Main Justice Turns to Manatt Partner on Impact of Asset Freezes on Banks
"Asset Freezes Mean Headaches for Third-Party Banks"
January 7, 2013 - Main Justice turned to Manatt's Jacqueline Wolff, co-chair of the firm's Corporate Investigations & White Collar Defense Practice, for insight into how seizures of assets in a government investigation can affect banks.
Main Justice reports that government asset freezes and property seizures have increased in the foreign bribery realm. The aim isn't to shut down a legitimate business, but to bring a company promptly to the government's negotiating table.
Wolff told the publication that though targets of seizures in the Foreign Corrupt Practices Act world may be violating the law, they also - unlike drug dealers - are engaged in legitimate business and have relationships with their banks that might be thrown into turmoil.
Once the government targets specific assets and has them frozen, they'll be off-limits until the case concludes.
"The assets aren't going anywhere," Wolff said. "There's no AUSA that's going to say to you, 'Yes, until things are resolved, you can use the account.'"
For a bank, the situation can be unnerving. Wolff said her bank clients are increasingly looking for guidance, and she said she's aware of close to a dozen banks since 2009 that have had to navigate forfeiture issues in the FCPA context.
However, the bank does have defenses. Third parties can contest a forfeiture, both in the civil and criminal processes. Also, in a civil forfeiture, prosecutors have to show that the assets are connected to the alleged crime, based on a preponderance of the evidence.
Compared to the criminal process, Wolff said a civil forfeiture leaves a bank more room to assert its right to the assets. The major issue, she said, is when the company's assets are used as collateral for a loan, which the lender won't want to give up.