fisher & krekorian kevin fisher (bar no. 131455)

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CLAIMANTS' MOTION TO DISMISS

04579.23529/4552387.14

FISHER & KREKORIAN Kevin Fisher (Bar No. 131455) [email protected] 2121 Park Drive Los Angeles, California 90026 Telephone: (310) 862-1225 Facsimile: (310) 388-0805 FOREMAN DEGEURIN & DEGEURIN Mike DeGeurin (Admitted Pro Hac Vice) [email protected] 300 Main Street, Third Floor Houston, Texas 77002 Telephone: (713) 655-9000 Facsimile: (713) 655-1812 Attorneys for Claimants Teodoro Nguema Obiang Mangue and Sweetwater Malibu, LLC

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

WESTERN DIVISION

UNITED STATES OF AMERICA,

Plaintiff,

vs. ONE WHITE CRYSTAL-COVERED "BAD TOUR" GLOVE AND OTHER MICHAEL JACKSON MEMORABILIA; REAL PROPERTY LOCATED ON SWEETWATER MESA ROAD IN MALIBU, CALIFORNIA; ONE 2011 FERRARI 599 GTO,

Defendants.

CASE NO. 2:11-03582-GW-SS Hon. George H. Wu CLAIMANTS TEODORO NGUEMA OBIANG MANGUE'S AND SWEETWATER MALIBU, LLC'S MOTION TO DISMISS FIRST AMENDED VERIFIED COMPLAINT FOR FORFEITURE IN REM Hearing Date: February 27, 2012 Time: 8:30 a.m. Place: Courtroom No. 10

Case 2:11-cv-03582-GW-SS Document 31 Filed 01/20/12 of 29 Page ID #:222

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-1-CLAIMANTS' MOTION TO DISMISS

04579.23529/4552387.14

TO ALL PARTIES AND THEIR COUNSEL OF RECORD:

PLEASE TAKE NOTICE that at 8:30 a.m. on February 27, 2012, or as soon

thereafter as this matter may be heard, in the courtroom of the Honorable George

H. Wu of the United States District Court for the Central District of California, in

Courtroom No. 10, 312 North Spring Street, Los Angeles, California 90012,

Claimants Teodoro Nguema Obiang Mangue and Sweetwater Malibu, LLC

("Claimants") will and hereby do move the Court for an Order, pursuant to Fed. R.

Civ. P. 12(b)(6) and Fed. R. Civ. P. Supp. R. G(8)(b)(i), dismissing Plaintiff

United States of America's ("United States") Amended Verified Complaint for

Forfeiture In Rem on the grounds that the Amended Complaint fails to state a claim

upon which relief can be granted.1

This Motion is based on this Notice of Motion and Motion, the

accompanying Memorandum of Points and Authorities, the records and files of this

Court, any matters of which the Court may take judicial notice, and such further

evidence and argument as may be presented at or before the hearing on this matter.

/ / /

/ / /

/ / /

/ / /

/ / /

/ / /

1 Claimant Teodoro Nguema Obiang Mangue, individually and by and through

and on behalf of Sweetwater Malibu, LLC, filed a verified claim on November 30, 2011. Having filed a timely, verified claim pursuant to Supplemental Rule G(5)(a), Claimants have attained statutory standing and are entitled to contest the forfeiture and move this Court to dismiss the action under Rule 12(b). Fed. R. Civ. P. Supp. R. G(8)(b)(i); G(5)(a-b).


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04579.23529/4552387.14 -2-

This motion is made following the conference of counsel pursuant to L.R. 7-

3, which took place on January 16, 2012, and at other times prior thereto.

DATED: January 20, 2012 FISHER & KREKORIAN By /s/ Kevin Fisher Kevin Fisher

2121 Park Drive Los Angeles, California 90026

Attorneys for Claimants Teodoro Nguema Obiang Mangue and Sweetwater Malibu, LLC


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04579.23529/4552387.14 -i-

TABLE OF CONTENTS

Page

PRELIMINARY STATEMENT ................................................................................. 1

SUMMARY OF ALLEGATIONS .............................................................................. 3

ARGUMENT ............................................................................................................... 5

I. THE GOVERNMENT'S COMPLAINT IS SUBJECT TO HEIGHTENED PLEADING REQUIREMENTS ............................................ 5

II. THE COMPLAINT'S CONCLUSORY ALLEGATIONS DO NOT SUPPORT A REASONABLE BELIEF THAT THE GOVERNMENT WILL BE ABLE TO MEET ITS BURDEN OF PROOF ................................ 8

A. The Amended Complaint Does Not State Sufficient Factual Allegations That Satisfy The Elements Of The Forfeiture Statutes .................................................................................................... 8

B. The Government Concedes That Claimant Had Lawful Concessions To Harvest Timber, From Which Claimant Derived Significant, Legitimate Wealth ............................................................. 11

C. The Government's Allegations Regarding The "Inner Circle" Draw No Nexus To The Defendants In Rem And A Plainly Insufficient Nexus to Claimant To Meet The Government's Burden ................................................................................................... 15

D. Claimant Did Not Violate E.G. Law; The Government's Legal Conclusion That He Violated "Foreign Law" Is Unfounded ................ 17

E. The Government Has No Adequate Factual Basis To Justify Forfeiture Of Defendants In Rem .......................................................... 18

III. THE APPROPRIATE REMEDY IS DISMISSAL......................................... 19

CONCLUSION .......................................................................................................... 21


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04579.23529/4552387.14 -ii-

TABLE OF AUTHORITIES

Page

Cases

Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009) ........................................................................... 7, 9, 18, 19

Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ......................................................................................... 7, 19

Cholla Ready Mix, Inc. v. Civish, 382 F.3d 969 (9th Cir. 2004) .................................................................................. 7

Clegg v. Cult Awareness Network, 18 F.3d 752 (9th Cir. 1994) .................................................................................... 8

Conley v. Gibson, 355 U.S. 41 (1957) ................................................................................................. 7

Dura Pharm., Inc. v. Broudo, 544 U.S. 336, 347 (2005) ..................................................................................... 19

