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United States v. All Assets Held In Account Number 80020796

United States District Court, District of Columbia

March 5, 2018

UNITED STATES OF AMERICA, Plaintiff,
v.
ALL ASSETS HELD IN ACCOUNT NUMBER 80020796, IN THE NAME OF DORA\TLLE PROPERTIES CORP., AT DEUTSCHE BANK INTERNATIONAL, LTD. IN JERSEY, CHANNEL ISLANDS, AND ALL INTEREST, BENEFITS OR ASSETS TRACEABLE THERETO, et al.,

          MEMORANDUM OPINION

          JOHN D. BATES UNITED STATES DISTRICT JUDGE

         The 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, 4. Eight claimants-all relatives of an individual alleged to have been involved in the conspiracy-filed verified claims of interest in four defendant investment portfolios, asserting that they are the beneficiaries of a trust structure that owns these portfolios. The government has moved to strike the verified claims, on the ground that claimants lack Article III standing to contest the forfeiture. For the reasons explained below, the Court will grant the government's motion to strike as to seven of the eight claimants, and grant in part and deny in part the government's motion to strike as to the remaining claimant, Ibrahim Bagudu.

         BACKGROUND

         I. Procedural History

         The United States commenced this 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. The defendant properties are alleged to contain proceeds from these illegal activities.

         On May 1, 2014, eight claimants-all relatives of Abubakar Atiku Bagudu-filed verified claims of interest in the four defendant investment portfolios (the "claimed assets").[1] See Verified Claims and Statements of Interest [ECF Nos. 17-19, 21-25]. The claimed assets are described in paragraphs 4(h) through 4(k) of the Complaint as follows:

h) All assets held in the name of Blue Holding[s] (1) Pte. Ltd., on behalf of or traceable to Ridley Group Limited and/or the Ridley Trust, at J.O. Hambro Investment Management Limited[2] in the United Kingdom, and all interest, benefits, or assets traceable thereto ["Asset 4(h)"];
i) All assets held in the name of Blue Holding[s] (2) Pte. Ltd., on behalf of or traceable to Ridley Group Limited and/or the Ridley Trust, at J.O. Hambro Investment Management Limited in the United Kingdom, and all interest, benefits, or assets traceable thereto ["Asset 4(f)"];
j) All assets held in the name of Blue Holding[s] (1) Pte. Ltd., on behalf of or traceable to Ridley Group Limited and/or the Ridley Trust, at James Hambro & Partners LLP, in the United Kingdom, and all interest, benefits, or assets traceable thereto ["Asset 4(j)"]; and
k) All assets held in the name of Blue Holding[s] (2) Pte. Ltd., on behalf of or traceable to Ridley Group Limited and/or the Ridley Trust, at James Hambro & Partners LLP, in the United Kingdom and all interest, benefits, or assets traceable thereto ["Asset 4(k)"].

Compl. ¶¶ 4(h)-(k).

         Five claimants are adults: Ibrahim Bagudu (Abubakar Atiku Bagudu's brother), Aisha Atiku Bagudu (one of Bagudu's wives), and Ibrahim Atiku Bagudu, Mohammed Atiku Bagudu, and Maryam Atiku Bagudu (Bagudu's adult children). The remaining three claimants are minor children of Abubakar Atiku Bagudu and Aisha Atiku Bagudu: I.A.B., F.A.B., and H.A.B. Claimants uniformly assert that they have a "beneficial ownership interest and/or financial stake" in the claimed assets as beneficiaries of two trusts: Blue Family Trust I and Blue Family Trust II (collectively, the "Blue Family Trusts"). See, e.g., Ibrahim Bagudu Verified Claim [ECF No. 19] ¶¶ 2(a)-(h), 3. Claimant Ibrahim Bagudu asserts an additional interest in the claimed assets because he is "entitled to receive-and [has] receive[d]-a $100, 000 annual annuity from Blue Family Trust II." IcL¶2(i).

         On March 3, 2017, the government filed a motion to strike claimants' verified claims on the ground that claimants lack Article III standing to contest this forfeiture action. PL's Mot. to Strike [ECF No. 165] at 1. The motion has now been fully briefed, and a hearing was held on October 26, 2017, followed by supplemental briefing. Because the trust structure is at the heart of the standing inquiry, the Court will first describe the Blue Family Trusts.

