posted to FEAR-List  & FEAR website (with permission) 10/14/99
(all other rights reserved by Mark Nestmann)

Foreign investors, beware.

If you have US investments and live in a country that restricts foreign investment or bans it altogether, your US holdings are in danger.  If the US Department of  Justice gets its way, your US property will be subject to civil forfeiture if you violate any of more than 100 laws in another country. And you won't get a chance to contest its seizure until after it's done.

DOJ's latest forfeiture reform bill, S. 1701, supposedly "balances" the reforms in the best civil forfeiture reform bill that's come this far to date, HR 1658--the "Hyde bill" that overwhelmingly passed the House of Representatives earlier this year.  But S. 1701 is a wolf in sheep's clothing.  In reality, it revives some of the most objectionable provisions in the DOJ's last "reform" bill, HR-1965, which a coalition of civil liberties groups derailed in 1997. As with HR-1965, S-1701 has a variety of provisions relating to the enforcement in the United States of foreign forfeiture orders.

Sec. 27 permits US courts to enforce foreign forfeiture judgments.  The requirements for enforcement are minimal and "the court shall be bound by the findings of facts to the extent that they are stated in the foreign judgment of conviction and value-based confiscation judgment."  The "value compensation" language refers to an order of a foreign court a criminal or civil defendant to pay a sum of money representing the proceeds of the offense.  Foreign forfeitures can be enforced in the event of a criminal narcotics or money laundering conviction. Sec. 1956(c)(7)(b) lists more than 100 crimes listed in this section that qualify as
"money laundering."

These crimes include "fraud against a foreign financial institution." Certainly a foreign central bank would qualify for this designation. German Jews who deposited money in Switzerland in violation of orders from the German Central Bank would be money launderers under this legislation.   And anyone who deposits money in the USA in the hope of finding financial refuge from a confiscatory government at home that has banned capital flight is also a money launderer, with their US assets subject to forfeiture.

How will a US court react to a petition from Cuba requesting the forfeiture of property in the United States conveyed by a person seeking political asylum who had conveyed the assets to the United States in violation of Cuban foreign exchange control laws?

Section 14 amends 18 USC 981(b), which relates to civil forfeitures related to "money laundering." It provides that a person who is arrested in a foreign country can have his US financial interests seized or frozen in a civil procedure.  The application to freeze the assets is made "ex parte," which means the opposing party doesn't even have an opportunity to be heard before a judge before his assets are frozen.

Section 22 makes it a felony to interfere with the seizure or forfeiture of property by "removing" it. One effective way to remove property from the jurisdiction of a US court is to move it outside the United States. This section would effectively ban any such transfer if the effect of that transfer would be to frustrate a US criminal forfeiture order. Will Congress next impose the death penalty for maintaining assets outside the United States to frustrate forfeitures, as Nazi Germany did in 1936?

Finally,  Sec. 18 provides the USA with a lever to force foreign investors to disclose their non-US investmentsto the US government Often, the US government tries to seize the non-US property of a foreign defendants in another country--as it did in the Noriega case and in many other cases. In such cases, even if you don't live in the USA, you have no right to contest a civil forfeiture brought in connection with these proceedings unless you are willing to request the foreign party holding records relating to these investments to disclose full details about them to the US government.  If you fail to do so, your claim will be dismissed "with prejudice," which means that you can never bring another claim relating to those assets.  Of course, these provisions apply equally to US persons.

In summary, S-1701 is the worst of all possible worlds. It is reform in name only.  And it needlessly endangers the legitimate holdings of hundreds of thousands of foreign investors guilty only of trying to protect their property from confiscatory governments.

Mark Nestmann

(Mark Nestmann is a journalist, legal researcher and author of many books and reports dealing with privacy, surveillance, asset protection,
offshore investing, alternative passports and citizenship.  See http://www.nestmann.com for the Table of Contents and excerpts from many of Nestmann's books and for archives of his newsletters.  He is editor of The Sovereign Individual, published by The Sovereign Society, http://www.sovereignsociety.com..)