LAS VEGAS (CN) - A Panamanian law firm suspected of helping launder $65 million in Argentine money can challenge jurisdiction in a civil lawsuit, but not stay discovery, a federal judge ruled.
NML Capital was one in a long line of investors who sued the Republic of Argentina for defaulting on its bond debts. It filed 11 collection actions against the nation in Manhattan Federal Court in 2003, demanding a total of $1.7 billion.
On Thursday, U.S. Magistrate Judge Cam Ferenbach in Las Vegas approved the Mossack Fonseca law firm's motion to intervene in NML Capital's lawsuit against Argentina.
The motion to intervene is "for the limited purpose of contesting service of process and jurisdiction" and was not opposed, Ferenbach in when granting the motion.
NML suspects that the law firm, through U.S. company M.F. Corporate Services, set up 123 shell companies in Nevada that laundered and hid $65 million in Argentine money .
NML subpoenaed M.F. Corporate Services in June 2014, seeking information on the companies, which it suspects are among those an Argentine journalist reported were used to launder billions in dollars and Argentine pesos from public infrastructure projects.
While Ferenbach granted Mossack Fonseca's motion to intervene, he denied motions to stay discovery from M.F. Corporate Services and Val de Loire, another company NML suspects of money laundering.
"The mere filing of an objection to a magistrate judge's discovery order does not automatically stay discovery," and M.F. Corporate Services suggested hypothetical harms rather than particular ones, Ferenbach ruled.
He said that M.F. Corporate Services merely repeated arguments made in previous motions.
"It is not the court's job to search a party's filings for assertions that could, in theory, be used to support a legal claim or argument," Ferenbach wrote.
He said Val de Loire made "unpersuasive" arguments that he erred in prior rulings, which amounted to "a legal conclusion" that is "generally not entertained by the courts."
Val de Loire claimed it would suffer irreparable injury if its records were made public during discovery, but Ferenbach said records are not available to the public during discovery.
Val de Loire also claimed that a district judge should be making a ruling soon and there is a public interest in protecting innocent parties.
But Ferenbach said that Val de Loire "is not in a position to predict" when a judge might make a ruling and that "(t)he court already determined that there is reasonable suspicion to believe that Val de Loire and M.F. Corporate Services are not 'innocent' nonparties."
The case is before U.S. District Judge Richard F. Boulware II.
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