United States v. All Assets Held at Credit Suisse ( 2022 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued December 2, 2021 Decided August 16, 2022
No. 20-5356
UNITED STATES OF AMERICA,
APPELLEE
v.
ALL ASSETS HELD AT CREDIT SUISSE (GUERNSEY) LIMITED,
ACCOUNT NUMBERS 41610 AND 41950, IN THE NAME OF
SAMANTE LIMITED AS TRUSTEES OF THE BALFORD TRUST,
LAST VALUED AT APPROXIMATELY $147.9 MILLION IN UNITED
STATES DOLLARS, ET AL.,
APPELLEES
PAVEL LAZARENKO,
APPELLANT
Appeal from the United States District Court
for the District of Columbia
(No. 1:04-cv-00798)
William H. Stassen argued the cause for appellant. With
him on the briefs were Ian M. Comisky, Jed M. Silversmith, and
David B. Smith. Barry W. Levine entered an appearance.
2
Emily Beckman was on the briefs for movant-intervenors
in support of appellant.
Andrew C. Noll, Attorney, U.S. Department of Justice,
argued the cause for appellee United States. With him on the
brief was Daniel H. Claman, Attorney. Scott A. Meisler,
Attorney, entered an appearance.
Before: TATEL, * KATSAS, and JACKSON, † Circuit Judges.
Opinion for the Court filed Circuit Judge KATSAS.
KATSAS, Circuit Judge: The government seeks the
forfeiture of a trust established by Pavel Lazarenko, a former
Prime Minister of Ukraine, located abroad on the island of
Guernsey. Since 2004, a Guernsey court order has prohibited
Lazarenko from accessing the trust, and a federal district court
order has prohibited him from challenging the Guernsey order
abroad. Lazarenko contends that the district court lacked
statutory authority to issue the latter order and that, in any
event, the order violated principles of international comity. We
reject both challenges on procedural grounds.
I
A
Civil forfeiture actions allow the government to take
property associated with criminal activity. Such actions are in
rem: The property itself is named as the defendant and is, “by
resort to a legal fiction, held guilty and condemned as though
*
Circuit Judge Tatel assumed senior status after this case was
argued and before the date of this opinion.
†
Circuit Judge, now Justice, Jackson was a member of the panel
at the time the case was argued but did not participate in the opinion.
3
it were conscious.” Various Items of Personal Prop. v. United
States, 282 U.S. 577, 581 (1931). “Traditionally, the property
had to be present within the court’s territorial jurisdiction.”
United States v. All Funds in Acct. Nos. 747.034/278,
747.009/278, & 747.714/278 Banco Espanol de Credito, 295
F.3d 23, 25 (D.C. Cir. 2002) (Banco Espanol). Without
possession of the property, a court would have “no power to
enforce its decree.” The Brig Ann, 13 U.S. (9 Cranch) 289, 291
(1815).
Congress altered this traditional rule in 1992. Now, if
property located in a foreign country is subject to forfeiture
under United States law, the federal government may bring a
forfeiture action in our district court. 28 U.S.C. § 1355(b)(2).
The district court thus may acquire in rem jurisdiction even if
a forfeiture order would have no practical effect without
cooperation by the foreign jurisdiction where the property is
located. See Banco Espanol, 295 F.3d at 26–27.
In any civil forfeiture action, the government may seek
interim relief to ensure that the property at issue remains
available while the case is pending. Section 983(j)(1) of title
18 provides that in such an action, the district court “may enter
a restraining order or injunction, require the execution of
satisfactory performance bonds, create receiverships, appoint
conservators, custodians, appraisers, accountants, or trustees,
or take any other action to seize, secure, maintain, or preserve
the availability of property subject to civil forfeiture.”
Civil forfeiture proceedings are governed by the
Supplemental Rules for Admiralty and Maritime Claims and
Asset Forfeiture Actions (Supplemental Rules). Under these
rules, a person asserting an interest in the property may file a
claim in the forfeiture action, Supp. R. G(5)(a)(i), and the
government may move to strike on the ground that the claimant
4
lacks standing, id. G(8)(c)(i)(B). The Federal Rules of Civil
Procedure do not apply to the extent that they are inconsistent
with the Supplemental Rules. Id. A(2).
B
Pavel Lazarenko served in the Ukrainian government from
1992 to 1998, including as Prime Minister from 1996 to 1997.
