Gang Luan v. United States

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued October 16, 2012 Decided July 9, 2013
No. 12-5142
GANG LUAN, ET AL.,
APPELLANTS
v.
UNITED STATES OF AMERICA,
APPELLEE
Appeal from the United States District Court
for the District of Columbia
(No. 1:11-mc-00208)
Barry J. Pollack argued the cause for appellants. With him
on the briefs were Brian A. Hill and Mia P. Haessly.
Vijay Shanker, Attorney, U.S. Department of Justice, argued
the cause for appellee. With him on the brief was Lanny A.
Breuer, Assistant Attorney General. Kirby A. Heller and Linda
M. Samuel, Attorneys, entered appearances.
Before: GARLAND, Chief Judge, HENDERSON, Circuit
Judge, and EDWARDS, Senior Circuit Judge.
Opinion for the Court filed by Chief Judge GARLAND.
2
GARLAND, Chief Judge: In 2010, a Hong Kong magistrate
issued a warrant for the arrest of appellant Gang Luan on
charges of smuggling, evasion of customs duties, bribery,
conspiracy to defraud, and money laundering. Before the police
could apprehend him, Luan fled to the United States.
Thereafter, a Hong Kong court issued a restraining order to
preserve Luan’s assets, and the government of Hong Kong asked
the United States Department of Justice for assistance in
restraining those assets that had been transferred to this country.
Pursuant to 28 U.S.C. § 2467(d)(3), the Justice Department filed
an application for a restraining order in the United States District
Court for the District of Columbia, which granted the
application. Luan now appeals,1 contending that the order fails
to comply with the requirements of section 2467(d)(3).
Concluding that the order does comply, we affirm the judgment
of the district court.
I
Gang Luan was the sole owner and director of Offtech
International Ltd. and Bluewhale Offshore Engineering
Technology Co. Ltd., two companies purportedly involved in
oilfield and ocean engineering and services. Luan’s sister was
the financial director of Bluewhale. According to Hong Kong
authorities and the United States Department of Justice, Offtech
and Bluewhale netted over $186 million by smuggling vessels
and equipment into China, submitting false documents to
customs officers, making bribes to win favorable contracts, and
artificially inflating the prices of their goods through fraudulent
agreements. See Affirmation of Inspector Chow Wai Tong
Dennis ¶¶ 3-4; Application of the United States to Enforce and
Register Foreign Restraining Order (“DOJ Application”), at 4-5.
Luan and his sister then allegedly laundered the proceeds to
1
The other appellants are entities that Luan owns or controls.
3
bank accounts in the United States and Mainland China.
Smuggling, evasion of customs duties, bribery, conspiracy to
defraud, and money laundering are crimes under Hong Kong
law, and any proceeds stemming therefrom are subject to
forfeiture. See Chow Aff. ¶ 25; DOJ Application at 11-12.
In late 2010, Hong Kong authorities moved to arrest Luan
and his sister. By the time a magistrate issued an arrest warrant,
however, Luan had fled Hong Kong for the United States.
Luan’s sister was arrested while attempting to travel to the
United States from Hong Kong, but she too absconded to the
United States after being released on bail.
In March 2011, Hong Kong prosecutors applied to the Court
of First Instance of the High Court of Hong Kong for a
restraining order to prevent the dissipation of assets controlled
by Luan and his alleged co-conspirators. See In re Male Luan
Gang et al., [Mar. 15, 2011] Misc. Proceeding No. 409, at 2
(C.F.I.) (H.K.) (J.A. 58). The prosecutors supported their
application with an affirmation from a Hong Kong customs
inspector enumerating the allegations against Luan and the
others. See Chow Aff.; In re Male Luan Gang et al. [Mar. 15,
2011] Misc. Proceeding No. 409, at 11 (C.F.I.) (H.K.) (J.A. 67)
(citing affirmation). The affirmation stated that, at Luan’s
direction, Bluewhale submitted false documents to customs
officials regarding six vessels and a dredger in order to avoid
customs import tax and value-added tax. It further stated that,
to obtain the contracts under which Bluewhale rented the vessels
and dredger, Luan paid bribes to various persons. The Hong
Kong investigation revealed that Offtech and Bluewhale had no
actual business operations in Hong Kong, and that their
registered business addresses were occupied by accounting firms
that furthered the fraud. The affirmation also listed several bank
accounts into which Luan and his co-conspirators had deposited
the proceeds of their fraud. It alleged that Luan instructed a
4
subordinate to transfer $23.7 million from those accounts to the
United States after authorities ordered his assets restrained, in
return for which Luan paid the subordinate several hundred
thousand dollars in cash. The affirmation estimated that the
proceeds of the fraud were more than three times the defendants’
identifiable assets. See Chow Aff. ¶¶ 3-5, 7-15, 25-37.
The Court of First Instance granted the prosecutors’
application, barring Luan, his sister, and other alleged co-
conspirators from dealing with their property located within or
outside Hong Kong, including specified bank accounts in the
United States. See In re Male Luan Gang et al., [Mar. 15, 2011]
Misc. Proceeding No. 409, at 2-6 (C.F.I.) (H.K.) (J.A. 58-62).
