Fugitive Disentitlement, Sanctions Evasion, and Shell Companies: Commentary on United States v. 73DT Business Enterprises (2d Cir. 2025)

I. Introduction

The Second Circuit’s summary order in United States v. 73DT Business Enterprises, No. 24-0370-cv (2d Cir. Dec. 2, 2025), though formally non‑precedential, is an important illustration of how federal courts are using the civil forfeiture “fugitive disentitlement” statute to support U.S. sanctions enforcement and to reach assets held through layered corporate structures.

The case arises at the intersection of:

• the Civil Asset Forfeiture Reform Act’s fugitive disentitlement provision, 28 U.S.C. § 2466;
• sanctions imposed under the International Emergency Economic Powers Act (IEEPA) and Executive Order 13848, concerning foreign interference in U.S. elections; and
• the use of shell companies and nominee corporate officers to conceal beneficial ownership of high‑value U.S. real estate and financial accounts.

The key question on appeal was whether two corporate claimants—7D Business Bureau, Inc. (“7D”) and 73DT Business Enterprises, LLC (“73DT”)—could litigate their ownership claims to Beverly Hills condominiums and bank accounts, or whether those claims could be struck under § 2466 because the individuals behind the entities, Andrii Derkach and his former wife, Oksana Terekhova, were fugitives from related criminal charges.

The Second Circuit affirmed the district court’s order striking the claims, reinforcing several practical points:

• Circumstantial evidence of control and benefit, including post‑divorce conduct, can establish a continuing joint interest in assets.
• A “sham divorce” may be inferred and supported by hearsay admitted under Federal Rule of Evidence 803(19).
• Once a sanctioned individual on the Specially Designated Nationals (SDN) list is found to own a 50% interest in an entity, OFAC’s “50 percent rule” (31 C.F.R. § 579.406) can effectively block all property of that entity and support fugitive disentitlement of its claims.
• Failure to challenge the fugitive status elements on appeal constitutes forfeiture of that challenge.

Although issued as a summary order and explicitly without precedential effect under Second Circuit Local Rule 32.1.1, the decision is likely to be cited for its persuasive reasoning in sanctions‑related forfeiture cases and for its treatment of corporate claimants whose beneficial owners are fugitives.

II. Factual and Procedural Background

A. Parties and Properties

The United States commenced a civil in rem forfeiture action in the Eastern District of New York against:

• two Beverly Hills condominiums located at 432 North Oakhurst Drive, Units 103 and 203, including “leases, rents and profits therefrom, and all proceeds traceable thereto”; and
• funds in two U.S. financial accounts:
  • a Stifel Nicolaus & Co. investment account held in the name of 7D; and
  • a Citizens Business Bank account (successor to Community Bank) also in the name of 7D.

The government alleged that these “Defendants In Rem” were effectively owned and controlled by:

• Andrii Derkach, a former member of the Ukrainian Parliament’s pro‑Russian Party of Regions; and
• Oksana Terekhova, his then ex‑wife at the time of the forfeiture action.

Their alleged objectives were to:

• conceal Derkach’s beneficial ownership and control of the assets from U.S. financial institutions; and
• evade U.S. sanctions arising from his designation on the SDN list under Executive Order 13848.

B. Criminal Charges and Sanctions

In September 2022, Derkach was indicted in the Eastern District of New York for:

• conspiracy to violate IEEPA;
• bank fraud conspiracy;
• money laundering conspiracy; and
• engaging in monetary transactions in property derived from specified unlawful activity.

A superseding indictment in January 2023 added Terekhova as a co‑defendant on the same charges. The criminal case (United States v. Derkach, No. 22‑CR‑432 (E.D.N.Y.)) is closely related to the civil forfeiture action.

