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United States of America v. All Funds On Deposit With R.J. ) O'brien & Associates

March 27, 2012

UNITED STATES OF AMERICA, PLAINTIFF,
v.
ALL FUNDS ON DEPOSIT WITH R.J. ) O'BRIEN & ASSOCIATES, HELD IN THE NAME OF BRIDGE INVESTMENT, S.L., ) BEARING ACCOUNT NUMBERS ) XX-X3931 AND XXX-X1784, MAINTAINED ) AT HARRIS BANK, ACCOUNT NUMBER XXX-171-6, DEFENDANT.



The opinion of the court was delivered by: Matthew F. Kennelly, District Judge:

MEMORANDUM OPINION AND ORDER

The United States filed this in rem action seeking forfeiture of approximately $6,600,000 held in futures trading accounts. It contends that the money is the property of an affiliate of the Al-Qaeda terrorist organization. Three groups of insurance companies (the insurance company claimants) with property damage claims arising from the September 11, 2001 terrorist attacks have filed claims to the funds and answers to the government's complaint. The government has moved to strike their claims and answers, and the insurance companies have moved to amend them. In addition, a group of individuals (the personal injury claimants) asserting personal injury and wrongful death claims arising from the September 11 attacks have moved to intervene and filed an answer to the government's forfeiture action. The government has moved to strike their answer. For the reasons discussed below, the Court grants the government's motions to strike and denies the personal injury claimants' motion to intervene.

Background

A. The defendant property

In 2003, an commodities futures trading account was opened at R.J. O'Brien & Associates (RJO) in the name of Bridge Investment, S.L., a Spanish corporation. In 2005, Mohammad Qasim al Ghamdi (Al Ghamdi), who was identified as Bridge Investment's general manager, took control of the trading account. Between June and September 2005, he deposited almost $24,000,000 in the account. The account lost money, and by May 2006 only about $6,600,000remained. Later in 2006, Bridge Investment opened a second account with RJO but did not deposit any additional money into the account.

The government alleges that the money Al Ghamdi deposited in the RJO account was the property of Muhammad Abdallah Abdan Al Ghamdi, also known as Abu al Tayyeb (Al Tayyeb), a member of Al-Qaeda and an associate of Al Ghamdi. The government alleges that Al Tayyeb raised money in Saudi Arabia and used it to support Al-Qaeda's activity. He provided approximately $35 million to Al Ghamdi, and it was a portion of this money that Al Ghamdi deposited in the RJO account. Saudi Arabian authorities arrested Al Tayyeb in June 2006. At the time, he had been planning or considering several different types of terrorist attacks on Saudi Arabia and the United States.

In June 2007, the United States Department of the Treasury's Office of Foreign Assets Control, using its authority under the International Emergency Economic Powers Act, blocked Bridge Investment's two accounts at RJO. The funds in the accounts remained blocked when the government initiated this forfeiture action on June 19, 2011. In this action, the government claims that the funds were forfeit as the assets of an individual or entity planning or perpetrating an act of terrorism against the United States or a foreign government in violation of 18 U.S.C. § 981(a)(1)(G)(I) and (iv). Following the filing of the complaint, the Court issued an in rem arrest warrant for the funds, and federal law enforcement agents then seized the funds. The United States Marshal has held the funds since July 15, 2011.

B. The claimants

Three different groups of insurance companies have filed verified claims and answers: (1) OneBeacon Insurance Group; (2) American Alternative Insurance Company, The Princeton Excess & Surplus Lines Insurance Company, and Great Lakes UK Insurance Company (collectively American Alternative); and (3) Vigilant Insurance Company, Chubb Custom Insurance Company, Chubb Indemnity Insurance Company, Federal Insurance Company, Chubb Insurance Company of New Jersey, Chubb Insurance Company of Canada, Pacific Indemnity Company, and Great Northern Insurance Company (collectively Chubb). The insurance company claimants collectively paid more than $2.5 billion in property damage and business interruption claims arising from the September 11 terrorist attacks. In 2003, they and other similarly situated insurance companies filed suit against Al-Qaeda and other defendants in the United States District Court for the Southern District of New York seeking to recover the funds they had paid out.

A group of several thousand individuals who assert personal injury or wrongful death claims related to the September 11 attacks filed suit in 2002 against Al-Qaeda and other defendants in the United States District Courts for the District of Columbia and the Southern District of New York. Their cases were consolidated with the suit brought by the insurance companies in the Southern District of New York.

In April and May 2006, the district court in New York issued what the insurance claimants call "default judgments" against Al-Qaeda and the other defendants in favor of the insurance companies and the personal injury plaintiffs because the defendants had not answered the complaint. The district court did not, however, determine the amount of liability or issue a final judgment. (For this reason, the so-called "judgments" were actually orders of default, not judgments.) In 2007, the insurance companies moved the court to assess damages in the total amount of more than $9.4 billion in favor of all the insurance company plaintiffs, including some plaintiffs who are not claimants here.

The district court, however, took no action on the insurance companies' motion until July 13, 2011, when it referred the motion to a magistrate judge. Consequently, when the insurance company claimants filed claims and answers in this forfeiture action in August and September 2011, they were able to say only that the New York court had determined liability in their favor, and they were unable to specify the amount of their claim.

In October 2011, the magistrate judge in New York recommended that the insurance companies be awarded the judgment they sought, with only minor subtractions. The district court adopted the recommendation fully and entered judgment in favor of the insurance companies on December 22, 2011. Because the insurance companies are entitled to treble damages under the applicable law, OneBeacon's judgment is worth almost $530 million, American Alternative's is for more than $320 million, and Chubb's is for $6.65 billion. On January 25, 2012, the district court in New York determined that there was no reason for delay and issued final judgments in favor of the insurance companies even though other portions of the consolidated cases were ongoing. On January 27, the insurance company claimants moved in this case to filed amended claims and answers reflecting that they now have final judgment for definite amounts.

The personal injury plaintiffs did not fill a timely claim or answer in the present forfeiture action. In November 2011, however, they sought to intervene as claimants either as a matter of right or permissively. The personal injury plaintiffs have not yet had their damages calculated by the New York district court, and thus they do not have final judgments. Because there are thousands of individual plaintiffs, each of whom requires a separate determination of damages, counsel for the personal injury claimants cannot predict when they might have final judgments. The personal injury claimants state, however, that they have reached a confidential ...


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