The order notified Luan and the others that they could “apply to
the Court at any time to vary or discharge this Order.” Id. at 10(J.A. 66). Several months later, the court held a hearing to
determine whether the order should be continued. Neither Luan
nor his counsel attended, and the restraining order was continued
pending further order of the court. See In re Male Luan Gang
et al., [Aug. 15, 2011] Misc. Proceeding No. 409 (C.F.I.) (H.K.)
(J.A. 126); Gov’t Br. 24 n.4.
Shortly after the Hong Kong court issued its restraining
order, the government of Hong Kong submitted a formal request
for assistance under the Agreement Between the Government of
the United States of America and the Government of Hong
Kong on Mutual Legal Assistance in Criminal Matters, U.S.-
H.K., Apr. 15, 1997, S. TREATY DOC. No. 105-6.2 Hong Kong
asked the United States to restrain $23.7 million of criminal
2
The Agreement was entered into on the eve of the transfer of
sovereignty over Hong Kong to the People’s Republic of China, and
was signed with the understanding that it would continue in force after
the transfer. See U.S.-H.K. Mutual Legal Assistance Treaty, S.
TREATY DOC. No. 105-6, at III (Letter of Transmittal).
5
proceeds that it said Luan had transferred to specific bank
accounts and companies located in Texas. DOJ Application at
2-3, 5-6. The Justice Department certified that the Hong Kong
restraining order was “in the interest of justice to register and
enforce,” and it filed an ex parte application to enforce the order
pursuant to 28 U.S.C. § 2467(d)(3). DOJ Application at 13; see
id., Exhibit 1 (Assistant Attorney General Decision (Apr. 14,
2011)). Because the Hong Kong restraining order was “an in
personam order against the charged individuals rather than an in
rem order limited to only the specific assets then known to
[Hong Kong] authorities,” id. at 7, the Justice Department
sought to enforce the Hong Kong restraining order against the
$23.7 million of Luan’s American assets that were traceable to
the alleged criminal activities, id. at 6-7. Finding the
prerequisites for a restraining order satisfied, the district court
restrained all assets owned or controlled by Luan (and his Hong
Kong co-defendants) located in the United States, up to $23.7
million, until the conclusion of the Hong Kong proceedings. See
In re Enforcement of a Restraining Order by the High Court,
Misc. Case No. 11-208 (D.D.C. Apr. 19, 2011); see also In re
Enforcement of a Restraining Order by the High Court, Misc.
Case No. 11-208 (D.D.C. May 5, 2011) (adding two safe deposit
boxes to the order).
In October 2011, Luan filed a motion to dissolve the district
court’s order on the ground that it did not comply with the
requirements of 28 U.S.C. § 2467(d)(3) because the Hong Kong
government had filed neither a civil forfeiture complaint nor its
functional equivalent. The district court disagreed, concluding
that the Hong Kong restraining order proceedings and pending
criminal proceedings were sufficient to secure United States
enforcement under the statute. See In re Enforcement of a
Restraining Order by the High Court, Misc. Case No. 11-208,
at 3-4 (D.D.C. Apr. 4, 2012). Luan timely appealed. See 28
U.S.C. § 1292(a)(1).
6
II
We begin by describing the statutory framework for issuing
restraining orders to preserve property subject to forfeiture under
foreign law.
The central statute at issue is 28 U.S.C. § 2467(d)(3),
entitled “Preservation of property.” For ease of exposition, we
first set out its text in full:
(A) Restraining orders.--
(i) In general.--To preserve the availability of
property subject to civil or criminal forfeiture
under foreign law, the Government may apply for,
and the court may issue, a restraining order at any
time before or after the initiation of forfeiture
proceedings by a foreign nation.
(ii) Procedures.--
(I) In general.--A restraining order under this
subparagraph shall be issued in a manner
consistent with subparagraphs (A), (C), and
(E) of paragraph (1) and the procedural due
process protections for a restraining order
under section 983(j) of title 18.
(II) Application.--For purposes of applying
such section 983(j)--
(aa) references in such section 983(j) to
civil forfeiture or the filing of a
complaint shall be deemed to refer to the
7
applicable foreign criminal or forfeiture
proceedings; and
(bb) the reference in paragraph (1)(B)(i)
of such section 983(j) to the United
States shall be deemed to refer to the
foreign nation.
(B) Evidence.--The court, in issuing a restraining order
under subparagraph (A)--
(i) may rely on information set forth in an affidavit
describing the nature of the proceeding or
investigation underway in the foreign country, and
setting forth a reasonable basis to believe that the
property to be restrained will be named in a
judgment of forfeiture at the conclusion of such
proceeding; or
(ii) may register and enforce a restraining order
that has been issued by a court of competent
jurisdiction in the foreign country and certified by
the Attorney General pursuant to subsection
(b)(2).
(C) Limit on grounds for objection.--No person may
object to a restraining order under subparagraph (A) on
any ground that is the subject of parallel litigation
involving the same property that is pending in a foreign
court.
28 U.S.C. § 2467(d)(3).
Three years ago, this Circuit read a previous version of
section 2467(d)(3) to permit the issuance of restraining orders
8
“only after a foreign court has entered a forfeiture judgment.”
In re Any and All Funds or Other Assets, in Brown Brothers
Harriman & Co. Account #8870792 in the Name of Tiger Eye
Investments Ltd., et al. (“Tiger Eye”), 613 F.3d 1122, 1124
(D.C. Cir. 2010) (second emphasis added). But Congress has
since amended the section, eliminating the requirement that
property be subject to “a foreign forfeiture or confiscation
judgment” prior to issuance of a restraining order. See
Preserving Foreign Criminal Assets for Forfeiture Act of 2010,
Pub. L. No. 111-342, 124 Stat. 3607. See generally 156 CONG.