Separately, in September 2020, the Treasury Department’s Office of Foreign Assets Control (OFAC) designated Derkach as a Specially Designated National under Section 2(a) of Executive Order 13848, which addresses the threat of foreign interference in U.S. elections under IEEPA authority. That designation:

• blocked “all property and interests in property” of Derkach that are in the United States or within the possession or control of U.S. persons; and
• by operation of OFAC’s 50 percent ownership rule (31 C.F.R. § 579.406), also blocked the property of any entity 50% or more owned (directly or indirectly) by him.

C. Use of Shell Companies and Nominee Officers

The government’s verified complaint alleged a multi‑layered scheme:

• In or about 2013, Derkach and Terekhova purchased the Beverly Hills condominiums through the shell entities 7D and 73DT. The “DT” in 73DT was said to refer to their surnames.
• They allegedly concealed Derkach’s interest from U.S. banks and used a U.S.-based financial professional, Yosef Manela, as a nominee officer:
  • Manela opened a Stifel Nicolaus account in 7D’s name, listing himself as “Secretary,” “President,” and “Sole Officer.”
  • More than $500,000 was transferred into that account between September and October 2015.
  • Funds from the Stifel account were transferred to a Community Bank (later Citizens Bank) checking account in 7D’s name, again with Manela listed as “Secretary.”
  • Approximately $95,000 per year was paid from that account to cover condominium maintenance expenses.
• Even after OFAC added Derkach to the SDN list in 2020, Manela continued to transact on these accounts.

D. District Court Proceedings

In the civil forfeiture action, 7D and 73DT appeared as claimants, asserting ownership of:

• the bank and investment accounts (as the named account holders); and
• the condominiums (through their corporate ownership structures).

The government moved to strike their claims under 28 U.S.C. § 2466 (the fugitive disentitlement statute), arguing that both Derkach and Terekhova were fugitives from the related criminal case while benefiting from the contested assets.

The claimants opposed and also filed a motion to dismiss the complaint for failure to meet civil forfeiture pleading standards. Their core arguments in opposition to fugitive disentitlement were:

• Derkach had no current interest in the forfeited assets, having divorced Terekhova in February 2020.
• The government had not carried its burden to prove the statutory elements of § 2466 as to Terekhova.
• Even if the § 2466 elements were met, the district court should decline, in its discretion, to strike the claims (at least as to Terekhova).

The district court (Irizarry, J.) held that:

• all five statutory prerequisites for fugitive disentitlement were satisfied as to both Derkach and Terekhova; and
• it would exercise its discretion to strike the claims of 7D and 73DT.

Because the court found the claimants disentitled, it did not reach their motion to dismiss, citing Collazos v. United States for the proposition that fugitives “waive their right to be heard in the civil case when they refuse to submit to state and federal jurisdiction in related criminal cases.”

E. The Appeal

On appeal to the Second Circuit, 7D and 73DT (the “Claimants”) narrowed their challenges to:

1. contesting the district court’s finding that Derkach retained any current interest in the Defendants In Rem, particularly after the 2020 divorce; and
2. arguing that the government failed to prove several § 2466 elements as to Terekhova, and that the district court misused its discretion by not separately analyzing whether disentitlement was appropriate as to her.

Significantly, the Claimants did not challenge on appeal the finding that Derkach was a fugitive under § 2466 (they targeted only his ownership interest). Nor did they dispute that if he still had a 50% stake in the property, OFAC’s 50 percent rule would block the property of entities he owned.

III. Summary of the Second Circuit’s Decision

The Second Circuit affirmed the district court’s order striking the claims. The court’s reasoning can be summarized in three main holdings:

