UNITED STATES OF AMERICA v. ALL FUNDS ON DEPOSIT AT

Filing 1503

MEMORANDUM OPINION AND ORDER directing the Clerk of Court to enter default as to the Correspondent Assets. See Memorandum Opinion and Order for details. Signed by Judge Paul L. Friedman on December 18, 2023. (lcak)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
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UNITED STATES OF AMERICA,
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Plaintiff,
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v.
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ALL ASSETS HELD AT BANK JULIUS )
Baer & Company, Ltd., Guernsey
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Branch, account number 121128, in the
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Name of Pavlo Lazarenko et al.,
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Defendants In Rem.
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____________________________________)

Civil Action No. 04-0798 (PLF)

MEMORANDUM OPINION AND ORDER
The United States seeks forfeiture of various funds allegedly related to Pavel
Lazarenko’s criminal activities. See First Amended Verified Complaint for Forfeiture In Rem
(“Amended Compl.”) [Dkt. No. 20] ¶ 1; United States v. All Assets Held at Bank Julius Baer &
Co., Ltd., Civil Action No. 04-0798, 2020 WL 7640213, at *2 (D.D.C. Dec. 23, 2020)
(collecting prior opinions that summarize factual and procedural history). In September 2023,
the United States submitted an affidavit in support of default against the defendant assets held in
correspondent bank accounts in the name of European Federal Credit Bank Limited in
Switzerland and Lithuania, and all assets traceable thereto (collectively, the “Correspondent
Assets”). See Affidavit in Support of Default Against Defendant Eurofed Correspondent Assets
Located in Lithuania and Switzerland (“U.S. Aff.”) [Dkt. No. 1478]; Amended Compl.
¶ 5(f)-(h), (j). The affidavit, signed by a U.S. Department of Justice attorney, describes the

Correspondent Assets and asserts that all previously existing verified claims to these assets have
been dismissed. U.S. Aff. ¶¶ 2, 9-17.
Mr. Lazarenko objects to this affidavit. See Objection to Entry of Clerk’s Default
[Dkt. No. 1479] (“Obj.”). In response, the United States requests that the Court direct the Clerk
of Court to enter default against the Correspondent Assets, over Mr. Lazarenko’s objections.
Response to Pavel Lazarenko’s Objection to Entry of Clerk’s Default as to Eurofed
Correspondent Assets [Dkt. No. 1482] at 1. Because assets are deemed to be in default when
there are no claimants who can defend their forfeiture, and because Mr. Lazarenko does not
refute the government’s assertion that all previously filed claims to the Correspondent Assets
have been dismissed, the Court will deny Mr. Lazarenko’s objections and direct the Clerk of
Court to enter default against the Correspondent Assets.
Mr. Lazarenko argues that entry of default is inappropriate because he filed a
claim to the Correspondent Assets, because the government has not shown a connection between
the assets and his alleged criminal conduct, and because he will lack another opportunity to
object before judgment is entered. Obj. at 1-2. Mr. Lazarenko further asserts that he may file a
motion for reconsideration of the Court’s August 4, 2023 decision to strike his claim to the
Correspondent Assets, and that an entry of default would preclude his doing so. Id.; see United
States v. All Assets Held at Bank Julius Baer & Co., Ltd., Civil Action No. 04-0798, 2023 WL
5000213 (D.D.C. Aug. 4, 2023).
Mr. Lazarenko is wrong on multiple grounds. First, his objection confuses entry
of default with entry of default judgment. As another judge in this district has explained:
Rule 55 specifies a two-step process for a party seeking to obtain a
default judgment. First, the plaintiff must request that the Clerk of
the Court enter a default against the party who has “failed to plead
or otherwise defend” against an action. Second, if the plaintiff's
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claim is not for a “sum certain,” the party must apply to the court for
an entry of default judgment. This two-step process gives a
defendant an opportunity to move to set aside a default before the
court enters judgment.
Boland v. Elite Terrazzo Flooring, Inc., 763 F. Supp. 2d 64, 66 n.1 (D.D.C. 2011) (Urbina, J.)
(citations omitted) (quoting FED. R. CIV. P. 55). An entry of default is not a judgment. It
“simply is an official recognition of the fact that one party is in default” and “is an interlocutory
step that is taken under Rule 55(a) in anticipation of a final judgment.” 10A CHARLES ALAN
WRIGHT, ARTHUR R. MILLER & MARY KAY KANE, FEDERAL PRACTICE AND PROCEDURE § 2692
(4th ed. 2023).
Because entry of default is only an interlocutory step, Mr. Lazarenko is wrong
that he will lack “a meaningful opportunity to object” before judgment. Obj. at 2. He will likely
have two such opportunities. First, under Rule 55(c), he may move to “set aside an entry of
default for good cause,” FED. R. CIV. P. 55(c), as he has with respect to other defendant assets in
this case. See Pavel Lazarenko’s First Motion to Lift Clerk’s Entries of Default [Dkt. No. 1493].
Second, if the United States moves for default judgment against the Correspondent Assets, Mr.
Lazarenko may oppose that motion. See FED. R. CIV. P. 55(b)(2).
Mr. Lazarenko is also wrong that the government must show a connection
between the Correspondent Assets and his alleged criminal conduct – which would be required
for the government to prevail on the merits – before the Clerk enters default. Entry of default
does not concern the merits of the lawsuit. It is true that the merits can matter when a court
considers whether to grant default judgment. In an in personam lawsuit, for example, default
judgment usually should not be granted where the defendant has indicated a “meritorious
defense,” Int’l Painters & Allied Trades Indus. Pension Fund v. Auxier Drywall, LLC, 531 F.
Supp. 2d 56, 57 (D.D.C. 2008) (quoting Gutierrez v. Berg Contracting Inc., Civil Action
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No. 99-3044, 2000 WL 331721, at *1 (D.D.C. Mar. 20, 2000)), or where “the equities that
specially arise in a given case” counsel against default. See Gilmore v. Palestinian Interim SelfGov’t Auth., 843 F.3d 958, 966 (D.C. Cir. 2016). But at the entry-of-default stage, all that is
required is that the plaintiff show a failure to defend “by affidavit or otherwise.” FED. R. CIV.
P. 55(a).
The affidavit provided by the United States shows the sort of failure to defend
necessary in the civil forfeiture context. “Because a res typically cannot respond on its own
behalf, unless a claimant properly intervenes to raise defenses to its forfeiture, the defendant
property is deemed to have ‘failed to plead or otherwise defend’ against the allegations.” United
States v. All Assets Held in Acct. No. XXXXXXXX, 330 F. Supp. 3d 150, 156 (D.D.C. 2018)
(quoting FED. R. CIV. P. 55(a)). Here, the United States filed an affidavit showing that all
verified claims to the Correspondent Assets have been struck and that there are no remaining
claims to the assets. See U.S. Aff. ¶ 10. Mr. Lazarenko does not offer an affidavit or other
evidence indicating otherwise. Nor does he assert that there are any remaining claims to the
Correspondent Assets. Instead, in addition to the arguments discussed above, he simply argues
that “allowing the United States to obtain a default when a litigated claim to the assets was filed
is not consistent with the default judgment procedure.” Obj. at 1. But entry of default when no
claims remain on an asset is exactly what the default judgment procedure requires.
Finally, Mr. Lazarenko asserts that entry of default would preclude him from
seeking reconsideration of the Court’s decision regarding standing. Obj. at 2. But because entry
of default is not a judgment – let alone a final judgment – the Court’s standing decision is still
subject to a motion for reconsideration under Rule 54(b). FED. R. CIV. P. 54(b) (“[A]ny order or
other decision . . . that adjudicates fewer than all the claims or the rights and liabilities of fewer