REC. S8637-38 (daily ed. Dec. 8, 2010) (statement of Sen.
Whitehouse). As the text makes clear, the Government now
“may apply for, and the court may issue, a restraining order at
any time before or after the initiation of forfeiture proceedings
by a foreign nation.” 28 U.S.C. § 2467(d)(3)(A)(i).
Pursuant to the current version of section 2467(d)(3), a
federal court may issue a restraining order “[t]o preserve the
availability of property subject to civil or criminal forfeiture
under foreign law.” 28 U.S.C. § 2467(d)(3)(A)(i). This
authorization applies when “the United States has a treaty or
other formal international agreement in effect providing for
mutual forfeiture assistance,” id. § 2467(a)(1), and when the
property to be restrained represents the suspected proceeds of a
“violation of foreign law that would constitute a violation or an
offense for which property could be forfeited under Federal law
if the offense were committed in the United States,” id.
§ 2467(a)(2)(A). There is no dispute that both requirements are
satisfied here.3 In issuing such a restraining order, the court may
3
See supra note 2 (regarding mutual assistance agreement); In re
Enforcement of a Restraining Order by the High Court, Misc. Case
No. 11-208, at 2 (D.D.C. Apr. 19, 2011) (finding by district court that
“the conduct giving rise to forfeiture under the [Hong Kong] law
constitutes conduct that would give rise to forfeiture under [U.S. law]
9
rely on an affidavit “describing the nature of the proceeding or
investigation underway in the foreign country, and setting forth
a reasonable basis to believe that the property to be restrained
will be named in a judgment of forfeiture at the conclusion of
such proceeding.” Id. § 2467(d)(3)(B)(i). Alternatively, the
court “may register and enforce a restraining order that has been
issued by a court of competent jurisdiction in the foreign country
and certified by the Attorney General” as “in the interest of
justice.” Id. § 2467(d)(3)(B)(ii), (b)(2). In this case, the district
court registered and enforced the Hong Kong restraining order
based on the Attorney General’s certification. See In re
Enforcement of a Restraining Order by the High Court, Misc.
Case No. 11-208, at 2 (D.D.C. Apr. 19, 2011); DOJ Application,
Exhibit 1 (Assistant Attorney General Decision (Apr. 14,
2011)).
Section 2467(d)(3)(A) further requires that a “restraining
order under this subparagraph shall be issued in a manner
consistent with” two sets of procedural prerequisites. 28 U.S.C.
§ 2467(d)(3)(A)(ii)(I).
First, the order must be “issued in a manner consistent with
subparagraphs (A), (C), and (E) of paragraph (1)” of
section 2467(d). Id. That paragraph directs entry of “such
orders as may be necessary to enforce the judgment on behalf of
a foreign nation unless the court finds that -- (A) the judgment
was rendered under a system that provides tribunals or
procedures incompatible with the requirements of due process
of law; . . . (C) the foreign court lacked jurisdiction over the
subject matter; . . . or (E) the judgment was obtained by fraud.”
Id. § 2467(d)(1) (emphasis added). The district court made the
if committed in the United States”); DOJ Application at 11-13
(describing offenses giving rise to forfeiture under 18 U.S.C.
§ 981(a)(1)(A), (C) and 28 U.S.C. § 2514).
10
appropriate contrary findings in this case. See In re
Enforcement of a Restraining Order by the High Court, Misc.
Case No. 11-208, at 2-3 (D.D.C. May 5, 2011); In re
Enforcement of a Restraining Order by the High Court, Misc.
Case No. 11-208, at 2-3 (D.D.C. Apr. 19, 2011). And Luan does
not dispute them on appeal.
Second, the restraining order must be “issued in a manner
consistent with . . . the procedural due process protections for a
restraining order under section 983(j) of title 18.” 28 U.S.C.
§ 2467(d)(3)(A)(ii)(I). The text adds that, for purposes of
applying section 983(j), “references in such section 983(j) to
civil forfeiture or the filing of a complaint shall be deemed to
refer to the applicable foreign criminal or forfeiture
proceedings.” Id. § 2467(d)(3)(A)(ii)(II)(aa).
Accordingly, our attention must now turn to 18 U.S.C.
§ 983(j). That section authorizes three different kinds of
restraining orders against property subject to civil forfeiture
under U.S. civil forfeiture statutes. First, a federal court may
issue a restraining order that lasts during the pendency of
forfeiture proceedings, “upon the filing of a civil forfeiture
complaint alleging that the property with respect to which the
order is sought is subject to civil forfeiture.” 18 U.S.C.
§ 983(j)(1)(A).4 Second, a court may issue a 90-day restraining
order prior to the filing of a civil forfeiture complaint after
conducting an adversarial proceeding akin to a preliminary
injunction hearing. Id. § 983(j)(1)(B); see id. § 983(j)(2)
4
See Gov’t Br. 17 (stating that restraining orders issued under
section 983(j)(1)(A) last “during the pendency of forfeiture
proceedings”); Luan Reply Br. 4 (same).
