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Case 1:04—cv—00593-GI\/IS Document 31-2 Filed 06/10/2005 Page1 0f4
EXHIBIT A

Case 1 :04—cv—00593-GI\/IS Document 31 -2 Filed 06/10/2005 Pa e 2 of 4
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2003 U.S. Dist. LEXIS 101
UNITED STATES OF AMERICA, Plaintiff -v- ALL FUNDS ON DEPOSIT IN UNITED BANK OF
SWITZERLAND, NEW YORK, NEW YORK, ACCOUNT NUMBER l0lWA263232000 UP TO AND
INCLUDING THE SUM OF $ 3,083,376.00 IN THE NAME OF SAWAN EXCHANGE COMPANY, LLC, AND
ALL PROCEEDS TRACEABLE THERETO, Defendant—in-rem.
01 Civ. 2091 (JSR) _
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
2003 U.S. Dist. LEXIS 101
· I January 6, 2003, Decided
January 7, 2003, Filed
DISP0SHiION_1: [*1] Claimzmfs. modem for CORE TERMS: regulation, technology, indirectly,
summary judgment and summary adjudication of . . . .
issues dcmcd in au respects unlawful activity, reexportatron, summary judgment,
` forfeiture, remittance, currency, entity, exportation,
CASE SUMMARY bank account, ambiguity, claimant, customers, savings,
. PROCEDURAL POSTURE. Plaintiff Um Sm ededd dddddeded» d acca d 1°»S“d’P“°°‘=W*‘°""VC‘
brought an in rem action against funds deposited in a LexisNexis(TM) Headnotes
bank account, seeking a forfeiture of the funds, and . . . .
proceeds traceable to the funds, alleging that the Cm] Procedure >RemedleS > Fwfelmres
claimant account owner, a currency exchange Immigration Law > Enforcement > Civil Liability >
company, undertook to transfer sums equivalent tot he Vehicle Farfeiture & Seizure
funds to Iran in violation of 31 C.F.R. § 560.204. The .
°°mPa“y dddeed ddd ededddey d“d`dm°“* de ddd lZ1};1L..;”‘?§m18a¤$Sp$OiCm i$§r(a¥})(,$?.SOT£J€°$$hrZ§
Summary add“d‘°i‘“°“ Of 1SSu€S' constitutes or is derived from proceeds traceable to any
OVERVIEW: The company contended that § 560.204 offense constituting "specified unlawful activity," as
was too vague to support forfeiture, that it was not a defined in 18 U.S.C.S. § l956(c)(7). Section
U.S. person subject to the regulation, and that the 1956(c)(7)(D), in turn, defines "specified unlawful
actual transfers were family remittances which were activity" to include violations of the International
exempt from the transfer prohibition. The company Emergency Economic Powers Act, 50 U.S.C.S. § 1701
also argued that its conduct was not willful, and that et seq., and regulations promulgated thereunder.
certain of the transferred funds were not themselves .
the direct fmits of criminal activities. The court first Intematmnal Trade Law >Imp0rtS & Exports
held that the regulation was not vague. since offering to [HN2]See 31 C.F.R. § 560.204.
exchange a customer's money and deliver it to a . . .
foreign country for a fee is well within the ordinary Governments >LeglShm0" >Im(erpremtw"
meaning of supplying a service. Further, the company's [HN3]In determining whether a statute is so vague as
conduct occurring in the United States was subject to to support a due process challenge, the statute must be
forfeiture, regardless of whether the company was a evaluated as applied to the facts of the case.
U.S. person, and the family remittance exception did Governments > Le mation > I t r t t.
not apply to the company which was not a depository g H wp e a mn
institution. Also, no showing of willfirlness was [HN4]A regulation need not define a temi where the
required since no criminal penalty was sought, and the ordinary meaning is manifest. —
transferred funds were not required to be direct .