The government alleges that Lazarenko exploited his positions
of authority to amass a $300 million fortune through fraud,
extortion, bribery, misappropriation, and embezzlement. The
government further alleges that Lazarenko laundered his
illicitly obtained funds through United States financial
institutions, in violation of U.S. law.
In 1997, Lazarenko established the irrevocable Balford
Trust under the laws of Guernsey, a self-governing Crown
Dependency of the United Kingdom. The trust beneficiaries
are members of Lazarenko’s family, including his daughters
Ekaterina and Lecia. The government alleges that, by 1998,
Lazarenko had transferred $121 million of ill-gotten funds to
the trust. As of November 2017, the trust was worth over $176
million.
In 2001, a grand jury in the Northern District of California
charged Lazarenko with 53 counts of money laundering,
conspiracy, wire fraud, and transportation of stolen property.
A jury convicted him on 14 counts, but the Ninth Circuit
reversed as to six, leaving in place seven convictions for money
laundering and one for conspiracy. United States v. Lazarenko,
564 F.3d 1026, 1047 (9th Cir. 2009).
In 2004, the government brought this civil action seeking
the forfeiture of over $230 million held in overseas bank
accounts, including the Balford Trust. The government
invoked 18 U.S.C. § 981, which provides for the forfeiture of
5
property traceable to federal money-laundering offenses. To
preserve the defendant assets, the government sought a
restraining order under section 983(j)(1). In May 2004, the
district court found probable cause to believe that the assets
were forfeitable, and it issued an order prohibiting Lazarenko
and others “from attempting or completing any action that
would affect the availability or value” of the Balford Trust and
other defendant assets. Restraining Order, ECF Doc. 3, at 4–5.
The United States then sought assistance from the Guernsey
government, which applied to the Royal Court of Guernsey for
an order restraining the Balford Trust and other defendant
assets located in Guernsey. The Royal Court granted the
application in July 2004, but its order provided that “any person
affected by this Order may apply … for the discharge or
variation of this Order.” App. to Mot. to Clarify Restraining
Order, ECF Doc. 538-3, at 105.
Between 2004 and 2008, Lazarenko, his daughters, and
others filed claims to the defendant property. Litigation
dragged on for years. The government filed several motions to
strike, and many discovery disputes arose.
In November 2015, Lazarenko asked the Guernsey court
to lift its restraining order on the ground that the disputed assets
were not forfeitable under Guernsey law. The government
threatened Lazarenko with a contempt motion for violating the
district court’s restraining order. In response, Lazarenko asked
the district court to clarify that its order did not bar him from
challenging the Guernsey restraining order in Guernsey. The
district court rejected the request, ruling that Lazarenko’s filing
in Guernsey violated “the plain language” of its order. United
States v. All Assets Held at Bank Julius, Baer & Co., Guernsey
Branch, Acct. No. 121128, 244 F. Supp. 3d 188, 191 (D.D.C.
2017). Lazarenko stopped pursuing his Guernsey application.
6
In 2020, the district court struck Lazarenko’s claim to the
Balford Trust for lack of standing. United States v. All Assets
Held at Bank Julius, Baer & Co., Guernsey Branch, Acct. No.
121128, 480 F. Supp. 3d 1 (D.D.C. 2020). It reasoned that
Lazarenko, as settlor of the irrevocable trust, had no concrete
interest in the disposition of its assets. Id. at 16. In response to
that ruling, Lazarenko moved to modify the district court’s
restraining order to allow him to litigate the forfeitability of the
Balford Trust under Guernsey law in Guernsey. Lazarenko
argued that the district court no longer had authority to restrain
him because he was no longer a party with respect to the trust
and that the order violated principles of international comity.
The district court denied the motion. The court held that
its decision to strike Lazarenko’s claim did not vitiate its power
to enforce the restraining order. United States v. All Assets
Held at Bank Julius, Baer & Co., Guernsey Branch, Acct. No.