11
(permitting extensions for good cause).5 Third, a court may
issue a temporary restraining order of not more than 14 days
without notice or hearing if there is probable cause to believe
that the property is subject to forfeiture and that notice would
jeopardize its availability. Id. § 983(j)(3).6
In sum, a court may issue restraining orders of
progressively longer duration as the property’s owner is
accorded progressively greater procedural protections. Because
the restraining order against Luan’s property has lasted far
longer than 90 days, both parties agree that it remains valid only
if it was issued in a manner consistent with the procedural due
process protections of section 983(j)(1)(A), the section
authorizing restraining orders that last during the pendency of
forfeiture proceedings. See Gov’t Br. 32; Luan Br. 42-46.
III
Luan contends that the district court’s order violated section
2467(d)(3) because it was not issued in a manner consistent with
the procedural due process protections of section 983(j)(1)(A).
Our review of the district court’s statutory construction is de
novo. See Tiger Eye, 613 F.3d at 1126. Our review of the
5
See also 18 U.S.C. § 983(j)(1)(B) (requiring the court, before
issuing a 90-day order, to determine that “there is a substantial
probability that the United States will prevail on the issue of
forfeiture,” that “failure to enter the order will result in” dissipation of
the property, and that “the need to preserve the availability of the
property . . . outweighs the hardship on any party against whom the
order is to be entered”).
6
See 18 U.S.C. § 983(j)(3) (requiring a hearing, if one is
requested, “at the earliest possible time and prior to the expiration of
the temporary order”).
12
court’s factual findings is for clear error. See United States v.
Murdock, 667 F.3d 1302, 1306 (D.C. Cir. 2012).
A
As noted above, section 983(j)(1)(A) provides that a court
may enter a restraining order that lasts during the pendency of
forfeiture proceedings, “upon the filing of a civil forfeiture
complaint alleging that the property with respect to which the
order is sought is subject to civil forfeiture.” 18 U.S.C.
§ 983(j)(1)(A) (emphasis added). In light of this wording, Luan
insists that section 983(j)(1)(A) “can only be invoked following
the filing of a civil forfeiture complaint.” Luan Br. 17; see id.
at 35. And because no civil forfeiture complaint against Luan’s
property was filed in Hong Kong, Luan maintains that the order
the United States district court entered was not “issued in a
manner consistent with . . . the procedural due process
protections” of section 983(j)(1)(A). 28 U.S.C.
§ 2467(d)(3)(A)(ii)(I).
The flaw in this argument is that it ignores section
2467(d)(3)’s admonition that “references in such section 983(j)
to civil forfeiture or the filing of a complaint shall be deemed to
refer to the applicable foreign criminal or forfeiture
proceedings.” Id. § 2467(d)(3)(A)(ii)(II)(aa). It is thus clear
that the filing of a foreign “civil forfeiture” “complaint” is not
a prerequisite to issuance of a restraining order under
section 2467(d)(3).
Indeed, were the filing of a civil forfeiture complaint
required, section 2467(d)(3) would be a statute of extremely
limited utility. The government represents, and Luan does not
dispute, that many foreign countries do not have civil forfeiture
laws or otherwise permit forfeiture apart from criminal
proceedings. Gov’t Br. 27; see Luan Reply Br. 14-15 & n.7.
13
Luan’s own expert represents, and the government does not
dispute, that forfeiture in Hong Kong is generally available only
in criminal cases. Decl. of Donald Lewis ¶¶ 4-5; see Gov’t Br.
27. Hence, if the statute required the filing of a foreign civil
forfeiture complaint, it would be unavailable to assist Hong
Kong and many other governments preserve property during the
pendency of criminal proceedings, notwithstanding that both the
statute and the 2010 legislative history cited by both parties
make clear that this was the statutory purpose.7
Accordingly, the fact that the government of Hong Kong
did not file a civil forfeiture complaint against Luan’s property
does not bar the issuance of a restraining order against it.
Instead, following the statutory admonition, we must determine
which (if any) Hong Kong proceedings constitute “the
applicable foreign criminal or forfeiture proceedings” necessary
7
See 28 U.S.C. § 2467(d)(3)(A)(i) (providing that the court may
issue a restraining order “[t]o preserve the availability of property
subject to . . . criminal forfeiture under foreign law” (emphasis
added)); id. § 2467(d)(3)(A)(ii)(II)(aa) (providing that references to
civil forfeiture in § 983(j) “shall be deemed to refer to the applicable
foreign criminal or forfeiture proceedings” (emphasis added)); 156
CONG. REC. S8638 (daily ed. Dec. 8, 2010) (statement by Sen.
Whitehouse that the 2010 amendments were necessary because, under
the previous version of the statute, the government was unable to
restrain money “that had been identified for forfeiture by foreign
governments in connection with criminal investigations and
prosecutions” (emphasis added)); 156 CONG. REC. H8540 (daily ed.
Dec. 16, 2010) (statement by Rep. Poe that “[w]e must ensure that
foreign governments can continue to rely on our assistance with their
criminal prosecutions” (emphasis added)); Gov’t Br. 23, 28 (citing
legislative history); see also Luan Br. 20-21 (relying on legislative
history). Senator Sheldon Whitehouse and Representative Ted Poe,
along with Representative Judy Chu, were co-sponsors of the 2010
amendments.
14
to satisfy section 2467(d)(3) and its cross-reference to section
983(j).