         II. The Blue Family Trusts

         The Blue Family Trusts were established in July 2010 as a successor trust structure to the Ridley Trust. Stmt, of A. Muffins ("Muffins Stmt") [ECF No. 187-24] ¶ 3. Blue PTC Pte. Ltd. ("Blue PTC"), a company registered in Singapore, serves as the trustee for the Blue Family Trusts. Id. ¶4; see Ibrahim Bagudu Interrog. Resp. [ECF No. 163-4] at 10-11. The Blue Family Trusts' assets consist entirely of shares of stock in two other Singapore Companies: Blue Holdings (1) Pte. Ltd. and Blue Holdings (2) Pte. Ltd. (collectively, the "Blue Holdings Companies"). Blue PTC holds 100% of the ordinary and redeemable preference shares of the Blue Holdings Companies. See Bus. Profiles of Blue Holdings (1) Pte. Ltd., Blue Holdings (2) Pte. Ltd. [ECF Nos. 165-10 & 165-11]; Muffins Stmt. ¶ 5. Blue PTC holds no other assets. Muffins Stmt. ¶ 5.

         The terms governing the Blue Family Trusts are set forth in two deeds of settlement. See Deed of Settlement of Blue Family Trust I ("Deed I") [ECF No. 165-3]; Deed of Settlement of Blue Family Trust II ("Deed II") [ECF No. 165-4]. The Blue Family Trusts are irrevocable trusts that are to be "construed according to the laws of Singapore." Deed I ¶¶ 3, 20; Deed II ¶¶ 3, 20. They are discretionary, as opposed to fixed, trusts. See Decl. of Prof. Tang Hang Wu ("Tang Decl.") [ECF No. 165-19] ¶ 13; Decl. of Prof. Hans Tjio ("Tjio Decl.") [ECF No. 187-23] ¶ 1. In a fixed trust, the shares of the beneficiaries are explicitly fixed from the outset. Tang Decl. ¶ 4. In contrast, in a discretionary trust the shares of beneficiaries are not fixed from the outset; instead, the trustee is typically given the authority in the trust deed to determine whether to apply trust assets for the benefit of beneficiaries.[3] Id.

         Claimants are among the currently named beneficiaries of the Blue Family Trusts. The beneficiaries listed in the Third Schedule for Blue Family Trust I include all of the claimants, as well as one non-claimant.[4] Deed I at 16-17. The beneficiaries listed in the Third Schedule for Blue Family Trust II include all the claimants, as well as two non-claimants. Deed II at 16-17.

         The discretionary nature of the Blue Family Trusts is evident from the terms of the deeds of settlement, which state that the trustee "may":

pay or apply the income of the Trust Fund to or for the benefit of all or such one or more of the Beneficiaries exclusive of the other or others of them as shall for the time being be in existence and in such shares if more than one and in such manner generally as the Trustees shall in their absolute discretion from time to time think fit.

         Deed I ¶ 5(c) (emphasis added); Deed II ¶ 5(c) (same). The trustee also has discretion to decline to distribute income to any of the beneficiaries and, instead, may apply all of the trusts' income to pay maintenance costs, liabilities, or to add to the trust capital. Deed I ¶¶ 5(a), (b), (d); Deed II ¶¶ 5(a), (b), (d). The trustee's discretion is similar with respect to capital-it may apply the trusts' capital "to or for the benefit of all or such one or more of the Beneficiaries exclusive of the other or others of them." Deed I ¶ 6(b); Deed II ¶ 6(b). Hence, if the trustee decides to distribute income or capital, it has absolute discretion to restrict such payouts to a subset of beneficiaries. In other words, the trustee could distribute all income and capital to some combination of the non-claimant beneficiaries, leaving nothing for the claimants. Furthermore, the trustee has discretion to determine the beneficiaries of the Blue Family Trusts. Specifically, the trustee may, at any time during the trust period, irrevocably remove any beneficiary (including any claimant) from the list of beneficiaries, or elect to add additional beneficiaries. Deed I ¶ 9(a)-(b); Deed II ¶ 9(a)-(b).

