United States Of America v. Besneli et al

Filing 13

OPINION & ORDER: The Government's motion is therefore granted. The Government is ordered to serve Besneli by email to the email address provided by the Government to the Court. Additionally, the Government shall provide the name of a newspaper and, as discussed above, a declaration or affidavit so that the Court may also order service by publication. (As further set forth in this Order) (Signed by Judge John F. Keenan on 8/12/2015) (kl)

USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #: _________________
DATE FILED: Aug. 12, 2015

UNITED STATES DISTRICT COURT
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OF NEW YORK
SOUTHERN DISTRICT NEW YORK
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UNITED FANNIE MAE AMERICA,
::
In re STATES OF 2008 SECURITIES
08 Civ. 7831 (PAC)
::
LITIGATION
09 MD 2013 (PAC)
Plaintiff,
::
::
No. 14 Civ. 7339 (JFK)
OPINION & ORDER
-against:
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:
OPINION & ORDER
HASAN BESNELI,
:
:
Defendant.
:
HONORABLE PAUL A. CROTTY, United States District Judge:
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JOHN F. KEENAN, United States District Judge:
BACKGROUND1
Before the Court is the Government’s motion for alternative
The early years of this decade saw a boom in home financing which was fueled, among
service on Defendant Hasan Besneli under Rule 4(f)(3) of the
other things, by low interest rates and lax credit conditions. New lending instruments, such as
Federal Rules of Civil Procedure. Specifically, the Government
subprime mortgages (high credit risk loans) and Alt-A mortgages (low-documentation loans)
requests permission to serve Besneli by (1) email and
kept the boom going. Borrowers played a role too; they took on unmanageable risks on the
(2) “publication in a newspaper widely read by the business
assumption that the market would continue to rise and that refinancing options would always be
community in the Istanbul area” of Turkey. (Gov’t Mem. 1.) For
available in the future. Lending discipline was lacking in the system. Mortgage originators did
the reasons that follow, the Government’s motion is granted.
not hold these high-risk mortgage loans. Rather than carry the rising risk on their books, the
Rule 4(f) provides the means of service for individuals in
originators sold their loans into the secondary mortgage market, often as securitized packages
foreign countries. See Fed. R. Civ. P. 4(f). Specifically, Rule
known as mortgage-backed securities (“MBSs”). MBS markets grew almost exponentially.
4(f)(1) allows for service in accordance with international
But then the housing bubble burst. In 2006, the demand for housing dropped abruptly
agreements, such as the Hague Convention on the Service Abroad
and home prices began to fall. In light of the changing housing market, banks modified their
of Judicial and Extrajudicial Documents, Nov. 15, 1965, 20
lending practices and became unwilling to refinance home mortgages without refinancing.
U.S.T. 361. Rule 4(f)(2) provides for service by other means,
such as by a letter rogatory.
1

Additionally, Rule 4(f)(3)

Unless otherwise indicated, all references cited as “(¶ _)” or to the “Complaint” are to the Amended Complaint,

permits the 2009. For purposes of this Motion, all allegationsservice on an individual
dated June 22, court to order alternative in the Amended Complaint are taken as true.
in a foreign country, so long as the means of service is not
1

prohibited by international agreement.

Exhaustion of the other

provisions of Rule 4(f) is not required before a plaintiff seeks
court-ordered service. See Advanced Aerofoil Techs., AG v.
Todaro, No. 11 Civ. 9505, 2012 WL 299959, at *1 (S.D.N.Y. Jan.
31, 2012) (“Service under subsection (3) is neither a last
resort nor extraordinary relief.

It is merely one means among

several which enables service of process on an international
defendant.” (internal quotation marks omitted)); SEC v.
Anticevic, No. 05 Civ. 6991, 2009 WL 361739, at *3 (S.D.N.Y.
Feb. 13, 2009) (“A plaintiff is not required to attempt service
through the other provisions of Rule 4(f) before the Court may
order service pursuant to Rule 4(f)(3).” (emphasis in
original)).
Courts have broad discretion in fashioning alternative
means of service under Rule 4(f)(3). See Anticevic, 2009 WL
361739, at *3.

In exercising this discretion, a court must

consider whether the alternative method is “reasonably
calculated to provide notice and an opportunity to respond” so
that it comports with the requirements of due process. See
Philip Morris USA Inc. v Veles Ltd., No. 06 Civ. 2988, 2007 WL
725412, at *2 (S.D.N.Y. Mar. 12, 2007); see also Luessenhop v.
Clinton Cnty., N.Y., 466 F.3d 259, 269 (2d Cir. 2006) (noting
that service must be “reasonably calculated, under all the
circumstances, to apprise interested parties of the pendency of
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the action and afford them an opportunity to present their
objections”).
Although it is not necessary for the Government to first
attempt service under the Hague Convention, the Court notes that
the Government cannot serve Besneli by those means because the
Government does not have a known address for Besneli. See 20
U.S.T. 361, art. 1 (“This Convention shall not apply where the
address of the person to be served with the document is not
known.”). This is despite, as demonstrated by the Declaration of
Andrew F. McLaughlin submitted by the Government, diligent
efforts by the Government to obtain Besneli’s physical address.
After Besneli ignored the Government’s request to confirm his
address via email, (McLaughlin Decl. ¶ 9; Ex. 3.), the
Government contacted Besneli’s daughter and ex-wife, neither of
whom knew of Besneli’s current whereabouts. (Id. ¶¶ 16–17.)
Moreover, the Government retained a due diligence firm that was
able to confirm that Besneli remains active in the business
community in and around Istanbul, but was unable to uncover his
specific location. (Id. ¶¶ 18–19.)
In considering the Government’s suggested alternatives, the
Court notes that there is a split among district courts as to
whether service by email is prohibited by international
agreement in certain instances. See AMTO, LLC v. Bedford Asset
Mgmt., LLC, No. 14 Civ. 9913, 2015 WL 3457452, at *7 (S.D.N.Y
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June 1, 2015) (collecting cases).

