Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

BASE METAL TRADING SA v. RUSSIAN ALLUMINUM

March 27, 2003

BASE METAL TRADING SA, BASE METAL TRADING LTD., ALUCOAL HOLDINGS LTD., MIKOM, DAVIS INTERNATIONAL, LLC, HOLDEX, LLC, FOSTON MANAGEMENT, LTD., OMNI TRUSTHOUSE, LTD., NEXIS PRODUCTS, LLC, AND POLYPROM, LTD., PLAINTIFFS,
v.
RUSSIAN ALUMINUM, RUAL TRADE LTD., SIBIRSKY ALUMINUM PRODUCTS USA CORP. A/K/A SIBIRSKY ALUMINUM (US), SIBIRSKY ALUMINUM (RUSSIA), BAUXAL MANAGEMENT, SA, METCARE MANAGEMENT, SA, UNIMETAL LIMITED, SA, OLEG DERIPASKA, MIKHAIL CHERNOI, BLONDE MANAGEMENT, INC., BLONDE INVESTMENTS, CORP., PAN-AMERICAN CORP., ARNOLD KISLIN, ISKANDER MAKHMUDOV, MOSKOVSKIY DELOVOI MIR BANK, NOVOKUZNETSK ALUMINUM ZAVOD, NEW START GROUP CORP., VENITOM CORP., UNIDALE LLC, AND INVESTLAND, LLC. DEFENDANTS.



The opinion of the court was delivered by: John G. Koeltl, United States District Judge.

OPINION AND ORDER

This is a case about two Russian companies, Novokuznetsk Aluminum Zavod ("NKAZ") and Kochkanarsky GOK ("GOK"), Russia's largest producers of aluminum and vanadium, respectively. The plaintiffs' claims arise from the defendants' alleged illegal takeovers of these companies by means including bribery of local Russian political officials, judicial corruption in Russia, and armed force. The plaintiffs argue that the defendants drove NKAZ and GOK into bankruptcy and then gained control of the companies through sham bankruptcy proceedings overseen by allegedly corrupt local Russian judges. The plaintiffs seek over $3 billion for alleged damages. The defendants have now moved to dismiss the current Complaint on many bases, including forum non conveniens.

The plaintiffs, Base Metal Trading, SA ("BMT SA"), Base Metal Trading, Ltd. ("BMT Ltd."), Alucoal Holdings, Ltd. ("Alucoal") (collectively the "BMT Plaintiffs"), MIKOM (collectively, with the BMT Plaintiffs the "NKAZ Plaintiffs" or the "Aluminum Plaintiffs"); Davis International, LLC ("Davis"), Holdex, LLC ("Holdex"), Foston Management, Ltd. ("Foston"), Omni Trusthouse, Ltd. ("Omni") (collectively the "Davis Plaintiffs"); Nexis Products, LLC ("Nexis") and Polyprom (collectively the "GOK Plaintiffs") bring this action for violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq., intentional interference with contract, and conversion. The defendants are Sibirsky Aluminum Group ("Sibirsky Russia"), Sibirsky Aluminum Products USA Corp. ("Sibirsky USA"), Bauxal Management, S.A. ("Bauxal"), Metcare Management, S.A. ("Metcare"), Unimetal Limited, S.A. ("Unimetal"), Mr. Oleg Deripaska ("Deripaska") ("collectively the "Sibirsky Defendants"), Russian Aluminum, RUAL Trade, Ltd. ("RUAL"), Mikhail Chernoi ("Chernoi"), Blonde Management, Inc. ("Blonde Management"), Blonde Investments, Corporation ("Blonde Investments"), Pan-American Corporation ("Pan-American"), Arnold Kislin ("Kislin"), Iskander Makhmudov ("Makhmudov"), Moskovskiy Delovoi Mir Bank ("MDM Bank"), NKAZ, New Start Group Corporation ("New Start"), Venitom Corporation ("Venitom"), Unidale LLC ("Unidale") and Investland, LLC ("Investland") (New Start, Venitom, Unidale and Investland hereinafter the "GOK Defendants").

The Sibirsky Defendants now move to dismiss on the basis of forum non conveniens and all defendants join this motion. MDM Bank has also filed a motion to dismiss for forum non conveniens. The Sibirsky Defendants move pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure to dismiss for lack of subject matter jurisdiction and failure to state a claim, as well as failure to plead fraud with particularity as required by Federal Rule of Civil Procedure 9(b). All defendants join in this motion. Two motions to dismiss on the ground of comity have also been filed, one by NKAZ and the other by the GOK Defendants. All defendants join in these motions.

I.