United States v. $80,010 in U.S. Currency, 303 F.3d 1182 (9th Cir. 2002) .......................................................................... 2, 20

United States v. 40,000.00 in U.S. Currency, 2010 WL 2330353 (W.D.N.C. May 11, 2010) ...................................................... 6

United States v. $191,910.00 in U.S. Currency, 16 F.3d 1051 (9th Cir. 1994) ............................................................................ 2, 20

United States v. All Assets Held at Bank Julius Baer & Co., 571 F. Supp. 2d 1 (D.D.C. 2008) ................................................................... 1, 5, 6

United States v. All Assets of Statewide Auto Parts, Inc., 971 F.2d 896 (2d Cir. 1992) ................................................................................. 20

United States v. Daccarett, 6 F.3d 37 (2d Cir. 1993) ......................................................................................... 6

United States v. Marolf, 173 F.3d 1213 (9th Cir. 1999) .............................................................................. 20

United States v. One 1936 Model Ford V-8 Deluxe Coach, 307 U.S. 219, 226 (1939) ..................................................................................... 20

United States v. Pole No. 3172, Hopkinton, 852 F.2d 636 (1st Cir. 1988) .......................................................................... 14, 18

United States v. Ramon Torres Gonzalez, 240 F.3d 14 (1st Cir. 2001) .................................................................................. 14


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04579.23529/4552387.14 -iii-

United States v. Real Property Located at 2323 Charms Road, Milford Tp., Oakland, 946 F.2d 437 (6th Cir. 1991) ............................................. 6

Statutes

18 U.S.C. § 1956 ..................................................................................................... 8, 9, 10, 14 § 1956(a)(1-3) ....................................................................................................... 10 § 156(c)(7) ............................................................................................................ 18 § 1957 ..................................................................................................... 8, 9, 10, 14 § 1957(a, d) ........................................................................................................... 10 § 1957(f)(2) ........................................................................................................... 10 § 1960 ........................................................................................................... 8, 9, 10 § 1960(b) ................................................................................................................. 9 § 981(a)(1)(A) ..................................................................................................... 8, 9 § 981(a)(1)(C) ............................................................................................. 8, 17, 18 § 983(c)(1) .............................................................................................................. 6 § 983(c)(3) ........................................................................................................ 6. 11

Fed. R. Civ. P. Rule 8 ...................................................................................................................... 6 Rule 11 .................................................................................................................. 10 Rule 12(b)(6) .............................................................................................. 7, 8, 19

Fed. R. Civ. P. Supp. R. Rule E(2)(a) ........................................................................................................ 5, 9 Rule G(2)(f) ............................................................................................................ 5

Miscellaneous

12 Charles Alan Wright, Arthur R. Miller & Richard L. Marcus, Federal Practice and Procedure § 3242 (2d ed. 1997) ....................................................................... 6


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04579.23529/4552387.14 -1-

MEMORANDUM OF POINTS AND AUTHORITIES

Preliminary Statement

The United States Government’s forfeiture action against Teodoro Nguema

Obiang Mangue, which seeks to seize his oceanfront Malibu home and other assets,

concedes that Minister Nguema’s wealth did not result from the violation of any

United States laws. Rather, the Complaint is premised entirely on alleged violations

of law in Minister Nguema’s home country of Equitorial Guinea (“E.G.”), a

developing nation in West Africa that while small (the size of Maryland), is

nonetheless sovereign, with its own laws and ways of conducting business.2

Although some of E.G.’s practices may be different from those of Western

industrialized nations, that does not mean – as the Government’s Complaint assumes

– (a) that everyone who works for the Government, including Minister Nguema, is

ipso facto corrupt; (b) that none of Minister Nguema’s fortune, including his

property in the United States, was acquired lawfully; or (c) that E.G. has identical

ethics, anti-nepotism, public corruption and/or conflict of interest laws as the United

States, such that the alleged conduct, even if true, would violate the laws of E.G. – a

condition precedent to the Government’s forfeiture action.

What is most troubling about the Government’s case – even apart from the

conclusory and illogical nature of its allegations – is its willingness to conflate

2 Unlike forfeiture actions the Government has brought against assets of other foreign political officials, such as former Ukrainian Prime Minister Pavlo Ivanovych Lazarenko, Minister Nguema has not violated the laws of his sovereign country, nor been adjudicated in the United States on violations of U.S. law. See, e.g., First Amended Verified Complaint For Forfeiture In Rem, United States v. All Assets Held at Bank Julius Baer & Co., Case No. 1:04-cv-00798-PLF (Dkt. No. 18) (D.D.C. 2005) (Complaint for forfeiture of assets belonging to former Ukrainian Prime Minister Pavlo Ivanovych Lazarenko filed after he was charged in his home country of Ukraine and convicted on 29 counts of a grand jury indictment by a jury in the United States, where he was later sentenced and incarcerated in federal prison).


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04579.23529/4552387.14 -2-

alleged foreign conduct it finds offensive with violations of law sufficient to justify

the “disfavored”3 practice of asset seizure. Indeed, the vast majority of the

Government’s Complaint either involves an attack of Minister Nguema’s “lavish”

lifestyle, or an assault on Minister Nguema’s father, Teodoro Obiang Nguema

Mbasogo, the President of E.G. and other top E.G. political officials (referred to by

the Government as the "Inner Circle") who the Government alleges have engaged in

extortion, misappropriation of public funds, embezzlement, theft, and

misappropriation of state land. But even assuming, arguendo, this characterization

of President Nguema’s regime is accurate, the Government has not alleged the

required facts necessary to support its claim that President Nguema’s son acquired

assets in the United States based on illegally-gotten gains. To the contrary, the

Amended Complaint acknowledges, as it must, that President Nguema granted his

Minister-son (who at the time was not involved in his country’s government) a 20-

year concession to harvest timber from approximately 88,000 acres of E.G. land.

