United States v. One Gulfstream G-V Jet Aircraft , 941 F. Supp. 2d 1 ( 2013 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
UNITED STATES, :
:
Plaintiff, : Civil Action No.: 11-1874 (RC)
:
v. : Re Document No.: 12
:
ONE GULFSTREAM G-V JET AIRCRAFT, :
Displaying tail number VPCES, its tools and :
Appurtenances, :
:
Defendant. :
MEMORANDUM OPINION
GRANTING THE CLAIMANTS’ MOTION TO DISMISS WITHOUT PREJUDICE;
GRANTING LEAVE TO AMEND
I. INTRODUCTION
The United States brings this forfeiture action against a $38.5 million dollar jet purchased
by Teodoro Nguema Obiang Mangue (“Nguema”), Equatorial Guinea’s Minister of Forestry and
Agriculture1 and the son of Equatorial Guinea’s president. The government alleges that Nguema
purchased the jet with funds derived from extortion, misappropriation, theft, and embezzlement.
Although the government describes a disconcerting pattern of corruption in Equatorial Guinea,
the complaint does not link the jet to any specific illicit acts. Accordingly, the court grants the
claimants’ motion to dismiss.
1
Since this litigation commenced, Nguema appears to have been promoted to Equatorial Guinea’s
Vice President in charge of National Defense and State Security. See Equatorial Guinea Leader
Promotes Son in Reshuffle, REUTERS (May 22, 2012), available at
http://www.reuters.com/article/2012/05/22/us-guinea-equatorial-idUSBRE84L0ZC20120522.
II. LEGAL & FACTUAL BACKGROUND
A. Legal Framework
Forfeiture is an ancient penalty; its origins can be traced to biblical times. See Calero-
Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 681 n.17 (1974) (citing Exodus 21:28) (“If
an ox gore a man or a woman, and they die, he shall be stoned and his flesh shall not be eaten”).
Based on the legal fiction that “the thing is primarily considered the offender,” Goldsmith-Grant
Co. v. United States, 254 U.S. 505, 511 (1921), forfeiture law allows suit to be brought against
an inanimate object rather than a person. See, e.g., Various Items of Personal Property v. United
States, 282 U.S. 577, 581 (1931) (“[I]t is the property which is proceeded against, and, by resort
to a legal fiction, held guilty and condemned as though it were conscious instead of inanimate
and insentient.”). Commentators and judicial decisions have primarily understood the rationale
for this peculiar concept to be a means of punishment for a wrongdoer. See, e.g., Austin v.
United States, 509 U.S. 602, 611–14 (1993); Calero-Toledo, 416 U.S. at 681.
The Civil Asset Forfeiture Reform Act of 2000 (“CAFRA”), 18 U.S.C. §§ 981 et seq.,
establishes several procedural and substantive rules governing forfeiture actions. The
government may initiate a suit in rem2 by filing a complaint within sixty days of the item’s
seizure. Id. § 983(a)(1)(A)(i). Any person claiming an interest in the seized property—referred
to as a “claimant”—may intervene after the seizure is effected. Id. § 983(a)(2)(A). The claimant
may then contest the government’s action. United States v. $515,060.42, 152 F.3d 491, 497 (6th
Cir. 1998).
Here, the government brings suit under two of CAFRA’s substantive provisions: 18
U.S.C. § 981(a)(1)(A) and § 981(a)(1)(C). Under 18 U.S.C. § 981(a)(1)(C), “[a]ny property, real
2
Latin for “against a thing.”
2
or personal, which constitutes or is derived from proceeds traceable to . . . any offense
constituting ‘specified unlawful activity’” is subject to forfeiture to the United States. “Specified
unlawful activity” may include offenses against a foreign nation involving “extortion,” or the
“misappropriation, theft, or embezzlement of public funds by or for the benefit of a public
official.” 18 U.S.C. § 1956(c)(7)(B)(ii), (iv). Under 18 U.S.C. § 981(a)(1)(A), “[a]ny property,
real or personal, involved in a transaction or attempted transaction in violation of [18 U.S.C. §
1957], or any property traceable to such property,” is subject to forfeiture to the United States.
18 U.S.C. § 1957 imposes a criminal penalty on any person who “knowingly engages or attempts
to engage in a monetary transaction in criminally derived property of a value greater than
$10,000 and is derived from specified unlawful activity.” The term “specified unlawful activity”
is again defined to include offenses against a foreign nation involving “extortion,” or the
“misappropriation, theft, or embezzlement of public funds by or for the benefit of a public
official.” 18 U.S.C. § 1956(c)(7)(B)(ii), (iv). To summarize both counts: the government alleges
that the Gulfstream Jet is subject to forfeiture because it is either derived from or traceable to
extortion, misappropriation, theft, or embezzlement of public funds by a public official.
B. Factual Allegations and Procedural History
Teodoro Nguema Obiang Mangue is the son of Equatorial Guinea’s President. Id. ¶ 14.
At the time the government filed suit, he was Equatorial Guinea’s Minister of Forestry and
Agriculture. Id. Despite his modest government salary, id. ¶ 34, Nguema has managed to
acquire many of life’s luxuries. Some of his recent purchases include a $6.5 million Bel Air
mansion, id. ¶ 33, nearly $10 million in luxury cars (including eight Ferraris, seven Rolls
Royces, five Bentleys, two Lamborghinis, and other top-notch acquisitions), id. ¶ 37, $3.2
million worth of Michael Jackson memorabilia, id. ¶ 42, a $30 million dollar Malibu mansion,
3
id. ¶ 40, and the aircraft at the heart of this case—a $38.5 million Gulfstream Jet. Id. The
government claims these lavish purchases were made possible by a number of illicit and
lucrative schemes. Id. ¶ 48.
