United States District Court, District of Columbia
OPINION AND ORDER
L. FRIEDMAN United States District Judge.
matter is before the Court on the emergency motion [Dkt. 538]
of Claimant Pavel Lazarenko, a.k.a. Pavlo Lazarenko
(“Lazarenko”), for clarification of the
restraining order [Dkt. 23] in this case. Specifically,
Lazarenko seeks an order that: (1) “legal action in the
Royal Court of Guernsey, filed on November 3, 2015, does not
violate the restraining order”; (2) that
“[Lazarenko] and his agents may engage in foreign
litigation to challenge the restraints on his foreign assets
without violating the Court's restraining order”;
and (3) that “[Lazarenko] and his agents may not move
or dispose of, or dissipate the funds without approval of
this Court.” See Proposed Order at 1 (Dec. 29,
2015) [Dkt. 538-1]. The United States opposes the motion.
Upon consideration of the parties' written submissions,
the relevant case law, the entire record in this case, and
the oral argument on January 25, 2017, the Court will grant
Lazarenko's motion for reconsideration in part and deny
it in part.
FACTUAL AND PROCEDURAL BACKGROUND
a civil in rem action in which the United States
seeks forfeiture of over $250 million dollars scattered
throughout bank accounts located in Antigua, Barbuda,
Guernsey, Liechtenstein, Lithuania, and Switzerland.
See Am. Compl. ¶ 1 (June 30, 2005) [Dkt. 20].
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., 307
F.R.D. 249, 250-51 (D.D.C. 2014); United States v. All
Assets Held at Bank Julius Baer & Co., Ltd., 959
F.Supp.2d 81, 84-94 (D.D.C. 2013); United States v. All
Assets Held at Bank Julius Baer & Co., Ltd., 571
F.Supp.2d 1, 3-6 (D.D.C. 2008). 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.”
United States v. All Assets Held at Bank Julius Baer
& Co., Ltd., 959 F.Supp.2d at 85 (quoting Am. Compl.
¶¶ 1, 10).
United States filed this in rem action in 2004,
Complaint (May 14, 2004) [Dkt. 1], and six days later moved
for an ex parte Restraining Order “to secure,
maintain and preserve the availability for forfeiture of all
properties named as defendants in this action.” United
States' Ex Parte Motion for a Post-Complaint
Restraining Order at 2 (May 20, 2004) [Dkt. 2]. The Court
fully reviewed the United States' motion for probable
cause to believe that all in rem defendants were
subject to forfeiture and, finding such probable cause,
signed the proposed Restraining Order on the same day as it
was filed. See generally Restraining Order (May 20,
2004) [Dkt. 3]. Shortly thereafter, the United States issued
a summons and warrant of seizure for each of the in
rem defendant assets in the case, see Docket
for June 7, 2004, resulting in the United States making
Mutual Legal Assistance Treaty (“MLAT”) requests
to various countries to freeze those assets. See,
e.g., Lazarenko's Appendix (“Appx.”)
at 73-84 [Dkt. 583-3]; see also United States v. All
Assets Held at Bank Julius Baer & Co., 772 F.Supp.2d
205, 209 (D.D.C. 2011) (explaining the use of MLAT requests
in this case).
longer an ex parte proceeding, Pavel Lazarenko and
his children - Alexander, Lecia, and Ekaterina Lazarenko -
then entered the case by filing claims and answers asserting
interests in some or all of the in rem defendant
assets. See Children's First Claim (June 29,
2004) [Dkt. 4]; Lazarenko's First Claim (June 29, 2004)
[Dkt. 5]; Children's First Answer (Aug. 13, 2004) [Dkt.
8]; Lazarenko's First Answer (Aug. 13, 2004) [Dkt. 9].
Eight months later, the United States moved to amend its
complaint and thereby its Restraining Order, see
Motion for Leave to File First Amended Complaint (Apr. 26,
2005) [Dkt. 15], which Lazarenko and his children did not
oppose. The Court granted the United States leave to file its
amended complaint by minute order, see Docket
(minute order of June 30, 2005), and, after reviewing the
proposed Restraining Order for probable cause and finding it
adequate, signed the new Restraining Order. See
Restraining Order (July 8, 2005) [Dkt. 23].
