Petition — Vesco v. International Controls Corp.

Supreme Court brief1979

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Supreme Court of the Unite

Ocroser Term, 1979 om

£81621

ROBERT L. VESCO,

Petitioner,

INTERNATIONAL CONTROLS CORP.,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

JosePH Foa.ia,

Law Offices of

Rosert D. Foaria

Counsel for Petitioner

530 Fifth Avenue

New York, New York 10036

(212) 697-8772

(201) 488-4433

TABLE OF CONTENTS

Page

Preliminary Statement............-. 1

Opinion Below........ceeeeee Wekeweee 2

; DWUBASGLSCION. acs cccsccccces Teer 2

Questions Presented for Review..... 3

Constitutional Provisions,

Treaties, Statutes and

tse ecewee | OD

Statement of the Case

l. The Consolidated Actions... 1

2. The Basis for Federal

ee tec eeee 12

3. The District Court

PROCPOMENGG c ccc cc escccese ec ee

4. The Decision of the

Court of Appeals.......... 14

Reasons for Granting the Writ

I. The Court of Appeals, by not

setting aside the service in

the 2518 and 15868 actions,

has accepted and condoned a

violation of Petitioner's

right to due process of law

which calls for the exercise

of this Court's power of

supervision.

TABLE OF CONTENTS (Continued)

Page

The Departure of the

District Court from the

Accepted and Usual Course

of Judicial Proceedings...... 21

II. F.R.C.P. Rule 4(i) (1) (E)

must be applied within the

terms of the International

Convention on the Service

Abroad of Judicial and

Extrajudicial Documents in

Civil or Commercial Matters.

A. The Status of the

ae ee ceca: Poa

B. The Applicability of

CHS CONVORECEORecccccsectee ST

C. ‘the Burden of Proving

SOFVLICS. occ 0606680 68 66 46

ai.

TABLE OF CONTENTS (Continued)

Page

CONSTITUTIONS CITED:

Bahamian Constitution, The Bahamas

Independence Order 1973,

Article 4, Operative July 10,

LUEGs vis eens 0% 03s pie aaa bie ke caacee (cee

United States Constitution,

RECLORS Buns s bos 00 0 6s 66866455 8 88 32

TREATIES CITED:

Convention on the Service Abroad

of Judicial and Extrajudicial

Documents in Civil or Commercial

Matters, The Hague, November 15,

1965, Effective February 10,

BER A C4 Sh b Keke ee Bia be ase Sete cthanssseeeee

37,42,

43,44,

CASES CITED:

Amba Marketing Systems, Inc. v.

Jabar Intern'l, Inc., 55 F.2d

Fe THEE GEES BOTT sa hercceveceese 47

Arcata Graphics Corp. v. Murrays

Jewelers & Distributors, Inc.,

384 F.Supp. 469 (S.D.N.Y.

EP Tep cccvcecccessaPocsessctececss 47

iii.

“ABLE OF CONTENTS (Continued)

CASES CITED:

Attorney General for Canada v.

Attorney General for Ontario,

(1937) A.C. 326 per Ld. Atkins

Privy Council. .ccecccvesscsccss

In Re Evanishyn, 1 F.R.D. 202

(S.D.N.Y. 1539), aff'd on

other grounds 107 F.2u 742

(20 Cike Boab) cc tve isn eee

Kadet-Kruger & Co. v. Celanese

Corp. Of Amer., 216 F.Supp.

249 (N.D. Ill. 1963)..... ts acs

Mullane v. Central Hanover Bank

& Trust Co., 339 U.S. 306

Product Promotions, Inc. v.

Cousteau, 495 F.2d 483 (5th

Chl. S0TOl sane ace Gaal ee

Shoei Kako Co., Ltd. v. Superior

Court, 33 C.A.3d 808, 109

Cal. Rptr. 402 (1973).........<%

Sibbach v. Wilson & Co., 312

-S. 1 (1940) reh. denied

312 U.S. Faueneene 0600 8a eee

Tamari v. Bache & Co., 431

F.Supp. 1226 (W4.D. Ill.

LOTT) wccccvccccesuue eee

Page

+ oie

a 26

oo we

oe 024,30

0032,33,

TABLE OF CONTENTS (Continued)

CASES CITED:

Whitney v. Robinson, 124 U.S.

DMs ckdeceasececese 323

Wuchter v. Pizzutti, 276 U.S.

eee ee cee ecewe cscs 32

RULES CITED:

PEO ees SUA) gies si oedcecceve o021,22,

23,24,

25,31,

34,35,

36,37,

: 45

Fed.R.Civ.P. ee ee rr i

Yearbook of the International

Law Commission, Art. 4,

subd. RTT Hy acm > ae ae ee. .6 6) 8 6 41-42

TREATISES, ENCYCLOPEDIAS CITED:

32 Am.Jur.2d, Federal Practice

Meee PROENO, BLBsiisccaccccccs 32

TABLE OF CONTENTS

APPENDIX

Order and Opinion of the

United States Court of

Appeals for the Second

Circuit, decided

January 24, 1979. .ccececs

Order Appointing Person to

Serve Process (Civil

Docket No. 73 Civ. 2518),

Dated July 27, 1973,

Entered July 31, 1973...

Order Appointing Person to

Serve Process (Civil

Docket No. 73 Civ. 2513),

Dated July 31, 1973.66.

Affidavit of Lois Sylor

Yohonn sworn to

August 6, 1973 (73 Civ.

2518) (regarding service

of original summons

and COMPLAINE) occccccces

Judgment of the United

States District Court

for the Southern District

of New York, Hon.

Charles E. Stewart, Jr.

(Civil Docket No.

73 Civ. 2518), Entered

October 5, 1973 ....2 eee

vi.

A34

A36

A38

A50

TABLE OF CONTENTS -

APPENDIX (Continued)

10.

Affidavit of Joseph A.

Bondi sworn to

November 12, 1973

(73 Civ. 2518) (regard-

ing service of summons

and amended complaint)..

Affidavit of Robert L.

Vesco, Undated, Filed

November 17, 1977.......

Affidavit of Lois Sylor

Yohonn sworn to April 8,

1974 (Civil Docket No.

74 Civ. 1588) (regard-

ing appointment of person

to serve process).......

Order Appointing Person to

Serve Process (Civil

Docket No. 74 Civ.

1588), Dated and

Entered April 9, 1974...

Affidavit of David M.

Butowsky sworn to

April 22, 1974 (73 Civ.

1588) (regarding service

of summons and

CUA MAIIGE 05 4 ok 00 6 0 e000

vii.

A56

A80

A99

A102

A105

TABLE OF CONTENTS -

APPENDIX (Continued)

ll. Judgment of the United

States District Court

for the Southern

District of New York,

Hon. Charles E.

Stewart, Jr. (Civil

Docket No. 74 Civ.

1588), Entered

September ll, 1974......

12. Order with Endorsed

Decision Denying

Motion to Vacate

Default Judgment

(74 Civ. 1588), Dated

May 2, 1978, Entered

tay 3, 2678 cee

13. Convention on the Service

Abroad of Judicial and

Extrajudicial bocuments

in Civil or Commercial

Matters, The Hague,

November 15, 1965,

Effective February 10,

A968: 606.5 4d kd Od Cees

14. Letter from the Prime

Minister of the Common-

wealth of The Bahamas

to the Secretary General

of the United Nations,

Dated July 10, 1973...

wits;

A110

Al13

A115

A119

TABLE OF CONTENTS -

APPENDIX (Continued)

15. The Bahamas Independence

Order 1973, Article 4,

Operative July 10,

BPISCL 6d UEC REPS Eh NSS 600 A123

ix.

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1979

No.

ROBERT L. VESCO,

Petitioner,

Vv.

INTERNATIONAL CONTROLS CORP.,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

PRELIMINARY STATEMENT

Petitioner, Robert L. Vesco,

respectfully prays that a writ of

certiorari be issued to review the

judgment, order and decision of the

United States Court of Appeals for the

Second Circuit, entered in two cases on

January 24, 1979. |

Although the Respondent may

argue that the actions sought to be

reviewed herein have been before this

Court on three prior occasions concern-

ing other or similar matters, the

questions raised in this petition have

never been before this Court, and the

Petitioner has never sought previous

access to this Court.

On the three previous

occasions, this Court has declined to

issue the writ on the questions then

raised.

OPINION BELOW

The opinion of the United

States Court of Appeals for the Second

Circuit is presently unreported, but

appears in full beginning at page "Al"

of the Appendix included herein.

JURISDICTION

The judgment and decision of

the Court of Appeals for the Second

Circuit was entered on January 24,

1979. The jurisdiction of this Court

is invoked pursuant to 28 U.S.C.

§1254(1).

QUESTIONS PRESENTED FOR REVIEW

l. Whether the particular

methods of service of process as directed

by the District Court against the

Petitioner comports with due process.

2. Whether service of

process under Rule 4(i), or more spéci-

fically, under Rule 4(i) (1) (E) of the

Federal Rules of Civil Procedure, must

afford "actual notice."

3. Whether the District

Court below, in directing the particular

methods of service of process under

Rule 4(i) (1) (E), so far departed from

the accepted and usual course of judicial

procedure, and whether the Court of

Appeals so far sanctioned such a de-

parture by the District Court, as to

call for an exercise of this Court's

powers of supervision.

4. Whether the various and

several methods of service of process

as specifically directed by the District

Court were so materially different as

to justify inconsistent results, thereby

denying the Petitioner due process; i.e.

does a prospective defendant have a

right to know when there has been

proper service consistent with due

process.

5. Whether the Convention

on the Service Abroad of Judicial and

Extrajudicial Documents in Civil or

Commercial Matters is subordinate or

equivalent to ‘the Federal Rules of

Civil Procedure, or more particularly,

whether Rule 4(i) (1) (E), providing for

service of process in a foreign country

“as directed by order of the court,"

must be applied within the terms of the

Convention.

6. Whether the Convention

is applicable to service of process in

the independent Commonwealth of the

Bahamas.

7. Whether the Court of

Appeals so far departed from the

accepted and usual course of inter-

national law and procedure as to call

for an exercise of this Court's powers

of supervision.

CONSTITUTIONAL PROVISIONS, TREATIES,

STATUTES AND RULES INVOLVED

| & Constitutional Provisions

"(NJor shall any State deprive any

person of life, liberty, or property

without due process of law." U.S.

Const. Amend. 14, Section l.

"This Constitution, and the laws

of the United States which shall be

made in pursuance thereof, and all

treaties made, or which shall be made,

under the authority of the United

States, shall be the supreme law of

the land; and the judges in every state

shall be bound thereby, anything in

the constitution or laws of any state

to the contrary notwithstanding." U.S.

Const. Art. 6.

The Bahamas Independence Order 1973,

Article 4, Operative July 10, 1973

(A123).

a Treaties

Convention on the Service Abroad

of Judicial and Extrajudicial Documents

in Civil or Commercial Matters, The

Hague, November 15, 1965, Effective

February 10, 1969 (A115).

: § Statutes

Jurisdiction is asserted by

Respondent based upon Section 27 of the’

Securities Exchange Act of 1934 (15

U.S.C. §78aa):

"The district courts of the United

States, and the United States

courts of any Territory or other

place subject to the jurisdiction

of the United States shall have

exclusive jurisdiction of violations

of this chapter or the rules and

regulations thereunder, and of all

suits in equity and actions at law

brought to enforce any liability

or duty created by this chapter or

the rules and regulations there-

under. Any criminal proceeding

may be brought in the district

wherein any act or transaction con-

stituting the violation occurred.

Any suit or action to enforce any

liability or duty created by this

chapter or rules and regulations

thereunder, or to enjoin any viola-

tion of such chapter or rules and

regulations, may be brought in

any such district or in the district

wherein the defendant is found or

is an inhabitant or transacts

business, and process in such cases

may be served in any other district

of which the defendant is an in-

habitant or wherever the defendant

may be found. Judgments and

decrees so rendered shall be

subject to review as provided in

sections 225 and 347 of Title 28.

No costs shall be assessed for or

against the Commission in any

proceeding under chapter brought by

Or against it in the Supreme

Court or such other courts."

Rules

Federal Rules of Civil Procedure

"Rule 4(i) Alternative Provisions

for Service in a Foreign Country.

(1) Manner. When the federal or

state law referred to in subdivision

(e) of this rule authorizes service

upon a party not an inhabitant of or

found within the state in which the

district court is held, and service is

to be effected upon the party ina

foreign country, it is also sufficient

if service of the summons and complaint

is made: (A) in the manner prescribed by

the law of the foreign country for

service in that country in an action in

any of its courts of general jurisdiction;

or (B) as directed by the foreign au-

thority in response to a letter rogatory,

when service in either case is reasonably

calculated to give actual notice; or

him personally, and upon a corporation

Or partnership or association, by de-

livery to an officer, a managing or

general agent; or (D) by any form of

mail, requiring a signed receipt, to be

addressed and dispatched by the clerk

of the court to the party to be served;

or (E) as directed by order of the court.

Service under (C) or (£) above may be

made by any person who is not a party

and is not less than 18 years of age or

who is designated by order of the district

court or by the foreign court. On re-

quest, the clerk shall deliver the

summons to the plaintiff for transmission

to the person or the foreign court or

officer who will make the service.

Mlnienien en «20a 2s

"(2) Return. Proof of service may

be made as prescribed by subdivision

(g) of this rule, or by the law of the

foreign country, or by order of the

court. When service is made pursuant to

subparagraph (1) (D) of this subdivision,

proof of service shall include a receipt

Signed by the addressee or other evidence

of delivery to the addressee satisfactory

to the court.”

"Rule 82. These rules shall not be

construed to extend or limit the juris-

diction of the United States district

courts or the venue of actions

therein."

B. Yearbook of the International Law

Commission

"2. When a successor State [the

Commonwealth of The Bahamas] communicates

to the third State [member nations of

the United Nations, including the United

States] a declaration expressing its

consent to the provisional application of

such treaties pending a decision with

regard to their maintenance in force,

modification or termination, the treaties

shall continue to apply provisionally as

between the successor State and the third

State unless in the case of a particular

treaty:

"(a) The treaty comes into force

automatically as between the States con-

cerned under general international law

independently of the declaration; or

"(b) It appears from the treaty or

is otherwise established that the appli-

cation of the treaty in relation to

successor State would be incompatible

with its object and purpose; or

"(c) Within three months of receiv-

ing the notification the third State in

question has informed the successor

State of its objection to such provi-

sional application of the treaty.”

Yearbook of the International Law

Commission, Art. 4, subd. 2, "Unilateral

Declaration By a Successor State,"

Vol. II (1969).

STATEMENT OF THE CASE

The Consolidated Actions

The Court of Appeals for the

Second Circuit consolidated for review

two appeals by the Petitioner, Robert L.

Vesco, (1) from an order of Judge

Charles E. Stewart, Jr., United States

District Judge for the Southern District

Sat Ss beni

of New York, entered February 1, 1978,

denying a motion pursuant to F.R.C.P.

Rule 60(b) (4) to vacate a default

judgment entered against the Petitioner

on October 5, 1973 (A50); and (2) from

another order (A113) of Judge Stewart

entered on May 3, 1978, denying a

motion by Petitioner in an entirely

different action to vacate a default

judgment. Judge Stewart's opinions in

the two cases are not officially re-

ported. It is these ew opinions that

the Court of Appeals affirmed, and it is

the Court of Appeals decision from

which the Petitioner prays that a writ

of certiorari issue to review the

judgment and decision of the United

States Court of Appeals for the Second

Circuit entered January 24, 1979. (Al)

ai The Basis for Federal Jurisdiction

The Respondent, International

Controls Corp. ("ICC"), instituted the

first action on June 7, 1973, entitled

ICC v. Robert L. Vesco, et al., Civil

Docket No. 73 Civ. 2518 (the "2518

action"). The complaint generally

alleged that the Petitioner, together

with numerous other named defendants,

did by means of interstate commerce and

the national securities exchanges

defraud Respondent and its stockholders

in violation of the Securities Exchange

Act of 1934 (15 U.S.C. §78aa). The

alleged violation of the securities

laws is the sole basis for federal

jurisdiction in the 2518 action.

The second action was commenced

On April 8, 1974, entitled International

a ee ort set

Controls Corp. v. Robert L. Vesco,

Civil Docket No. 74 Civ. 1588 (the

"1588 action"). The complaint alleged

breach of the Petitioner's fiduciary

duty as president and chairman of the

board of directors of ICC, and violation

of Rule 10b-5 of the Rules of the

Securities and Exchange Commission.

Federal jurisdiction was invoked under

28 U.S.C. §§1331, 1332.

3. The District Court Proceedings

"Service" in the 2518 Action

In an order dated July 27,

1973, but entered July 31, 1973, Judge

Stewart appointed Lois S. Yohonn, Esq.,

a lawyer associated with Shea Gould

* Climenko & Kramer, predecessor attorneys

of record for Respondent, ICC, to

“effect service of process in the

[2518] action on defendant, Robert L.

Vesco." (A36) In an order dated

July 29, 1973, but entered July 3l,

1973, Judge Stewart ordered that:

"[Slervice of process upon said

defendant Robert L. Vesco may he

effected by depositing a copy of

the summons and complaint herein

upon the premises of the last

known residence of said defendant

located in Nassau, Bahamas, and

mailing a copy of the summons and

complaint herein to said defendant

at the address of such last known

residence in Nassau, Bahamas."

(A37)

Both applications resulting in the

above orders were granted ex parte, the

grounds for such orders being explained

by Circuit Judge Medina in his Court of

Appeals decision as follows:

"The reason for the order, and

another order to which we shall

refer later, was that from the SEC

proceedings mentioned in the

preliminary part of this opinion

Vesco was known to be not averse

to evading the service of process.

Thus actual delivery of the

summons and complaint to Vesco in

person was not required." (A117)

In an affidavit sworn to on

August 6, 1973, Ms. Yohonn described

her inability to locate the Petitioner

in the environs of Nassau, The Bahamas,

but narrated her valiant efforts in

serving the Petitioner at his "residence,"

afterwards "becoming seriously concerned

for [her personal] safety." (A38)

On the basis of Ms. Yohonn's

affidavit of service, a default judgment

was entered against the Petitioner on

October 5, 1973: (A50) Judge Stewart,

United States District Judge for the

Southern District of New York, sub-

sequently denied Petitioner's motion to

vacate the default judgment despite the

obvious questions raised in Petitioner's

undated affidavit filed November 17,

1977 contesting service. (A80)

On September 7, 1973, Re-

spondent filed an amended complaint.

