Last week, we reported that the U.S. government was attempting to seize $71 million worth of assets including a Michael Jackson glove worn on the “Bad” Tour from Teodoro Nguema Obiang Mangue, the son of the president of Equatorial Guinea.
At a hearing on Monday, attorneys for Nguema attempted to have the property returned on the basis that the government lacked probable cause when it initiated the forfeiture proceedings. The United States believes that government officials in Equatorial Guinea are corrupt and that Nguema, appointed by his father to be a forestry minister, was able to go on a celebrity memorabilia splurge as a result of laundering “stolen” public infrastructure funds. But Nguema says that all the government has is evidence of how he spent the money, not how it was derived.
The case deals with complicated issues concerning what kind of information is needed to institute a forfeiture action and whether the government gets to amend or file new claims to seize property that’s sourced to corruption.
After the hearing, a judge circulated his ruling, which largely represents a defeat for the U.S. government but contains just enough wiggle room to allow the case to continue and for the property to be held onto for the time being. Big issues have yet been resolved in a case where prosecutors are likely spending a lot of time and money to pursue.
The United States is attempting to stand up to Nguema, who they say “amassed over $300 million in net worth, all while earning an income of less than $100,000 per year as an unelected public official appointed by his father.”
In an amended complaint, Justice Department attorneys accuse him of extortion, embezzlement and bribery under Equatorial Guinea’s own laws.
But the evidence that they’ve brought to the table — like reports from Italian law enforcement — are deemed by the judge to lack sufficient heft as establishing a firm link between Nguema and the alleged bad acts.
U.S. District Judge George Wu says the fact that Nguema maintained a large network of overseas accounts is “suspicious,” but wouldn’t form a basis for a reasonable juror’s conclusion that the accounts contained proceeds of foreign corruption. And the judge adds, “Government’s presentation of additional circumstantial evidence — such as ongoing criminal investigations, Claimant’s substantial net worth, inability to explain the source of his wealth, possession of large sums of cash, and use of shell companies — would have been more meaningful if the Government’s underlying evidence of corruption were not defective…. While this circumstantial evidence may suggest that Claimant possibly engaged in illegal activities, it scarcely indicates that he was involved in the type of political corruption that is the basis of this forfeiture action.”
And so, the judge grants in part Nguema’s motion for summary judgment.
The one saving grace for the United States at the moment — and the reason why it doesn’t have to return Michael Jackson’s glove just yet — is that Judge Wu isn’t yet offering relief from a bank fraud claim under U.S. law.
Nguema’s attorneys at at Quinn Emanuel believe the government’s bank fraud theories to be flawed, but that’s a whole long story in and of itself and will be addressed at a hearing next month. What has yet to be established is what kind of allegations the U.S. can bring to the table to support its bank fraud theory. The judge finds unpersuasive Nguema’s argument that the government needs to plead all of its legal claims in its initial complaint, but also cites federal rules of civil procedure that the government can’t simply sit on evidence that existed as of the filing date.
And then there’s the whole question of whether the United States can institute an entirely new forfeiture action, which we mockingly suggested might be captioned United States of America v. Dictator Who Committed Bank Fraud and Is Now Stubbornly Trying to Hold on to a Michael Jackson White Crystal-Covered “Bad Tour” Glove. The judge decided not to make a determination about this.
Here’s Judge Wu’s ruling, and because of the judge’s lack of confidence, his second ruling in an effort “to clarify.”
