UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


BCCI HOLD

v.

KHALIL, ABDUL RAOUF


99-7171a

D.C. Cir. 2000


*	*	*


Edwards, Chief Judge: This case involves a civil action  resting on the
Racketeer Influenced and Corrupt Organiza- tion Act ("RICO"), 18
U.S.C. ss 1961, et seq. (1994), common  law fraud, unjust enrichment,
and conversion. The lawsuit  was brought by appellees, fiduciaries
appointed on behalf of  the Bank of Credit and Commerce International
("BCCI") to  liquidate the principal BCCI holdings and recover assets
on  behalf of depositors and innocent creditors, against appellant, 
Abdul Raouf Hasan Khalil, and three co-conspirators. The  District
Court found Mr. Khalil liable on many, but not all, of  the claims
arising under RICO, common law fraud, unjust  enrichment, and
conversion. The total non-duplicative  amount of actual damages
entered in favor of appellees  against Mr. Khalil was $388,402,534.
The District Court  trebled this amount pursuant to 18 U.S.C. s
1964(c) (1994),  for a total judgment of $1,165,207,602 against Mr.


On appeal, Mr. Khalil raises two principal issues: First,  Mr. Khalil
claims that the District Court erred under Federal  Rules of Civil
Procedure 39(b) in denying his late request for  a jury trial; second,
Mr. Khalil contends that the District  Court erred in holding that
appellant's alleged RICO and  common law tort violations were the
legal cause of BCCI's  losses. With one exception, we find no merit in
Mr. Khalil's  arguments.


Appellant's disputed motion for a jury trial was filed more  than a
year late, after discovery had been concluded and after  a trial date
had been set. The trial judge denied the motion  because of prejudice
to the plaintiff, who had prepared for a  bench trial. The trial judge
also noted that expediency would  be served in holding to the existing
trial schedule, to avoid  undue delay and potential complications with
other trials  involving related issues. In short, the District Court
found  that counsel's inexcusable neglect in failing to request a jury
 trial in a timely fashion waived defendant's right to a jury 


trial. We find no error in this judgment, for the trial judge  acted
within the discretion afforded him under Rule 39(b).


We also affirm most of the District Court's judgments on  the merits.
As the court's opinion indicates, see BCCI Hold- ings (Luxembourg),
Societe Anonyme v. Khalil ("Khalil"), 56  F. Supp. 2d 14 (D.D.C.
1999), there is ample evidence in the  record to show but-for and
proximate causation, supporting  most of the judgments on the RICO and
the common law tort  claims. We can find no record evidence, however,
to support  the District Court's finding that Mr. Khalil is liable to
BCCI  for damages in the amount of $62,021,193 for certain silver  and
copper trading losses.


We reverse the District Court's judgment for damages  resting on the
silver and copper trading losses. We affirm  the District Court's
judgment on all other points. The case  will be remanded for the
District Court to recalculate the  damages that are due to


I. Facts


This lawsuit was spawned by BCCI's international collapse,  which was
the largest international bank failure in history.  See Khalil, 56 F.
Supp. 2d at 20. BCCI's court-appointed  liquidators filed a complaint
on July 3, 1995 to recover  damages suffered by BCCI as a result of
Mr. Khalil's alleged  violations of RICO, common law fraud, unjust
enrichment,  and conversion. The liquidators charged that Mr. Khalil 
participated in a conspiracy with BCCI's management that  allowed BCCI
secretly to acquire ownership and maintain  control of First American
Corporation and First American  Bankshares, Inc. (collectively "First
American"). This illegal  scheme operated through the use of nominee
shareholders-- like Mr. Khalil--who allowed BCCI to hide financial
losses  from bank regulators.