As to service of the amended complaint,

Judge Stewart authorized Messrs. Bondi

and others to "leave" the process at

the "residence" of the Petitioner in

Nassau, The Bahamas:

"ORDERED, that service of process

upon any of said defendants

[including Petitioner] may be (i)

by any method of service of

process authorized by Rule 4 of

the Federal Rules of Civil Proce-

dure; or (ii) as to individual de-

fendants, by leaving a copy of the

summons, and amended complaint

herein upon the premises of such

defendant's last known residence

located in Nassau, Bahamas and

mailing a copy thereof to such

defendant at either the Post

Office Box of such defendant or to

the address of such last known

residence of such defendant in

Nassau, Bahamas...." (A29)

The Court of Appeals affirmed the

District Court's holding that service

of the amended complaint was defective

on the grounds that the "summons and

[amended] complaint had not been 'left'

at Vesco's residence." (A29)

"Service" in the 1588 Action

Upon the affidavit of Ms.

Yohonn sworn to on April 8, 1974 (A99)

Judge Stewart issued an order entered

April 9, 1974 appointing David M.

Butowsky, a member of the firm of

Gordon Hurwitz Butowsky Baker Weitzen &

Shalov, and appointed special counsel

to ICC by Judge Stewart. (A102)

In his affidavit sworn to on

April 22, 1974, Mr. Butowsky described

how he served process in the 1588

action at the "premises" of the Peti-

tioner:

"Upon my arrival at such premises

I proceeded to a gate and was

confronted by two men who stopped

me from entering upon the premises.

I held out the summons and complaint

and stated that I would like to

hand the envelope to Mr. Vesco.

One of the guards stated to me 'we

are instructed not to accept any

papers’. Thereupon I dropped the

envelope on the driveway and

requested the guard to hand it to

Mr. Vesco. He remained mute and I

took leave of the premises." (A107)

On the basis of the described service,

default judgment was entered against

the Petitioner on September 11, 1974.

(A110) Judge Stewart denied Petitioner's

motion to vacate in an endorsed decision

entered May 3, 1978. (A113)

4. The Decision of ‘the Court of Appeals

Upon appeal to the Second

Circuit, the 2518 and 1588 actions

were consolidated, Medina, J., speaking

for the Court of Appeals, affirmed

Judge Stewart's decision in the District

Court upholding service of the summons

and complaint by the methods above-

described, and agreeing with Judge

Stewart that service of the amended

complaint was defective and juris-

dictionally fatal. (Al1-33)

In affirmino the lower court,

the Court of Appeals held that the

international Convention on the Service

Abroad of Judicial and Extrajudicial

Documents in Civil or Commercial

Matters was inapplicable to service of

process in the Commonwealth of the

Bahamas (A24-27), or if applicable the

methods of service prescribed hy

F.R.C.P. Rule 4 controls the jurisdictional

question. (A27)

Under the several and various

methods of service as directed by the

District Court, the Court of Appeals

saw no material differences in the

interpretation and application of the

Orders of service to justify inconsistent

results between service of the amended

complaint and the other process.

REASONS FOR GRANTING THE WRIT

THE COURT OF APPEALS, BY NOT

SETTING ASIDE THE SERVICE IN

THE 2518 AND 1588 ACTIONS, HAS

ACCEPTED AND CONDONED A VIOLATION

OF PETITIONER'S RIGHT TO DUE

PROCESS OF LAW WHICH CALLS FOR

THE EXERCISE OF THIS COURT'S

POWER OF SUPERVISION.

The Departure of the District Court

from the Accepted and Usual

Course of Judicial Proceedings

The Court of Appeals reasoned

that F.R.C.P. Rule 4(i) (1) (E) permitted

the District Court "to tailor the

manner of service to fit the necessities

of [the] particular case." (A19)

Advisory Committee's Note of 1963 to

Rule 4(i) (1) (E). The Court of Appeals

relies on the decisions of this Court

in upholding the methods of service in

these actions:

"The Supreme Court has long

recognized that no one form of

substitute service is favored over

any other so long as the method

chosen is reasonably calculated,

under the circumstances of the

particular case, to give the de-

fendant actual notice of the

pendency of the lawsuit and an

opportunity to present his defense.

The constitutional determination

is derived from the necessities of

each case rather than from a

preconceived notion of what will

provide actual notice in every

case." (A19-20)

Each of the methods of service under

Rule 4(i), including service "as

directed by order of court" under

subdivision 4(i) (1) (E), is and should

be calculated to give "actual notice":

(1) subdivision "(A)" prescribes service

according to the rules of the subject

foreign country; (2) subdivision "(B)"

requires service to be "reasonably

calculated to give actual notice"; (3)

subdivision "(C)" prescribes personal

delivery; and (4) subdivision "(D)"

necessitates a "Signed receipt."

Contrary to the view of the Court of

Appeals, the scheme of Rule 4(i) does

provide for a preconceived notion of

actual notice to be applied to the

necessities of the case. Judge Medina

would have the exigencies of the case

dictate whether actual notice is feasible

Or even necessary. The initial question

determining the method of service under

Rule 4(1i) (1) (E) "as directed by order

of ccurt" is how actual notice may be

given under the particular circumstances

of the case, and not what type of

notice (actual or otherwise) the circum-

stances will bear:

"But when notice is a person's

due, process which is a mere

gesture is not due process. The

means employed must be such as one

desirous of actually informing the

absentee might reasonably adopt to

accomplish it. The reasonableness

and hence the constitutional

validity of any chosen method may

be defended on the ground that it

is in itself reasonably certain to

inform those affected ... or where

conditions do not reasonably

permit such notice, that the

form chosen is not substantially

less likely to bring home notice

than other of the feasible and

customary substitutes. Mullane v.

Central Hanover Bank & Trust Co.,

339 U.S. 306, 314-15 (1950) ."

(Citations omitted) (Emphasis

supplied)

Therefore, both the District

Court and the Court of Appeals erred as

to the basic premise of Rule 4(i): an

order directing service under sub-

division "(E)" must in the first instance

conform the method of service to giving

actual notice with secondary regard to

the hardship created under the circum-

stances.

In the present case, there

was no real attempt to personally serve

the Petitioner. In both the 2518 and

1588 actions, service was effected in

less than 24 hours of the arrival in

Nassau, the Bahamas, of the appointees.

No effort to personally serve a prospec-

tive defendant need ever be necessary

under the interpretation by the Second

Circuit of Rule 4(i). Customarily,

fair notions of due process require an

attempt to serve a defendant personally

before substituted service iss permitted

(e.g. N.Y. Civil Practice Law and Rules

§308 subd. (4) so provides).

Furthermore, the more difficult

the circumstances of serving a prospec-

tive defendant, the more the parties

interested in the case, including the

‘attorneys appearing of record in one

capacity or another, should disassociate process includes the voluntary surrender

themselves from the crucial service of of prospective defendants to marauding

process. Ms. Yohonn was associated process servers. Even under general

with the attorneys of record for the notions of due process within a civilized

Plaintiff-Respondent, ICC; Mr. Butowsky | system of law, no natural person has

was appointed Special Counsel for ICC. | been compelled to make himself or

In hearing an application by an attorney | herself available for service of process.

representing a petitioning creditor for . To assume otherwise would dispense with

authorization to serve crucial process } service of process in its entirety,

in the action, the Second Circuit | except for retaining archaic methodology

stated that an "attorney stands in the | under historical legal tradition.

Same relationship as the party" and | Under the circumstances here

cannot, and should not be appointed as presented, both lower courts so far

process server. In Re Evanishyn, 1 F.R.D. departed from the accepted and usual

202 (S.D.N.Y. 71939), aff'd on other course of judicial procedure, as to

grounds 107 F.2a 742 (2a Cir. 1939). call for an exercise of this Court's

It appears from the Court of | power of supervision. The particular

Appeals decision in this case that the | methods of service described in the

Second Circuit's present view of due orders of Judge Stewart (A36 and A102)

do not comport with due process. There

26 27

is no real material difference between

"depositing" process and "leaving"

process at the last known "residence"

of the Petitioner.

Both Judges Medina and

Stewart agreed that Ms. Yohonn had

complied with the order directing

service by "depositing" the process at

the purported "residence" of the

Petitioner, but that service of the

amended complaint in the 2518 action

was defected and therefore invalid

because the process happened to be

"thrown back" and carried off in the

process server's car, thereby not being

"left" at the premises. (A28-29) The

deficiency of due process concerning

each of the attempted "services" is

blatant considering the inconsistent

results between substantially the same

types of service of the original and

amended complaints. It would appear

that if a mere "deposit" of the process

was required, then whatever happened to

the process thereafter is inconsequential;

if merely "leaving" the process was all

that was necessary, then whatever

happened to the process after being

"left" is also inconsequential. The

reasonable conclusion is the same in

each instance. The prospective de-

fendant receives no actual notice of

the process under each "method," but is

subject to in personam jurisdiction in

one instance, but not in the other.

Either all the services of process are

valid, or all are defective.

Allowing Judge Stewart to

arbitrarily interpret his orders after

the fact is abhorrent to standards of

due process. The obvious question here

is whether the orders directing service

were "tailored" to the circumstances,

or whether the circumstances of service

were "tailored" to the terms of the

orders.

A prospective defendant

should have the right firstly, to know

that he or she has been served with

process (i.e. "actual notice"), and

secondly, when he or she has been

properly served: "The means employed

must be such as one desirous of actually

informing the absentee might reasonably

adopt to accomplish it." Mullane v.

Central Hanover Bank & Trust Co., 339

U.S. at 314 (1950). No solace can be

found in the fact that a prospective

defendant is aware of judicial proceed-

ings: "“([NJo jurisdiction is acquired

over a defendant defectively served

merely because he has full knowledge of

the proceedings against him." Wuchter

v. Pizzutti, 276 U.S. 13, 24 (1928).

Kadet-Kruger & Co. v. Celanese Corp. of

Amer., 216 F.Supp. 249 (N.D. Ill.

1963).

F.R.C.P. RULE 4(i) (1) (E) MUST BE

APPLIED WITHIN THE TERMS

OF THE INTERNATIONAL CONVENTION

ON THE SERVICE ABROAD OF

JUDICIAL AND EXTRAJUDICIAL

DOCUMENTS IN CIVIL OR

COMMERCIAL MATTERS

A. The Status of the Convention

"Congress has undoubted power

to regulate the practice and procedure

of federal courts and may exercise that

power by delegating to the Supreme

Court or other federal courts authority

to make rules not inconsistent with the

statutes or Constitution of the United

States. 32 Am.Jr.2d, Federal Practice

and Procedure, §15. Although the

Federal Rules of Civil Procedure have

the force and effect of a federal

statute, they are not accorded the

status of "federal law" and cannot be

inconsistent with the statutes or

Constitution of the United States.

Sibbach v. Wilson & Co., 312 U.S.1l, 9-

10 (1940) reh. denied 312 U.S. 713.

"Plainly the Rules are not acts of

Congress and can not [sic] be treated

as such." 312 U.S. at 18.

' The United States Constitution

provides as follows:

"This Constitution, and the laws

of the United States which shall

be made in pursuance thereof, and

all treaties made, or which shall

”

be made, under the authority of

the United States, shall be the

supreme law of the land; and the

judges in every state shall be

bound thereby, anything in the

constitution or laws of any state

to the contrary notwithstanding."

U.S. Const. Art. 6

By the Constitution a treaty has the

same status as an act of congressional

legislation. Both are declared to be

the "supreme law of the land" and no

Superior efficacy is given to either

one over the other. Whitney v. Robinson,

124 U.S. 194 (1888).

The Federal Rules of Civil

Procedure, although having the force

and effect of federal law, are not

accorded the same status as the Consti-

tution, federal statutes, or treaties.

The Rules are not the "supreme law of

the land." Sibbach v. Wilson & Co.,

supra .

In Tamari v. Bache & Co., 431

F.Supp. 1226 (N.D. Ill. 1977), the

District Court considered F.R.C.P. Rule

4(i) in relation to the international

Convention on the Service Abroad of

Judicial and Extrajudicial Documents in

Civil or Commercial Matters (the

"Convention"), The Hague, November 15,

1965, entered into force February 10,

1969, 20 U.S.T. 361, TIAS No. 6638, 658

UNTS 163. (A115) The District Court

for the Northern District of Illinois

stated, "(Wle are persuaded by the

reasoning of the California court in

finding that the treaty [i.e. Convention]

was not meant to abrogate the provisions

of Rule 4, as evidenced by the fact

that there has been no change in the

provisions of the Rule since the treaty

became effective." 431 F.Supp. at

1229, citing Shoei Kako Co., Ltd. v.

Superior Court, 33 C.A.3d 808, 109 Cal.

Rptr. 402 (1973).

Agreeably, the Convention did

not "abrogate" the provisions of Rule

4(i) in that the treaty did not abolish,

nullify or replace the methods of

service described in the Rule. However,

the Rules of Civil Procedure cannot be

in conflict, or inconsistent with the

"supreme law of the land," i.e. the

Constitution, federal statutes and

relevant treaties. Sibbach v. Wilson &

Co., supra. When a treaty and a

federal procedural rule relate to the

same subject, the courts should endeavor

to construe both the treaty and the

rule so as to give effect to each

without violating the language of the

other. Should the language and effect

of the rule be totally unsalvageable in

relation to similarly applicable provi-

sions of a treaty, the federal procedural

rule should be subordinated to the

provisos of the treaty.

In the present case, Rule

4(i) (1) (E) of the Federal Rules of

Civil Procedure provides for service

"as directed by order of the court."

Not only must such an order provide for

actual notice in a manner consistent

with the other subdivisions of Rule

4(i), but the prescribed method of

service under such an order must comply

with the terms of the Convention where

applicable.

An order issued under Rule —

4(i) (1) (E) cannot be construed as

ushering a prospective defendant into

federal court thereby extending in

personam federal jurisdiction into

foreign countries, where jurisdiction

had not previously existed, or in

contravention of a treaty, the "supreme

law of the land":

"These rules shall not be construed

to extend or limit the jurisdiction

of the United States district

courts or the venue of actions

therein." F.R.C.P. Rule 82.

Thus, the terms and methods of service

described in an order issued under Rule

4(i) (1) (E) must comply with the provi-

sions of the Convention as the "supreme

law of the land." U.S. Const. Art. 6.

B. The Applicability of the Convention

The Court of Appeals for the

Second Circuit asserts that, "It is

undisputed that the Bahamas has never

become a direct signatory to the

Convention." (A25)

On July 10, 1973, the Common-

wealth of the Bahamas became independent

from the United Kingdom of Great Britain.

In an official letter dated July 10,

1973, from the Office of the Prime

Minister of the Bahamas to the Secretary

General of the United Nations, the

Prime Minister expressed his continuing

"desirability of maintaining existing

legal relationships, and conscious of

its [the Commonwealth of the Bahamas]

Obligations under international law to

honour its treaty commitments acknowledges

that many treaty rights and obligations

of the Government of the United Kingdom

in respect of the Bahamas were succeeded

to by the Commonwealth of the Bahamas

upon Independence by virtue of customary

international law." (Emphasis supplied)

(A119) The letter presumes that the

Commonwealth of the Bahamas succeeded

to "each treaty" entered into by the

United Kingdom on behalf of its con-

stituents, including the Bahamas,

unless the treaty had previously lapsed

"by virtue of customary international

law":

"It is desired that it be presumed

that each treaty has been legally

succeeded to by the Commonwealth

of The Bahamas and that action be

based on this presumption until a

decision is reached that the

treaty should be regarded as

having lapsed. Should the Govern-

ment of the Commonwealth of The

Bahamas be of the opinion that it

has legally succeeded to a treaty,

and wishes to terminate the

operation of the treaty, it will

in due course give notice of

termination in the terms thereof."

(Al120-21)

Although the Court of Appeals

cites many unofficial sources (including

the Memorandum to United States Marshalls

Concerning Instructions for Serving

Foreign Judicial Documents in the

United States and for Processing Re-

quests by Litigants in This Country for

Service of American Judicial Documents

Abroad, Dep't. of Justice Memo No. 386,

Revision 2, June 15, 1977) (A27),

contending that the Convention does not

apply to foreign service of United

States documents in The Bahamas, there

was no discussion of international law,

or of whether the Commonwealth of The

Bahamas gave notice of the termination

Or inapplicability of the Convention as

provided in the above quoted letter, or

any official citation from Bahamian

sources as to the status of the Conven-

tion in the independent Commonwealth.

Under generally accepted

principles of international law, until

express termination by the successor

State, all treaties provisionally

remain in effect:

"2. When a successor State [the

Commonwealth of The Bahamas]

communicates to the third State

[member nations of the United

Nations, including the United

States] a declaration expressing

its consent to the provisional

application of such treaties

pending a decision with regard to

their maintenance in force, modifi-

cation or termination, the treaties

shall continue to apply provi-

sionally as between the successor

State and the third State unless

in the case of a particular treaty:

"(a) The treaty comes into force

automatically as between the

States concerned under general

international law independently of

the declaration; or

"(b) It appears from the treaty

or is otherwise established that

the application of the treaty in

relation to successor State would

be incompatible with its object

and purpose; or

"(c) Within three months of

receiving the notification the

third State in question has

informed the successor State of

its objection to such provisional

application of the treaty."

Yearbook of the International Law

Commission, Art. 4, subd. 2,

"Unilateral Declaration By a

Successor State," Vol. II (1969)

(Emphasis supplied)

The official letter from the

Office of the Prime Minister of the

Commonwealth of the Bahamas (A119) is a

unilateral declaration by the Common-

wealth, as a “successor State" of the

United Kingdom, to member nations of

the United Nations, that each treaty,

including the Convention signed by the

United Kingdom, provisionally remains

in effect unless it has previously

lapsed, or express notice of termination

is received from the Bahamian government.