P proceeds of criminal activity, but only traceable to Imematwmll Trade Law >Imp0rtS & E"1"""‘
such activity. [HN5]The exemption from the prohibition of transfers
OUTCOME: The companys motion for Summary to Iran for family remittances only apphes to transfers
judgment or for summary adjudication of issues was of famlly iemmmcgs made by 3 Umtcd States
denied depository institution," 31 C.F.R. § 560.516(a), which
' is defined as any entity (including its foreign branches)
organized under the laws of any jurisdiction within the
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2003 U.S. Dist. LEXIS 101
United States, or any agency, office, or branch located United States person, wherever located, of any goods,
in the United States of a foreign entity, that is engaged technology, or services to Iran or the Government of
primarily in the business of banking (for example, Iran is prohibited, including the exportation,
banks, savings banks, savings associations, credit reexportation, sale or supply of any goods, technology,
unions, tmst companies, and United States bank or services to a person in a third country undertaken
holding companies). 31 C.F.R. § 560.319. with knowledge or reason to know that:
COUNSEL: For UNITED STATES OF AMERICA,
plaintiff: Daniel Ruzumna, Office of the United States (3) Such gO0FlS’ tcclmologx Or [*3]
services are intended specifically for
AtmmCy’ New YOIk’ NY' supply, transshipment, or reexportation,
directly or indirectly, to Iran or the
For SAWAN EXCHANGE CO., claimant: Peter N. Govemrnent of Iran; or
Wang, Scott D. Corrigan, Friedman, Wang & Bleiberg,
P.C., New York, NY. (b) Such goods, technology, or services are
` intended specifically for use in the
For SAWAN EXCHANGE CO., claimant: Mark E. production ofQ for commingling with, or
Beck, Anthony A. De Corso, Beck, De Corso, Daly & for incorporation into goods, technology,
Kreindler, Los Angeles, CA. or services to be directly or indirectly,
mers: me S. MKOFF, U.s.D.J. S¤PP¤¢d» tmShi¤P#d» of mpm
exclusively or predominantly to Iran or the
OPINIONBY: JED S. RAKOFF Government of Iran.
OPINION: MEMORANDUM ORDER In its instant motion, Sawan argues, first, that key
terms of these regulations are so vague as to deprive it
IBD S- RAKOFR Um- 2§.i`;?.?;§ff§;..E$E§,°§§h§§`{.2I$;3.§“.§i¥§?i‘;.i?ZZ2
The Govemment, proceeding in rem under the Civil Chapman v. United States, 500 U.S. 453, 467, 114 L.
Asset Forfeiture Reform Act ("CAFRA"), 18 U.S.C. § Ed. 2d 524, 111 S. Ct. 1919 [HN3](in determining
@1, seeks forfeiture of $ 3,083,376 held in a New whether a statute is so vague as to support a due
York bank account in the name of Sawan Exchange process challenge, the statute must be evaluated as
Company, LLC ("Sawan"). The Govemment alleges applied to the facts of the case). The fifth term,
that Sawan, a currency exchange company, undertook "services," carries its ordinary legal meaning -- see
on behalf of certain of its customers to transfer to Iran Black's Law Dictionary 1372 (7th ed. 1999), defining
sums equivalent to the amount here sought to be "service" as "the act of doing something useful for a
. forfeited, in violation of Executive Orders promulgated person or company for a fee" —— and is here applied
under the Intemational Emergency Economic Powers without difficulty or ambiguity, for offering [*4] to
Act ("IEEPA"), 50 U.S.C. §§ 1701-07. See United exchange a customer's money and deliver it (by
States v. All Funds on Deposit in United Bank of whatever method) to a foreign country for a fee is well
Switzerland, 188 F. Supp. 2d 407, 408-10 ]S.D.N.Y. within the ordinary meaning of supplying a "service."
» 2002). [*2] Sawan, as claimant, now moves for While Sawan, in what partakes more of an exercise in
summary judgment, or, in the alternative, for summary literary deconstmctionism than legal analysis, purports
l adjudication of certain specified issues. to find an invitation to ambiguity in the fact that
[HNUTM pmvisidn of CAFRA here pcmmm, § "services" is not further defined in the regulation,
. . [HN4]a regulation need not defme a term where the
981(a)(1)(C), subjects to forfeiture "any property, real ,, d. . . .f tn U .t d St t
or personal, which constitutes or is derived from or mary mczmmg IS mam Qi
. . . Ehsan, 163 F.3d 855, 858 [4th Crr.»1998}.