The government alleges that Nguema is a member of Equatorial Guinea’s “Inner Circle,”
a coterie of powerful individuals who have ties to Equatorial Guinea’s ruling family. The
government alleges that members of the Inner Circle demand extortionate payments from oil
companies seeking to do business in the country. Id. ¶ 49 (“For example, Nguema, as Minister
of Forestry, is responsible for approving the export of timber logged in E.G., and refuses to sign
such approvals until the exporter first pays a ‘tax’ for Nguema’s personal benefit.”). The
government also alleges that members of the Inner Circle misappropriate government funds into
a slush fund created for their personal use. Id. ¶¶ 58–62 (“Riggs Bank records show that money
paid by oil companies to the government of E.G. was misappropriated by E.G. government
officials and their family members.”). Members of the Inner Circle allegedly steer government
contracts to companies in which they have a financial interest. Id. ¶ 66 (“Because government
contracts are awarded to companies owned by or associated with members of the Inner Circle
without true competition, those companies are able to charge the E.G. Government fees that bear
little, if any, rational relationship to the actual economic value of the services or products
tendered to the E.G. Government. The bids from such companies include built-in mark-ups of
from 50 percent to 400 percent or more, so that members of the Inner Circle can obtain the
difference.”). Finally, members of the Inner Circle have allegedly misappropriated valuable
state-owned land. Id. ¶¶ 68–69 (“[I]n the early 1990s, members of the Inner Circle began to
transfer and register large amounts of state-owned land into their own names. . . . At the same
time, the foreign oil and gas companies that were becoming active in E.G. in the 1990s needed to
4
lease land for their operations. Because the lands formerly owned by the state now were owned
in the name of members of the Inner Circle, the oil companies’ lease payments went to benefit
the Inner Circle rather than the state.”). The government alleges that these schemes provided the
funds with which Nguema bought the Gulfstream Jet.
After some initial difficulties, Nguema purchased the jet from a private party via a
nominal buyer known as Ebony Shine International, Ltd., a British Virgin Islands company. Id.
¶ 77. After the government initiated this case, Nguema and Ebony Shine International, Ltd.,
filed claims to the defendant jet, and they subsequently filed a motion to dismiss. The court will
now grant their motion without prejudice to the government’s ability to file an amended
complaint.
III. ANALYSIS
A. The Court Denies the Claimants’ Motion to Dismiss for Lack of Jurisdiction
1. Legal Standard for a Motion to Dismiss for Lack of Jurisdiction3
Federal courts are courts of limited jurisdiction and the law presumes that “a cause lies
outside this limited jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377
(1994). Accordingly, a federal court should first determine that it has jurisdiction over a case
before ruling on the merits. Al-Zahrani v. Rodriguez, 669 F.3d 315, 317–18 (D.C. Cir. 2012).
On a motion to dismiss for lack of jurisdiction under Rule 12(b)(1), the plaintiff bears the burden
of establishing jurisdiction by a preponderance of the evidence. Lujan v. Defenders of Wildlife,
504 U.S. 555, 561 (1992). When considering a motion under Rule 12(b)(1), the court may look
3
The question of standing implicates the court’s subject-matter jurisdiction, and the court will
therefore construe the claimants’ standing argument as if it had been brought under Rule 12(b)(1)
and Supplemental Rule G(8)(b)(i).
5
beyond the allegations set forth in the complaint and “may consider materials outside the
pleadings.” Jerome Stevens Pharm., Inc. v. FDA, 402 F.3d 1249, 1253 (D.C. Cir. 2005).
2. The Court Has Jurisdiction Notwithstanding the Equatoguinean Government’s Avowed
Refusal to Comply With This Court’s Orders
The claimants argue that the government lacks Article III standing because its alleged
injury cannot be redressed. Claimants’ Mot. at 15. The claimants note that the jet is currently
located in Equatorial Guinea, and the Equatoguinean government has emphatically stated that it
will not comply with a forfeiture order issued by this court. Opp’n at 16. Due to Equatorial
Guinea’s intransigence, the claimants conclude that the government’s claim cannot be redressed.
Id.4 The government maintains that the claimants put the cart before the horse, arguing that the
Equatoguinean government’s decision to comply does not impair the court’s jurisdiction to issue
the order in the first place. Govt.’s Opp’n at 8–11.
The language of 28 U.S.C. § 1355(b)(2) makes clear: “Wherever property subject to
forfeiture under the laws of the United States is located in a foreign country . . . an action or
proceeding for forfeiture may be brought in . . . the United States District Court for the District
of Columbia.” Courts interpreting this provision have concluded that “Congress intended the
District Court for the District of Columbia . . . to have jurisdiction to order the forfeiture of
property located in foreign countries.” United States v. All Funds in Account in Banco Espanol
de Credito, 295 F.3d 23, 27 (D.C. Cir. 2002). Whether or not a foreign government will
4
The claimants also argue that absent Article III standing, any opinion rendered by this court
would be “advisory.” Of course, this merely restates the premise, as these closely related
doctrines are simply two sides of the same coin. See Rainbow/PUSH Coalition v. FCC, 396 F.3d
1235, 1247 (D.C. Cir. 2005) (“[T]he standing requirement simply ensures that the petitioner has a
defined and personal stake in the outcome of the litigation and that the court does not render an
advisory opinion.”) (citation and internal quotation omitted). Because the claimants’ “advisory
opinion” argument is merely a different way of arguing that the government lacks standing, the
court’s analysis is unaffected.
