we have rough jan b is in his capacity as a court appointed receiver for the stanford international bank ltd against the libyan investment authority and another company yes or mr powers or new reporting in there please the court my name is scott powers i'm here on behalf of mr john b the court appointed receiver we have two consolidated appeals for the court this morning i was several overlapping issues but i think i can distill most of the issues in this appeal to two really two key questions first is libyan foreign investment company or if i go the other entity in this case an agent of the libyan government and of the libyan investment authority or we refer to as the second question is does the commercial activities exception apply to the receivers causes of action based on elf like those investment in and redemption of the stanford international bank c and so i'll start with the agency question first the two defendants in this case are investment entities they invest and try to grow the state owned resources in libya that's their entire purpose sharif who is a libyan lawyer and who gave testimony in this case on behalf of the defendants said that l a n l think oh both conduct themselves and this is a quote exclusively in accordance with the national interest of libya he went  on to say that all property owned by them is held exclusively on behalf of and for the benefit of the state he said that when the libyan government created elf psycho the purpose and the intent of the way they created elf iko was that they would have an active supervisory role over all fica he also said that in two thousand and six when ally was created it was created for the purpose of taking over the government's active supervisory role and so it's against that backdrop that the district court in front of the question of whether el fica was an agent of ally in the libyan government now the district court reviewed the facts in the record the only in the interest of the government and found important this active supervisory role that was intended and was indeed implemented over all five go and the district courts conclusion was correct elf iko unlike a standard corporation was never intended to serve its own interests it was only intended to serve the interests of the libyan government it was never any position to be publicly traded for example so unlike the  think you had to act in the interest of the government not its own interests unlike the first investment case we don't have an entity that acts in its own interest separate from the government we don't have it has like  shares could be purchased by the public nobody could on this entity other than the government or an agency of the government as is alleged to have been the case when i was implemented in first investment we had entities who were not agents of the state because they acted arm's length with the government this is the opposite of arm's length with the government in first investment you had officers who control the day to day actions not on behalf of the government but on their own behalf the defendant's own evidence in this case is that the essentially just an administrative arm of the government that's what's happening here and what i think is so interesting is that l a doesn't even argue that l a is not an agent of the government and part of the argument of the opening brief have anything in the record that says he is shares were assigned to l a or the board of directors or l a approved it was just an act of the the legislature and not to the legislature to say ok now you have all of you and it's assets and you own it's assets and that's different from a traditional american corporate situation where you would expect there would be some involvement of the board of directors another interesting thing that happened in two thousand and six was the government the legislature in libya said  legislative which is not consistent with treating these are separate entities not consistent where do we draw the line is as far as it being a legal decision by the court and we  and factual findings that the court made in reaching its decision that we review per being clearly erroneous well i think the fact the court made some pretty specific factual findings on this point i think those factual findings are reviewed for clear error and then the implication of those factual findings i think that's where the legal conclusion comes in and i think that just the district court's perspective on this i believe was i have made these factual findings about the close relationship of these two entities the purposes for us to which i  were correct i think they were correct now the question then becomes what of ally there and here we have a tension within the district court's order but that the tension is this the district court said as to l a i don't think l counts as the principle like that because i don't see active day to day control by l a over all five go and i decided that question under texas law the problem is you can still be a principal even if you only have the right to control so that was that was  life they start there but in the name of al fica they were bought in the name of the fica however i would say two things about that number one is doesn't own its assets on its own behalf so that it chose to put the assets in its own name is meaningless from an agency standpoint because it's only buying things for the benefit of its principles and so and the second thing i would say about that is the evidence in the record was as of two thousand and seven the assets  ourself like it was correct and so i think the district court should have taken from that that then you look at the commercial activities exception and you analyze the commercial activities exception the same way i asked each of them the same way to each of them and so if i could turn to the commercial activities question i think it fundamentally comes down to this there's a dispute there's a dispute over whether this bank as i be is an antique and bank or is it fundamentally a us census