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

UNITED STATES OF AMERICA, Plaintiff, v. ALL ASSETS HELD AT BANK JULIUS Baer & Company, Ltd., Guernsey Branch, account number 121128, in the Name of Pavlo Lazarenko et al., Defendants In Rem.

Civil Action No. 04-0798 (PLF)

United States District Court, District of Columbia

September 7, 2021

OPINION

PAUL L. FRIEDMAN, United States District Judge.

This matter is before the Court on the motion [Dkt. No. 1256] of the United States to strike the claims of Ekaterina Lazarenko and Lecia Lazarenko to the Balford Trust assets. Upon consideration of the parties' written submissions, the relevant legal authorities, and the entire record in this case, the Court will grant the United States' motion to strike.^[1]

I. FACTUAL AND PROCEDURAL BACKGROUND

A. History of this Civil Forfeiture Proceeding

The Court's prior opinions summarize the factual and procedural history of this case, starting with the criminal prosecution of Mr. Pavel Lazarenko, also known as Pavlo Lazarenko, in 2004 and continuing through this long-running in rem civil forfeiture proceeding. See United States v. All Assets Held at Bank Julius Baer & Co., Ltd. (“All Assets XI”), Civil Action No. 04-0798, 2020 WL 7640213, at *2 (D.D.C. Nov. 23, 2020) (collecting prior opinions). In brief, Mr. Lazarenko was “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. (“All Assets IV”), 959 F.Supp.2d 81, 85 (D.D.C. 2013) (quoting Amended Complaint ¶¶ 1, 10).

B. The United States' Motion to Strike the Lazarenko Children's Claim to the Balford Trust

In May 2004, the United States filed an in rem civil forfeiture complaint seeking forfeiture of, among other things, “[a]ll funds on deposit at Credit Suisse (Guernsey) Limited, in account number 41610 in the name of Samante Limited as Trustees of the Balford Trust.” Complaint ¶ 5(b). The next year, in June 2005, the United States filed an amended complaint identifying an additional bank account in Guernsey, account number 41950, and increasing the total Balford Trust assets sought to be forfeited to $147, 919, 401.13. Amended Complaint ¶ 5(b). The amended complaint also identified an escrow account for the Balford Trust, account number 41843, with £ 14, 308.52 pounds sterling of the United Kingdom. Id. ¶ 5(c).

Alexander, Lecia, and Ekaterina Lazarenko (collectively, the “Lazarenko children”) are “the three adult children of Pavel Lazarenko.” United States v. All Assets Held at Bank Julius, Baer & Company, Ltd. (“All Assets VI”), 228 F.Supp.3d 118, 121 (D.D.C. 2017). On June 29, 2004, Alexander Lazarenko, “for himself and as agent and attorney-in-fact for Lecia Lazarenko and Ekaterina Lazareko, ” filed a pro se verified claim stating their interest in the Balford Trust assets. See First Claim at 1. Alexander Lazarenko attached signed and notarized power of attorney forms to the claim, indicating that Lecia and Ekaterina Lazarenko (the “Lazarenko daughters”) each empowered him to “represent all [of their] right, title and interest in the Balford Trust” in this litigation. Id. at 5. The claim asserted that the claimants “have a present beneficial interest in” the Balford Trust assets based on their status as “beneficiaries of the Balford Trust.” Id. at 3. In addition to their claim, the Lazarenko children - with the assistance of counsel - filed a verified answer to the complaint. Answer ¶ 73.

Following the filing of the 2005 amended complaint, the Lazarenko children filed a second pro se verified claim. The claim stated their interest in “[a]ll assets held at Credit Suisse (Guernsey) Limited account numbers 41610 and 41950” because they are “the beneficiaries of the Balford Trust . . . and thereby have a present beneficial interest in and right to all said currency.” Second Claim at 3. Alexander Lazarenko again attached signed and notarized power of attorney forms. The Lazarenko children did not, at that time, file an answer to the amended complaint.

In April 2015, the United States moved to strike the Lazarenko children's claims to the Balford Trust. All Assets VI, 228 F.Supp.3d at 122. The United States argued that the Lazarenko children lacked statutory standing because they failed to file an answer to the amended complaint. Id. It further argued that Lecia and Ekaterina Lazarenko lacked statutory standing because they failed to verify their claim. Id. The Court denied the United States' motion, concluding that “it should excuse [the Lazarenko children's] failure to file an answer to the amended complaint in this case because that failure [had] not at all prejudiced the United States.” Id. at 126. The Court also declined to strike the claims of Lecia and Ekaterina Lazarenko because they had filed their claim in accordance with the procedural rules in effect at the time their claim was filed. Id. at 126-27. The Court ordered the Lazarenko children to refile their claims in accordance with subsequently enacted procedural rules. Id. at 127.