On December 19, 2000, the BMT Plaintiffs — BMT SA, BMT Ltd. and Alucoal — filed suit in this Court alleging that defendant Deripaska, the head of Sibirsky Aluminum, and his partner, defendant Chernoi, conspired with others to monopolize the Russian aluminum industry beginning in the 1990's. (Original Compl. ¶ 1.) The Complaint alleged that Sibirsky, comprising Sibirsky Aluminum and its affiliates, including Russian Aluminum, took over NKAZ through rigged bankruptcy proceedings in the Kemerovo Region of Russia. (Original Compl. ¶ 5.) The Kemerovo Region is located in Western Siberia north of the border between Kazakhstan and Mongolia. Once in control of NKAZ, Sibirsky terminated contracts between NKAZ and the BMT Plaintiffs and forced the BMT Plaintiffs to enter into less favorable contracts with Sibirsky affiliates. (Original Compl. ¶ 6.) None of the BMT Plaintiffs are United States citizens or residents. (Am. Compl. ¶¶ 23, 25, 27.)

In May, 2001, all of the defendants filed motions to dismiss on a series of grounds, including forum non conveniens and lack of subject matter jurisdiction. In response, the BMT Plaintiffs amended the Complaint on August 3, 2001 to add seven new plaintiffs, including three United States corporations.*fn1 The Amended Complaint added twelve new defendants and a new scheme to take over GOK, in addition to NKAZ. The Amended Complaint alleges a:

massive racketeering scheme beginning in the 1990's among, inter alia, the members of an international Russian-American organized crime group, headed by Mikhail Chernoi, and including business moguls Oleg Deripaska, the head of Sibirsky Aluminum, and Iskander Makhmudov, the then de facto head of MDM Bank, and the Izmailovo Russian-American mafia group to take over and monopolize the Russian aluminum and other metals industries (the "Illegal scheme")
(Am. Compl. ¶ 1.) The plaintiffs claim Chernoi, Deripaska, and Makhmudov ("the Conspirators"), as well as their allies and the companies they control, directly or indirectly committed numerous criminal acts including physical violence, mail and wire fraud, and money laundering in the United States in furtherance of the illegal scheme. (Am. Compl. ¶¶ 2-4.)

The Amended Complaint comprises two primary parts. First, the BMT Plaintiffs and one new party, MIKOM, reallege that the Conspirators took over NKAZ in 2000 by using rigged bankruptcy proceedings.*fn2 (Am. Compl. ¶¶ 5-6.) Second, the remainder of the new plaintiffs bring new claims for the alleged illegal takeover of GOK through physical force, bribery, and extortion.*fn3 (Am. Compl. ¶ 5.)

Changes to one section of the Original Complaint exemplify the way in which the plaintiffs try to meld the new claims into the old to form one coherent scheme. The Original Complaint included a section entitled "The Aluminum Wars" that traced the history of an alleged series of "wars" to control the Russian aluminum industry precipitated by its privatization in the 1990s. (Original Complaint ¶¶ 68-71.) The BMT Plaintiffs alleged that during this period and continuing to the present, Deripaska and Chernoi conspired together to take over the Russian aluminum industry, including NKAZ. (Original Compl. ¶ 71.) These allegations have been newly styled in the Amended Complaint as the history of "The Metal Wars." The sole changes to the Original Complaint are added references to the vanadium industry and other metal industries that are tacked on to the text of the Original Complaint. (Am. Compl. ¶¶ 122-24.) Additionally, Chernoi and Deripaska are now alleged to have been joined by defendant Makhmudov in conspiring to control the Russian metals industry, including NKAZ and GOK. (Am. Compl. ¶ 124.)

(A)

The Amended Complaint first tells the story of the defendants' alleged illegal takeover of the Russian aluminum industry, particularly with respect to NKAZ. The first steps in this scheme allegedly included takeovers of three other Russian aluminum companies: Krasnoyarsk Aluminum Zavod ("KRAZ"), Sayansk Aluminum Zavod ("SAZ"), and Bratsk Aluminum Zavod ("BRAZ"). (Am. Compl. ¶¶ 123, 125-47.) The Conspirators allegedly effected the takeovers through various illegal means, including redirecting the shipment of finished aluminum from the factories, the murder of numerous rivals in association with the Izmailovo Mafia, the filing of false criminal charges against an official of KRAZ, rigged Russian court proceedings and economic extortion. (Am. Compl. ¶¶ 130, 136, 138, 140, 142, 145.)

