Judgment Enforcement

• Author: International Law Group

In 1984, the United States convicted Larry Barnette with defrauding the United States government of some $15 million arising from his operation of military laundries overseas. There were several counts of fraud and related offenses, including those under the Racketeer Influenced and Corrupt Organizations Act (RICO).

A district court sentenced him to a term of imprisonment. It also ordered Barnette to forfeit his shares in Old Dominion, S.A. (ODSA), a Panamanian company, which he controlled and which he had been using it to "launder" the proceeds of his fraudulent activity. Shortly before the grand jury had indicted him, Barnette had transferred 800 of his 900 shares in the company to his then wife, who is now Kathleen Conway Montgomery (appellant here). In 1983, the appellant had left Barnette and married a man named Montgomery. She renounced her U.S. citizenship in April 1992 and became a London resident the following month. She then became a citizen of St. Kitts and Nevis in June 1994 and lost her U.S. nationality in November 1994.

The U.S. court ruled in 1984 that, under RICO, the government had gotten title to those shares before their transfer to the appellant. Thus Barnette had a duty either to hand them over or to specify their value. Barnette paid the U.S. $7,000,000, but failed to provide information about the market value of the shares. After long and complex litigation, the American court issued a confiscation order. After several judicial revisions (e.g, to include interest between 1985 and 1995), the final effect of these orders was to raise the total sum payable by the appellant and Barnette to $11,767,754, plus costs and expenses.

The two individuals had then appealed to the U.S. Court of Appeals for the Eleventh Circuit in which their attorney filed a substantial brief. That Court, however, had dismissed the appeal on the basis of the "fugitive disentitlement" doctrine. That is to say that the Court had exercised its discretion to decline to decide, or even to hear, the appeal on the ground that Barnette was a fugitive from justice.

The U.S. government next applied to register the confiscation order in the U.K., as the first step in enforcing it against the appellant's U.K. assets. It is undisputed that the United States is a designated country, by virtue of the Criminal Justice Act 1988 (CJA) (Designated Countries and Territories) Order 1991. Moreover, under Section 97 of the CJA, the confiscation order made by the U.S...