to have deposits on no no i can't comment on that you're out of but the factual finding here is the factual findings from the district court and i think it is well well supported in the record by doing business with  and investing them those things were based in the united states the uncontroverted evidence in the record was the sale of c the marketing in the sale of c d s the epicenter of that activity was in the united states the bank accounts for a side be the main operating bank accounts for us i believe or in the united states the treasurer of the person who control the purse strings we actually just tried for breach of fiduciary duty in the fall patricia maldonado she sat in houston she controlled the bank accounts in houston she made sure for example that if somebody like the libyan defendants came in and said i want my money that there would be sufficient assets sitting in a bank account in canada to be wired out to them allen stanford  made an investment in two thousand and seven fifty million dollars they sent two people here just perceiving that investment it took an extensive tour of what they refer to as the bank's headquarters in the united states they visited mr hender guest in memphis tennessee they visited in houston the general counsel they visited the chief compliance officer of the brokerage there they went to miami they visited the brokerage president in miami they visited allen stanford chief of staff yo they knew this was a u s bank in two thousand and eight well let me back up i just gave you on this fact in two thousand and five and this is from the defendant's own production the defendants had a letter dated two thousand and five from republican national republican national bank the precursor bank to trust mark in houston that letter was a reference letter and it said yes we know allen stanford and we know stanford international bank and they do banking with us here in houston oh they each invested fifty million dollars into as i'd be in the fall of two thousand and eight you can count this as coincidence or not but las chief executive decided right on the heels of that to come visit india and if you look at the face of the c d s that they do say executed at st john's in te god but the point is this where was the bank actually run when the courts in this country have looked at the question of who are you dealing it with and where you're dealing with them for  purposes of diversity for example you look at the nerve center of the uncontroverted evidence even from a board of directors member whose testimony is in the record said the nerve center of the operation was in was in texas was in houston and so  i think what that the lip but you know is arguing for is what you have to make dispositive is the place of incorporation and that can't possibly be the rule the official cause of mr janney being here in the courtroom this morning is that the u s securities and exchange s bank we can't possibly turn back the clock and say now we're going to just recognize the fiction that this isn't even baked in the argument coming from the other side is that the court was indulging a fiction but the opposite is true the court was recognizing the reality of the route the word reality is even in its findings so what they want to do is indulge a fiction that this is an antique and bank of the u s has nothing to do with this but the u s is all over this and this is not the kind of case where you would say the u s has connections and this million dollars in principle which is a separate sovereign wealth fund in libya located in a different city fifty miles away founded twenty five years after with ico did not invest in stanford international bank of and did not receive any monies from stanford international bank then what i would like to focus on this morning something i did not hear at all is the actual words of the statute we are here in the case of the foreign sovereign news act i want to focus on the words  statute and what the words of the statute tell us is to look at the acts of the specific name defendant and see how if at all they fit into one of the exceptions of the foreign sovereign his act with respect to l i k i actually think we can deal with it in short order but we heard this morning similar to a closing argument with a marshal the facts marshall very impressively put all their facts on the table all of those facts for you to the district court we argued all of our facts the district cour it was as mr powers said after an extensive factual record and judge god he made factual findings and found in our favor and i will explain when we get in there why those are both correct and certainly not clear air with respect to l let's turn to the statute we did not hear whether with respect to l a they were saying that they are going to close one two or three of the commercial activities exception but under any of them each of them turns on an act or act the foreign state or a commercial activity the foreign state l i hey did not make any at this action is not based upon my action has to be based upon an act or commercial activity of the foreign state this action is based upon the ficos request to stanford groups we censor it stating when our cd matures please wire the proceeds to our account in tripoli libya that is what the action is based upon there is no allegation of the plane there is no fact in the record that says that this action is based upon any act or activity of the libyan investment authority that should be the end of the story with respect to l a instead what we have done for years now is fight where their argument is l a and the fico or alter egos l i is somehow the principle of the vehicle and that is what we heard for most of the fifteen minutes very well argued this is our evidence that suggests that with ico are somehow the same entity that one is talking for the other would have all of that when there was an extensive document production thousands of documents were viewed in libya the documents that were relevant to their claims were produced