1. Derkach’s continuing joint interest in the assets was not clearly erroneous.
   The panel upheld the district court’s factual finding that, notwithstanding the 2020 divorce, Derkach “had and continues to have an interest in” the Defendants In Rem. The court cited:
   • his “decision‑making authority” and “veto power” over the condominiums as described by Manela;
   • statements by the couple’s daughter to building employees describing him as an owner and explaining that finances were structured to avoid sanctions; and
   • evidence that the divorce appeared to be a sham motivated by sanction‑avoidance, supported by hearsay admissible under Federal Rule of Evidence 803(19).
2. Because Claimants did not challenge the fugitive status elements as to Derkach, and because he retained a 50% interest, fugitive disentitlement properly applied.
   The court held that:
   • Claimants forfeited any appellate challenge to whether the § 2466 prerequisites were met as to Derkach by failing to raise those arguments, citing Shakur v. Selsky.
   • Given Derkach’s SDN status and at least 50% ownership of the property, OFAC’s regulations (31 C.F.R. § 579.406) blocked the property and allowed disentitlement of the corporate claimants’ interests, regardless of whether § 2466’s elements were proved as to Terekhova.
3. In any event, the government also met its burden under § 2466 with respect to Terekhova, and the district court properly exercised its discretion to disentitle.
   As an alternative holding, the panel agreed with the district court that:
   • the government proved by a preponderance of the evidence that Terekhova had notice of the indictment, was not confined in another jurisdiction, and was deliberately avoiding the jurisdiction of the United States; and
   • the district court acted within the “range of permissible decisions” in striking the claims once the statutory conditions were satisfied.

Accordingly, the Second Circuit affirmed the order of forfeiture and did not require the district court to address the underlying motion to dismiss on the merits.

IV. Legal Framework

A. Civil Forfeiture and CAFRA

The Civil Asset Forfeiture Reform Act of 2000 (CAFRA) governs many federal civil forfeiture proceedings. Under 18 U.S.C. § 983(c), the government must establish the forfeitability of property by a preponderance of the evidence. Civil forfeiture actions are often brought in rem, meaning the “defendant” is the property itself, not the owner.

CAFRA also codified the fugitive disentitlement statute at 28 U.S.C. § 2466, which allows a court, in its discretion, to prevent certain fugitives from using civil forfeiture proceedings to recover or protect assets while evading related criminal prosecution.

B. The Fugitive Disentitlement Statute (28 U.S.C. § 2466)

Under § 2466, as interpreted in Collazos v. United States, 368 F.3d 190 (2d Cir. 2004), a court may bar a claimant from contesting a civil forfeiture proceeding if five elements are satisfied:

1. a warrant or similar process has been issued in a criminal case for the claimant’s apprehension;
2. the claimant had notice or knowledge of that warrant;
3. the criminal case is related to the forfeiture action;
4. the claimant is not confined or held in custody in another jurisdiction; and
5. the claimant has deliberately avoided prosecution by:
   • leaving the United States,
   • declining to enter or reenter the United States, or
   • otherwise evading the jurisdiction of a U.S. court where the criminal case is pending.

If these prerequisites are met, the statute “confers upon a court the discretion to bar certain individuals or entities from raising claims contesting civil forfeiture actions.” United States v. Technodyne LLC, 753 F.3d 368, 377 (2d Cir. 2014).

C. OFAC Sanctions and the 50 Percent Rule

Executive Order 13848, issued in 2018, declared a national emergency concerning foreign interference in U.S. elections and authorized sanctions against individuals and entities engaged in such interference. Under OFAC’s implementing regulations, including 31 C.F.R. §§ 579.201 n.1, 579.301 n.1, 579.406:

• U.S. persons are generally prohibited from dealing in the property and interests in property of persons listed on the SDN list; and
• if an SDN owns, directly or indirectly, a 50% or greater interest in an entity, that entity’s property and interests in property are also considered blocked.

In this case, the Second Circuit read those regulations in tandem with fugitive disentitlement: if Derkach is both a fugitive from related criminal charges and a 50% beneficial owner of the corporate claimants’ property, then the corporate property is blocked property associated with a fugitive. Disentitlement of corporate claims is thus a logical extension of § 2466’s purpose.

V. Analysis of the Court’s Reasoning

A. Establishing Derkach’s Continuing Joint Interest

1. Evidence of Control and Decision‑Making

The core factual dispute regarding Derkach was whether he retained any current interest in the assets, particularly after the 2020 divorce from Terekhova. The panel affirmed the district court’s conclusion that he did.

