Ex-Ukrainian PM Barred From ‘Primrose Path’

(CN) - A corrupt former Ukrainian prime minister's request for government documents was denied in part by a federal magistrate, who refused to let him walk a "primrose path."

Pavel Ivanovich Lazarenko was convicted in 2004 by a federal jury of laundering ill-gotten gains through banks worldwide. The United States in turn sought the forfeiture of more than $250 million scattered throughout banks in Antigua and Barbuda, Guernsey, Liechtenstein, Lithuania and Switzerland.

Over nearly a decade, the government successfully dismissed seven would-be intervenors and survived a motion to dismiss its action.

However, a contest to the forfeiture filed by the European Federal Credit Bank of Antigua - known as Eurofed - proved to be a tougher thorn.

In 2014, U.S. District Judge Paul Friedman approved a proposed settlement for over $2 million in assets held at Bank Julius Baer & Company Ltd. and called the ousted politician's objections "nonsensical."

Lazarenko had contended that dismissal of the forfeiture action, with respect to a portion of the Lithuanian funds, would deprive him of the opportunity to assert a statute of limitations defense regarding the assets.

"This argument is nonsensical," Friedman wrote. "The United States' voluntary dismissal of its forfeiture action with respect to a portion of the European funds simply relieves Lazarenko of any need to defend against efforts by the United States to forfeit those funds."

Lazarenko served as prime minister of Ukraine from 1996 to 1997.

Between 1992 and 1998, Lazarenko allegedly pocketed more than $300 million from kickbacks, multimillion-dollar natural gas import contracts and other nefarious behavior.

Lazarenko recently claimed in an amended complaint that he was the "beneficial owner of, or has an interest in, all or nearly all of the in rem assets, and that the more than $250 million at issue was not derived from any illegitimate activity or sources."

On Monday, Magistrate Judge G. Michael Harvey in Washington, D.C. ruled on Lazarenko's request to compel the government's response to 34 discovery demands.

"Much of the discovery that claimant now seeks in this matter is focused on reconstructing the discovery he previously received in the criminal case - a long, and time-consuming process, as the court's recent scheduling order demonstrates, that would have been unnecessary had claimant's attorneys retained the discovery they received in the criminal matter," the 31-page ruling stated.

Harvey said it was "equally problematic" that Justice Department attorneys "apparently did not collect and retain" discovery from Lazarenko's criminal case as it was produced, "and are presently in the process of attempting to reassemble what was produced."

Chiding counsel, Harvey said the parties were to be "more diligent in meeting their obligations to work with each other collegially, conscientiously, and in good faith to resolve discovery disputes before they are raised with the court."

Harvey partially denied Lazarenko's discovery requests, but ruled the government may have asked him to describe financial transactions that were "highly complex."

Thus, Lazarenko's request that he "be permitted to refresh his recollection with the records" was not unreasonable, the judge said.

"Accordingly, based on the entire record, the court will not require claimant's immediate further response to the government's interrogatories, and will permit him the opportunity to receive and review the financial records and interview memoranda he says he needs before supplementing his responses," Harvey wrote.

He did, however, reject Lazarenko's suggestion that the government be limited in its inquiry to funds that were, "in fact," derived from illegal activities alleged in the amended complaint, calling it "unworkable."

"Limiting discovery in the way claimant suggests would provide him with a basis to argue that he need not provide any information about the funds in the in rem assets or pooling accounts because, in his view, all of the funds in those accounts were derived from legitimate sources," Harvey wrote. "It would also spark endless litigation as the parties sparred over whether there is sufficient threshold evidence that a given dollar in the accounts (of the 100s of millions of dollars at issue) was in fact derived from the criminal allegations in the amended complaint, thereby justifying discovery."

He continued: "The court declines claimant's offer to walk down that primrose path."

Counsel and the Justice Department did not immediately return requests for comment.

In 2011, the U.S. government forfeited its right to nearly $2.5 million in Lazareno-related assets - held in two Eurofed correspondent accounts at Bank of America in San Francisco - by botching forfeiture proceedings.

Lazarenko won reversal of a $19 million restitution award he was ordered to pay to his co-conspirator, Peter Kiritchenko, in 2010.

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