- A Glimpse Into The Operation Of The Kleptocracy Asset Recovery Initiative - Forfeiture Of U.S. Property Of The Family Of The Former President Of Taiwan
- May 17, 2013
- Law Firm: Lee Tsai Partners Attorneys-at-Law - Taipei Office
On November 14, 2012, the Department of Justice (the “DOJ”) announced on its website that, as part of DOJ’s Kleptocracy Asset Recovery Initiative, the DOJ forfeited a Virginia residence and a New York condominium purchased with alleged bribes paid to the family of the former president of Taiwan- Shui-Bian Chen (hereinafter “Chen”). To understand how the relevant law operates to allow the DOJ to forfeit U.S. property purchased with bribe money received outside of the U.S., we now take a closer look at what happened in the forfeiture actions.
Procedure-wise, although both complaints for forfeiture were brought by U.S. attorneys in federal district courts having in rem jurisdiction over the defendant properties in Virginia and New York, the Federal Rules of Civil Procedures (the “FRCP”) is not the principal source of procedural rules. Because the Supplemental Rules for Certain Admiralty or Maritime Claims and Asset Forfeiture Action (“Supplemental Rules”) are made applicable to forfeiture actions in rem arising from a federal statute, Supplemental Rules shall govern the forfeiture actions procedurally while the FRCP is applicable to the extent that it is not inconsistent with the Supplemental Rules.
According to the Supplemental Rules, a complaint for forfeiture pursuant to a federal statute shall include verification of an officer from an agency of proper jurisdiction, statement of the grounds of the court’s subject mater and in rem jurisdiction, description of the defendant property, the location of the defendant property, the legal basis of forfeiture, and statement of sufficiently detailed facts to support a reasonable belief that the government will be able to meet its burden of proof at trial.
Substantively, the bases of forfeiture in a complaint alleging properties purchased with bribe money mainly involve 18 U.S.C. § 981(a)(1)(A) and § 981(a)(1)(C), §§ 1956 and 1957. Specifically, 18 U.S.C. § 981(a)(1)(A) provides for the forfeiture of “[a]ny property, real or personal, involved in a transaction or attempted transaction in violation of section 1956, 1957 or 1960 of this title, or any property traceable to such property.” 18 U.S.C. § 981(a)(1)(C) provides for forfeiture of “[a]ny property, real or personal, which constitutes or is derived from proceeds traceable to a violation of - any offense constituting “specified unlawful activity” (as defined in section 1956 (c)(7) of this title), or a conspiracy to commit such offense. Section 1956 (c)(7), as referred to in § 981(a)(1)(C), provides that the term “specified unlawful activity” means, “with respect to a financial transaction occurring in whole or in part in the United States, an offense against a foreign nation involving bribery of a public official, or the misappropriation, theft, or embezzlement of public funds by or for the benefit of a public official.” Sections 1956 and 1957 are money laundry statutes providing various actus reus and mens rea that constitute an offense of money laundry.
In both of the complaints in the Virginia and New York actions, the U.S. attorneys traced the source of the fund for the purchase of the defendant properties to NT$ 200 million of “Political Contributions” made by Wei-Chen Ma of Yuanta Securities Co., Ltd. (“Yuanta”). The transactions to purchase the defendant properties were shown to have occurred at least in part in the U.S. Moreover, the US attorneys alleged that Chen’s or his family’s taking of the “political contributions” in exchange of Chen’s procurement of the governmental approval of Yuanta’s acquisition of Fuhwa Financial Holding Company Limited constitutes an offense against Taiwan involving bribery of a public official- President of Taiwan.
In the end, Chen’s family, through Avallo, Ltd. (a British Virgin Island company, managed by Chih-Chung Chen (Chen’s son) for the benefit of Su-Jen Wu (Chen’s wife) and Jui-Ching Huang (Chen’s daughter-in-law)), reached settlements with the U.S. attorneys. The Chen family agreed to the forfeitures of the defendant properties and the U.S. agreed that certain proceeds from the sale of the properties shall be paid to Avallo, Ltd.
It is noted that the district court need not defer to a foreign court in determining whether there is “an offense against a foreign nation... involving bribery of a public official,” at least not in case of non-final judgment or ruling. First of all, neither the full faith and credit statute (28 U.S.C. §1738) nor the full faith and credit clause of the Constitution requires a federal court to defer to a foreign judgment. Second of all, even if the principles of comity ordinarily suggest deference to foreign final judgment, such principles do no compel courts to follow non-final foreign judgment. In the present case, the U.S. District Court for the Western District of Virginia refused to defer to an appealable Taipei District Court decision acquitting Chen, his wife, son, daughter-in-law and others.