The court pointed to multiple strands of evidence:

• Meetings with Manela (2013–2017). Manela met with Derkach on at least four occasions. During these meetings, Derkach allegedly “conveyed the impression that he had decision‑making authority” over the condominiums and related accounts, with “veto power” over decisions regarding the assets and their management. He reviewed financial statements, including condominium costs and investment performance.
• Daughter’s statements to third parties. The couple’s daughter reportedly told various third parties, including building employees, that:
  • Derkach was an owner of the condominiums; and
  • “her living situation and finances were structured to avoid implicating [Derkach] or sanctions.”
  This narrative strongly reinforced the idea that formal ownership structures were being used to conceal his continuing beneficial interest.
• Joint property acquisition. The complaint alleged that Derkach and Terekhova jointly viewed and selected properties before purchase, and that they began obscuring their identities only after a bank refused to open an account due to Derkach’s status as a politically exposed person. This supported the inference that the corporate entities were created or used to disguise joint ownership rather than to reflect a genuine transfer of ownership.

Considering “the totality of the circumstances,” the panel held that it was not clearly erroneous to find that Derkach maintained a joint interest in the Defendants In Rem.

2. Sham Divorce and Rule 803(19)

The divorce between Derkach and Terekhova in February 2020 was the Claimants’ primary argument for severing Derkach’s connection to the assets. The panel rejected that argument on two levels:

1. Evidence that the divorce was a sham. The court noted record evidence that the couple’s younger daughter told others that the divorce was essentially fake—engineered “to protect Derkach’s assets from sanctions.” The Claimants objected that this was hearsay. The court held that the statement was admissible under Federal Rule of Evidence 803(19), which permits hearsay concerning reputation in the community about an individual’s personal or family history, including “marriage” and “divorce.”
2. Lack of asset disposition in the divorce decree. Even assuming the divorce were genuine, the decree itself “does not make mention of any assets or property interests, let alone the distribution thereof.” Thus, there was no evidence that Derkach was divested of any interest in the particular assets at issue. On the contrary:
   • as of December 2020—almost a year post‑divorce—the listed representatives of the condominiums included Derkach’s parents and the couple’s children, suggesting he remained involved in the properties’ management and upkeep.

The panel thus endorsed the district court’s reliance on circumstantial evidence, including family‑reputation hearsay, to treat the divorce as either a sham or, at minimum, as not proving any severance of Derkach’s beneficial interest.

3. Beneficial Ownership after Divorce

Crucially, the panel did not confine “interest” to formal title. Instead, it effectively equated:

• ongoing control over key decisions,
• review and oversight of finances, and
• family statements acknowledging his ownership but structured to avoid sanctions

with a continuing beneficial ownership interest sufficient for purposes of both OFAC’s 50 percent rule and the fugitive disentitlement statute.

On this record, the panel was not “left with the definite and firm conviction that a mistake has been committed,” the standard for clear error articulated in Otal Investments Ltd. v. M/V CLARY, 673 F.3d 108, 113 (2d Cir. 2012). Accordingly, it deferred to the district court’s factual finding of joint ownership.

B. Applying Fugitive Disentitlement to the Corporate Claimants

1. Linking the Fugitives and the Entities

The statutory text of § 2466 speaks of “the person claiming the property,” but courts have long recognized that corporate or nominal claimants can be disentitled where they are effectively stand‑ins for fugitives. Collazos and Technodyne both involved nuanced applications of this principle, and the present case follows the same path.

Here:

• the claimants were the corporations 7D and 73DT;
• the individuals behind those entities (Derkach and Terekhova) had been indicted in a related criminal case and were alleged fugitives; and
• the corporate forms were used to conceal the individuals’ beneficial interests and shield the property from sanctions.

The Second Circuit, tracking Technodyne, reiterated that § 2466 “confers upon a court the discretion to bar certain individuals or entities” from contesting forfeiture. The corporate form did not insulate the assets from the disentitlement consequences flowing from the fugitives’ misconduct.