Beginning in late 1994 or early 1995, plaintiff MIKOM, under its president Mikhail Zhivilo ("Zhivilo"), entered into a contract to manage NKAZ. (Am. Compl. ¶¶ 12, 30, 148.) MIKOM then solicited Western trading partners such as BMT Ltd. to extend loans to NKAZ and to trade with the company. (Am. Compl. ¶ 149.) At that time, NKAZ purchased approximately 70% of its alumina, a raw material necessary to produce aluminum, from the Pavlodarsky Aluminum Zavod ("PAZ"). (Am. Compl. ¶ 150.) At about the same time, the plaintiffs allege, Chernoi and his allies gained control of PAZ and threatened to stop shipments of alumina to NKAZ unless NKAZ gave them 50% of its aluminum sales profits and 50% of the shares in NKAZ. (Am. Compl. ¶ 151.) Chernoi later manipulated NKAZ into buying all of its alumina from PAZ at a premium. (Am. Compl. ¶ 152.)

In August 1995, Zhivilo informed Chernoi that NKAZ and BMT Ltd. would no longer trade with PAZ. (Am. Compl. ¶ 161.) The plaintiffs allege that shortly thereafter, Deripaska and Chernoi made direct and indirect threats on Zhivilo's life that were followed by an unsuccessful attempt to assassinate him. One of the threats was allegedly made to Yuri Zhivilo, Mikhail Zhivilo's brother, in Chicago, Illinois in 1995. (Am. Comp. ¶¶ 165-66.) Other threats were allegedly made directly to Mikhail Zhivilo in Tel Aviv, Israel and in Paris, France. (Am. Comp. ¶¶ 165-70, 189.) In response to the threats, BMT Ltd., NKAZ, and Alucoal allegedly paid millions of dollars in protection money to the Conspirators between April, 1996 and October, 1999. (Am. Compl. ¶¶ 172-74.) The payments were allegedly made through several New York banks and the funds were eventually laundered through various entities including defendants Pan-American and Blonde Management. (Am. Compl. ¶¶ 173-176.)

In or about 1997, Russian President Boris Yeltsin appointed Aman Tuleyev ("Tuleyev") as Kemerovo Regional Governor. (Am. Compl. ¶ 186.) The next year Tuleyev allegedly began demanding that Zhivilo pay bribes from NKAZ, MIKOM, BMT Ltd. and BMT SA. (Am. Compl. ¶ 187.) Tuleyev threatened that failure to pay would result in the transfer of NKAZ to the Conspirators. (Am. Compl. ¶ 188.)

In 1999, the Conspirators and Tuleyev allegedly joined together to take over NKAZ illegally with the assistance of the local energy provider, Kuzbass. (Am. Compl. ¶¶ 177, 193-94.) The essence of the takeover scheme was for Kuzbass to "assert false tariff claims [against NKAZ], file suit upon them, and obtain a sham judgment against NKAZ, with the active assistance of Tuleyev, using the corrupt Russian regional court system."*fn4 (Am. Compl. ¶ 199.) This would allow the Conspirators to force NKAZ into an involuntary bankruptcy after which the Conspirators could place their own agents in control of the company. (Am. Compl. ¶ 202.) The Conspirators would then cancel NKAZ's trading contracts with the BMT Plaintiffs as well as the management contract with MIKOM and replace those companies with affiliates of the Conspirators. (Am. Compl. ¶ 201.) The Conspirators would profit from the scheme by supplying raw materials to NKAZ and then trading in the finished aluminum, while Kuzbass would receive higher energy payments for its participation in the takeover. (Am. Compl. ¶ 200.) For his role in the takeover, Tuleyev allegedly received $3 million between 1999 and 2000 paid at least in part with funds wired by Pan-American, Blonde Management, and Blonde Investments through American banks at Kislin's instruction. (Am. Compl. ¶¶ 196-98, 455, 459.)

The plaintiffs allege that the illegal scheme unfolded as follows. Beginning in late 1994, NKAZ contracted with Kuzbass to supply energy at agreed upon rates. (Am. Compl. ¶¶ 204-06.) In an action filed on November 12, 1997 in the Kemerovo Arbitrazh Court, Kuzbass repudiated its agreements with NKAZ in response to which NKAZ filed a counter suit. (Am. Compl. ¶¶ 208-15.) As a result of the dispute, the Kemerovo Arbitrazh court ultimately awarded Kuzbass a judgment of approximately $26.3 million on October 21, 1999. (Am. Compl. ¶ 216.) The plaintiffs contend that Tuleyev influenced the arbitrazh court to obtain this result. (Am. Compl. ¶ 216.) NKAZ unsuccessfully appealed the award to the appellate branch of the Kemerovo Arbitrazh Court which was "also apparently under the influence of Tuleyev" and which entered a final judgment upholding the award on December 24, 1999. (Am. Compl. ¶¶ 217-18.) NKAZ then appealed the award to the West Siberian Circuit Federal Arbitrazh Court in Tyumen. (Am. Compl. ¶ 219.) The court stayed the execution of the award on or about January 19, 2000 pending consideration of the appeal. (Am. Compl. ¶ 220.)