(Compl. at ¶ 34.) The Government concedes that such a concession does not violate

E.G. law.4 Nor is there any dispute that the revenue generated from these timber

concessions was significant. There is thus no basis to establish, much less by a

heightened showing, that Minister Nguema’s assets can be traced to illegally gotten

gains sufficient to justify civil forfeiture. Notably, only two paragraphs in the

3 See United States v. $191,910.00 in U.S. Currency, 16 F.3d 1051, 1068 (9th

Cir. 1994) ("Government confiscation of private property is disfavored in our constitutional system."), superseded on other grounds as stated in United States v. $80,010 in U.S. Currency, 303 F.3d 1182, 1184 (9th Cir. 2002) ("CAFRA transferred the burden of proof from the claimant to the government and required the government to establish forfeiture by a preponderance of the evidence rather than by the lower probable cause standard.").

4 The Government’s allegation that the concession was unlawful because the “land belongs to the people” is conclusory and devoid of any statutory citations establishing that such concessions contravene E.G. law.


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Government’s 120-paragraph Complaint even pertain to Minister Nguema’s

allegedly unlawful receipt of funds, and those paragraphs are entirely conclusory

and fail to raise an inference that they were sufficient to constitute the purchase

money for the defendants in rem. See infra at II.B.5 In short, because the

Government’s Complaint fails on its face to plead conduct sufficient to satisfy the

stringent requirements for asset forfeiture, Claimants’ Motion to Dismiss should be

granted.

Summary of Allegations

In October 2011, the Government filed an Amended Complaint seeking

forfeiture of certain defendant property consisting of an automobile, certain

celebrity memorabilia, and real property located in Malibu, California, in which

Claimants have a bona fide property ownership interest. The Complaint alleges that

this property was purchased by Claimant with extorted or misappropriated public

funds and therefore should be forfeited to the United States. However, the

allegations in support of the Complaint fail to demonstrate a nexus between any

action by Claimaint and the defendants in rem. This failure is fatal and the

Complaint must be dismissed as a matter of law.

The Amended Complaint concedes that in 1993 and 1994, Claimant was

awarded a 20-year concession to harvest timber from approximately 88,000 acres by

the president of E.G. (Compl. at ¶ 34.) There is no dispute that the revenue

received as a result of the lawful timber concessions would have generated

5 At bottom, the United States government is effectively attempting to use the

mechanism of civil forfeiture to punish a government with which it takes offense (or disagrees). Not only is this an impermissible use of a rare and disfavored remedy but, if permitted, would have significant ramifications on the sovereignty of numerous nations who conduct their affairs based on different standards than the United States. Clearly the law does not permit such an unjustified expansion of the scope of civil forfeiture.


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significant income for Claimant well above and beyond his official government

salary and made him a very wealthy man by 2005 when he purchased defendants in

rem. Accordingly, this forfeiture action is not only misplaced, but fatally flawed.

In an attempt to avoid that inevitable result, the Government has

manufactured a conspiracy by members of the so-called Inner Circle to obtain funds

by corruption. These claims are little more than inflammatory recitations of

grievances against unnamed "E.G. officials." For example, the Amended Complaint

states, "In another extortion scheme, a businessman in E.G. who owned a

construction company was forced to share 50 percent of his profits with a senior

E.G. public official, and to provide the official with 50 percent of the equity in the

company, in order to continue to secure government contracts in E.G. Ultimately,

the businessman was forced to leave E.G. against his will, and the senior public

official took over 100 percent of his company." (Compl. at ¶ 57.)

The Government continues this inflammatory rhetoric by devoting more than

a dozen paragraphs over several pages to describing Claimant's lifestyle and

expenditures, including the defendants in rem. The Complaint also purports to

describe payments to the President and the First Lady of E.G.

However, the complaint is notably silent as to specific acts of misconduct by

Claimant. Indeed, only two paragraphs in the 120-paragraph complaint describe

any alleged gain to Claimant from his supposed involvement in the so-called

"corrupt schemes."

In paragraph 52, the Government alleges that Claimant, "as Minister of

Forestry, is responsible for approving the export of timber logged in E.G., and

refuses to sign such approvals until the exporter first pays a 'tax' for Nguema's

personal benefit." (Compl. at ¶ 52.)

In paragraph 53, the Government alleges that Claimant "demands that timber

companies seeking to obtain [logging] concessions [in E.G.] first pay him a personal

fee." (Compl. at ¶ 53.)


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These vague and conclusory allegations fail to meet the stringent pleading

requirements necessary to sustain a forfeiture complaint. As set forth below, the

Amended Complaint is devoid of the specificity or particularity necessary to draw a

nexus between these alleged offenses and the defendants in rem. Similarly, it fails

to state sufficiently detailed allegations to support a reasonable belief that the

Government will be able to prove that Claimant purchased the defendants in rem

with funds criminally-derived from such alleged illegal conduct.

Argument

I. THE GOVERNMENT'S COMPLAINT IS SUBJECT TO

HEIGHTENED PLEADING REQUIREMENTS

The Federal Rules of Civil Procedure Supplemental Rules for Admiralty or

Maritime Claims and Asset Forfeiture Actions ("Supplemental Rules") provide the

pleading standard for this action. Under Supplemental Rule E, which applies to an

action in rem, "the complaint shall state the circumstances from which the claim

arises with such particularity that the defendant or claimant will be able, without

moving for a more definite statement, to commence an investigation of the facts and

to frame a responsive pleading." Fed. R. Civ. P. Supp. R. E(2)(a). Further,

Supplemental Rule G requires that a complaint for civil forfeiture must "state

sufficiently detailed facts to support a reasonable belief that the government will be

able to meet its burden of proof at trial." Fed. R. Civ. P. Supp. R. G(2)(f).6 That is,

6 Rule G(2), added in the 2006 amendments, did not change the pleading

standard, but rather "carries the forfeiture case law forward without change." Fed. R. Civ. P. Supp. R. G advisory committee's note; see also United States v. All Assets Held at Bank Julius Baer & Co., 571 F. Supp. 2d 1, 16 (D.D.C. 2008) ("The Advisory Committee's Note clarifies that it adopts the standard that evolved in case law interpreting the earlier Rule E(2)(a) requirement and is intended to 'carr[y] forward this forfeiture case law without change.' . . . The Court agrees with Claimants that Rule G (and its predecessor Rule E(2)) creates a heightened burden for pleading on the plaintiff.").


