OPINION ORDER

Michael B. Mukasey, United States District Judge.

The United States seeks civil forfeiture of Portrait of Wally, a painting by Egon Schiele ("Wally" or "the painting") under 18 U.S.C. § 545, 19 U.S.C. § 1595(a)(c), and 22 U.S.C. § 401(a), alleging that it was imported into the United States and was about to be exported in violation of the National Stolen Property Act, 18 U.S.C. § 2314 (1994). The painting was brought to the United States for an exhibit at the Museum of Modern Art ("MoMA"), on loan from an Austrian museum, Leopold Museum-Privatstiftung, ("the Leopold"). The Leopold, MoMA, and various purported heirs of the alleged rightful owner of the painting have joined the suit as claimants. InUnited States v. Portrait of Wally, 105 F. Supp.2d 288 (S.D.N.Y. 2000) ("Portrait of Wally I"), I granted claimant Leopold's Rule 12(b)(6) motion to dismiss the government's Second Amended Verified Complaint. I subsequently granted the government's motion pursuant to Fed.R.Civ.P. 59(e) to alter that judgment so as to allow the government to file a third amended complaint. United States v. Portrait of Wally, No. 99 Civ. 9940, 2000 WL 1890403 (S.D.N Y Dec. 28, 2000) ("Portrait of Wally II")

The government has filed a Third Amended Verified Complaint ("the Complaint") in this action, and pending now before the court are the Leopold's and MoMA's motions to dismiss pursuant to Rule 12(b)(1) and (6). Also pending is the government's motion to dismiss or strike the claim of MoMA, the Leopold's motion to dismiss or strike the claim of the heirs, and a motion for summary judgment by one group of purported heirs to reject the claim of another purported heir. For the reasons stated below, the motion for summary judgment is granted; all other motions are denied.

I.

For purposes of a motion to dismiss, the factual allegations pleaded in the complaint are taken as true and are construed in the light most favorable to the plaintiff. McEvoy v. Spencer, 124 F.3d 92, 95 (2d Cir. 1997). The following recitation is based entirely on those allegations.

In or about March 1938, Austria was annexed by Germany and became part of the German Reich. (Compl. ¶ 5c) In April of that year, Friedrich Welz acquired a Viennese art gallery belonging to Lea Bondi Jaray ("Bondi"), an Austrian Jew, through the process of "Aryanization," whereby Jews were forced to sell their property to "Aryans" at artificially low prices. (Id.) Welz later joined the Nazi party. (Id. ¶ 5d) During a subsequent visit to Bondi's apartment, Welz saw Wally hanging on the wall and insisted that his Aryanization of the gallery entitled him to it. Bondi responded that Wally was part of her private collection and had nothing to do with the gallery, but "Welz continued to pressure (her] for the painting until [Bondi's] husband finally told her that, as they wanted to leave Austria, perhaps as soon as the next day, she should not resist Welz, because "you know what he [Welz] can do.'" Bondi then surrendered the painting to Welz and fled to London. (Id. ¶ 5e)

After World War II, Welz was interned on suspicion of having committed war crimes. All of his possessions, whether they were stolen outright, Aryanized, or legitimately acquired, were seized and put under the authority of the United States armed forces in Austria. (Id.¶¶ 5i-j) Under the military decrees and policies in effect in post-war Austria, property seized by the United States armed forces was sorted and turned over to the country from which each object had been taken. (Id. ¶ 5k) The United States armed forces transferred Wally to the government authority in Austria designated to take custody of such seized artwork, the Bundesdenkmalamt ("BDA"). (Id. ¶ 5l)

After the war, Austria was required to enact laws to reverse the results of Nazi persecution. Austria enacted seven codes governing the restitution of property. Under these codes, claims were to be filed with statutory Restitution Commissions and restitution proceedings would then be held to adjudicate claims. Property that could not be restored to the true owner was to be transferred to one of two collecting organizations, to be put up for auction, and the funds were to be used to aid victims of the Holocaust. (Id. ¶ 5m)

When the United States armed forces had Wally in their possession, those in authority did not know that it was stolen property or that it had belonged to Bondi. Records indicate that they thought it may have been the property of Dr. Heinrich Rieger, whose art collection Welz had acquired through Aryanization in or about 1938. Wally, which depicted the artist's mistress, was confused with a Schiele drawing in Rieger s collection entitled "Bildnis seiner Frau" (Portrait of His Wife). Based on conversations with Welz and review of his records, the United States military authorities appear to have questioned whether Wally was properly included in the Rieger collection. In their inventory of artwork and in the accompanying cover letter given to the BDA, they called attention to their doubts, noting that Welz's records do not indicate Wally was acquired from Rieger and that Welz stated that the woman depicted in the painting was not the artist's wife. (Id. ¶ 5o)

Rieger and his wife were killed in the Holocaust, survived by their son and granddaughter ("the Rieger heirs"). (Id. ¶ 5f) In 1948, the Rieger heirs sued Welz under the Austrian Third Restitution Code for the return of various artworks. The Restitution Commission returned to the Rieger heirs 12 works of art, including three by Egon Schiele. The Rieger heirs neither demanded nor recovered Wally. (Id. ¶ 5s)

The Rieger heirs then agreed to sell some of the returned artworks to the Belvedere. Wally was erroneously shipped to the Belvedere as part of the sale. Dr. Garzarolli, then director of the Belvedere, inspected the artworks and compiled a list of them dated December 1, 1950. On his copy of this list, next to the entry for "Frauen Bildnis" (Portrait of a Woman) Dr. Garzarolli noted by hand "Vally Neuzil aus Wein [Wally Neuzil from Vienna]." (Id. ¶ 5t)

After the war, Bondi visited Vienna and questioned Welz about the whereabouts of Wally. Welz told her it had been confiscated and was now at the Belvedere, having erroneously been mixed in with the Rieger collection. Bondi had to return to London on urgent business; she was not concerned about Wally, believing it was safe at the Belvedere. (Id. ¶ by)

In or about 1949, Bondi recovered her art gallery in a restitution proceeding against Welz. The Restitution Commission noted in its partial judgment that Welz had also "demanded . . . a Schiele from [Bondi]," referring to Wally. (Id. ¶ 5w)

In or about 1953, Dr. Rudolph Leopold, a collector of paintings by Schiele, visited Bondi in London to ask for her help in buying such paintings. Dr. Leopold mentioned that Wally was hanging in the Belvedere, "knowing that it had belonged to her." Bondi asked Dr. Leopold to explain to the Belvedere on her behalf that Wally was her property. In return, Bondi was to help Dr. Leopold locate other Schieles. "Despite Dr. Leopold's knowledge of Bondi's ownership of Wally," he acquired Wally from the Belvedere for himself in or about August or September of 1954 in an exchange for one of his own Schiele paintings, "Rainerbub." He did not tell Bondi about his visit to the Belvedere. She discovered that he had obtained Wally in or about 1957, when the painting was featured in a catalogue for an exhibition and Dr. Leopold was listed as the owner. (Id.¶¶ 5x-y)

Bondi then engaged an Austrian lawyer, Dr. Hunna, to help her recover Wally. In a letter to him, she suggested that Dr. Leopold be held up to public ridicule as a common thief. She hoped the matter could be resolved this way, "because she believed it was futile to file a lawsuit in Vienna against a Viennese doctor, since she believed that the Viennese judge always sided with Viennese residents, "and if the lawsuit is lost, I have lost my painting forever.'" (Id. ¶ 5z) Bondi described an encounter with Dr. Leopold at an exhibit featuring his collection. She wrote that Dr. Leopold did not bring Wally to the exhibit because he knew she would make a claim to it and that when confronted about Wally, Dr. Leopold "'was self-conscious, said it must be solved in some way'". Bondi did not speak with him again. (Id. ¶ 5aa)

In late 1957, Dr. Hunna wrote to both Dr. Leopold and the Belvedere, demanding return of Wally. The Belvedere's director, Garzarolli, responded that the lawyers for the Rieger heirs had advised them that all of the items in the collection were the property of the Rieger heirs. In his letter, he acknowledged that Dr. Leopold had informed him in 1954 of "the possible property right of Ms. Lea Jaray regarding the painting "Vally," but claimed that he had never heard that before or since, and that Bondi had visited the Belvedere at least twice without mentioning it. Thus, he claimed, the Belvedere and Dr. Leopold "did not have any doubt about the legality of the exchange" of Wally for "Rainerbub." Hunna advised Bondi that in his opinion, Dr. Leopold was obligated to return the painting to her, but Bondi told Hunna's law partner that she did not wish to sue. (Id.¶¶ 5bb-cc)

In or about 1966, Bondi sought the help of her colleague and friend, Otto Kallir. By letter, Bondi recounted how she had engaged Hunna and another lawyer, but feared that they were siding with Dr. Leopold and did not wish to rely on them. In a declaration obtained by Kallir dated January 5, 1967, Rieger's son acknowledged that his father never owned Wally. Bondi died in or about 1969, and Kallir stopped his efforts on her behalf to reacquire Wally. (Id. ¶¶ 5dd-ff)

After Bondi's death, an unsigned, undated statement, written in English, was found in her home which bore the heading, "Concerning my Painting 'Vally' by Egon Schiele." In this letter, Bondi recounted how she acceded, "under duress," to Welz's demands for Wally and how she went to the Belvedere after the war and claimed Wally as hers, but got no reply. She wrote also that she had asked Dr. Leopold to help recover her painting from the Belvedere. She explained that she prevented a lawsuit against the Belvedere, deeming any quarrel with the Belvedere "not possible" because the Belvedere is the museum of modern art in Vienna and she had just been reinstated as the proprietor of her modern art gallery in Vienna. (Id. ¶ 5gg)

In August 1994, Dr. Leopold sold Wally to the Leopold, of which he is a Director and the Museological Director for life. Wally has been valued at over $2 million. (Id. ¶ 5hh) In 1995, Dr. Leopold published his current catalogue raisonne on Schiele, in which he changed his 1972 published provenance for Wally to include Rieger ownership. When the Austrian Daily newspaper Der Standard questioned the change, he attempted to justify it in a rebuttal letter to the editor, explaining that although Bondi had told him twice of her ownership of Wally, he was convinced she had sold it to Rieger because she never registered her claims with the Belvedere. (Id. ¶¶ 5jj, nn)

In 1997, pursuant to a contract, the Leopold sent the painting to New York where it was displayed at a MoMA exhibit from October 8, 1997 to January 4, 1998. (Id. ¶ 5ii) Three days after the exhibit ended, the New York County District Attorney's Office issued a subpoena for the painting; that subpoena was quashed by the New York Court of Appeals on September 21, 1999. In the Matter of the Grand Jury Subpoena Duces Tecum Served on Museum of Modern Art, 93 N.Y.2d 729, 697 N.Y.2d 729, 697 N.Y.S.2d 538, 719 N.E.2d 897 (1999). (Id. ¶ 5ll) That day, United States Magistrate Judge James C. Francis IV issued a seizure warrant for the painting and the next day the United States started this forfeiture action. (Id. ¶ 4) The government claims that under 18 U.S.C. § 545, 19 U.S.C. § 1595a(c), and 22 U.S.C. § 401, the painting must be forfeited because the Leopold transported it in foreign commerce knowing it to have been stolen or converted property, in violation of the National Stolen Property Act, 18 U.S.C. § 2314 (1994).

II.

The Leopold's and MoMA's motions to dismiss make many of the same or related arguments, and the Leopold has incorporated MoMA's arguments by reference into its own motion. Their motions therefore are treated together here. However, I must address first the issue of MoMA's standing.

"Whether a claimant has standing is the threshold question in every federal case, determining the power of the court to entertain the suit."United States v. Cambio Exacto, S.A., 166 F.3d 522, 526 (2d Cir. 1999) (citations omitted). Before a claimant can contest a forfeiture, it must demonstrate both statutory and Article III standing. Id.