proceeds traceable to . . . any offense constituting
'specified unlawful activity,"’ as defined in section Sawan next argues that the regulations only apply to a
1956(c)(7) of Title 18. Section l956(c)(7)(D), in tum, "U.S. person" and that Sawan does not fall within the
defines "specified unlawful activity" to include definition thereof. See C.F.R. § 560.314. In actuality,
violations of IEEPA and regulations promulgated however, the regulations cover U.S. activity by
thereunder. Among these regulations are the Iranian anyone, whether a "U.S. person" or otherwise, the
Transactions Regulations, 31 C.F.R. Part 560, Section latter limitation only being relevant to activity
560.204, which in relevant part provide that: conducted entirely abroad. Specifically, § 560.204
[HN2]Except as otherwise authorized pursuant to this prohibits "the exportation, reexportation, sale or
part . . . the exportation, reexportation, sale or supply, supply, directly or indirectly, from the United States,
directly or indirectly, from the United States, or by a or by a United States person, wherever located, of any
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2003 U.S. Dist. LEXIS 101
goods, technology, or services . . ." (emphasis added). Similarly, Sawan's claim that certain of the transferred
The disjunctive "or" indicates that the prohibition funds were not "proceeds" covered by § 98l(a)(1)(C)
reaches domestic activities [*5] by anyone, whether or because they were not themselves the direct fruits of
not a "U.S. person," and that it also reaches foreign criminal activities seeks to import into the statutory
activities when conducted by a "U.S. person." In this scheme an additional requirement found nowhere in
case, the evidence is undisputed that Sawan received the statutory language, which requires only that the
funds in the United States and placed them in a New proceeds be "traceable" to the specified unlawful
York bank account to be thereafter exchanged for activity. Hence, this argument, like the others, must be
Iranian currency to be delivered to individuals in Iran. rejected.
It ls th‘T’“f°“ clear that. Sawins Scrvlcci were m Finally, as a fall-back, Sawan argues that, even if it is
substantial measure supplied, directly and indirectly, . . .
. . . not entitled to complete or partial summary judgment,
from the United States and thus fall wrthm the above- . . ,
uotcd prohibition even if HO HU S person, was the Court should resolve, at this stage and rn Sawans
ivclved , ' ` favor, two other issues: first, that the S 507,648 of
' transferred funds remitted before July 2000 did not
Sawan also argues that the funds that were the subject involve the defendant account and therefore cannot
of the actual transfers (the presently attached funds support a forfeiture; and, second, that because the
being surrogates therefor) were "family remittances" Government allegedly knew at the time of the transfers
exempt from the prohibition of transfers to Iran. See § of some $ 277,000 in July and August of 2000, the
560.5l6(a)(3). But [HN5]this exemption only applies Government is not entitled to recover that portion of
to transfers of family remittances made by a "United the money. But even if the Court were otherwise
States depository institution," see § 560.5l6(a), which inclined to exercise its discretion and reach these
is defined as "any entity (including its foreign issues at this stage, the Government has adduced
branches) organized under the laws of any jurisdiction sufficient evidence contradicting [*8] Sawan's factual
within the United States, or any agency, office or assertions to require the matters to be resolved at trial.
· branch located in the United States of a foreign entity, . . , .
. . . . . For the foregomg reasons, claimants motion for
that rs engaged primarily in the busmess of [*6] . . . .
. . . summary judgment and summary adjudication of
banking (for example, banks, savings banks, savings . . . .
. . . . . . issues rs hereby denied rn all respects. Counsel are
associations, credit unions, trust companies and United . . .
. . ,, directed to jointly call Chambers by January 17, 2003
States bank holding companies). 31 C.F.R. § 560.319. .
. . . . to schedule a date for trial.
. The plain meaning of this language (as well as its
evident purpose to limit family remittance transfers to SO ORDERED.
those. bank—l1ke entities regularly subject to U.S. JED S. RAKOFF) USDJ.
oversight and regulation) does not reach a currency
exchange facility like Sawan. nl _
Dated: New York, New York
—-——-—--—----- Footnotes -------—-
-—-—-- January 6, 2003
nl As this is a matter of statutory
interpretation, Sawan’s reliance on an
"expert" affidavit is irrelevant and, indeed,
inappropriate.
---------—-- End Footnotes -------- [
Sawan further contends that a "specified unlawful »
activity" only occurs when a person wilfully violates ·
an order under IEEPA or when an officer, director, or
agent of a corporation knowingly participates in such
violation. See 50 U.S.C. § 1705(b); 31 C.F.R. §
- 560.701] a[] 2 [. Under both these provisions, however, a
showing of wilfulness is required only where a
criminal penalty is sought, whereas here [*7] the
Government seeks only a civil remedy.
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