On February 1, 2017, each of the Lazarenko children filed an amended verified claim and statement of interest. The claims of the Lazarenko daughters assert their interest in “[a]ll assets held at Credit Suisse (Guernsey) Limited, account numbers 41610, 41950, and 41843 in the name of Samante Limited as Trustees of the Balford Trust ....” Ekaterina Claim at 1; Lecia Claim at 1. They further assert that the Lazarenko daughters' “rights in the property are set forth in the Declaration of Trust.” Ekaterina Claim at 1; Lecia Claim at 1.

In July 2019, the United States filed a motion for sanctions against Alexander Lazarenko for failing to appear for a noticed deposition. See United States v. All Assets Held at Bank Julius Baer & Co., Ltd., Civil Action No. 04-0798, 2019 WL 6970727, at *5 (D.D.C. Sept. 5, 2019). The United States requested that Alexander Lazarenko's claim be dismissed or, in the alternative, that he be required to appear for a deposition in Ukraine. Id. at *2. Magistrate Judge Harvey issued a report and recommendation that concluded that “no sanction other than dismissal of Alexander Lazarenko's claims would be effective.” He therefore recommended that the government's motion for sanctions be granted in part and that Alexander Lazarenko's claims be dismissed. Id. at *9. This Court adopted and approved Magistrate Judge Harvey's recommendation and dismissed Alexander Lazarenko's claim to the Balford Trust. United States v. All Assets Held at Bank Julius Baer & Co., Ltd. (“All Assets VIII”), Civil Action No. 04-0798, 2019 WL 6910067, at *1 (D.D.C. Dec. 19, 2019).

In January 2016, the United States moved to strike Pavel Lazarenko's claim to the Balford Trust assets. See Mot. Strike Pavel Lazarenko. The Court granted the United States' motion in April 2020. See United States v. All Assets Held at Bank Julius (“All Assets IX”), 480 F.Supp.3d 1, 6 (D.D.C. 2020). The Court later denied Mr. Lazarenko's motion for reconsideration of its opinion and order striking his claim to the Balford Trust. See United States v. All Assets Held at Bank Julius Baer & Co., Ltd., Civil Action No. 04-0798, 2020 WL 6591391, at *7 (“All Assets X”) (D.D.C. Nov. 11, 2020). The Lazarenko daughters therefore are the only remaining claimants to the Balford Trust.

II. LEGAL FRAMEWORK

A. Motion to Strike

In a forfeiture action brought in rem pursuant to a federal statute, at any time before trial, the United States “may move to strike a claim or answer . . . because the claimant lacks standing.” SUPP. R. G(8)(c)(i)(B). Such a challenge to a party's claim and answer “may be presented . . . as a motion to determine after a hearing or by summary judgment whether the claimant can carry the burden of establishing standing by a preponderance of the evidence.” SUPP. R. G(8)(c)(ii)(B).

Summary judgment is appropriate only if “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986); see Baumann v. District of Columbia, 795 F.3d 209, 215 (D.C. Cir. 2015); FED. R. CIV. P. 56(a), (c). In making that determination, the Court must view the evidence in the light most favorable to the non-moving party and draw all reasonable inferences in its favor. Baumann v. District of Columbia, 795 F.3d at 215; Anderson v. Liberty Lobby, Inc., 477 U.S. at 255. A disputed fact is “material” if it “might affect the outcome of the suit under the governing law.” Talavera v. Shah, 638 F.3d 303, 308 (D.C. Cir. 2011) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. at 248). A dispute over a material fact is “genuine” if it could lead a reasonable jury to return a verdict in favor of the non-moving party. See Scott v. Harris, 550 U.S. 372, 380 (2007); Grimes v. District of Columbia, 794 F.3d 83, 94-95 (D.C. Cir. 2015).

Although all reasonable inferences must be drawn in favor of the non-moving party, that party's opposition to the summary judgment motion must consist of more than mere unsupported allegations or denials, and must instead be supported by affidavits, declarations, or other competent evidence setting forth specific facts showing that there is a genuine issue for trial. See FED. R. CIV. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). The non-moving party is required to provide evidence that would permit a reasonable jury to find in her favor. Laningham v. U.S. Navy, 813 F.2d 1236, 1241 (D.C. Cir. 1987). For the...