GAB is pleased to publish this account of the 3^rd day of the trial of Equatorial Guinean Vice President Teodorin Nguema Obiang by Shirley Pouget and Ken Hurwitz of the Open Society Justice Initiative.

Much of the third day of Teodorin’s trial was taken up with a lengthy, and highly misleading, “explanation” by defense counsel of United States of America v. One White Crystal-Covered “Bad Tour” Glove And Other Michael Jackson Memorabilia, a civil forfeiture action the US Department of Justice filed and later settled that involved property Teodorin owned in California.  The Paris hearing began at 1:30 pm, Wednesday, June 22, with the three judges filing into the august Chambre des Crieés of the Tribunal Correctionnel of Paris.  The Presiding Judge asked the civil parties and the defense counsel to comment on the background to the case she had reviewed the preceding day.  While the civil parties’ counsel had little to say, the defense had much to say — little of which was accurate.

Lead defense lawyer Emmanuel Marsigny began to discuss submissions in the One White Crystal-Covered “Bad Tour” Glove And Other Michael Jackson Memorabilia case. The action was filed by the Department of Justice’s Kleptocracy Asset Recovery Initiative against Teodorin properties in the United States, a collection of Michael Jackson memorabilia, a $30 million Malibu mansion, a $38 million Gulf Stream Jet, a fleet of luxury automobiles, and other assets (hence the case’s odd name).

In such actions, the government brings a “lawsuit” against a thing (“in rem”),which is considered the “defendant.” The government asserts the “defendant” asset is “guilty” either of being the proceeds of crime (the money stolen from the bank) or of having assisted in a crime (the bank robber’s get-away car). If the government persuades the court of the “defendant’s” culpability, the court allows the government to take ownership of the asset.

Anyone who considers him or herself to be the an innocent owner of such an asset is free to join the proceeding as a “claimant.”  Claimants can block the forfeiture by showing they have lawful title to the property and were unaware of its use in a crime.  An example would be the owner of an automobile which was stolen and then used as the get-away car in a bank robbery.

While this kind of proceeding is indeed civil (and not penal) in nature, civil forfeiture proceedings have long been an integral part of the criminal law enforcement arsenal at the Department of Justice.  They are often used to combat drug cartels and other forms of organized crime.  As the DoJ has explained, such proceedings “enhanc[e] public safety and security…by removing the proceeds of crime and other asserts relied upon by criminals and their associates to perpetuate their criminal activity.”  Civil forfeiture are attractive to law enforcement because of the lower burden of proof the government is required to meet to prevail.  Rather than persuading a jury or judge that the evidence proves its case “beyond a reasonable doubt,” in a civil action the government need only show that the evidence proves its claim by a “preponderance of the evidence.”  That is, that it is “more likely than not” true that the facts are as the government has argued.

In the Kleptocracy context civil forfeiture actions offer three particular advantages: they can be pursued even when the alleged perpetrator of the underlying crimes is i) beyond U.S. jurisdiction, ii) enjoys immunity as a high-level official, or iii) is deceased.  The stolen wealth can still be seized and returned to benefit the populations whose property it rightly is.

In the Teodorin civil asset forfeiture case in the U.S., after three and a half years of litigating, during which DoJ offered reams of evidence of Teodorin’s alleged bribery, extortion and other corrupt acts, in October 2014, DoJ and Teodorin reached a settlement under which Teodorin agreed to give up the Malibu house and some of the other assets.  Of the approximately $30 million proceeds, $20 million is to be given to a charitable organization to be used for the benefit of the people of Equatorial Guinea; and another $10.3 million is to be forfeited to the United States to be used to benefit the Equatoguinean people.

Back to Paris.  The defense counsel managed to distort both the nature of this civil forfeiture mechanism (which does not exist in France), and the specific outcome of the US case against Teodorin’s property. Counsel Marsigny seemed to argue that the 2014 Settlement Agreement reached between the US and Teodorin occurred in the context of civil proceedings and could, therefore, not be considered as admission or indicator of wrongdoing on the part of the Teodorin. To those familiar with the American law, this argument seemed disingenuous and misleading in the extreme.

Marsigny several times repeated that there had been no criminal proceedings brought in connection with the allegations against Teodorin’s property, seemingly suggesting that the civil forfeiture case was of no great significance from a law enforcement perspective.

The French prosecutor (who has not played much of a role in the proceedings) noted that although the US forfeiture cases were civil in nature, the settlement agreement was signed by the DoJ’s Criminal Division.

The Presiding Judge wanted to know why Teodorin would have agreed to settle if he had done nothing wrong.  “Why would one give away $30 million if the assets were not related to a wrongdoing?” she pressed.  The defense said that even if Teodorin had complete confidence in his innocence, he still had good reason to settle with DoJ.  In particular, the defense highlighted Teodorin’s altruistic personality, and his involvement in numerous charitable enterprises.

