United States v. $6,976,934.65, Plus Interest Deposited Into Royal Bank of Scotland International, Account No. 2029-56141070, Held in the Name of Soulbury Ltd.

554 F.3d 123, 2009 U.S. App. LEXIS 1312
CourtCourt of Appeals for the D.C. Circuit
DecidedJanuary 27, 2009
Docket07-5383
StatusPublished
Cited by22 cases

This text of 554 F.3d 123 (United States v. $6,976,934.65, Plus Interest Deposited Into Royal Bank of Scotland International, Account No. 2029-56141070, Held in the Name of Soulbury Ltd.) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. $6,976,934.65, Plus Interest Deposited Into Royal Bank of Scotland International, Account No. 2029-56141070, Held in the Name of Soulbury Ltd., 554 F.3d 123, 2009 U.S. App. LEXIS 1312 (D.C. Cir. 2009).

Opinion

Opinion for the Court filed by Circuit Judge GRIFFITH.

GRIFFITH, Circuit Judge:

This case is an appeal of an in rem action brought by the United States seeking the civil forfeiture of $6,976,934.65 plus interest on the ground that it was involved in or is traceable to a scheme to launder money earned through an unlawful offshore Internet gambling enterprise. The district court invoked the fugitive disen-titlement statute, 28 U.S.C. § 2466 (Supp. V 2005), to grant summary-judgment to *125 the government against a claim to the money filed by appellant Soulbury Limited, a British Virgin Islands corporation. The court determined that the company’s majority shareholder, William Scott, was evading prosecution in two criminal cases related to the civil forfeiture action by remaining outside the United States. Because we conclude there is a genuine issue of fact whether the disentitlement statute applies to Scott, we reverse.

I.

William Scott is a former U.S. citizen currently living abroad. According to the government, beginning in 1997 and continuing through 2002, Scott and an associate named Jessica Davis operated a network of offshore Internet gambling sites from the Caribbean that catered primarily to U.S. residents. Hundreds of millions of dollars in bets placed on sporting events flowed from the United States to the Caribbean through these sites.

In March 1998, the United States filed a criminal complaint in the Southern District of New York charging Scott and Davis with conspiracy to violate the Wire Act, 18 U.S.C. § 1084 (2000), by soliciting and accepting sports wagers from U.S. gamblers through the Internet. The court issued a warrant for Scott’s arrest, but he was not in the country. Although living abroad, Scott was aware of the criminal proceedings. He appeared in an episode of the Canadian television newsmagazine the fifth estate, broadcast in 2001, about the rise of Internet gambling. The report featured Scott’s operation of several gambling websites and mentioned the pending criminal charges against him. When the reporter interviewing him stated that there was a warrant out for his arrest, Scott responded, “No, ... no ... well you can call it warrant. There is a criminal complaint. Complaint. I have not been indicted. It’s a complaint. Which means, yes, if I would go to the U.S., I would probably be arrested.” the fifth estate: The Big Gamble (CBC television broadcast Oct. 31, 2001).

While Scott and Davis remained abroad, the conspiracy complaint grew stale, but the United States continued its pursuit of the two. The government contends that Scott funneled the proceeds of his unlawful gambling enterprise from Caribbean bank accounts through American bank accounts and into an account at the Royal Bank of Scotland International (RBSI) opened by Scott and held in the name of Soulbury. At Scott’s direction, RBSI later transferred $10,000,000 from the account to an investment company controlled by the bank, which invested the money in bonds, insurance funds, and mutual funds held for the benefit of Soulbury in the name of Rock Nominees Limited, Account No. A92.

On December 15, 2003, the government filed this in rem action in the United States District Court for the District of Columbia, seeking civil forfeiture of $6,976,934.65 plus interest. The complaint alleged that the res was subject to forfeiture under 18 U.S.C. § 981(a)(1)(A) as property involved in or traceable to money laundering transactions. The district court issued a warrant for in rem arrest of the funds. Although the forfeitable funds were being held in the Rock Nominees account in the Bailiwick of Guernsey, an island dependency of the United Kingdom located off the coast of France, seizure was possible under 18 U.S.C. § 981(k). That statute provides that forfeitable funds on deposit at a foreign financial institution that has an eligible interbank account in the United States “shall be deemed to have been deposited into the interbank account in the United States, and any ... arrest warrant in rem regarding the funds may be served on the covered financial institution, and funds in the interbank ac *126 count ... may be restrained, seized, or arrested.” Id. On December 17, 2003, the United States served the arrest warrant on Harris Bank International in New York and seized the funds from RBSI’s interbank account with that institution.

Soulbury filed a claim in this action on March 1, 2004, asserting an interest and right in the seized funds and demanding restitution from the government. As required by 18 U.S.C. § 983(a)(4)(B), Soul-bury also filed an answer to the government’s complaint, denying that the funds were linked to any illegal activity or to Scott and asserting twelve affirmative defenses, including improper venue and failure to state a claim upon which relief can be granted. On the government’s motion and over Soulbury’s opposition, the district court stayed the forfeiture action on May 28, 2004, in light of ongoing related grand jury investigations in the District of Columbia. Those investigations led to a federal indictment of Scott, Davis, and Soul-bury on money-laundering and other charges related to Internet gambling operations. The district court also issued a warrant for Scott’s arrest. Although the indictment and warrant issued on April 7, 2005, the district court kept them under seal for over a year based on the government’s belief that Davis might enter the country voluntarily. When it became apparent that Davis would not, the government asked the court to unseal the indictment and lift the stay in the civil forfeiture case. The court lifted the stay on March 24, 2006, and unsealed the indictment on May 16, 2006.

Soulbury then filed a motion to dismiss the forfeiture case, again asserting improper venue and failure to state a claim upon which relief can be granted. On the same day, the government moved to strike Soulbury’s claim and answer based on 28 U.S.C. § 2466, the fugitive disentitlement statute. The district court denied both motions but instructed the parties to conduct limited discovery into whether Scott owned or controlled Soulbury. Only then could the court determine whether Soul-bury’s claim could be barred by the fugitive disentitlement statute.

Soulbury initially refused to respond to the government’s discovery requests but ultimately stipulated that Scott is its majority shareholder. The United States then filed a motion for summary judgment. Soulbury opposed the motion, again making its arguments in favor of dismissal and also arguing that the fugitive disentitlement statute violates due process.

In an opinion issued on November 8, 2007, the district court concluded that the requirements of § 2466 were met and that Soulbury could not press its claim to the seized funds.

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554 F.3d 123, 2009 U.S. App. LEXIS 1312, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-697693465-plus-interest-deposited-into-royal-bank-of-cadc-2009.