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sufficiently detailed facts to support a reasonable belief that the Government will be

able "to establish, by a preponderance of the evidence, that the property is subject to

forfeiture." 18 U.S.C. § 983(c)(1).

Thus, the Supplemental Rules impose a more stringent standard than the

pleading requirements of Rule 8—a heightened particularity-in-pleading

requirement. See United States v. All Assets Held at Bank Julius Baer & Co., 571

F. Supp. 2d 1, 16 (D.D.C. 2008) ("The Court agrees with Claimants that Rule G

(and its predecessor Rule E(2)) creates a heightened burden for pleading on the

plaintiff."); see also United States v. Daccarett, 6 F.3d 37, 47 (2d Cir. 1993) ("These

standards [under the Supplemental Rules] are more stringent than the general

pleading requirements set forth in the Federal Rules of Civil Procedure, an implicit

accommodation to the drastic nature of the civil forfeiture remedy.") (internal

citation omitted); United States v. Real Property Located at 2323 Charms Road,

Milford Tp., Oakland, 946 F.2d 437, 440-41 (6th Cir. 1991). This heightened

standard is "an implicit accommodation to the drastic nature of the civil forfeiture

remedy." Daccarett, 6 F.3d at 47; see also All Assets Held at Bank Julius Baer &

Co., 571 F. Supp. 2d at 16 ("The additional burden of pleading requiring 'added

specifics is thought appropriate because of the drastic nature of those remedies.

Thus, it fortifies the procedural-due-process protections against improper use of

these remedies.'") (quoting 12 Charles Alan Wright, Arthur R. Miller & Richard L.

Marcus, Federal Practice and Procedure § 3242 (2d ed. 1997)); United States v.

40,000.00 in U.S. Currency, 2010 WL 2330353, at *2 (W.D.N.C. May 11, 2010)

("Because civil forfeiture in rem provides the government with a powerful tool to

effectuate an immediate deprivation of property (subject to later judicial review),

pleading requirements under the Supplemental Rules are more stringent than the

general pleading requirements found in the Federal Rules of Civil Procedure.").

In addition, the complaint must also conform to the Supreme Court's

plausibility standard. It is no longer the case that "a complaint should not be


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dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff

can prove no set of facts in support of his claim which would entitle him to relief."

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 546 (2007) (quoting Conley v. Gibson,

355 U.S. 41, 45-46 (1957)). Rather, to survive a motion to dismiss, a complaint

must allege "sufficient factual matter, accepted as true, to state a claim to relief that

is plausible on its face." Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (internal

quotation marks and citations omitted) ("Our decision in Twombly expounded the

pleading standard for 'all civil actions. . . .'").

When examined in light of the Supplemental Rule's requirements of

"particularity" in "sufficiently detailed facts to support a reasonable belief that the

government will be able to meet its burden of proof at trial"—"to establish, by a

preponderance of the evidence, that the property is subject to forfeiture," it is clear

that the Amended Complaint here fails. Even the less stringent pleading standard

must "give the defendant fair notice of what the . . . claim is and the grounds upon

which it rests." Twombly, 550 U.S. at 555 (ellipsis in original) (quoting Conley v.

Gibson, 355 U.S. at 47). Thus, a pleading that offers only "labels and conclusions,"

or "a formulaic recitation of the elements of a cause of action," or one that sets forth

"'naked assertions' devoid of 'further factual enhancement,'" does not pass muster.

Iqbal, 129 S. Ct. at 1949 (quoting Twombly, 550 U.S. at 557).

To determine whether a complaint is sufficient, the court first identifies mere

legal conclusions within the complaint and disregards them because they are "not

entitled to be assumed true." Iqbal, 129 S. Ct. at 1949-51.7 Second, the court is to

7 See also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) ("While a

complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do."); Cholla Ready Mix, Inc. v. Civish, 382 F.3d 969, 973 (9th Cir. 2004) ("[T]he court is not required to accept

(footnote continued)


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take the remaining well-pleaded and non-conclusory factual allegations (the "nub"

of the complaint) and determine whether those allegations, standing alone, suffice to

state a plausible claim for relief. Id. Applying this approach, the Amended

Complaint seeking forfeiture of the defendants in rem clearly fails to satisfy the

legally required pleading standards. As shown below, the Amended Complaint is

riddled with only conclusory, non-specific allegations that largely fail even notice

requirements, let alone the requirement of particularity in stating sufficiently

detailed facts to support a reasonable belief that the Government will be able to meet

its burden. Accordingly, the Complaint should be dismissed pursuant to Rule

12(b)(6).

II. THE COMPLAINT'S CONCLUSORY ALLEGATIONS DO NOT

SUPPORT A REASONABLE BELIEF THAT THE GOVERNMENT

WILL BE ABLE TO MEET ITS BURDEN OF PROOF

A. The Amended Complaint Does Not State Sufficient Factual

Allegations That Satisfy The Elements Of The Forfeiture Statutes

The Government simply avers that the defendant property is subject to

forfeiture pursuant to 18 U.S.C. § 981(a)(1)(A, C). Under 18 U.S.C. § 981(a)(1)(A),

property can be subject to forfeiture to the United States provided it is "involved in a

transaction or attempted transaction in violation of section 1956, 1957 or 1960 of

this title, or any property traceable to such property." 18 U.S.C. § 981(a)(1)(A).

[as true] legal conclusions cast in the form of factual allegations if those conclusions cannot reasonably be drawn from the facts alleged. Nor is the court required to accept as true allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.") (internal citations and quotations omitted); Clegg v. Cult Awareness Network, 18 F.3d 752, 754-755 (9th Cir. 1994) ("[T]he court is not required to accept legal conclusions cast in the form of factual allegations if those conclusions cannot be reasonably drawn from the facts alleged.").