To establish statutory standing in a civil forfeiture proceeding, a claimant must comply with the procedural requirements of Rule C(6) of the Supplemental Rules for Certain Admiralty and Maritime Claims, which include a verified claim stating the claimant's interest in the property. The Rule provides further that "an agent, bailee, or attorney must state the authority to file a statement of interest in or right against the property on behalf of another." MoMA's verified claim states that it has a legal right to possess the painting pursuant to its loan contract with the Leopold. The government argues that the loan contract makes MoMA a bailee, and that MoMA has failed to state that it is authorized to bring a claim on behalf of the Leopold. Moreover, it argues, such a claim would be superfluous because the Leopold has already filed its own claim. MoMA counters that it is not bringing a claim on behalf of the Leopold, but rather is asserting its own right to possess the painting, and therefore need not comply with this provision of Rule C(6).

Anyone with a possessory interest may claim under the Rule. See Fed.R.Civ.P. Supp. Adm. R. C(6) advisory committee's note. However, it is not entirely clear whether in the case of a bailee, its interest can be deemed its own or whether its claim is necessarily made "on behalf of" the bailor. Compare United States v. $191,910.00 in U.S. Currency, 16 F.3d 1051, 1058 (9th Cir. 1994) (permitting a bailee to assert his own possessory interest in property rather than act as bailee asserting the ownership interest of a bailor) with United States v. $260,242.00 in U.S. Currency, 919 F.2d 686, 688 (11th Cir. 1990) (requiring bailee to identify bailor and state that he was authorized to make the claim),United States v. $557,933.89, More or Less, in U.S. Funds, No. 95 CIV. 3978, 1998 WL 817651, at *23 (E.D.N.Y. Mar. 2, 1998) (same), and United States v. $205,991.00 in U.S. Currency, No. 97 Civ. 3520, 1997 WL 669839, at *2 (S.D.N.Y. Oct. 28, 1997) (same). I need not decide this question, however, because even if MoMA makes its claim "on behalf of" the Leopold, the requirement that it state it is authorized to make the claim is met where the bailee names the owner in its claim. See $260,242.00 in U.S. Currency, 919 F.2d at 688; United States v.Currency: $4,424.00, No. 91 CIV. 1022, 1994 WL 568594, at *3 (N.D.N.Y. Sept. 30, 1994). MoMA has done so here, and therefore has accommodated the Rule's policy of deterring false or naked claims. See $557,933.89, 1998 WL 817651, at *2.

As to whether or not MoMA's claim is superfluous, at least one case has permitted both bailee and bailor to contest a forfeiture. See United States v. $38,000.00 in U.S. Currency, 816 F.2d 1538 (11th Cir. 1987). Moreover, a court does not have discretion to dismiss a claim for lack of standing merely because one claimant's interest is derivative of another's. The case the government relies on, United States v. Premises Known as 281 Syosset Woodbury Road, Woodbury, New York, 791 F. Supp. 61 (E.D.N.Y. 1992) was one in which the court had discretion to allow an untimely claim. Finding the claim to be duplicative and therefore unnecessary, the Court denied permission to file. Here, there is no dispute that MoMA's claim was timely filed. MoMA has satisfied its statutory burden.

The government argues also that MoMA lacks Article III standing. To establish constitutional standing, the claimant must demonstrate ""sufficient stake in an otherwise justiciable controversy to obtain judicial resolution of that controversy.'" Cambio Exacto, 166 F.3d at 526-27 (quoting Sierra Club v. Morton, 405 U.S. 727, 731 (1972)). That is, a litigant "must allege a distinct and palpable injury to himself that is the direct result of the putatively illegal conduct of the adverse party and likely to be redressed by the requested relief." Id. at 527 (citations omitted).

In a civil forfeiture proceeding, a claimant with an ownership or possessory interest generally will have standing because "'an owner or possessor of property that has been seized necessarily suffers an injury that can be redressed at least in part by the return of the seized property.'" Id. at 527 (quoting United States v. $515,060.42 in U.S. Currency, 152 F.3d 491, 497 (6th Cir. 1998). Courts have "widely held" that a bailee has a sufficient stake in seized goods to have Article III standing. United States v. U.S. Currency in the Sum of Ninety Seven Thousand Two Hundred Fifty-Three Dollars ($97,253.00), More or Less, and All Proceeds Traceable Thereto, No. 95 CIV. 3982, 1999 WL 458155, at *6, 8 (E.D.N.Y. June 30, 1999). As one leading case has explained, a bailee "has a possessory interest in the [seized goods], and consequently may assert a claim to the currency against anyone, other than the bailor, who interferes with that interest." $38,000 in U.S. Currency, 816 F.2d at 1544 (citations omitted).

However, although possession is evidence of standing, the ultimate focus of any standing inquiry is injury. Cambio Exacto, 166 F.3d at 527. MoMA has demonstrated lawful possession pursuant to its contract with the Leopold. The seizure has interfered with MoMA's rights and obligations under the contract, and the Leopold has threatened MoMA with liability for any damage it suffers. This lawful possession and financial stake is sufficient to confer standing. See Cambio Exacto, 166 F.3d at 527-28; U.S. Currency in the Sum of $97,253.00, 1999 WL 458155, at *7-8. Accordingly, I must now consider MoMA's motion to dismiss in conjunction with the Leopold's motion.

III.

The Supreme Court has recently cautioned federal courts not to exercise "hypothetical jurisdiction," and to address jurisdictional questions as a threshold issue. Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94-95 (1998)). Therefore, it is necessary to address first the Leopold's Rule 12(b)(1) challenge to this court's subject matter jurisdiction. The Leopold does not dispute that 28 U.S.C. § 1345, 1355, and 1395 support jurisdiction and venue in the Southern District in this in rem forfeiture proceeding. Rather, it argues that the Austrian State Treaty of 1955, as well as the act of state, international comity, and political question doctrines, oust this court of jurisdiction to hear the government's claim. The Republic of Austria, as amicus curiae, endorses this view. Those doctrines go to justiciability rather than to jurisdiction See Bigio v. Coca-Cola Co., 239 F.3d 440, 451, 454 (2d Cir. 2001) (holding that the act of state and comity doctrines are not jurisdictional); 767 Third Ave. Asscos. v. Consulate Gen. of Socialist Fed. Republic of Yugoslavia, 218 F.3d 152, 163-64 (2d Cir. 2000) (holding that the political question doctrine is not jurisdictional). However, because they can operate as principles of abstention, they similarly present a threshold issue: whether or not to exercise the court's jurisdiction.

A. The Austrian State Treaty of 1955

Article 26 of the Austrian State Treaty of 1955, 6 U.S.T. 2369, 217 U.N.T.S. 223, to which the United States is a signatory, defines Austria's responsibility to return property improperly seized from its citizens during Nazi rule. Under the first paragraph of Article 26, Austria was obligated to restore the legal rights and interests of the true owners of such property where possible. The second paragraph specifically provides that if property remains unclaimed or heirless six months after the Treaty comes into force, Austria "agrees to take under its control all [such] property" and "transfer such property . . . to the appropriate agencies or organizations . . . to be used for the relief and rehabilitation of victims of persecution."

The Leopold and the Republic of Austria argue that the Treaty expressly designated the sovereign Republic of Austria as the sole authority responsible for the disposition of property improperly seized during Nazi rule. They reason that because neither Bondi nor anyone else claimed Wally within the six months after the Treaty came into force, Article 26(2) vested the Austrian Republic with sole responsibility for disposing of the unclaimed painting. When the Senate ratified the Treaty, the argument goes, the United States recognized that the disposition of property was expressly entrusted to Austria, and neither this nor any other United States court has jurisdiction to consider or decide issues relating to Austria's disposition of property covered by Article 26. That is, this court would have to usurp jurisdiction in order to direct the painting's forfeiture in contravention to the Treaty.

This argument is without merit. First, as Dr. Lambert, the government's Austrian law expert, has stated, Article 26 on its face does not state that the Austrian government has exclusive jurisdiction over such property, and the Leopold provides no case law from any country in support of its novel interpretation. The restitution laws enacted to fulfill Austria's obligations under the Treaty have never been viewed as the exclusive means for restoring property: indeed, other restitution actions have been filed in the United States. See, e.g., Altmann v. Republic of Austria, 142 F. Supp.2d 1187, 1208 (C.D. Cal. 2001). Nothing in the Treaty suggests that this court is without jurisdiction to hear a forfeiture case which includes issues of ownership of property taken by the Nazis.

Furthermore, under the Treaty, Austria was charged with taking all unclaimed property and transferring it to an agency to be used for the relief of victims of the Holocaust. It is unclear how this provision could be invoked by the Leopold to support its title to the painting. As the government argues, had the Republic of Austria taken control of Wally as unclaimed property within the meaning of the Treaty, it would have breached the Treaty to allow the painting to remain with the state-owned Belvedere or to give it to Dr. Leopold. Under Austrian law pursuant to the Treaty, all such property was to be transferred to Assembly Centers, whose contents have since been liquidated for the benefit of the victims of the Nazis.

Whether or not United States courts would review such a breach need not be decided, however, because it makes no logical sense to apply this provision to Wally, which was not and could not have been taken under Austria's control as "unclaimed" property, but rather was mistakenly transferred to the Belvedere as part of the sale of the Rieger collection before the Treaty was enacted. That Austria, pursuant to Treaty, sought to return all improperly seized property or to otherwise use it for the victims' general benefit does not deprive this court of jurisdiction over property that escaped such disposition. The express purpose of the Treaty, and of related Austrian law, was to restore property to its true owner; an exercise of jurisdiction in this case would seem unobjectionable under the Treaty.

B. The Act of State Doctrine

The Leopold seeks dismissal also based on the act of state doctrine. MoMA too invokes this doctrine in its Rule 12(b)(6) motion to dismiss. The classic statement of this doctrine was articulated over 100 years ago: "Every sovereign state is bound to respect the independence of every other sovereign state, and the courts of one country will not sit in judgment on the acts of the government of another done within its own territory." Underhill v. Hernandez, 168 U.S. 250, 252 (1897); see also Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 401 (1964) ("The act of state doctrine in its traditional formulation precludes the courts of this country from inquiring into the validity of the public acts of a recognized sovereign power committed within its own territory.") The Leopold and MoMA argue that this doctrine bars this court from revisiting and invalidating Austria's disposition of the painting to the Belvedere together with other property given to the Rieger heirs.

The parties initially spent many pages on the question of whether the Republic of Austria was a "recognized sovereign power at the time the BDA transferred the painting, due to its having been occupied by and under the control of the allied occupying forces until 1955. Until the signing of the Austrian State Treaty of 1955, the allies would "sit in judgment" of the Austrian government, in that all official acts required their approval. However, as the government now concedes, this question can be put aside because the circumstances of this case do not engage the doctrine at all.

As an initial matter, it is far from clear that doctrine applies to the act in question. An "act of state" must be a formal or official act by an actor with sovereign authority. See W.S. Kirkpatrick Co., Inc. v.Envt'l Tectonics Corp., Int'l, 493 U.S. 400, 406 (1990); Alfred Dunhill of London, Inc. v. Republic of Cuba, 425 U.S. 682, 693-95 (1976) (plurality opinion). Contrary to the conceptualization by the Leopold and MoMA, Wally was never legally transferred to the Rieger heirs pursuant to an official Austrian government determination of ownership. Rather, the BDA erroneously attributed it to the Rieger collection and mistakenly shipped it to the Belvedere with the Rieger collection. Although the court might be reluctant to second-guess the public acts of a sovereign, this does not seem to have been such an act. The court is notably not being asked to review a decision by a Restitution Commission regarding the restitution of Wally.

