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NAFTA v. FENIKS INT'L HOUSE OF TRADE

July 2, 1996

VENTSPILS NAFTA, Plaintiff, against FENIKS INTERNATIONAL HOUSE OF TRADE (U.S.A.) INC., ISAAK NOVIKOV, VLADIMIR FROLOV, JOULIYA KHAMIDOVA and YURY KACHANOVSKY, Defendants.


The opinion of the court was delivered by: GLASSER

 FACTS

 The facts summarized here are from plaintiff's amended complaint. Plaintiff Ventspils Nafta is a corporation organized under the laws of the Republic of Latvia and one of the largest corporations in that Republic. It oversees the movement of commodities in Latvia. Complaint PP 2,5. *fn1" Defendant Feniks International House of Trade is a New York trading corporation with its principal place of business in Brooklyn, New York. Defendant Isaak Novikov is a principal shareholder and chairman of Feniks. Defendant Yury Kachanovsky and Jouliya Khamidova are both principals of Feniks, and residents of New York State. Defendant Frolov, a resident of Latvia, was at the times relevant to the complaint the head of Ventspils Nafta's marketing department. Complaint PP 6-10.

 The complaint alleges on information and belief that in early 1993 defendants Novikov, Kachanovsky, Khamidova, and Frolov conspired to defraud Ventspils Nafta, taking advantage of Ventspils Nafta's inexperience in Western business practices. Complaint P 15. In furtherance of this conspiracy, defendants allegedly committed the following acts:

 . In May, 1993, defendants Novikov and Frolov convinced Janis Blazevics, managing director and president of Ventspils Nafta, to authorize Feniks to arrange for Ventspils Nafta to do business in New York and establish a bank account in New York. Complaint P 16.

 . In May, 1993, defendants Novikov and Frolov convinced Blazevics to authorize Feniks to open a bank account for Ventspils Nafta at the Brighton Beach branch of the Chase Manhattan Bank.

 . In June, 1993, defendants Novikov, Kachanovsky, Khamidova and Feniks submitted a false "Application for Authority" on behalf of Ventspils Nafta to the Office of the Secretary of the State of New York. This Application contained forged signatures and an improper seal. Complaint P 24.

 . Between September 1993 and December 1993, plaintiff, acting on misrepresentations made by defendants Novikov and Frolov, instructed its customers to deposit amounts totaling over $ 2.5 million into the Chase account. Some of these deposits were made by Ventspils Nafta's customers acting on Frolov's instructions without Blazevics' authorization. Complaint P 30.

 . Between October, 1993 and March, 1994, Ventspils Nafta's money was withdrawn from the Chase account either by wire transfer or debit memo payment or by certified check pursuant to the instructions of defendants Kachanovsky and Khamidova,. Many of these transfers were to Feniks' bank accounts at Chemical Bank or in Finland. Complaint PP 31-40.

 . Between December, 1993, and April, 1994, defendant Novikov prepared and faxed to plaintiff false bank account reports which deliberately failed to reflect any of the transactions by defendants that had not been authorized by plaintiff. Complaint PP 41-45.

 . In August, 1994, upon being accused and confronted by Blazevics, defendant Novikov acknowledged that Feniks had taken money from the Ventspils Nafta bank account. At that time, defendant Novikov told Blazevics that if Blazevics would enter into a back-dated agreement with Feniks, Feniks would repay the money. Novikov threatened Blazevics with physical harm if he would refuse to sign such an agreement. Complaint PP 48-49. Blazevics signed the agreement, but the money has not been repaid. Complaint PP 50-53.

 Plaintiff's Second Claim for Relief states that defendants Novikov, Kachanovsky, Khamidova, Feniks and Frolov violated the civil RICO statute, 18 U.S.C. § 1962(b), by acquiring in, or maintaining an interest in or control of, an enterprise, namely Ventspils Nafta, through a pattern of racketeering activity. Complaint P 64. Plaintiff also claims that defendants' conduct of the affairs of Feniks through a pattern of racketeering activity constituted a separate violation of 18 U.S.C. § 1962(c). Complaint P 65. Plaintiff's First Claim for Relief states that defendants conspired to violate § 1962(b) and § 1962(c) in violation of § 1962(d). Plaintiff's Third Claim for Relief is for common law fraud.

 Defendants have moved the Court to dismiss plaintiff's RICO claims on the ground that they fail to state a cause of action pursuant to Fed. R. Civ. P. 12(b)(6). *fn2" In addition, defendants have moved to dismiss all claims against Kachanovsky and Khamidova for failure to plead fraud with ...


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