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As opposed to stating with particularity the factual allegations underlying the

Government's accusations that form the basis for the application of this forfeiture

statute, however, the Amended Complaint merely concludes that "[a]s property

involved in a money laundering offense in violation of 18 U.S.C. §§ 1956 or 1957,

the defendants in rem are subject to forfeiture. . . ." (Compl. at ¶ 1.)

Absent particularized and precise allegations of specific conduct the

Government alleges is violative of Sections 1956 or 1957, it cannot be said that the

Complaint "state[s] the circumstances from which the claim arises with such

particularity that the defendant or claimant will be able, without moving for a more

definite statement, to commence an investigation of the facts and to frame a

responsive pleading." Fed. R. Civ. P. Supp. R. E(2)(a). Without more than this rote

recital and vague, disconnected factual allegations sprinkled throughout the

Amended Complaint's "facts" section, it stretches the imagination how the Amended

Complaint can be said to state a plausible claim where it does not even allege the

particular conduct applied to the statutory scheme that allegedly forms the basis for

forfeiture. "Where a complaint pleads facts that are merely consistent with a

defendant's liability, it stops short of the line between possibility and plausibility of

entitlement to relief." Iqbal, 129 S. Ct. at 1949 (internal quotations and citations

omitted).

Further, the Government has failed to state sufficient allegations to state a

claim for which relief could be granted under any of the sections.8 For example,

8 Claimants do not understand the Complaint to allege that any violation of

Section 1960 forms the claimed basis for forfeiture under 18 U.S.C. § 981(a)(1)(A). Nevertheless, due to the vagueness with which the Complaint makes its conclusory allegations, a passing observation should note that Section 1960 requires the United States prove Claimant "knowingly conducts, controls, manages, supervises, directs, or owns all or part of an unlicensed money transmitting business. . . ." 18 U.S.C. § 1960(b). No allegations have been levied that either Claimant "knowing conducts,



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Section 1957 requires that the Government prove that Claimants "knowingly

engage[d] or attempt[ed] to engage in a monetary transaction in criminally derived

property9 of a value greater than $10,000 and is derived from specified unlawful

activity . . .," and that such offense took place "in the United States or in the special

maritime and territorial jurisdiction of the United States." 18 U.S.C. § 1957(a, d)

(emphasis added).

To meet its burden at trial pursuing a forfeiture theory premised on a violation

of Section 1957, the Government will have to be able to prove each of these

elements, including knowledge. Similarly, Section 1956 would require that the

Government prove that Claimants had either knowledge that the transaction

represents the proceeds of some form of unlawful activity, or that Claimants had the

requisite intent to promote or carry on the specified unlawful activity. 18 U.S.C. §

1956(a)(1-3). The Amended Complaint fails to state, with particularity, sufficiently

detailed facts to support a reasonable belief that the Government will be able to

establish, by a preponderance of the evidence, that the defendants in rem are

criminally-derived property and that Claimant engaged (or attempted to engage) in

the transaction with such knowledge, and that such transaction occurred in the

United States.10

controls, manages, supervises, directs, or owns all or part of an unlicensed money transmitting business," nor could such allegations be pled in a manner that complies with Rule 11. Claimants assume the United States does not purport to accuse the Claimants of violating Section 1960.

9 As defined in the statute, "'criminally derived property' means any property constituting, or derived from, proceeds obtained from a criminal offense." 18 U.S.C. § 1957(f)(2).

10 Further, while the United States' "theory of forfeiture" is anything but clear from the vague and conclusory allegations in the Amended Complaint, in the event the United States' theory of forfeiture includes "that the property was used to commit or facilitate the commission of a criminal offense, or was involved in the commission of a criminal offense," the United States must "establish that there was



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B. The Government Concedes That Claimant Had Lawful

Concessions To Harvest Timber, From Which Claimant Derived

Significant, Legitimate Wealth

The Amended Complaint would conclude that because Claimant's "level of

spending is inconsistent with his salary as a Minister" (Compl. at ¶ 34.), the only

explanation for the supplemental wealth was alleged corrupt schemes. But the

Government concedes that in 1993 and 1994, Claimant was awarded a 20-year

concession to harvest timber from approximately 88,000 acres by the president of

E.G. (Compl. at ¶ 34.) It is the Government's pleading burden to state, with

particularity, facts sufficient to support a reasonable belief that the Government will

be able to demonstrate, by a preponderance of the evidence, that the property is

subject to forfeiture. This necessarily includes a showing that the conduct alleged

was indeed unlawful. Nowhere in the Amended Complaint, however, does the

Government allege that this concession to harvest timber was illegal or improper in

any way.11

a substantial connection between the [defendant] property and the offense. See 18 U.S.C. § 983(c)(3). The Amended Complaint makes no attempt to allege an adequate nexus between the alleged schemes and the defendant property and therefore, to the extent the United States advances such a theory of forfeiture, there are no well-pleaded facts with adequate particularity to state sufficiently detailed facts to plausibly entitle the plaintiff to relief.

11 The United States obliquely alleges that "[u]nder E.G. law, the nation's mineral resources and hydrocarbons belong to the public, not individuals." (Compl. at ¶ 25.) This is not a novel concept, but what becomes troublesome is the leap from "the nation's mineral resources and hydrocarbons belong to the public, not individuals," to the contention that no personal or property rights can be gained in such resources. Claimants challenge the United States to square this unsupported leap with long-standing practices in the United States, such as mining claims, gas and oil leases, and yes, even concessions to harvest timber, all of which are given to companies and individuals on United States federal land, as well as land of the several states.


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In fact, the Amended Complaint acknowledges that "Forestry concessions in

E.G. are awarded by either the President or the Minister of Forestry without

competitive bidding. Companies or individuals awarded a concession are permitted

to harvest timber in the national forests." (Compl. at Pg. 12 n.2 (emphasis added).)

Thus, the United States concedes that Claimant's harvesting timber pursuant to his

concession granted him by the President of E.G. was proper and not unlawful

conduct.

