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City of Almaty v. Ablyazov

226 F. Supp. 3d 272 (2017)

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City of Almaty v. Ablyazov

United States District Court for the Southern District of New York

226 F. Supp. 3d 272 (2017)

Facts

The City of Almaty, Kazakhstan, and Kazakh bank BTA Bank JSC (plaintiffs) sued alleging Almaty’s former mayor Viktor Khrapunov, his son Ilyas Khrapunov, former bank chairman Muhktar Ablyazov, and Triadou SPV S.A. (defendants) looted billions from the city and laundered the money around the world, ultimately investing in New York real estate. The Khrapunovs allegedly appropriated public assets at nominal prices and seized private properties using eminent domain, then transferred the proceeds to entities they controlled, while Ablyazov siphoned more than $6 billion out of the bank primarily through fraudulent loans to valueless entities he owned or controlled. The Khrapunovs and Ablyazov were related by marriage and allegedly joined together to move the stolen funds out of Kazakhstan and launder them using shell companies, sham transactions, and outwardly legitimate investments. The three men allegedly funneled hundreds of millions into a Swiss real estate investment company they created and pretended to sell to hide their continued control, then created several Luxembourg entities to invest stolen funds in American real estate projects. One of those entities was Triadou, an investment vehicle the three men controlled through the Swiss company. Triadou invested the allegedly embezzled funds in New York City real estate projects, including the Flatotel and the Cabrini Medical Center, with a prominent New York real estate developer. Ablyazov’s financial advisor managed accounts at a Tanzanian-headquartered financial institution, which covertly moved stolen funds by wiring them to the developer’s escrow accounts in New York without asking questions, despite the indicia of money laundering. As pressure from law enforcement abroad and a lawsuit Almay filed in California mounted, Ablyazov and the Khrapunovs allegedly liquidated Triadou’s New York real estate assets to remove the funds from the United States and hide them elsewhere. Again, the move allegedly entailed a sham transaction purporting to assign equity in the properties to the New York developer for a fraction of their fair market value and bribing a Triadou executive. Meanwhile, the Kazakh bank secured numerous judgments in the United Kingdom against Ablyazov and his associates, obtaining over $4 billion in judgments, asset freezes, receivership orders, and sanctions against Ablyazov for violating them. Ablyazov was sentenced to prison for contempt in the United Kingdom and awaited extradition in a French prison. The Khrapunovs faced charges in Kazakhstan while residing in Switzerland, which froze their Swiss accounts and assets while Kazakhstan requested Viktor Khrapunov’s extradition.

Rule of Law

Issue

Holding and Reasoning (Nathan, J.)

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