B
Section 2467(d)(3) does not itself explain how to determine
which proceedings constitute “the applicable foreign criminal or
forfeiture proceedings.” The Justice Department contends that
those proceedings occur as soon as a foreign government
“initiat[es] . . . criminal proceedings” against the owner of the
assets that the U.S. government seeks to restrain. Gov’t Br. 29.
Under Hong Kong law, the Department says, the issuance of the
warrant for Luan’s arrest served that function. See id. at 32-33;
Organized and Serious Crimes Ordinance, (2007) Cap. 455, 4,
§ 2(15) (H.K.) (“Proceedings for an offense are instituted . . .
when a magistrate issues a warrant or summons . . . in respect of
the offence[.]”). The Justice Department does not spell out the
rationale for this construction. Apparently it reads section
2467(d)(3) as instructing courts to “replace[]” the words “civil
forfeiture” wherever they appear in section 983(j) with the
words “foreign criminal or forfeiture proceedings.” Gov’t Br.
25. On this reading, section 2467(d)(3) authorizes “a restraining
order of unspecified duration” upon “the filing of” -- that is, the
initiation of -- a “foreign criminal or forfeiture proceeding.” Id.
at 24.
The problem with making the direct substitution the Justice
Department suggests is that section 2467(d)(3) does not merely
say that “the filing of a complaint shall be deemed to refer” to
“foreign criminal or forfeiture proceedings.” 28 U.S.C.
§ 2467(d)(3)(A)(ii)(II)(aa). Rather, it states that the filing of a
complaint shall be deemed to refer to “the applicable foreign
criminal or forfeiture proceedings.” Id. (emphasis added). This
is not to say that the issuance of a warrant is not the “applicable”
15
proceeding, but an argument based on substitution alone does
not resolve the question.
Another way to construe the relevant portion of section
2467(d)(3), although proposed by neither party, might begin by
noting that section 983(j) authorizes restraining orders of three
different durations. A court might then find the “applicable”
foreign criminal proceeding by identifying the foreign
proceeding that authorizes the kind of order entered in this case
-- namely, an order that lasts during the pendency of forfeiture
proceedings.8 Hong Kong law does in fact define such a
proceeding. See Organized and Serious Crimes Ordinance,
(2003) Cap. 455, 20, § 14(1) (H.K.) (authorizing restraining
orders against defendants for whom “proceedings have been
instituted” and “have not . . . been concluded”). Indeed, there is
no doubt that there was such a proceeding in this case because
the Hong Kong High Court issued an order lasting for the
pendency of the proceedings against Luan, which the U.S.
district court then registered and enforced. See In re Male Luan
Gang et al., [Aug. 15, 2011] Misc. Proceeding No. 409, at 2
(C.F.I.) (H.K.) (J.A. 127) (extending restraining order “until a
further Order of the Court”). Hence, if all that is necessary is to
identify the kind of Hong Kong proceeding that authorizes a
restraining order lasting for the pendency of proceedings in that
jurisdiction, we need look no further.
A third possible construction, which Luan presses in the
event that we reject his contention that the filing of an actual
civil forfeiture complaint is required, is that the word
8
It is important to reiterate that the statutory authorization for
U.S. restraining orders applies only if the foreign nation is one “with
which the United States has a treaty or other formal international
agreement in effect providing for mutual forfeiture assistance.” 28
U.S.C. § 2467(a)(1).
16
“applicable” directs us to identify the foreign proceeding that is
the “functional equivalent” of the filing of a civil forfeiture
complaint. Luan Br. 36. Luan cites nothing to support the
contention that section 2467(d)(3) requires that a foreign
proceeding be the “functional equivalent” of the filing of an
American civil forfeiture complaint in order to be deemed
“applicable.” Nor does he flesh out what he means by
“functional equivalent.”9 There is, however, support for the
contention that the prerequisite for a restraining order that lasts
during the pendency of foreign forfeiture proceedings should be
procedural protections that are “analogous” or “similar” to those
afforded by the filing of a civil forfeiture complaint. See 156
CONG. REC. S8638 (daily ed. Dec. 8, 2010) (statement by Sen.
Whitehouse that the bill to amend section 2467 “includes due
process protections analogous to those used for restraining
orders in anticipation of domestic forfeiture judgments”
(emphasis added)); 156 CONG. REC. H8540 (daily ed. Dec. 16,
2010) (statement by Rep. Chu that the bill “includes due process
protections similar to those used for restraining orders in
anticipation of domestic forfeiture judgments” (emphasis
added)); see also Gov’t Br. 23 (citing this history). Perhaps the
best descriptor is simply the one employed by the statute itself:
the prerequisite for such a restraining order should be procedural
9
In his reply brief and at oral argument, Luan’s counsel contended
that the only foreign criminal proceeding that could be the functional
equivalent of the filing of a civil forfeiture complaint would be the
filing of an “indictment or comparable charging document.” Luan
Reply Br. 3; see Oral Arg. Recording at 28:45 - 29:10. There is no
statutory support for this contention; section 2467(d)(3) does not use
the term “indictment,” but rather the phrase “applicable foreign
criminal or forfeiture proceedings.” 28 U.S.C.