2. OFAC’s 50 Percent Rule as a Bridge to Disentitlement

The panel’s most practically significant move was to link:

• the OFAC regulation that blocks the property of an entity 50% or more owned by an SDN (31 C.F.R. § 579.406); and
• the disentitlement of civil claims in a forfeiture action where that SDN is a fugitive from related criminal charges.

The court explained that if the district court properly found that Derkach had a 50% ownership interest in the Defendants In Rem, then:

“the statute’s regulations permit disentitlement of the property regardless of whether the elements are met as to Terekhova.” (citing 31 C.F.R. § 579.406)

In other words:

• Derkach is on the SDN list under E.O. 13848.
• Under OFAC’s 50 percent rule, entities he owns 50% or more are themselves blocked persons for sanctions purposes.
• If those entities are the claimants in a civil forfeiture case arising out of his sanctions‑evasion conduct, and if § 2466’s conditions are satisfied as to him, the court can strike the entities’ claims even without separately satisfying § 2466 as to other individuals (such as Terekhova).

This reasoning effectively allows a single sanctioned fugitive—if found to hold a 50% interest—to function as a “gateway” fugitive whose status disentitles the corporate vehicle he uses, regardless of any more complex ownership arrangements.

C. Alternative Ground: Fugitive Disentitlement as to Terekhova

1. Contested Elements on Appeal

Unlike with Derkach, the Claimants did contest the § 2466 elements as to Terekhova. They focused on three of the five prerequisites:

• whether she was “deliberately avoiding” U.S. jurisdiction;
• whether she was “confined or otherwise held in custody in another jurisdiction”; and
• whether she had “notice or knowledge” of the indictment against her.

The panel did not reproduce all of the underlying evidence in the summary order, but it noted that the district court’s detailed analysis (Special App’x 8–14) found sufficient proof on each point.

2. Deference to the District Court’s Findings

The court reiterated key principles from Technodyne:

• once § 2466’s legal applicability is established (reviewed de novo), the government must prove the factual prerequisites by a preponderance of the evidence;
• the district court may make the necessary findings “on the basis of the parties’ presentations” and is permitted to consider the “totality of the circumstances”； and
• those factual findings are reviewed for abuse of discretion, which encompasses clearly erroneous fact‑finding, erroneous legal standards, or decisions outside the range of permissible outcomes.

Here, the panel concluded that the district court’s finding—that Terekhova knew of the indictment, was not confined elsewhere, and was deliberately avoiding U.S. jurisdiction—was supported by record evidence and therefore not an abuse of discretion.

3. Discretionary Disentitlement

The Claimants argued that even if the § 2466 elements were met, the district court failed to undertake a meaningful discretionary analysis with respect to disentitlement as to Terekhova. The panel implicitly rejected this characterization, emphasizing that:

• once the prerequisites were found satisfied, the court explicitly decided to exercise its discretion to strike the claims; and
• that exercise of discretion was within the permissible range, particularly given the statute’s purpose of preventing fugitives from selectively invoking the jurisdiction of U.S. courts “from a safe distance” solely to retrieve alleged criminal proceeds, as underscored in Technodyne and Collazos.

D. Appellate Standards and Forfeiture of Arguments

The decision also underscores two important appellate‑procedure points:

• Forfeiture of issues not raised on appeal. The panel applied Shakur v. Selsky, 391 F.3d 106, 119 (2d Cir. 2004), to hold that because the Claimants did not challenge whether Derkach was a “fugitive” under § 2466, they forfeited any such challenge. This allowed the court to accept his fugitive status as given and focus only on the disputed ownership issue.
• Limited review of discretionary rulings. Relying on SEC v. Razmilovic, 738 F.3d 14, 25 (2d Cir. 2013), and Technodyne, the panel framed abuse of discretion as encompassing (1) an erroneous view of the law, (2) clearly erroneous assessment of the facts, or (3) a decision outside the range of permissible outcomes. Finding none of these defects, the panel left the district court’s disentitlement decision undisturbed.

