Commissions Import Export S.A. v. Republic of the Congo et al

Filing 95

MEMO ENDORSEMENT on 94 Joint Letter addressed to Judge Katherine Polk Failla from Charles R. Jacob III dated December 27, 2021 re: Commissions Import Export S.A. v. Republic of the Congo and Ecree LLC, 1:19-mc-00195 (KPF), granting 34 MOTI ON to Vacate CERTIFICATE OF DEFAULT AND FOR SUMMARY DISMISSAL OF PETITION; granting 56 MOTION to Vacate Certificate of Default. ENDORSEMENT: The Court is in receipt of the parties' joint letter, dated December 27, 2021, outlining the parties' preferred next steps in this case following Respondents' payment of the court-ordered attorneys' fees. (Dkt. #94). The Court wishes to hear from Respondents on their purported bases for dismissal of this case. Ac cordingly, the Court ORDERS Respondents to file pre-motion letters regarding their anticipated motions to dismiss on or before January 10, 2022. Petitioner may file a responsive letter on or before January 17, 2022. After reviewing these submissions, the Court will decide whether to hold a conference to discuss Respondents' anticipated motions and whether to permit discovery during the pendency of these motions. Furthermore, in acknowledgment of Respondents' satisfaction of the Court&# 039;s attorneys' fees order (Dkt. #93), the Court hereby GRANTS both of Respondents' motions to vacate the certificates of default that were entered against them. As such, the Clerk of Court is directed to vacate these certificates of default and to terminate the pending motions at docket entries 34 and 56. SO ORDERED. (Signed by Judge Katherine Polk Failla on 12/28/2021) (mml)

Case 1:19-mc-00195-KPF Document 95 Filed 12/28/21 Page 1 of 6

Charles R. Jacob III
[e-mail]
[phone] Tel

December 27, 2021
VIA ECF
Hon. Katherine Polk Failla
United States District Judge
Thurgood Marshall United States Courthouse
40 Foley Square
New York, NY 10007
Re:

MEMO ENDORSED

Commissions Import Export S.A. v.
Republic of the Congo and Ecree LLC, 1:19-mc-00195 (KPF)

Dear Judge Failla:
This joint letter is submitted by the parties as directed by the Court’s October 27, 2021
Order (Doc. No. 93 at 16). Respondents completed their reimbursement of legal fees (id.) on
December 21, 2021. Because the parties do not agree as to next steps in this matter, the parties’
respective positions are set forth below.
Petitioner-Judgment Creditor’s Position
Petitioner-Judgment Creditor Commissions Import Export S.A. (“Judgment Creditor”)
holds two unsatisfied judgments (the “Judgments”) of this Court against the Republic of the
Congo (the “Republic”): (1) a judgment in the amount of $772,562,221.53 originally entered on
June 18, 2014, and as amended on July 17, 2020, in 1:14-mc-00187 (AJN) (Doc. No. 20 in that
proceeding); and (2) a judgment in the amount of $189,781,887.17 entered on July 28, 2017 in
1:17-mc-0175 (Doc. No. 1 in that proceeding).
This is a judgment enforcement proceeding seeking the turnover, in partial satisfaction of
the Judgments, of a condominium in Manhattan (Unit 32G at One Central Park West; the
“Condo”) nominally owned by Respondent Ecree LLC (“Ecree”) but in fact purchased by and
for the use of Claudia Lemboumba Sassou-Nguesso (the “President’s Daughter”), daughter of
the President of the Republic, Denis Sassou-Nguesso (the “President”). Because the Condo was
purchased with funds embezzled from the Republic, it is an asset of the Republic against which
the Judgments may be enforced. E.g., NML Capital Ltd. v. Republic of Argentina, 2014 WL
3898021 at *5 (D. Nev. 2014) (an “embezzler acquires no title to the property which he steals,”
including from a foreign republic).

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Hon. Katherine Polk Failla
December 27, 2021
Page 2