121128, 502 F. Supp. 3d 91, 102 (D.D.C. 2020). The purpose
of the restraining order, the court explained, was “to preserve
the availability of property subject to forfeiture during the
pendency of the forfeiture proceedings.” Id. (cleaned up). The
court concluded that restraining Lazarenko still served that
purpose because the Balford Trust would become unavailable
to other claimants if he were to gain access to it through
successful litigation in Guernsey. Id. Allowing Lazarenko to
litigate abroad would thus prejudice the rights of other
claimants. Id.Lazarenko seeks review of the denial of his motion to
modify the restraining order. Because that order has remained
in effect for more than 14 days, it counts as an injunction
immediately appealable under 28 U.S.C. § 1292(a)(1). In re
Any & All Funds or Other Assets in Brown Bros. Harriman &
Co. Acct. No. 8870792, 613 F.3d 1122, 1125 (D.C. Cir. 2010).
7
The district court’s order refusing to modify the injunction was
therefore itself immediately appealable.
C
Shortly after the district court struck Lazarenko’s claim to
the Balford Trust, the government moved to strike the
daughters’ claim as well. The daughters opposed the motion
and filed a conditional cross-motion asking the district court to
modify the restraining order to allow them to litigate in
Guernsey should it strike their claim. The cross-motion raised
the same arguments as Lazarenko’s motion to modify, which
the daughters incorporated by reference.
The district court granted the government’s motion to
strike, and it denied the daughters’ cross-motion for the reasons
set forth in its opinion denying their father’s motion to modify.
United States v. All Assets Held at Bank Julius Baer & Co.,
Guernsey Branch, Acct. No. 121128, No. 04-cv-0798 (PLF),
2021 WL 4060353, at *16 (D.D.C. Sept. 7, 2021). The
daughters’ appeal of this ruling is being held in abeyance
pending the resolution of their father’s appeal. See Order,
United States v. All Assets Held at Credit Suisse (Guernsey)
Ltd., Acct Nos. 41610 & 41950, No. 21-5226 (D.C. Cir. Jan.
20, 2022). The daughters have moved to intervene as a matter
of right in their father’s appeal.
II
We begin with the daughters’ motion to intervene. Federal
Rule of Civil Procedure 24(a)(2) provides that a nonparty may
intervene in district court, as a matter of right, if she files a
timely motion and claims an interest relating to the property at
issue that may be practically impaired in the case, “unless
existing parties adequately represent that interest.” Because
the Federal Rules of Appellate Procedure are silent on the
8
subject, we apply the intervention standards of Civil Rule 24.
See Harrington v. Sessions (In re Brewer), 863 F.3d 861, 871–
73 (D.C. Cir. 2017).
The daughters claim an interest in being able to litigate in
Guernsey themselves, which might be impaired by a decision
in favor of the government in this appeal. But Lazarenko
himself adequately represents that interest. A would-be
intervenor is adequately represented when she “offer[s] no
argument not also pressed by” an existing party. Bldg. &
Constr. Trades Dep’t v. Reich, 40 F.3d 1275, 1282 (D.C. Cir.
1994). Here, the daughters seek to raise precisely the same
arguments as their father. Moreover, the daughters have
revealed by their conduct that they find his representation
adequate. In their cross-motion below, they adopted his
arguments wholesale. And in this appeal, they declined our
invitation to appear at oral argument. We therefore deny the
daughters’ motion to intervene. 1
III
On the merits, we review a district court’s refusal to
modify an injunction for abuse of discretion. See Manitoba v.
Zinke, 849 F.3d 1111, 1117–18 (D.C. Cir. 2017). A district
court abuses its discretion “when it makes an error of law.”
Koon v. United States, 518 U.S. 81, 100 (1996).
Lazarenko raises three arguments that the district court
abused its discretion. First, the court can no longer enjoin him
because he is no longer party to the dispute over the Balford
Trust. Second, the court had no statutory authority to enjoin
1
Because we deny the daughters’ motion to intervene, we deny
as moot their motion to supplement the record on appeal.
9
him from litigating in the courts of other sovereigns. Third, the
injunction here violates principles of international comity.
A
Lazarenko contends that the district court lost the authority
to restrain his conduct regarding the Balford Trust when it held
that he lacks standing to contest its forfeitability. This
argument fails for two reasons.
First, Lazarenko remains a party in this case, including
with respect to the Balford Trust. Unless a district court
expressly directs entry of a final judgment, any order “that
adjudicates fewer than all the claims or the rights and liabilities
of fewer than all the parties does not end the action as to any of
the claims or parties.” Fed. R. Civ. P. 54(b). Here, the order
striking Lazarenko’s claim to the Balford Trust neither entered
a final judgment nor adjudicated all claims of all parties. To
the contrary, Lazarenko still has pending claims to other
defendant assets, as do the government and other claimants.