Finally, consistent with Collazos, the Second Circuit approved the district court’s decision not to address the Claimants’ motion to dismiss on the merits, because fugitives “waived [their] right to be heard in the civil case” by refusing to submit to jurisdiction in the related criminal case.

VI. Precedents and Authorities Cited

A. Collazos v. United States, 368 F.3d 190 (2d Cir. 2004)

Collazos is the foundational Second Circuit case interpreting § 2466. It articulated the five‑part test for fugitive disentitlement and emphasized the statute’s policy objective: preventing a person from “invok[ing] from a safe distance only so much of a United States court’s jurisdiction as might secure [them] the return of alleged criminal proceeds while carefully shielding [them] from the possibility of a penal sanction.”

In 73DT Business Enterprises, the Second Circuit:

• quoted Collazos’s summary of the statutory prerequisites; and
• relied on its principle that fugitives who refuse to appear in related criminal proceedings waive the right to be heard in associated civil forfeiture litigation.

The present case thus fits squarely within the Collazos framework and reinforces its application to modern sanctions‑evasion schemes.

B. United States v. Technodyne LLC, 753 F.3d 368 (2d Cir. 2014)

Technodyne elaborated on Collazos, clarifying that:

• § 2466 applies not only to physical flight from the United States but also to “constructive flight”—refusing to enter or re‑enter U.S. jurisdiction to face charges;
• courts may rely on the “totality of the circumstances” in determining whether there has been deliberate avoidance of prosecution; and
• district courts have discretion, even when the statutory conditions are met, to decide whether disentitlement is appropriate.

The 73DT Business Enterprises panel:

• cited Technodyne for the proposition that § 2466 “confers upon a court the discretion to bar certain individuals or entities” from contesting forfeiture claims; and
• relied on its statements about burdens of proof and discretionary review in affirming the district court’s decisions as to both Derkach and Terekhova.

C. Other Authorities

• Otal Investments Ltd. v. M/V CLARY, 673 F.3d 108 (2d Cir. 2012).
  Quoted for the classic definition of “clear error”: a finding is clearly erroneous when the reviewing court is left with the “definite and firm conviction that a mistake has been committed” despite some supporting evidence. The panel applied this standard to uphold the district court’s fact‑finding on Derkach’s continued joint interest.
• SEC v. Razmilovic, 738 F.3d 14 (2d Cir. 2013).
  Cited for the abuse‑of‑discretion standard, emphasizing that such an abuse occurs only if the lower court applies the wrong legal standard, makes clearly erroneous factual findings, or renders a decision beyond the permissible range. The panel used this framework to uphold the district court’s decision to exercise its discretion to disentitle.
• Shakur v. Selsky, 391 F.3d 106 (2d Cir. 2004).
  Applied for the principle that issues not raised in an appellant’s opening brief are typically deemed forfeited. This allowed the court to treat Derkach’s fugitive status as undisputed on appeal.
• Executive Order 13848 & 31 C.F.R. Part 579.
  E.O. 13848 and its implementing regulations, particularly 31 C.F.R. § 579.406 (the 50 percent rule), supplied the sanctions framework. The Second Circuit used these authorities to link Derkach’s SDN designation and beneficial ownership to the blocking of the corporate claimants’ property and to justify disentitlement notwithstanding disputes about Terekhova’s status.

VII. Impact and Implications

A. Sanctions Enforcement Against Foreign Political Actors

The decision illustrates how civil forfeiture and fugitive disentitlement can be powerful adjuncts to OFAC sanctions in cases involving foreign political figures accused of interference in U.S. affairs.

Key implications:

• Individuals designated on the SDN list who are indicted for related criminal conduct and remain abroad risk not only criminal liability but also the loss of any ability to litigate claims to U.S. assets held through corporate structures.
• Courts may be receptive to the argument that corporate vehicles, family members, and sham divorces used to shield sanctioned individuals are part of a single sanctions‑evasion scheme warranting disentitlement.

