United States v. Prevezon Holdings, Ltd.

289 F. Supp. 3d 446
CourtDistrict Court, S.D. Illinois
DecidedFebruary 2, 2018
DocketNo. 13–cv–6326 (WHP)
StatusPublished
Cited by13 cases

This text of 289 F. Supp. 3d 446 (United States v. Prevezon Holdings, Ltd.) is published on Counsel Stack Legal Research, covering District Court, S.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Prevezon Holdings, Ltd., 289 F. Supp. 3d 446 (S.D. Ill. 2018).

Opinion

WILLIAM H. PAULEY III, United States District Judge:

The United States of America (the "Government") moves to enforce the terms of a Stipulation and Order memorializing a settlement between Prevezon Holdings, Ltd., et al. ("Prevezon") and the Government resolving this civil forfeiture action (the "Settlement Agreement"). The Settlement Agreement provides that the protective order restraining various properties shall be vacated, and the claims against Prevezon dismissed, when several conditions are satisfied. At issue is whether the Government fulfilled its obligation to release the seizure of Prevezon's asset in the Netherlands. With the parties at loggerheads over the Government's compliance, Prevezon refused to make its settlement payment of $5.9 million.

Separately, based on events following execution of the Settlement Agreement, Prevezon seeks discovery into whether the Government interfered with the release of the Dutch asset in question. For the reasons that follow, the Government's motion to enforce the Settlement is granted, and Prevezon's motion for discovery is denied.

BACKGROUND

On May 12, 2017, the parties entered into the Settlement Agreement to resolve the claims in this action. On May 15, 2017, this Court so-ordered the Settlement Agreement (ECF No. 716), bringing to a close a multi-year saga that arose from an elaborate tax scheme designed to bilk the Russian treasury of approximately $230 million in tax refunds (the "Russian Treasury Fraud"). According to the complaint, members of a Russian criminal syndicate utilized an intricate web of entities to funnel proceeds of the Russian Treasury Fraud to various accounts around the world. A portion of those funds-approximately $1.96 million-was transferred to Prevezon. (Second Amended Complaint, ECF No. 381 ("Compl."), ¶¶ 75-128.) Prevezon invested that money in European real estate, and then allegedly laundered the returns on that investment to purchase a portfolio of Manhattan real estate. (Compl. ¶¶ 105-110, 129-142.)

The Government commenced this action in September 2013. Shortly thereafter, Judge Griesa entered a protective order restraining several of Prevezon's assets in the United States valued in the tens of millions of dollars. (ECF No. 2.) In January 2014, the Government moved to freeze an additional asset, a debt of approximately 3 million euros owed to Prevezon by AFI Europe N.V. (the "AFI Europe Debt"). To effect that freeze, the Government *449asked law enforcement authorities in the Netherlands to restrain the AFI Europe Debt (the "US Restraint"). The Netherlands obliged, and the AFI Europe Debt was added to an Amended Protective Order reflecting all of the properties restrained in connection with this action (the "Amended Protective Order"). (Amended Protective Order, ECF No. 173, ¶ 4(m).) The AFI Europe Debt lies at the center of the parties' dispute concerning their respective obligations under the Settlement Agreement.

I. Settlement Agreement

Under the Settlement Agreement, the Government agreed to "inform the Government of the Netherlands that this matter has been resolved and that the Government withdraws any request for the Government of the Netherlands to continue to restrain the AFI Europe Debt, and shall request that the Government of the Netherlands lift the restraint of the AFI Europe Debt that had been implemented at the request of the United States." (Settlement Agreement ¶ 3.) Further, the Settlement Agreement provides that the "Amended Protective Order shall be deemed modified to allow the release of the AFI Europe Debt." (Settlement Agreement ¶ 3.)

Concomitantly, Prevezon agreed to pay approximately $5.9 million "within 15 business days of the release by the Government of the Netherlands of the AFI Europe Debt." (Settlement Agreement ¶ 3.) The Settlement Agreement further contemplates that after the Government receives Prevezon's payment, the Amended Protective Order "shall be vacated as to all Restrained Properties, the Court shall order the Restrained Properties returned to the Claimants, and the Action shall be dismissed against all Defendants with prejudice." (Settlement Agreement ¶ 11.)

II. Post-Settlement Events

On May 16, 2017-a day after this Court so-ordered the Settlement Agreement-Hermitage Capital Management Ltd. ("Hermitage") and its founder, William Browder,1 filed a complaint with law enforcement authorities in the Netherlands. The Dutch complaint mirrors many of the same allegations underlying this action. The Government represents that it had no knowledge of the Netherland's investigation into Prevezon until May 24, 2017, when Dutch officials advised the Government that they were contemplating its seizure in connection with their own investigation. (Declaration of Paul M. Monteleoni in Support of Motion to Enforce Settlement Agreement, ECF No. 753 ("Monteleoni Decl."), ¶ 6.)

On June 1, 2017, the Government informed the Netherlands that this action had been resolved, and that the Government withdrew its request for the Netherlands to restrain the AFI Europe Debt. It further requested the Netherlands to lift the US Restraint from the AFI Europe *450Debt, and to do so in expedited fashion. (Monteleoni Decl. ¶ 7.)

On June 14, 2017, with the Government's request still pending, Dutch law enforcement officials sought a meeting with the Government regarding Hermitage's complaint in the Netherlands. The Government acceded to that request and met with Dutch officials on July 19 and 20, 2017. Over the course of those two days, at the Netherlands' request, the Government provided non-confidential information relating to the facts undergirding this action. The Government maintains that it did not disclose any confidential information. Separately, the Government reiterated its request for the Netherlands to lift the US Restraint from the AFI Europe Debt. (Monteleoni Decl. ¶ 9.)

A few months passed with no word from the Netherlands about the fate of the AFI Europe Debt. On October 9, 2017, the Government followed up with the Netherlands on its request. A Dutch official informed the Government that the Netherlands intended "to attempt to release the AFI Europe Debt from the restraint imposed in this case [i.e., the US Restraint] the next day (i.e., October 10, 2017) and simultaneously seize it in connection with its own investigation." (Monteleoni Decl. ¶ 10.) On October 10, 2017, the Netherlands confirmed that it successfully lifted the US Restraint from the AFI Europe Debt and simultaneously seized it in connection with its own investigation. (Monteleoni Decl. ¶ 11.) Thus, the AFI Europe Debt remains frozen, but is now seized pursuant to the Netherlands' restraint.

Based on the Netherlands' release of the US Restraint, the Government took the position that it had satisfied its obligations under the Settlement Agreement as of October 10, 2017. The Government argues that Prevezon should have paid the $5.9 million settlement by October 31, 2017. On October 27, 2017, Prevezon asked the Government for an extension of the payment deadline, explaining that it did not believe it was yet obligated to pay. The Government declined the request. After Prevezon failed to pay, the Government brought this motion to enforce the Settlement Agreement.

DISCUSSION

I. Standard

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289 F. Supp. 3d 446, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-prevezon-holdings-ltd-ilsd-2018.