6
ultimately choose to comply with a judicial forfeiture order “determines only the effectiveness of
the forfeiture order of the district courts, not their jurisdiction to issue those orders.” Id. at 26
(emphasis added);5 see also United States v. Approximately $1.67 Million (US) in Cash, 513 F.3d
991, 998 (9th Cir. 2008) (“The plain language and legislative history of [28 U.S.C. § 1355]
makes clear that Congress intended § 1355 to lodge jurisdiction in the district courts without
reference to constructive or actual control of the res.”); Contents of Account Number 03001288 v.
United States, 344 F.3d 399, 405 (3d Cir. 2003) (noting that the foreign country’s “compliance
and cooperation with this forfeiture determines only the effectiveness of the District Court’s
order, not its jurisdiction to issue that order”).6 Thus, the court has jurisdiction to issue a
forfeiture order, regardless of whether the Equatoguinean government sees fit to comply. United
States v. All Assets Held at Bank Julius Baer & Co., Ltd., 772 F. Supp. 2d 205, 211 (D.D.C.
2011) (rejecting the claimant’s notion that a foreign government’s potential refusal to obey a
court-issued forfeiture order diminishes the government’s Article III standing).7
5
The claimants concede that this court is bound by the Circuit’s ruling in Banco Espanol, but
submit that the Circuit has adopted faulty reasoning and should not be followed in the present
case. Of course, judicial review is a one-way street, and this court has no power to reverse the
Circuit.
6
In support of their contrary argument, the claimants cite to the Second Circuit’s decision in
United States v. All Funds On Deposit in Any Accounts Maintained in the Names of Meza, 63
F.3d 148, 152–53 (2d Cir.1995). But Meza’s reasoning was squarely rejected by this Circuit in
Banco Espanol. See 295 F.3d at 26–27.
7
The government also alleges that a number of treaty obligations make it likely that the
Equatoguinean government will feel bound to comply with an order issued by this court.
Whether or not this is true, Banco Espanol implicitly rejected this as a factor affecting the court’s
jurisdiction. There, the district court concluded that Spain was bound by a number of treaties and
that there was a substantial likelihood that it would comply with its order. United States v. All
Funds in Account Nos. 747.034/278, 141 F. Supp. 2d 548, 551–52 (D.D.C. 2001). The Circuit
affirmed but applied a different standard, concluding that jurisdiction existed regardless of
Spain’s likelihood of compliance. See 295 F.3d at 27.
7
B. The Court Grants the Claimants’ Motion to Dismiss, But Grants the Government Leave
to File an Amended Complaint
1. International Comity
The claimants argue that the complaint should be dismissed on the basis of international
comity. Claimants’ Mot. at 19. Because adjudicating this case might require the court to pass
judgment over Equatorial Guinea’s application of its own laws, the claimants maintain that the
court should decline to hear this case. Id. The government counters that the doctrine of
international comity counsels U.S. courts to defer only to final judgments rendered by impartial
foreign tribunals. Here, no such decision exists. Govt.’s Opp’n at 12–13. In addition, the
government maintains that the doctrine of comity cannot be used to trump the United States’
prerogative to enforce its own anti-money laundering statutes. Id. at 14.
International comity is a doctrine of deference based on respect for the decisions of
foreign sovereigns. United States v. Kashamu, 656 F.3d 679, 683 (7th Cir. 2011) (Posner, J.);
see Hilton v. Guyot, 159 U.S. 113, 164 (1895) (noting that comity is “the recognition which one
nation allows within its territory to the legislative, executive or judicial acts of another nation”).
This doctrine provides that a U.S. court should give full effect to a foreign judgment that has
been rendered with impartiality and due process. Hilton v. Guyot, 159 U.S. at 163, 202–03; Doe
v. Exxon Mobil Corp., 654 F.3d 11, 64 (D.C. Cir. 2011). The purpose underlying the rule is to
foster international cooperation and encourage reciprocal recognition of U.S. judgments in
foreign courts. Oetjen v. Central Leather Co., 246 U.S. 297, 304 (1918) (“To permit the validity
of the acts of one sovereign state to be reexamined and perhaps condemned by the courts of
another would very certainly imperil the amicable relations between governments and vex the
peace of nations.”); Laker Airways, Ltd. v. Sabena, Belgian World Airlines, 731 F.2d 909, 937
(D.C. Cir. 1984) (stating that “the decisions of foreign tribunals should be given effect in
8
domestic courts, since recognition fosters international cooperation and encourages reciprocity,
thereby promoting predictability and stability through satisfaction of mutual expectations.”).
Thus, the doctrine is accurately described as a “golden rule among nations—that each must give
the respect to the laws, policies and interests of others that it would have others give to its own in
the same or similar circumstances.” Mich. Community Servs., Inc. v. NLRB, 309 F.3d 348, 567
(6th Cir. 2002).8
The doctrine of comity has no single definition, as the doctrine “summarizes in a brief
word a complex and elusive concept.” Laker Airways, 731 F.2d at 937; see also United States v.
