Updated 5:09 p.m.
Lawyers in Washington representing three corporate investment accounts at UBS Financial Services in Miami are mounting a legal challenge to unlock tens of millions of dollars that the U.S. Justice Department contends is linked to an illegal gambling operation in the Dutch Caribbean.
A federal trial judge in Washington issued a restraining order in August at the request of federal prosecutors. The Justice Department moved to restrain the money amid a four-year criminal investigation in Curaçao.
The authorities in Curaçao, according to the Justice Department, believe the gambling operation has generated at least $60 million in proceeds. A businessman named Robertico Alejandro dos Santos was arrested in April in Curaçao on charges that include money laundering, forgery and tax fraud. DOJ's request to enforce a foreign restraining is here (PDF).
At issue in the forfeiture action in Washington’s federal trial court are three UBS accounts in the name of Ponsford Overseas Limited, Caribbean Investment Group Ltd. and Tula Finance Ltd. The law firm Williams & Connolly, representing the three companies, this week filed court papers challenging the propriety of the continued restraint of the assets.
Williams & Connolly partners Peter Kahn and Ana Reyes said in the court papers that authorities in Curaçao, an island off the coast of Venezuela, have misled prosecutors in the DOJ’s asset forfeiture and money laundering section.
The Justice Department, the companies’ lawyers argue, has failed to adequately provide evidence of any criminal wrongdoing.
“Nothing in the record identifies what acts the companies have allegedly committed,” Kahn said. “The government therefore has not established that those acts—whatever they may be—would give rise to forfeiture both under Curaçao law and federal law were they committed in the United States.”
The investment companies did not have opportunity to challenge the seizure authorization before it was issued, Kahn also said in the court papers (PDF).
Kahn and Reyes want U.S. District Judge Colleen Kollar-Kotelly to dissolve the restraining order.
“Entering an indefinite restraining order under these circumstances would be unprecedented and violate even the most rudimentary notions of due process and fair play,” Kahn said.
Prosecutors said in court papers that Dos Santos is suspected of tax fraud in Curaçao. But the companies’ attorneys said DOJ is unfairly trying to link the alleged crimes to the companies.
Kahn said Curaçao has a long history of not prosecuting individuals for the unofficial sale of lottery tickets. “This is so because such sales provide needed employment to the island’s citizens,” he said in court papers.
The sale of unofficial lottery tickets, Kahn said, does not rise to the level of a crime and cannot, therefore, support a money laundering violation.
The lawyers for the three companies also said that a judge in Curaçao earlier this month ordered the lifting of a seizure authorization. The authorities, however, obtained a second seizure authorization last January against the companies’ assets.
There was no hearing. The government in Curaçao secretly obtained the second authorization, the Williams & Connolly lawyers said.
The Justice Department, Kahn said in court papers, “asks this court to ignore an express order, issued after a contested evidentiary hearing, that the seizure be lifted and instead enforce yet another authorization obtained ex parte.”
Kotelly has not indicated whether she will hold a hearing on the dispute. Justice Department lawyers said the three investment companies are not entitled to a hearing in federal district court.
DOJ lawyers said in court papers (PDF) that Curaçao is the appropriate venue to challenge the seizure authorization.