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United States v. All Assets Held In Account No. 80020796

United States District Court, District of Columbia

September 4, 2018

UNITED STATES OF AMERICA, Plaintiff,
v.
ALL ASSETS HELD IN ACCOUNT No. 80020796, IN THE NAME OF DORAVILLE PROPERTIES CORP., AT DEUTSCHE BANK INTERNATIONAL, LTD. IN JERSEY, CHANNEL ISLANDS, AND ALL INTEREST, BENEFITS OR ASSETS TRACEABLE THERETO, et al., Defendants.

          MEMORANDUM OPINION

          JOHN D. BATES UNITED STATES DISTRICT JUDGE

         This civil forfeiture proceeding involves sixteen foreign defendant properties collectively worth more than a half billion dollars, multiple litigants who have attempted to assert claims to these assets, and allegations by the United States government of criminal conduct by Nigeria's former de facto President and his associates. This Court has already determined the fate of most of the defendant assets and purported claims in prior opinions. The question now before the Court is whether to grant [226] the government's motion for entry of default and final judgment against two of the remaining defendant properties. For the reasons described below, the Court will enter default judgment against these two properties but will not certify this judgment as final.

         BACKGROUND

         On November 18, 2013, the United States filed a verified complaint seeking civil forfeiture of assets totaling more than $500 million in value. Compl. [ECF No. 1] ¶ 1. As alleged and as described more fully in this Court's March 19, 2015 Memorandum Opinion, see United States v. All Assets (“All Assets I”), 83 F.Supp.3d 360, 364-366 (D.D.C. 2015), the defendant assets were “involved in an international conspiracy to launder proceeds of corruption in Nigeria during the military regime of General Sani Abacha, ” Compl. ¶ 1. General Abacha, his son Mohammed Sani Abacha, Abubakar Atiku Bagudu, and others allegedly embezzled billions of dollars of public funds from Nigeria by fraudulently representing that the funds would be used for national security purposes. Id. ¶¶ 2, 25-29. General Abacha and his associates also allegedly caused the Nigerian government to repurchase government debt at inflated prices from a company controlled by Abubakar Bagudu and Mohammed Abacha, yielding a profit of approximately $282 million. Id. ¶¶ 2, 36-44. The government asserts that the proceeds from these schemes were laundered through the purchase and subsequent liquidation of hundreds of millions of dollars of U.S.-backed Nigerian Par Bonds (“NPBs”), which entailed the transfer of funds into and out of U.S. domiciliary accounts and the disbursement of coupon interest payments from and liquidation of the NPBs by a U.S. bank. Id. ¶¶ 3, 34-35, 45, 52-53, 57, 85. Sixteen separate in rem defendants were alleged to contain proceeds from the illegal activities: seven bank accounts, identified at paragraphs 4(a)-(g) of the verified complaint; four investment portfolios, identified at paragraphs 4(h)-(k) of the verified complaint; and five corporate defendants. Compl. ¶ 4.

         After filing the complaint, the United States sent direct notice of the action to known potential claimants and, on March 6, 2014, published notice of the forfeiture in accordance with the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions of the Federal Rules of Civil Procedure. See Mot. for Entry of Default J. and for Final and Appealable Order of Forfeiture Against Assets Identified in Paragraphs 4(h)[] and 4(j) of the Compl. (“Gov't's Mot.”) [ECF No. 226] at 3. Potential claimants were required to file any verified claim to an asset within 60 days of publication of the notice. See Fed.R.Civ.P. Supp. R. G(5)(a).

         Purported claims to various assets were subsequently filed by third parties. Godson Nnaka and his attorneys filed claims to all of the assets on behalf of himself and purportedly on behalf of the Republic of Nigeria, all of which have been struck for failure to meet certain filing requirements. See July 3, 2014 Mem. Op. & Order [ECF No. 54] at 14.

         Eight relatives of Abubakar Bagudu also filed verified claims of interest in the four defendant investment portfolios.[1] See Verified Claims and Statements of Interest [ECF Nos. 17- 19, 21-25]. These four defendant investment assets are described in paragraphs 4(h) through 4(k) of the Complaint as:

(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 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(i)”] . . . .
(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)”] . . . .
(k) All assets held in of 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). These assets form the basis of two discretionary trusts. The two defendant assets held by Singaporean company Blue Holdings (1) Pte. Ltd.-Assets 4(h) and 4(j) (collectively, the “Blue Holdings (1) Assets”)-comprise the Blue Family Trust I. See Ibrahim Bagudu Verified Claim [ECF No. 19] ¶ 2(a), (c). The two defendant assets held by Singaporean company Blue Holdings (2) Pte. Ltd. -Assets 4(i) and 4(k) (collectively, the “Blue Holdings (2) Assets”)-comprise the Blue Family Trust II. See id. ¶ 2 (e), (g).

         The Bagudu litigants primarily asserted claims to the defendant investment portfolio based on their status as beneficiaries of the Blue Family Trusts I and II. See United States v. All Assets (“All Assets III”), 299 F.Supp.3d 121, 124-125 (D.D.C. 2018). One of the eight litigants, Ibrahim Bagudu, asserted an additional interest in the claimed assets based on an annuity he received from the Blue Family Trust II. Id. This Court struck the claims of seven of the Bagudu claimants, finding they had no vested beneficial interest in-and hence no colorable claim to-the Blue Holdings (1) and Blue Holdings (2) Assets, and no standing to contest their forfeiture. Id. at 135, 137. Ibrahim Bagudu's claim to the Blue Holdings (1) Assets was likewise struck, but the Court held that he had standing to challenge the forfeiture of the Blue Holdings (2) Assets due to his annuity. Id. at 131, 140. His claim to the Blue Holdings (2) Assets is now the sole remaining third-party claim to the assets in this litigation.

         In the absence of any verified claims to certain defendant properties, the government sought default judgment. The government first requested, and the Court granted, default and final judgment against the seven bank accounts identified in paragraphs 4(a)-(g) of the verified complaint. See Aug. 6, 2014 Mem. Op. & Order [ECF No. 65] (granting default judgment); United States v. All Assets (“All Assets II”), Civil Action No. 13-1832, 2015 WL 13673819, at *3-4 (D.D.C. Dec. 17, 2015) (certifying judgment as final). Then, on March 13, 2018, the government filed an affidavit in support of default against the Blue Holdings (1) Assets. See Aff. for Default Against Defs. Assets H and J [ECF No. 216]. Two days later, the Clerk of Court entered default against these defendant assets. See Clerk's Entries of Default [ECF Nos. 217-18].

         The government now moves for entry of default judgment against and forfeiture of the Blue Holdings (1) Assets. The government also asks the Court to certify as final any order of default judgment pursuant to Federal Rule of Civil Procedure 54(b). Ibrahim Bagudu, claimant to the Blue Holdings (2) Assets, opposes the motion. He contends that entry of default judgment is inappropriate because this Court's exercise of jurisdiction over the assets would violate due process, see Claimant Ibrahim Bagudu's Opp'n to Gov't's Mot. (“Opp'n to Gov't's Mot.”) [ECF No. 231] at 8-14, and because under Frow v. De La Vega, 82 U.S. 552 (1872), it could result in “inconsistent judgments of liability” against the Blue Holdings (1) and Blue Holdings (2) Assets should he successfully defend against forfeiture of the Blue Holdings (2) Assets, see id. at 15-19. He ...


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