§ 2467(d)(3)(A)(ii)(II)(aa). Moreover, as we explain below, Luan
received all of the procedural protections (and more) that would have
been afforded by the filing of a “civil forfeiture . . . complaint,” which
is the language the statute does use, id.17
protections “consistent with” those afforded by the filing of a
civil forfeiture complaint. See 28 U.S.C. § 2467(d)(3)(A)(ii)(I)
(requiring that a “restraining order under this subparagraph shall
be issued in a manner consistent with . . . the procedural due
process protections for a restraining order under section 983(j)”
(emphasis added)).
We need not decide precisely which of these three
constructions of section 2467(d)(3) is correct. In this case, the
Hong Kong proceedings included an application for and
issuance of an arrest warrant, an application for and issuance of
a restraining order, and a subsequent adversarial hearing to
determine whether to continue that restraining order. For the
reasons discussed in the following subpart, we conclude that --
taken together -- those proceedings provided procedural due
process protections consistent with those that the filing of an
American civil forfeiture complaint would have afforded Luan.
Accordingly, even under the most demanding plausible
interpretation of section 2467(d)(3), the Hong Kong restraining
order satisfied the prerequisites for enforcement.
C
In order to determine whether Luan received procedural due
process protections “consistent with” those afforded by the filing
of a civil forfeiture complaint, we begin by cataloguing the
procedural protections that a civil forfeiture complaint provides
in the United States.10 Rule G of the Supplemental Rules for
10
By including this catalogue, we do not mean to suggest that a
“manner consistent with . . . the procedural due process protections for
a restraining order under section 983(j)” requires a foreign analogue
for every particular of the federal pleading rules that we discuss
below. Even if that degree of congruity were required, however,
nothing in the record suggests the proceedings against Luan were
18
Admiralty or Maritime Claims and Asset Forfeiture Actions
“governs a forfeiture action in rem arising from a federal
statute.” SUPP. R. G(1). That rule requires (inter alia) that
notice be provided to known potential claimants, id. G(4)(b), and
further requires that the complaint:
(a) be verified;
(b) state the grounds for subject-matter jurisdiction, in
rem jurisdiction over the defendant property, and
venue;
(c) describe the property with reasonable particularity;
(d) if the property is tangible, state its location when
any seizure occurred and -- if different -- its location
when the action is filed;
(e) identify the statute under which the forfeiture action
is brought; and
(f) state sufficiently detailed facts to support a
reasonable belief that the government will be able to
meet its burden of proof at trial.
Id. G(2). Supplemental Rule E, which applies to “the extent that
[Rule G] does not address an issue,” id. G(1), provides that the
complaint “shall state the circumstances from which the claim
arises with such particularity that the defendant or claimant will
be able, without moving for a more definite statement, to
commence an investigation of the facts and to frame a
responsive pleading.” Id. E(2)(a). Section 983(j)(1)(A) itself
provides that, in order to serve as the basis for a restraining
deficient in any of those respects.
19
order, a civil forfeiture complaint must “alleg[e] that the
property with respect to which the order is sought is subject to
civil forfeiture.” 18 U.S.C. § 983(j)(1)(A). Finally, the filing of
a civil forfeiture complaint commences adversarial proceedings
of finite (although not necessarily brief) duration, during which
a person who asserts an interest in the property may contest the
forfeiture. SUPP. R. G(5).11
Luan does not dispute that the Hong Kong proceedings
collectively gave him many of the same procedural protections
that a U.S. civil forfeiture complaint would provide.12 But he
maintains that there were still other important protections that he
did not receive.
First, Luan suggests that the Hong Kong proceedings failed
to describe the property to be forfeited with reasonable
particularity, as required by Supplemental Rule G(2)(C). That
is simply incorrect. In their application for a restraining order
against Luan, Hong Kong authorities enumerated $23.7 million
in suspected criminal proceeds that they sought to restrain.
Chow Aff. ¶¶ 8-14. They further identified specific U.S. bank
accounts to which the funds had been sent. See id. ¶¶ 11-12.
So, too, did the restraining order issued by the Hong Kong court.
11
See Gov’t Br. 24 (“The point of allowing a restraining order of
unspecified duration upon the filing of some proceeding . . . is that the
party affected by the restraining order has a forum in which to
challenge the restraint.”).
12
Luan does not dispute: that he received notice of the restraining
order proceedings; that the Hong Kong inspector’s affirmation in
support of a restraining order was effectively verified; that the Hong
Kong pleadings stated the grounds for jurisdiction and venue in Hong
Kong; or that the pleadings identified the statute under which the
forfeiture action was brought. See SUPP. R. G(2)(a), (b), (c), (e); id.G(4)(b).
20
See In re Male Luan Gang et al., [Mar. 15, 2011] Misc.
Proceeding No. 409, at 3-6 (C.F.I.) (H.K.) (J.A. 59-62). Under
Hong Kong law, those criminal proceeds were the assets that
would be subject to forfeiture upon Luan’s conviction. See
Organized and Serious Crimes Ordinance, (2003) Cap. 455, 12,
§ 8(6)-(7) (H.K.).13
Second, Luan maintains that the proceedings failed to allege
“sufficiently detailed” facts to support a reasonable belief that
his property is subject to forfeiture, as required by Supplemental
Rules E(2)(a) and G(2)(f). See United States v. Mondragon, 313
F.3d 862, 865 (4th Cir. 2002) (explaining pleading standard).14
This claim is also incorrect. The affirmation of the Hong Kong
customs inspector made numerous particularized allegations,
describing in detail the unlawful transactions in which Luan
engaged, the bank accounts into which he deposited the
proceeds, and the incriminating manner in which he transferred
$23.7 million from those bank accounts to the United States.