to them arguments were made to judge god and briefed after briefing appendix after and it was filed and his findings were that the evidence in the record particularly the last affidavit in the mo affidavit indicates the fico operated independently and was not subject to l a's control that's the order of page twenty his finding was based on the evidence remember we had had there was a hero from a junction hearing first where they put motion the court again concludes that the receiver has failed to establish that with eco is a lie is alter ego the evidence quote tends to establish that the fico now each enjoyed a separate corporate existence the receiver's quote novel being a one hundred percent owned subsidiary does not make you on its face the agent of your parent and the court has heard all this at the district court heard the evidence on both sides made clear factual findings so what did we hear in the brief they said the does declaration is quote simply not credible that's not argument clear air it can't be clear error when the district court had sworn evidence and documents in front of them  made factual findings it's not clear error to say but he made the wall mistake because he shouldn't have taken what the chairman of l a with the chairman of the fico or a partner the major law firm in tripoli says is what these foreign corporation documents mean and instead he should have taken the evidence that we had a professor from austin who an american professor who doesn't have any training in libya and what we're docked with he said no this is what i think my point there other victims i know that they came out and make they got some of their money back but but weren't they just ordinary it is are sort of the cd the allegation is a little bit beyond that that somehow they're different from  they had over one hundred million dollars left in their account we stand for the national bank eighty four million of which is principle so they defer to them they defer to the porton way which is that they were the largest those are let's look again at the words of the statute activities exception could apply to fraudulent transfer case against them what judge gandhi correctly found he said that quote the actions and decisions associated with the those investments took place outside the u s that's his factual activities were outside the u s but what he found the exception he found himself same exceptions he felt applied in the case you're going to hear after this is that the that the acts the acts and activities of walk quite frankly that is an important precedent for many other cases this idea of extending this directed facts exception so that it would capture conduct that foreign state is dealing with another foreign entity on an argument because there was ultimately some effect united states but let's go to the actual words of the statute and the words of the supreme court and well to over which i think will give us the answer why that was wrong the the the third prong says there will be the commercial out to there will be an exception where the action is based upon an act outside the territory of the united states in connection with the commercial activity of the foreign state elsewhere and that act causes a direct effect in the united states so we have factual findings that say that all of the acts and commercial activities of the fico were outside the united states so the question is is the action based upon an act revering in every case since that was thirty one years ago say you must focus on the defendants act not the act of somebody in houston not the act of allen stanford not the act of somebody in memphis but on the defendant's act because those cases say the key is predictability a foreign state has to know if a foreign state is dealing with an entity of another foreign country it has to have some idea that it's doing conduct that could subject libyan foreign bank in tripoli that is what the actions based upon every circuit court cases you must focus and isolate what the action is based upon now does that fax that goes from tripoli to  direct effect a consequence it has to be immediate i felt it was his immediate the d c circuit said a consequence is immediate if no intervening act breaks the chain of causation leading from the asserted wrongful  there was any effect in the united states or a personal financial effect is not sufficient in the united states but if there was any effect in the united states it comes as a result of stanford and his cohorts funneling the money out here when we look you're i just want to touch on a few issues the first is the direct effect argument but the act in question i don't dispute that the acting question is the redemption of the c d s but the question is did it have a foreseeable a direct effect in the united states the immediate argument implies that it has to happen immediately temporally that's not true the s i b c d would have a direct effect the united states of course it was it happened as an unbroken sequence i demand my money from the make in the united states his whole argument is premised on the idea that it's an antique in bank but if it's an if it's a u s bank you're not hearing that argument so the question is is functionally the u s bank is it in reality you a u s bank the court made a factual finding it is it is a u s bank so it was foreseeable that this would have a direct effect in the united states and it didn't have a direct effect in the united states there was an argument about there's a financial advisor in switzerland and all that sort of thing all that's fine but the bank the bank stamper national bank it's bank accounts where here they were here in the united states there was no dispute about that so the effect is direct it is a foreseeable consequence that happens in fact in this case it happens within a matter of a couple of days which is actually a lot shorter than some of the cases that this court has recognized a direct effect so as far as the directness of the effect i don't think there's really any argument