Despite the stay, Kuzbass prevailed on an ex parte petition to the Kemerovo Arbitrazh Court for an order declaring NKAZ bankrupt, appointing Sergey A. Chernyshev ("Chernyshev") as Provisional Manager, and imposing allegedly unnecessary conservatory measures on the company. (Am. Compl. ¶ 222-24, 227-230.) The plaintiffs claim that the bankruptcy order constituted a clear violation of Russian law which requires an executable judgment of a creditor in order to place a business into involuntary bankruptcy. (Am. Compl. ¶¶ 221, 225.) Moreover, the plaintiffs claim that NKAZ was never bankrupt. (Am. Compl. ¶ 226.)

The plaintiffs contend that Chernyshev proceeded to issue a series of unreasonable information requests on MIKOM and used MIKOM's failure to satisfy the requests promptly as a basis for his petition to remove the company as NKAZ's manager.*fn5 (Am. Compl. ¶¶ 231-236.) Kuzbass also petitioned the arbitrazh court to remove MIKOM using information supplied by Chernyshev from his investigation. The gist of the information was that MIKOM was hiding money that should have been used to pay current debts. (Am. Compl. ¶¶ 237-38.) In an allegedly unusual step, the local Kemerovo procurator filed a separate petition for bankruptcy against NKAZ at the behest of Tuleyev. (Am. Compl. ¶¶ 239-41.) The plaintiffs claim that the procurator did so "to signal to the Kemerovo court that the local political authorities supported Chernyshev's position and Kuzbass' petition." (Am. Compl. ¶ 239.) At an alleged sham hearing on February 16 and 17, 2000 the arbitrazh court summarily granted the motions for MIKOM's removal and Chernyshev's appointment. (Am. Compl. ¶¶ 245, 252-57.) The plaintiffs claim that the BMT Plaintiffs, NKAZ, and MIKOM were denied important procedural rights at the hearing, including the full opportunity to present evidence and to properly cross-examine witnesses, as well as timely access to an interpreter. (Am. Compl. ¶¶ 252-56, 258-59.)

Once installed as Acting Manager, Chernyshev instructed NKAZ's attorneys to cease to pursue the actions preceding the award and to withdraw prosecution of NKAZ's claims against Kuzbass. (Am. Compl. ¶¶ 261-64.) Chernyshev proceeded to recognize a series of allegedly fictitious claims against NKAZ by companies controlled by the Conspirators totaling approximately $70 million. (Am. Compl. ¶¶ 265-67.) Recognition of the false creditors provided the Conspirators with voting power at subsequent creditor meetings where control of the agenda was proportional to the sums due to each creditor. (Am. Compl. ¶ 268.) At the same time, Chernyshev allegedly refused to recognize valid claims asserted by BMT Ltd. and Alucoal worth approximately $60 million. (Am. Compl. ¶ 269.) These maneuvers altered the balance of power at future creditor meetings because prior to the allegedly illegal takeover the BMT Plaintiffs allegedly held the majority of NKAZ's debt. (Am. Compl. ¶ 270.)

At the first creditors' meeting, the new creditors voted to place NKAZ under external management and to appoint Chernyshev to the position of External Manager. (Am. Compl. ¶ 272.) The Kemerovo Arbitrazh Court confirmed the appointment on March 20, 2000, enabling Chernyshev to cancel NKAZ's contracts with the BMT Plaintiffs for the supply of raw materials and subsequent purchase of finished aluminum. (Am. Compl. ¶¶ 272-76.) Chernyshev then entered into substitute purchase and supply contracts with companies controlled by the Conspirators. (Am. Compl. ¶¶ 276-290.)

While not referred to in the Amended Complaint, BMT SA, supported by MIKOM, sought review of the Arbitrazh Court's March 20, 2000 decision in the West Siberian Circuit Federal Arbitrazh Court. The Circuit Court rejected all of the grounds for appeal finding, among other things, that NKAZ was insolvent. (Declaration of Paul B. Stephan III ("Stephan") dated Jan. 28, 2002 ("Stephan 2002 Decl.") ¶ 29; Decree of the Federal Arbitration Court of the West Siberian District dated July 3, 2000 ("West Siberian District July 3, 2000 Decree") attached as Ex. 112 to Second Declaration of Sergei Chernyshev dated Jan. 27, 2002 ("Chernyshev Decl.").)