Nippon Paper Indus., 109 F.3d 1, 8 (1st Cir. 1997) (“Comity is more an aspiration than a fixed
rule, more a matter of grace than a matter of obligation.”).9 A timeless characterization of the
doctrine urges U.S. courts to recognize a foreign judgment if:
there has been opportunity for a full and fair trial abroad before a court of competent
jurisdiction, conducting the trial upon regular proceedings, after due citation or voluntary
appearance of the defendant, and under a system of jurisprudence likely to secure an
impartial administration of justice between the citizens of its own country and those of
other countries, and there is nothing to show either prejudice in the court, or in the system
of laws under which it was sitting, or fraud in procuring the judgment.
8
See also JP Morgan Chase Bank v. Altos Hornos de Mexico, S.A. de C.V., 412 F.3d 418, 423 (2d
Cir. 2005) (“Whatever its precise contours, international comity is clearly concerned with
maintaining amicable working relationships between nations, a ‘shorthand for good
neighbourliness, common courtesy and mutual respect between those who labour in adjoining
judicial vineyards.’”) (quoting British Airways Bd. v. Laker Airways Ltd., [1984] E.C.C. 36, 41
(Eng. C.A.)).
9
One scholar has described the doctrine as “an amorphous never-never land whose borders are
marked by fuzzy lines of politics, courtesy, and good faith.” Harold G. Maier, Extraterritorial
Jurisdiction at a Crossroads: An Intersection Between Public and Private International Law, 76
AM. J. INT’L L. 280, 281 (1982).
9
Hilton v. Guyot, 159 U.S. 113, 202 (1895). If anything is clear, however, it is that the doctrine of
international comity will not impede a judicial proceeding when no foreign judgment exists. A
defendant invoking the doctrine of comity must either point to a valid legal proceeding to which
the court must defer; or at the very least, the defendant must demonstrate that some alternate
forum would be adequate. E.g., Doe v. Exxon Mobil Corp., 654 F.3d at 65 (“In order to invoke
this doctrine, Exxon must either point to a legal proceeding in Indonesia involving these
particular plaintiffs to which the court must defer or at least the availability of effective and non-
futile local remedies.”); cf. Turner Entertainment Co. v. Degeto Film GmbH, 25 F.3d 1512,
1518–21 (11th Cir. 1994) (deferring to German litigation where a German court had reached
judgment on merits of same issue).
A foreign state’s statutory remedies may also warrant deference, provided that they
provide plaintiffs with an adequate remedy. Compare Ungaro-Benages v. Dresdner Bank AG,
379 F.3d 1227, 1239 (11th Cir. 2004) (indicating that Germany had provided an adequate forum
to compensate plaintiffs for Nazi-era crimes) and Bi v. Union Carbide Chems. & Plastics Co.,
984 F.2d 582, 586 (2d Cir. 1993) (determining that India had provided an adequate and
comprehensive statutory remedy to victims of the Union Carbide disaster) with Cruz v. United
States, 387 F. Supp. 2d 1057, 1070 (N.D. Cal. 2005) (determining that the Mexican Congress’s
creation of a special commission to investigate the plaintiffs’ claims did not provide a sufficient
basis for this Court to dismiss on comity grounds because the Mexican commission did not
provide an adequate remedy). In addition, courts rarely abstain on the basis of comity if the
court is not assured that foreign courts would accomplish the aim of the litigation. United States
v. Lazarenko, 504 F. Supp. 2d 791, 802 (N.D. Cal. 2007) (“The Court also finds it inappropriate
to disturb the criminal forfeiture based on comity principles. This Court has few assurances that
10
proceedings in Antiguan courts would accomplish the aims of criminal forfeiture—punishment
of Lazarenko by seizure of his assets associated with the criminal activity for which he was
convicted.”).
Here, the claimants have not identified any foreign proceeding to which this court should
lend its deference. Instead, the claimants note that Nguema “is a sitting public official in good
standing and has not been investigated or prosecuted for any wrongdoing, much less convicted of
such.” Claimants’ Mot. at 21–22. But invoking the doctrine of international comity would be
inappropriate under these circumstances, as there is no foreign adjudication of rights to which
this court might defer. See Bodner v. Banque Paribas, 114 F. Supp. 2d 117, 130 (E.D.N.Y.
2000) (choosing not to abstain on comity grounds in part because “[t]here is no pending
litigation in France, nor is the Court aware of any current law or policy of the French government
which could either supplant or fully redress plaintiffs’ claims”). In addition, the claimants have
not put forth evidence to suggest that Equatorial Guinea would be an adequate forum for the U.S.
government to pursue its interests. See Lazarenko, 504 F. Supp. 2d at 802.
Two additional factors counsel against invoking the doctrine of comity here. First, the
claimants believe that courts should decline to exercise its jurisdiction whenever a case touches
upon the realm of foreign affairs. But it would be erroneous “to suppose that every case or
controversy which touches foreign relations lies beyond judicial cognizance.” Baker v. Carr,
369 U.S. 186, 211 (1962). Thus, few cases view international comity as a doctrine of
preemption that would require courts to decline jurisdiction merely because foreign affairs are at
play. United States v. Portrait of Wally, A Painting By Egon Schiele, 2002 WL 553532, at *10
(S.D.N.Y. 2002) (noting that “the principle of comity does not operate as a pre-emption doctrine,
11
barring this court from hearing a valid forfeiture action merely because there are foreign laws
that might also apply”).