Unquestionably, prior to

independence, the Convention formed part

of the laws of The Bahamas Islands as a

member of the United Kingdom, a direct

signatory of the treaty. Subsequent to

independence on July 10, 1973, until

express declaration to the contrary, and

an act of legislation by the Bahamian

Parliament, the Convention provisionally

formed a part of the laws of the inde-

pendent Commonwealth of The Bahamas.*

* Under British commonwealth law,

treaties remain in full force and effect

until termination or alteration by an act

of Parliament. And when a treaty affects

existing domestic law, only an act of

legislation (in this case Bahamian legis-

lation) may alter or terminate the

provisos of an international treaty

entered into for the benefit of common-

wealth nations, such as the Bahamas, by

the United Kingdom: "Within the British

Empire there is a well-established rule

that the making of a treaty is an execu-

tive act, while the performance of its

obligations if they entail alteration of

the existing domestic law requires legis-

lative action." Attorney General for

Canada v. Attorney General for Ontario,

A.C. 326 per Ld. Atkins Privy

Council.

Moreover, as part of the laws

of The Bahamas prior to independence, the

Convention remained provisionally in

effect thereafter under Section 4 of ‘the

Bahamas Independence Order 1973 which is

an integral part of the Constitution of

the Commonwealth of The Bahamas. The

Independence Order provides that the

laws existing prior to Bahamian inde-

pendence are preserved and guaranteed con-

tinuity through and after independence

until amended or annulled by Parliament

of the Commonwealth of The Bahamas.

(A122)

In writing the Court of

Appeals decision, Medina, J., speaking

for the Court, is unsure of the Conven-

tion's Bahamian legal status even after

citing many unofficial U.S. sources,

and attempts to gloss over the issue in

an obvious misapplication of case law

to the present circumstances:

"Moreover, there is much to be

said in support of the view that,

even if the terms of the Convention

were applicable, the Convention

was not intended to abrogate the

methods of service prescribed by

F.R.C.P. Rule 4." (A27)

There should be no question that service

under Rule 4(i) (1) (E) must comply with

treaties relating to the same subject

matter. The Convention did not “abro-

gate" Rule 4, however, that is not to

say that Rule 4 need not be construed

within the terms of the Convention,

especially where service is "as directed

by order of the court" under subdivision

"(E)." The Convention is the “supreme

law of the land" to which federal

procedural rules are subordinate.

The Court of Appeals surely

so far departed from the accepted and

“ customary principles of: international

law and procedure as to call for an

exercise of this Court's powers of

supervision.

S. The Burden of Proving Service

As to any alternative arguments

that the Petitioner never demonstrates

that the service of process employed in

the instant case does not meet the

terms of the Convention, the burden of

proof is misplaced. The Respondent-

Plaintiff, seeking to invoke in personam

federal jurisdiction over the Petitioner-

Defendant, has the burden of establishing

service of \procéss in conformity with

applicable law, rules and treaties, and

has the obligation to come forward with

the facts. Amba Marketing Systems, Inc.

v. Jobar Intern'l, Inc., 551 F.2d 784

(9th Cir. 1977). The party seeking to

invoke the in personam jurisdiction of

the federal court has the burden of

proof, and the onus may not be shifted

to the party challenging jurisdiction.

Product Promotions, Inc. v. Cousteau,

495 F.2d 483 (5th Cir. 1974); Arcata

Graphics Corp. v. Murrays Jewelers &

Distributors, Inc., 384 F.Supp. 469

(S.D.N.Y. 1974).

CONCLUSION

For the reasons hereinabove

stated, the Petitioner respectfully

submits that a writ of certiorari

should issue to review the judgment and

opinion of the United States Court of

Appeals for the Second Circuit.

Respectfully submitted,

Law Offices of

Robert D. Foglia

530 Fifth Avenue

New York, New York 10036

(212) 697-8772

(201) 488-4433

APPENDIX

UNITED STATES COURT OF APPEALS

Vor tus Seconp Circurr

r.%

Nos. 159 & 323—August Term, 1978.

(Argued October 6, 1978 Decided January 24, 1979.)

Docket Nos. 78-7279 & 78-7092

INTERNATIONAL Controis Corp., .

Plaintiff-Appellee,

—

Rosert L. Vesco,

Defendant-A ppellant.

INTERNATIONAL Controts Corp.,

Plaintiff-Appellee,

—vV Pee

Rozsert L. Vesco, Harry L. Sears, Frank G. Bearry,

Norman LeBuano, Stan.ey Graze, Mizv0on F. Meissner,

Urricu J. Srnickier, Ricnarp E. Cray, Wisert J.

Syires, Frevenic J. Weymar, Gitperr R. J. Straus,

C. Henry Buuv III, Ratpx P. Dopp, Atwyn Elsen-

HAVER, Geonce PHiLuirz, Jor Gravy, Sairuey Baey,

Vrsco & Co., Inc., IOS Lrp., Courumsus Trust Company,

Limi. », Basnamas Commonwratra Bank, InrTerna-

TIONAL Bancorp, Kitmorey Investments Lrp., VaLue

Carrrau Lirp., GLopaL Houpines Lrp., GuopaL Financia.

Lrv., Butters Bank, Lip. (Now Known as Wao Ho.p-

xcs Lrp.), Anian J. Butter, Bank Cantrape Lrtp.,

Famriztp Aviuvrion Coxrrorarion, Fainrienp Gexenan

Corroration, Skyways Leastne Corporation and Ma-

RINE Miptanp Bank, New York,

Defendants,

Rozert L. Vesco,

Defendant-A ppellant.

Before:

Mepina and Mansrievp, Circuit Judges,

and Warp, District Judge.*

Consolidated appeals from two orders of the District

Court for the Southern District of New York, Judge

Charles E. Stewart, Jr.

In these two consolidated appeals, Robert L. Vesco

appeals from two orders denying: (1) a motion to vacate

a default judgment entered against Vesco on October 5,

1973; and (2) a motion in an entirely different action to

vacate another default judgment entered against Vesco

on September 11, 1974. The orders in each of these two

cases are affirmed, with costs. The opinions below have not

been officially reported.

Rosert D. Foctia, New York, N.Y., for Defen-

dant-A ppellant.

Mitton S. Goutp, New York, N.Y. (Daniel L.

Carroll, Thomas J. Johnson and Shea

Gould Climenko & Casey, New York, N.Y.,

on the brief), for Plaintiff-Appellee.

ae.

° District Judge of the Southern District of New York, sitting by

designation.

ee a ee Te

Mepina, Circuit Judge:

We have before us two consolidated appeals by Robert

L. Vesco. The first is from an order of Judge Charles

E. Stewart, Jr., dated February 1, 1978, denying a motion

pursuant to F.R.C.P. 60(b) (4) by Vesco, on certain papers

and “on all the proceedings heretofore had herein” to

vacate a default judgment entered against him on October

5, 1973. Th: second is from another order of Judge

Stewart entered on May 3, 1978, denying a motion by Vesco

in an entirely different action, also made “upon all of

the proceedings heretofore had herein,” to vacate a default

judgment entered on September 11, 1974. We shall proceed

with the first appeal, leaving the second until the end of

this opinion. Judge Stewart’s opinions in the two cases

are not officially reported.

After probing and analyzing a considerable number of

side issues, digressions and a morass of procedural detail

raised in the briefs and on the oral argument of the ap-

peals, we have concluded to affirm, as dispositive of the

two appeals, Judge Stewart’s findings that: (1) the service

of the summons and complaint on Vesco on July 30, 1973

at his Brace Ridge Road residence in Nassau, Bahamas,

gave the Court in personem jurisdiction over Vesco (73 Civ.

2518) ; and (2) the service of the summons and complaint on

Vesco on April 17, 1974 in the separate action in the South-

ern District of New York (74 Civ. 1588) at the same Brace

Ridge Road residence in Nassau, Bahamas, gave the Court

in personam jurisdiction over Vesco. With regard to the

attempted service of the amended complaint on October

24, 1973, referred to in Vesco’s brief on the first of the

two appeals, we also approve Judge Stewart’s finding that

this service did not give the Court in personam jurisdiction

over Vesco. We do not reach Judge Stewart’s ruling that

Vesco’s motion to vacate the default judgment of October

5, 1973 was not timely made.

As this Vesco controversy will probably reach this Court

again from time to time for some years to come, we think

it may spare other judges the time and effort we have

spent studying the briefs and the twelve large manila

folders in the Clerk’s Office containing the “proceedings

heretofore had herein,” and constituting the original

record in Appeal 78-7092, if we make a preliminary state-

ment describing the salient features of the prior proceed-

ings and especially the prior opinions filed by various

panels of this Court. This we think is especially important

as it will serve to place the matters dispositive of these

appeals in their proper relation to what has already been

decided and what has not already been decided.

Part Oxr

Prior History of the Case.

For some years prior to 1972 the SEC took note of

the conduct of Vesco and his manipulation of corporate

entities, spin-offs, the shuffling about of individual ofticers

and directors and the use of foreign banks as depositaries

of the alleged hundreds of millions of dollars he is said

to have misappropriated from investors in violation of

the federal securities laws. The result of the ensuing in-

vestigation was that on November 27, 1972 the Commission

filed a suit against Vesco, 20 other individuals and 21

corporate entities in which the complaint, based upon a

vast array of alleged wrongdoing by Vesco and his asso-

ciates, prayed for extensive legal and equitable relief.

This action in the District Court for the Southern District

of New York is entitled Securities and Exchange Com-

ten Oe

wee

ate Ge Brest AST OE

PS ae ae PD A

mission v. Robert L. Veseo, No. 72 Civ. 5001.2 The com-

plaint in this action alleged “a scheine of extraordinary

magnitude, deviousness and ingenuity in violation of the

anti-fraud provisions of the Securities and Exchange Act

of 1934 * * * masterminded by Vesco.” One of the defen-

dants was International Controls Corp., alleged to be a

principal vehicle used by Vesco to implement various fea-

tures of the scheme to defraud investors. On March 16,

1973 ICC consented to the entry of final judgment against

it in the SEC action, and Judge Stewart, in lieu of the

appointment of a receiver sought by the SEC, appointed

a Special Counsel and a new interim board of directors

to represent ICC.

David M. Butowsky, the Special Counsel appointed by the

Court as authorized by the terms of the consent judg-

ment, on June 7, 1973 filed in the District Court for the

Southern District of New York the complaint in the ac-

tion in which we have the first of the two consolidated

appeals (78-7092). In this action plaintiff ICC sued 32

individual and corporate defendants, 22 of whom were

defendants in the already pending SEC action (72 Civ.

1 Securities and Exchange Commission v. Robert L. Vesco, Norman

LeBlanc, Milton F. Meissner, Ulrich J. Strickler, Stanley Craze, Frank

G. Beatty, Richard E. Clay, Wilbert J. Snipes, James Roosevelt, Frederic

J. Weymar, Gilbert K. J. Straub, C. Henry Buhl, I1/, Allan.C, Butler,

Lawrence B. Richardson, John D. Schuyler, Edward Stoltenberg, Howard

F. Cerny, Georges Phillipe, Allan F. Conwill, Raymond W. Merritt,

John 8. D'Alimonte, 10S Ltd., International Controls Corp., Bahamas

Commonwealth Bank, Ltd., Overseas Development Bank Luxembourg

8.A., International Bancorp Ltd., Value Capital Ltd., Butlers Bank

Ltd., Transglobal Financial Services Ltd., Kilmorcy Investments Ltd.,

Global Holdings Ltd., Global Financial Ltd., 1.1.T. Management Co.,

S.A., F.0.F. Management Co., Ltd., Venture Management Co., Ltd.,

Transglobal Growth Fund Management Co., Ltd., Bank Cantrade, Ltd.,

Venture Fund (International), N.V., Fund of Funds, Ltd., Transglobal

Growth Fund, Ltd., 117, An International Investment Trust, Consulentia

Verwaltungs, 4.G., No. 72 Civ. 5001 (S.D.N.Y. Filed November 27,

1972).

5001) and 10 of whom were not. These new defendants

included Vesco & Co., Inc. and various corporations con-

nected in one way or another with a Boeing 707 aircraft

purchased for $1,375,000 and refurbished by an expendi-

ture of $600,000 to $700,000 “for the personal comforts,

conveniences and zest for living” of Vesco and with the

yacht Patricia III, located in Miami, Florida, {9 be fitted

up at great expense to suit Vesco’s “Sybaritic testes.” On

June 20, 1973, Vesco, Patricia Vesco, his wife, « ::1 Vesco’s

family boarded the yacht, and Vesco and his family re-

mained its sole users until shortly before it was put into

Miami for repairs.

The first phase of this case (International Controls

Corp. v. Vesco, 73 Civ. 2518 (S.D.N.Y.)? to reach this

Court was an appeal from an order of Judge Stewart

granting a preliminary injunction, among other things

enjoining the contro) or disposition of certain assets, in-

cluding the Boeing 707 and the yacht Patricia III. This is

Appeal No. 1. The opinion affirming Judge Stewart’s in-

junction, with a certain modification, was written by Chief

Judge Kaufman, for a panel consisting of himself, Judge

Mansfield and Judge Mulligan, the latter of whom dis-

sented in part. This Appeal No. 1 was argued on Decem-

ber 10, 1973, decided on January 15, 1974, and it is reported

as International Controls Corp. v. Vesco, 490 F.2d 1334

(2d Cir.), cert. denied, 417 U.S. 932 (1974).

The part of that opinion pertinent to these two present

consolidated appeals states that Vesco was not one of the

appellants but Vesco & Co., Inc. was one of the appellants.

The default j.dgment of October 5, 1973 is mentioned (490

F.2d at page 1350); also that Vesco & Co., Inc, was in-

corporated by Vesco on July 12, 1972 as an estate planning

2 See the title page of this opinion.

ee.

Pre.

el Ta ie dt Bt BS OR Le Le

device, all the voting common stock of which is owned

by Patricia Veseo as custodian for Vesco’s children, and

the officers are Mrs. Veseo and Shirley Bailey, Vesco’s

personal secretary (490 F.2d at page 1349). Judge Stew-

art, in the findings upon which the preliminary injunction

was based, stated that “Vesco & Co. is a corporate alter

ego for defendant Robert Vesco and was created by him

during and after the perpetration of the fraud charged

in the complaint.” This is the finding referred to in Chief

Judge Kaufman’s opinion (490 F.2d at page 1350). Be-

cause of the relevance of this alter ego finding to the

disposition of the two appeals now before us, however,

we think it proper to state that, at a later date and on

August 22, 1975, in connection with a different appli-

cation in this same action, Judge Stewart repeated this

finding. We shall find that an appeal was taken to this

Court and the upshot was that the finding was not re-

versed or modified and that it stands now as the law of

this case for all purposes. We shall discuss this particular

matter later in some detail.

For our present purposes this opinion in Appeal No. 1

by Chief Judge Kaufman, made as above stated on the

appeal from the order of Judge Stewart granting the pre-

liminary injunction, also refers to the fact that Vesco

had already absented himself from the territorial limits

of the United States, had refused to return and was “safely

ensconced in Nassau, the Bahamian capital” (490 F.2d at

_ page 1338). The order to show cause, on which this motion

for the preliminary injunction was made, is dated June

8, 1973.

After the affirmance of the order of Judge Stewart

granting the preliminary injunction, Special Counsel for

plaintiff proceeded with the utmost diligence to try to

reach assets to satisfy the default judgment, which did

not provide for the payment of any specific sum as the

damages had not yet been proved. This led to extended

and time-consuming hearings which resulted in a finding

of “specified damages of $2,433,466.72, but left open the

possibility that ICC might be able to prove further dam-

ages in subsequent proceedings.” A second default judy-

ment in this amount was entered against ‘esco on July

16, 1974. All this time, quite obviously ware of the

allegations in the complaint in this action and of all the

proceedings above referred to, Vesco was sitting in the

wings leaving it to his alter ego to do the appealing and the

presentation to this Court of the reasons for reversal of

some or all of Judge Stewart's rulings. One of these argu-

ments asserted by Vesco & Co., Inc. was that because of

the alleged defective service of process the judgment

against Vesco was void. And this is precisely the prin-

cipal question asserted by Vesco in the first of these two

consolidated appeals now before us for decision, As he

had not directly submitted to the personal jurisdiction

of the court, Judge Stewart in the hearings above re-

ferred to properly refused to permit Vesco & Co., Ine.

to assert or prove defenses personal to Vesco. At this

point it is well to remember that the complaint alleges

the facts from which the alter ego relationship is to he

inferred and Vesco by his default has placed none of the

allegations of the complaint in issue.

On May 20, 1975 1CC moved before Judge Stewart for

an order of execution to reach the assets of Vesco & Co.,

Inc, to satisfy the default judgment against Vesco. On

August 22, 1975 Judge Stewart ruled that Vesco & Co.,

Inc. was the alter ego of Vesco and directed both Vesco

and Vesco & Co., Inc. to turn over their ICC stock to a

receiver. Vesco & Co., Inc. took an appeal from this de-

cision to our Court. The resulting opinion is reported as

International Controls Corp, v. Vesco, 5385 W.2d 742 (2d

Cir, 1976), cert. denied, 429 U.S. 1088 (1977). This Appeal

No. 2 came on for argument before a different panel con-

sisting of Judges Kaufman, Smith and Anderson, The

appeal was argued on March 8, 1976 and dacided on May

13, 1976. The Court, in an opinion by Judge Smith, did

not decide the merits or any part thereof, Instead, its

attention was diverted by counsel for Vesco & Co., Ine.

to the interesting questions of finality and compliance with

Rule 54(b). Since the judgment appealed from was against

Vesco and not the other defendants, it was held that fur-

ther damages might be proved later; and, as the complaint

contained multiple claims, this Court stated that it could

not discern with the clarity required by the final judg-

ment rule just how much of the judgment was final and

how much was not. The Court was also unsure as to

whether the single Section 54(b) certification was intended

to apply not only to the first default judgment but also

to the second. Accordingly, on May 13, 1976, the case was

remanded to Judge Stewart. While the opinion makes no

reference to Vesco, the fact is that extradition to face

the three indictments described in footnote 1 to Chief

Judge Kaufman's opinion on Appeal No. 1 had been re-

fused and Veseo was still at large and eluding process

servers as will more fully appear later in this opinion.

