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A $250 million pie the DOJ can’t let go of

On October 10, 2011, in federal, by Eapen Thampy

Mike Scarcella at the Blog of Legal Times reports on a massive DOJ forfeiture action implicating hundreds of third party interests:

Prosecutors in Washington are objecting to a judge’s order that requires the government to provide a more detailed explanation of the U.S. Justice Department’s pursuit of assets in a $250 million forfeiture dispute.

At issue in the case in Washington federal district court is whether prosecutors have adequately responded to information requests from the attorneys who are representing banks and other companies that claim ownership of assets in dispute.

Prosecutors contend the government is entitled to seize potentially hundreds of millions of dollars allegedly tied to the money laundering exploits of a corrupt former Ukranian prime minister named Pavlo Lazarenko.

DOJ has fought for years to gain control of the money, scattered in banks around the world. The litigation in the case, one of the largest pending kleptocracy actions in the United States, has spanned more than a decade in federal courts on both coasts. The case in U.S. District Court for the District of Columbia has been pending since 2004.

A federal magistrate judge in Washington, Deborah Robinson, recently told the Justice Department to provide more information to lawyers for the former European Federal Credit Bank. The judge’s decision in September was a setback for the government, which resisted providing more broad discovery in the case.

The Eurofed bank’s attorneys at McDermott Will & Emery, including Jason Levine, are pushing for a greater understanding of how the disputed funds are tied to Lazarenko’s alleged criminal exploits.

Lazarenko was tried in California on money laundering, wire fraud and other charges and is currently serving a nine-year prison sentence. But the bulk of the criminal case didn’t survive trial and appellate rulings.

Late Friday, the government’s legal team, including Daniel Claman and Teresa Turner-Jones of the DOJ’s asset forfeiture and money laundering section, filed an objection (.pdf) to Robinson’s order. The Justice Department wants Robinson’s order vacated. A federal district judge has the authority to overrule a decision from a magistrate.

DOJ makes three big points. Claman and Turner-Jones contend the magistrate’s decision is broad, burdensome and will intrude on the confidential communication between the United States and foreign countries.

Robinson’s order compelled the government to provide, among other things, all information sought or received through the Justice Department’s legal assistance treaties with several countries, including Antigua. Eurofed Bank was based in Antigua; Lazarenko and an associate purchased a controlling interest in the bank to further a money laundering conspiracy, according to prosecutors.

DOJ attorneys said Robinson’s ruling will allow the banks and other claimants, including the Russian gas company OAO Gazprom, to continue a “fishing expedition into government communications.”

The judge’s order, DOJ also said, ignores “the impracticality of being able to identify, much less describe, any communication during the course of twelve years of investigation and litigation by numerous government attorneys and law enforcement personnel.”

The Justice Department said “matching up what may have been requested in a mutual legal assistance request with evidence produced, much less what may have been left unanswered, is an impossible task.”

DOJ said it has already produced to the banks and other companies a detailed financial analysis of showing the movement of money in Lazarenko’s control.

Lawyers for the banks and other claimants has not responded yet in court to the Justice Department’s criticism of Robinson’s order.

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