Second, dismissal would not be appropriate when doing so “would be contrary to the
policies or prejudicial to the interests of the United States.” Pravin Banker Assocs., Ltd. v.
Banco Popular Del Peru, 109 F.3d 850, 854 (2d Cir. 1997); see Allied Bank Int’l v. Banco
Credito Agricola de Cartago, 757 F.2d 516, 522 (2d Cir. 1985); Laker Airways, 731 F.2d at 937(“No nation is under unremitting obligation to enforce foreign interests which are fundamentally
prejudicial to those of the domestic forum.”). Thus, if the government viewed dismissal as
necessary to protect its relationships with foreign countries, the doctrine would apply with
greater force. Whiteman v. Dorotheum GmbH & Co. KG, 431 F.3d 57, 69–74 (2d Cir. 2005);
Ungaro-Benages v. Dresdner Bank AG, 379 F.3d 1227, 1237 (11th Cir. 2004). But here, the
government brings suit to enforce its anti-money laundering laws and to prevent the United
States from being a haven for the proceeds of illegal activity committed abroad. United States v.
All Assets Held At Julius Baer & Co., 571 F. Supp. 2d 1, 12 (D.D.C. 2008); United States v.
Portrait of Wally, 2002 WL 553532, at *6 (noting that the United states “has a strong interest in
enforcing its own laws as applied to conduct on its own soil . . . . United States courts will not
yield in the name of comity if doing so conflicts with the law or policy of the United States”).
Thus, the Executive Branch’s decision to bring this case could be viewed as evidence of its
judgment that the delicate balance of foreign affairs would not be disturbed by the lawsuit.
United States v. Baker Hughes Inc., 731 F. Supp. 3, 6 n.5 (D.D.C. 1990) (noting that it is “not the
Court’s role to second-guess the executive branch’s judgment as to the proper role of comity
concerns” when “the United States has decided to go ahead with the case”). Because the
executive “has already done the balancing in deciding to bring the case in the first place,” United
12
States v. Brodie, 174 F. Supp. 2d 294, 306 (E.D. Pa. 2001), the doctrine of international comity
does not bar this lawsuit.
2. The Act of State Doctrine
The claimants also argue that the complaint should be dismissed due to the “act of state”
doctrine. Claimants’ Mot. at 19. They maintain that the doctrine is “based on notions of
sovereign respect and intergovernmental comity,” and that the court should be “reluctan[t] to
complicate foreign affairs by validating or invalidating the actions of foreign sovereigns.” Id.(citations and quotations omitted). The government counters that “Nguema’s reliance on the Act
of State Doctrine is . . . unavailing,” as the complaint does not impugn any official acts. Govt.’s
Opp’n at 16. Instead, the government maintains that all relevant acts were perpetrated for
Nguema’s personal benefit. Govt.’s Opp’n at 16.
The act of state doctrine precludes domestic courts from inquiring into the validity of the
public acts that a recognized foreign sovereign power committed within its own territory.
McKesson Corp. v. Islamic Republic of Iran, 539 F.3d 485, 491 (D.C. Cir. 2008); see Underhill
v. Hernandez, 168 U.S. 250, 252 (1897) (“Every sovereign state is bound to respect the
independence of every other sovereign state, and the courts of one country will not sit in
judgment on the acts of the government of another done within its territory.”); see also
RESTATEMENT (THIRD) OF THE FOREIGN RELATIONS LAW OF THE UNITED STATES § 443 (1987).
The doctrine applies when the relief sought or the defense interposed would require a court in the
United States to declare invalid the official act of a foreign sovereign performed within its
boundaries. W.S. Kirkpatrick & Co. v. Envtl. Tectonics Corp., 493 U.S. 400, 405 (1990). The
policies underlying the doctrine include international comity, respect for the sovereignty of
foreign nations on their own territory, and the avoidance of embarrassment to the Executive
13
Branch in its conduct of foreign relations. World Wide Minerals, Ltd. v. Republic of Kazakhstan,
296 F.3d 1154, 1165 (D.C. Cir. 2002).
The doctrine is not a principle of abstention, however—that is to say, a defendant may
not raise the act of state doctrine as a complete bar to suit whenever the case touches upon the
realm of foreign affairs. W.S. Kirkpatrick, 493 U.S. at 409 (noting that “[t]he Act of State
doctrine does not establish an exception for cases and controversies that may embarrass foreign
governments”). Rather, it serves as “a rule of decision for the courts of this country,” id. at 405(quoting Ricaud v. Am. Metal Co., 246 U.S. 304, 310 (1918)), which requires that “the acts of
foreign sovereigns taken within their own jurisdictions shall be deemed valid,” id. Application
of the doctrine requires a fact-sensitive “balance of the relevant considerations,” Banco Nacional
de Cuba v. Sabbatino, 376 U.S. 398, 428 (1964), and this analysis “must always be tempered by
common sense,” Allied Bank Intern. v. Banco Credito Agricola de Cartago, 757 F.2d 516, 521
(2d Cir. 1985); see also Sabbatino, 376 U.S. at 428 (declining to announce “an inflexible and all-
encompassing rule” to govern the doctrine).
There are two reasons why the doctrine does not bar this lawsuit. First: the applicability
of this doctrine is weakened when the Executive Branch of the United States is the party that
brings suit. One of the major concerns underlying the act of state doctrine is “the strong sense of
the judicial branch that its engagement in the task of passing on the validity of foreign acts of a
state may hinder rather than further this country’s pursuit of goals both for itself and for the
community of nations as a whole in the international sphere.” Sabbatino, 376 U.S. at 423; cf.