that this is a direct case judge crowder you asked a question about how are these folks different from some of the investors she lost money here is the difference and if we're back in the trial court the argument we intend to make is  these investors did not have good taste these are sophisticated investors this is an investor that's got billions in assets they've got advisors they understand what they were into they understood what they were into in the fall of two thousand and eight when it became apparent that this was a fraud it became apparent to sophisticated investors and this is a fraud and there were some investors like these defendants here who realized what they were into and they got their money out and they cut in line and that's not right and the statute allows us to go and get that money and that's why we're here libyan government so regardless of whether exercised active day to day control regardless of whether exercise exercised activated a control you still nevertheless have a situation where l l a the principal of delphi code even if they weren't involved in the initial investment and were not suggesting they were they still had the right to control that investment they had the right to control their withdraw activity that's what makes them the agent and it's the nature of their relationship based on the factual finding that the district court made us to go that makes l a the principal and it makes the agent i wanted to just briefly touch over the health like you know in the in the commercial activities exception i think the other piece of this besides direct effect that you could find for the commercial activities exception applies is program one of the commercial activities exception you talked about activity that that that is related to our claim is the investment in the redemption of the stanford c d s that relationship that activity had a substantial connection the united states that's not like stana where you had pandemics dealing with a platform operation off the coastal waters of mexico dealing with another mexican corporation that's not what this case is this case is based on the district court's factual finding is that you have a libyan state dealing with a u s entity and so it's acting ask asking for a redemption of its cd that absolutely has a substantial connection the united states and there's not a case there's not a case that they have cited that says otherwise and and certainly i haven't seen a case that says the act of the foreign state for clause will has to actually be within the territorial borders the united states i just don't think that's a requirement a statute i think that's very clear so i think the bottom line the bottom line for these  follows from that is that las all five of those principal and that the commercial activities exception applies to both of them for that reason we ask you to reverse the dismissal of a claim against a lie and affirm the order the district court most assuredly did not find that the fico was dealing with the us agency the district court was clear that stanford international bank ltd was ninety one entity with the district court v brown decision and the district court in two other decisions has found as if he will morph all the entities together to say they operate out of houston but every one of those decisions isn't a choice of law decision that makes perfect sense to look at the most relevant context and to aggravate the entities when you are talking about jurisdiction you do know that the district court did not do that in g n d out water which was a personal jurisdiction there are the court said where did this defendant deal with here we are talking about subject managers diction and foreign sovereign immunity you did not simply say we're going to morph all these entities together and ignore the corporate form like we would do in a choice of law case when we're talking about jurisdiction here the factual finding that the facts are clear from a few close investments again we're managed by a swiss nice to hear that this fraud was being run out of houston and that there were serious accounts in houston or in memphis or elsewhere but the accounts in our case all of the monies were transferred from accounts overseas to other accounts overseas there was are ones where a foreign state had a contract obligation that was payable in the united states when it failed to take that action overseas it causes a direct effect in the united states there are no cases finding a direct effect  united states where it is anything other than the foreign state takes action or doesn't take an action and the harm is felt in the united states here in less you accept this fiction which the district court did not accept and which for other than choice of law purposes there be no reason to accept it lest you accept the fiction that all stanford is just one entity and that our client didn't in fact deal with a swiss entity and invest in an empty plane company but instead we're go this of what it did we're just going to say it was all the u s entity in less you accept that fiction the only way that the money's that there was a direct effect in the united states is that a judge got the sat what he said was you invested in antigua entity but the direct effect as an immediate consequence without the intervening act of i don't stand for there's no direct effect in the united states as a result of them sending that fax to switzerland in less all these other steps take place and you have the funding and that criminal acts of violence stanford for those reasons lost the court has any more questions the portrait of from the district court's decision based on well his and accurate facts with respect to l a but reversed on the legal issue with respect us could be a parent of that company the us could be there could be a us affiliate there but when a foreign state is dealing with private entities outside the united states and the court has accepted that all of the tax and commercial activities that foreign state are outside the united