United States District Court, D. New Jersey
WILLIAM J. MARTINI, U.S.D.J.
United States of America (the “Government”)
brings this action against Sberbank of Russia
(“Sberbank”), seeking forfeiture of $1, 879,
991.64, in connection with the criminal conviction of
Alexander Brazhnikov, Jr. This matter comes before the Court
on Sberbank's motion for reconsideration of the
Court's January 30 Opinion and Order (the
“Opinion”), under the District of New Jersey
Local Civil Rule 7.1(i). There was no oral argument.
Fed.R.Civ.P. 78(b). For the reasons set forth below,
Sberbank's motion is DENIED.
forfeiture proceeding arises out of Alexander Brazhnikov,
Jr.'s criminal proceeding, in which he pleaded guilty to
three conspiracy charges related to the smuggling of
restricted items from the United States to Russia. The Court
assumes the parties' familiarity with the facts. Sberbank
now seeks reconsideration of the Court's Opinion and
Order issued on January 30, 2017. See ECF Nos. 51
The Court's January 30 Opinion
Opinion, the Court granted, in part, and denied, in part, the
Government's motion to strike Sberbank's claim of
ownership to $1, 879, 991.64 that was seized by the
Government in connection with Brazhnikov's criminal
conviction. At the time of seizure, the funds were being held
in Sberbank's interbank account located at Deutsche Bank
Trust Company of Americas and, as a result, were subject to
the Government's seizure pursuant to 18 U.S.C. §
981(k) and Supplemental Admiralty and Maritime Claims Rule
G(8)(c). See Op. at 3.
Court acknowledged the “dearth of case law interpreting
§ 981(k), ” but considered precedent from the
First Circuit and the District Court for the District of
Columbia that established opposing views concerning the reach
§ 981(k) to assets held in foreign bank accounts. The
Court recognized that both courts agreed “that Congress
intended to treat foreign deposits as domestic deposits under
§ 981(k), ” with which this Court also agreed.
Id. at 5. The Court then underscored a critical
factual distinction from the precedent cases to the instant
case in its analysis of § 981(k): neither precedent case
concerned the forfeiture of property by a defendant convicted
of a federal crime. Id.
light of the Congressional intent to put foreign and domestic
deposits on equal footing, and in light of the unique facts
before it, the Court considered what type of forfeiture the
funds would be subject to if they were deposited in a
domestic account. It concluded that “if Brazhnikov had
originally deposited the funds into a domestic bank account
but subsequently moved them beyond the reach of this Court
prior to seizure, the Government would have been entitled to
the equivalent amount of money located in any other domestic
bank account or accounts owned by Brazhnikov, regardless of
its nexus to the predicate criminality.” In other
words, the Government would have been entitled to the same
amount of money held in any other account under the legal
construct of “substitute property” as set forth
in 21 U.S.C. § 853(p). See id. at 6.
Court then applied § 981(k) to the facts before it in
the manner that Congress intended-i.e., it put the
funds held in a foreign account on equal footing to those
held in a domestic account. In so doing, the Court expressly
joined the First Circuit's conclusion “that a
foreign financial institution must show beyond a
preponderance of the evidence that it has discharged its
entire obligation to the prior owner of funds in
establishing statutory standing under §
981(k)(4)(B)(ii)(II).” Id. (citing United
States v. Union Bank for Sav. & Inv. (Jordan), 487
F.3d 8, 17-22 (1st Cir. 2007)). Put another way, §
981(k) does not require that the Government prove beyond a
preponderance that the seized funds were directly tied to the
criminality warranting forfeiture; the statute only requires
that the Government show that Brazhnikov held funds equal to
the forfeiture amount in any Sberbank account.
Consequently, the Government was entitled to $808, 661.28 of
the funds because it was indisputable that Sberbank had not
discharged this portion of its obligation to Brazhnikov on
the date of seizure. See id. at 6-7. Genuine
disputes of material fact existed concerning the remaining
forfeiture amount and the Court, therefore, denied the
Government's motion with respect to those funds. See
id. at 7-9. The Court also granted Sberbank's motion
to amend its answer.
argues that the Court erroneously applied § 853(p) to
the instant case in concluding that the funds in question
were subject to forfeiture as “substitute
property.” Sberbank first argues that the Court reached
the issue sua sponte, without the benefit of further
development of its “novel” argument by the
parties. See Mot. for Reconsideration
(“Sberbank's Mot.”) 3-4, ECF No. 53. Sberbank
next argues that the Court ignored the due process
protections afforded to third-parties by 18 U.S.C. § 983
and Supplemental Rule G, requiring that notice be given at
the outset of forfeiture in rem proceedings. See
id. at 7. Sberbank claims that the Government's
failure to follow the proper procedure-i.e., notice
to third-parties-for the forfeiture of substitute assets is
fatal to its seizure of the funds. Id.
Government responds that Sberbank's motion should be
denied because it “fails to demonstrate that the Court
committed clear error when it held that the Government is
entitled to the forfeiture of substitute property where the
funds subject to forfeiture under 18 U.S.C. § 981(k) are
unavailable by the act or omission of the convicted
defendant.” Gov't Resp. 2, ECF No. 54. The
Government also claims that Sberbank has not shown that the
Court's holding would create a manifest injustice because
Sberbank “has been aware since the beginning that the
Government is seeking forfeiture of $1, 879, 991.64 in
relation to funds held by Alexander Brazhnikov and his father
at Sberbank.” Id.
Civil Rule 7.1(i) allows a party to seek a motion for
reconsideration within 14 days after entry of the judgment,
and directs the party seeking reconsideration to submit
‘[a] brief setting forth concisely the matter or
controlling decisions which the party believes the Judge . .
. has overlooked.'” Valcom, Inc. v.
Vellardita, No. 13-cv-3025, 2014 WL 2965708, at *1
(D.N.J. July 1, 2014) (quoting L. Civ. R. 7.1(i)).
“Reconsideration motions will only be granted (1) where
an intervening change in the law has occurred, (2) where new
evidence not previously available has emerged, or (3) to
correct a clear error of law or fact or prevent manifest
injustice.” Id. (citing Max's Seafood
Cafe ex rel. LouAnn, Inc. v. Quinteros, 176 F.3d 669,
677 (3d Cir. 1999)). Under the clear error or manifest
injustice rationale, “reconsideration is proper if the
contested holding (1) was ‘without support' in the
case law or (2) would create ‘manifest injustice'
if not ...