The Amended Complaint dedicates more than a dozen paragraphs over

several pages to describing Claimant's lifestyle and expenditures,12 but notably

includes only two paragraphs describing any alleged gain to Claimant from his

supposed involvement in the so-called "corrupt schemes." The Amended Complaint

makes the naked allegation that Claimant "used ownership of [his forestry

companies] and his status as Minister of Forestry (and President Obiang's son) to

enrich himself through corrupt schemes in the timber industry." (Compl. at ¶ 34.)

The Amended Complaint, however, is devoid of any factual allegations as to what

this alleged scheme was or how and by what measure he profited from it.

The Government further alleges that Claimant, "as Minister of Forestry, is

responsible for approving the export of timber logged in E.G., and refuses to sign

such approvals until the exporter first pays a 'tax' for Nguema's personal benefit."

(Compl. at ¶ 52.) The Amended Complaint also alleges that Claimant "demands

that timber companies seeking to obtain [logging] concessions [in E.G.] first pay

12 The Amended Complaint's description of Claimant's expenditures and property acquisition (as if a foregone ipso facto conclusion that in light of his relatively modest official salary for his government post, the funds must have been criminally-derived) is insufficient to meet the government's burden. To conclude otherwise begins down a slippery slope that would open flood gates of civil forfeiture actions against any government official, including American political officials, who acquire assets and property from legitimate business ventures, investments, and other income in excess of their "official" government pay.


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him a personal fee." (Compl. at ¶ 53.) However, the Government has utterly failed

to allege with any particularity the scope of this alleged scheme or the amount of

gain Claimant allegedly realized from it. Even assuming, arguendo, such "taxes"

and "fees" were collected for personal gain, there is insufficient factual detail to

support a reasonable belief that the Government will be able to prove that the funds

required to purchase defendants in rem was derived from this illicit source.

As noted above, the Government already concedes that Claimant received

lawful concessions to harvest timber over a significant area of forest. It is

undisputed that such concessions were given to Claimant prior in time to the alleged

corrupt scheme. As one would expect, the value derived from harvesting timber

over a 137.5 square-mile piece of forested land is a significant and, as the

Government concedes, legitimate source of income to supplement Claimant's

official government salary. The Government's fanciful ipse dixit theory

conveniently ignores this significant, legitimate supplemental business income. The

Government's conclusion that any income Claimant does not receive as part of his

official government salary must therefore be ill-gotten is a legal fallacy without

sufficient factual support.13

13 The Amended Complaint makes the naked allegation that Claimant "used

ownership of [his forestry companies] and his status as Minister of Forestry (and President Obiang's son) to enrich himself through corrupt schemes in the timber industry." (Compl. at ¶ 35.) The Amended Complaint is devoid of any factual allegations as to what this alleged scheme was or how and by what measure he profited from it. As a result, the Amended Complaint fails to "state the circumstances from which the claim arises with such particularity that the defendant or claimant will be able, without moving for a more definite statement, to commence an investigation of the facts and to frame a responsive pleading," and it certainly cannot be said that the United States has "state[d] sufficiently detailed facts to support a reasonable belief that the government will be able to meet its burden of proof at trial."


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Moreover, in addition to having to prove that Claimant's underlying source of

funds were derived from unlawful conduct, the Government bears the burden of

tracing the allegedly illicit funds to the seized asset, see, e.g., United States v.

Ramon Torres Gonzalez, 240 F.3d 14, 17 (1st Cir. 2001), and the Government's

burden under Sections 1956 and 1957 requires substantial tracing for the allegedly

illicit funds to show the defendants in rem are "criminally-derived property," 18

U.S.C. §§ 1956, 1957, including at least: (1) from the alleged unlawful conduct to

Claimant, (2) from Claimant to the account at the originating financial institution,

(3) from the originating financial institution to the financial institution in the United

States, and (4) from the account in the United States to the acquisition of the

defendants in rem.

Although the Complaint alleges that Claimant caused sums of money to be

wire transferred from various accounts into accounts in the United States to pay for

the defendant property, the Amended Complaint fails to draw any nexus between

those funds and any allegedly corrupt schemes or other unlawful conduct, nor does

it trace the funds to Claimant. Instead, the Amended Complaint alleges, without any

particularity or factual basis, only that Claimant caused such transfers or that they

were made on his behalf.14 These fatal flaws exhibit the fact that the Amended

Complaint fails to state the circumstances from which the claim arises with such

particularity that the defendant or claimant will be able, without moving for a more

14 Even assuming, arguendo, the United States could trace a portion of the allegedly illicit funds used to purchase the defendant property to the so-called corrupt schemes, forfeiture is limited to the portion traceable to the illegal activity. See, e.g., United States v. Pole No. 3172, Hopkinton, 852 F.2d 636, 639-40 (1st Cir. 1988) ("We do not believe, however, that forfeitability spreads like a disease from one infected mortgage payment to the entire interest in the property acquired prior to the payment. After all, only the actual proceeds of drug transactions are forfeitable.").


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definite statement, to commence an investigation of the facts and to frame a

responsive pleading.

C. The Government's Allegations Regarding The "Inner Circle"

Draw No Nexus To The Defendants In Rem And A Plainly

Insufficient Nexus to Claimant To Meet The Government's Burden

The remaining paragraphs describing the alleged corrupt schemes merely

make broad-stroke conclusory allegations against the so-called Inner Circle, a

faceless and nameless references to high-ranking E.G. political figures. These

allegations are anything but pled with particularity, especially with regards to

Claimant. For example, the Amended Complaint alleges that "in the early 1990s,

members of the Inner Circle began to transfer and register large amounts of state-

owned land into their own names." (Compl. at ¶ 71.) "Because the lands formerly

owned by the state now were owned in the name of members of the Inner Circle, the

oil companies' lease payments went to benefit the Inner Circle rather than the state."

(Compl. at ¶ 72 (emphasis added).)

These types of broad allegations against the "Inner Circle" do not support a

reasonable belief that the Government will be able to meet its burden. Notably

absent from these allegations is any particularized factual allegations that Claimant

derived the funds for the purchase of the defendants in rem from these actions of the

"Inner Circle." Indeed, as is the case with most of the allegations in the Amended

Complaint, no nexus is drawn between the subjects of the forfeiture action

whatsoever. For instance, the Government alleges that "Company A's E.G.

subsidiary paid President Obiang's wife approximately $365,000 as rental

payments," and that "Company B" "has paid members of the Inner Circle a total of

nearly $1 million in building lease payments." (Compl. at ¶ 73.)

