LOS ANGELES (CN) — A federal judge declined for the time being to remove Kuwait's claims from consolidated asset forfeiture lawsuits brought by the U.S. Justice Department to seize a slew of properties in Beverly Hills and Los Angeles a former Kuwaiti minister is suspected of acquiring with embezzled state funds.
U.S. District Judge Christina Snyder at a hearing Monday tentatively denied the request by Victor Franco Noval, a businessman whose investment companies received the purportedly stolen Kuwaiti money, to strike Kuwait's claims to the disputed real estate, bank accounts and other assets.
Noval and his holding companies have filed their own claims to the properties the U.S. is trying to forfeit, and they argue that since Kuwait belatedly filed its own claims, they "are now faced with an incredibly unfair tag team" by two separate sovereigns.
"Due to Kuwait’s inept procedures and in-fighting between different factions of its royal family and the government, the Noval claimants have been victims of what was supposed to be a business loan by a known, vetted wealthy Arab royal, Al-Sabah," Noval and his companies said in their motion, referring to former Kuwaiti Minster of Defense Khaled al-Sabah.
The problem for Noval, however, is that controlling Ninth Circuit law doesn't allow one claimant in a forfeiture lawsuit to try to throw out the claims of another claimant to the assets.
"You're challenging it under a procedural vehicle it that is not available to you," Snyder told Ronald Richards, the attorney representing the Noval claimants.
Snyder didn't issue a final ruling at the hearing and said she would give the issue some more thought, noting that sooner or later she'd have the address the issue whether Kuwait has standing to bring its claims in the case.
She also tentatively denied the request by the Noval claimants to stay their depositions in the forfeiture cases until the statute of limitations has run for any criminal charges they could potentially face.
"I think you're asking for too much," Snyder told Richards, adding that while she understood his concerns about his clients possibly incriminating themselves, there was no way to get an ironclad guarantee.
Assistant U.S. Attorney Daniel Boyle reiterated there was no criminal investigation in progress but did not elaborate.
According to the Justice Department, starting around 2010 al-Sabah and other Kuwaiti officials used the London attaché office of the defense ministry to illegally funnel more than $100 million in Kuwaiti public funds from the office's procurement account to bank accounts in California.
Al-Sabah used the money to invest with a California father-and-son duo in the notorious "Mountain" in Beverly Hills — a 157-acre, undeveloped hilltop property that over the years has belonged to the sister of the last shah of Iran, Merv Griffin and the late Herbal Life founder Mark Hughes. The site has at one point been valued at $1 billion.
The investment, al-Sabah has claimed, turned out to be a fraud scheme. He has argued that his California business partners, convicted felon Victorino Noval and his son Victor Franco, who is fighting the forfeiture lawsuits, stole most of the $165 million in investment funds they received from him. They were the ones, al-Sabah claims, who used the funds to buy the Beverly Hills properties and a private airplane, yacht and Lamborghini that the U.S. now seeks to seize.
In their bid to strike Kuwait's claim, the Noval claimants insist they did their due diligence when accepting al-Sabah's investments in their ventures and that the transactions weren't secret but had all the appearances of a legitimate foreign real estate investor.
"The contentions that Kuwait did not know about these accounts at its state-owned bank, the transfers of hundreds of millions of dollars into the accounts from other Kuwait government accounts, and the wire transfers to the Noval claimants lacks credibility," they claim.
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