United States v. Curtiss-Wright Export Corp., 299 U.S. 304, 320 (1936) (“The Executive Branch
is “the sole organ of the federal government in the field of international relations.”). When the
Executive Brank brings suit, therefore, the doctrine’s rationale no longer applies. United States
14
v. One Etched Ivory Tusk of African Elephant, 2012 WL 1802026 (E.D.N.Y. May 17, 2012)
(“where the United States Government has brought suit, clearly the court need not worry that it
will intrude into an area that the executive branch does not want it, or that the court’s action will
hinder its administration of its foreign affairs power”); United States v. Lazarenko, 504 F. Supp.
2d at 802 (concluding that the act of state did not apply where the government brought suit, as a
judicial consideration of the matter would not “embarrass or hinder the executive in the realm of
foreign relations” (citing Bigio v. Coca-Cola Co., 239 F.3d 440, 452 (2d Cir. 2000))); United
States v. Giffen, 326 F. Supp. 2d 497, 502 (S.D.N.Y. 2004) (“The major underpinning of the act
of state doctrine is the policy of foreclosing court adjudications involving the legality of acts of
foreign states on their own soil that might embarrass the Executive Branch of our Government in
the conduct of our foreign relations . . . . Where the Executive Branch files an action, however,
courts are reluctant to invoke the act of state doctrine on this rationale.”).
Second: even if the doctrine applied, its invocation would be premature at this stage
because several factual disputes exist. In particular, the party invoking the doctrine must
establish that the act was an exercise of its sovereign power. See Alfred Dunhill of London, Inc.
v. Republic of Cuba, 425 U.S. 682, 695 (1976); Republic of the Philippines v. Marcos, 862 F.2d
1355, 1369 (9th Cir. 1988) (for the doctrine to apply, “the acts in question must have involved
public acts of the sovereign”); Callejo v. Bancomer, S.A., 764 F.2d 1101, 1115 n.15 (5th Cir.
1985) (the doctrine only applies when the acts were “invested with the sovereign authority of the
state.”). Aside from vague allegations that this lawsuit would “interfere with . . . Equatorial
Guinea’s right to administer its domestic laws within its borders,” the claimants do not identify
what acts, if any, were taken on behalf of the sovereign. Claimants’ Mot. at 21. In fact, the
claimants argue that Nguema purchased the jet with private funds obtained independently of his
15
office. Thus, it is not clear whether any relevant acts were taken with the imprimatur of the
Equatoguinean government. See Alfred Dunhill, 425 U.S. at 695 (requiring the party invoking
the act of state doctrine to produce some “statute, decree, order, or resolution” to show that the
government’s act was vested with sovereign authority). Accordingly, the act of state doctrine
poses no bar to this suit.
3. Equitable Estoppel
The claimants argue that the government should be equitably estopped from filing this
suit because the claimants relied on a 2005 letter from the Department of Justice stating that it
had no basis for believing that the purchase would violate the federal anti-money laundering
laws. Claimants’ Mot. at 22. The government responds that the doctrine of equitable estoppel
only applies in sparing circumstances and is not warranted here. Govt.’s Opp’n at 16.
Estoppel is an equitable doctrine invoked to avoid injustice by precluding a litigant from
asserting an otherwise available claim or defense against a party who has detrimentally relied on
that litigant’s conduct. See Heckler v. Cmty. Health Servs. of Crawford Cnty., Inc., 467 U.S. 51,
59 (1984). “To apply equitable estoppel against the government, a party must show that (1) there
was a definite representation to the party claiming estoppel, (2) the party relied on its adversary’s
conduct in such a manner as to change his position for the worse, (3) the party’s reliance was
reasonable, and (4) the government ‘engaged in affirmative misconduct.’” Morris Commc’ns,
Inc. v. FCC, 566 F.3d 184, 191 (D.C. Cir. 2009). The doctrine applies only if the government’s
conduct can be characterized as “misrepresentation or concealment” such that it will cause an
“egregiously unfair result.” GAO v. Gen. Accounting Office Pers. Appeals Bd., 698 F.2d 516,
526 (D.C. Cir. 1983); Heckler, 467 U.S. at 60 (noting that “the Government may not be estopped
on the same terms as any other litigant”). For if the government “is unable to enforce the law
16
because the conduct of its agents has given rise to an estoppel, the interest of the citizenry as a
whole in obedience to the rule of law is undermined.” Id. Thus, the doctrine’s application to
government conduct “must be rigid and sparing,” and the evidence in favor of its application
must be “compelling.” ATC Petroleum, Inc. v. Sanders, 860 F.2d 1104, 1111 (D.C. Cir. 1988);
see Int’l Union v. Clark, 2006 WL 2598046, at *12 (D.D.C. 2006) (“There is a clear presumption
in this Circuit against invoking the doctrine against government actors in any but the most
extreme circumstances.”). Although the court has its doubts as to whether the claimants can
successfully invoke this doctrine, it is unnecessary to weigh in on the matter at this stage in time.
For the reasons explained below, the court will dismiss the government’s complaint for failure to
allege sufficient facts in support of its claim. And if an amended complaint is filed and proceeds
to discovery, the parties can fully explore the factual underpinnings for an estoppel argument,
which can be raised again in a summary judgment motion.