See supra Part I; Chow Aff. ¶¶ 3-5; id. ¶¶ 6-12 (describing
financial transactions and listing specific bank accounts). The
order of the Hong Kong court continuing the restraining order
added further particulars. In re Male Luan Gang et al., [Mar.
13
Thus, the Hong Kong application also satisfied section
983(j)(1)(A)’s requirement that the complaint “alleg[e] that the
property with respect to which the order is sought is subject to civil
forfeiture.” 18 U.S.C. § 983(j)(1)(A); see DOJ Application at 2-4
(noting that the $23.7 million restrained by the district court
constituted “suspected criminal proceeds” that would be subject to
forfeiture upon Luan’s conviction); Chow Aff. ¶ 37 (estimating that
the criminal proceeds were more than three times the total assets that
were restrained).
14
See SUPP R. G, Advisory Committee Note, Subdivision (2)
(explaining that Supplemental Rule G(2)(f) was intended to codify the
interpretation of Rule E(2)(a) set out in Mondragon).
21
15, 2011] Misc. Proceeding No. 409, at 3-6 (C.F.I.) (H.K.) (J.A.
59-62). These allegations were sufficiently “particularized” to
satisfy Luan’s only objection regarding compliance with
Supplemental Rules E(2)(a) and G(2)(f).
Moreover, the Hong Kong proceedings, which culminated
in the issuance and continuation of the restraining order, offered
additional procedural protections in this respect that the mere
filing of a civil forfeiture complaint in the U.S. would not. No
judicial approval of any kind is required before the government
may file such a complaint in the United States. See Oral Arg.
Recording at 10:40 - 11:00 (acknowledgment by Luan’s
counsel). And while presumably no approval is required for a
customs inspector to file an affirmation in Hong Kong either,
there was more here: namely, the issuance of both an arrest
warrant and a restraining order. In order to secure the arrest
warrant, Hong Kong authorities were required to present
evidence to a magistrate, under oath, that Luan had committed
an indictable offense. See Magistrates Ordinance, (1997) Cap.
227, 8, 29-30, §§ 10, 72, 75 (H.K.). And in order to secure a
restraining order, the Hong Kong government had to show (and
the court had to find) that there was “reasonable cause to believe
that [the defendant] has benefited from that specified offence.”
Organized and Serious Crimes Ordinance, (2003) Cap. 455, 20,
§ 14(2)(b) (H.K.).
Third, Luan objects that the Hong Kong proceedings, unlike
the filing of a civil forfeiture complaint, were not “adversary
proceeding[s].” Oral Arg. Recording at 6:43-57. As Luan’s
counsel concedes, however, the filing of a civil forfeiture
complaint is not itself an adversary proceeding. Rather, it
“begins adversary proceedings” of “finite duration,” in the sense
that they end when the court resolves the complaint. Id. at
11:28-48.
22
But the same is true in Hong Kong. The proceedings
against Luan set in motion multiple adversarial proceedings in
which he will be able to contest the prospect of forfeiture. The
issuance of an arrest warrant began criminal proceedings under
Hong Kong law. See Organized and Serious Crimes Ordinance,
(2007) Cap. 455, 4, § 2(15)(a) (H.K.). As a consequence, Hong
Kong courts now must hold a preliminary inquiry, in which
Luan will be able to challenge the government’s evidence; as
well as a criminal trial, in which Luan will be entitled to the
presumption of innocence. See Magistrates Ordinance, (1997)
Cap. 227, 33, § 81 (H.K.) (requiring adversarial preliminary
inquiry); id. at 36, § 85 (requiring either discharge or committal
for trial after preliminary hearing); Bill of Rights Ordinance,
(1997) Cap. 383, 5, § 8 Art. 11(1) (H.K.) (establishing
presumption of innocence).
All of these proceedings are finite. If they are not instituted
within a reasonable time, or if Luan is acquitted, the Court of
First Inquiry must discharge the restraining order against Luan.
See Organized and Serious Crimes Ordinance, (2003) Cap. 455,
20-21, § 14(1), (4). Moreover, Hong Kong law requires the
court to regularly consider whether to extend or discharge an
extant restraining order. Id. at 20, § 14(1A)-(2); see In re Male
Luan Gang et al., [Aug. 15, 2011] Misc. Proceeding No. 409
(C.F.I.) (H.K.) (J.A. 127). And, of course, if the Hong Kong
restraining order is discharged, the U.S. restraining order must
be discharged as well. See 28 U.S.C. § 2467(d)(3)(A)(i)
(authorizing restraining orders to preserve the availability of
property subject to . . . forfeiture under foreign law” (emphasis
added)); DOJ Application at 8 (stating that U.S. restraining
orders are available under section 2467(d)(3) only “during the
pendency” of foreign forfeiture actions). That Luan has
delayed, or failed to take advantage of, these proceedings by
fleeing arrest does not diminish the procedural protections they
afford him.
