Mourant du Feu & Jeune has recently made a successful application on behalf of its client, Mr Gary Kaplan, to secure the discharge of a saisie judiciaire obtained at the United States' behest freezing all his realisable property situate in Jersey.

Internet gambling

In 2007 US businessman Mr Kaplan was arrested in the Dominican Republic in connection with charges brought in Missouri by the United States in relation to his former internet gambling business, BetonSports Plc. Whilst BetonSports had been based outside the USA, the majority of its 1.2 million customers had been US citizens. The US Department of Justice viewed its activities as illegal and Mr Kaplan, having been placed on a rendition flight from the Dominican Republic to Puerto Rico, was placed in custody in Missouri.

Betonsports Plc had been floated on AIM in 2004 and the profits from the sale of its shares had found their way into two Jersey trusts whose sole trustee at the time was a Jersey trustee. The principal assets of the Jersey trusts were an estate in Costa Rica and cash held in Swiss bank accounts.

Several months after Mr Kaplan's arrest, the Attorney General made an application to the Jersey court at the behest of the US Department of Justice for a saisie judiciaire under the Proceeds of Crime (Jersey) Law 1999 (the '1999 Law') in respect of Mr Kaplan's property in Jersey. The court granted the application and authorised the Viscount to take possession of the property and manage or otherwise deal with it in accordance with the directions of the court.

At the beginning of 2008, at the request of the US Department of Justice, a Seizure Order was granted by the Département Fédèrale de Justice et Police in Berne freezing bank accounts in Switzerland. Mr Kaplan then launched his application to discharge the saisie judiciaire in Jersey in the summer of 2008.

Not the world's policeman

Whilst the court found that the saisie judiciaire had been properly obtained by the Attorney General in 2007, it decided to exercise its discretion to discharge the saisie. It did so on the following bases:

  1. The continuation of the saisie placed the Viscount in an impossible position: the Viscount's duty to "take possession of and to manage or otherwise deal with any realisable property" could not be fulfilled in this scenario because, first, the assets in Switzerland had been frozen as a result of action taken by the US and, secondly, the assets in Costa Rica were principally immoveable property which was beyond his reach.
  2. Continuation of the saisie would be unfair to the trustee: the court stated that the trustee of the Jersey trusts should not be condemned to 'some form of legal purgatory' for an indefinite period. The Trustee had resigned during the continuation of the saisie but the assets it held remained vested in the Viscount.
  3. No role as the world's policeman: the court referred and relied on the recent House of Lords case of King v Serious Fraud Office [2009] UKHL 17, which held that requests to countries for assistance in preserving and recovering property that is related to criminal activity should be restricted to provision of assistance in relation to property located within that country's own jurisdiction. If each country were requested to take steps to procure the preservation or recovery of property on a worldwide basis, this would lead to confusing and possibly conflicting overlap of international requests for assistance. The court stated that, in this case, the US Department of Justice clearly wanted assistance from Jersey in relation to property situate outside the jurisdiction. It held that, generally, assistance to countries applying to the Jersey court for enforcement of an external confiscation order should be confined to property within the jurisdiction.
  4. Conflicting judgments: the real risk of conflicting orders by the Jersey court and the courts in Switzerland would place any trustee or person in the saisie judiciaire in a very difficult position.

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