However disheartening the further delay caused by this

remand might have seeined to Special Counsel for appellee,

he took immediate steps to rernedy the procedural defects

that had been brought to the attention of the Court by

counsel for Vesco & Co,, Inc. So, upon proper notice to

Vesco & Co., Inc. and to Veseo by order to show cause

dated May 21, 1976, and on May 27, 1976, despite urgent

and prolonged arguments on behalf of Vesco & Co., Inc.

for further hearings and further delay, Judge © owart

prepared and signed a new and amended judguxat en-

tered May 27, 1976, in which the part of the claims as-

serted in the complaint that was covered by the judgment

and the part of the claims asserted in the complaint that

was not covered by the judgment were made unmistakably

clear. He also certified, in compliance with the require-

ments of Rule 54(b), that as to the amended judgment

thus defined “there is no just reason for delay in entering

a final judgment.”

This led to a fantastic series of events and a new spate

of procedural smoke sereens by Vesco & Co., Ine. which,

whether so intended or not, resulted in further delays in

bringing Vesco to justice,

Veseo & Co., Inc. appealed to this Court from the

amended judgment, entered on May 27, 1976 on the remand.

But this notice of appeal was served on July 7, 1976, nine

days too late. The flimsy excuses for this “mistake” are

exposed in Judge Stewart's opinion of October 27, 1976.

On August 4, 1976 appellee moved in this Court to dis-

miss the appeal; on August 31 Vesco & Co., Inc. moved in

the District Court, pursuant to Rule 4(a) of the Federal

Rules of Appellate Procedure for an extension of time

within which to file a notice of appeal, which was denied.

On September 14, 1976 this Court heard appellee’s mo-

tion to dismiss and a cross-motion by Vesco & Co., Ine,

for reconsideration of the remand. On the same day, by

order of Judges Anderson, Mansfield and Mulligan, the

motion for reconsideration was denied and the motion to

dismiss was granted “for lack of jurisdiction.”

Accordingly, as no effective appeal was taken by Vesco

& Co., Inc. from the order of Judge Stewart holding that

Vesco & Co., Inc. was the alter ego of Vesco, that ruling

is now the law of this case. Moreover, it is the key to

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reaching the assets of Vesco, who, for all these years has

by one means or another frustrated every attempt to bring

him back to the United States and cause him to disgorge

the avails of his misconduct, including the huge sums said

to be deposited in seeret accounts in banks in Switzerland,

Liechtenstein and elsewhere. p

In any event, as of September 14, 1976 it appeared that

Special Counsel for appellee might then be able to get

at Vesco’s assets in Vesco & Co., Inc. But Vesco merely

shifted lawyers and tried something entirely new. This

was a motion in the District Court to vacate the May 27,

1976 judgment pursuant to Rule 60(b) of the F.R.C.P.

The main thrust of the motion was for the first time to

bring before the Court the fact that the judgment of October

5, 1973 was plainly based on the original complaint and,

so the argument of Vesco & Co., Inc. went, the mere filing

of an amended complaint on September 7, 1973, before the

entry of the default judgment of October 5, 1973, super-

seded the original complaint and made the default judgment

void [Rule 60(b)(4)]. Judge Stewart’s reason for denying

this motion on October 27, 1976 was that the mere filing

of an amended complaint does not supersede the original

complaint, and that until proper service of an amended

complaint has been made pursuant to Rule 5(a) the origi-

nal complaint remains in full force and effect. He further

held that the only attern’;»ted service of the amen@ed com-

plaint on Vesco was at his Brace Ridge Road resiience in

Nassau, Bahamas, on October 24, 1973, and that this service

was invalid and ineffective because not made in compliance

with his order authorizing the service. Accordingly, as this

service gave the Court no in personam jurisdiction over

Vesco, the amended complaint did not supersede the origi-

nal co:nplaint and the motion under I'.R.C.P. Rule 60(b) (4)

to vacate the default judgment of October 5, 1973 against

All

Vesco was denied on October 27, 1976. Thus, in connection

with the first of the two consolidated appeals, and to be

sure that we leave no loose ends, we feel that we should

discuss in a later part of this opinion the details concerning

this attempted service and our reasons for approving Judge

Stewart’s ruling that the service was improperly-ma-le and

ineffective to give the Court in personam jurisdiction over

Vesco.

This brings us to the third time this case has come

before our Court. Appeal No. 3 by Vesco & Co., Inc. was

from Judge Stewart’s order of October 27, 1976. On June

3, 1977 the order was affirmed, in an opinion by Judge

Oakes, in which Judge Wyzanski, Senior Judge of the Dis-

trict Court for the District of Massachusetts, sitting by

designation, and Judge Holden, Chief Judge of the District

Court for the District of Vermont, also sitting by designa-

tion, concurred. The case is reported as International Con-

trols Corp. v. Vesco, 556 F.2d 665 (2d Cir. 1977), cert.

denied, 434 U.S. 1014 (1978).

In the opening paragraph of the opinion Judge Oakes

commented (556 I'.2d at page 667):

While those transactions are not before us in the in-

stant appeal, it was Mr. Veseo’s “multifarious manipu-

lations” that led him to absent ::imself from this coun:

try and to be unavailable for service of process. This

persistent refusal to appear in any American court is

the single most important contributing cause to the

procedural problems that have culminated in this ap-

a * *

To return to the procedural claim then asserted by Vesco,

counsel had a serious problem. This problem, as will ap-

pear more clearly when we come to discuss the merits in

connection with our disposition of the first of the two con-

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solidated appeals, was that a holding that the service of the

amended complaint on Vesco on Oc'o ver 24, 1973 was valid

would be inconsistent with and greatly weaken the argu-

ment now pressed upon us by Vesco that the service of the

original complaint on him on July 30, 1973 was not valid.

So, true to form, counsel for Vesco & Co., Inc. on Appeal

No. 3 so presented his argument for reversal as to concen-

trate on the claim that the mere filing of the amended com-

plaint on September 7, 1973 superseded the original -om-

plaint so tiv:e was no basis on which the default jud;:. ent

could rest and it must, therefore, be vacated. And the way

Judge Stewart’s ruling that the service on Vesco of the

amended complaint on October 24, 1973 was invalid was

pushed into the backgroun:: was by the simple expedient

of making no attack, on Appeal No. 3, on this ruling. This

turns out to be just another of Vesco’s maneuvers as

he now, in the first of the appeals before us (Vesco’s Main

Brief, in 78-7092, at pp. 19ff), challenges as erroneous Judge

Stewart’s finding that the October 24, 1973 service was

invalid, whereas in Appeal No. 3 this finding was not chal-

lenged by Vesco & Co., Inc.

It is interesting to note that the failure to chalienge

the finding of invalidity of service on Vesco on Appeal No.

3 did not escape the vigilance of Judge Oakes, who com-

mented at 556 F..'d at page 668: “The District Court found

that the amended complaint was not properly served on

Vesco, a finding not challenged by appella:: here.”

The net result was that the finding of invalidity of the

service of the amended complaint on Vesco on October 24,

1973 was affirmed. By failing to challenge this finding the

.Court was given the impression that the ruling was correct.

This deliberate and purpereful act of Vesco & Co., Inc., the

alter ego of Vesco, estops Vesco from claiming, on the

first of the two consolidated appeals now before us, that the

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ruling of Judge Stewart was erroneous. This is especially

true in view of all that has oceurred in the interval between

the failure to challenge the finding on Appeal No. 3 from

Judge Stewart's order of October 27, 1976 and the assertion

that the finding was erroncous now made in Vesco’s main

brief herein on *ptember 1, 1978. Moreover, as stated

infra at p. 28f, we are of the opinion that Judge Stewart’s

ruling that the service on Vesco on October 24, 1973 was

invalid is correct beeiuse the service was not made in av-

cordance with the terms of Judge S‘«wart’s order authoiiz-

ing the service of ti... amended com ,.:::int.

There is another aspect of the opinion of .J.:dge Dios

on Appeal No. 3 that might lead to some misun ' rstanding.

As urged on by counsel for Vesco & Co., Inc., Judge Oakes

commented with reference to the disposition by this Court

of Appeal No. 2, 556 F.2d at page 667: “The court did not

reach the question of the va'idity of the alter ego ruling.”

This is literally true. But the reason it is true is that this

Court remanded the case as we have previously stated, and

this was done without reaching any of the que: ions raised

by appellant Vesco & Co., Inc. As a r::'ter of fact and

law this alter ego ruling was « repetition of the ruling made

on Appeal No. 1 as statcd in Chief Judge Kaufman’s

opinion above referred to; and the -econd ruling to the

same effect by Judge Stewar: »ecams« final, as above stated,

when counsel for Vesco & Co., Inc. fil: d its notice of appeal

from the order as amended on the r ‘and nine days too

late and the appeal was dismissed.

After all this litigation over a per'el of five years on’

might surmise that the Special Counsel was at last in a

position to close in on some of Vesco’s assets Nothing

could b» further from tle fact. During this period of five

years and despite the ut: :»st diligence of the Special Conn-

sel, the coui ts, and especially this Court, have been wusy

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wrestling with Vesco’s procedural inaneuvers. Except for

the alter ego finding in Chief Judge Kaufman’s opinion on

Appeal No. 1, and repeated from time to time as we have

said, progress has been delayed and obstructed by Vesco’s

procedural maneuvers, Nevertheless, it now appears that,

during all these years, Veseo has had a card up his sleeve

and that is his claim that the service of the summons and

complaint upon him at his Brace Ridge Road residence in

Nassau, Bahainas on J::'y 30, 1973 was not good service.

He had “talked” about this off and on, and Vesco & Co.,

Inc. had mentioned this claim in one way or another on

some of its various appea's. but the question had never been

squarely decided.

And so, on July 29, 1977 Vesco at last moved to vacate

the default judgment rendered against him on October 5,

1973, pursuant to Rule 60(b)(4) on the ground that the

judgment was void because the service, made almost to the

day five full years before, was not properly made and the

court had no 7 personam jurisdiction of Veseco. This is the

subject of the first appeal before us now.

The situation is incongruous, to say the least. Here we

have a man who has “masterminded” the whole alleged

scheme to defraud investors, who is familiar with every

phase of the prolonged effort to defeat justice by absenting

himself from the territorial limits of the United States,

by avoiding extradition, by evading process servers and by

engineering various appeals to this Court, all with full

knowledge of the contents of ‘he complaint which charges

him as the principal defrau: -:, and he comes before the

Court and asserts th» clair: that the service was invalid

because he was not yiver “air notice of the charge. Thus

‘there is much to be said in support of Judge Stewart’s

finding that the motion, under all the circumstances, was

untimely made. Nevertheless, we have decided not to reach

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that point but rather to decide on the merits whether or not

the service was valid.

Part Two

The Service by Miss Yohonn at Vesco’s Brace

Ridge Road Residence in Nassau on July 30} 1973

Was Good and Effective Service and Gave the

Court In Personam Jurisdiction over Vesco.

Discussion of Law Authorizing Judge Stewart's

Orders of July 27, 1973 and July 29, 1973.

The service of t!,. summons and complaint on July 30,

1973, was pursua: to the terms of an order by Judge

Stewart on July 2%, 1973 authorizing Lois S. Yohonn, a

lawyer employed in the office of plaintiff’s attorneys of

record in New York,’ to deposit “a copy of the summons

and complaint upon the premises of the last known resi-

dence of said defendant located in Nassau, Bahamas, and

3 Vesco claims that the appointment of an associate of plaintiff’s law

firm was improper, citing a 1939 opinion by District Judge Hulbert

in In re Evanishyn, 1 F.R.D, 202 (S.D.N.Y. 1939). We think Evanishyn

was wrongly decided and we refuse to follow it. The Advisory Com-

mittee’s Note of 1963 to Rule 4(i) statcs that allowing “any person

who is not a party” to effect service authorized by a court order

“increases the possibility that the plaintiff will be able to find a

Process server who ean proceed unimpeded in the foreign country * * *.”

Service by Bahamian counsel proved absolutely futilo in this case, and

no doubt the same would have been true if the aid of a local official

had been solicited. The person selected had the requisite information

at her disposul as to both Vesvo’s whereabouts and the ancillary order

for service and was knowledgeable about the business of serving process.

We believe that so long as the court does not appoint the actual party

to effoct service under Rule 4(i)(1)(E), the selection of the person

believed to be in the best position to effect service of process is a

matter of discretion. Certainly there was no abuse of discretion by

Judge Stewart here.

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mailing a copy of the summons and complaint to said defen.

dant at the address of such last known residence in Nassau,

Sahainas.”* The reason for the order, and another order

to which we shall refer later, was that from the SEC pro-

ceedings mentioned in the preliminary part of this opinion

Vesco was known to be not averse to evading the service

of process. Thus actual delivery of the Summons and com.

plaint to Veseo in person was not required. As will later

appear, two bodyguards stationed at Vesco’s residence

made any delivery of process to Vesco in person impos-

sible. We shall devote this part of the opinion to a brief

discussion of the provisions of law that make it proper

for Judge Stewart to have made this order of July 29, 1973.

As we are dealing here with service of process in a for-

eign country, we must, in our consideration of the matter,

start with F.R.C.P. Rule 4(f) “T:rritorial Limits of Effee-

tive Service.” This subdivisio: provides inter alia for

service “when authorized by a statute of the United States.”

This statute is Section 27 of the Securities Exchange Act

of 1934, 15 U.S.C. §78aa, which is the same statute on which

the subject matter jurisdiction® of the District Court in

4 Vesco claims that registered mail with a return receipt requested

was required. We disagree. The views expressed by Judge Weinfeld

in an analogous case, Levin v. Kuby Trading Corp., 248 F.Supp. 537

(S.D.N.Y. 1965), are applicable. Where, as here, mailing is coupled

with leaving the summons and complaint at a place where the defendant

is reasonably likely to learn of their contents, and where the defendant

has a long history of avoiding process servers, due process is accorded

without the use of a return receipt.

5 The complaint here alleged complex schemes involving multiple cor-

porate manipulations in violation of Section 10(b) of the 1934 Act,

15 U.S.C. $78j(b), and Rule 10b-5, 17 C.F.R. $240.10b-5. Our Court

resolved the question of subject matter jurisdiction in Appeal No. 1,

International Controls Corporation v. Vesco, 490 F.2d 1334, 1342-1346,

1350-1351 (2d Cir.), cert. denied, 417 U.S. 932 (1974).

(footnote continued on next page)

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this case is based. But, while Section 27 authorizes service

“wherever the defendant may be found,” it does not ex-

plicitly authorize service ontside the territorix’ limits of

the United States. This gap was bridged by thi. Court in

an opirion by Judge Friendly in Leasco Data Processing

Equipment Corp. v. Maxwell, 468 F.2d 1326 (2d Cir. 1972),

interpreting Section 27 as authorizing international service

of process.*

The next step in our reasoning, leading up to Judge

Stewart’s orders authorizing service, is F.R.C.P. Rule 4(e),

which provides with reference to extraterritorial service

that service may be made in the manner authorized by the

Veseo further argues that the District Court lacked subject matter

jurisdiction because the partial inquests held pursuant to the default

judgment focused on damages related to common law claims rather

than solely to claims arising under the Sccurities Laws. Appellant's

Brief, at pp. 23-27. This is, in reality, a restatement of the argument

made by Veseo & Co., Inc., in Appeal No. 1, namely that the facts

pleaded in the complaint state claims, if at all, arising under state

law and not the Securitics Laws. Chief Judge Kaufman met this argu-

ment in his opinion for our Court in Appeal No. 1 at the pages.

noted above.

Assuming that the partial inquests referred in part to damages

arising under state law claims, principles of pendent jurisdiction allowed

the District Court to consider these damages once a claim arising

under Scction 27 was established. Recent uuthority holds this to be

the case even where, as here, extraterritorial service has been made

pursuant to a federal statute. Octiker v. Jurid Werke, G.m.b.11., 556

F.2d 1 (D.C. Cir. 1977); Robinson v. Penn Central Co., 484 F.2d 553

(3rd Cir. 1973); Travis v. Anthes Imperial Lid., 473 F.2d 515 (8th

Cir. 1973); Schwartz ¥. Eaton, 964 F.2d 195 (24 Cir. 1959) (Dictum) ;

Mills, Pendent Jurisdiction and Eztraterritorial Service Under the

Federal Securities Laws, 70 Colum. L. Rev. 423 (1970); Note, 63

Colum. L. Rev. 762 (1963); Note, 73 Harv. L. Rev. 1164 (1960).

See also 2 Moore’s Federal Practice §4.42[1], at 4-524 n.4/ (1978);

4 Wright & Miller, Federal Practice and Procedure, §1125, at 527

(1969). We believe these authoritics better reasoned than carlier cases,

collected in Moore’s Federal Practice and Wright ¢ Miller, holding to

the contrary.

6 See also 2 Moore’s Federal Practice 94.42[1], at 4-521, 94.45, at

4-563, and cases cited.

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statute (i.e. Section 27), or, “if there is no provision therein

prescribing the manner of service,” then service is to be

made “in a manner stated in this rule.” As Section 27 does

not, with reference to extraterritorial service, prescribe

“the manner of service,” this brings us to the “manner

stated in” other relevant parts of F.R.C.P. Rule 4. Thus, in

addition to the standard methods of service set dut in

Rule 4(d), we find that Rule 4(i) “Alternative Provisions

for Service in a Foreign County” comes into play. Rule

4(i) authorizes the use of five alternative forms of sub-

stitute service which provide the plaintiff and the court

with the flexibility required to effect service on a defendant

in a foreign country.’ Subparagraph (5) of Rule 4(i) (1)

provides for service “as directed by order of the court,”

and in this section we find the specific authority on which .