Even if the BDA had purposefully placed Wally with the state-owned Belvedere in derogation of Bondi's interest, it had no authority to dispose of artwork other than through the Restitution Commissions; rather, Austrian law provided that the Restitution Commissions would govern the return of property to its rightful owner. Cf. Galu v.Swissair, 873 F.2d 650, 654 n. 3 (2d Cir. 1989) (noting that the act of state doctrine does not insulate unlawful actions that are wholly unratified by the government); Republic of Philippines v. Marcos, 806 F.2d 344, 358-59 (2d Cir. 1986), and cases cited therein (holding that only public acts of the sovereign as opposed to unlawful private acts are immune from review).

Moreover, even if the act were properly deemed an act of state, "the policies underlying the act of state doctrine should be considered in deciding whether, despite the doctrine's technical availability, it should nonetheless not be invoked." Kirkpatrick, 493 U.S. at 409; see also Bigio, 239 F.3d at 452. Those policies include "the traditional concern of U.S. courts to ensure an adequate separation of powers between itself and its coordinate political branches in matters touching upon foreign affairs." European Community v. RJR Nabisco, Inc., 150 F. Supp.2d 456, 473 (E.D.N.Y. 2001). That is, a court will refrain from inquiring into the validity of a foreign state's acts if adjudication would embarrass or hinder the executive in its conduct of foreign relations.Bigio, 239 F.3d at 452.

Without deciding whether the "act" or "state" requirements have been met, I conclude that the balance of interests in this case counsels against applying the doctrine. Here, there is no possible interference with the executive branch in its conduct of foreign relations. Notably, it is the executive branch that has brought this forfeiture action, and the restoration of proper ownership of seized property is a pronounced goal of Austrian law. Further, the highly doubtful presence of an "act" of "state" here suggests the inappropriateness of the doctrine's application. An inquiry into the BDA's shipment of a painting under the post-war Austria regime would not impinge upon the executive's preeminence in foreign relations, particularly where the restoration of ownership has always been a professed goal of Austrian law and where it is the executive branch itself that brings this forfeiture action under United States law. Absent sufficient separation of powers concerns, there is no basis in the act of state doctrine for this court to abrogate its obligation to decide cases and controversies properly presented to it.See Kirkpatrick, 493 U.S. at 409.

C. International Comity

The Leopold argues next that international comity requires this court to abstain from deciding the case out of deference to Austria's restitution framework.

International comity requires recognition of foreign actions, decrees, and proceedings that do not conflict with the interests or policies of the United States. See Bigio, 239 F.3d at 454 (citing Hilton v. Guyot, 159 U.S. 113, 164 (1895)); Pravin Banker Assocs. v. Banco Popular del Peru, 165 B.R. 379, 387 (S.D.N.Y. 1994). This recognition "fosters international cooperation and encourages reciprocity." Spatola v. United States, 925 F.2d 615, 618 (2d Cir. 1991). Comity requires a balancing of interests of the respective forums and of international policy. See In re Maxwell Communication Corp., 93 F.3d 1036, 1048 (2d Cir. 1996). The Leopold argues that the court should defer to the Austrian restitution system, which was enacted with the approval of the allies and is thus consistent with both United States and international policy. It argues also that Austria's interest in the subject matter of this action is paramount.

As the government suggests, the first problem with the Leopold's argument is that there is no pending action, proceeding or decree relating to this case in Austria to which this court could defer. Austria may have a system of laws that are neither contrary nor prejudicial to the laws and interests of the United States and international law, but the principle of comity does not operate as a pre-emption doctrine, barring this court from hearing a valid forfeiture action merely because there are foreign laws that might also apply. The mere existence of the Austrian restitution system does not vest exclusive jurisdiction in Austrian courts to hear all issues touching upon Holocaust-related property.

Nor are Austria's interests affronted by the adjudication of this case. The Leopold argues that Austria has a greater interest in this case because of acts taken by Austria with respect to the painting, the existence of its restitution system, and its responsibility under the Austrian State Treaty. However, as noted, there has been no formal or purposeful act of the Austrian judiciary, executive, or legislature with respect to the painting rising to a level that would implicate international comity. Because Bondi's ownership of Wally was never adjudicated on the merits under Austrian law, neither the restitution system nor the Treaty was ever implicated. Adjudication of this case, then, would not offend Austrian law.

The United States, on the other hand, has a strong interest in enforcing its own laws as applied to conduct on its own soil. The ownership of the painting under Austrian law is merely a predicate to the determination of whether there has been a violation of United States law. The basis for this forfeiture action is the alleged importation of Wally into the United States in violation of the National Stolen Property Act. It is United States law and policy to prohibit knowing transportation of stolen or converted goods into the United States. Even when there is true conflict with the laws of a foreign nation, United States courts will not yield in the name of comity if doing so conflicts with the law or policy of the United States. See In re Treco, 240 F.3d 148, 157 (2d Cir. 2001). Dismissal on international comity grounds, then, is not warranted here.

D. The Political Question Doctrine

The Leopold's final threshold argument is that this action relates to foreign policy, and therefore is nonjusticiable by virtue of the political question doctrine. That doctrine bars adjudication of certain issues that are committed to the political branches of the government; it is a function of the separation of powers. Baker v. Carr, 369 U.S. 186, 210-11 (1962). Repeating its former arguments, the Leopold contests this court's interference with Austria's "exclusive" restitution system. It argues specifically that adjudication of the present case not only would show disrespect for Austria, but also would interfere with the political decisions of the United States and its allies during the post-war period to approve Austria's restitution laws and the Austrian State Treaty. This argument is without merit.

In Baker v. Carr, the Supreme Court set forth the following list of relevant factors to be considered by a court when deciding case-by-case whether a political question is presented:

[1] a textually demonstrable constitutional commitment of the issue to a coordinate political department; or [2] a lack of judicially discoverable and manageable standards for resolving it; or [3] the impossibility of deciding without an initial policy determination of a kind clearly for nonjudicial discretion; or [4] the impossibility of a court's undertaking independent resolution without expressing lack of the respect due coordinate branches of government; or [5] an unusual need for unquestioning adherence to a political decision already made; or [6] the potentiality of embarrassment from multifarious pronouncements by various departments on one question.

None of the six factors is present here. It should first be noted that although the doctrine is often applicable in matters of foreign affairs, "it is error to suppose that every case or controversy which touches foreign relations lies beyond judicial cognizance." Id. at 211. Thus, tort suits against the Palestine Liberation Organization, or by Croat and Muslim victims of wartime atrocities against the leader of Bosnian-Serb forces, have not been barred by the political question doctrine where Baker factors were not present. See Klinghoffer v. S.N.C. Achille Lauro Ed Altri-Gestione Motonave Achille Lauro in Amministrazione Straordinaria, 937 F.2d 44, 49 (2d Cir. 1991) ("The fact that the issues before us arise in a politically charged context does not convert was is essentially an ordinary tort suit into a non-justiciable political question."); Kadic v. Karadzic, 70 F.3d 232, 249 (2d Cir. 1995).

The issues to be resolved in the instant case include whether the Leopold owns a painting under Austrian law and whether the Leopold violated United States law in transporting that painting into the United States and thereby subjected the painting to civil forfeiture. As the government suggests, "["[t]hese are not issues constitutionally committed to other, nonjudicial branches of government. To the contrary, adjudication of these types of claims is squarely within the parameters of what is entrusted to the judiciary." (Gov. Mem. Opp. at 166) Determining the standards to resolve such a claim, then, is within the court's competence.

Further, there is no impermissible policy determination to be made, nor any intrusion on or lack of respect for a decision already made, or yet to be made, that would engage the remainder of the Baker factors. Despite the Leopold's protestations to the contrary, the Austrian restitution systems has never been found to be the exclusive mechanism for the recovery of Holocaust property (Lambert Reply Decl. C ¶¶ 3-6), and the United States has never committed such claims to the Austrian government. That distinguishes this case from In re Nazi Era Cases Against German Defendants Litigation, 129 F. Supp.2d 370 (D.N.J. 2001), where it was found that the United States had entered an Executive Agreement with Germany agreeing to inform United States courts that it was United States policy to recognize Germany's exclusive jurisdiction over forced labor claims.

The other forced labor cases that the Leopold relies on are also inapposite. In Iwanowa v. Ford Motor Co., 67 F. Supp.2d 424, 485-489 (D.N.J. 1999) the court likewise declined to adjudicate war reparations claims against German companies, finding war reparations within the domain of the political branches. In Burger-Fisher v. DeGussa AG, 65 F. Supp.2d 248, 282 (D.N.J. 1999), the court held that questions such as whether reparations made by Germany provided adequate relief for Nazi victims and whether Germany and properly implemented reparations raised political questions that are not subject to judicial resolution. By contrast, as the government points out, the present case does not ask this court to pass on the adequacy and implementation of Austria's restitution scheme, or even to adjudicate a restitution claim. Rather, this is an in rem action seeking forfeiture of a painting pursuant to United States law. The court's review of Austrian law is limited to determining the predicate issue of ownership. This question alone is not a political question.

IV.

Because this court has subject matter jurisdiction in this case and is not barred from exercising it, I turn now to the Leopold's and MoMA's arguments addressing the merits of the government's claim. The government predicates this forfeiture action on a violation of 18 U.S.C. § 2314. The elements of such a violation are (1) the transportation in interstate or foreign commerce of property, (2) valued at $5,000 or more, (3) with knowledge that the property was "stolen, converted or taken by fraud." 18 U.S.C. § 2314; Dowling v. United States, 473 U.S. 207, 214 (1985); United States v. Wallach, 935 F.2d 445, 466 (2d Cir. 1991). The Complaint alleges that the Leopold transported Wally knowing it to have been stolen by Welz and/or converted by Dr. Leopold. The Leopold and MoMA dispute the sufficiency of the Complaint.

A. The Legal Standard

On a motion to dismiss, a court does not test the sufficiency of evidence or assess its admissibility. Rather, as noted, the factual allegations in the complaint are taken as true, and a forfeiture complaint will not be dismissed ""unless it appears beyond a doubt that the plaintiff can prove no set of facts in support of [its] claim which would entitle [it] to relief.'" United States v. All Right, Title and Interest in Five Parcels of Real Property and Appurtenances Thereto Known as 64 Lovers Lane, 830 F. Supp. 750, 756 (S.D.N.Y. 1993) (quoting Conley v. Gibson, 355 U.S. 41, 45-46 (1957)).

In addition to the Federal Rules of Civil Procedure, this forfeiture case is governed by the Supplemental Rules for Certain Admiralty and Maritime Claims. United States v. Daccarett, 6 F.3d 37, 47 (2d Cir. 1993). Under these rules, the complaint must "state the circumstances from which the claim arises with such particularity that the defendant or claimant will be able, without moving for a more definite statement, to commence an investigation of the facts and to frame a responsive pleading." Fed.R.Civ.P. Supp. Adm. R. E(2)(a). That standard is "more stringent than the general pleading requirements . . . an implicit accommodation to the drastic nature of the civil forfeiture remedy."Daccarett, 6 F.3d at 47.

To satisfy Rule E(2)(a), the complaint must "assert specific facts supporting an inference that the property is subject to forfeiture."United States v. All Right, Title and Interest in Real Property and a Bldg. Known as 16 Clinton St., New York, New York, 730 F. Supp. 1265, 1267 (S.D.N.Y. 1990). At trial, the government must show probable cause to believe that the property is subject to forfeiture. Daccarett, 6 F.3d at 55. However, the Second Circuit has held that "[t]he complaint does not have to meet the ultimate trial burden of showing probable cause for forfeiture; it simply needs to establish a reasonable belief that the government can show probable cause for forfeiture at trial." Id. at 47 (citations omitted).