Second, the court would be able to restrain Lazarenko
regardless of his party status. Section 983(j)(1) permitted the
court to “enter a restraining order or injunction … or take any
other action to seize, secure, maintain, or preserve the
availability of property subject to civil forfeiture.” This
provision is not limited to parties. Like 18 U.S.C. § 1963(d)(1),
which permits district courts to “enter a restraining order or
injunction … or take any other action to preserve the
availability of property” subject to certain criminal forfeitures,
section 983(j)(1) permits restraining orders against nonparties.
See United States v. Regan, 858 F.2d 115, 119 (2d Cir. 1988).
Lazarenko counters that Federal Rule of Civil Procedure
65(d)(2) limits injunctions against nonparties. But the Civil
Rules do not apply to in rem actions “to the extent that they are
10
inconsistent with the[] Supplemental Rules.” Supp. R. A(2);
see also id. G(1) (the Civil Rules apply to in rem forfeiture
actions only “[t]o the extent that this rule does not address an
issue”). Like section 983(j)(1), the Supplemental Rules permit
a court to “enter any order necessary to preserve the property”
or “to prevent its removal or encumbrance” whenever “the
government does not have actual possession” of it. Supp. R.
G(7)(a).
Lazarenko also relies on United States v. Kirschenbaum,
156 F.3d 784 (7th Cir. 1998). Kirschenbaum dealt with 21
U.S.C. § 853(e)(1), a criminal analogue to section 983(j)(1),
which empowers district courts to “enter a restraining order or
injunction … or take any other action to preserve the
availability of property.” The Seventh Circuit held that this
language permits orders only against nonparties over whom the
district court has personal jurisdiction. See 156 F.3d at 795.
Here, though, Lazarenko makes no argument that the district
court lacked personal jurisdiction over him.
B
Lazarenko next argues that section 983(j)(1) does not
empower the district courts to issue anti-suit injunctions. He
reasons that its general language, which authorizes restraining
orders or similar actions to preserve the availability of property,
does not specifically address anti-suit injunctions, and that we
should require a clear statement for anti-suit injunctions given
the comity concerns that they implicate.
This argument is forfeited, because Lazarenko did not
raise it below in his motion to modify the restraining order. See
Manitoba v. Bernhardt, 923 F.3d 173, 179 (D.C. Cir. 2019).
Lazarenko contends that he raised the argument in his 2015
motion to clarify the restraining order. But that motion merely
stated in a footnote, without further elaboration, that section
11
983(j)(1) “does not contemplate barring a claimant from filing
lawsuits in foreign countries to challenge invalid process.”
ECF Doc. 538, at 4 n.3. And “cursory arguments made only in
a footnote” are forfeited. Hutchins v. District of Columbia, 188
F.3d 531, 539 n.3 (D.C. Cir. 1999) (en banc). Lazarenko also
points to his reply brief in support of his motion to clarify, but
an argument first presented in a reply brief is also forfeited.
Abdullah v. Obama, 753 F.3d 193, 199 (D.C. Cir. 2014).
In his reply brief, Lazarenko also argues section 983(j)(1)
does not authorize district courts to issue foreign anti-suit
injunctions. On this point, he reasons that section 983(j)(1)
contains no language to overcome the presumption against
extraterritoriality. This argument is doubly forfeited:
Lazarenko failed to raise it either below or in his opening brief.
We therefore decline to consider it.
C
Finally, Lazarenko contends that even if section 983(j)(1)
authorizes foreign anti-suit injunctions as a general matter, the
restraining order in this case violates principles of international
comity. In his view, the district court abused its discretion by
granting such an injunction for no compelling reason.
Even when granted the power to issue foreign anti-suit
injunctions, courts must exercise that power with due regard
for international comity. The “mere filing” of a suit in one
jurisdiction does not disable other sovereigns from exercising
their own prescriptive jurisdiction. Laker Airways Ltd. v.