4. The Court Grants the Claimants’ Motion to Dismiss for Failure to State a Claim
a. Legal Standard for Failure to State a Forfeiture Claim
The pleading requirements in a civil forfeiture action are simultaneously governed by the
Federal Rules of Civil Procedure and the Supplemental Rules for Admiralty or Maritime Claims
and Asset Forfeiture Actions. 18 U.S.C. § 983(a)(3)(A). Although the Supplemental Rules
govern, the normal set of rules may help to clarify any ambiguity. See SUPP. R. A; United States
v. $22,173.00 in U.S. Currency, 2010 WL 1328953, at *2 (S.D.N.Y. Apr. 5, 2010); United States
v. $8,221,877.16 in U.S. Currency, 330 F.3d 141, 149 (3d Cir. 2003) (“Parties to civil forfeiture
proceedings are the servants of two procedural masters: the Supplemental Rules specially
devised for admiralty and in rem proceedings, and the generally applicable Federal Rules of
17
Civil Procedure . . . . The balance between the two is struck in favor of the Supplemental Rules .
. . .”).
Supplemental Rule E(2)(a) requires that the government set forth its claims “with such
particularity that the defendant will be able, without moving for a more definite statement, to
commence an investigation of the facts and to frame a responsive pleading.” Supplemental Rule
G(2)(f) requires that the government “state sufficiently detailed facts to support a reasonable
belief that the government will be able to meet its burden of proof at trial.” Read in conjunction,
these rules require the government to allege enough facts such that the court may infer that the
property is subject to forfeiture. United States v. $22,173.00 in U.S. Currency, 2010 WL
1328953, at *2 (S.D.N.Y. Apr. 5, 2010); see SUPP. RULE G, Advisory Committee Notes, (noting
that the “reasonable belief” standard in Rule G(2)(f) mirrors the sufficiency standard that was
previously codified in Rule E(2)).
The standards set forth in Supplemental Rules G and E impose a pleading that is
somewhat more exacting than the liberal notice pleading standard contemplated by Rule 8(a)(2).
See United States v. All Assets Held at Bank Julius Baer & Co., 571 F. Supp. 2d 1, 16–17
(D.D.C. 2008) (“Rule G (and its predecessor Rule E(2)) creates a heightened burden for pleading
on the plaintiff.”); cf. FED. R. CIV. P. 8(a)(2) (requiring only a short and plain statement of the
claim in order to give the defendant fair notice of what the claim is and the grounds upon which
it rests). This heightened particularity requirement is designed to guard against the improper use
of seizure proceedings and to protect property owners against the threat of seizure upon
conclusory allegations. See United States v. Mondragon, 313 F.3d 862, 865 (4th Cir. 2002); see
also 12 WRIGHT & MILLER, FEDERAL PRACTICE AND PROCEDURE § 3242 (2d ed. 1997) (noting
that the supplemental rules “require[] a more particularized complaint than is demanded in civil
18
actions generally,” and that “added specifics is thought appropriate because of the drastic nature
of those remedies”).
At the pleading stage, it suffices for the government to simply allege enough facts so that
the claimant may understand the theory of forfeiture, file a responsive pleading, and undertake an
adequate investigation. Mondragon, 313 F.3d at 864; United States v. $22,173.00 in U.S.
Currency, 2010 WL 1328953, at *2 (S.D.N.Y. Apr. 5, 2010). And a court may not dismiss the
complaint “on the ground that the government did not have adequate evidence at the time the
complaint was filed to establish the forfeitability of the property.” SUPP. R. 8(b)(ii); 18 U.S.C. §
983(a)(3)(D).
A claimant in an in rem proceeding may move to dismiss in the same form provided by
Rule 12(b). SUPP. R. G(8)(b)(i). As is the case under Rule 12(b), the plaintiff’s factual
allegations must be presumed true and should be liberally construed in his or her favor. United
States v. Seventy-Nine Thousand Three Hundred Twenty-One Dollars, 522 F. Supp. 2d 64, 68
(D.D.C. 2007). Likewise, the plaintiff must be afforded every favorable inference that may be
drawn from the allegations of fact set forth in the complaint. Id; accord United States v.
829,422.42 in U.S. Currency Seized from Account No. 202252771 at Citibank, N.A., 2009 WL
1743753, at *5 (D. Conn. June 18, 2009) (“When evaluating a motion to dismiss an in rem
forfeiture complaint pursuant to Rule 12(b)(6), the Court still must accept as true all factual
allegations made in the complaint and draw all reasonable inferences in favor of the plaintiff.”).
b. The Government Fails to Allege that the Jet Is Derived From or Traceable to Illicit
Activity
The government alleges that the Gulfstream Jet was purchased with funds that can be
traced to or derived from illegal activity. The claimants counter that the complaint “merely
states in a conclusory fashion that Minister Nguema and other members of the Equatoguinean
19
government have amassed extraordinary wealth through ‘corrupt schemes’ and that because
Minster Nguema’s ‘level of spending is inconsistent with his salary as a Minister,’ the Aircraft
must be derived from unlawful activity.” Claimants’ Mot. at 31.
The government alleges that a group of Equatoguinean individuals—dubbed the Inner
Circle—has amassed great wealth by siphoning funds from the public fisc. See Compl. ¶ 27.