Mr. Khalil is a wealthy Saudi Arabian businessman and  former
government official who deposited large amounts of 


money in BCCI. He may have been BCCI's largest deposi- tor. See id. at
21. In their complaint, the liquidators claimed  that, in the late
1970s and 1980s, BCCI's former management  sought out Mr. Khalil and
paid him large sums of money in  exchange for the use of his name and
prestige to disguise  three schemes: (1) Mr. Khalil agreed to act as a
nominee  shareholder of First American Bank's parent corporation to 
disguise BCCI's illegal acquisition of an American bank with- out
required regulatory approval; (2) Mr. Khalil agreed to  serve as a
nominee shareholder of BCCI Holdings to disguise  the truth about
BCCI's artificially and misleadingly inflated  capital resources and
support; and (3) Mr. Khalil agreed to  allow BCCI to use his name,
both individually and on behalf  of his corporations, to disguise
risky investments and to  create the false impression that BCCI was
servicing large  loans that were actually in default. See id. The
liquidators  contended that Mr. Khalil's assent to these schemes
prevent- ed BCCI's true financial condition from becoming apparent 
much earlier, stopped BCCI from closing down much sooner,  and thus
precipitated significant financial losses for thousands  of creditors


Not all of the liquidators' claims against Mr. Khalil rested  on a
passive view of Mr. Khalil's relationship with BCCI.  The liquidators
also asserted that Mr. Khalil and Mr. Syed  Ziauddin Ali Akbar
conspired to loot BCCI's assets so that  they could create and fund a
commodities brokerage that they  called Capcom UK. Mr. Akbar, who was
a BCCI officer from  1976 to 1986 and was in charge of BCCI's Treasury
Division  from 1982 to 1986, created loans in BCCI's books to Mr. 
Khalil and his companies. Mr. Akbar never intended, howev- er, for
these loans to be repaid. In particular, between  October 1984 and
December 1984, Mr. Akbar transferred  $100,000,000 to Capcom that was
not authorized by Mr.  Akbar's superiors. Mr. Akbar also transferred
$25,000,000 to  Capcom in June 1985 and $136,000,000 to Capcom between
 January and April 1986. See id. at 42-43. For his part, on  August
20, 1985, Mr. Khalil negotiated a $12.5 million check  from BCCI as a
payment for his share of the "profits" from  the trading operations,
received a $15 million "parting gift" 


on July 3, 1987 that he had cajoled when he withdrew his  deposits from
BCCI, and, on June 25, 1987, coaxed a $17,000,- 000 "loan" from BCCI
to General Securities Corp., a company  co-owned by Mr. Khalil and Mr.
Akbar that had an account at  Capcom. See id. at 43-45.


Mr. Khalil does not disavow this general characterization of  the
facts. And he does not claim that he was innocent. His  appeal is
based on two much more narrow grounds. The first  ground centers on
the District Court's denial of Mr. Khalil's  request for a jury trial.
The liquidators filed their complaint  on July 3, 1995, and Mr. Khalil
filed his answer on February  10, 1997. Subsequently, on April 21,
1998, the parties had a  status conference and agreed to schedule a
bench trial to  begin on January 25, 1999. On April 24, 1998, Mr.
Khalil's  attorney filed a motion for a jury trial, claiming that
counsel  had inadvertently omitted a jury demand from Mr. Khalil's 
answer to the complaint. Under Fed. R. Civ. P. 38(b), the  jury demand
was over a year late; it was therefore deemed  "waived" under Fed. R.
Civ. P. 38(d). Mr. Khalil's attorney  argued, however, that the tardy
demand for a jury trial could  be granted by the District Court under


On October 8, 1998, guided by the Supreme Court's deci- sion in Pierce
v. Underwood, 487 U.S. 552, 562 (1988), the  District Court denied Mr.
Khalil's motion for a jury trial.  The court found that (1) Mr.
Khalil's lawyer's claimed inad- vertent omission was not excusable,
given that counsel had  taken so long to discover the omission,
discovery was com- plete, the deadline for motions had passed, and the
court and  the opposing party had prepared for a bench trial; (2) 
plaintiffs would be significantly prejudiced if the court were  to
grant Mr. Khalil's tardy request for a jury trial, because  plaintiffs
had premised many of their decisions in discovery  upon their
understanding that there would be a bench trial;  (3) a bench trial
would be much more efficient than a jury  trial; (4) granting Mr.
Khalil's motion would translate into  delays for other litigants
awaiting trial; (5) given Mr. Khalil's  poor health, the court would
be ill-advised to delay Mr.  Khalil's case pending resolution of the
other cases; and (6)  there was no real threat of bias or prejudice,