Judge Stewart relied when he signed the orders authoriz-

ing service on Vesco,

Rule 4(i)(1)(E) permits the district court “by order to\.

tailor the manner of service to fit the necessities of a par-

ticular case.”* The district court is not limited to those

methods for service set out in Rules 4(d) and 4(i)(1)(A)

through (D), but is authorized to fashion a method of ser-

vice, under Subparagraph (EF), to satisfy the requirements

of the case at hand and of the Due Process Clause. The

Supreme Court has long recognized that no one form of

substitute service is favored over any othe” so long as

the method chosen is reasonably calculate. under the

7 Advisory Committce’s Note of 1963 to Rule 4(i). Sce also United

States v. Danenza, 528 F.2d 390 (2d Cir. 1975); Levin v. Ruby Trading

Corp., 248 F.Supp. 537 (S.D.N.Y. 1965); 2 Moore’s Federal Practice

f4.45, at 4-566; 4 Wright § Miller $1133, at 558-559; Kaplan, Amend-

ments of the Federal Rules of Civil Procedure, 1961-1963 (1), 77 Harv.

L. Rev. 601, 636 (1964).

8 Advisory Committee’s Note of 1963 to Rule 4(i)(1)(E). Sce also

4 Wright g Miller $1124, at 564-565.

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circumstances of the particular case, to give the defendant

actual notice of the pendency of the lawsuit and an oppor-

tunity to present his defense.’ The constitutional deter-

mination is derived from the necessities of each case rather

than from a preconceiv: } notion of what will provide

actual notice in every case. :

Thus we think Judge Stewart’s order of July 29, 1973

was clearly authorized by law. That it was designed to

give proper notice to Vesco and to comply with ‘':c re-

quirements of due process are the only inference... com-

patible with the circumstances of this particular case that

can be made from the recital of what occurred in Nassau

in the months of June and July, 1973, and especially the

service first attempted by Miss Yohonn on July 30, 1973,

and the service later consummated by her on that same

day, to which we shall now turn.

The Service of the Summons and Complaint on

Vesco, July 30, 1973.

International Controls Corporation filed its complaint in

this action against Vesco and other defendants on June 7,

1973. Service was first attempted on Vesco by Bahamian

counsel, authorized by an order of Judge Stewart dated

June 15, 1973.° For unstated reasons Bahamian coun-

9 Hlanson v. Denckla, 357 U.S. 235 (1958); McGee v. International

Life Insurance Co., 355 U.S. 220 (1957); Walker v. City of Mutchinson,

852 U.S. 112 (1956); Mullane v. Central Hanover Bank § Trust Co.,

339 U.S. 306 (1950); Milliken v. Meyer, 311 U.S. 457 (1940).

10 Sce the District Court Docket Entry +r June 15, 1973, appearing

at page iv of the Appendix of Defends... Appellant Robert L. Vesco.

This was referred to in the Affidavit of I.conard C. Gordon, sworn to

on July 27, 1973, submitt.« in support of his request that Miss Yohonn

be appointed to serve Vesey in the Bahamas.

A20

sel» not able to effeet service. Thus, in July 1973, coun

sel fo ICC applied to Judge Stewert for an order permit

ting Lois S. Yohonn, one of his associates, t> serve Vesco

in Nassau, Bahamas. On July 27, 1973 “lige Stewart

signed an order granting this request withoui detailing the

methed by which service was to be made." ICC anticipated

further difficulty in serving Vesco and therefore prepared

at this time an ancillary o:-'er whic!: Judge Stewart ulti-

mately signed on July 29, 1973, permitting service } -

leaving the summons and complaint at Vesco’s last known

residence in the Bahamas and then mailing a copy of the

papers to that address.”

Miss Yohonn proceeded to Nassau on Saturday, July

28, 1973. Contrary to Vesco’s claim that she never at-

tempted personal service, she spent the afternoon and eve-

ning of Sunday, July 29, and most of Monday, July 30,

searching for Vesco at various locations in Nassau and

Paradise Island. Unsuccessful in these efforts, Miss

Yohonn drove herself to the Brace Ridge Road residence.

ll The order of July 27, 1973 stated in part:

“* © * it appearing that Lois S. Yohonn is a qualified person over

twenty one years of age and is not a party to this action, and that

specd is essential in the service of the summons and complaint and

that there will therefore be a saving in fees if service is made by

said person, it is hereby

‘.DEKED, that Lois 8. Yohonn be and she hereby is authorized

to . “vet dervice of process in the within action on defendant Robert

L. Vesco.”

12 The order of July 29, 1973 duplicated the order set out above,

adding the following:

“e * © and ‘' is further

“Orprrep that, service of process upon said defendant Robert

L. Veseo may be effected by depositing a copy of the summons and

complaint herein upon the premises of the last known residence of

said defendant located in Nassau, Bahamas, and mailing a copy of

the summons and complaint herein to «uid defendant at the address

of such last known residence in Nas. ., Bahamas.”

A21

There she found a bolted gate and two men who appeared

to he bodyguards. One of them inquired as to her business.

She asked if this was Vesco’s residence. After some eva-

sion one of the two men said it was his residence. Miss

Yohonn represented that she was a friend of Vesco’s and

wished to speak with him. One = ° the guards left to go

into the house and said he would sake inquiry.

While the one guard was in the house two events of

particular importance occurred. A car drove up to thie

gate and was admitte:’. Inside, according to Miss Yohonn

on information and belief, were Mrs. Veseo : ‘1 two chil-

dren. Later, a boy of approximately 16 years came out

of the house aud, approaching the gate, stated to Miss

Yohonn, “My father said to ask what you want.” Miss

Yohonn responded that she wished to serve a summons

and complaint and threw the papers at the boy. The boy

threw them back and returned into the house.

In the meantime the first guard had returned. When

Miss Yohonn attempted to serve one of the guards, the

response was: “You get out of here. We don’t want no

papers on this property. Don’t you put anything on this

property.” They then threw the papers onto the road.

Miss Yohonn ran back to her car, afraid of the guards,

and drove toherh: «J. There she telephoned Judge Stewart,

who authorized he: to effect service according to the terms

of the ancillary order signed on the previous day.”

13 It is interesting to note that, while counsel for Vesco made a showing

of skepticism at oral argument with respect to the signing of the

second order aud Miss Yohonr’s telephone communication with Judge

Stewart, during oral argument before Judge Stewart on December

20, 1977 Veaco’s present counsel authorized a chani:: on the face of

Vesco’s undated affidavit acknowledging that Miss sonn telephoned

Judge Stewart's chambers iu the afternoon or early «..ning of July 30,

1973, rather than in the morning of that day, to ask permission to

use the alternative method of service.

A22

Miss Yohonn hired a tani for the second trip to Vesco’s

residence. There she threw a copy of the summons and

complaint folded and tied with a blue ribbon over the

fence and photographed the papers as they remained on

the lawn in front of the house. The two gunrds immediately

ran out to the gate, one armed with a stick and the other

with a piece of pipe. One pulled open th: door of the car

and demanded that Miss Yohonn come out. The cab driver

remonstrated with the guards and told them they could

do nothing to Miss Yohonn while she was in his cab. When

she told the guard that he had no right to touch the cab, .

he replied that she had no right to put anytl. g on the

property. Then the driver began to drive away.

After they had driven a short distance the driver in-

formed Miss Yohonn that the guards were following them

inacar. Fearing for her safety, Miss Yohonn directed the

driver to -iroceed to a different hotel that was connected

with her jiotel by a series of corridors. She asked that the

driver keep secret her whereabouts and returned to her

hotel by a circuitous route, where she put the film in a

safe deposit box. She arrived at her room at approxi-

mately 7:00 P.M. and remained there for some time dur-

ing which the phone rang on sever:' occasions, each time

with no one on the other end. Mis» Yohonn returned to

New York on the following day, July 31, 1973.

On August 1, 1973 Miss Yohonn mailed a copy of the

summons and complaint to Vesco at his Brace Ridge Road

residence by ordinary ‘rst-class mail.

We think it quite clear and we hold and decide that the

service of the summons and complaint at the Brace Ridge

Road residence on July 30, 1973 was reasonably calcu-

lated to give Vesco actual notice of the lawsuit. Indeed,

there is substantial and persuasive circumstantial proof

A23

that, during the entire episode, Vesco himself was physi-

cally present in the house and witnessed the entire affair.

The very presence of the bods uards indicates this. And

the boy’s statement, “My fatiir said to ask what you

want,” is most significant. And there is more.

Veseo’s motion papers, on the motion to vacate the de-

fault judgmer:! of October 5, 1973 were served on July

29, 1977. One of the mystious and singular features of

this remarkable case is an undated “aflidavit” by Vesco

filed in support of the motion on November 17, 1977. This

“affidavit” contains 9 pages of rambling and d‘<connected

statements having little relevance to what occ red at the

Brace Ridge Road residence on July 30, 1973. He does

not deny that the 16 year old boy was his son; he does not

deny that the woman and children who drove up in the

car were his wife and family; he does not deny that he

asked anyone to inquire of Miss Yohonn what she wanted;

and, most important of all, he does not .icny that he was

right there in the house all the time. He does not even deny

that he hired the bodyguards to ward off process servers

When inquiry was made of his lawyer on the oral argu.

ment of the appeals, he gave no explanation and did not

answer. Instead, he asserted Vesco’s attorney-client privi-

lege.

The International Convention on Service of

Process Is Not Applicable Here as the Bahamas

Never Agreed to It.

A new point not raised by Vesco when the matter was

before Judge Stewart is that the service as made on Vesco

on July 30, 1973 was not in accordance with the require-

ments of a treaty entered into by the United States in 1969

A24

and deseribed us the Convention on the Service Abroad of

Judicial and Extrajudicial Documents in Civil or Com-

mercial Matters, done at The Hague, November 15, 1965,

[1969] 20 U.S.T. 361, T.ILA.S. No. 6635, 658 U.N.T.S. 163

(Entered into force February 10, 1969). One difficulty with

this argument is that the treaty cannot have any applica-

tion to this case unless the Bahamas agreed to it, and the

fact appears to be that it did not.

It is undisputed that the Bahamas has never become a

direct signatory to the Convention. This leaves the ques-

tion of whether it ever became a party through the United

Kingdom, which was empowered by Art! le °9 of the Con-

vention to declare, at the time of its signature or at any

time thereafter, that the Convention should “extend to all

the territories for the international relations of which it

is responsible, or to one or more of them.”

Vesco’s brief quotes a letter from the Prime Minister

of the Bahamas that merely indicates that the Bahamas

became an independent state on July 10, 1973 and that

many treaty rights and obligations of the Government of

the United Kingdom in respect to the Bahamas were suc-

eceded to by the Commonwealth of the Bahamas and others

were not. 1978 T.I.F. 10. In letters dated May 14 and

May 15, 1970, the British Ambassador to The Hague in-

formed the Ministry of Foreign Affairs of the Netherlands

of the intention of the United Kingdom to extend the Con-

vention to various territories effee ‘ve July 19, 1970. The

lh Sec Letter from the Netherlands Ambassador to the United States

to Secretary of State William Rogers (July 2, 1970). This letter re-

ferred to the letters of May 14 and 15, 1970 by which the United King-

dom extended the Convention to numerous territories. The letter of

May 14 extended the Convention to Hong Kong. The letter of May 15

extended the Convention *» Antigua, Bermuda, British Honduras,

British Virgin Islands, Briiish Solomon Islands Protectorate, Cayman

Islands, Central and Southero J.ine Islands, Falkland Islands and

A25

Bahamas was not included among these territories." Thus

it appears that the United Kingdom never extended the

Convention t» the Bahamas.

On the oral argument, counsel for Vesco was presented

with the 1978 list of Treaties in Force, issued annually by

the Office of the Legal Adviser, Department of State, which

states that the trea!. ‘vas extended’ through Great Britain

to the following:

dependencies, Fiji Islands, Gibraltar, Gilbert and Ellice Islands

Colony, Guernacy, Jersey, Isle of Man, Montserrat, Pitcairn, St. Helena

and dependencies, St. Lucia, St. Vincent, Seychelles, Turl.s and Caicos

Islands. }

15 The discrepancy between the territories listed in the Ictters of May

14 and 15, 1970 and those listed in 1978 Treaties in Force results

from the manner in which Treaties in Force is compiled. The let-

ters represent an accurate list of the territories to which the United

Kingdom in fact extended the Convention. Treaties in Force sets forth

a list of countries and territories to which the Convention actually

applics, current through to the date of publication.

While Treaties in Force states that the United Kingdom “ex-

tended” the Convention to the territorics listed in the text, that list

is not inclusive since the compilers have deleted references to ter-

ritories which have become independent since the time the Convention

was extended to them and which have not succeeded to the Convention.

For example, Fiji and the Scychelles Islands were referred to in the

letter of May 15, 1970 but are not included in Treatics in Force. Fiji

became independent on October 10, 1970; the Seychelles Islands be-

came independent on June 28, 1976. Neither Fiji nor the Seychelles

Islands have succeeded to the Convention, and thus the Convention is

not in effect there. Nevertheless, the Convention did apply there prior

to their independence.

Furthermore, Treaties in Force does not indicate instances where

British colonics have changed their names. For exampie, th British

Hondijras changed its name to Belize on June 1, 1973. Belize has

remained a British Colony, and thus the Convention is currently in

effect there. This explains why only the British Honduras is mentioned

in the letter of May 15, 1970 and why only Belize is mentioned in

Treati*s in Force.

The case of the Gilbert and Ellice Islands Colony involves both

changes of names and subsequent independence. On October 1, 1975

the Ellice Islands separated from the Colony and changed their name

to Tuvalu. Vie remaining islands of the Colony were renamed the

Gilbert Islands. Both Tuvalu and the Gilbert Islands remained British

A26

Antigua, Belize, Bermuda, British Virgin Islands, Cay-

man Islands, Central and Southern Line Tslands, F’alk-

land Islands and dependencies, Gilbert Islands, Gi-

braltar, Guernsey, Hong Kong, Isle of Man, Jerscy,

Montserrat, Piteairn, St. Helena and dependencies, St.

Lucia, St. Vincent, Solomon Islands, Turks and Caicos

Islands, and Tuvalu.

When faced on the oral argument with the advice that the

United Kingdom had not extended the Convention to

the Bahamas and that the Bahamas has not succeeded to

the Convention since its independence, and when asked if

he had anything to show to the contrary, counsel for Vesco

replied: “No, Sir.”

Moreover, there is much to be said in support of the

view that, even if the terms of the Convention were ap-

plicable, the Convention was not intended to abrogate the

methods of service prescribed by F.R.C.P. Rule 4.*

Bian

colonies, and thus the Convention remained in effect there. This is

why the Colony is mentioned in the May 15 letter and why Tuvalu

and the Gilbert Islands are mentioned in Treaties in Force. Tuvalu

became independent on October 1, 1978 and has not as yet succeeded

to the Convention. The Convention is not currently in effect in Tuvalu,

and, absent subsequent succession, this fact will be reflected in 1979

Treaties in Force by deleting the reference to Tuvalu.

Finally, the Solomon Islands became independent on July 7, 1978

and have not since succeeded to the Convention. This fact will also be

reflected by deleting reference to this country in the 1979 edition of

Treaties in Force, absent subsequent succession to the Convention.

16 The Treatics Affairs Office of the Department of Justice has com-

piled a lengthy work entitled International Judicial Assistance (Depart-

ment of Justice, September 1976). This document discusses service of

American documents in foreign countries as well as other issues of

importance involved in international litigation. See also Memorandum

to United States Marshals Concerning Instructions for Serving Foreign

Judicial Documents in the United States and for Processing Requests

by Litigants in This Country for Service of Americun Judicial Docu-

ments Abroad (Department of Justice Memo No. 386, Revision 2,

June 15, 1977).

A27

Part Trikes

We Approve Judye Stewarl’s Finding that Service

of the Amended Complaint on Vesco at the Brace

Ridge Road Residence on October 24, 1973 by

Joseph A. Bondi, et al. was Invalid and Ineffective.

On Appeal No. 3, by Vesco & Co., Inc., before the panel

of this Court consisting of Judges Oakes, Wyzanski and

Holden, Judge Stewart’s order making this finding of in-

validity was affirmed, as above stated. But because Vesco

& Co., Inc. did not challenge the finding then but Vesco

now does challenge it in 78-7092, the first of the two con-

solidated appeals now before us, we think it proper to

dispose of the matter so as not to leave any loose ends

that might be resorted to in the future by either Vesco or

Vesco & Co., Inc. for purposes of further delay.

Judge Stewart set this service of the amended com-

plaint aside because it was not made in compliance with

his order authorizing Messrs. Bondi and others to make

the service. He was not deciding any question of due proc-

ess or constitutional law but was merely interpreting the

terms of his own order. The order pursuant to which Miss

Yohonn made service .2 July 30, 1973 merely required

that a copy of the suu-.ions.and complaint be “deposited”

on the premises of the residence at Brace Ridge Road. And

this was after the throwing back of the papers in the first

attempted service, and after Miss Yohonn had telephoned

Judge Stewart for permission to proceed again, this time

under the order of July 29, 1973, which merely required

that the papers be “deposited” on the premises. She did

deposit the papers on the premises and she took a photo-

graph of them lying on the lawn, identified by the blue

ribbon.

A28

In the case of the amended complaint the order re-

quired that Mr. Bondi or one of his altern: +s “leay.

the summons and complaint at the Brace Ridge Road resi-

dence and this was not done. Bondi had thrown the papers

over the gate and on to the driveway. One of the gardeners

picked them up and handed them to a security guard, who

had been summoned from the Bahamas Commonwealth

Bank, and the security guard threw them into Bondi’s car.

So Bondi drove away with the summons and complaint

in his car. Obviously, the summons and complaint had not

been “left” at Vesco’s residence. Thus there is no incon-

sistency whatever between Judge Stewart’s ruling that the

service of the original summons and complaint on Vesco

on July 30, 1973 was valid and his ruling that the service

of the amended complaint on Vesco on October 24, 1973

was not valid. We must and do assume that Judge Stewart

had good and suflicient reasons for the different wording

of his various orders authorizing service pursuant to

F.R.C.P. Rule 4(i) (1) (F).

17 The order stated in relevant part:

“** © it appearing that Joseph A. Bondi, David M. Butowsky and

Daniel L. Carroll are qualified persons over twenty-one years of age

and are not partics to this action, and that there are difficulties

entailed in the service of the summons and complaint and that it is

expedient that service be made by any of said persons, it is hereby

“Oxprrep, that [the above stated individuals] * * * be and each

hereby is authorized to effect service in the within action on defen-

dants Robert L. Vesco, * * *, and it is further

“Oxperep, that service of process upon any of said defendants

may be (i) by any method of service of process authorized by Rule 4

of the Federal Rules of Civil Procedure; or (ii) as to individual

defendants, by leaving a copy of the summons and amended com-

plaint herein upon the premises of such defendant’s last known

residence located in Nassau, Bahamas and mailing a copy thereof

to such defendant at either the Post Office Box of such defendant

or to the address of such last known residence of such defendant

in Nassau, Bahamas; or (iii) as to corporate defendants * * ° .”