B. Corporate Structures, Shell Entities, and Beneficial Ownership

The case underscores that:

• Formal title and corporate paperwork (e.g., listing a nominee as officer of record) will not, without more, protect entities from being treated as vehicles for a fugitive’s interests.
• Evidence of actual control, decision‑making authority, and benefit—combined with family statements and sanctions‑avoidance motives—can establish beneficial ownership for both sanctions and fugitive‑disentitlement purposes.
• Once a sanctioned fugitive’s 50% ownership is shown, OFAC’s 50 percent rule effectively taints the entire entity and its assets, making disentitlement of the entity’s claim a natural extension of § 2466.

Practically, this sharpens the risk calculus for:

• financial institutions dealing with politically exposed persons;
• lawyers structuring ownership arrangements for sanctioned or high‑risk clients; and
• corporate claimants whose beneficial owners are subject to U.S. criminal charges but decline to appear in U.S. court.

C. Procedural Rights of Fugitives in Civil Forfeiture

The decision reaffirms a hard line: fugitives who refuse to submit to U.S. jurisdiction in related criminal cases will generally not be allowed to use civil forfeiture proceedings to contest the seizure of assets.

Important features:

• Once § 2466’s conditions are satisfied, courts have broad discretion to disentitle, and appellate review is deferential.
• District courts are not required to reach the merits of other defenses (such as failure to state a claim under CAFRA pleading standards) once they find disentitlement appropriate.
• Arguments not advanced at the appropriate time—such as challenges to fugitive status elements—may be deemed forfeited and will not be revisited on appeal.

This is consistent with the statute’s purpose of preventing selective participation: fugitives cannot insist on procedural protections for property while evading criminal responsibility.

D. Evidence, Hearsay, and Family-Law Maneuvers

The court’s acceptance of the daughter’s statements about the parents’ divorce as admissible under Rule 803(19) is noteworthy. It suggests:

• In sanctions‑evasion and forfeiture cases, courts may be willing to rely on family‑reputation hearsay to infer the authenticity—or lack thereof—of domestic‑relations transactions (such as divorces) allegedly used to shield assets.
• Divorces, transfers, and other intra‑family restructurings undertaken in the shadow of sanctions will be scrutinized for substance over form, with circumstantial and reputational evidence playing a significant role.

For litigants, this underscores the need to anticipate robust evidentiary challenges to family‑law arrangements when they coincide with enforcement actions targeting sanctions evasion.

VIII. Complex Concepts Explained

1. Civil Forfeiture (in rem)

Civil forfeiture actions are brought directly against property (“Defendant: 432 N. Oakhurst Dr., Unit 103,” etc.), rather than against a person. The theory is that the property is tainted by criminal conduct (e.g., proceeds of or facilitating illegal activity). Owners or claimants can come into the case to assert their interests, but the case nominally proceeds against the property itself.

2. Fugitive Disentitlement (28 U.S.C. § 2466)

Fugitive disentitlement allows a court to bar a person (or entity standing in that person’s shoes) from using the court system to contest the forfeiture of property when that same person is fleeing or deliberately avoiding prosecution in a related criminal case. The idea is to prevent someone from:

• shielding themselves from criminal consequences; while
• simultaneously invoking the court’s protections to reclaim or retain allegedly criminal proceeds.

3. OFAC, SDNs, and the 50 Percent Rule

The Office of Foreign Assets Control administers U.S. sanctions programs. When a person is placed on the SDN list:

• U.S. persons must generally block and report any property or interests in property of that person; and
• under the 50 percent rule, any entity that is 50% or more owned (directly or indirectly) by one or more SDNs is itself treated as blocked, even if not separately named on the SDN list.

In this case, the Second Circuit used this regulatory backdrop to treat the property of entities half‑owned by Derkach as blocked property associated with a fugitive, supporting disentitlement.