court had presided over related criminal and civil cases. See  BCCI
Holdings (Luxembourg), Societe Anonyme v. Khalil,  Civ. Act. No.
95-1252, Mem. Op. (D.D.C. Oct. 8, 1998) ("Mem.  Op."), reprinted in
Joint Appendix ("J.A.") 277.


The issues on the merits raised by Mr. Khalil focus on the  District
Court's award of damages and the underlying find- ings of causation.
The District Court generally agreed with  the liquidators that Mr.
Khalil was liable for receiving money  for his participation in the
various nominee schemes, though  the trial court did not accept all of
the liquidator's claims. In  particular, the court found that Mr.
Khalil was liable for  $27,500,000 that he received as direct payments
from BCCI  for his participation in the nominee schemes, $15,249,283
that  BCCI paid for Mr. Khalil's expenses, $47,069,808 that BCCI  paid
to Mr. Khalil's companies, an additional $236,562,250  that BCCI sent
to Capcom, and $62,021,193 that represented  the losses that BCCI
suffered from silver and copper trading  that involved and was
facilitated by accounts in Mr. Khalil's  name. The final result was
that the liquidators were awarded  damages of $388,402,534, which were
tripled to $1,165,207,602  pursuant to 18 U.S.C. s 1964(c). See
Khalil, 56 F. Supp. 2d  at 66-69. This appeal followed.


II. Discussion


A. Standard of Review


The parties agree that the standard of review covering the  District
Court's denial of Mr. Khalil's Rule 39(b) motion for a  jury trial is
abuse of discretion. The parties also agree that  the findings on the
claims based on common law fraud, unjust  enrichment, and conversion
are reviewed under the clearly  erroneous standard. The parties
disagree, however, over the  standard of review covering the findings
of proximate cause  under RICO.


On this last point, we find the Supreme Court's decision in  Exxon Co.,
U.S.A. v. Sofec, Inc., 517 U.S. 830, 840-41 (1996),  to be persuasive.
In Sofec, the Court explained that "[t]he  issues of proximate
causation and superseding cause involve 


application of law to fact, which is left to the factfinder,  subject
to limited review." Id. Mr. Khalil argues that Sofec  is inapposite,
because the standard enunciated there is limited  to admiralty cases.
There is nothing in the Court's opinion,  however, that so narrows its
applicability. It seems clear  here, just as in Sofec, that findings
on proximate causation  involve mixed questions of law and fact
subject to limited  review. In any event, even if we were to engage in
de novo  review, as Mr. Khalil suggests, our judgments on the matters 
in issue would not change.


B. The Jury Issue


Mr. Khalil's jury-demand argument is specious. Mr. Khalil  did not file
a jury demand either when the liquidators filed  their complaint on
July 3, 1995 or when he filed his answer to  the complaint on February
10, 1997. It took almost three  years from the filing of the complaint
and more than a year  after the filing of the answer for Mr. Khalil to
bring it to the  District Court's attention that he wanted a jury
trial. By  then, the trial court had scheduled the case for a bench
trial,  discovery had been extended and closed, and the deadline for 
motions had already passed.


Federal Rule of Civil Procedure 38 is clear that a party  waives his
right to a trial by jury if he does not "(1) serv[e]  upon the other
parties a demand therefor in writing at any  time after the
commencement of the action and not later than  10 days after the
service of the last pleading directed to such  issue, and (2) fil[e]
the demand as required by Rule 5(d)."  Fed. R. Civ. P. 38. A party who
fails to make a timely request  for a jury trial may avoid waiver and
secure a jury trial only  if the District Court "in its discretion"
acts favorably on such  a request. Fed. R. Civ. P. 39(b).