Despite its bluster, at its core, devoid of non-conclusory, factual allegations

evidencing even a scintilla of a nexus between the defendants in rem and the

requisite criminally-derived funds, the Amended Complaint boils down to nothing


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more than an argumentum ad hominem character assassination against Claimant and

the entire E.G. system of government.

Presumably to connect these naked allegations to Claimant, the Amended

Complaint makes the conclusory claim, framed as a factual allegation, that "[s]ome

of the money obtained by other members of the Inner Circle has made its way to

Nguema. . . ." (Compl. at ¶ 66.) The factual allegation it pleads as support,

however, is that "on October 21, 2002, $200,000 was transferred from a personal

account at Riggs Bank belonging to a member of the Inner Circle to Nguema's

personal bank account." (Compl. at ¶ 66.) Clearly this allegation does little to

connect Claimant to the corrupt schemes it alleges are undertaken by the Inner

Circle. No factual allegations are as to the identity of this "member of the Inner

Circle," the source of the $200,000 allegedly transferred, and significantly, that

these funds were criminally-derived.15

The Government also attempts to connect Claimant with the alleged wrongs

of the "Inner Circle" through non-particularized declaratory statements that the Inner

Circle "included" Claimant without stating sufficiently detailed facts to allege any

funds were so criminally-derived by Claimant. As for drawing a nexus with the

defendants in rem, no attempt is made. According to the Amended Complaint,

"Members of the Inner Circle, including Nguema, also demand that foreign

companies operating in E.G. provide them with gifts and free services." (Compl. at

¶ 54.) Here, the Amended Complaint alleges, "a major international civil

engineering firm in E.G., which had obtained several substantial infrastructure

contracts from the Government of E.G., built a mansion for Nguema in Malabo,

E.G., at his request and direction. Upon completion of that project, however,

Nguema refused to pay this firm for its work." (Compl. at ¶ 54.) Even if taken as

15 And, of course, this $200,000 would not be sufficient to purchase the defendants in rem.


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true, however, there is no nexus between the alleged house in E.G. and the currency

used to purchase the defendants in rem. For example, no allegations are made that

Claimant used this property to purchase the defendants in rem, not that he used it as

leverage or that he liquidized the asset in order to obtain the defendant assets. Even

if accepted as true for the purposes of the motion, such irrelevant allegations do not

advance the Government's case.

Similarly, the Amended Complaint claims, "Like other members of the Inner

Circle, Nguema has also diverted E.G. public resources and monies for his personal

use. On one occasion in 2005, Nguema, who was attempting to purchase a $40

million luxury aircraft for his personal use, advised the manufacturer that he could

have a United States oil company operating in E.G. assume responsibility for

making the payments for his personal jet. These payments would then be credited

against balances owed by the oil company to the government of E.G. . . . In this

instance, however, the oil company refused." (Compl. at ¶ 66.) The Amended

Complaint concedes that Claimant did not receive any financial benefit from this

alleged scheme and, significantly, does not allege any other instance in which

Claimant diverted public funds in this manner. Such empty allegations do not

advance the Government's theory, nor provide any support for a reasonable belief

that it can meet its burden at trial. Quite simply, because the Government has "not

nudged their claims across the line from conceivable to plausible, their complaint

must be dismissed." Twombly, 550 U.S. at 570.

D. Claimant Did Not Violate E.G. Law; The Government's Legal

Conclusion That He Violated "Foreign Law" Is Unfounded

The Government also claims the defendants in rem are subject to forfeiture

under 18 U.S.C. § 981(a)(1)(C). Under this provision, property can be subject to

forfeiture to the United States provided it "is derived from proceeds traceable to a

violation of . . . any offense constituting 'specified unlawful activity' (as defined in


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section 1956 (c)(7) of this title), or a conspiracy to commit such offense." 18 U.S.C.

§ 981(a)(1)(C).

At the outset, the Amended Complaint simply declares that "[a]s property

derived from a violation of foreign law, the defendants in rem are subject to

forfeiture. . . ." Rather than attempting to meet the particularity pleading standard,

the Amended Complaint merely claims that the property at issue "was derived from

extortion, or from the misappropriation, embezzlement, or theft of public funds by

or for the benefit of a public official." Such "[t]hreadbare recitals of the elements of

a cause of action, supported by mere conclusory statements, do not suffice" to meet

the plausibility standard. Iqbal, 129 S. Ct. at 1949. A "district court must insist on

knowing the factual grounds of the government's claim" and require the Government

to "clearly articulate in its complaint the facts on which the seizure was premised."

United States v. Pole No. 3172, Hopkinton, 852 F.2d 636, 638-41 (1st Cir. 1988)

(reversing and holding the court "should have dismissed the complaint for lack of

particularity" because the Government's complaint failed to meet the standards

under the Supplemental Rules and "allege sufficient facts to provide a reasonable

belief that the property is subject to forfeiture" where the complaint "merely

described the property, and, parroting the language of the statute, stated that it was

forfeitable as proceeds of a drug transaction."). That the Amended Complaint does

not include particularized factual allegations applied to these statutory elements is

not only telling, but fatal to this claim. Because well-pleaded facts do not plausibly

entitle the plaintiff to relief, the claim should be dismissed. Iqbal, 129 S. Ct. at

1949.

E. The Government Has No Adequate Factual Basis To Justify

Forfeiture Of Defendants In Rem

As late as April 2005, the United States Department of Justice represented

that it had "no basis for either restraining or seizing proceeds used to finance this

proposed sale [of a Gulfstream aircraft] as potentially forfeitable property.


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Similarly, at this time we have no basis for believing that the monies used to

purchase the aircraft would violate U.S. money laundering laws." See Letter from

U.S. Department of Justice, dated April 18, 2005, attached hereto as Exhibit 1.

