Background
French authorities investigated alleged aggravated tax fraud and money laundering involving the sale of substantial French real-estate assets by subsidiaries of the [2] group. The tax administration reported that the sales had produced no French taxation and estimated the tax debt at €202,909,958.60. Investigators suspected that Mr. [L] indirectly held the group subsidiaries’ assets through a structure involving Luxembourg and Danish companies, a Jersey trust, and a Luxembourg life-insurance arrangement.
On March 2, 2023, the liberty and custody judge ordered the seizure, in a notary’s hands, of €164,053,000 from the proceeds of Société [Adresse 1]’s €1.032 billion sale of real estate. The company appealed. The Paris Court of Appeal’s Investigation Chamber affirmed the seizure order on December 19, 2024, reasoning in part that Mr. [L] had free disposal of the funds as the trust’s beneficial owner and the insured person under the life-insurance contract, and that the company could not qualify as a good-faith owner.
Two cassation appeals were lodged. The Court of Cassation held that only appeal No. 24/01434 was admissible because it had been filed by counsel holding special authority; it declared appeal No. 24/01416 inadmissible.
The Court’s Holding
The Court of Cassation quashed the Investigation Chamber’s judgment in full and remanded the case to a differently composed panel of the same court. It did not itself vacate the underlying seizure order. The court held that describing Mr. [L] as the trust’s beneficial owner, even together with his status as the insured person under a policy benefiting the trust, did not by itself establish that he had free disposal of the trust’s assets. French tax law’s definition of a trust’s “beneficial owner” encompasses several categories of persons and does not necessarily establish effective control.
To find free disposal, the lower court had to show that Mr. [L] was the trust property’s economic owner and that the trust was merely the apparent legal owner interposed to conceal his actual ownership or control. Such a showing could rest on evidence about the trust’s concrete operation. Alternatively, the court could show that Société [Adresse 1] was merely the apparent legal owner by identifying evidence that Mr. [L] held or exercised management or disposition powers over the property.
The Investigation Chamber also failed adequately to establish that Société [Adresse 1] lacked good faith because its findings about the company’s fictitious character and intermediary role concerned distinct alleged tax-fraud and laundering conduct, without demonstrating that those findings extended to the offenses for which Mr. [L] had been formally charged. Its valuation analysis was independently deficient: it relied on the restitution of €151,260,232 from a patrimonial seizure when assessing whether a separate value-based seizure exceeded the alleged €141,901,852.60 proceeds or object of the charged offenses. The Court nevertheless rejected the company’s other relevant challenge, holding that the appellate court could consider Mr. [L]’s post-seizure formal charges when evaluating the evidence existing at the time of the appeal.
Key Takeaways
- Status as a trust’s statutory “beneficial owner” does not, without evidence of actual economic ownership or control, establish free disposal of trust-held assets for criminal confiscation and seizure purposes.
- When property is legally held through a trust or company, courts must identify concrete evidence showing that the entity is an apparent owner interposed to conceal the accused person’s ownership or exercise of management or disposition powers.
- A third-party owner’s lack of good faith must be tied to the offenses supporting the challenged seizure, and amounts released from a patrimonial seizure cannot automatically be used to measure the proportionality of a distinct value-based seizure.
Why It Matters
The ruling requires French investigating courts to look beyond formal labels in trust and corporate structures. A seizure premised on an accused person’s free disposal of property must be supported by evidence of how the structure actually operates and who exercises ownership powers.
It also clarifies that appellate review may account for developments occurring after the original seizure order, including a later formal charge. But the reviewing court must still justify the third-party owner’s lack of good faith and assess the seized amount using legally comparable seizure measures.