Under Rule 39, a trial court may abuse its discretion in  denying a
late request for a jury trial. This does not mean,  however, that a
trial court must indulge a presumption in  favor of the neglectful
party when faced with a late demand.  Thus, a trial court is not
required to grant a Rule 39(b)  request based on nothing but
inadvertence, because,  "[t]hough the court might, in its discretion,


jury trial, it [is] under no obligation to do so." May v.  Melvin, 141
F.2d 22 (D.C. Cir. 1944); see also Wall v.  National R.R. Passenger
Corp., 718 F.2d 906, 910 (9th Cir.  1983) ("The record does not
demonstrate any reason, other  than counsel's inadvertence, for the
failure to comply with  rule 38(b). The district judge did not abuse
his discretion.");  Rhodes v. Amarillo Hosp. Dist., 654 F.2d 1148,
1154 (5th Cir.  Unit A 1981) (finding even under a presumption in
favor of  granting untimely jury demands that "[i]t is not an abuse of
 discretion by a District Judge to deny a Rule 39(b) motion  ... when
the failure to make a timely demand for a jury trial  results from
mere inadvertence on the part of the moving  party"); Paramount
Pictures Corp. v. Thompson Theatres,  Inc., 621 F.2d 1088, 1090 (10th
Cir. 1980) ("By failing to make  a timely demand defendants waived
their rights. The trial  court then has the discretion, upon motion,
to order trial by  jury. That discretion is broad, and the court's
exercise, either  to grant or to deny a jury trial, is reversible only
if it appears  from all of the facts and circumstances that the court
abused  its discretion." (internal citations omitted)).


In this case, mere inadvertence is the only leg upon which  Mr. Khalil
can stand, and it is at best a very weak base. Mr.  Khalil does not
deny that he waived his right to a jury.  Rather, he claims that
despite his mistake, the burden should  be on the opposing party to
present strong and compelling  reasons why the late demand for a jury
trial should not be  granted. This is not what Rule 39 says, however.
The rule  merely states that, upon motion from a party like Mr.
Khalil,  the District Court "may" (not shall) "in its discretion"
order  a trial by jury. Absent an abuse of discretion by the trial 
court, a defaulting party who has already waived the right to  a jury
trial under Rule 38(d) has no viable claim. This does  not mean that a
trial court can simply ignore a Rule 39(b)  motion or whimsically deny
it for no good reason. But trial  courts have wide latitude under the
abuse of discretion stan- dard to weigh the merits of late demands for


The District Court's judgment in this case easily survives  review
under the abuse of discretion standard. The District  Court reasonably
considered the factors enunciated by the 


Supreme Court in Pierce v. Underwood, 487 U.S. 552. In  Pierce, the
Court noted that,


[o]ver the years, appellate courts have consistently up- held the trial
judges in allowing or refusing late- demanded jury trials, but in
doing so have laid down two  guidelines for exercise of the
discretionary power. The  products of cumulative experience, these
guidelines re- late to the justifiability of the tardy litigant's
delay and  the absence of prejudice to his adversary.


Id. at 562. Following the Pierce Court's lead, the District  Court
found that Mr. Khalil's delay was not justified, because  it was the
product of mere inadvertence, and "where the  length of time to
discover the error is as long as here, where  discovery is complete
and the motions' deadline has passed,  and where the Court and the
opposing party have come to  rely on a bench trial, this factor weighs
against granting a  trial by jury." Mem. Op. at 8, reprinted in J.A.
284. The  trial court also reasonably found that BCCI had made a 
"plausible and specific enough showing of prejudice." Id. at  9,
reprinted in J.A. 285. In short, we have no basis upon  which to
second-guess the judgment of the District Court.


C. Proximate Causation


On the merits of this case, Mr. Khalil first posits that the  District
Court's standard of proximate cause under RICO was  too lax. He argues
that "a RICO claimant must prove that  he was the 'intended target' of
the RICO scheme and that the  alleged injury was the 'preconceived
purpose' of the RICO  activity." Br. of Appellant at 35. In our view,
appellant's  argument on this point is simply wrong.