The DoJ prosecutors who brought the case against Teodorin’s property would certainly have gotten a laugh with this one.  In June 2012, in their Second Amended Complaint (para. 73), DOJ gave an example of what they had learned about this altruism:

73. Nguema also has demanded that companies operating in E.G. contribute money to what are described as public service campaigns but which, in fact, were vehicles for Nguema to misappropriate funds for his personal benefit. For example, as recently as July 2011, Nguema operated a program to generate funds purportedly to improve the housing conditions of the poor by changing palm roofs to ones consisting of zinc tiles. Nguema possesses a substantial financial interest in the company that is responsible for distributing and supplying these zinc tiles in E.G. Although advertisements promoting this campaign claim that contributions to these programs are voluntary, companies that do not contribute to these campaigns face retaliation. Companies that have not contributed to the current campaign, for instance, are identified publicly as not having contributed on televised advertisements in E.G. Furthermore, donor contributions are not used for their alleged purpose, but instead are largely misappropriated by Nguema for his personal benefit.

The defense further gave the impression that the US government had simply lost the forfeiture case in August 2013, having failed to show any evidence of any corruption crime.  Though not literally false, the defense’s account is thoroughly misleading. On August 20, 2013, the US Federal District Court in Los Angeles did indeed throw out the core of DoJ’s claims against Teodorin.  The federal judge acted under a procedural requirement requiring the prosecutor have “probable cause” to believe the particular property is related to crime.  This must be demonstrated before the government can begin court proceedings to seize someone’s property.

In determining a motion by Teodorin’s American lawyers to dismiss the DoJ case for lack of probable cause, the federal judge considered the amount and nature of the evidence that DoJ had accumulated by April 2011, the date when it filed its initial first complaint.  He found that, as of April 2 011, the government was not able to satisfy the “probable cause” test with regard to the central corruption allegations (based on violations of Equatoguinean law against extortion, misappropriation, theft, embezzlement and bribery).  (Separate bank fraud charges in the same complaint, however, were supported by sufficient evidence the judge ruled.)

The Department had argued that the test should have been whether the government had “probable cause” as of the date of the operative complaint, the one then before the court.  DoJ had filed two amended complaints since April 2011, in October 2011, and then in June 2012.  Between the first and the third complaint submissions, as increasingly publicity around the case spread, new sources and potential witnesses learned of the case and were moved to come forward to offer their assistance.  By June 2012, the government had accumulated a riche cache of evidence that filled in much of what it could earlier present only in outline.  Had the judge considered himself procedurally permitted to take all of this additional information into account, the government insisted, he would have had ample grounds to rule in the government’s favor. (Examples of some of the evidentiary materials excluded from the court’s consideration of “probable cause” are available here.)

The defense in Paris has included in the record the US federal court’s two-page “Final Ruling” of August 20, 2011, which does indeed throw out the core corruption charges.  However, in a much lengthier “Tentative Ruling,” which the judge had given the parties the preceding day, he included important language not included in the Final Ruling. Even while dismissing the major corruption claims, the Tentative Ruling strongly suggested the court would be willing to give the government a second shot at a forfeiture complaint, backed up with its full and updated arsenal of evidence:  “[A] dismissal for lack of probable cause in the instant suit would likely not bar the Government from instituting another action based on new evidence.”  Because this point was not directly relevant to the legal question before the court at that time, it was not included in the Final Ruling issued the next day.  However, that remained the judge’s thinking.  Indeed, on December 13, 2013, the government successfully filed a new complaint, starting a new case, built on a rich evidentiary foundation.

With both sides no doubt aware of the implications of what all this additional evidence could mean for the success of the forfeiture action, negotiations between DoJ and Teodorin’s lawyers picked up following commencement of the new case.  By July 2014, the parties had advised the court that “tentative agreement” had been reached; and in October, the agreement was concluded, bringing the litigation to end.  (Here and here for previous posts on the settlement.)

By (figuratively) waving around the abbreviated two-page Final Ruling, and omitting the subsequent history from his account of  the DoJ case, the defense counsel misleadingly implied that DoJ negotiated its settlement with Teodorin’s lawyers with its back against the wall, because its case had been thrown out in August 2013 by a judge who believed DoJ had no evidence to support its allegations.  In fact, the negotiation took place against the background of a newly revivified case built on the richly detailed December 2013 complaint.

As for why the government chose to settle, if it’s case was so much improved by December 2013, it is worth noting that at the time of the original 2011 filings, the Gulf Stream jet – representing more than half the value of all the targeted assets – was not within US jurisdiction and was considered highly unlikely ever to come within US jurisdiction.  Moreover, contrary to agreement with DoJ and to applicable US law, almost all the automobiles and most of the Michael Jackson memorabilia – including the famous glove – had been removed from the US by 2012.  What was left at the time negotiations were underway were essentially the $30 million Malibu mansion, one Ferrari and a half dozen life-sized Michael Jackson statues.  The math suggests that even had the government successfully litigated through to forfeitures of all the properties within US jurisdiction, it would have been able, as a practicable matter, to recover little or no additional value than what it got in the settlement.

Following the vibrant back-and-forth respecting the US case and the settlement, the rest of the hearing was rather quietly devoted to reviewing the real and movable properties that Teodorin purchased in France.  (Examples below.)

As mentioned in our last blog, the facts about those purchases have not really been contested by the parties. The question of whether the purchases may have constituted the laundering of criminal proceeds is expected to be discussed Wednesday June 28.