A29

Part For

In the Second of These Two C.. olidated Appeals

(78-7279) We Affirm Judge ~'ewart’s Finding

That Effective Service Was Made on Vesco at

the Brace Ridge Road Residence in Nassau on

April 17, 1974 and Ilis Denial of Vesco’s Motion

to Vacate the Default Judgment Based on Such

Service and Entered on September 11, 1974.

We have postponed discussion of the questions raised

on Vesco’s second of the two consolidated appeals to

avoid unnecessary repetition of much that is stated in the

foregoing parts ‘of this opinion. This Appeal 78-7279 is

from an order of Judge Stewart, in an action entirely dif-

ferent from the one we have been discussing. This order

denies a motion by Vesco to vacate a default judgment

entered against him on September 11, 1974 but based on

service made at the same Brace Ridge Road residence of

Vesco that has been the subject matter of our discussion

in Part Two of this opinion. Because some of the same

or very similar questions were involved we consolidated the

two appeals.

The complaint in this case was filed on April 8, 1974 and

alleged fraud with regard to the purchase and sale of

shares of the Empire Financial Corporation, in violation

of Section 10(b) of the 1934 Act, 15 U.S.C. §17j(b) and

Rule 10b-5, 17 C.F.R. §240.10b-5, as well as related State

law claims. When ICC was unable to purchase the shares

for its own account, Vesco interceded and purchased the

shares, agreeing to hold them for resale to ICC. Later

Vesco agreed to account to ICC for any profits he received

on the sale should ICC decide not to exercise its option.

ICC never exercised this option, and when Vesco ulti-

A30

mately sold the shares he and his associutes realized a total

profit of $2,900,000. No prior arrangement had been made

to share these monies with ICC. ICC obtained a default

judgment against Vesco in the amount of $2,900,000."

Service in this case was carried out pursnant to a court

order entered on April 7, 1974 under Rule 4(i)(1) (I) of

the Federal Rules of Civil Procedure. The order anthor-

ized David M. Butowsky, Special Counsel to ICC, to serve

Vesco in Nassau by any method provided by Rule 4, or by

“leaving” a copy of the summons and complaint at Vesco’s

last known residence in Nassau and by mailing the papers

to Vesco at his address or Post Office Box.’® On April 16,

18 We pause to address the question of subject matter jurisdiction,

though this was not briefed by the parties. Clarkson Co., Ltd. v.

Shaheen, 544 F.2d 624 (2d Cir. 1976). Only actual purchasers and

sellers may bring suit under Section 10(b). Blue Chip Stamps v. Manor

Drug Stores, 421 U.S. 723 (1975); International Controls Corp, v.

Vesco, 490 F.2d 1334 (2d Cir.), cert. deaied, 417 U.S. 932 (1974);

Birnbaum v. Newport Steel Corp., 193 F.2d 461 (24 Cir.), cert. denied,

343 U.S. 956 (1952). The definitional provisions of the 1934 Act

extend the meanings of “purchase” and “sale” to “any contract” to buy

or sell or otherwise acquire or dispose of securities. Sections 3(a)(13)-

(14) of the 1934 Act, 15 U.S.C. $$78¢(a)(13)-(14). The majority in

Blue Chip Stamps stated that “the holders of puts, calls, options, and

other contractual rights or duties to purchase or sell securities” come

within these definitions, 421 U.S. at 751. We feel that the complaint

sufficiently pleads fraud pertaining to a contract or option to purchase

Empire shares to give ICC standing to sue unler the Securities Laws.

Hagans vy. Levine, 415 U.S. 528 (1974); Beker ¥. Carr, 369 U.S. 186

(1962); Bell v. Hood, 327 U.S. 678 (1946).

19 This order stated in relevant part:

“* © © it appearing that David M. Butowsky is a qualified person

over twenty-one years of age and not a party to this action, and

that there are difficulties entailed in the service of the summons

and complaint and that it is expedient that service be made by said

person, it is hereby

“Ov~ .«v, that David M. Butowsky, be and hereby is, authorized

to eff .«rvice of process in the within action on defendant Robert

L. Vewv, and it is further

“Orperrp, that service of process upon said defendant may be

(i) by any method of service of procees authorized by Rule 4 of the

A31

174, Butowsky went to Nassau, and, on Wednesday, April

17, he and the United States Consul proceeded to Vesco’s

Brace Ridge Road residence. There they were met by two

guards who prevented them from entering the premises.

When Butowsky held out an envelope containing the sum-

mons and complaint and identified himself and his inten-

tion, one of the guards responded, “We are instructed not

to accept any papers.” Butowsky then dropped the en-

velope in front of the guards, who remained mute, and

asked them to deliver it to Veseo. After this Butowsky

left Vesco’s residence and, later that day, mailed an addi-

tional copy of the summons and complaint to Vesco at his

Post Office Box in Nassau by registered mail.

Butowsky based his belicf that the Brace Ridge Road

home had remained Vesco’s residence in Nassau on his

attempted service of the amended complaint in the first

of these appeals, his renewed inquiries during this trip to

Nassau, and the statement of various residents of Nassau

as well as of a former Vesco employce with personal

knowledge of Vesco’s comings and goings from the Brace

Ridge Road home.

We find nothing presented in support of Vesco’s motion

to controvert what is established by the affidavits support-

ing the facts we have just recited. The arguments to the

effect that Vesco was domiciled in Costa Rica, that he had

various places of residence, and that his whereabouts were

at all times a matter of public knowledge are of no more

Federal Rules of Civil Procedure; or (ii) by leaving a copy of the

summons and complaint herein upon the premises of the defendant’s

last known residence in Nassau, The Bahamas and mailing a copy

thereof to the defendant at either the Post Office Box of the defen-

dant or to the address of the last known residence of the defendant

in Nassau, The Bahamas.”

A32

validity or relevance here than they were in connection

with the first of the two consolidated appeals (78-7092).

The summons and complaint were clearly “left” at

Vesco’s residence and Judge Stewart so found in his opin-

ion of May 2, 1978. As in the case of the service made by

Miss Yohonn, we think there was a clear compliance with

the constitutional requirements of due process.

ConcLusIon

Further delay in this Vesco situation is intolerable.

After five years of procedural maneuvers it surely is time

to clear the decks for action and prevent further dissipa-

tion of assets that should be available to reimburse the

investors who have been defrauded.

In each of the two consolidated appeals the order is

affirmed with costs. |

A33

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

INTERNATIONAL CONTROLS CORP.,

Plaintiff,

-against-

ROBERT L. VESCO, et al.,

Defendants.

Civil Action No. 73 Civ. 2518

ORDER APPOINTING PERSON

TO SERVE PROCESS

Upon the annexed affidavit of

C. Leonard Gordon sworn to on July 27,

1973, and it appearing that Lois S.

Yohonn is a qualified person over

twenty-one years of age and is not a

party to this action, and that speed is

essential in the service of the summons

and complaint and that there will

therefore be a saving in fees if service

is made by said person, it is hereby

A34

ORDERED, that Lois S. Yohonn

be and she hereby is authorized to

effect service of process in the within

action on defendant Robert L. Vesco.

Dated: New York, New York

July 27, 1973

s/ Charles E. Stewart, Jr.

U.S.D.J.

Entered July 31, 1973

A35

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

INTERNATIONAL CONTROLS CORP.,

Plaintiff,

-against-

ROBERT L. VESCO, et al.,

Defendants.

Civil Action No. 73 Civ. 2518

ORDER APPOINTING PERSON

TO SERVE PROCESS

Upon the affidavit of

C. Leonard Gordon sworn to on July 27,

1973, and it appearing that Lois S.

Yohonn is a qualified person over

twenty-one years of age and is not a

party to this action, and that speed is

essential in the service of the summons

and complaint and that there will

therefore be a saving of fees if

service is made by said person, it is

A36

hereby

ORDERED, that Lois S. Yohonn

be and she hereby is authorized to

effect service of process in the within

action on defendant Pobert L. Vesco,

and it is further

ORDERED that, service of

process upon said defendant Robert L.

Vesco may be effected by depositing a

copy Of the summons and complaint

herein upon the premises of the last

known residence of said defendant

located in Nassau, Bahamas, and mailing

a copy of the summons and complaint

herein to said defendant at the address

of such last known residence in Nassau,

Bahamas.

Dated: New York, New York

July 29, 1973

s/_ Charles E. Stewart, Jr.

U.S.D.J.

Entered July 31, 1973

A37

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

INTERNATIONAL CONTROLS CORP.,

Plaintiff,

‘ -against-

ROBERT L. VESCO, et al.,

Defendants.

Civil Action No. 73 Civ. 2518

AFFIDAVIT

LOIS SYLOR YOHONN, being duly

sworn, deposes and says:

1. I am an attorney associ-

ated with the firm of Shea Gould

Climenko & Kramer, 330 Madison Avenue,

New York, New York 10017, General

Counsel for International Controls

Corp., plaintiff herein.

2. By Order dated July 27,

1973, I was authorized to serve the

A38

Summons and Complaint herein upon the

defendant Robert L. Vesco ("Vesco").

3. On Saturday, July 28,

1973 I proceeded to Nassau, the Bahamas.

Having been informed that there were

guards stationed at the residence of

defendant Vesco, I determined to first

attempt to serve him personally other

than at his house. Therefore, after

making numerous inquiries as to the

possible whereabouts of defendant

Vesco, I spent the afternoon and even-

ing of Sunday, July 29, and most of the

day on Monday, July 30 searching for

the said defendant in various places

located in Nassau and Paradise Island,

the Bahamas, which places I had been

informed defendant Vesco frequented.

‘These places included several

restaurants, hotels, other places of

A39

entertainment, and yacht marinas.

4. Late in the afternoon on

July 30, 1973, having been unsuccessful

in locating the defendant Vesco up to

that time, I proceeded to his residence

on Brace Ridge Road, Nassau, the

Bahamas.

5. Upon arriving at the

defendant's residence, I proceeded to

the gate of the grounds, which was

locked and secured by three bolts. Two

men who appeared to be guards were

standing in the driveway near the gate.

They approached and asked what I

wanted. I inquired whether this was

Mr. Vesco's house. After some evasion,

one of the guards said that it was, and

asked what I wanted.

6. I told him that a friend

of Mr. Vesco in New York had suggested

A40

seal edited sitll vere

I stop by while I was in Nassau, and

asked if I could speak to Mr. Vesco.

The guard asked my name and I told him

that I was Miss Yohonn.

Fe One of the guards said

that he would have to check, and went

inside the house. The other guard

remained in the driveway. While the

first guard was in the house, a car

drove up containing several persons,

including a woman whom I believe to be

Mrs. Vesco, and two children. The

remaining guard opened the gate for the

car to enter; I remained standing

outside the gate. After the people had

gotten out of the car and entered the

house, a boy of about 16 or 17 years

Old came out of the door, came up to me

‘at the gate, and said, "My father said

to ask you what you want." I replied,

A4l1

"T want to serve him with a summons and

complaint in an action entitled ICC v.

Vesco." The boy jumped back and ey

threw the complaint at him. He caught

it and threw it back at me, and ran

back into the house. I then picked up

the papers and handed them to one of

the guards saying, "I am serving you

with the summons and complaint in

IcC v. Vesco." The guards then became

belligerent, threw the papers at me and

said repeatedly, "You get out of here.

We don't want no papers on this pro-

perty. Don't you put anything on this

property." They then threw the conm-

plaint out in the road.

$. At this point, being

somewhat afraid of the guards, I ran

back to my car, which was parked

several yards down the road, and drove

A42

Pts SOR LORE tea tes rs A a

oO a Cran —

Re ne a ee at th Ot BE

RA LPP 0 FS

Bila ithe ete itn NORA A hI en ede:

2 AC Ras ess OS o

back to the Paradise Island Hotel.

9. I returned to my room

and telephoned the Chambers of

Charles E._Stewart, District Judge, to

inform him of what had happened and to

request that he authorize me to use the

ancillary order which had been previously

prepared and signed on July 29, 1973,

which Order permitted me to effect good

service upon defendant Vesco by de-

positing a copy of the summons and

complaint upon the premises of de-

fendant Vesco's residence on Brace

Ridge Road. Judge Stewart authorized

me to effect service as provided in

this’ second Order.

10. Anticipating possible

problems upon my return to defendant

Vesco's residence, I rolled up the said

summons and complaint and tied it with

A43

a blue ribbon in order to facilitate

throwing it over the wall onto the

property.

Ll. I then hired a taxi and

instructed the driver to drive along

the coast road, which he did. I then

told him to turn on to Brace Ridge

Road, drive to the end, and come back.

When we came even with the beginning of

Mr. Vesco's property, which was located

several yards from the gate at which

the guards were standing, I told him to

stop. I got out of the car, threw the

summons and complaint onto the lawn a

few feet from the front door of the

house, and took a photograph of the

premises with the summons and complaint

lying on the lawn. I then got quickly

back into the taxi. At this point, the

two guards came running out of the

A44

PibaSSin ws. ir. teres Dek woke ee +

a ee eee ee

ak emia. rns patna aE < lem AIA a. OE TE te

gate, one of them bearing a piece of

pipe and the other carrying a stick.

One of them pulled open the door of the

taxi and ordered me to get out. I

answered, "No." He held the door open

and kept saying, "You get out of that

car, you take back those papers." I

again refused. At this point, the taxi

driver said to the guard, "This lady

hired me. You can't do anything to her

while she is in my taxi." I then said

to the guard, "Close that door imme-

diately. You have no right to touch

this car." The guard replied, "You

have no right to put anything on this

property." One guard then said to the

Other, "Go call the C.I.D.". (The

C.I.D. is the Bahamian Secret Police).

- There then ensued a period of one or

two minutes during which the guard

A45

continued to demand that I get out of

the taxi; the taxi driver insisted that

I had hired him and that the guards had

no right to touch the car; and during

which I repeatedly requested the taxi

driver to drive on. Finally, the taxi

driver put the car into gear and

started to drive slowly down the road.

At this point, I noticed that Vesco's

son, whom I had spoken with earlier,

was standing in the middle of the road

watching the altercation. The taxi

driver drove slowly to the end of the

road and proceeded onto the coast road.

A short way down the road, he said to

me, "Ma'am, those men are following us.

They are in the car behind the car in

back of us." At this point, becoming

seriously concerned for my safety, I

A46

ee ee ee ee ee EE

instructed the driver to proceed to the

Britannia Beach Hotel, which is a hotel

some distance from the Paradise Island

Hotel, but connected thereto by various

corridors and the like.

12. I got the name and taxi

number of the driver, and requested

that he be good enough not to inform

anyone of my whereabc its in the event

the people in the car which had followed

us approached him and asked any questions.

I then proceeded by a circuitous route

back to the Paradise Island Hotel,

placed the film in my camera in a safe-

deposit box and proceeded to my room.

I remained in my room for perhaps one

hour, during which on a couple of

occasions the telephone rang. Each

time I picked it up there was no one on

A47

the line.

13. I do not know whether or

not the last-mentioned event is of any

significance, but I was and continued

to be concerned for my personal safety

from that point until I left the

Bahamas, which was the following day,

July 31, there being no further flights

available on July 30 after my return to

the hotel at approximately 7:00 p.m.

14. On August l, after my

return to New York, I mailed an addi-

tional copy of the summons and complaint

herein to defendant Robert L. Vesco,

addressed to him at his last known

residence in Nassau, the Bahamas at

Brace Ridge Road, by depositing true

and correct copies of the same, pro-

perly enclosed in a first class post

paid wrapper, in the official depository

A48

tn tt tine an ate a Dk *. rme he h e e a E RR L e

maintained and exclusively controlled

by the United States Government at 330

Madison Avenue, New York, New York

10017.

s/ Lois Sylor Yohonn

Sworn to before me this

6th day of August, 1973.

Notary Public

A49

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

INTERNATIONAL CONTROLS CORP.,

Plaintiff,

-against-

ROBERT L. VESCO, et al.,

Defendants.

Civil Action No. 73 Civ. 2518

JUDGMENT

This action having been

commenced by the filing of a complaint

and the issuance of a summons on the

7th day of June, 1973, and this court

by order dated July 27, 1973, having

authorized Lois Sylor Yohonn to effect

service of process herein on defendant

Robert L. Vesco, and a copy of the said

summons and complaint having been duly

served on defendant Robert L. Vesco by

Lois Sylor Yohonn on the 30th day of

A50

July, 1973, and proof of such service

having been filed in the office of the

Clerk. of this Court on the 6th day of

August, 1973; and

Defendant, ROBERT L. VESCO,

having failed to plead, appear, move or

otherwise defend with respect to the

complaint herein, and the time for said

Gefendant to appear, answer or other-

wise move having expired, and said

defendant's default having been noted

and entered;

AND, it appearing to the

court that there is no just reason for

delay in entering the within judgment

against defendant Robert L. Vesco;

NOW, On motion of Shea Gould

Climenko & Kramer attorneys for the

_plaintiff, and, upon the affidavit of

Sheldon D. Camhy, sworn to the 2nd day

A51l

of October, 1973 that defendant

Robert L. Vesco is not an infant or

incompetent perscn and is not in the

military service of the United States;

it is hereby

ORDERED, ADJUDGED AND DECREED

that plaintiff have judgment against

the defendant Robert L. Vesco as

demanded in the complaint herein; and

it is further

ORDERED, ADJUDGED AND DECREED

that defendant Robert L. Vesco be, and

he hereby is, permanently enjoined from

using the assets of plaintiff or its

subsidiaries or the proceeds thereof

for his own purpose to the loss and

detriment of International Controls

Corp. and its shareholders; and it is

further

ORDERED, ADJUDGED AND DECREED

that defendant Robert L. Vesco account

to plaintiff for all profits or gains

received by him or those acting in

concert with or aiding and abetting him

in the transactions set forth in the

complaint herein or in transaction

thereafter entered into by him with

funds or property wrongfully held by

him by reason of the wrongful acts set

forth in the complaint and all injury

sustained by plaintiff by reason of the

acts alleged in the complaint; and it

is further

ORDERED, ADJUDGED AND DECREED

that Robert L. Vesco be and he hereby

is required to indemnify plaintiff for

all liability to others which it has or

‘May incur by reason of the acts alleged

in the complaint; and it is further

A53

ORDERED, ADJUDGED AND DECREED

that defendant Robert L. Vesco be and

he hereby is, liable to plaintiff for

all loss, damage, cost and expense

arising from the acts alleged in the

complaint herein and that the amount of

said loss, damage, cost and expense be

determined by the Court upon a hearing;

and it is further

ORDERED, ADJUDGED AND DECREED

that the aforesaid hearing as to

plaintiff's loss, damage cost and

expense be set down and held on a day

designated by plaintiff, upon the

plaintiff giving defendant Robert L.