In Holmes v. Securities Investor Protection Corp., 503 U.S.  258
(1992), which involved a civil action under RICO, the  Court
considered the meaning of the statutory phrase-- "[a]ny person injured
in his business or property by reason of  a [RICO] violation"--found
in 18 U.S.C. s 1964(c). The  Court's discussion is illuminating:


This language [18 U.S.C. s 1964(c)] can, of course, be  read to mean
that a plaintiff is injured "by reason of" a 


RICO violation, and therefore may recover, simply on  showing that the
defendant violated s 1962, the plaintiff  was injured, and the
defendant's violation was a "but for"  cause of plaintiff's injury.
This construction is hardly  compelled, however, and the very
unlikelihood that Con- gress meant to allow all factually injured
plaintiffs to  recover persuades us that RICO should not get such an 


... Congress modeled s 1964(c) on the civil-action provi- sion of the
federal antitrust laws, s 4 of the Clayton Act.


... [W]e [have] held that a plaintiff's right to sue under  s 4
required a showing that the defendant's violation not  only was a "but
for" cause of his injury, but was the  proximate cause as well.


The reasoning applies just as readily to s 1964(c)....  Proximate cause
is thus required [under RICO].


Id. at 265-68.


The Court in Holmes defined proximate cause as essential- ly reflecting
"ideas of what justice demands, or of what is  administratively
possible and convenient." Id. at 268. Proxi- mate cause exists to
ensure that a random third party who  suffers "merely from the
misfortunes visited upon [him] by  the defendant's acts" does not
recover. Id. It also ensures  that courts do not get ensnared in
administratively complex  questions over factual causation and
apportionments of dam- ages. The Court reasoned that a proximate cause
require- ment would sufficiently deter injurious conduct, because "di-
rectly injured victims can generally be counted on to vindicate  the
law as private attorneys general, without any of the  problems
attendant upon suits by plaintiffs injured more  remotely." Id. at
269-70. The Court never suggests, howev- er, that the only or best way
to prove proximate cause is for a  plaintiff to prove he was the
"intended target" and that the  injury was the "preconceived purpose"
of the RICO activity.  We therefore reject appellant's highly


With one exception, the record in this case offers ample  evidence to
support the District Court's findings that Mr.  Khalil was the
proximate cause of RICO injuries suffered by  BCCI, as well as the
District Court's findings of common law  violations. The District
Court's judgments on these points  are well-explained in its published
opinion; that opinion needs  no revision, save for one point.


The one exception centers on the $62,021,193 in silver and  copper
trading losses that the District Court found were  directly linked to
the use of Mr. Khalil's name. Unlike the  other payments, which are
directly traceable to Mr. Khalil's  fees for participating in the
nominee scheme, the silver and  copper trading losses are much more
contingent on other  factors. Without much other analysis, the trial
court rea- soned that, "[a]lthough market conditions played an impor-
tant role in bringing those losses about, the use of Khalil's  name
remained a substantial factor causing those losses.  These losses can
be traced directly to the fraudulent use of  Khalil-owned companies."
Khalil, 56 F. Supp. 2d at 61. The  District Court and appellees seem
to claim that the bank's  losses would have been prevented or reduced
had the bank  known about the futures trading at issue. In particular,
they  suggest that the Board of Directors had placed limits on 
investments and that Khalil facilitated the avoidance of these  limits
by lending his name to fraudulent endeavors, thus  causing the bank to
suffer losses. We can find no record  evidence demonstrating that this
specific set of losses is  directly traceable to the ability of the
perpetrators to hide the  losses in Mr. Khalil's name. We therefore
reverse the judg- ment against Mr. Khalil resting on the disputed
silver and  copper trading losses.


III. Conclusion


We reverse the judgment of the District Court resting on  the silver
and copper trading losses. We affirm the judgment  of the District
Court in favor of appellees on all other points. 


The case is hereby remanded to the District Court to recalcu- late the
damages that are due to appellees.


So ordered.