The Leopold and MoMA argue that the Civil Asset Forfeiture Reform Act of 2000 ("CAFRA"), Pub.L. No. 106-185, 114 Stat. 202, applies in this case and raises the government's burden of pleading and proof above the probable cause standard. CAFRA did raise the government's burden in forfeiture cases to proof by a preponderance of the evidence. However, CAFRA is inapplicable to this motion to dismiss.

CAFRA was enacted on April 25, 2000, and by the express terms of its section 21, applies only to "forfeiture proceeding[s] commenced on or after the date that is 120 days after the date of the enactment of this Act." § 21, 114 Stat. at 225. Thus, CAFRA does not apply to forfeiture proceedings commenced before August 23, 2000.

The forfeiture proceeding at issue here was commenced on September 22, 1999, when the government filed its complaint. The filing of the Third Verified Complaint on January 23, 2001 did not begin a new forfeiture proceeding. Rather, "[a]n amendment of a pleading relates back to the date of the original pleading when the claim or defense asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading." Fed.R.Civ.P. 15(c)(2). Relation back is appropriate "even where the revised pleading contains legal theories not included in the original." White v.White Rose Food, 128 F.3d 110, 116 (2d Cir. 1997). Under Rule 15(c)(2), "the central inquiry is whether adequate notice of the matters raised in the amended pleading has been given to the opposing party . . . by the general fact situation alleged in the original pleading. Stevelman v.Alias Research Inc., 174 F.3d 79, 86-87 (2d Cir. 1999) (citations omitted).

The prior complaints sought forfeiture of the painting on the basis that the Leopold imported the painting knowing it to have been stolen by Welz. The Third Verified Complaint added the allegation that Dr. Leopold acquired the painting from the Belvedere by conversion, which provided another basis for the allegation of the Leopold's illegal transport. The Leopold argues that this amendment completely shifts the focus of the complaint. I disagree. The earlier complaints detailed the theft by Welz as well as the circumstances surrounding each acquisition of the painting thereafter, including its acquisition by the Leopold. All the basic factual allegations have remained the same, including the allegations regarding Dr. Leopold's knowledge of Bondi's ownership when he acquired the painting from the Belvedere. Moreover, Dr. Leopold's knowledge has been in issue from the beginning, and is relevant both to the scienter requirement of § 2314 and to his ability to have acquired good title by prescription. The prior complaints gave claimants notice of the conduct and transactions now in issue.

There is no basis in the CAFRA's effective date provision to apply it retroactively to pending cases. Contrary to the Sixth Circuit's view relied on by the Leopold and MoMA, see United States v. Real Prop, in Section 9, Town 29 North W., Range 1 West Township of Charlton, 241 F.3d 796, 798 (6th Cir. 2001), reh'd en banc denied (June 8, 2001), I do not find the meaning of the word "commenced" in section 21 to be ambiguous. Using the ordinary and common meaning of "commenced," see United States v. Martinez-Santos, 184 F.3d 196, 204 (2d Cir. 1999), a civil forfeiture proceeding is "commenced" when a judicial action is filed. See, e.g., Fed.R.Civ.P. 3 ("A civil action is commenced by filing a complaint with the court."). Because Congress has explicitly prescribed the statute's reach, the Sixth Circuit's use of theLandgraf default rules, see Landoraf v. USI Film Prods., 511 U.S. 244, 280 (1994), to justify retroactive application of CAFRA will not be followed here. This forfeiture action is governed by law prior to CAFRA.

B. Wally I: The Recovery Doctrine

The Leopold's motion to dismiss begins, logically, with the argument that this court has already decided that Wally is not stolen property, which would preclude a § 2314 violation. (Leopold Mem. 2 at 20) MoMA echoes this argument. (MoMA Mem. 2 at 8) In Wally I, I determined that federal law controls the question of whether an item is stolen. Wally I, at 292. I then relied on the recovery doctrine, Originating in common law and adopted into federal law, which holds that stolen property may no longer be considered stolen when it is recovered by the owner or his agent, including the police. Wally I, at 290 (citing United States v.Muzii, 676 F.2d 919, 923 (2d Cir. 1982). I found that the seizure of Wally from Welz by the United States armed forces after World War II was tantamount to a recovery of the painting by an agent of its true owner, Bondi, and therefore purged the painting of the taint that it had. Wally I, at 294. The government vigorously protested my characterization of the armed forces as an agent of Bondi, and in Wally II, I permitted the government to set forth further specifics in its Third Amended Complaint that might refute an agency relationship. Wally II, at *1-2. Based on the new factual allegations that followed, I now find the recovery doctrine inapplicable because the United States armed forces cannot properly be deemed an agent of Bondi.

As the Wally I holding makes clear, the doctrine "is rooted in agency principles" and applies only where an agency relationship can be said to exist. Wally I, at 293; see also Muzii, 676 F.2d at 923. When stolen goods are recovered by law enforcement officers, typically the police, "the law implies a principal-agent relationship between the true owner and the government officials who recover it, . . . who are deemed to act on her behalf because they are charged by law with doing so." Wally I, at 293. The government's prior complaint alleged that, "with respect to art restitution," the United States armed forces in Austria were charged with sorting works of art and returning them to the countries from which they had been seized, "in order for those countries to return them to their rightful owners." (Second Am. Compl. ¶ 5g) That allegation suggested that the United States armed forces were likewise acting on behalf of the true owners, and it was on that basis that I found them to be an implied agent of Bondi. Wally I, at 294.

In its present complaint, the government has modified and expanded upon its description of the United States armed forces' possession of artwork in Austria. It has retracted the allegation that the United States armed forces were holding stolen works of art with an eye toward their eventual restitution, which, as noted above, formed the predicate of the implied agency. Rather, the Complaint now alleges that, pursuant to a military decree in effect, "Decree No. 3," the allied forces seized all of the property of suspected war criminals, regardless of whether it was stolen, Aryanized, or legitimately acquired. (Compl. ¶ i) Vast quantities of property were subject to seizure under this decree and millions of items of property were in fact seized. (Id.) Pursuant to military decrees and policies then in effect, all of this property was then transferred to its country of origin. (Id. ¶ k)

Under these circumstances, it can no longer be said that the United States military acted as Bondi's agent when it came into possession of Wally. Rather than "recovering" stolen property, the United States armed forces were simply collecting all property. They did not even know that Wally was stolen. (Id. ¶ 5o) Nor were they "charged by law" with holding Wally on Bondi's behalf or with securing Wally's eventual return. Wally I, at 293. Rather, they were required merely to sort all seized property and transfer it to the BDA. This lack of both knowledge and duty makes this case unlike every other case cited to the court that applied the recovery doctrine to the police or other implied agents. It negates the existence of the requisite agency relationship. See id. (explaining an agency relationship is implied when stolen goods are recovered by someone charged by law with acting on the owner's behalf). And although there is language in some cases to suggest that any lawful possession triggers the recovery doctrine, see Wally I, at 293-94 and cases cited therein, the doctrine has never been applied, and should not be applied, where property has merely passed through the hands of government officials who were unaware that the property was stolen and who were under no legally enforceable duty to act on the owner's behalf.See id. The point of the recovery doctrine rests on the agent's knowledge that stolen property has been recovered. I therefore rescind my prior ruling that Wally could not be considered stolen based on the recovery doctrine.

Nor should the Leopold's and MoMA's invitation to extend the recovery doctrine to the BDA's possession of the painting be accepted. First, the lack of agency relationship between Bondi and the United States armed forces prevents any finding that the BDA was a subagent or joint agent of those armed forces. Second, like the armed forces, the BDA did not know Wally was stolen and was not required, or even authorized, to return Wally to its true owner. (Compl. ¶ 5l) Its role thus differed sharply from that of the police or other implied agents. Moreover, the BDA had divided loyalties because it was also responsible for deciding whether owners of cultural assets should be permitted to export them from Austria. The facts alleged in the Complaint indicate that the BDA, along with the Belvedere, often sought to keep certain works in Austria and place them in Austrian museums. (Compl. ¶ 5n) Notably, the BDA ignored information that Wally was not properly sorted with the Rieger collection, information that would have prevented the Belvedere from acquiring it. Whether this was deliberate or not, the underlying conflict of loyalties precluded any agency relationship between the BDA and the true owners of Holocaust property. See, e.g., Restatement (Second) of Agency §§ 112, 387 (1958); State v. DiGiulio, 835 P.2d 488, 491-93 (Ariz.Ct.App. 1992) (refusing to apply the recovery doctrine to an agent with adverse interests). Accordingly, the possession of Wally by the BDA was not tantamount to a recovery by Bondi or her agent, and the recovery doctrine does not apply.

C. Welz's Criminal Intent to Steal Wally

The Leopold next argues that, even if the recovery doctrine does not apply, Wally cannot be considered stolen within the meaning of § 2314 because the Complaint fails to allege that Welz had the specific criminal intent to steal Wally. (Leopold Mem. 2 at 23-26) This argument is utterly meritless.

The Leopold argues that the Complaint shows that Welz acquired the painting in connection with his Aryanization of the gallery, which, although repugnant, was legal at the time. Even if Welz's belief that he was entitled to the painting was erroneous, the Leopold argues, "there is no allegation that he knew he was wrong." (Leopold Mem. 1 at 21; Leopold Mem. 2 at 24)

In fact, the Complaint does not state that Welz acquired Wally through Aryanization, but rather that Welz demanded the painting from Bondi in the face of a claim that it was part of her private collection and thus unconnected to Welz's Aryanization of her gallery. (Compl. ¶ 5e, w) This taking of Bondi's private property was outside the scope of his authority to Aryanize the gallery. (See Lambert Decl. ¶ 19) As to whether Welz knew he was wrong, the Complaint specifically alleges that the painting was hanging in Bondi's home, and that he continued to pressure Bondi even after Bondi informed him that the painting was her private property. The Complaint goes on to detail that Bondi surrendered Wally to him without compensation only because she and her husband, Austrian Jews, feared what Welz could do to them. (Compl. ¶ 5e)

The Leopold further argues that these allegations do not amount to an allegation that Wally was stolen. Instead, it argues, "the Complaint alleges only that Welz made demands and that Bondi acquiesced, albeit reluctantly." (Leopold Mem. 1 at 22; Leopold Mem. 2 at 25) As the Leopold concedes, however, the term "stolen" under § 2314 includes "'all felonious takings . . . with intent to deprive the owner of the rights and benefits of ownership, regardless of whether or not the theft constitutes common-law larceny.'" United States v. Long Cove Seafood, Inc., 582 F.2d 159, 163 (2d Cir. 1978) (quoting United States v. Turley, 352 U.S. 407, 417 (1937)). Although the Leopold is correct that a "felonious" taking must be one with criminal intent, see id., such intent is present on the facts alleged here. The Complaint will not fail, then, for lack of an alleged felonious taking by Welz.

D. Title to the Painting Under Austrian Law

To state a violation of § 2314 in this case, the government must allege not only that Welz stole the painting but also that the painting remained stolen at the time it was imported in 1997. See United States v. An Antique Platter of Gold, 991 F. Supp. 222, 231 (S.D.N.Y. 1997),aff'd, 184 F.3d 131 (2d Cir. 1999). The Leopold argues that the government cannot make the requisite showing because by 1997, the Leopold had acquired good title to the painting from its predecessors through operation of the Austrian doctrine of prescription. (Leopold Mem. 1 at 26-30; Leopold Mem. 2 at 33-38) Austrian law does govern here, because although federal law determines whether property has been stolen, local law "controls the analytically prior issues of (a) whether any person or entity has a property interest in the item such that it can be stolen, and (b) whether the receiver of the item has a property interest in it."Wally I, at 292. However, an analysis of that law as applied to the facts alleged in the Complaint shows that this argument too fails.