Vesco ten days notice of said hearing

by registered or certified mail at

Brace Ridge Road, Nassau, The Bahamas

and 170 Denville Road, Boonton Township,

New Jersey 07005; and it is further

A54

ORDERED, ADJUDGED AND DECREED

that upon the holding of the aforesaid

hearing as to plaintiff's damages and

the determination of said damages, the

within judgment be amended granting

plaintiff judgment against defendant

Robert L. Vesco for the amount of such

loss, damage, cost and expense together

with interest and costs and disburse-

ments of this action and that such

amended judgment be entered against

defendant Robert L. Vesco; and it is

further

ORDERED, ADJUDGED AND DECREED

that plaintiff shall have the right to

apply at the foot of said judgment for

such other and further relieve [sic] as

to the Court may seem just and proper

in the circumstances.

s/f Charles E. Stewart, Jr.

Useless

Entered October 5, 1973

A55

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

INTERNATIONAL CONTROLS CORP.,

Plaintiff,

-against-

ROBERT L. VESCO, et al.,

Defendants.

Civil Action No. 73 Civ. 2518

AFFIDAVIT

JOSEPH A. BONDI, being duly

sworn, deposes and says:

1. I am an attorney

associated with the firm of Shea Gould

Climenko & Kramer, 330 Madison Avenue,

New York, New York 10017, general

counsel for International Controls

Corp., plaintiff herein.

2. By order dated October 19,

1973, Davia Butowsky, Special

A56

Counsel to International Controls

Corp., and I were authorized to effect

service of process herein upon de-

fendants Robert L. Vesco, Norman

LeBlanc, Stanley Graze, Richard E.

Clay, Wilbert J. Snipes, Frederic E.

Weymar, Gilbert R. J. Straub, C. Henry

Buhl III, Ralph P. Dodd, Shirley

Bailey, I.0.S., Ltd., Columbus Trust

Company, Limited, Bahamas Commonwealth

Bank ("BCB"), International Bancorp,

Kilmorey Investments, Ltd., Value

Capital, Ltd., Global Holdings Ltd.,

Global Financial Ltd., Butlers Bank

Ltd. (now known as Who Holdings Ltd.)

and Allan J. Butler.

3. On Monday, October 22,

1973, David Butowsky and I proceeded

to Nassau, Bahamas. On Tuesday,

A57

October 23, 1973 at approximately 9:30

A.M., Mr. Butowsky and I went to the

premises in Nassau, Bahamas known as

"Charlotte House" in which defendant

BCB is located and we ascertained by

examining a listing inside the bank

premises that BCB was the registered

agent for defendants Global Financial

Ltd., Global Holdings Ltd. and Kilmorey

Investments Ltd. Thereupon, we

approached a receptionist situated at

a desk on the main banking floor near

a stairway providing access to offices

On the second floor, including those

of certain of the other corporate

defendants herein. The receptionist

identified herself as Norma Russell.

We asked Miss Russell whether Norman

LeBlanc, President of BCB, was available

for us to deliver some papers. Miss

A58

Russell, in our presence, checked by

telephone with Mr. LeBlanc's office

and told us that she had been authorized

to accept papers on Mr. LeBlanc's

behalf. We thereupon identified

ourselves to Miss Russell and left

with her three copies of the Summons

and Amended Complaint herein, which

were in envelopes marked Global

Financial Ltd., Global Holdings Ltd.

and Kilmorey Investments Ltd. Miss

Russell provided us with a written

receipt for the Summons and Amended

Complaint herein.

4. Immediately thereafter,

a woman who identified herself as Miss

Hastie, Norman LeBlanc's secretary,

appeared, accompanied by a man who

identified himself as a security

officer of BCB. I recognized Miss

A59

Hastie as being one of Mr. LeBlanc's

secretaries from a prior visit to Mr.

LeBlanc. Miss Hastie asked us what we

wanted and we advised her that we

wished to serve defendants in the

action herein with a Summons and

Amended Complaint. She stated that

she could not accept the Summons and

Amended Complaint and we stated that

Miss Russell had accepted them.

5. Mr. Butowsky and I

thereupon left the BCB by its main

entrance and proceeded to a side

entrance which we knew from a prior

visit led to defendant LeBlanc's

office. We proceeded to the wooden

door to Mr. LeBlanc's private offices,

which was locked, and I affixed to the

door a copy of the Summons and Amended

Complaint. As I was doing this, Miss

A60

Hastie, two uniformed guards and the

security officer we met previously ran

towards us yelling that we should

leave at once. We immediately left

and Miss Hastie ripped the Summons and

Amended Complaint from the door and

threw it at us.

6. Thereafter, at about

10:15 A.M., Mr. Butowsky and I drove

to the Sonesta Beach Hotel in Nassau,

Bahamas, to seek to attend a share-

holders meeting of Investment Properties

International, Ltd. ("IPI"), which was

scheduled for 10:00 A.M. that morning.

Defendants Norman LeBlanc and Gilbert R.

J. Straub were listed in the notice of

meeting as being shareholders proposed

to be selected as members of a committee

_Of inspectors with the power of

appointing a liquidator of IPI and we

Aél

believed that we might vossibly be

able to serve them personally at the

meeting. Upon arriving at the hotel

we inquired where the meeting was

being held and were advised that the

meeting had been adjourned as no

quorum had been present and that

Messrs. Straub and LeBlanc were also

not present.

y Thereafter, at about

11:00 A.M., Mr. Butowsky and I proceeded

to Beaumont House, located in Nassau,

Bahamas, in which the offices of

defendant Columbus Trust Company, Ltd.

are located. We proceeded to the

offices of Columbus Trust Company Ltd.

and asked to see Mr. Frederick Murray,

the Secretary of Columbus Trust

Company Ltd. We introduced ourselves

to Mr. Murray, advised him why we were

A62

in Nassau and I served him with a copy

of the Summons and Amended Complaint

herein.

3. Thereafter, at about

12:15 P.M., Mr. Butowsky and I went to

a premises located on Charlotte

Street, Nassau, Bahamas, in which we

had been advised defendant Allan J.

Butler had his offices. We asked a

person present in the office if Mr.

Butler was there and a lady who

identified herself as Miss Knowles and

stated that she was Mr. Butler's

secretary advised us that Mr. Butler

was in the United States. We asked

Miss Knowles if the office was also

the office of Butlers Bank Ltd. (now

known as Who Holdings, Ltd.) and she

. Stated that it was. After identifying

ourselves, we advised Miss Knowles

Aé3

that we were serving Butlers Bank,

Ltd. (now known as Who Holdings Ltd.)

with a Summons and Amended Complaint

in the action herein on Allan J.

Butler and would leave it with her.

She promised us that she would give

the Summons and Amended Complaint

herein to Mr. Butler upon his return.

The road from Mr. Butler's office

required that we pass the premises

occupied by BCB and we observed that

uniformed security guards were patroll-

ing the sidewalk in front of the bank

and the entrance to Mr. LeBlanc's

office.

‘10. ‘Thereafter, on October 23,

1973, Mr. Butowsky and I made inquiries

from persons as to the possible

whereabouts of the individual de-

fendants herein and then sought to

A64

locate such persons at various restau-

rants and other establishments known

to be frequented by them.

ll. On October 24, 1973,

Mr. Butowsky and I engaged the services

of a resident of Nassau, Bahamas who

was familiar with the roads on New

Providence island and who, we believed,

would be helpful in locating the

residences of various of the defendants

herein. At about 1:30 P.M. on October 24,

Mr. Butowsky, the local guide and I

drove to the offices of BCB, and I

entered the main entrance of the bank

with copies of the Summons and Amended

Complaint herein, which were marked

with the names of Bahamas Commonwealth

Bank, International Bancorp, Kilmorey

Investments, Ltd., I.0.S., Ltd., Value

Capital Ltd., Global Holdings Ltd. and

A65

Global Financial Ltd. As there had

been guards patrolling the bank

premises and the sidewalk outside the

bank building following our visit on

the previous day, and as other guards

had chased us while we were serving

process herein on the previous day, we

deemed it imprudent to wait in the

bank and make extended inquiries as to

the presence of officers. I deposited

the copies of the Summons and Amended

Complaint herein with the receptionist

in the bank and advised her that these

were papers in the action herein being

served on BCB and on various corporations

for which BCB was registered agent.

We then left the premises.

12. thereafter, Mr. Butowsky,

the local guide and I proceeded to the

A66

me ns ee

residence located on Brace Ridge Road,

Nassau, Bahamas, which we had been

advised was the last known residence

of, and:owned by, defendant Gilbert R.

J. Straub and was also the last known

residence in Bahamas of defendant

Robert L. Vesco and an occasional

residence of defendant Norman LeBlanc.

This was the same residence at which

Mr. Vesco had been personally served

with a subpoena by an Assistant United

States Attorney and at which plaintiff

herein had served Mr. Vesco with the

Original Summons and Complaint. Upon

arriving at such premises, we proceeded

to the gate. Two men who identified

themselves as gardeners were standing -

at the gate and asked us what we

wanted. We identified ourselves and

stated that we wished to serve the

A67

Summons and Amended Complaint herein

on Messrs. Vesco, LeBlanc and Straub.

13. One of the gardeners

proceeded into the house to call BCB

and the other gardener remained inside

the gate watching us. After approxi-

mately ten minutes a car approached,

occupied by the same man who had

identified himself as a security

officer of BCB on the previous day and

a man named Charles Evans, who, from

Our previous visit to Nassau, Bahamas

we believed to be employed as a

chauffeur by either defendant LeBlanc

or for defendant LeBlanc by defendant

BCB. These gentlemen asked what’ we

wanted and we identified ourselves and

stated that we wished to serve the

Summons and Amended Complaint herein

On Messrs. Straub, Vesco and LeBlanc.

A6&

The men said that they could not

accept the papers and the man who had

previously identified himself as a

security officer for Bahamas Common-

wealth Bank abruptly removed a miniature

camera from his shirt pocket and

proceeded to take photographs of both

Mr. Butowsky and me.

14. I thereupon sought to

hand copies of the Summons and Amended

Complaint herein to the gardeners and

they jumped back. I then tossed

copies of the Summons and Amended

Complaint herein over the gate and

onto the driveway inside the premises.

One of the gardeners picked them up

and handed them to the security officer

who threw them into our car. We then

drove away.

A69

15. Mr. Butowsky, the local

guide and I then drove to the Sonesta

Beach Hotel, which we had been informed

was one of the customary residences of

Mr. LeBlanc in Nassau, Bahamas. I

went to the front desk of the Sonesta

Beach Hotel, asked for Mr. LeBlanc and

was advised that he was not present.

I stated that I wished to leave a

Summons and Amended Complaint herein

for him and was told that I could

leave it with the desk clerk, who

assured me that he would see that it

was promptly given to Mr. LeBlanc.

16. Mr. Butowsky, our local

guide and‘I then proceeded to Knob

Hill Apartments, located off East Bay

Street, Nassau, Bahamas. We had been

advised that Knob Hill Apartments was

a known residence of Norman LeBlanc in

A70

—

eal E> Bigtawtinn ieieten os So eae ree

comer ncnslpen. mtn A a

Nassau, Bahamas. We inquired of one

of the residents in the apartment

complex where Mr. LeBlanc's apartment

was and were advised that Mr. LeBlanc

had been known to reside in an apart-

ment on the first floor. We then

proceeded to such apartment, and

knocked on the door. We received no

answer. I thereupon taped a copy of

the Summons and Amended Complaint

herein on the doorway of such premises.

i7. Mr. Butowsky, our local

guide and I then proceeded to a

premises in Nassau, Bahamas, located

opposite the residence of a Dr.

Applewood, which premises, we had been

advised, was presently the residence

of Miss Wendy Kenyon, and also one of

A71

the customary residences of Mr.

LeBlanc in Nassau, Bahamas. We rang

the doorbell and knocked on the door

of such premises and did not receive

an answer. We thereupon returned to

our hotel.

18. At 8:00 o'clock on the

evening of October 24, Mr. Butowsky

and I drove to the premises of Miss

Wendy Kenyon. We approached the

doorway and rang the bell. A person

inside with a female voice asked who

we were and we identified ourselves as

David Butowsky and Joseph Bondi. The

person inside refused to open the door

and I thereupon taped a copy of the

Summons and Amended Complaint herein

to the outside of the door.

i9. We then proceeded to

the Cafe Martinique on Paradise

A72

Island, Bahamas, known by us to be a

restaurant frequented by various of

the defendants herein. We asked a

waiter if he had seen Messrs. LeBlanc,

Straub, Clay or Vesco that evening and

he said he had not but believed that

several of them had been present the

previous evening. He then searched

the restaurant for such persons and

advised us that none were present.

20. At approximately 7:00

A.M. on the morning of October 25,

1973, I received a telephone call from

a man who identified himself as (and

whose voice I recognized as) Norman

LeBlanc. Mr. LeBlanc advised me that

he was calling from Costa Rica and

that our conversation was being tape

recorded. He asked that I cease

harrassing his secretary by leaving

A73

copies of the Summons and Amended

Complaint herein taped on the doorway

of her residence. I replied that we

were not seeking to harrass him or any

other persons, but that we were seeking

to effect service in the action herein.

He then stated that I should govern my

actions in accordance with Bahamian

law and that such service was not

effective under Bahamian law. I

advised him that we believed our

service to be effective under the laws

of the United States of America and

that we were seeking to serve him in

an action pending in courts of the

United States of America. Mr. LeBlanc

suggested that I retain Bahamian

counsel and repeated that I should

A74

cease harrassing him and his secretary.

abe After breakfast on the

morning of October 25, 1973, I asked

the switchboard operator if I had any

messages and she advised me that a man

had sought to telephone me at ten

minute intervals between 9:30 and

11:00 P.M. on the evening of October 24.

I believe that this was Mr. LeBlanc.

22. On the morning of

October 25, 1973, Mr. Butowsky and I

went to the general post office in

Nassau, Bahamas and obtained the Post

Office box numbers from the inquiry

clerk therein of defendants Robert L.

Vesco, Gilbert R. J. Straub, Bahamas

Commonwealth Bank, Allan J. Butler,

Butlers Bank, and of Miss Wendy

Kenyon. [There is no street mail

delivery service in the Bahamas]. I

A75

thereupon purchased stamps and de-

posited copies of the Summons and

Amended Complaint herein in envelopes

addressed to the Post Office boxes of

Bahamas Commonwealth Bank; Inter-

national Bancorp, Kilmorey Investment

Ltd., Value Capital Ltd., Global

Holdings Ltd., Global Financial Ltd.,

and 1I.0.S., Ltd., all c/o Bahamas

Commonwealth Bank; Robert L. Vesco,

Gilbert R. J. Straub, Allan J. Butler,

Butlers Bank Ltd. (now known as Who

Holdings Ltd.) and Norman LeBianc c/o

Miss Wendy Kenyon. I then deposited

all such envelopes, with the proper

postage affixed, into the mail receptacle

located in the post office.

23. Thereafter, I went to

my hotel to pack and proceed to the

airport. I noticed that the man who

A76

had identified himself as a security

guard of BCB and whom I had met

previously at the residence at Brace

Ridge Road was sitting outside my

hotel. I thereupon checked out of the

hotel, intending to proceed by my

rented automobile to the airport.

Before leaving Paradise Island I

noticed that the security officer was

following me in an automobile. I

sought to verify that he was following

me by first driving quickly, then

slowing down, then halting and then

turning on a side road. He continued

to follow me and I determined that it

would not be prudent to drive to the

airport. I thereupon returned the

automobile at the Avis depot in Nassau

and proceeded by taxi to the aitport

[sic]. I did not notice the security

A77

guard following the taxi until I

reached the main entrance at the

airport. At that time, I again

noticed the security guard and upon

leaving the taxi at the airport imme-

diately approached a policeman. I

pointed out the security guard to the

policeman and stated that he had been

following me. The policeman stated

that he knew the security guard to be

a former Nassau policeman and asked me

who I was. I identified myself and

stated that I had been authorized by a

United States court to serve process

on various defendants including

Robert L.‘Vesco and Norman LeBlanc and

that I believed the security guard to

be in their employ. The policeman

acknowledged that he also understood

this to be the case and said that he

A78

RTO 00 TS ET be

would see to it that I would board my

airplane without interference. I

boarded the airplane and left Nassau,

Bahamas without further incident.

s/ Joseph A. Bondi

Sworn to before me this

twelfth day of November, 1973

s/ ;

Notary Public

A79

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

INTERNATIONAL CONTROLS CORP.,

Plaintiff,

-against-

ROBERT L. VESCO, et al.,

Defendants.

Civil Action No. 73 Civ. 2518

AFFIDAVIT

ROBERT L. VESCO, being duly

sworn, deposes and says:

1. I am now, and I have

continuously since at least 1972 been a

domicilary and permanent resident of

the Republic of Costa Rica. I have

also made an express declaration of my

intention to continue to reside per-

manently in Costa Rica and adopt the

nationality at the appropriate time.

A80

2A enna

Ze My presence and status

in Costa Rica has not been a secret.