         Six of the claimants are members of the Final Repository of the Blue Family Trusts.[5] Deed I at 17; Deed II at 17. Accordingly, to the extent that any part of the trust fund remains undisposed at the conclusion of the trust period, the trustee will hold any remaining assets in trust for the Final Repository. Deedl ¶ 7; Deed II ¶ 7. However, in exercising its powers throughout the trust period, the trustee "shall not take into account any interest which the Final Repository as Final Repository may at any time have in the Trust Fund." Deedl ¶ 7(c); DeedII ¶ 7(c). Nor is the trustee obliged to disclose to any member of the Final Repository that he or she "may become entitled to an interest in the Trust Fund . . . except after ... the Final Repository has become entitled to an absolute vested indefeasible interest in the Trust Fund." Deed I ¶ 7(d); Deed II ¶ 7(d).

         To date, two claimants have received distributions from Blue Family Trust II, while six claimants have not received any distributions.[6] Claimant Ibrahim Atiku Bagudu received a distribution from Blue Family Trust II in the amount of €117, 865 around May 21, 2013. Ibrahim Atiku Bagudu Interrog. Resp. [ECF No. 163-11] at 20-21. Claimant Ibrahim Bagudu has received eleven distributions from Blue Family Trust II between January 2011 and August 2014, totaling €5, 139, 672. Ibrahim Bagudu Interrog. Resp. at 22-23. The trustee has never denied any claimant's request for a distribution, see Muffins Stmt. ¶ 22, and no claimant has received a distribution from Blue Family Trust I.

         III. The Blue Holding Companies

         As described above, the trustee, Blue PTC, holds shares of stock in two companies-the Blue Holdings Companies-that themselves hold the claimed assets. The same two individuals serve as the directors of Blue PTC and the Blue Holdings Companies. Id. ¶¶ 7, 10. The Blue Holdings Companies are family-owned investment holding companies that were incorporated in Singapore solely to hold assets as part of the Blue Family Trusts structure. Id. ¶ 6. Two of the claimed assets-Assets 4(h) and 4(j)-are held in the name of Blue Holdings (1) Pte. Ltd. at two investment management companies in the United Kingdom-Waverton Investment Management and James Hambro & Partners LLP. The other two claimed assets-Assets 4(i) and 4(k)-are held in the name of Blue Holdings (2) Pte. Ltd. at the same U.K. firms. Compl. ¶¶ 4(h)-(k).

         LEGAL STANDARDS

         In a civil forfeiture action, the government is the plaintiff, the properties subject to forfeiture are the defendants in rem, and "defenses against the forfeiture can be brought only by third parties, who must intervene." United States v. 8 Gilcrease Lane, 641 F.Supp.2d 1, 4 (D.D.C. 2009) (citation omitted). To intervene, a claimant must establish Article III standing.[7] Id. at 5. Under Rule G(8)(c)(i) of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions ("Suppl. Rule"), the government may move to strike a claim at any time before trial because the claimant lacks standing. The government may frame the motion as one for summary judgment, as it has done here. See Suppl. Rule G(8)(c)(ii)(B).

         I. Summary Judgment

         Summary judgment shall be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986); Holcomb v. Powell, 433 F.3d 889, 895 (D.C. Cir. 2006). "A fact is 'material' if a dispute over it might affect the outcome of a suit under the governing law; factual disputes that are 'irrelevant or unnecessary' do not affect the summary judgment determination." Holcomb, 433 F.3d at 895 (quoting Anderson, 477 U.S. at 248). "An issue is 'genuine' if 'the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'" Id. (quoting Anderson, 477 U.S. at 248). "If there are no genuine issues of material fact, the moving party is entitled to judgment as a matter of law if the nonmoving party 'fails to make a showing sufficient to establish the existence of an element essential to that party's case"'[8] Id. (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)).

         In deciding a motion for summary judgment, "the evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in [her] favor." Anderson, 477 U.S. at 255; see Mastro v. Potomac Elec. Power Co., 447 F.3d 843, 850 (D.C. Cir. 2006). The nonmoving party's opposition, however, must consist of more than mere unsupported allegations or denials and must be supported by affidavits, declarations, or other competent evidence. See Fed.R.Civ.P. 56(e); Celotex, 477 U.S. at 324. If the non-movant's evidence is ...


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