1. Prescriptive Possession by the Belvedere

The Leopold argues first that the Belvedere had obtained ownership of Wally through prescription, and was thus able to transfer good title to the painting's subsequent owners. Under Austrian law, a possessor of property may acquire title to that property if the possession is based on legal title (purchase or exchange) and extends throughout the statutory period accompanied by the possessor's belief that the possession is lawful. (Lambert Decl. ¶ 17)

The government advances myriad reasons why the Belvedere's possession of Wally was insufficient to confer ownership through prescription as a matter of law. These arguments, some of which are novel and all of which are contested, range from the claim that the Belvedere did not enter a purchase contract for Wally, to a suggestion that the applicable prescription period was six years, to the flat insistence that state-owned entities could not acquire Holocaust-related property through prescription. It is sufficient, however, and much simpler, for the court to rely here on the allegations in the Complaint that establish that the Belvedere had reason to doubt that it was the legal possessor of Wally. This too is among the government's smorgasbord of arguments.

Although good faith is presumed under Austrian law (Friedrich Decl. ¶ 35(a)), a possessor will be found not to have had the requisite confidence for prescription if, at any time during the prescription period, the possessor had any objective reason to doubt his claim, or if he was negligent in maintaining his belief of lawful possession. (Lambert Decl. ¶ 17; Lambert Reply Decl. B. ¶ 30) The government would have the court infer that the Belvedere lacked the requisite good-faith possession based on three circumstances: (1) that the Belvedere was in close contact with the BDA, which had been put on notice of Wally's mistaken inclusion in the Rieger collection (Compl. ¶¶ 5n-o); (2) that the director of the Belvedere listed Wally merely as "Portrait of a Woman" on his typed inventory of the Rieger collection, while recognizing explicitly that the painting depicted Wally Neuzil and noting this by hand on his own copy of the list (id. ¶ 5t); (3) that the Belvedere negligently failed to investigate Wally's provenance.

Although an inference of bad faith may arise from these facts, it arises more directly from Bondi's letter, excerpted in the Complaint, which states explicitly that she visited the Belvedere after the war and made a claim to her painting. (Id. ¶ 5gg) The Leopold strongly protests this allegation, citing Dr. Garzarolli's letter, also excerpted in the Complaint, which denies that Bondi made any such claim and insists that the Belvedere believed it owned the painting based on assurances by the Rieger heirs. (Id. ¶ 5bb) However, construing the facts in the light most favorable to plaintiff, I must at this point infer Bondi's statement to be true and Dr. Garzarolli's to be merely self-serving. If Bondi did present her claim to the Belvedere, that was enough to overcome the presumption of that institution's good faith under Austrian law. The Leopold thus cannot rest any claim to title on the Belvedere's prescriptive possession of Wally.

2. Prescriptive Possession by Dr. Leopold

Based on the allegations in the Complaint, neither could the Leopold hold good title to Wally based upon Dr. Leopold's acquisition of ownership by prescription. Again, goodfaith possession will not be found where the possessor knew or should have known that he was not the legal possessor. (Lambert Decl. ¶¶ 50, 69, Ex. 1) The Complaint recounts that Bondi informed Dr. Leopold more than once of her claim to Wally. The first time was in 1933, when Bondi asked Dr. Leopold for help in getting her painting back from the Belvedere. (Compl. ¶ 5x) He was again reminded of Bondi's claim on at least two occasions after acquiring Wally for himself, once in an encounter with Bondi at an exhibition opening and once by letter from her attorney in 1957. (Compl. ¶¶ 5aa-bb). According to the government's Austrian law expert, the Austrian Supreme Court has held that there cannot be good-faith possession where the true owner informs the possessor of his legal opinion that property belongs to him. (Lambert Decl. ¶ 51) Bondi's communications with Dr. Leopold, then, were enough to raise an objective doubt in his mind that he was the legal owner.

MoMA persists that even if Dr. Leopold was aware of Bondi's claim, the Complaint does not rebut the possibility that he may have been a confident owner based on his own investigation of that claim and his conclusion that it was meritless. MoMA cites Dr. Leopold's discussion with the Belvedere regarding Bondi's claim, in which Dr. Garzarolli told him that Bondi never made a claim to the painting and assured him that the painting was theirs. (Compl. ¶¶ 5b) Further, the Leopold and MoMA argue that "Dr. Leopold may also have had confidence in the legality of his ownership of Wally based on the belief that the Belvedere, even if it did not acquire title to Wally directly from the Rieger heirs, had acquired title to Wally by prescription." (MoMA Reply Mem. I at 16) So long as Dr. Leopold reasonably believed this, they argue, the fact that the belief was erroneous is not enough to defeat his prescription of the painting. (Id.; Leopold Mem. 2 at 37).

First, to the extent that this theory relies on Dr. Garzarolli's report of his conversation with Dr. Leopold, set out in his letter to Bondi's lawyer, Dr. Garzarolli's contentions are not allegations in the Complaint that are to be taken as true on this motion to dismiss. In fact, as discussed above, they are legitimately suspect. Second, the facts alleged in the Complaint are sufficient to rebut the argument that Dr. Leopold had the requisite confidence to become Wally's legal owner. As noted above, at this stage of the proceedings, the allegation that Bondi told Dr. Leopold of her claim is enough. That Dr. Leopold may have been able to whistle past the graveyard with enough confidence to fool even himself is a hypothesis I need not indulge at this stage of the case.

Because neither the Belvedere nor Dr. Leopold obtained legal ownership of Wally through prescription, the Leopold did not acquire good title to Wally through its predecessors, and the painting did not lose its taint on that basis.

E. Expiration of Claims

The Leopold further maintains that, even if Bondi and her heirs did not lose title to the painting through prescription, they lost the right to claim it because applicable statutes of limitation ran before the painting reached the United States in 1997. Therefore, it was not "stolen" when imported because there was then no one with a superior claim. (Leopold Mem. 1 at 30-37; Leopold Mem. 2 at 28-33)

The Leopold is correct in arguing that in order for property to be considered "stolen," the property must rightfully belong to someone other than the person who has it. United States v. McClain, 545 F.2d 988, 995 (5th Cir. 1977). Forfeiture under § 2314 is not proper where the alleged illegal taking does not interfere with another party's ownership or possessory interests. Long Cove Seafood, Inc., 582 F.2d at 163-64;see also United States v. Bennett, 665 F.2d 16, 21-22 (2d Cir. 1981). The Leopold bases its limitations arguments on Austrian and New York law, and on the equitable doctrine of laches. As set forth below, Austrian law does not bar the Bondis' claim; New York law does not apply, and would not bar the claim even if it did; and the record is insufficient at this point to support a finding of laches.

1. The Third Restitution Act

The Leopold first argues that any claim Bondi may have had to the painting was extinguished by her failure to file a claim in accordance with the restitution laws enacted in Austria immediately following World War II. It cites specifically the Third Restitution Act, enacted in 1947 with the approval of the United States and its allies, which the Leopold argues provided the exclusive framework for resolving post-war restitution claims. The Act itself set a one-year limitations period for the filing of such claims, which was later extended until the Reception Organizations Act provided an absolute deadline of June 30, 1961. (Friedrich Decl. ¶ 23, Friedrich Reply Decl. ¶ 10).

However, the Third Restitution Act was not the exclusive basis on which Bondi could claim her painting. Rather, because Welz's taking of Wally was either theft or extortion under Austrian law (Lambert Decl. ¶¶ 34-38), Bondi also had a viable ownership claim to Wally under the Austrian Civil Code, which does not generally subject ownership rights to limitation. (Lambert Decl. ¶ 90; Lambert Reply Decl. A ¶¶ 4, 16-17). As there is no basis in law or logic to believe the Third Restitution Act extinguished claims arising under the Austrian Civil Code, Bondi's failure to file a claim within the limitations period of the Third Restitution Act did not operate as a waiver of her ownership rights.

The Third Restitution Act voided all methods of property seizure practiced by the Nazis, declared that dispossessed property should be returned to rightful owners, and eased the burden of proof for applicants seeking restitution. (Friedrich Decl. ¶ 21) It thereby provided a streamlined procedure for victims of Nazi persecution to regain ownership rights, and importantly, provided a cause of action for victims whose property was Aryanized, or similarly seized under color of law, and whose ownership rights might therefore have been lost under general principles of the Austrian Civil Code. (Id.; Lambert Decl. ¶ 61) Its purpose, then, was to help restore ownership rights, not to limit rights owners would otherwise have under Austrian law, and thereby reward outright theft by Nazis. (Lambert Decl. ¶¶ 61, 78)

The Leopold counters that the Third Restitution Act explicitly stated that the Restitution Commissions provided the exclusive means for asserting claims for restitution and therefore the limitations period in the Act operates to bar all ownership claims. However, Section 15 of the Act provided only that "Restitution Commissions shall have exclusive jurisdiction to decide any claims resulting from a nullity of acts of property-dispossession under the present Federal Act" (Friedrich Decl. ¶ 23). That did not establish exclusivity over Bondi's claim or other claims arising under the general Civil Code, which did not depend upon the "nullity of acts" announced in the Third Restitution Act. Although all ownership claims may have been transferred to the Restitution Commissions while they remained in existence, that was a matter of procedural competence; it was not intended to terminate substantive rights. (See Lambert Decl. A ¶ 10)

The plain meaning of the Third Restitution Act confirms that its limitations period did not apply to claims arising under the General Civil Code. The limitations period is set out in paragraph 14(1) of the Act and provides that the aggrieved "owner shall forfeit the claims resulting from the nullification of dispossession of property, (Paragraph 1, Subparagraph (1)), unless he initiates proceedings under Paragraph 15 of the present Federal Act within one year." (Lambert Decl. ¶ 62 n. 17) The claims that must be brought within one year, then, are those brought directly under Paragraph 1, Subparagraph i of the Act. Claims arising under the Civil Code are not subject to this limitation. Moreover, the Act specifically provides that "["[e]xcept where otherwise provided by this Federal Act, the provisions of the Civil Law shall apply." (Id.) Thus, there is no basis for finding that the Third Restitution Act extinguished the right to bring a valid claim under the Civil Code when the time for bringing a claim under the Third Restitution Act expired.

Dr. Friedrich, the Leopold's expert, finds support for his contention that "all claims have expired long ago" in two recent decisions issued by the Supreme Restitution Commission established at the Austrian Supreme Court. (Friedrich Decl. ¶ 25) However, according to the government's expert, these decisions merely confirm that claims under the Third Restitution Act have expired. (Lambert Decl. ¶ 77) To be sure, Bondi could not now bring her claim to a Restitution Commission and rely on the relaxed burdens of proof permissible in restitution proceedings under the Third Restitution Act. But that does not mean that her claim under the General Civil Code has expired, and the cases do not so hold. (Id.)

