Judge Divvies Up Corrupt Ukrainian PM’s Fortune

     (CN) – A federal judge has approved a settlement giving an Antiguan bank a portion of nearly $250 million that the United States traced to a corrupt former prime minister of Ukraine, calling the ousted politician’s objections “nonsensical.”
     Jurors convicted Pavel Ivanovich Lazarenko of laundering ill-gotten gains through banks worldwide in 2004. 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 – known as Eurofed – of Antigua, proved to be a tougher thorn.
     “Here the plaintiff’s winning streak comes to an end, because the court concludes that Eurofed, acting by and through its appointed liquidators, has standing to contest the forfeiture of the defendant assets that are located in Antigua and Barbuda,” U.S. District Judge Paul Friedman ruled, in 2013. “As for the remaining assets to which Eurofed lays claim, however – those located in Lithuania and Switzerland – the court agrees with the plaintiff that Eurofed has not demonstrated its standing to contest their forfeiture.”
     Eurofed’s liquidation status did not immediately grant the U.S. government access to the funds, Friedman said.
     Friedman also rejected Uncle Sam’s claim that Eurofed’s Lazarenko-related funds “did not become assets of the bank” because they were merely “held in a custodial or safekeeping relationship.”
     On Nov. 14, Friedman ruled that Lazarenko’s objections to a proposed settlement over $2 million in assets held at Bank Julius Baer & Company Ltd. lacked merit and granted a motion for approval and entry of the agreement.
     Lazarenko, Friedman said, argued that approval of a settlement between the parties, which is not detailed in the ruling, could prejudice him in three ways. For one, Lazarenko said the settlement would force him to bear the liquidators’ attorneys’ fees.
     “Lazarenko’s reading of Antiguan law may be correct, but the court simply fails to make out how its approval of the settlement agreement might have any negative bearing on Lazarenko’s bottom line,” the ruling states. “If anything, as Eurofed points out, this settlement agreement will reduce the liquidators’ legal expenses, thus lessening the chance that any liquidation distribution to Lazarenko would be diminished by them.”
     Lazarenko’s second and third allegations were “even less creditable,” Friedman added.
     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 had also cautioned that approval of the settlement could mislead the Angtiuan High Court of Justice over whether currently frozen funds lying in its registrar’s account should be released to liquidators.
     “The court has little doubt that the Antiguan judiciary is more than capable of resolving any issues that will come before it in the Eurofed liquidation proceedings,” Friedman wrote.
     The ruling does not detail the approved settlement.
     Lazarenko served as prime minister of Ukraine from 1996 to 1997.
     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 and advisor, Bay Area businessman Peter Kiritchenko, in 2010.

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