Tag Archives: Togo

Case of the Day: United States v. Lebanese Canadian Bank SAL

The case of the day is United States v. Lebanese Canadian Bank SAL (S.D.N.Y. 2012). Following a Drug Enforcement Agency investigation into an “alleged scheme to launder money through the U.S. financial system and the used car market, for the benefit of Hizballah, designated as a Foreign Terrorist Organization by the U.S. Department of State,” the government brought an in rem civil forfeiture action and and also brought a civil money laundering action against several used car purchasers and several foreign financial institutions: Lebanese Canadian Bank SAL, Ellissa Holding Company, and Hassan Ayash Exchange Co., each of which was located in Lebanon; Salhab Travel Agency and STE Marco SARL, located in Togo; and STE Nomeco SARL, located in Benin. Neither Lebanon, Togo, nor Benin is a party to the Hague Service Convention.

On the in rem forfeiture claim, Lebanese Canadian, Ayash, and Ellissa had filed claims to the property in question, as they was required to do under Rule E of the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions if they wanted to contest the government’s claim that the property was subject to forfeiture. But under Rule E(8):

An appearance to defend against an admiralty and maritime claim with respect to which there has issued process in rem, or process of attachment or garnishment, may be expressly restricted to the defense of such claim, and in that event is not an appearance for the purposes of any other claim with respect to which such process is not available or has not been served.

Lebanese Canadian, Ayash, and Ellissa expressly restricted their appearances as provided in the rule, though as we shall see, the effect of their effort to restrict their appearance was not what they thought it would be.

The government then moved for leave to serve LCB, Ayash, and Ellissa by alternate means under FRCP 4(f)(3), namely, by mail directed to the US lawyers who had submitted the claims in the in rem action on their behalf. I’ve frequently reported on cases where a US lawyer surfaces for a foreign defendant in a lawsuit for one reason or another and then becomes the means for the plaintiff to effect service of process cheaply and easily. In the usual case, the lesson is that if you are a foreign defendant and you want to avoid service of process come what may, don’t have your US lawyer make an appearance in the case. In this case, the foreign defendants didn’t have a choice, at least as long as they were intent on challenging the forfeiture claims.

The defendants made an interesting argument, asserting that allowing service by alternate means would violate Rule E(8). There are several ways the judge could have responded to this challenge. The judge rejected the argument, supported by some precedent in the SDNY, that Rule E(8), which on its face applies only to admiralty and maritime cases, is simply inapplicable in civil forfeiture cases. I think another approach would have been to say that even if Rule E(8) did apply, making alternate service on the lawyers does not violate the rule, which simply provides that the act of entering an appearance for the purpose of asserting a claim to a res is not a general appearance for all purposes. The judge went on, as one would expect, to authorize service by alternate means. The judge also granted the motion, without discussion, for letters rogatory to Lebanon, Togo, and Benin for service on those defendants who had not filed claims in the in rem case.