Ecree is simply among the vehicles used to embezzle from the Republic. There is ample
evidence of this already. Ecree purchased the Condo in 2014, when Ecree was newly formed
and had no other assets or business, for $7,000,000 in cash. In previous post-judgment
discovery, the condominium board produced documents showing, inter alia, that the occupant of
the Condo would be the President’s Daughter and that the President’s Daughter submitted her
own personal financial statement and references as an applicant to purchase the Condo. This
documentation also refers to her as the “owner” and the “purchaser.” As her financial statement
submitted to the condominium board showed assets of substantially less than $7,000,000, it is a
reasonable inference that the funds being used to purchase the Condo for the President’s
Daughter were not her money – it was the Republic’s money.
Accordingly, the next step in this proceeding should be discovery forthwith from the
Republic and Ecree as to the connections between and among the cash used to purchase the
Condo and the President’s Daughter, the President and the Republic. As the Second Circuit
stated in EM Ltd. v. Republic of Argentina, 695 F.3d 201, 207-08 (2d Cir. 2012):
At the outset, we note that broad post-judgment discovery in aid of execution is the norm
in federal and New York state courts. Post-judgment discovery is governed by Federal
Rule of Civil Procedure 69, which provides that “[i]n aid of the judgment or execution,
the judgment creditor ... may obtain discovery from any person—including the judgment
debtor—as provided in these rules or by the procedure of the state where the court is
located.” Fed.R.Civ.P. 69(a)(2) … [and] Fed.R.Civ.P. 26(b)(1) (allowing a court to
“order discovery of any matter relevant to the subject matter involved in the
action”); First City, Texas–Houston, N.A. v. Rafidain Bank, 281 F.3d 48, 54 & n. 3 (2d
Cir. 2002); Libaire v. Kaplan, 760 F.Supp.2d 288, 293 (E.D.N.Y. 2011).
New York state's post-judgment discovery procedures, made applicable to proceedings in
aid of execution by Federal Rule 69(a)(1), have a similarly broad sweep. The New York
Civil Practice Law and Rules provides that a “judgment creditor may compel disclosure
of all matter relevant to the satisfaction of the judgment.” N.Y. C.P.L.R. §
5223; see David D. Siegel, New York Practice § 509 (5th ed. 2011) (describing § 5223 as
“a broad criterion authorizing investigation through any person shown to have any light
to shed on the subject of the judgment debtor's assets or their whereabouts”).
The discovery sought by Judgment Creditor is necessary to further trace the Republic’s
funds used to purchase the Condo, from their embezzlement from the Republic, to Ecree, for the
benefit of the President’s Daughter. It will also further confirm that Ecree is just a front for the
President’s Daughter. It is proper post-judgment discovery in aid of execution.
Notably, it is the stated position of the United States Government that the President
embezzles from the Republic on behalf of his children. Just last year the United States

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Hon. Katherine Polk Failla
December 27, 2021
Page 3
Department of Justice filed a Complaint in the Southern District of Florida1 alleging – in
excruciating detail – how funds of the Republic were embezzled to buy a condominium in Miami
for the President’s son. The Department of Justice describes a scheme “to launder money
embezzled from” the Republic for the benefit of the President’s children. Among the points
made by the Department of Justice:
-

The President allowed the President’s son to “embezzle[] millions of dollars” from
the Republic and its state-owned entities (S.D. Fla. Compl. ¶ 17);
This was done through “a network of bank accounts in the names of shell companies
and nominees [like Ecree here] to attempt to conceal the money” (id. ¶ 18);
The President and his family members have been investigated and charged with
“corruption, money laundering and related crimes around the world” (id. ¶ 12)
involving their “pattern in acquiring real property” (id. ¶ 72), generally in a manner
substantially identical to how they used Ecree here.

There have likewise been numerous findings of international bodies that the rule of this President
is that of a kleptocracy for the benefit of his family, thus including his daughter. Judgment
Creditor respectfully submits that discovery should proceed forthwith, and will support turnover
of the Condo in partial satisfaction of the Judgments. Judgment Creditor has already served
document requests on Ecree that can serve as its document requests in this proceeding as well.2
Judgment Creditor will serve its document requests on the Republic on or before January 10,
2022. Depositions can be discussed once the documents are produced.
Nothing in Respondents’ discussions below should alter the normal course of postjudgment discovery. It is axiomatic that “imposition of a stay [of discovery] is not appropriate
simply on the basis that a motion to dismiss has been filed, as the Federal Rules make no such
provision.” In re Currency Conversion Fee Antitrust Litigation, 2002 WL 88278 at *1
(S.D.N.Y. Jan. 22, 2002), citing In re Chase Manhattan Corp. Sec. Litig., 1991 WL 79432, at *1
(S.D.N.Y. May 7, 1991). Since the most important factor in considering whether to stay
discovery is whether “defendant makes a strong showing that the plaintiff’s claim is
unmeritorious,” id., and Respondents cannot make such a showing, the Republic’s proposed
motion to dismiss should not delay the commencement of discovery.

1

United States of America v. Real Property Located at 900 Biscayne Boulevard, Unit #6107, Miami, FL
33132, 1:20-cv-22427-MGC (S.D. Fla.). The Complaint is referred to as “S.D. Fla. Compl.”
2

In July 2021 Judgment Creditor served a subpoena duces tecum on Ecree in 1:14-mc-00187 (AJN).
Ecree moved to quash that subpoena on the ground that such discovery should occur in this proceeding
before Your Honor. The motion to quash is pending before Judge Nathan but will be rendered moot if
discovery is granted as requested here.