The applicable provision of the General Civil Code is found in Paragraph 1459. It provides that "the rights of a person in regard to his/her property are not subject to limitation unless, according to an express provision of law, the failure to use those rights for a certain period of time causes the loss thereof." (Lambert Decl. ¶ 63) Because title to Wally was not legally transferred to Welz under Austrian law, nor acquired by prescription by its subsequent possessors, Bondi had an ownership right to Wally. And because the Third Restitution Act does not explicitly limit claims other than those arising under that Act, Bondi's ownership claim survives. (See Lambert Decl. ¶ 63; Lambert Reply Decl. A ¶¶ 4, 16-17)

In its reply, the Leopold again relies on Article 26(2) of the Austrian State Treaty of 1955, as well as the Reception Organizations Act enacted pursuant thereto, to support its argument that Bondi did not have an ownership claim outside the Third Restitution Act. (Leopold Mem. 2 at 30; Reply Mem. 2 at 30-31) As noted, Article 26(2) gave Austria responsibility for all unclaimed property and mandated that such property be transferred to an organization for the relief Holocaust victims. The Reception Organizations Act thus created Assembly Centers to take title to property that was not claimed under the restitution laws, and set a deadline of June 30, 1961 for pursuing claims to such property. (See Friedrich Decl. ¶¶ 1-10; Lambert Reply Decl. A ¶¶ 5, 9) Property that could not be returned to its true owner was later auctioned for the Holocaust victims' collective benefit. (Lambert Decl. ¶ 20) The Leopold argues that these provisions support its view that Bondi forfeited her ownership rights to the state with her failure to bring a timely restitution claim. However, these provisions of the Austrian State Treaty and its implementing legislation concerned Austria's obligations with respect to property in its possession that could not be returned to its true owners. There is no basis for applying such provisions to bar claims to property that never came under the Assembly Centers' control, and they certainly cannot be used to defend the Leopold's title to Wally. (See Lambert Decl. A ¶¶ 5, 9) These laws thus fail to establish that neither Bondi nor her heirs have a claim against the Leopold for the painting under Austrian law.

2. New York Law

The Leopold next argues that even if a claim to the painting survives under Austrian law, Bondi's heirs do not have a claim to the painting because all arguable claims are barred by New York's statute of limitations or by the doctrine of laches. (Leopold Mem. 1 at 32-37; Leopold Mem. 2 at 30-33)

The Leopold opines that the government brought this forfeiture plan with the intent that the heirs would file a claim to the painting. It then reasons that because the heirs have asserted their claim in New York, New York law determines the timeliness of that claim. The Leopold goes on to argue that under the applicable version of New York's Borrowing Statute, the heirs' claim cannot be brought in New York if it is barred either by the laws of New York or the laws of Austria, the situs where Bondi's cause of action arose. Because the New York statutes of limitation have long since run on all conceivable claims of the heirs — conversion, fraud, or breach of contract — the Leopold argues that the heirs' claim is time-barred irrespective of Austrian law. (Leopold Mem. 1 at 32-36; Leopold Reply Mem. 2 at 31)

This argument contains at least three fatal flaws. First, there is no basis for applying New York law to the government's forfeiture action. The government's case does not depend upon the heirs' ability to file a claim in this proceeding. Although Bondi or her heirs must have a viable claim to the painting before it can be considered stolen, see supra pp. 47-48, their property interest is to be determined by local law —i.e. Austrian law, see supra p. 42. The Complaint, then, cannot be dismissed on the basis of New York law.

Second, even if the government had brought the action on the condition that the heirs assert a claim in this action, the heirs' claim is timely. Although this finding is again unnecessary to the government's claim, it bears discussion here because the Leopold revives its arguments regarding New York law in its motion to dismiss the heirs' claim. There is no clear precedent for applying New York law to the heirs' claim in this federal forfeiture action. Arguably, Austrian law applies here as well. However, even if the heirs' claim in this forfeiture action were dependent upon their having a viable underlying state tort claim, all of the limitations periods cited by the Leopold would have been tolled until Wally was imported in 1997, when the Leopold, or any of its purported owners, first became subject to suit in New York through in rem jurisdiction over the painting. See N.Y. C.P.A. § 19 (predecessor to C.P.L.R. § 207 (McKinney 1990) (tolling statutes of limitations until a nonresident defendant became amenable to suit in New York); see, e.g.,Meyers v. Credit Lyonnais, 259 N.Y. 399, 182 N.E. 61 (1982). Thus, the heirs' claim in 1999 in this action was within the three-year limitations period for conversion claims, the shortest limitations period cited by the Leopold. Even if New York law applied, it would not bar the heirs' claim.

Nor can the Leopold find refuge in the equitable doctrine of laches on this motion to dismiss. To show laches here, the Leopold would have to show that Bondi and her heirs unreasonably delayed in starting an action and that the Leopold suffered undue prejudice as a result. See Robins Island Preservation Fund, Inc. v. Southhold Dev. Corp., 959 F.2d 409, 423 (2d Cir. 1992); Solomon R. Guggenheim Foundation v. Lubell, 153 A.D.2d 143, 149, 550 N.Y.S.2d 618, 621-22 (1st Dep't 1990), aff'd, 77 N.Y.2d 311, 567 N.Y.S.2d 623 (1991). This would involve a fact-intensive inquiry into the conduct and background of both parties in order to determine the relative equities. See Guggenheim, 77 N.Y.2d at 321, 567 N.Y.S.2d at 628; Guggenheim, 153 A.D.2d at 151-52, 550 N.Y.S.2d at 623. Such issues are often not amenable to resolution on a motion for summary judgment, let alone a motion to dismiss. See id.; Greek Orthodox Patriarchate of Jerusalem v. Christies's, Inc., No. 98 Civ. 7664, 1999 WL 673347, at *7-*10 (S.D.N.Y. Aug. 30, 1999) (determining the laches issue on a motion for summary judgment, but noting that application of the laches defense is often an issue for trial and collecting cases so holding). The record here does not provide the factual basis for a finding as to delay and prejudice. (See, e.g., Compl. ¶¶ 5z, dd, gg (explaining Bondi's reluctance to file suit); Leopold Mem. 2 at 32 (asserting grounds for a finding of prejudice)); (Heirs' Mem. 1 at 27-28) (refuting those grounds))

None of the Leopold's arguments overcomes the conclusion, based on the allegations in the Complaint, that the painting was properly considered stolen at the time of its importation in 1997.

F. Elements of Conversion

In its Third Amended Complaint, the government does not rest its § 2314 case solely on the allegation that the painting was stolen by Welz. Rather, as previously noted, it asserts an independent ground for forfeiture based on the allegation that the painting was converted by Dr. Leopold. (Compl. ¶ 9, 11) Specifically, it argues that when Dr. Leopold acquired Wally from the Belvedere, knowing it rightfully belonged to Bondi, he committed an act of criminal conversion under § 2314. (Gov't Mem. at 119)

The Leopold and MoMA argue that the Complaint fails to allege sufficiently the elements of criminal conversion. The Leopold argues first that criminal conversion occurs only when one who is lawfully in possession of the property of another later takes action to deprive the true owner of his or her rights in that property. It then notes that there is no allegation in the Complaint that Dr. Leopold was rightfully in possession of Wally and somehow later converted it. (Leopold Mem. 2 at 26-27) However, the definition of criminal conversion under federal law is broader than the Leopold's.

The Leopold relies on United States v. Hill, 835 F.2d 759 (10th Cir. 1987), a case that treated conversion under 18 U.S.C. § 641. That Court, citing Morisette v. United States, 342 U.S. 246, 271-72 (1952), held that the crimes of stealing and conversion were mutually exclusive because stealing involves wrongful taking, while conversion involves an initially lawful possession and a later wrongful exercise of dominion over that property against the rights of the true owner. Hill, 835 F.2d at 764. However, Morisette itself does not support this holding and in fact directly contradicts it.

The Morisette Court did state that "[c]onversion . . . may be consummated without . . . any wrongful taking, where the initial possession by the owner was entirely lawful." Morisette, 342 U.S. at 271-272 (emphasis added). However, it made clear that conversion also includes unlawful initial takings. See id. It indeed found "considerable overlap" between stealing and conversion, noting that "probably every stealing is a conversion." Id. at 271. Thus, as other courts have noted, Hill misreads Morisette to say that conversion requires initial lawful possession, and that mistake will not be repeated here. See United States v. Wilkinson, 124 F.3d 971, 976-77 (8th Cir. 1997); United States v.Johnson, 726 F. Supp. 668, 670-71 (N.D. Ill. 1989). Rather, "[t]he knowing and unauthorized exercise of dominion over another's property, though possession is wrongful in the inception, is no less a conversion than is the knowing and unauthorized exercise of dominion over another's property after possession is lawfully obtained." Wilkinson, 124 F.3d at 977. Dr. Leopold's allegedly unlawful taking of Wally may have constituted, or been a part of, a conversion.

A broad definition of conversion has also been read into § 2314. InUnited States v. Evans, 579 F.2d 360, 361 (5th Cir. 1978), the Fifth Circuit approved a jury instruction that conversion means "to appropriate dishonestly or illegally to one's own use anything of value." The Court explained that "the language of § 2314 reflects a congressional purpose to reach all ways by which an owner is wrongfully deprived of the use or benefits of his property." Id. (citations omitted); see also United States v. Smith, 686 F.2d 234, 242 (5th Cir. 1982) (defining conversion under § 2314 as the "[u]nauthorized and wrongful exercise of dominion and control over another's personal property, to exclusion of or inconsistent with rights of owner"). Conversion thus includes Dr. Leopold's wrongful acquisition of property belonging to Bondi.

MoMA, and the Leopold in its reply, argue also that the Complaint does not allege conversion because Dr. Leopold's acquisition of Wally from the Belvedere did not interfere with Bondi's property rights to the painting. That is, they argue that Bondi did not have possession either before or after the transaction, and that her existing right to sue to recover the painting remained intact. (MoMA Mem. 2 at 6; MoMA Reply Mem. 2 at 10; Leopold Reply Mem. 2 at 22) However, as the government argues, limiting one's view of Bondi's existing rights to her right to file a lawsuit confuses her rights with her remedies. (Gov't Mem. at 120) Rather, as the owner of Wally, Bondi had the right to possess the painting, not merely to sue to get it back, and Dr. Leopold's possession deprived her of that right. That Bondi, like all other victims of theft or conversion, had an available remedy does not insulate his actions.

The Leopold argues further that the Complaint does not allege, as it must, that Dr. Leopold had the intent required for criminal conversion. (Leopold Mem. 2 at 27; Leopold Reply Mem. 2 at 22) It argues that on the facts alleged in the Complaint, when Dr. Leopold met with Bondi in 1953 he knew only that the painting had belonged to her in the past, not that it was then her property. (Leopold Mem. 2 at 28) To the contrary, the very paragraph of the Complaint cited by the Leopold alleges that Bondi told Dr. Leopold that Wally was "her property" and that she sought his assistance in getting Wally returned to her. (Compl. ¶ 5x) The Complaint further alleges that Dr. Leopold acquired Wally from the Belvedere for himself "[d]espite [his] knowledge of Bondi's ownership of Wally." (Id. ¶ 5y) At this stage of the proceedings, these allegations are sufficient. Although the Complaint does excerpt statements by Garzarolli of the Belvedere and Dr. Leopold in which they assert their good faith in the transaction (Id. ¶¶ 5bb, nn), these are not sufficient to negate the other allegations in the Complaint. Rather, such statements will be assumed to be self-serving on a motion to dismiss. Thus, the Complaint sufficiently establishes that Dr. Leopold knew Wally belonged to Bondi and that he intentionally and dishonestly acquired Wally. See Evans, 579 F.2d at 361. Because Bondi's ownership claim survives, the painting was still converted at the time of its importation in 1997. See supra Part IV.D-E.

G. Section 2314's Scienter Requirement

The Leopold and MoMA's final attack on the sufficiency of the Complaint is that even if Wally was stolen or converted, the allegations cannot satisfy the knowledge element of § 2314 because they do not establish that the Leopold Foundation knew the painting's status when it transported the painting in 1997. (Leopold Mem. 2 at 38; MoMA Mem. 2 at 4-5) All parties concede that Dr. Leopold's knowledge can be imputed to the Leopold Foundation by reason of his having been the Museological Director at all relevant times. In somewhat of a reprise of its earlier arguments, the Leopold argues that Dr. Leopold did not have the requisite mens rea.