23
Moreover, Luan has already been given the opportunity to
challenge his restraint in an adversarial hearing. As noted
above, the Hong Kong Court of First Instance notified Luan that
he could request a hearing in which to argue that the restraining
order against him should be discharged. See In re Male Luan
Gang et al., [Mar. 15, 2011] Misc. Proceeding No. 409, at 10
(C.F.I.) (H.K.) (J.A. 66). The court subsequently held such a
hearing, during which it heard argument from one of his alleged
co-conspirators before concluding that discharge was
unwarranted. See In re Male Luan Gang et al., [Aug. 15, 2011]
Misc. Proceeding No. 409, at 2 (C.F.I.) (H.K.) (J.A. 127). Luan
could have appeared at that proceeding and argued that the
evidence against him was insufficient. See Organized and
Serious Crimes Ordinance, (2003) Cap. 455, 20, § 14(2)(b)
(H.K.); Sec’y for Justice v. Wu Lihui & Ors., [2008] H.K.C.
1446 (C.A.) (H.K.) (decision by the Court of Appeal of the High
Court of Hong Kong discharging a restraining order because it
was “based entirely on speculation”). Again, his failure to take
advantage of that proceeding does not alter the protections it
afforded.
Finally, Luan observes that the Hong Kong court issued an
in personam order restraining him (and his co-defendants) from
dealing with assets that he owned or controlled. He argues that
an in personam order cannot supply procedural due process
protections consistent with section 983(j) because that section
authorizes only in rem orders restraining specific property.
Luan Br. 40-42.15 As Luan notes, a civil forfeiture complaint
filed under Supplemental Rule G(2)(b) must state the grounds
for “in rem jurisdiction.” SUPP. R. G(2)(b). And because the
15
In personam jurisdiction is jurisdiction over the defendant. In
rem jurisdiction is jurisdiction over the property. See United States v.
Bajakajian, 524 U.S. 321, 330-34 (1998); United States v. Fleet, 498
F.3d 1225, 1231 (11th Cir. 2007).
24
Hong Kong government did not seek, let alone state the grounds
for, in rem jurisdiction of Luan’s property, Luan contends that
“no document meeting the substantive requirements of a civil
forfeiture complaint was entered in the Hong Kong
proceedings.” Luan Br. 41-42.
Criminal forfeiture (at least in the United States) is in
personam. See Alexander v. United States, 509 U.S. 544, 558
(1993); United States v. One Assortment of 89 Firearms, 465
U.S. 354, 363 (1983) (“In contrast to the in personam nature of
criminal actions, actions in rem have traditionally been viewed
as civil proceedings . . . .”). Moreover, as noted above, many
countries do not have provisions for civil forfeiture at all. See
supra Part III.A. Accordingly, Luan’s insistence that the
forfeiture order must be in rem essentially restates his contention
-- which we have rejected above -- that section 2467(d)(3) can
only be invoked following the filing of a civil forfeiture
complaint. As we have explained, that argument ignores section
2467(d)(3)’s admonition that “references in such section 983(j)
to civil forfeiture or the filing of a complaint shall be deemed to
refer to the applicable foreign criminal or forfeiture
proceedings.” 28 U.S.C. § 2467(d)(3)(A)(ii)(II)(aa) (emphasis
added). Likewise, Luan’s contention that the legislative history
of section 2467(d)(3) “supports the conclusion that Congress
intended the statute to apply to civil in rem forfeiture,” Luan Br.
41 n.3, is unsupported by that history, which makes clear that
section 2467(d)(3) was intended to permit foreign governments
to preserve property during the pendency of criminal
proceedings, see supra note 7.
In a footnote, Luan contends that the “plain language” of
section 2647(d)(3) makes clear that the statute was intended to
permit only in rem restraints. Luan Br. 41 n.3. The language he
cites states that the court may enter a restraining order “[t]o
preserve the availability of property . . . .” Id. (quoting
25
§ 2647(d)(3)(A)(i)) (emphasis added by appellant). The
problem for Luan is that the U.S. statute governing many
criminal forfeitures contains exactly the same language, see 21
U.S.C. § 853(e)(1), and yet there is no doubt that the latter
authorizes in personam orders, see United States v. Price, 914
F.2d 1507, 1512 (D.C. Cir. 1990) (stating that 21 U.S.C. § 853authorizes “in personam criminal forfeiture proceedings”).
Other than objecting that section 983(j) does not itself
authorize in rem orders, Luan makes no argument that an in
personam order is not consistent with the procedural due process
protections for restraining orders under that section. Because
that is what he must show to render a section 2467(d)(3) order
invalid, see 28 U.S.C. § 2467(d)(3)(A)(ii)(I), this claimed
deficiency in the Hong Kong proceedings -- like the others he
asserts -- does not warrant reversal of the district court’s order.
D
In sum, we conclude that the district court’s restraining
order was “issued in a manner consistent with . . . the procedural
due process protections” of section 983(j)(1)(A), because the
“applicable foreign criminal or forfeiture proceedings” in this
case afforded protections consistent with those afforded by the
filing of a civil forfeiture complaint in the United States. 28
U.S.C. § 2467(d)(3)(A)(ii)(I), (II)(aa). We need not decide
whether all of those proceedings were required, or whether
fewer or different proceedings would have sufficed. We decide
only that the proceedings that Luan was afforded were sufficient
to satisfy the mandate of section 2467(d)(3).
26
IV
For the foregoing reasons, the district court’s order denying
Luan’s motion to dissolve the restraining order is
Affirmed.