Quite to the contrary, it has been

open, documented and internationally

publicized. Moreover, on the 15th day

of June, 1973, Viron P. Vaky, the

Ambassador of the United States of

America made a formal request to the

Ministry of Foreign Relations of Costa

Rica for my extradition and provisional

arrest. This request was predicated

upon the text of a warrant issued

June 1, 1973, by Judge John M. Cannella

of the United States District Court for

the Southern District of New York.

3 A review of the documents

submitted in support of the extradition

application contains the statement that

the United States Government and the

A81

judicial authorities of the SDNY were

not only aware of my status as a

resident of Costa Rica travelling with

a provisional Costa Rican passport, but

argued that Costa Rica was my domicile

and permanent home. (Paragraph 3 of

page 9. Exhibit A with translation).

4. This extradition proceed-

ing received international media

coverage. At no time have I ever

sought to hide my presence in Costa

Rica. In point of fact, on numerous

Occasions reported in the international

media, I have expressed my pleasure and

gratitude in being accorded the oppor-

tunity to reside with my family in one

of the finest democratic countries in

the Western Hemisphere.

S. Miss Sylor Yohonn, in

her affidavit dated August 6, 1973

A&2

states that pursuant to an order dated

July 27, 1973, she was authorized to

serve the summons and complaint upon

me. She further stated that she

unsuccessfully spent the afternoon and

evening of Sunday, July 29 and most of

cia, July 30 searching for me in

various places located in Nassau. She

then alleges that she went to a house

On Brace Ridge Road, Nassau, the

Bahamas, where an unidentified person

who appeared to be a guard indicated

after some evasion that it was my

house.

6. It is true that I have

at various times been in the Bahama

Islands, staying at different hotels,

villas, houses and apartments. How-

ever, my principal place of residence

anc domicile was then and remains now,

A383

the Republic of Costa Rica.

7. I do not now, nor have I

ever owned, nor has any member of my

family owned a house on Brace Ridge

Road in Nassau, Bahamas. I have stayed

at a house on Brace Ridge Road during

several of my trips to Nassau, however,

at other times I have also stayed at

other locations while in Nassau.

8. I do recall recently

reviewing a document prepared by one of

the attorneys from International

Controls Corp. (ICC) wherein he de-

scribes the house on Brace Ridge Road

as being owned by Mr. Straub and

resided. in periodically by Messrs.

LeBlanc and me along with other persons.

9. It would appear that

this was a convenient way for counsel

to attempt to establish one mail drop

A84

ts An ease Ce ESE ab Aes Oe. eee Ts BAS.

for a number of persons without regard

to the actual facts and in total

disregard of fundamental principals of

law. Fairness and due process surely

require a more substantial predicate

upon which to rest proper service of a

summons - complaint.

10. Miss Yohonn further

states that while she was outside the

front gate of the premises, a teenage

boy asked her what she wanted, and

she replied that she wanted to serve a

summons and complaint in an action

entitled ICC vs. Vesco, and when the

teenage boy jumped back, ste threw the

complaint at him, which he caught and

threw back at her. She then gave the

papers to the unidentified person who

threw the papers at her in the road.

Miss Yohonn indicated that she was

A85

somewhat afraid and ran back to her car

and drove to her hotel, where she

claims to have telephoned the chambers

of Charles E. Stewart, District Judge,

on the evening of July 30, 197[(3}), to

explain what occured and to request

authorization to use an ancillary order

which she states was signed on Sunday,

July ‘29, 1973.

ll. This purported order

dated July 29, 1973 authorized the

service of process by depositing a copy

of the papers upon the premises of the

last known residence of the defendant

(not Brace Ridge Road) located in

Nassau, Bahamas, along with mailing a

copy to the same residence,

12. I state without qualifi-

cation or reservation that at the time

A86

the summons and complaint was purportedly

left on the grass on the premises

located at Brace Ridge Road, Nassau,

Bahamas, as described in the Yohonn

affidavit, I was not informed of such

and in fact I was a resident and

domicilary of the Republic of Costa

Rica, a fact well known to the plain-

tiff and their counsel.

L3. I further state, again

without qualification or reservation,

that personal service of the summons

and complaint was not made upon me, and

I further state to the best of my

knowledge and belief, service of the

summons and complaint was not made in

Costa Rica, by mail, or otherwise at my

then known place of residence.

14. A careful analysis of

the Yohonn affidavit reveals a series

A387

of fatal flaws. At no place in the

affidavit does Miss Yohonn state that

she had reason to believe that I was in

fact in Nassau, Bahamas or attempting

to avoid service during the period of

time she was purportedly attempting to

effect service of process upon me. As

a matter of fact, Miss Yohonn quite

Clearly states that notwithstanding the

fact she went to all the places where I

would have normally been seen had I

been in Nassau, she was unable to

either find me or anyone who had even

seen me.

15. The order of October 5,

1973 indicates that service of the

summons and complaint was effected in

accordance with the provisions of the

Order dated July 27, 1973. However,

A&s

en See A ER ae a es

ee Po BIG EA cE LL Rees nee

wh 5b iad Eee

the July 27, 1973 order required

personal service of the summons and

complaint and it is an uncontradicted

fact that personal service was never

made upon me. Miss Yohonn makes

reference to the fact that she called

chambers in the early evening of

July 30, 1973 to ask permission to use

another method of service as she was

not able to effect personal service.

16. At no point does she

ever explain how she knew on July 30

that an order had been signed on a

Sunday, July 29, to permit another

method of service, when on July 29,

there was no need for an alternate

means of service as she had not ex-

hausted nor even begun her attempt at

personal service. Having left New York

on July 28, 1973 how did she know an

A89

order was signed on Sunday, July 29?

Moreover, why was it necessary to sign

an order on a Sunday when at the time

the order was signed, there was no

reason for its existance? Furthermore,

if she knew of its existance, why did

she have to call for authorization to

act pursuant to the order?

17. Miss Yohonn's affidavit

offers no proof that the house on Brace

Ridge Road was my last known residence

in Nassau nor does she submit any

evidence that the house was owned by

me.

18. The concept of "last

known residence" has application where

a party is unable to ascertain the

present whereabouts of a proposed |

defendant. To suggest that ICC was

unaware or unable to determine where I

A90

v0. Bans

re nre gD

7 _ pe ee a a

a —pr

resided is at best ludicrous, when

their own Special Counsel appointed by

this court stated two weeks before that

I was "residing in Costa Rica".

19. At one point in the

Yohonn affidavit, she states that the

summons and complaint was thrown out in

the road by the unidentified person.

She never indicates that she picked it

up and in light of her statement that

she was somewhat afraid of guards and

ran back to her car, it is difficult to

perceive that she did. Nevertheless,

she later states that she rolled up the

said summons and complaint and tied it

with a blue ribbon. How she was able

to tie a ribbon around a summons and

complaint which was still lying on the

road is rather difficult to explain or

understand.

A91

20. The irony of the matter

is that ICC, by unilateral action, was

successful in setting aside the service

of the amended summons and complaint

which was purportedly served in an

identical fashion at Brace Ridge Road

in Nassau, the Bahamas relying sub-

stantially upon the argument that at

the time of the service the amended

pleading, ICC knew of my residence in

Costa Rica. It is of interest to note

that ICC's knowledge of my Costa Rican

residence is described in an affidavit

dated prior to the purported service of

the original summons and complaint,

which is the subject of this motion.

41. On the 18th of June,

1973, the court appointed special

counsel for ICC characterized me as a

"fugitive from justice residing in

A92

Costa Rica".

22. ICC realized that it had

committed a fatal error in procuring a

default judgement purportedly predicated

upon allegations contained in the

original oimmkaine, when the pleading

had in fact been amended. Despite the

fact that an affidavit of service of

the amended complaint was not at the

time under attack by me, ICC advanced

the very argument I am now submitting

to this court, in support of its

position to void the pleadings which

would destroy the efficacy of its

judgement. ICC cannot have it both

ways.

23. It should not be permitted

to argue that service of the amended

pleading was properly set aside because

I was residing in Costa Rica, ‘however,

A93

service of the original summons and

complaint is valid. This position is

untenable in view of the fact that the

information relied upon namely: the

Butowsky affidavit, clearly establishes

in June of 1973, ICC's knowledge of my

actual residence in Costa Rica. Any.

attempt to distinguish the purported

service of the original complaint from

the amended complaint is totally

without merit.

24. I did not attack the

purported service of the original

summons and complaint before, as I was

not and am not a resident or citizen of

the United States and felt confident

that I would be able to defend myself

against any attempt to enforce the

judgement resulting therefrom, in a

court of competent jurisdiction at the

A94

wee had 5 Peden veds as 8

place of my domicile.

25. As a matter of fact, for

the past two years, i have actively

defended against an exequator proceed-

ing initiated by Icc in Costa Rica.

IcC is aware that one of my defenses in

this proceeding is the original lack of

jurisdiction, attacking the due process

of the alleged default judgement due to

the form of alleged service.

26. IcC realizing the ulti-

INMate success of these arguments in

Costa Rica, initiated proceedings in

the United States to satisfy the ICC

judgement out of assets owned by

Vesco & Co, Inc., a corporation that

was Organized as part of an estate

planning program with my children.

27. It has come to my

attention that Vesco & Co. assets are

A95

in danger of being appropriated under a

concept of "alter ego" and that the

appelate procedure normally available

may have been foreclosed by reason of

prior counsel's negligence and omission

to file a timely appeal. I am also

aware of the fact that a petition for a

writ of certioari [certiorari] has been

filed with the United States Supreme

Court to certain of these issues.

28. I. also deem it appropriate

to bring to this court's attention,

matters which I have only recently

become aware of, namely: ICC cefault

judgement established damages in the

amount of approximately 2.4 million

dollars despite the fact that the

entire sum was written off by the

corporation as a tax deduction, re-

ducing the alleged damage to the

A96

Se ere

corporation of approximately fifty

percent of the judgement and certain

other benefits have been obtained for

the same alleged expenses, it would be

unconscionable to permit such a judge-

ment in the amount of 2.4 million to

remain of record.

29. In view of the foregoing,

I have at this time instructed counsel

to appear in this action for the

purpose of attack this courts juris-

diction over my person by reason of

IcC's failure to properly effect

service of the summons and complaint in

* accordance with notions of due process.

30. I request that the

service of the summons and complaint be

vacated and set aside and the judgement

A97

and order thereunder be likewise

vacated and set aside.

s/ Robert L. Vesco

Filed November 17,

1977

A98

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

INTERNATIONAL CONTROLS CORP.,

Plaintiff,

-against-

ROBERT L. VESCO,

Defendant.

Civil Action No. 74 Civ. 1588

AFFIDAVIT

STATE OF NEW YORK )

COUNTY OF NEW YORK) Ea

LOIS SYLOR YOHONN, being duly

Sworn, deposes and says: |

Ae I am associated with the

firm of Shea Gould Climenko & Kramer,

attorneys for plaintiff in the above-

entitled action. I make this affidavit

in support of the instant application

pursuant to Rule 4(c) of the Federal

A99

Rules of Civil Procedure for an order

appointing David M. Butowsky as a

qualified person to effect service of

the summons and complaint herein upon

defendant Robert L. Vesco.

2. It appears that it may

be possible to serve the defendant in

Nassau, Bahamas. Since it is not

feasible or practical to have the

United States Marshal attempt to serve

said defendant in the circumstances,

and since the appointment of another to

make service will result in the saving

of fees of the United States Marshal,

it is respectfully requested that

David M. Butowsky be appointed to serve

the summons and complaint herein upon

said defendant. Mr. Butowsky is in

A100

all respects qualified to serve process

in this action.

LOIS SYLOR YOHONN

Sworn to before me this

8th day of April, 1974.

s/ 7

Notary Public

Al0l

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

INTERNATIONAL CONTROLS CORP.,

Plaintiff,

-against-

ROBERT L. VESCO,

Defendant.

Civil Action No. 74 Civ. 1588

ORDER APPOINTING PERSON

TO SERVE PROCESS

Upon the affidavit of Lois

Sylor Yohonn sworn to on April 8&8, 1974,

and it appearing that David M. Butowsky

is a qualified person over twenty-one

years of age and not a party to this

action, and that there are difficulties

entailed in the service of the summons

and complaint and that it is expedient

that service be made by said person, it

A102

is hereby

ORDERED, that David M.

Butowsky, be and he hereby is, au-

thorized to effect service of process

in the within action on defendant

Robert L. Vesco, and it is further

ORDERED, that service of

process upon the said defendant may be

(i) by any method of service of process

authorized by Rule 4 of the Federal

Rules of Civil Procedure; or (ii) by

leaving a copy of the summons and

complaint herein upon the premises of

the defendant's last known residence in

Nassau, The Bahamas and mailing a copy

thereof to the defendant at either the

Post Office Box of the defendant or to

the address of the last known residence

A103

of the defendant in Nassau, The Bahamas.

Dated: New York, New York

April 9, 1974

s/ Charles E. Stewart, Jr.

U.S.D.J.

Entered April 9, 1974

Alu4

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

INTERNATIONAL CONTROLS CORP.,

Plaintiff,

-against-

ROBERT L. VESCO,

Defendant.

Civil Action No. 74 Civ. 1588

AFFIDAVIT

STATE OF NEW YORK )

4 £8.12

COUNTY OF NEW YORK)

DAVID M. BUTOWSKY, being duly

sworn, deposes and says:

Le I am Special Counsel

appointed by this Court in Securities

and Exchange Commission v. Robert L.

_ Vesco, et al, 72 Civ. 5001 (CES).

i By order dated April 9,

1974 I was authorized to effect service

Al05

of process in the within action on

defendant Robert L. Vesco either (i) by

any method of service of process

authorized by Rule 4 of the Federal

Rules of Civil Procedure; or (ii) by

leaving a copy of the summons and

complaint herein upon the premises of

the defendant's last known residence in

Nassau, The Bahamas and mailing a copy

thereof to the defendant at either the

Post Office Box of the defendant or to

the address of the last known residence

of the defendant in Nassau, The Bahamas.

3. On Tuesday, April 16,

1974 I proceeded to Nassau, Bahamas.

On Wednesday, April 17, 1974, ac-

companied by Marvin Groeneweg, Consul

to the United States of America, I

proceeded to Brace Ridge Road, Nassau,

Bahamas, which is known to me based

A106

upon prior visits to such residence as

the last known residence in the Bahamas

of Robert L. Vesco. This is the same

residence at which I had served Mr.

Vesco with service of process in

International Controls Corp. v.

Robert L. Vesco, et al, 73 Civ. 2518.

Upon my arrival at such premises I

proceedec to a gate and was confronted

by two men who stopped me from entering

upon the premises. I held out the

summons and complaint and stated that I

would like to hand the envelope to Mr.

Vesco. One of the guards stated to me

"we are instructed not to accept any

papers". Thereupon I dropped the

envelope on the driveway and requested

the guard to hand it to Mr. Vesco. He

remained mute and I took leave of the

A107

premises.

4. On April 17, 1974 1 EXHIBIT A

mailed a copy of the summons and

complaint to Robert L. Vesco at his q.

been

listed post office box no. N-8323 by Certificate of Posting ‘Tegistered and. posted anya 2

registered mail. A copy of the receipt

is affixed hereto as Exhibit A.

Accepting ek ; ha. X Lan

s/ Initials -..... 2 FOR REGULATIONS SEE ! ove AY AWAD: :

David M. Butowsky : :

Sworn to before me this

22nd day of April, 1974.

Notary Public

A108 chub

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

INTERNATIONAL CONTROLS CORP.,

Plaintiff,

-against-

ROBERT L. VESCO,

Defendant.

Civil Action No. 74 Civ. 1588

JUDGMENT

This action having been

commenced by the filing of a complaint

On the 8th day of April, 1974, and this

court by order dated April 9, 1974,

having authorized David M. Butowsky to

effect service of process herein on

defendant Robert L. Vesco by David M.

Butowsky on the 17th day of April,

1974, and proof of such service having

been filed in the office of the Clerk

A110

of this Court on the 24th day of April,

1974; and

Defendant, Robert L. Vesco,

having failed to plead, appear, move or

otherwise defend with respect to the

complaint herein, and the time for said

defendant to appear, answer or other-

wise move having expired, and said

defendant's default having been noted

and entered;

AND, it appearing to the

court that there is no just reason for

delay in entering the within judgment

against defendant Robert L. Vesco;

NOW, on motion of Shea Gould

Climenko & Kramer, attorneys for the

plaintiff and upon the affidavit of

Sheldon D. Camhy, sworn to the 27th day

of August, 1974; it is hereby

ORDERED, ADJUDGED AND DECREED

Alll

UNITED STATES DISTRICT COURT

: : SOUTHERN DISTRICT OF NEW YORK

that plaintiff have judgment against

the defendant Robert L. Vesco as INTERNATIONAL CONTROLS CORP.,

demanded in the complaint herein; and Plaintiff,

it is further -against-

ORDERED, ADJUDGED AND DECREED ROBERT L. VESCO,

that defendant Robert L. Vesco be and ctwatank.

he hereby is, liable to the plaintiff

i Civil Action No. 74 Civ. 1588

for damages in the amount of $2,900,000

together with interest thereon, by ENDORSED DECISION ON MOTION

TO VACATE DE ULT JUDGMENT

reason of the acts alleged in the

complaint herein. Vesco's motion to vacate the

Dated: New York, New York default judgment pursuant to F.R.Civ.P.

August 29, 1974 ;

60(b) is denied. The Court finds that

s/ Charles E. Stewart, Jr. the service of the summons and complaint

was effectuated in a manner reasonably

calculated, under the circumstances, to

Entered September 11, 1974 assure delivery to a place where the

‘defendant was likely to receive it and

All2 complied with this Court's April 9,

1974 order. Although in his memorandum

All13

in support of his motion Vesco asserts

service was by registered mail, in fact

a review of the affidavit of service

indicates that a copy of the summons

and complaint was left on the premises

of the defendant's last known residence

in the Bahamas and a copy was mailed by

registered mail. The summons and

complaint were delivered to a place

reasonably assured to give the de-

fendant notice, and in his present

application the defendant has submitted

nothing to counter this finding.

Accordingly, the defendant's

motion to vacate the default judgment

is denied.

SO ORDERED.

s/ Charles E. Stewart, Jr.

U.S.D.J.

May 2, 1978.

Entered September 11, 1974

All14

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