Thursday, September 13, 2007

Kobi Alexander Is Down $50 Million from Civil Asset Forfeiture

While former Comverse Technology CEO Kobi Alexander has been successful in fighting off extradition from Namibia on charges related to options backdating at the company, he lost on the government's civil asset forfeiture action that may well result in the seizure of nearly $50 million from two brokerage accounts.  In July 2006, after Alexander fled the U.S., the federal government filed a civil asset forfeiture action to obtain the money from two Citigroup accounts on the ground that they represented a portion of the proceeds of the options backdating and one account had been used to launder the funds. Shortly before the government declared him a fugitive, Alexander wired $57 million from the accounts to Israel, and he has since been living with his family off that money, along with other overseas assets.

The district court granted summary judgment (opinion below) to the government by applying 28 U.S.C. Sec. 2466(a) , which enacted the fugitive disentitlement doctrine for civil asset forfeiture cases after the Supreme Court rejected its application in such cases in the 1996 in Degen v. U.S, 517 U.S. 820 (1996).  The statute provides:

a) A judicial officer may disallow a person from using the resources of the courts of the United States in furtherance of a claim in any related civil forfeiture action or a claim in third party proceedings in any related criminal forfeiture action upon a finding that such person--
(1) after notice or knowledge of the fact that a warrant or process has been issued for his apprehension, in order to avoid criminal prosecution--
(A) purposely leaves the jurisdiction of the United States;
(B) declines to enter or reenter the United States to submit to its jurisdiction; or
(C) otherwise evades the jurisdiction of the court in which a criminal case is pending against the person; and
(2) is not confined or held in custody in any other jurisdiction for commission of criminal conduct in that jurisdiction.

In applying Sec. 2466, the district court held that "[t]here is absolutely no basis for concluding that Kobi is not free to return to the United States to face the criminal charges against him" -- except that he would be put in jail until trial so quickly it would make his head spin.  Perhaps more ominously for Alexander, the district court noted that "there is no basis for concluding that the government's case is weak considering the early stage of this litigation."  Also rejected were arguments that the fugitive disentitlement provision violates the Constitutional due process and the excessive fines provisions.

While Alexander lost his claim to the $50 million, his wife fared slightly better -- but just slightly.  Mrs. Alexander asserted that she had standing to claim the money in a filing by her counsel, Goodwin Proctor.  The district court noted that "[o]rdinarily, I might simply find that when such a law firm submits a standing allegation as vague and conclusory as this one, the claim should be dismissed as a matter of law."  Yet, "despite the flagrant shortcomings of this allegation," the court did order discovery on her claim to the account, although simply being the spouse of the account owner will not be sufficient to give her standing to fight the civil asset forfeiture action.  While the government does not have the $50 million quite yet, it moved a big step closer to it. (ph)

Download us_v_alexander_asset_forfeiture_ruling_sept_10_2007.pdf

Civil Enforcement, Fraud, Judicial Opinions | Permalink

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