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Congress Permits Proceeds from Sale of Russian Oligarchs’ Forfeited Assets to Be Sent as Aid to Ukraine

Washington, D.C. (February 17, 2023) – In a continuation of effort to increase the bite of U.S. sanctions, on December 29, 2022, President Biden signed the Consolidated Appropriations Act of 2023, Pub. L. 117–328 (H.R. 2617), into law (CAA). This Act provides the Attorney General with authority to send the proceeds from certain forfeited asset sales of sanctioned Russian oligarchs and other entities supporting Russia’s invasion of Ukraine to the Ukrainian people.

Justice Department Now Has Authority to Send Proceeds from Sale of Certain Forfeited Assets to Ukraine

An amendment to the CAA created § 1708(a), which provides: “The Attorney General may transfer to the Secretary of State the proceeds of any covered forfeited property for use by the Secretary of State to provide assistance to Ukraine to remediate the harms of Russian aggression towards Ukraine.” H.R. 2617–742 (Dec. 29, 2022) (enacted) (emphasis added). “Any such transfer shall be considered foreign assistance…[and] the Attorney General in consultation with the Secretary of the Treasury and the Secretary of State” must submit a report to the appropriate Congressional committee within 15 days. Nothing in the CAA changes the judicial or administrative appeals process.

“The term ‘covered forfeited property’ means property forfeited under” (1) 18 U.S.C. Ch. 46 (civil and asset criminal forfeiture); or (2) 18 U.S.C. § 1963 (Racketeer Influenced and Corrupt Organizations Act) and “which property belonged to, possessed by, or was controlled by a person subject to sanctions.” H.R. 2617–742, § 1708(c)(2) (emphasis added). The term “covered forfeited property” also includes property “involved in an act in violation of sanctions enacted pursuant to Executive Order 14024, and as expanded by Executive Order 14066 of March 8, 2022, and relied on for additional steps taken in Executive Order 14039 of August 20, 2021, and Executive Order 14068 of March 11, 2022.” Id. In other words, the Act permits the Attorney General to seize and forfeit property formerly owned or controlled by Russian oligarchs potentially ensnaring purchasers who would have to prove being an innocent owner. See 18 U.S.C. § 983(d).

The Act’s limitations to the most recent Executive Orders promulgated by the Biden Administration are interesting. DOJ is seeking forfeiture of a 348-foot yacht named the Amadea purportedly owned by sanctioned Russian oligarch Suleiman Kerimov. See Seizure Warrant, In re: the Motor Yacht Amadea, with International Maritime Organization No. 1012531, Case No. 22-sz-9 (D.D.C. Apr. 13, 2022). The Executive Orders implementing the International Emergency Economic Powers Act that Mr. Kerimov allegedly violated are not those listed above. See Lewis Brisbois’ alert from June 17, 2022. The indictment contains significant redactions. Nevertheless, Mr. Kerimov’s alleged conduct is covered by 18 U.S.C. Ch. 46.

Deputy Attorney General Lisa Monaco told CBS’s 60 Minutes on January 15, 2023, that the U.S. has moved to seize $1 billion of illicit assets since the start of the war. But the legislation enacting that forfeiture-fund-share program appropriated $45 billion more to Ukrainian war efforts. See Additional Ukraine Supplemental Appropriations Act, 2023, Pub. L. 117–328, Div. M.

Conclusion

In addition to $45 billion in the Additional Ukraine Supplemental Appropriations of 2023, Congress provided for allowing the proceeds from sale of forfeited assets from individuals violating certain Executive Orders and other laws to be sent to Ukraine. Because forfeiture proceedings are not quick, this is largely a symbolic move when compared to the $113.4 billion for supplemental funding that Congress provided Ukraine in FY2022 and FY2023.

Lewis Brisbois’s attorneys are actively engaged in the wide range of legal issues in this area and are advising clients on managing legal and business risk as events continue to develop at an accelerated pace. For more information, contact a member of Lewis Brisbois’ Ukraine Conflict Response Team.

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Author:

Justin Carl Pfeiffer, Partner

Editors:

Jane C. Luxton, Managing Partner - Washington, D.C.

Andrew Pidgirsky, Partner 

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