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United States v. BNP Paribas S.A.

United States District Court, S.D. New York

April 30, 2015

UNITED STATES OF AMERICA,
v.
BNP PARIBAS S.A., Defendant.

OPINION & ORDER

LORNA G. SCHOFIELD, District Judge.

On July 9, 2014, pursuant to a plea agreement (the "Agreement") it negotiated with the Government, Defendant BNP Paribas S.A. ("BNPP") pleaded guilty to a one-count Information, charging it with conspiring to violate the International Emergency Economic Powers Act and the Trading with the Enemy Act in violation of 18 U.S.C. § 371. The Court accepted the guilty plea and approved the Agreement as fair and reasonable. Pursuant to the Agreement, BNPP consented to the entry of a monetary judgment of over $8 billion, and has deposited in escrow with the Government approximately $3.83 billion (the "Subject Funds"), which is the judgment amount less penalties due to other state and federal entities.

By Notice of Lien filed on January 29, 2015, and amended on February 27, 2015 (the "Petition"), Third-Party Petitioner Marilyn Wiederspan ("Petitioner") claims a lien on the Subject Funds and seeks an ancillary hearing pursuant to 21 U.S.C. § 853(n)[1] to resolve her claims over the Subject Funds. The Government moves to dismiss the Petition and opposes Petitioner's request for a hearing. For the reasons that follow, the Government's motion to dismiss is granted, and Petitioner's application for an ancillary hearing is denied.

I. BACKGROUND

Only the relevant procedural history and the facts alleged in the Petition necessary for the disposition of the present motion are recounted below. The facts alleged in the Petition are assumed to be true for purposes of the motion.

A. The Present Case

Defendant's criminal conduct consisted of the covert processing and transfer of billions of U.S. dollars to and from entities in Sudan, Iran and Cuba, in direct contravention of the U.S. sanctions regime. The Government and BNPP stipulated to a Statement of Facts (the "Statement of Facts") detailing the conduct to which BNPP was pleading guilty, including unlawful transactions of over $6 billion with Sudanese entities, $687 million with Iranian entities and $1.747 billion with Cuban entities. The Cuban transactions were conducted principally through BNPP's participation in U.S. dollar-denominated credit facilities intended to provide financing to Cuban entities.

The parties stipulated to, and the Court endorsed, a Consent Preliminary Order of Forfeiture/Money Judgment (the "Preliminary Order") stating that a judgment of $8, 833, 600, 000 (the "Judgment Amount") would be entered and become final at sentencing. The Judgment Amount represents the amount of proceeds traceable to BNPP's criminal conduct. The Government agreed to credit against the Judgment Amount not more than $4, 994, 800, 000 in payments that BNPP was required to make in connection with its concurrent settlements of related investigations, including by the New York County District Attorney's Office, the Board of Governors of the Federal Reserve System and the New York State Department of Financial Services. On July 28, 2014, BNPP transferred to the Government the Subject Funds of $3, 838, 800, 000 - i.e., the amount of the judgment payable to the Government and remaining after the offset - to be held in escrow until sentencing and then applied to the money judgment. Sentencing is scheduled for May 1, 2015.

B. The Third-Party Petition

On January 12, 2012, Petitioner obtained a Florida state court judgment against the Republic of Cuba for over $63 million for the extrajudicial torture and assassination of her father. She seeks to satisfy that judgment and 4.5% post-judgment interest "out of the $1.7 billion dollars attributable to [BNPP]'s unlawful business dealings with Cuba."

Petitioner has taken various steps to "domesticate the judgment, " including by filing complaints in the Southern District of Florida and subsequently in this District. See Wiederspan v. The Republic of Cuba, 15 Civ. 1983 (S.D.N.Y.) (Caproni, J.). Petitioner seeks to enforce her judgment in the present case. She bases her claim on Cuba's alleged interest in the forfeited funds. The Petition advances various legal arguments for Petitioner's interest in the Subject Funds, including the doctrine of constructive trust, New York law and the doctrine of constitutional avoidance.[2]

II. LEGAL STANDARD

Ancillary proceedings pursuant to the criminal forfeiture statute, 21 U.S.C. § 853(n), are governed by Federal Rule of Criminal Procedure 32.2(c). See, e.g., Willis Mgmt. (Vermont), Ltd. v. United States, 652 F.3d 236, 241 (2d Cir. 2011). Rule 32.2(c) provides that "[i]n the ancillary proceeding, the court may, on motion, dismiss the petition for lack of standing, for failure to state a claim, or for any other lawful reason." Fed. R. Cr. P. 32.2(c)(1)(A). Based on the advisory committee's notes explaining the rule, "a motion to dismiss a third-party petition in a forfeiture proceeding prior to discovery or a hearing should be treated like a motion to dismiss a civil complaint under Federal Rule of Civil Procedure 12(b)." Pacheco v. Serendensky, 393 F.3d 348, 352 (2d Cir. 2004). Further, as in the case of motions to dismiss in civil cases, "the facts set forth in the petition are assumed to be true" for purposes of the motion. Fed. R. Cr. P. 32.2(c)(1)(A).

"In general, [i]n order to contest a governmental forfeiture action, claimants must have both standing under the statute or statutes governing their claims and standing under Article III of the Constitution as required for any action brought in federal court." United States v. Technodyne LLC, 753 F.3d 368, 380 (2d Cir. 2014) (quoting United States v. Cambio Exacto, S.A., 166 F.3d 522, 526 (2d Cir. 1999)). "[A] district court must generally resolve material factual disputes and establish that it has federal constitutional jurisdiction, including a determination that the plaintiff has Article III standing, before deciding a case on the merits." Alliance for Envtl. Renewal, Inc., 436 F.3d 82, 85 (2d Cir. 2006) (citing Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 101 (1998)). A motion to dismiss for lack of standing is properly analyzed under Federal Rule of Civil Procedure 12(b)(1) rather than Rule 12(b)(6) because it concerns "the authority of a federal court to exercise jurisdiction." Id. at 88 n.6. In defending against a motion to dismiss under Rule 12(b)(1), the ...


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