. FRIEDMAN United States District Judge

         On November 3, 2015, Magistrate Judge G. Michael Harvey issued a Memorandum Opinion and Order granting in part and denying in part the United States' motion to compel Claimant Pavel Lazarenko to produce certain financial documents, including tax records, in connection with this in rem proceeding. See United States v. All Assets Held at Bank Julius Baer & Co., Ltd., 142 F.Supp.3d 37 (D.D.C. 2015) (“All Assets VII”). Claimant Lazarenko filed Objections to Magistrate Judge Harvey's Memorandum Opinion and Order on November 24, 2015. See Dkt. 504. Upon consideration of the parties' papers, the relevant legal authorities, and the entire record in this case, the Court concludes that Magistrate Judge Harvey's decision was not clearly erroneous or contrary to law, and accordingly affirms the decision.[1]

         I. FACTUAL AND PROCEDURAL 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 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); 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). In brief, 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 Lazarenko's present objections, the United States during discovery submitted requests for production of financial and tax records relating to Lazarenko's asserted interest in the in rem assets. Mot. at 7. At issue here are request Nos. 28 and 29, which read as follows:

28. Produce all documents and communications relating to personal income tax returns, business tax returns, and Reports of Foreign Bank and Financial Accounts (FBARs) filed with or submitted to the United States Government or any State of the United States of America by or on your behalf or any legal entity in which you claim an interest for the years 1992 to date.
29. Produce all documents and communications submitted to the Government of the United States of America, any State of the United States of America or any other foreign or domestic government office concerning your income or assets, including but not limited to any financial disclosure documents, tax returns, or other statements of income you have submitted to any government between January 1, 1992 and the present.

Mot. at 7.

         Lazarenko responded by generally objecting to “any and all Document Requests to the extent that they are overly broad, seek information that is irrelevant, will be inadmissible at trial, are unduly burdensome, or are not reasonably calculated to lead to the discovery of admissible evidence.” Opp. at 2. He also made the specific objections that his tax records were privileged under the confidentiality provisions of 26 U.S.C. § 6103, and that he did not possess any foreign bank account records. Id. The parties could not resolve the discovery dispute and the United States moved to compel. Lazarenko opposed the motion, arguing that the requested tax and financial records are not discoverable because: (1) he does not have tax and other financial records from 1992 to 1999; and (2) such records from 2000 to the present are not relevant. Opp. at 3.

         Magistrate Judge Harvey found that Lazarenko's tax and other financial records from 1992 to 1999 records are relevant to both forfeitability and Lazarenko's standing, and thus discoverable. All Assets VII, 142 F.Supp.3d at 42-43. He concluded that those records are relevant to forfeitability because they might establish: “(1) whether Claimant's income during the period matches the quantum of assets he claims here; (2) whether Claimant can prove that his income sources were legitimate; and (3) whether Claimant failed to file tax returns at all, a fact which may support forfeiture of the defendant assets.” Id. (internal citations omitted). Magistrate Judge Harvey also found that Lazarenko's records from 2000 to the present day are relevant only to Lazarenko's standing. Id. at 44. While there may already be evidence in the record demonstrating Lazarenko's “interest” in the in rem assets in this case, Magistrate Judge Harvey explained that “the broad scope of discovery embodied in Rule 26” of the Federal Rules of Civil Procedure permits the government “to take further discovery on this issue to contest [Lazarenko's] evidence” concerning his interest. Id.[2] Accordingly, Magistrate Judge Harvey granted Lazarenko's motion in part and denied it in part. Lazarenko subsequently filed the Objections currently before the Court.

         II. STANDARD OF REVIEW

         A party may seek review of a magistrate judge's decision in a discovery dispute by filing an objection pursuant to Rule 72 of the Federal Rules of Civil Procedure. A magistrate judge's determination in a non-dispositive matter such as a discovery dispute is entitled to “great deference, ” and the Court will set it aside only if it is “clearly erroneous or contrary to law.” Fed. R. Civ. P 72(a); see also Loc. Civ. R. 72.2(c); Beale v. District of Columbia, 545 F.Supp.2d 8, 13 (D.D.C. 2008). The district court reviews objections to the magistrate judge's factual findings or discretionary decisions for clear error. American Center for Civil Justice v. Ambush, 794 F.Supp.2d 123, 129 (D.D.C. 2011). Under this standard, the Court will affirm the magistrate judge's factual findings or discretionary decisions unless the court “is left with the definite and firm conviction that a mistake has been committed.” Neuder v. Batelle Pacific Northwest Nat. Laboratory, 194 F.R.D. 289, 292 (D.D.C. 2000) (quoting United States v. U.S. Gypsum Co., 333 U.S. 364, 365 (1948)). By contrast, the “contrary to law” standard requires the Court to review the magistrate judge's legal conclusions de novo. American Center for Civil Justice v. Ambush, 794 F.Supp.2d at 129.

         III. DISCUSSION

         The Court concludes that Magistrate Judge Harvey correctly articulated the applicable legal principles and that his decision was not clearly erroneous. As an initial matter, Lazarenko does not object to Magistrate Judge Harvey's decisions that (1) none of Lazarenko's tax and financial records were privileged, and (2) those records from 1992 to 1999 are relevant to the issues of forfeitability and standing, and thus discoverable. Nor does he object to ...


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