The Leopold first argues that the Complaint fails to allege that Dr. Leopold was ever informed that Wally had been stolen from Bondi by Welz. (Leopold Mem. 1 at 39-42; Leopold Mem. 2 at 38-43) It argues that at most, the Complaint alleges that Dr. Leopold was aware that Bondi had some claim to Wally. This argument, however, misstates or ignores relevant allegations in the Complaint. In fact, the Complaint details that Bondi told Dr. Leopold in 1953 that she owned Wally, not just that she had a claim to it. (See Compl. ¶¶ 5x, y) In addition, Dr. Leopold was reminded of Bondi's ownership of the painting on at least two occasions after he acquired Wally, once by Bondi herself and once by her lawyer. (Id. ¶¶ 5aa, bb) Indeed, Dr. Leopold admitted that Bondi twice told him that Wally belonged to her. (Id. ¶ 5nn)

It is reasonable to infer from these allegations that Dr. Leopold either knew or could deduce that Wally was stolen, particularly given the historical backdrop of Nazi persecution. Such an inference is further supported by a letter, excerpted in the Complaint, in which Bondi reports that Dr. Leopold acted self-consciously after she confronted him about her painting. (Id. ¶ 5aa) Another allegation giving rise to suspicion is that Dr. Leopold amended Wally's published provenance in 1995 to show that Bondi had sold Wally to Heinrich Rieger, although he knew Bondi's claim to the contrary, and notwithstanding that former published statements of provenance, including his own, did not include Rieger ownership. (Id. ¶ 5jj)

Given that knowledge can be proved by circumstantial evidence, see United States v. Spencer, 439 F.2d 1047, 1049 (2d Cir. 1971), and that deliberate ignorance is no defense, see United States v. Boothe, 994 F.2d 63, 69 (2d Cir. 1993); United States v. Rodriguez, 983 F.2d 455, 457-58 (2d Cir. 1993), these allegations suggest that the government at trial will be able to show probable cause that the Leopold, through Dr. Leopold, knew Wally to have been stolen at the time it was transported in foreign commerce. See Daccarett, ¶ F.3d at 47.

MoMA raises a different argument regarding the knowledge element of § 2314. It insists that the knowledge requirement cannot be met because "as a matter of Austrian law Wally's ownership is in reasonable dispute, and the [Leopold] has a colorable claim to title." (MoMA Mem. 2 at 5) Its papers repeatedly focus on the "material uncertaint[ies]" under Austrian law regarding the proper period for prescription, the applicability of prescription to Holocaust property, and the statutes of limitation governing Bondi's claim. (See, e.g., MoMA Mem. 1 at 16-19) The Leopold echoes this argument, suggesting that even if Dr. Leopold once knew the painting to have been stolen, he could not have known the painting remained stolen or converted in 1997 because of these uncertainties under Austrian law. (Leopold Mem. 2 at 46; Leopold Reply Mem. 2 at 20-21) This suggestion is unavailing for two reasons.

First, many of the "uncertainties" cited are not "material" on this motion. That is, the above analysis of prescription did not depend on Dr. Leopold's knowledge of the proper limitations period or its applicability to Holocaust property. Rather, it was based on allegations establishing the Belvedere's and Dr. Leopold's own lack of confidence that they were the legal possessors of Wally. See supra Part IV.D.1-2. These allegations, if true, defeat prescription, regardless of any underlying uncertainties of law.

Second, as detailed throughout this section of the opinion, the government has shown that Bondi owns Wally under Austrian law; Wally is thus not the subject of an objectively colorable ownership dispute. Further, the government has specifically alleged conversations and conduct by Dr. Leopold suggesting his guilty knowledge of this fact. The government has thus alleged facts to support its general averment that the Leopold, through Dr. Leopold, transported Wally knowing it to be stolen and converted property. (Compl. ¶¶ 9-12) On the strength of these allegations, I cannot say as a matter of law that the government will not be able show the requisite knowledge at trial, and the Complaint will not be dismissed on that basis. Whether or not Dr. Leopold actually had the knowledge is a question of fact for trial.

In summary, then, despite voluminous arguments to the contrary, the Complaint satisfies the Rule E(2)(a) standard of particularity and states a claim on which relief can be granted.

V.

Beyond the sufficiency of the Complaint, the Leopold and MoMA raise statutory and constitutional arguments in support of their motion to dismiss. All are without merit, as set forth below.

A. Fair Warning

The Leopold and MoMA first assert that because Austrian law is so unclear on the issue of ownership of Wally, the Leopold could not possibly have had "fair warning" that importation of Wally violated § 2314. They argue specifically that the rule of lenity and due process preclude application of § 2314 to property that is subject to a genuine ownership dispute or property that can be deemed stolen only on the basis of unclear foreign law. (Leopold Mem. 2 at 43-47; MoMA Mem. 1 at 8-9; 15-16)

"[T]he canon of strict construction of criminal statues, or rule of lenity, ensures fair warning by so resolving ambiguity in a criminal statute as to apply it only to conduct clearly covered." United States v. Lanier, 520 U.S. 259, 266 (1997); see also United States v. Brennan, 183 F.3d 139, 150 (2d Cir. 1999). Relatedly, "due process bars courts from applying a novel construction of a criminal statute to conduct that neither the statute nor prior judicial decision has fairly disclosed to be within its scope." Id. Under either of these statements of the constitutional fair warning requirement, "the touchstone is whether the statute, either standing alone or as construed, made it reasonably clear at the relevant time that the conduct was criminal." Lanier, 520 U.S. at 267.

Although these doctrines do apply to civil forfeiture cases, see,e.g., United States v. One 1973 Rolls Royce. V.I.N. SRH-16266, 43 F.3d 794, 801 (3d Cir. 1994) (applying the rule of lenity in a forfeiture case);see also County of Suffolk, New York v. First Am. Real Estate Solutions, 261 F.3d 179, 195 (2d Cir. 2001) (citing One 1973 Rolls Royce with approval), they have no relevance here.

First, as noted previously, the government is not arguing that § 2314 be applied to property that is the subject of a genuine ownership dispute. Rather, under its theory of forfeiture, the Leopold imported Wally into the United States with knowledge that it was stolen and converted. (Compl. ¶¶ 9-12) This conduct "plainly and unmistakably" falls within § 2314, as is clear not only from the statutory language itself but also from Dowling v. United States, the very case relied on by the Leopold and MoMA in support of narrow construction. See 473 U.S. 207, 213-18, 228 (1985) (analyzing the language of § 2314 and declining to extend that statute to cover goods that infringe copyright). As the government has also shown that title to Wally is not an open question under Austrian law, there is no concern that the statute will, in this way, be construed too broadly.

The Leopold and MoMA analogize this case to United States v. McClain, 593 F.2d 658, 671 (5th Cir. 1979), in which the Fifth Circuit overturned convictions under § 2314, stating that "it cannot properly be applied to items deemed stolen only on the basis of unclear pronouncements by a foreign legislature. That Court found a denial of due process and of notice because the Mexican patrimony statutes governing ownership of the goods in question "do not clearly announce any line that appellants' willfulness can have led them to cross," observing that "willful conduct cannot make definite that which is undefined." Id. (citations omitted). However, on the basis of the declarations and exhibits before me, construed in the light most favorable to the government, it appears that Bondi retained ownership of Wally since it was taken from Welz, that neither the Belvedere nor the Leopold ever obtained good title to Wally, and that neither had sound reason to believe otherwise.

At this stage, I cannot say that Austrian law is so ambiguous so as to preclude fair notice to the Leopold and its principal, Dr. Leopold, who, notably, are themselves Austrian. Although their subjective knowledge of the law ultimately may not meet § 2314's scienter requirement, the objective standards of due process are not offended by allowing this case to proceed.

B. Statutory Purpose

The Leopold and MoMA also contend that applying § 2314 to the facts of this case is contrary to the stated purpose and spirit of the statute. (Leopold Mem. 2 at 55-58; MoMA Mem. 1 at 13-14) The Supreme Court has noted that in enacting § 2314, Congress sought to assist the states in detecting and punishing criminals who evade state authorities by utilizing the channels of interstate commerce. See Dowling, 473 U.S. at 220; United States v. Sheridan, 329 U.S. 379, 384 (1946). In addition to their repeated, yet unavailing insistence that Dr. Leopold is not a criminal, but rather someone with a genuine claim to title, the Leopold and MoMA also argue that § 2314's purpose is not vindicated if it is not applied to supplement Austrian law enforcement efforts. They argue that Austria is not seeking to "detect" or "punish" Dr. Leopold; nor did Dr. Leopold use "the channels of interstate commerce" to make a successful getaway. Rather, the Leopold participated in "an arms-length cultural exchange with a world-renowned museum . . . with the express permission of the Patrimony authorities of the Republic of Austria and their explicit requirement that the Painting be returned to Austria directly following the MoMA exhibit." (Leopold Mem. 2 at 56) Thus, the Leopold argues, this forfeiture action not only fails to aid, but actually interferes with Austria's interests.

However, as the government argues, "[t]he dominant purpose of the statutes under which this case is brought, 18 U.S.C. § 545, 19 U.S.C. § 1595a, and 22 § U.S.C. § 401, is undeniably to effectuate the forfeiture of property which has been imported into the United States or is about to be exported in violation of law." (Gov't Mem. at 137) On its face, § 2314 proscribes the transportation in foreign commerce of all property over $5,000 known to be stolen or converted. Although the museum parties and amici would have it otherwise, art on loan to a museum — even a "world-renowned museum" — is not exempt. Moreover, the United States need not speculate upon, consult, nor follow a state's prosecution decisions in a given case regarding property deemed stolen or converted under U.S. law. Rather, if Wally is stolen or converted, application of § 2314 will "discourage both the receiving of stolen goods and the initial taking," which was Congress's apparent purpose. United States v. McClain, 545 F.2d 988, 994 (5th Cir. 1977) Such discouragement of trafficking in stolen goods was intended to, and ultimately does, serve states' interests by closing an enforcement gap, and thereby enhances government protection of the rights of property owners. See id. Thus, a forfeiture based on § 2314 is entirely proper.

In further reliance on Dowling, the Leopold argues that there is no "enforcement gap" requiring supplemental federal action here because Bondi could have brought a private restitution claim under the restitution system in post-war Austria. See Dowling, 473 U.S. at 219, 221 ("[T]he premise of § 2314 [is] the need to fill with federal action an enforcement chasm created by limited state jurisdiction . . . .") However, this reliance on Dowling is again misplaced. The Dowling Court held that § 2314 did not apply to the interstate distribution of goods that infringe copyright. It reasoned that Congress showed no intent to cover copyright infringement and further, that there was no need here for supplemental federal action because Congress has always had direct authority to legislate as to copyright and because of the comprehensive federal legislation already in existence. Id. at 219-21. This holding cannot be extended to mean that § 2314 does not apply to stolen goods because the owner could have brought a private civil claim under legislation in the state or country where the theft occurred. Rather, the gap that would exist absent application of § 2314 is a gap in governmental protection of property rights, because just as a state cannot reach property beyond its borders, a foreign country cannot reach property in the United States. McClain, 545 F.2d at 994, 996. A foreign country s civil restitution scheme is irrelevant to Congress's efforts to recover stolen property for its true owner once it is transported into the United States.

C. Forfeiture Procedures

The Leopold's contention that this case is an "improperly brought 'interpleader' action" is likewise without merit. (Leopold Mem. 2 at 58) According to the Leopold, the court cannot award Wally to Bondi's heirs even if it is established that the heirs have a legal right to the painting and should prevail on their claim. In its view, the court's only options are to forfeit the painting to the government, or return it to MoMA as improperly seized. The Leopold thus faults the government for failing to move to dismiss the heirs' claim and moves separately to strike or dismiss the heirs' claim for lack of standing.

