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Department of Justice

United States Attorney
Southern District of New York

The Silvio J . Mollo Building
One Saint Andrew’s Plaza
New York, New York 10007

September 11, 2013
By ECF and Fax

The Honorable George B. Daniels
United States District J udge
Southern District of New York
500 Pearl Street
New York, New York 10007

Re: United States v. A 10
Century Cambodian Sandstone Statue
12 Civ. 2600 (GBD)

Dear J udge Daniels:

The Government writes in advance of tomorrow’s conference in this matter regarding the
motion for judgment on the pleadings and to stay discovery filed by Claimants Sotheby’s Inc.
and Ms. Ruspoli di Poggio Suasa (“Claimants”) on September 9, 2013 (the “Motion”). While
the Government will file a full response if necessary, we respectfully request that the Court
dispose of the Motion without the need for further briefing by (1) converting the Claimants’
motion for a judgment on the pleadings to a motion for summary judgment and deferring it until
the close of discovery, and (2) denying the motion for a stay without further briefing.

Despite claiming that the Motion is ripe for resolution and should preclude further
discovery, Claimants themselves attached and rely upon material produced by the Government in
discovery. This is not only plainly improper on a motion for judgment on the pleadings, it
reflects Claimants’ own view that facts being elicited in discovery are relevant to the issue before
the Court. Moreover, the sole new support for dismissal contained in the Motion aside from
these discovery materials is an expert affidavit which does not contradict two of the three bases
for Cambodian ownership of the Duryodhana. This evidence therefore cannot eliminate all the
Government’s theories of ownership, which the Court indicated would be required when it
allowed Claimants to submit such a motion. Finally, Claimants have identified no basis for the
Court to reverse its prior determinations that a further stay of discovery is unwarranted.
Therefore, the Court should reject this effort to delay the case and relitigate issues piecemeal.

I. Background

As the Court is aware, the Government seeks in this action to forfeit all right, title and
interest in the Duryodhana, a statue stolen from the Prasat Chen Temple at Koh Ker in
Cambodia. After a brief initial period of document discovery, Claimants filed a motion to
dismiss the Complaint, during the pendency of which the Court stayed discovery. The
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The Honorable George B. Daniels
September 11, 2013


Government then filed a motion for leave to amend the Complaint, which Claimants opposed.
On March 28, 2013, the Court denied Claimants’ motion to dismiss, and granted the
Government’s motion for leave to amend.

After the Government filed the Amended Complaint, Claimants answered on May 6,
2013. On May 10, 2013, four days after the Answer was filed, Claimants requested that the
Court hold an immediate hearing on the meaning of Cambodian laws at issue in the case, and
defer discovery on all other topics until that hearing. The Government opposed that request, and
the Court held a conference to address the issue on J uly 2, 2013.

At the conference, the Court denied Claimants’ request and ordered discovery to proceed.
(Tr. at 41-43.) The Court also stated that Claimants were free to present any expert report or
motion on the Cambodian legal issue and ask the Court to stay discovery while it addressed that
motion in advance of summary judgment or trial, but that the Court would not consider doing so
unless Claimants’ expert could “eliminate any theory or possibility that the government can
prove a theory of ownership.” (Id. at 42-43.)

On September 9, 2013, Claimants filed the Motion. It is based in large part on
communications produced in discovery by both Sotheby’s and Government, which Claimants
claim show, in essence, that (1) the Cambodian government did not believe its national
ownership laws gave it ownership to the Duryodhana; (2) the State Department “invented a
theory of Cambodian ownership;” and (3) that the Government caused Cambodia to stop seeking
an amicable resolution of the ownership dispute with Sotheby’s, leading to this action.
Claimants interpretation of the early stages of the Government’s investigation in this matter is
simply inaccurate, but their reliance on facts regarding Cambodia and the Government’s
understanding of Cambodian law demonstrates that further discovery is required.

As for the notion that the Government was the obstacle to an amicable resolution here,
the Government deferred bringing any action in this matter for more than a year after learning of
Sotheby’s attempted sale of stolen property to allow Cambodia and Claimants to attempt to
resolve the matter without litigation. That attempt failed not due to the Government’s
intervention, but because Claimants rejected the offer of a third party to buy the Duryodhana for
$1 million and return it to Cambodia. In short, to the extent these events have any relevance here
they counsel against allowing Claimants to continue to delay the public airing of the facts.