As the Government concedes,

Turkey did not agree to service by “postal channels” when it
joined the Hague Convention. (Gov’t Mem. 8 n.2.). See also Hague
Conference on Private International Law, Turkey – Central
Authority & Practical Information (last updated July 17, 2014),
www.hcch.net/index_en.php?act=authorities.details&aid=277.

The

majority view is that email does not fall within “postal
channels” unless the country specifically objected to service by
email or other electronic means. See, e.g., AMTO, 2015 WL
3457452, at *7; FTC v. PCCare247 Inc., No. 12 Civ. 7189, 2013 WL
841037, at *4 (S.D.N.Y. Mar. 7, 2013).

Indeed, given that the

Convention was ratified in 1965, email would not have been
contemplated by the signatories.

The Court thus joins the

majority, and because it is not aware of any agreement entered
into by Turkey that prohibits service by email, finds that
service on Defendant by email is not prohibited by international
agreement. See also WhosHere, Inc. v. Orun, No. 13 Civ. 526,
2014 WL 670817, at *3 (E.D. Va. Feb. 20, 2014) (“ Turkey has not
specifically objected to service by email or social media
networking sites which are not explicitly listed as means of
service under Article 10.”)
In this case, service by email is reasonably calculated to
notify Besneli of this action because the Government has
demonstrated that Besneli is likely to receive the email. See
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PCCare247, 2013 WL 841037, at *4 (“Service by email alone
comports with due process where a plaintiff demonstrates that
the email is likely to reach the defendant.”); United States v.
Machat, No. 08 Civ. 7936, 2009 WL 3029303, at *4 (S.D.N.Y. Sept.
21, 2009) (allowing service by email after acknowledging that
the Government had “successfully corresponded with [defendant]
by the email address that she provided.”).

As evident from the

McLaughlin Declaration and the emails attached as exhibits, the
Government has already conversed with Besneli by using the email
address provided to the Court. (McLaughlin Decl. ¶¶ 4–10; Exs.
1–3.)

Indeed, Besneli himself indicated that email is the “most

convenient and reliable way” to contact him.1

Thus, the Court

concludes that service on Besneli by email is appropriate and
will order that the Government serve Defendant at the email
address provided to the Court.
Service by publication will serve as a sensible set of
suspenders to go along with the belt provided by email.

Courts

ordering service by publication typically consider whether
defendant has some knowledge of the suit against him and whether
service may be accomplished by more traditional means. See SEC

1

The full two sentences state: “At this time the most convenient and
reliable way to get in contact with me is by mail. Anywhere with internet
access, I try to keep up with my mail.” (Ex. 3.) It is clear in context that
“mail” is referring to “email.” For one, Besneli’s email is in response to a
request to confirm his physical address, which he does not confirm or
otherwise provide. Furthermore, the reference to “internet access” removes
any doubt that Besneli was in fact referring to email.

5

v. Tome, 833 F.2d 1086, 1093-94 (2d Cir. 1987); SEC v. Shehyn,
No. 04 Civ. 2003, 2008 WL 6150322, at *3-4 (S.D.N.Y. Nov. 26,
2008).

As detailed above, the Government is unable to serve

Besneli by traditional means because it has not been able to
ascertain his address despite diligent efforts, including
directly asking Besneli for his address.

Moreover, Besneli is

likely aware of this action as Government investigators told
Besneli, via email, that they had recommended the filing of this
action. (McLaughlin Decl. Ex 3.)

Service by publication is thus

an appropriate means of formally notifying Defendant of this
action.
The Court also concludes that the Government’s specific
publication request – a newspaper widely read by the business
community in the Istanbul area – is well-suited to notify
Besneli of this action.

As indicated by the McLaughlin

Declaration, Besneli stated in 2012 that he was “living in
Istanbul.” (McLaughlin Decl. ¶ 5; Ex. 1.)

Besneli’s ex-wife

indicated to the Government that Besneli was still residing in
Turkey as of late November 2014. (McLaughlin Decl. ¶ 17.)

And,

critically, the Government’s due diligence firm’s research
caused the firm to conclude that Besneil “remains involved in
the business community in the Istanbul area in Turkey.”
(McLaughlin Decl. ¶ 19–20.)

Thus, the Court concludes that

service by publication in a newspaper widely read by the
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business community in the Istanbul area is an appropriate means
to notify Besneli.
The Government has not, however, indicated which newspaper
it intends to publish notice.

Before service by publication,

the Government shall provide the Court with the name of the
newspaper along with an affidavit or declaration explaining how
it is widely read by the business community in the Istanbul
Upon approval of an acceptable newspaper, the Court will

area.

order publication in that newspaper once a week for four
consecutive weeks. See Machat, 2009 WL 3029303, at *4; Shehyn,
2008 WL 6150322, at *3.
The Government's motion is therefore granted.

The

Government is ordered to serve Besneli by email to the email
address provided by the Government to the Court.

Additionally,

the Government shall provide the name of a newspaper and, as
discussed above, a declaration or affidavit so that the Court
may also order service by publication.
SO ORDERED.

Dated:

New York, New York
August 12, 2015

cJ.&~hknan

United States District Judge

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