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than all the parties . . . may be revised at any time before the entry of a [final] judgment.”); see
also Cobell v. Jewell, 802 F.3d 12, 25 (D.C. Cir. 2015) (clarifying that Rule 54(b) governs
motions to reconsider interlocutory decisions).
For these reasons, it is hereby
ORDERED that the Clerk of Court shall enter default against the following
defendants, as described in the government’s Affidavit in Support of Default Against Defendant
Eurofed Correspondent Assets Located in Lithuania and Switzerland [Dkt. No. 1478]:
As set forth in paragraph 5 of the Amended Complaint, . . . the
following assets located in Switzerland and Lithuania:
f. All assets on deposit at Credit Suisse (Geneva), in account
number 0251-562927-6, in the name of European Federal Credit
Bank Limited. These defendant assets are located in Switzerland
and were last valued at approximately $4,822,598.45 in United
States dollars;
g. All assets held at Banque SCS Alliance S.A. (Geneva) in account
number 5491, in the name of European Federal Credit Bank
Limited. These defendant assets are located in Switzerland and
were last valued at approximately $483,629.69 in United States
dollars;
h. All assets held at Vilniaus Bankas held for the benefit of
European Federal Credit Bank Limited, formerly held at accounts
073721 and 073420 at Bankas Hermis in the name of European
Federal Credit Bank Limited. In February, 2000, Bankas Hermis
merged with Vilniaus Bankas, and the account number for the
defendant assets is believed to have changed to 5110730 or other
account numbers at Vilniaus Bankas. These defendant assets are
located in Lithuania and were last valued at approximately
$29,344,05.35 in United States dollars; and

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j. And all assets traceable to the above-mentioned proceeds and
property, including but not limited to, any interest accrued or assets
held in related sub-accounts or escrow accounts.
U.S. Aff. ¶ 2; see Amended Compl. ¶ 5(f)-(h), (j).
Digitally signed by
Paul L. Friedman
Date: 2023.12.18
16:00:18 -05'00'

SO ORDERED.

PAUL L. FRIEDMAN
United States District Judge
DATE: December 18, 2023

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