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

United States District Court, District of Columbia

March 13, 2019

UNITED STATES OF AMERICA Plaintiff,
v.
ALL ASSETS HELD AT BANK JULIUS BAER & CO., LTD., GUERNSEY BRANCH, ACCOUNT No. 121128, IN THE NAME OF PAVLO LAZARENKO, et al., Defendants In Rem.

          MEMORANDUM OPINION AND ORDER

          G. MICHAEL HARVEY UNITED STATES MAGISTRATE JUDGE.

         Claimant Pavel Lazarenko has filed a motion to compel Plaintiff, the United States (the “government”) to provide more specific responses to nine of his requests for admission (“RFAs”). For the reasons that follow, the motion is denied as untimely, but the government is nevertheless ordered to supplement and correct its responses to the RFAs at issue.[1]

         I. BACKGROUND

         This is an in rem action seeking, pursuant to 18 U.S.C. §§ 981(a)(1)(A) & (C), forfeiture of funds held by a number of foreign financial institutions that the government alleges can be traced to a variety of criminal acts committed by Claimant Pavel Lazarenko, the former Prime Minister of Ukraine, or his associates between 1992 and 1998. The factual background of the litigation can be found elsewhere. See, e.g., United States v. All Assets Held at Bank Julius Baer & Co., 307 F.R.D. 249, 250-51 (D.D.C. 2014); United States v. All Assets Held at Bank Julius Baer & Co., 959 F.Supp.2d 81, 84-94 (D.D.C. 2013); United States v. All Assets Held at Bank Julius Baer & Co., 772 F.Supp.2d 205, 207-08 (D.D.C. 2011); United States v. All Assets Held at Bank Julius Baer & Co., 571 F.Supp.2d 1, 3-6 (D.D.C. 2008). As relevant here, and as noted above, Claimant Lazarenko objects to the government's reponses to nine of his RFAs. Each of those nine requests concerns one in rem defendant-funds held at Vilniaus Bankas in Lithuania (known as the “Lithuanian account”). That account holds approximately $29 million in the name of Eurofed Bank, an Antiguan offshore bank in which Claimant Lazarenko purchased an interest. He was Eurofed's largest depositor, holding customer accounts in his own name and in the name of six corporate entities that he controlled. Eurofed established correspondent accounts at various banks to hold its customer funds.[2] The Lithuanian account is one of those correspondent accounts.

         RFA 196 asks the government to “[a]dmit that the funds at the Lithuanian account are not traceable to the Transfer and Concealment ‘scheme.'” ECF No. 1063-5 at 65. RFAs 197 through 200 ask the government to admit that certain “payments” or “proceeds” “are not traceable to the Lithuanian account.”[3] Id. at 66. RFAs 201 through 204 ask the government to “[a]dmit that the funds in the Lithuanian account are not traceable to” specific “schemes.”[4] Id. at 67. In its October 6, 2016 responses, the government responded to each of those RFAs identically. Specifically, it incorporated its general objections as well as an objection that the requests are vague because “‘traceable' has different meanings, and different methodologies produce different results, ” and that “to compute whether something is ‘traceable' under every available methodology would be unduly burdensome in terms of time and expense.” Id. at 55. Subject to those objections, the government stated that “after a reasonable inquiry it lacks sufficient information to admit or deny.” Id. at 66. The government continued:

As Mr. Petron [the government's accounting tracing expert] stated in his expert report, he did not complete his tracing analysis for the Lithuanian account to avoid potential double counting. As Petron explained, given additional time and resources, he could perform a more detailed analysis of the Lithuanian account. Additionally, a money laundering analysis might well conclude that those transfers are part of the transfer and concealment scheme.

Id. at 66.[5]

         Mr. Petron's April 21, 2016 expert report asserts that the Lithuanian account is a Eurofed correspondent account-that is, an account that holds the funds of multiple Eurofed customers.

         ECF No. 1063-2 at 24.

Deposits into this account are numerous, and for those deposits that are directly traceable to other examined accounts, I have marked them on the . . . account statements. However, these marked deposits are also credited to a Eurofed depositor as the beneficiary of a particular transaction, which is already included in the examined accounts. Therefore, I have not performed a WA[6] on the marked deposits within this correspondent account because they may already have been included in the WA of the accounts of Eurofed depositors. . . . Given enough information and time, it would be possible to reconcile the transactions involving these accounts. As discovery continues, if I receive enough information to perform a further analysis of the proceeds deposited into the account, then I may update this report accordingly.

Id. at 24-25.

         Fact discovery as to Claimiant Lazarenko closed on January 16, 2017. ECF No. 840; ECF No. 1063 at 6; ECF No. 1065 at 2. With the appearance of Claimants Alexander, Ekaterina, and Lecia Lazarenko (Pavel Lazarenko's children), expert depositions were put off until after fact discovery as to the so-called “A/E/L Claimants” was completed. ECF No. 966 at 2; ECF No. 976 at 1. Expert discovery was stayed on October 6, 2017, before Claimant Lazarenko had deposed Mr. Petron. ECF No. 1034; ECF No. 1044 at 101, 108. In any case, for various reasons, including a stay of the action imposed to allow the parties to consummate a settlement based on a term sheet executed in August 2018 (ECF No. 1105 at 1; ECF No. 1106), further discovery proceeded in fits and starts (see, e.g., ECF No. 1064 at 66; ECF No. 1085). On February 6, 2019, the Court lifted the stay of the action and the stay of expert discovery, requiring the parties to complete all expert discovery by May 31, 2019. ECF No. 1121. Meanwhile, on December 6, 2017, while the stay of expert discovery was in place (but before the stay of the case in contemplation of settlement), Claimant Lazarenko filed the motion currently before the Court. ECF No. 1063. With the most recent stay having been lifted last month and mediation not having resulted in a settlement, the undersigned turns to resolving Claimant Lazarenko's motion to compel.

         II. DISCUSSION

         The parties first argue over the timeliness of the motion. As noted, fact discovery as to Claimant Lazarenko ended on January 17, 2017. Almost eleven months later-and fifteen months after the RFA responses at issue were served on Claimant Lazarenko-he filed this motion. His primary argument that the motion should not be found untimely is that the government would suffer no prejudice from the relief requested because discovery as to other claimants and as to the experts is still open. Id. at 9-10; ECF No. 1075 at 2. He argues that courts generally deny motions to compel as untimely only where they are filed after a dispositive ...


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