4. Beneficial Ownership vs. Record Title

“Record title” refers to who appears as the owner on formal documents (e.g., deeds, account opening forms). “Beneficial ownership” concerns who actually controls, benefits from, and directs the use of the property.

Courts routinely look beyond nominal title to determine who truly owns property for purposes of sanctions, forfeiture, and disentitlement. Here, evidence of Derkach’s control, financial oversight, and family statements about structuring finances to avoid sanctions outweighed the absence of his name on corporate and account documents.

5. Sham Divorce

A “sham” divorce is a legal dissolution that is formally valid on paper but undertaken not to end a genuine marital relationship, but to achieve some collateral objective—such as shielding assets from creditors or sanctions.

In this case, circumstantial evidence (including the daughter’s statements and the absence of property disposition in the divorce decree) supported the inference that the divorce was designed, at least in part, to hinder or delay sanctions enforcement against Derkach’s assets.

6. Hearsay and Rule 803(19)

“Hearsay” is an out‑of‑court statement offered to prove the truth of the matter asserted. It is generally inadmissible unless an exception applies. Rule 803(19) allows hearsay evidence about a person’s “reputation among a person’s family by blood, adoption, or marriage—or among a person’s associates or in the community—concerning the person’s birth, adoption, legitimacy, ancestry, marriage, divorce, death, relationship by blood, adoption, or marriage, or similar facts of personal or family history.”

The Second Circuit treated the daughter’s statements about her parents’ divorce and its purpose as reputation evidence concerning marriage/divorce, admissible under this exception—thus legitimately considered by the district court in determining whether the divorce was a sham and whether Derkach retained an interest.

7. Standards of Proof and Review

• Preponderance of the Evidence. In civil forfeiture and § 2466 applications, the government’s burden is to show that a fact is more likely than not (greater than 50% likelihood).
• Clear Error. An appellate court will not disturb a factual finding unless, after reviewing all the evidence, it is left with a “definite and firm conviction” that a mistake has been made.
• Abuse of Discretion. Discretionary decisions are overturned only if based on an incorrect legal standard, clearly erroneous fact‑finding, or a decision outside the range of reasonable options.

8. Non‑Precedential Summary Orders

Under Federal Rule of Appellate Procedure 32.1 and Second Circuit Local Rule 32.1.1, summary orders:

• do not have precedential effect; but
• may be cited in court filings, with appropriate notation (“SUMMARY ORDER”), and must be served on any unrepresented parties.

While not binding, such orders frequently influence lower courts and practitioners as persuasive authority—particularly where they apply and synthesize established precedents, as in this case.

IX. Conclusion

United States v. 73DT Business Enterprises confirms and operationalizes several important principles in modern sanctions‑related forfeiture litigation:

• Fugitive disentitlement under 28 U.S.C. § 2466 remains a potent tool to prevent indicted individuals—and the entities they control—from leveraging civil courts to protect assets while evading criminal jurisdiction.
• Beneficial ownership and control, not mere formal title, determine whose interests are at stake in property subject to forfeiture and sanctions.
• Sham domestic‑relations maneuvers, including divorces timed to coincide with sanctions exposure, will be scrutinized and may be rebutted using circumstantial evidence and family‑reputation hearsay under Rule 803(19).
• OFAC’s 50 percent rule ties the fate of corporate assets to the status of their sanctioned owners, enabling courts to disentitle corporate claimants when those owners are fugitives from related criminal charges.
• Procedurally, litigants must carefully preserve all challenges—especially to the elements of fugitive status—lest they be deemed forfeited on appeal.

Though labeled a summary order without precedential effect, the Second Circuit’s opinion offers a clear and instructive application of Collazos and Technodyne in the context of sanctions evasion, shell entities, and high‑value U.S. real estate. It will likely serve as a practical reference point for future cases at the intersection of civil forfeiture, fugitive disentitlement, and international sanctions enforcement.