The government alleges that the Inner Circle committed a number of violations of
Equatoguinean law, including “extortion and misappropriation, theft, and embezzlement of
public funds.” Id. The complaint describes a general process by which the Inner Circle took
advantage of Equatorial Guinea’s natural resources—yet careful scrutiny of the complaint
reveals that Nguema is often implicated by association only. See id. ¶ 32 (“[Nguema] used
ownership of Sofona and Somagui Forestal and his status as Minister of Forestry (and President
Obiang’s son) to enrich himself through corrupt schemes in the timber industry, as described
below.”); id. ¶ 35 (“In the 2000s, the rapid growth of the oil and gas sector in E.G. led to a boom
in construction and other infrastructure-related activities in that country. This provided another
opportunity for the Inner Circle, including Nguema, to obtain money corruptly, as the
government began awarding large construction contracts to companies owned by the Inner
Circle.”) (emphasis added).
To illustrate: under the heading “Illegal Corrupt Schemes Used by Nguema and the Inner
Circle to Enrich Themselves,” the government alleges that “members of the Inner Circle, such as
Nguema, demand[ed] payments from companies doing business in E.G., in exchange for the
performance of official acts.” Id. ¶ 49. But the government does not allege what companies
were victim to this scheme, or when this occurred, or which members of the Inner Circle were
behind the acts. In the same vein, the government claims that “in order to engage in logging in
20
E.G.’s National Forests, timber companies must first receive a logging concession from Nguema.
Nguema demands that timber companies seeking to obtain such concessions first pay him a
personal fee.” Id. ¶ 50. Again, the government does not provide enough detail for the court to
infer the contours of the illicit scheme.
Many of the complaint’s allegations do not even give rise to an inference of illegal
activity. See, e.g., id. ¶ 51 (“For instance, a major international civil engineering firm in E.G.,
which had obtained several substantial infrastructure contracts from the Government of E.G.,
built a mansion for Nguema in Malabo, E.G., at his request and direction. Upon completion of
that project, however, Nguema refused to pay this firm for its work.”); see also id. ¶ 63 (“Some
of the money obtained by other members of the Inner Circle has made its way to Nguema; for
example, on October 21, 2002, $200,000 was transferred from a personal account at Riggs Bank
belonging to a member of the Inner Circle to Nguema’s personal bank account.”).
Other allegations make no mention of Nguema whatsoever. See id. ¶ 54 (“In another
extortion scheme, a businessman in E.G. who owned a construction company was forced to share
50 percent of his profits with a senior E.G. public official, and to provide the official with 50
percent of the equity in the company, in order to continue to secure government contracts in E.G.
Ultimately, the businessman was forced to leave E.G. against his will, and the senior public
official took over 100 percent of his company.”).
A recurring theme in the government’s complaint is the allegation that Nguema’s
outlandish wealth raises suspicions about the lawfulness of his income. Id. ¶ 34 (“Nguema’s
level of spending is inconsistent with his salary as a Minister. His official salary today is
approximately $6,799 per month, or less than $100,000 per year, according to official E.G.
sources.”). When viewed in tandem with other details suggesting illegal behavior, Nguema’s
21
wealth might allow an inference of illegal activity—but standing alone, it does not. See
Mondragon, 313 F.3d at 864 (“The presence of that much cash [half a million dollars], oddly
packaged, could raise a suspicion that someone was up to no good, but without more it does not
suggest a connection to drug trafficking.”); cf. United States v. $22,173.00 in U.S. Currency,
2010 WL 1328953, at *2 (S.D.N.Y. Apr. 5, 2010) (deeming certain allegations “troubling” and
noting that “a great deal more” would be necessary to survive summary judgment, but
concluding that unusually large sums of cash could give rise to an inference of illegal activity
when viewed in conjunction with other specific allegations “suggesting a pattern of drug
trafficking”).
The government itself has alleged that Ngema owns or controls a number of companies.
Yet nothing is known about what income Nguema derives from them. Thus, without knowing
what Nguema’s means are, the court is hard-pressed to infer that he lives beyond them. Absent
other details, the court cannot infer how Nguema’s wealth may have been derived, nor from what
sources, nor the legality of those sources. Although the government alleges that Nguema lives
far beyond his means, the court cannot leap to the conclusion that his largesse is evidence of
criminal activity.
Faced with this complaint, the claimants would find it difficult to know where to begin
their investigation, what individuals to interview, or what documents to review. Cf. Mondragon,
313 F.3d at 864. To be sure, the government paints a troubling picture of endemic corruption in
Equatorial Guinea. But the government has done so with brushstrokes that are much too broad.
The government cannot proceed by casting general allegations of lawlessness in the country in
which the relevant transactions took place. United States v. $1,399,313.74 in U.S. Currency, 592
F. Supp. 2d 495, 499 (S.D.N.Y. 2008) (“The principal new allegation in support of the narcotics-
22
trafficking theory is that many of the funds were sent from Latvia, which the Government asserts
is a notorious money laundering haven. This does not raise the right to relief above a speculative
level.”). Absent some specific indication that the Jet is derived from or traceable to illicit
activity, the complaint must be dismissed. Id. The court has little doubt that the government
could cure these deficiencies by filing an amended complaint that alleges additional facts. Thus,
the court will dismiss the complaint without prejudice and grant leave to amend the complaint.
IV. CONCLUSION
For the foregoing reasons, the court grants the claimants’ motion to dismiss. But the
government is granted leave to amend the complaint. An order consistent with this
memorandum opinion is separately and contemporaneously issued this 19th day of April, 2013.
RUDOLPH CONTRERAS
United States District Judge
23