II. The Motion Should Be Converted to a Motion for Summary Judgment Because
It Relies on Documents Outside of the Pleadings.

Claimants’ Motion relies on a full 10 pages of “supplemental facts” which are entirely
beyond the pleadings. Claimants clearly ask the Court to consider the understanding of
Cambodia and the State Department’s regarding the Cambodian laws in ruling on the Motion.
Where a party presents matters outside the pleadings on a motion for judgment on the pleadings
under Rule 12(c) and they are not excluded by the Court, “the motion must be treated as one for
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The Honorable George B. Daniels
September 11, 2013


summary judgment under Rule 56,” and “all parties must be given a reasonable opportunity to
present all the material that is pertinent to the motion.” F.R. Civ. P. 12(d).

Here, the Government is entitled not only to dispute Claimants’ theories regarding the
understandings of Cambodia and U.S. Government personnel, but also to take discovery
regarding Sotheby’s own understanding of the Cambodian laws in question, and present that
pertinent evidence to the Court for its consideration in evaluating the Motion. Sotheby’s cannot
simultaneously present evidence of the former, while seeking to preclude any inquiry into the
latter. Therefore, the Court should convert the Motion to one for summary judgment and defer
the Government’s response until a reasonable period after the close of discovery.

III. The Motion Does Not Present Any New Arguments or Expert Evidence That
Could Eliminate All of the Government’s Theories of Ownership.

The Court indicated at the conference that early consideration of a new motion based on
an expert report regarding the Cambodian law would be appropriate only if it could eliminate all
of the Government’s theories of ownership. The Motion, however, contradicts only one of the
Government’s three asserted bases of Cambodian ownership. As set forth in more detail in the
Government Reply in support of its motion for leave to amend, and its opposition to Claimants’
request for a hearing on the Cambodian law, the Government alleges that the Cambodian State
gained ownership of the Duryodhana in three ways:

1) By “acquir[ing] such property in the general manner by which private persons come
to own property,” in this case by building the Duryodhana and the rest of the Prasat
Chen temple. See United States v. McClain, 545 F.2d 988 (5th Cir. 1977).

2) By operation of the law of May 6, 1925 (the “May 6, 1925 Decree”), and a similar
law of March 9, 1900 law (the “1900 Decree”) which provided that antiquities,
including sculptures, that might be discovered on or in the grounds of land belonging
to the state were also the property of the state. As the entire Koh Ker site was the
property of the Cambodian State at the time of its construction, and never transferred
to any private owner, the May 6, 1925 Decree and its 1900 predecessor clearly vested
ownership of the Duryodhana in the State to the extent it had not previously owned it.

3) By operation of the law of May 16, 1925 (the “May 16, 1925 Decree”), which
designated Koh Ker and Prasat Chen as historical monuments and objects “of French
Indochina,” thereby declaring them to be property of the state.

The expert affidavit submitted by Claimants in support of their Motion disputes the
Government’s interpretation of the May 16, 1925 Decree. (Declaration of Prof. Alexander
Deroche at ¶ 7(b).) If accepted by the Court, this would indeed dispose of the Government’s
third theory of ownership. Professor Deroche actually confirms the Government’s reading of the
May 6, 1925 Decree and the 1900 Decree, however, thereby bolstering, not refuting the
Government’s second theory. (Id. at ¶ 7(c).) While Professor Deroche also states that he has
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The Honorable George B. Daniels
September 11, 2013


found no law declaring the land at Koh Ker to be state property, no such law is necessary where,
as here, the Cambodian State owned the land in ordinary manner. And finally, Prof. Deroche
does not even appear to mention the Government’s first theory, which is that the Duryodhana
itself has always been owned by the Cambodian State in the ordinary manner.

The expert evidence presented by Claimants does not, therefore, refute two of the
Government’s three theories of ownership. The other new evidence offered by Claimants is, as
noted above, improper on a motion for judgment on the pleadings. The remainder of Claimants’
Motion is simply yet another restatement of arguments previously made in Claimants’ prior
submissions to the Court, which the Court rejected in denying the motion to dismiss and granting
leave to amend. While the Government will, of course, respond to these arguments once more if
the Court wishes, there is no reason to allow Claimants to further delay this case by yet again
litigating this same issue, piecemeal. Instead, the Court should direct the parties to expeditiously
complete discovery and “resolve all the issues in this case.” (Tr. at 43.)

