Washington, D.C. (May 20, 2022) -  In March 2022, in response to Russia's actions in the Ukraine conflict, the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) issued sanctions targeting Russian "elites and business executives who are associates and facilitators of the Russian regime" (see Lewis Brisbois' April 13 alert). The result of these sanctions was to place the names of these individuals – often referred to as " oligarchs" – on the Specially Designated Nationals and Blocked Persons list (SDN List). That action prohibits U.S. persons from engaging in any transfer of products or payments to, or financing of any property interest of anyone on the SDN List, and the ban extends to any entity that is directly or indirectly 50% or more owned by any SDN-listed party, whether or not the entity itself is listed. 

More recently, in an effort to go further, on April 28, 2022, the Administration released a package of proposals to "establish new authorities for the forfeiture of property linked to Russian kleptocracy." The proposals seek the enactment of new laws that would allow the federal government to seize "oligarch assets, expand the assets subject to seizure, and enable the proceeds to flow to Ukraine." The proposals would greatly enhance existing legal authority under the Racketeer Influenced and Corrupt Practices Act (RICO), 18 U.S.C. § 1956(c)(7)(B), which authorizes forfeiture in the event of an underlying crime, often bribery, misappropriation, theft, or embezzlement of public funds "by or for the benefit of a public official."

Although the specific legislative proposals have not yet been released, this alert addresses two of the most interesting aspects of this initiative: (1) augmenting the statute of limitations under RICO and (2) adding "sanctions evasion" to RICO's predicate offenses. Given RICO's powerful treble-damages provision and significant criminal penalties, as well as the breadth of the SDN List coverage, these proposed changes warrant close attention by all whose dealings may touch upon covered assets.

A. Increasing RICO's Statute of Limitations from Five to Ten Years

Congress did not include an express statute of limitations period for either criminal or civil RICO suits. However, Congress did provide a catch-all provision for all offenses against the United States for which there is not a specific statute of limitations. 18 U.S.C. § 3282(a). Unless expressly provided, "no person shall be prosecuted, tried, or punished for any offense, not capital, unless the indictment is found or the information is instituted within five years next after such offense shall have been committed." Id.

For civil RICO actions, the United States Supreme Court has strongly suggested that the statute of limitations is four years. Agency Holding Corp. v. Malley-Duff & Associates, Inc., 483 U.S. 143, 150 (1987) (analogizing to antitrust actions).

Without specifying whether the intended coverage is for criminal or civil violations, the Administration proposes increasing the statute of limitations from five years to ten. This would suggest the change is meant to be applicable to criminal RICO actions. Although explained as providing more time to "follow the money," ten years may still be insufficient in practice. Proving any case beyond a reasonable doubt with foreign evidentiary materials is a herculean task, and it is questionable whether doubling the allowed limit to ten years will ultimately be sufficient.

B. Adding Sanctions Evasion as a RICO Predicate Offense

Racketeering activity is a pattern of "predicate offenses," which normally builds on other specified violations of federal criminal law. 18 U.S.C. § 1961(1). Aside from "bribery of a public official," 18 U.S.C. § 1956(c)(7)(B), general money laundering, 18 U.S.C. § 1956, is a common predicate offense to root out foreign corruption.

Both offenses suffer from foreign proof problems – evidence of corruption or illegality of the laundered proceeds resides with, relevant here, the Russian government. To address this difficulty, the proposals seek to add sanctions evasion, which would allow for a more easily obtained U.S.-based tie as a foundation for proof.

The International Economic Powers Act (IEEPA), 50 U.S.C. §§ 1701 et seq., authorizes the President to "declare[] a national emergency with respect to" an "unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States." 50 U.S.C. § 1701(a). IEEPA authorizes the government to "block during the pendency of an investigation ... transactions involving[] any property in which any foreign country or a national thereof has any interest ...." Such frozen assets function as a "bargaining chip" in international conflict. Dames & Moore v. Regan, 458 U.S. 654, 673 (1981). Willful violations of such blocking orders are criminalized by up to 20 years' incarceration and a $1 million fine. 50 U.S.C. § 1705(c).

As best as can be construed, the Administration will seek to include § 1705(c) offenses as a RICO predicate offense. Criminal violations of the Export Control Reform Act, 50 U.S.C. § 4819(b), would also be a RICO predicate offense, and could come into play in the context of sanctions on sales to Russia.

Adding IEEPA violations as a predicate is an interesting proposal for three reasons. First, "blocked" assets will often have a U.S. nexus. Obtaining proof that a defendant violated the sanctions order by doing something to a U.S.-based asset is much more feasible than establishing who bribed whom in Russia. Second, because each asset tampered with provides a separate offense, meeting RICO's pattern requirement will likely be easier. Third, given the monetary value of many of the blocked assets – e.g. nine-figure yachts – trebling well exceeds the present statutory maximum fine of $1 million.


Although the Administration proposals remain very much a work in progress, this initiative calls for close monitoring. The prospect of adding sanctions evasion as a RICO predicate offense offers a major new enforcement tool for seizing oligarchs' assets, and in practical terms is a more promising approach than doubling the statute of limitations. Many legal questions will have to be addressed in considering such a significant change to the forfeiture laws, but adding sanctions evasion as a predicate offense to RICO may provide a means to use U.S.-based evidentiary proof to win such cases in a U.S. district court, making it worth the government's resources to pursue. 

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