Notably, the vast majority of the allegations in the Amended Complaint pre-date this

letter. Claimant's timber commission pre-dates the letter by more than a decade.

The Government must come forth with more particularized factual allegations to

support its sudden revelation that what it had no basis to believe was improper in

2005 suddenly became illicit funds derived from schemes of criminal corruption,

including the very subject of the letter—the 2005 funds involved in the proposed

sale of the Gulfstream aircraft.

The Government’s bare legal conclusions cast as factual allegations that

Claimant violated the law, must be set aside and cannot be as accepted as true Iqbal,

129 S. Ct. at 1949-51. The result is an Amended Complaint which is whittled down

to nothing but vague allegations of alleged misconduct with neither a nexus to the

defendant property, nor an adequate application to the statutory scheme allegedly

forming the basis for the forfeiture. To survive a motion to dismiss, however,

requires "more than an unadorned, the defendant-unlawfully-harmed-me

accusation." Id. at 1949 (citations omitted).

III. THE APPROPRIATE REMEDY IS DISMISSAL

The Supreme Court has explained that the practical significance of requiring

more than threadbare allegations in a complaint is to provide judicial protection

from the needless infliction of the "expenditure of time and money by the parties

and the court." Twombly, 550 U.S. at 557-58 (citations omitted). A complaint must

therefore allege something more than a "mere possibility" of harm, thereby

preventing a plaintiff with a "largely groundless claim" from "tak[ing] up the time of

a number of other people, with the right to do so representing an in terrorem

increment of the settlement value." Id. (quoting Dura Pharm., Inc. v. Broudo, 544

U.S. 336, 347 (2005)). Courts enforcing Rule 12(b)(6) curtail this risk by weeding


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out complaints that fail to give rise to a plausible inference of harm to the plaintiff.

Claimants should not be required to expend the resources necessary to litigate the

merits of the forfeiture action based on nothing more than vague and conclusory

allegations that fail to state, with particularity, sufficiently detailed facts to support a

reasonable belief that the Government will be able to establish, by a preponderance

of the evidence, that the property is subject to forfeiture.

Particular pause is warranted in the case of a civil forfeiture complaint

inasmuch as "Government confiscation of private property is disfavored in our

constitutional system." United States v. $191,910.00 in U.S. Currency, 16 F.3d

1051, 1068 (9th Cir. 1994), superseded on other grounds as stated in United States

v. $80,010 in U.S. Currency, 303 F.3d 1182, 1184 (9th Cir. 2002) ("CAFRA

transferred the burden of proof from the claimant to the government and required

the government to establish forfeiture by a preponderance of the evidence rather

than by the lower probable cause standard."); see also United States v. All Assets of

Statewide Auto Parts, Inc., 971 F.2d 896, 905 (2d Cir. 1992) ("We continue to be

enormously troubled by the government's increasing and virtually unchecked use of

the civil forfeiture statues and the disregard for due process that is buried in those

statutes."). Indeed, courts are "particularly wary of civil forfeiture statutes, for they

impose 'quasi-criminal' penalties without affording property owners all of the

procedural protections afforded criminal defendants." $191,910.00 in U.S.

Currency, 16 F.3d at 1068. Accordingly, courts are "reluctant to find that a statute

allows forfeiture where a plausible interpretation of the statute would not allow it."

Id. (citing United States v. One 1936 Model Ford V-8 Deluxe Coach, 307 U.S. 219,

226 (1939)); see also United States v. Marolf, 173 F. 3d 1213 (9th Cir. 1999)

("[F]orfeitures should be enforced only when within both the letter and spirit of the

law.").

The Amended Complaint is devoid of sufficient well-pleaded and non-

conclusory particularized factual allegations to "state sufficiently detailed facts to


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support a reasonable belief that the government will be able to meet its burden of

proof at trial," especially as to the elements of the criminal statutes and civil

forfeiture statutes that the Government alleges, in mere conclusory form, justify the

forfeiture. Dismissal is the appropriate remedy here.

Conclusion

For the foregoing reasons, the Court should grant Claimants' motion to

dismiss pursuant to Fed R. Civ. P. 12(b)(6).

DATED: January 20, 2012 FISHER & KREKORIAN

By /s/ Kevin Fisher Kevin Fisher

2121 Park Drive Los Angeles, California 90026 Attorneys for Claimants Teodoro Nguema Obiang Mangue and Sweetwater Malibu, LLC


EXHIBIT 1


1433

1R18 7 100:8 202 307 3228 P.82/02

U.S. Department af JUStice

Kenneth L. WainsteinUnited States Attorney

Ditrict of Columbla

Wains:o. Ar, 20MJ

April 18, 200$

Via vdenier (20-736-871-1)IWOMAs C. Green, Esq.SidleyAustin Brown & Wood LLP1501 K Struet, N.W.Washington, D.C. 20005

Re" Sal of aircraft by rulhtmem Aeropge Cor. to.Tcodoro mzller% ObiMn

Dear Wr Green:

Our office has completed its inquiry into the proposed sale referenced above, The inquirycommenced based upon information which was provided to us concerning a contrat for thepurchms of the lirera~t entered into by Gulfateam Aeroapace Corp, with Wr. Teodore, NgucenaObieng, the son of the President of Equatorial Guinea.

In response toyour inq.is Maer iadvise you ta at the pcsnt time, we haveno basis for eith er saining or scizing proceeds used to finance this proposed sale as potentiallyforfeitable property. Similarly, at this time we have no basis for believing that the monies usedto purchase the airaraft would violate the U, mroney laundering laws..

Please do not hesitate to contact me if>1,u have any questions.

Sincerely,

KBNNEMX L,. WAINSTEIN

UNITED STATES ATTORNEY

ASSISTANT U.S. ATTORNEYCHIEF, FRAUD & PUBLICCORRUPTION SECTION(202) 514-7W

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, VerDate Nov 242008 14:14 Aug 17, 2010 Jkt 056840 P0 00000 Erm 01465 Fmt 6601 Sftit6601 P:\DOCS\56840.TXT SAFFAIRS PsN PAT


fisher & krekorian kevin fisher (bar no. 131455)

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