(CN) - Former Ukrainian Prime Minister Pavlo Lazarenko, convicted in the U.S. in August 2006 of engaging in a $250 million fraud scheme has been granted the right to negotiate with Antigua over some of his frozen assets.
The United States filed its criminal case against Lazarenko in 2004, accusing him and several associates of carrying out a massive scheme of fraud, extortion, bribery, misappropriation and/or embezzlement throughout the 1990s.
It also filed a request for a restraining order to secure and preserve tens of millions of dollars scattered in bank accounts in Antigua, Barbuda, Guernsey, Liechtenstein, Lithuania, and Switzerland.
Shortly thereafter, U.S. prosecutors issued a summons and warrant of seizure of the defendant's assets in the case, resulting in the United States making Mutual Legal Assistance Treaty requests to various countries to freeze those assets.
Lazarenko and his children — Alexander, Lecia, and Ekaterina Lazarenko — then filed claims asserting interests in some or all of the assets.
In 2005, the prosecutors moved to amend both their complaint and the restraining order, a move the Lazarenkos did not oppose. A federal judge granted the motion and signed the new restraining order.
Several of the assets that are the subject of these actions are held at Bank Julius Baer & Company, Ltd., Guernsey Branch, also known as Bank Julius Baer (Guernsey) Limited, or Credit Suisse (Guernsey) Limited.
In December 2015, Lazarenko filed an application with the Royal Court of Guernsey, asking that the freeze be partially lifted so that he could pay his criminal forfeiture judgment in the United States. In In doing so, Lazarenko claimed the Guernsey order freezing assets was based on an incorrect understanding of the scope of criminal conviction in the U.S. District Court for the Northern District of California.
Specifically, Lazarenko said the order fails to take account that the Ninth Circuit later vacated six of his 14 counts of conviction.
But the former Ukrainian politician failed to tell the United States he'd filed the application until six weeks later.
Once they learned of it, prosecutors told Lazarenko to either withdraw it, or they would file a motion opposing it, accusing him of being in contempt of the restraining order.
Lazarenko then told his attorney in Guernsey not to take any further action on his application, and the funds remained frozen for 16 years pursuant to freeze orders issued under Antiguan law.
That changed on Dec. 24, 2015, when the High Court of Justice in Antigua granted the Antiguan government’s motion for interest and ownership in the funds and an order that they be transferred into the government's forfeiture fund.
Lazarenko then filed an emergency motion seeking clarification of the restraining order and permission to negotiate with the Antiguan government over the funds it now claimed as its own.
On March 23, U.S. District Judge Paul Friedman granted Lazarenko's motion in part and denied it in part.
Friedman held that Lazarenko's Guernsey application did indeed violate the 2005 restraining order, and that any foreign litigation Lazarenko or his attorneys engaged in to challenge the restraints on his foreign-held assets would also violate the order.
While he said he would allow Lazarenko to negotiate with Antigua over the seized funds, Friedman cautioned the disgraced politician that any settlement or proceeds he secures would automatically be subject to the 2005 restraining order, and that those proceeds must be deposited, in their entirety, into an account controlled by the Registrar of the High Court of Antigua and Barbuda.
Friedman said the court must promptly receive notice when each of these events occurs, and that these conditions apply not just to Lazarenko, but his children as well.