If accepted, this argument would frustrate the whole purpose of this proceeding. As is true in every forfeiture case, the government is acting to seize property that is alleged to be the subject of criminal activity. Any person who has a legal interest in the property may file a claim to defend against forfeiture, and a claimant with a meritorious claim will prevail. That the claimants in this particular case dispute the issue of ownership does not make this an interpleader action, despite the Leopold's and museum amici's arguments to the contrary; nor is it reason to deny the heirs the opportunity to show that the painting is not subject to forfeiture as against them.

D. Due Process

The Leopold's final argument is that "the unfairness of the instant forfeiture action denies the Leopold Museum due process." (Leopold Mem. 2 at 47) The Leopold first points to the "dubious constitutionality of civil in rem forfeiture proceedings, wherein the Government seeks to proceed with inadmissible evidence to demonstrate only probable cause, and to force the claimant to prove its title to the subject property by a preponderance of admissible evidence." (Id. at 48) However, the Second Circuit, as well as the First, Fourth, Seventh, Ninth, Tenth, and Eleventh Circuits, have all explicitly upheld the constitutionality of the probable cause standard in civil forfeiture cases. See United States v. 228 Acres of Land and Dwelling Located on Whites Hill Road, 916 F.2d 808, 814 (2d Cir. 1990); United States v. One Beechcraft King Air 300 Aircraft, 107 F.3d 829, 829-30 (11th Cir. 1997) (collecting cases). Those decisions will not be disregarded here, and certainly not on the strength of nothing but overheated rhetoric.

The Leopold nonetheless contends that its application here violates due process because the theft and conversion occurred more than 40 years ago, the chain of title to the painting is complex and involves the interpretation of Austrian law, many of the witnesses are dead and most of the documents are lost, and whatever few sources of proof still exist are in Austria and not subject to this court's subpoena power. (Leopold Mem. 2 at 48) As the government points out, however, these generalized complaints bypass the important point that Dr. Leopold himself was personally involved in almost all the critical events in Wally's history. (Gov't Mem. at 142) There is no allegation that the Leopold and Dr. Leopold no longer have documents relevant to this litigation, and as is clear from the Complaint, important documents already have been obtained. Moreover, the Leopold and Dr. Leopold are themselves Austrians residing in Austria and will be able to retrieve relevant Austrian documents and procure the testimony of Austrian witnesses more readily than any other party. At this stage of the proceeding, prior to discovery, I am not willing to dismiss the Complaint on the empty claim that there is nothing discoverable.

I disagree also with the Leopold's further contention that neither the government nor New York has an interest in this case, and that resolution of this dispute should be left to Austria. (Leopold Mem. 2 at 50-54) The government brings this forfeiture action pursuant to federal laws proscribing the transportation of stolen and converted property in foreign commerce, and there is a strong federal interest in enforcing these laws. A civil forfeiture action based on the United States law is properly brought in the United States, in the district in which the property is found and in which the transportation occurred. 28 U.S.C. § 1355(b)(1)(A), 1395(b). In this case, the Leopold brought the painting into New York, allegedly with the knowledge that it was stolen and converted, and the painting is now in New York. Thus, there is no injustice in this court's. assertion of in rem jurisdiction.

Finally, due process did not require that the Leopold be given pre-seizure notice or an opportunity to be heard before the painting was seized. The principle that the Leopold relies upon, that a pre-seizure hearing must be held absent exigent circumstances (See Leopold Mem. 1 at 53), has been applied in forfeiture proceedings. United States v. James Daniel Good Real Property, 510 U.S. 43, 53 (1993). However, the Supreme Court has recognized also that exigent circumstances exist in cases involving civil forfeiture of personal property, because such property can so easily be removed to another jurisdiction and because the seizure of such property is necessary to establish in rem jurisdiction. See Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 678-80 (1974) Although the Leopold cites forfeiture cases disapproving ex parte warrants, these cases all involve real property, which does not implicate the concerns noted in Calero-Toledo. See James Daniel Good Real Property, 510 U.S. at 52-53, 57, 62 (1993); United States v. Premises and Property at 4492 South Livonia Road, Livonia, New York, 889 F.2d 1258, 1263-65 (2d Cir. 1989); see also United States v. All Assets of Statewide Auto Parts, Inc., 971 F.2d 896, 900-05 (2d Cir. 1992) (similarly disapproving an ex parte warrant for an ongoing business). By their own analyses, these cases are inapposite here. See id.

Nor are the Leopold's attacks on the affidavit upon which the ex parte warrant was granted particularly compelling. (Leopold Mem. 1 at 58) The faults the Leopold finds are unfounded or exaggerated, and in any event would not result in dismissal of this action. As the Second Circuit has held, even if the seizure warrant was invalid, "the illegal seizure of property, standing alone, will not immunize that property from forfeiture, so long as impermissibly obtained evidence is not used in the forfeiture proceeding." 4492 South Livonia Road, 889 F.2d at 1265-66. No such evidence was obtained by Wally's seizure. In short, the issuance of the ex parte seizure warrant does not entitle the Leopold to prevail on its motion.

None of the arguments in opposition to this forfeiture action provides a reason to dismiss the government's Complaint. The government may therefore proceed with its case; the Leopold's and MoMa's motions are denied.

VI.

Also before me is the Leopold's motion to dismiss or strike the claim of Bondi's heirs ("the Bondi heirs" or "the heirs"). One of the argued bases for dismissal, the heirs' failure to comply with the estate laws of England and New York, has been concededly rendered moot by the heirs' interim compliance with those laws. In addition, the Leopold's arguments concerning the justiciability of this action, its own claim to title to Wally, and the timeliness and redressability of the heirs' claim were already considered in its motion to dismiss the Complaint and will not be reconsidered here. The only remaining argument, then, is the Leopold's suggestion that the heirs lack constitutional standing because of their failure to show a legal interest in Wally, such as "'actual possession, dominion, control, title, or financial stake.'" (Leopold Mem. 1 Supp. Mot. to Dismiss Heirs at 28 (quoting United States v. Contents of Accounts Numbers 208-06070 and 208-06068-1-2, 847 F. Supp. 329, 333 (S.D.N.Y. 1994)))

To establish standing, the heirs "need not prove the full merits of [their] underlying claim. All that needs to be shown is a facially colorable interest in the proceedings sufficient to satisfy the case-or-controversy requirement and prudential considerations defining and limiting the role of the court." Torres v. $36,256.80 U.S. Currency, 25 F.3d 1154, 1158 (2d Cir. 1994) (citations omitted). The heirs allege that they are the lawful owners of defendant in rem. An owner of property has standing to challenge its forfeiture if the allegation of ownership is supported by a prima facie showing of actual injury. See id.; Cambio-Exacto, 166 F.3d at 527. Based on the allegations in their claim and in the Complaint, the heirs have suffered injury sufficient to give them standing to challenge this forfeiture. Most of the Leopold's arguments opposing the heirs' claim simply recycle its earlier arguments directed at the government's claim, and have already been found unavailing; its motion to dismiss or strike the heirs' claim is denied.

VII.

The final motion under consideration is a motion for summary judgment — not merely dismissal — by the Bondi heirs to reject the claim of Ronald Jaray ("Jaray"), the grandson of Bondi's husband Alexander Jaray. Jaray "believes" that the painting either belonged to his grandfather (whose second wife was Bondi), or was community property of the marriage. (Jaray Affirm. at 1) As the sole heir of his grandfather's estate, Jaray claims either full or one-half interest in the painting on behalf of his grandfather's interest. In addition, Jaray also claims Bondi's one-half interest, "[b]y reason of [her] being childless; and by reason of her having raised and having assumed parental care and control of Stephan [Jaray's father], as though he were her own child, and in a manner consistent with adoption." (Id. at 1-2)

Summary judgment will be granted if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c). Once the moving party has demonstrated the absence of a genuine dispute for trial, the nonmoving party must come forward with enough evidence to support a reasonable jury returning a verdict in his favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248(1986). Under Rule 56(e) of the Federal Rules for Civil Procedure, "an adverse party may not rest upon the mere allegations or denials of the adverse party's pleading." Nor may the opposing party rely simply on conclusory allegations, speculation, or conjecture; rather, the party "must offer some hard evidence showing that its version of events is not wholly fanciful." D'Amico v. City of New York, 132 F.3d 145, 149 (2d Cir. 1998).

Jaray provides no evidence in support of his claim regarding Wally's ownership. His lengthy submissions are filled merely with speculation and surmise, along with numerous irrelevancies. The Bondi heirs, by contrast, have submitted the declaration of a renowned expert on Egon Schiele's work, which sets forth 70 years of scholarly consensus regarding Wally's provenance. (See Kallir Decl. Exs.) Her own scholarship, as well as every catalogue raisonne published to date, recognizes Bondi's acquisition of Wally from the art dealer Richard Lanyi in the early 1920's, prior to her marriage to Alexander Jaray in 1936. (Id.) There is no indication that Alexander Jaray had ever owned Wally. (Id.) Thus, there is uncontroverted evidentiary support for the heirs' allegation that Wally was Bondi's separate property.

Not only is there no evidence supporting the allegation that Wally belonged to Alexander Jaray, but also this alleged fact is not material. Under the estate laws of England, where Alexander Jaray resided and died, even if he had owned Wally, Bondi would have inherited title at the time of her husband's death in 1943. As Jaray's own submissions show, the intestacy laws then in effect provided that all personal chattels, and any additional property up to the value of */*1000, passed absolutely to the surviving spouse. (See Jaray Answer Ex. K; Jaray Letter of 04/12/00 ¶ 46; see also Elphinson Decl. Ex. 2, 3; Spiegler Decl. Ex. 3) The definition of "personal chattels" includes pictures, prints, and household ornaments, such as Wally, and Jaray himself has acknowledged that Wally was personal property. (See Spiegler Decl. Ex. 5; Jaray Answer ¶¶ 15, 31, 71; Jaray Letter of 04/12/00, at 20; Jaray's First Answer ¶¶ 6, 40)

Moreover, even if Wally were a business asset of Alexander Jaray's, and hence excludable from the category of personal chattels (See Spiegler Decl. Ex. 5), Bondi still would have inherited full title to Wally from her husband. According to the High Court of Justice's Grant of Probate to Lea Bondi, the total value of Bondi's husband's estate at the time of his death was 237 pounds (See Spiegler Decl. Ex. 4), well below the 1000-pound fixed sum that Bondi was entitled to, exclusive of personalty (See Spiegler Decl. Ex. 5). This certification by the English courts is entitled to presumptive acceptance, and can not be challenged on the basis of Jaray's "mere assertion of fraud." Clarkson Co. v. Shaheen, 544 F.2d 624, 629-30 (2d Cir. 1976) (citing Hilton v. Guyot, 159 U.S. 113, 203 (1893)); see also United States v. Garland, 991 F.2d 328, 332-34 (6th Cir. 1993). Thus, regardless of prior ownership, as a matter of law, Bondi owned Wally outright upon her husband's death.

Finally, Jaray's argument regarding his right to inherit from Bondi must be rejected. Bondi died intestate in 1969. (See Southwell Decl. Ex. 1) Even if Bondi had treated her stepson (Jaray's father) like a son (See Jaray Response at 1-2; Jaray Letter of 4/12/00 at 21), he was never formally adopted and thus not entitled to share in his stepmother's estate under the applicable intestacy laws. (See id. Jaray Affirm. ¶ 6; Elphinston Decl. Ex. 3) Jaray thus presents no valid legal theory under which he would be entitled to Wally.

There being no material fact in dispute and no legal basis upon which Jaray can assert a claim to Wally, the heirs' motion for summary judgment dismissing Jaray's claim is granted.

* * *

For the reasons set forth above, the motion for summary judgment to dismiss the claim of Ronald Jaray is granted; all other motions are denied.