Sabena, 731 F.2d 909, 927 (D.C. Cir. 1984). For actions in
personam, parallel proceedings “should ordinarily be allowed
to proceed simultaneously, at least until a judgment is reached
in one which can be pled as res judicata in the other.” Id. at
926–27. And foreign anti-suit injunctions are appropriate only
when “required to prevent an irreparable miscarriage of
12
justice,” such as when “necessary to protect the jurisdiction of
the enjoining court, or to prevent the litigant’s evasion of the
important public policies of the forum.” Id. at 927. The
“duplication of parties and issues alone is not sufficient.” Id.
at 928.
A different rule traditionally prevailed in in rem actions.
In such cases, “the first court seized of jurisdiction over
property, or asserting jurisdiction in a case requiring control
over property, may exercise that jurisdiction to the exclusion of
any other court.” SEC v. Banner Fund Int’l, 211 F.3d 602, 611
(D.C. Cir. 2000). The justification for this rule is tied to the
historic limits on in rem proceedings: A court exercising in
rem jurisdiction “has possession or must have control of the
property which is the subject of the litigation in order to
proceed with the cause.” Princess Lida v. Thompson, 305 U.S.
456, 466 (1939). For this reason, “the jurisdiction of the one
court must yield to that of the other.” Id.Lazarenko contends that the traditional rule governing in
rem proceedings does not apply here. Because section 1355
eliminates the requirement that the court have control over the
res, he argues that courts now have no special need to rely on
anti-suit injunctions when asserting jurisdiction over property
located abroad. Instead, he contends, the more stringent
standard applicable to in personam suits should govern. And
because prohibiting him from litigating in Guernsey was
unnecessary for the district court to protect its jurisdiction, its
refusal to modify the restraining order was improper.
Whatever the force of this argument, we think it is
untimely. Where a litigant seeks to bring a second action in
another jurisdiction long after the commencement of the first,
“equitable principles” analogous to laches “make it more
appropriate to enjoin the second action.” Laker Airways, 731
13
F.2d at 929 n.63. In such cases, the litigant’s lack of diligence
in asserting its rights may bar an otherwise meritorious claim
or defense if the delay prejudices other parties. See Menominee
Indian Tribe v. United States, 614 F.3d 519, 531 (D.C. Cir.
2010). Both conditions are met here.
To begin, it took Lazarenko nearly 16 years to raise his
current argument that the district court could not or should not
restrain him from litigating in Guernsey. The district court and
the Guernsey restraining orders were issued in 2004. Although
the Guernsey order expressly permitted Lazarenko to seek a
modification or discharge, he failed to do so until 2015. And
even when the government then threatened to seek contempt in
the district court, Lazarenko did not challenge the propriety of
that court issuing a foreign anti-suit injunction. Instead, he
argued only that the district court had not prevented him from
litigating in Guernsey. After the district court ruled otherwise
in March 2017, Lazarenko did not challenge the propriety of
the anti-suit injunction until July 2020.
Lazarenko offers no justification for this extraordinary
delay. He does not claim that he was unable to raise his
objections to a foreign anti-suit injunction before 2020. To the
contrary, he could have raised all his current arguments as early
as 2004. His delay squarely reflects a lack of diligence.
As the district court recognized, overlooking Lazarenko’s
delay would prejudice other parties to the forfeiture action.
When Lazarenko filed his motion to modify, the parties had
already spent over a decade and a half litigating in the district
court. By then, they had undertaken extensive discovery and
briefed dozens of motions, the district court had written nearly
40 opinions, and the docket contained over 1300 filings.
Opening a second front of litigation now, in the middle of
ongoing proceedings here, would unfairly disrupt the parties’
14
settled understanding that the district court had become the
principal forum for determining the forfeitability of the trust.
On the other side of the balance, any prejudice to Lazarenko
from keeping the injunction in place would be mitigated
because, as the district court and the government both have
acknowledged, Lazarenko may assert any defenses he may
have under Guernsey law when and if the United States seeks
to enforce a forfeiture judgment by the district court in the
Guernsey courts.
Lazarenko could have pressed his current objections more
than a decade and a half ago, and excusing his delay would risk
wasting the considerable time and resources that the parties
have invested in the district court proceedings. Under these
circumstances, the district court reasonably denied his motion
to modify the restraining order.
IV
We deny Ekaterina and Lecia Lazarenko’s motions to
intervene and to enlarge the record on appeal. We affirm the
denial of Pavel Lazarenko’s motion to modify the restraining
order.
So ordered.