IV. A Stay of Discovery Is Not Warranted.
Even if the Court believes the Motion should not be postponed until the summary
judgment stage, a discovery stay is totally unwarranted. As discussed above, Claimants have not
presented dispositive new expert testimony, as the Court indicated would be the minimum
requirement to slow down the discovery schedule. Moreover, they have themselves taken
advantage of discovery produced by the Government to support their motion, while seeking to
deny the Government equivalent discovery. Under these circumstances, a stay of discovery
would plainly be inappropriate.

Aside from restating arguments from their last request to restrict discovery, which the
Court found unpersuasive, Claimants now argue that a stay is warranted because of Government
discovery requests that are allegedly burdensome. If Claimants believe the Government has
made unduly burdensome requests, the remedy is to object to the requests. That Claimants
object to the scope of the Government’s requests is not a basis to stay discovery.

Finally, Claimants suggest that the Government’s conduct of its early investigation in this
matter in some way supports a stay of discovery. In light of that, the Government is forced to
point out that during that period, as described below, Sotheby’s provided false and misleading
information to the Government in an effort to prevent the Government from obtaining the true
facts regarding the theft of the Duryodhana from a third party. Thus, to the extent the events of
2011 are relevant here, they militate strongly against allowing Claimants to continue to conceal
the facts regarding this case.

On March 22, 2011, Special Agent Brent Easter of Homeland Security Investigations
forwarded J ane A. Levine, Sotheby’s Worldwide Director of Compliance, an email he had
received from a representative of Spink and Sons (“Spink”), the auction house which originally
sold the Duryodhana on the Western art market in 1975. (Exhibit A at 1193.) Spink had
informed Easter due to ownership changes since 1975, the current iteration of Spink had no
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The Honorable George B. Daniels
September 11, 2013


records from that time, but that Christie’s, which had owned Spink after 1975, might have them.
(Id. at 1193-1194.) Easter asked Levine if he “[s]hould contact Christie’s, or do you have solid
provenance[.]” (Id. at 1193.) In response, Levine discouraged Easter from contacting Christie’s,
assuring him that Sotheby’s had “identified two individuals who presently have no financial
interest in the property and who personally saw the piece in London in the late 1960s.” (Id.)

The information provided by Levine was simply false. As shown by the Spink records
ultimately obtained by the Government from Christie’s, the Duryodhana was only stolen from
Prasat Chen in 1972. Moreover, the sources with no financial interest “presently” were in fact
the original seller of the piece, who conspired with the looting network to steal it from Prasat
Chen (the “Collector”), and Sotheby’s own retained art expert, who was herself was a longtime
associate of the Collector. Had Levine accurately identified her sources, of course, the
Government would have discounted their obviously self-interested statements. Instead, she
withheld their identities and suggested they lacked a motive to lie. In short, Sotheby’s chief
compliance officer provided false and misleading provenance information to the Government
while discouraging the Government from obtaining the documents that ultimately showed that
asserted provenance to be false.

Both before and after this action, Claimants have sought at every turn to prevent the
Government from unearthing the facts about the theft and sale of the Duryodhana. At every
stage of this proceeding they have invented a new reason why going forward with discovery
would be inappropriate. Discovery has already been halted for nearly a year while they fought
first the motion to dismiss, and then their request for a hearing on the Cambodian law. Now they
seek to stay discovery yet again. The Court should not permit them to do so.

V. Conclusion

For the reasons set forth above, the Government requests that the Court (1) convert the
Claimants’ motion for a judgment on the pleadings to a motion for summary judgment and defer
the Government’s response until the close of discovery, and (2) deny the motion for a stay
without further briefing.

Respectfully submitted,

United States Attorney

By: /s/ Alexander Wilson
Alexander Wilson/Sarah E. Paul
Assistant United States Attorney
Southern District of New York
(212) 637-2453/2326

cc: Peter G. Neiman, Esq. (by email)
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Exhibit A

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