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Hon. Katherine Polk Failla
December 27, 2021
Page 4

The Republic’s Position
The Republic understood the Court’s October 27 Order to be a straightforward directive
that the parties confer and provide an update regarding their respective intentions vis-à-vis
procedural next steps and a proposed schedule for this proceeding. In light of the various
allegations, citations to extraneous materials, and arguments submitted by Petitioner’s counsel,
we share our legal analysis in general terms below; however, we did not read Your Honor’s
Order as an invitation to supplement pleadings, make arguments regarding discovery, or submit
the equivalent of pre-motion conference letters.
Upon the vacatur of the default, the Republic seeks to file a responsive pleading as
provided defending litigants under the Federal Rules of Civil Procedure. Specifically, to that
end, the Republic would respectfully request that it be permitted to file a pre-motion conference
letter by January 10, 2022, setting forth the bases for a motion to dismiss. Should the Court
conclude that a pre-motion conference is unnecessary, the Republic would propose February 16,
2022, as the due date for filing a responsive pleading. See Oceanic Trading Corp. v. Vessel
Diana, 423 F.2d 1, 6 (2d Cir. 1970) (vacating default remanding case “to the district court for the
scheduling of the filing of pleadings, pre-trial discovery and other proceedings, as the court shall
direct, and for assignment for trial on the merits”); Sec. & Exch. Comm’n v. Cable/Tel Corp., 90
F.R.D. 662, 664 (S.D.N.Y. 1981) (vacating default judgment on the basis of excusable neglect
and directing defendant to answer the complaint within twenty days of the filing of court’s
vacatur order).
If granted permission by the Court, and pursuant to the schedule established by the Court,
the Republic intends to file a motion to dismiss on multiple grounds, including Rule 12(b)(6).
The deficiencies in Petitioner’s claim render the Petition appropriate for summary dismissal,
notwithstanding Petitioner’s strategy, as indicated above, to reframe its Petition around an
“embezzlement” theory and obfuscate the fatal defects of its Petition. The Republic would
submit that Petitioner should not be permitted to use discovery in hopes of finding a viable
theory to support its speculation-dependent Petition. Pending the Court’s permission, the
Republic will set forth the legal and factual basis for dismissal via the proper medium and in the
appropriate context.
Ecree’s Position
Respondent Ecree objects to Petitioner’s attempt to litigate this matter through this joint
status report rather than through legitimate motion practice, and if need be, discovery and
trial. Petitioner’s allegations are based on rank hearsay, innuendo, and speculation and have no
bearing on the next procedural steps in this matter.
Petitioner’s argument, that these allegations, and the existence of unrelated litigation,
require this Court to bypass the Federal Rules of Civil Procedure and immediately proceed to
discovery, is similarly misguided. The Federal Rules of Civil Procedure are clear that
Respondent Ecree is entitled to file a responsive pleading. Fed. R. Civ. P. 12(a)(1)(A)(i),
12(b)(6), and 55(c); see also Oceanic Trading Corp., 423 F.2d at 6, Johnson v. New York Univ.,

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Hon. Katherine Polk Failla
December 27, 2021
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324 F.R.D. 65, 69-72 (S.D.N.Y. 2018) (vacating certificates of default and permitting the
defendants to respond to the complaint within 21 days), American Federated Title Corp. v. GFI
Mgmt. Srvs., Inc., 39 F. Supp. 3d 516, 520-522 (S.D.N.Y. 2014) (analyzing a motion to dismiss
filed pursuant to Rule 12(b)(6) for an action for post-judgment relief brought pursuant to Rule
69).
Therefore, Ecree joins Respondent Republic of the Congo in requesting that the Court
permit Ecree to file a pre-motion conference letter by January 10, 2022 to set forth its bases for a
motion to dismiss. In the alternative, Ecree requests that the Court set February 16, 2022 as the
deadline for filing an answer or a motion to dismiss under Rule 12(b)(6) for failure to state a
claim upon which relief can be granted. In accordance with the schedule set by this Court, Ecree
intends to address the legal and factual bases for dismissal of the Petition at the appropriate
stage.
Finally, pursuant to the Court’s October 27, 2021 Order, Ecree also confirms that it
reimbursed Petitioner $15,843.50 for its share of attorneys' fees.
Respectfully submitted,
Charles R. Jacob III
On Behalf of the Judgment Creditor
Michael J. Sullivan
On Behalf of the Republic
Daniel A. Schnapp
On Behalf of Ecree

cc:

All Counsel via ECF

Case 1:19-mc-00195-KPF Document 95 Filed 12/28/21 Page 6 of 6
The Court is in receipt of the parties' joint letter, dated December 27,
2021, outlining the parties' preferred next steps in this case following
Respondents' payment of the court-ordered attorneys' fees. (Dkt. #94).
The Court wishes to hear from Respondents on their purported bases for
dismissal of this case. Accordingly, the Court ORDERS Respondents to
file pre-motion letters regarding their anticipated motions to dismiss
on or before January 10, 2022. Petitioner may file a responsive letter
on or before January 17, 2022. After reviewing these submissions, the
Court will decide whether to hold a conference to discuss Respondents'
anticipated motions and whether to permit discovery during the pendency
of these motions.
Furthermore, in acknowledgment of Respondents' satisfaction of the
Court's attorneys' fees order (Dkt. #93), the Court hereby GRANTS both
of Respondents' motions to vacate the certificates of default that were
entered against them. As such, the Clerk of Court is directed to vacate
these certificates of default and to terminate the pending motions at
docket entries 34 and 56.
Date:

December 28, 2021
New York, New York

SO ORDERED.

HON. KATHERINE POLK FAILLA
UNITED STATES DISTRICT JUDGE