Proceeds Of Crime And Jersey Trust Assets

Representation of Gary Stephen Kaplan [2009] JRC 082 (29 April

2009)

The Royal Court has recently delivered the latest instalment in

the matter of the Bird Charitable Trust and the Bird Purpose Trust

(see Ogier briefing dated February 2008). The Bailiff's

judgment of 29 April 2009 in the above case, concerned an

application to discharge a saisie judiciaire granted in May 2007 by

the Royal Court under the Proceeds of Crime (Jersey) Law 1999 (the

"Law"), on the request of the United States, in respect

of the realisable property of Mr Gary Kaplan situated within

Jersey, including the assets of the Bird Trusts.

Facts

The salient facts are as follows. Mr Kaplan has been indicted in

United States in relation to alleged offences arising out the

online gaming business of BetonSports Plc. The proceeds of the

floatation of BetonSports Plc were settled by Mr Kaplan on the Bird

Trusts. Mr Kaplan applied to the Royal Court for a discharge of the

saisie, on various grounds, including that: a confiscation order in

the United States was not likely to be made; the dual criminality

test under the Law was not met; and, in any event, the assets of

the Bird Trusts were not situate in Jersey.

Decision

The Court held that, as a matter of discretion, the saisie

should be discharged, even though it rejected all of the grounds on

which Mr Kaplan relied in his application. As a preliminary matter,

the Court confirmed that in discharge applications, there is no

strict burden of proof falling on the Attorney General (on whose

application the saisie was granted) or on the applicant for the

discharge - the Court will apply a test of fairness.

The key points from a Jersey trust law perspective were as

follows: first, the property settled into the Bird Trusts fell

within definition of realisable property of the settlor under the

Law, on the basis that it amounted to a "gift" (as

defined in the Law); and, second, property held by Jersey based

nominees (in this case, nominees of Basel Trust Corporation) was

"situate" in Jersey for the purposes of the Law, even

though the actual assets were located overseas (such as Swiss bank

accounts), on the basis that the nominees were controlled in

Jersey.

The factors which the Court took into account in exercising its

discretion to discharge the saisie included the following: first,

the Viscount (in whom assets subject to a saisie vest under the

Law) was in an impossible position as he was unable to manage the

assets that had been...