2005 Restraining Order governs the conduct of the parties
with respect to the in rem defendant assets in this
case. As relevant here, the Restraining Order prohibits
Lazarenko, his children, and others listed therein:
without prior approval of this Court and upon notice to the
United States and an opportunity for the United States to be
heard, from attempting or completing any action that would
affect the availability or value of the Defendants In
Rem including, but not limited to, withdrawing,
transferring, assigning, pledging, distributing, encumbering,
wasting, secreting or otherwise disposing of or diminishing
the value of, by any means, all or any part of the Defendants
Dkt. 23 at 7.
of the assets that are the subject of this in rem
action are held at Bank Julius Baer & Company, Ltd.,
Guernsey Branch - also known as Bank Julius Baer (Guernsey)
Limited - or Credit Suisse (Guernsey) Limited. Am. Compl.
¶ 5(a)-(c). In December 2015, Lazarenko filed an
Application with the Royal Court of Guernsey to “[v]ary
the Order” freezing those in rem assets,
essentially asking that the freeze be lifted as to a portion
of those funds so that he could pay his criminal forfeiture
judgment in the United States. See Appx. at 8 [Dkt.
538-3]. The basis for Lazarenko's Application is that the
Guernsey order freezing assets was based on an incorrect
understanding of the scope of his United States criminal
conviction in the U.S. District Court for the Northern
District of California. Id. at 6-7. In particular,
Lazarenko's Application claims that the order fails to
take account of the fact that the Ninth Circuit later vacated
six of Lazarenko's 14 counts of conviction. Id.
at 7; see United States v. Lazarenko, 564 F.3d 1026
(9th Cir. 2009). Lazarenko did not disclose this Application
to the United States until roughly six weeks after he filed
it. Appx. at 135 [Dkt. 538-3]. Once notified, the United
States responded by “request[ing] that [Lazarenko]
immediately withdraw the Guernsey Application” or the
United States would “file a motion to show cause as to
why Mr. Lazarenko should not be sanctioned and found in civil
contempt of [this] court's restraining order.”
Appx. at 135. Lazarenko then instructed his attorney in
Guernsey “not to undertake any action pending”
resolution of the present emergency motion, which Lazarenko
filed shortly thereafter. Mot. at 2.
federal court is authorized, under 18 U.S.C. §
983(j)(1)(A), to enter a restraining order “upon the
filing of a civil forfeiture complaint alleging that the
property with respect to which the order is sought is subject
to civil forfeiture, ” in order to preserve the
availability of property subject to forfeiture during the
pendency of the forfeiture proceedings. The Court finds that
Lazarenko's Guernsey Application violates the plain
language of the 2005 Restraining Order in this case.
Lazarenko does not dispute that the Restraining Order enjoys
the full force of law under 18 U.S.C. § 983(j). Nor does
he argue that he sought the “prior approval of this
Court, ” as the Restraining Order requires, before
instituting his Guernsey Application. See
Restraining Order at 7. The only dispute, therefore, is
whether Lazarenko's Guernsey Application “would
affect the availability or value of the Defendants In
Rem.” Id. The answer is plainly yes, and
Lazarenko's arguments to the contrary are frivolous.
argues that “the restraining order makes no reference
to the initiation of foreign litigation.” Mot. at 9.
While the Restraining Order enumerates a laundry list of
activities that might “affect the availability or
value” of the property at issue and does not expressly
include foreign litigation, the phrase “including, but
not limited to” precedes the list of actions that are
prohibited or restrained. Restraining Order at 7.
Cf. SEC v. Bilzerian, 613 F.Supp.2d 66, 69
(D.D.C.) (instituting restraining order that barred
“the commencement of any proceedings in any
court”), aff'd SEC v. Bilzerian, 75 F.
App'x 3, 4 (D.C. Cir. 2003). Moreover, the list of
prohibited activities includes “otherwise disposing of
or diminishing the value of, by any means, ”
all or part of the defendants in rem. Restraining
Order at 7 (emphasis added). Lazarenko's Guernsey
Application asks to take a portion of the res
“to pay” his criminal forfeiture judgment in the
United States. Appx. at 8 [Dkt. 538-3]. It strains credulity
for Lazarenko to now ...