UNITED STATES OF AMERICA v. ALL FUNDS ON DEPOSIT AT
MEMORANDUM OPINION AND ORDER that the United States shall file a supplemental memorandum on or before January 26, 2018 discussing interplay between excessive fines and innocent interest defenses; and counsel for the children shall file a reply on or before February 16, 2018. Signed by Judge Paul L. Friedman on January 5, 2018. (MA)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
ALL ASSETS HELD AT BANK JULIUS, )
Baer & Company, Ltd., Guernsey
Branch, account number 121128, in the
Name of Pavlo Lazarenko et al.,
Defendants In Rem.
UNITED STATES OF AMERICA,
Civil Action No. 04-0798 (PLF)
MEMORANDUM OPINION AND ORDER
This matter is before the Court on The Lazarenko Children’s Motion [Dkt.
No. 997] for Reconsideration of the Court’s Order Denying Them Leave to Plead an Eighth
Amendment Excessive Fines Affirmative Defense. The Lazarenko children argue, inter alia, that
because they had pled an “innocent interest” affirmative defense under the Fifth Amendment in
2004, and the United States therefore had actual notice of the factual allegations underlying that
defense, the government has had every opportunity to take discovery on the children’s
culpability for many years and cannot now legitimately claim prejudice. Motion at 1-3.
Discovery with regard to innocence, they assert, is synonymous with discovery respecting lack
of culpability. Id. at 7-8; Reply at 3. In other words, litigation of the innocent owner defense
necessarily “raise[s] the issue of the Lazarenko Children’s culpability.” Motion at 8; Reply at 4.
The United States’ assertion that “[t]he knowledge inquiry for an innocent ownership defense is
entirely separate from a consideration of culpability” for an excessive fines defense, Opp. at 13,
therefore is “devoid of merit.” Reply at 3-4.
Under the relevant case law, there may be substance to the children’s argument
that the innocent interest defense and the excessive fines defense are not totally separate and may
be sufficiently related such that the government can show no prejudice from permitting the
children now to plead an excessive fines defense. See Austin v. United States, 509 U.S. 602, 617
(1993); United States v. Ferro, 681 F.3d 1105, 1112-14 (9th Cir. 2012); see also United States v.
Bajakajian, 524 U.S. 321 (1998). Accordingly, it is hereby
ORDERED that on or before January 26, 2018, the United States shall file a
supplemental memorandum, not to exceed 10 pages in length, discussing the cases listed above
and the interplay between the excessive fines and innocent interest defenses and the roles that
knowledge and culpability (or lack of innocence) play in each; and it is
FURTHER ORDERED that on or before February 16, 2018, counsel for the
children shall file a reply, not to exceed 10 pages in length, to the United States’ analysis.
PAUL L. FRIEDMAN
United States District Judge
DATE: January 5, 2018
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