The Conspirators allegedly reached a subsequent agreement with an unnamed powerful Russian oligarch to form Russian Aluminum, thus establishing a monopoly over the Russian aluminum industry. (Am. Compl. ¶ 305.) This partnership freed the Conspirators from their need to partner with Kuzbass, and Chernyshev subsequently attempted to remove Kuzbass from NKAZ's list of outstanding creditors. (Am. Compl. ¶¶ 306-10.) Tying up further loose ends, Tuleyev accused Zhivilo of conspiring to have him murdered. (Am. Compl. ¶ 302.) As a result, allegedly false charges were filed against Zhivilo before he sought asylum in France in February 2001. (Am. Compl. ¶¶ 302-04.)

In or about August 2000, the Conspirators secured total control of NKAZ by allegedly forcing its shareholders to sell their stock at distressed prices to four unspecified companies controlled by the Conspirators. (Am. Compl. ¶¶ 312-13.) At a final creditors' meeting on March 6, 2001, through the votes of the allegedly false creditors recognized by Chernyshev, the Conspirators won approval of a bankruptcy settlement. (Am. Compl. ¶ 315.) The settlement was allegedly highly prejudicial to NKAZ's legitimate creditors, including the BMT Plaintiffs. (Am. Compl. ¶ 316.) The Kemerovo Arbitrazh Court approved the allegedly sham settlement on April 3, 2001. (Am. Compl. ¶ 317.) Again, while not referred to in the Amended Complaint, BMT SA and others appealed the April 3, 2001 decision of the Kemerovo Arbitrazh Court to the West Siberian Circuit Federal Arbitrazh Court. On September 6, 2001, a panel of three judges, different from those who heard the previous appeal, approved the settlement agreement terminating the bankruptcy. (Stephan 2002 Decl. ¶ 30; Resolution of the Federal Arbitrazh Court of the Western-Siberian Circuit dated Sept. 6, 2001 ("West Siberian Circuit Sept. 6, 2001 Resolution") attached as Ex. 133 to Chernyshev Decl.)

The Conspirators allegedly remain in control of NKAZ today and use the sales and purchasing power of the company to benefit their affiliates, including defendants Metcare, RUAL, Bauxal and Unimetal. (Am. Compl. ¶ 321.) The plaintiffs claim that the Conspirators also siphon profits from the company while failing to pay the legitimate debts owed to the NKAZ Plaintiffs. (Am. Compl. ¶ 322.)

(B)

The Amended Complaint contains a new series of claims not present in the Original Complaint and in which the BMT Plaintiffs play no part. The claims involve a conspiracy to take over GOK, "Russia's largest vanadium ore mining factory." (Compl. ¶ 5.) GOK is located in the Sverdlosk Oblast which is situated on the east side of the Ural Mountains north of central Kazakhstan. Six new plaintiffs bring these allegations: Davis, Holdex, Foston and Omni (collectively the "Davis Plaintiffs"), as well as Nexis and Polyprom (collectively the "GOK Plaintiffs"). These allegations can be divided into two parts. First, the Davis Plaintiffs allege the fraudulent transfer of their shares in GOK which collectively totaled over 70% of the company. (Am. Compl. ¶¶ 32-36.) Second, the GOK Plaintiffs allegedly maintained contracts and loan agreements with GOK that GOK then breached. (Am. Compl. ¶¶ 37-39.)

The plaintiffs' narrative of the events involving GOK similarly begins with claims of extortion and threats of violence. In December 1998, Jalol Khaidarov ("Khaidarov") became general director of GOK after having worked as a financial advisor for Chernoi and Makhmudov. (Am. Compl. ¶ 341.) In April 1999, Khaidarov allegedly met twice with his former employers in Paris to discuss GOK. (Am. Compl. ¶ 342.) At the second meeting, Chernoi allegedly instructed Khaidarov to convince GOK's shareholders to transfer their shares to Chernoi and Makhmudov and reminded Khaidarov that, "Some people refuse my offers. But for the rest of their lives, they wear bullet proof jackets." (Am. Compl. ¶ 343.)

In response to ongoing threats, GOK's controlling shareholders agreed preliminarily to sell 20% of their shares to a company controlled by the Conspirators. (Am. Compl. ¶ 344.) Makhmudov and Chernoi made a $5 million down payment on the shares with money allegedly wired through an unnamed United States bank. (Am. Compl. ¶ 345.) However, Makhmudov and Chernoi were soon unsatisfied and demanded that Khaidarov arrange for the transfer of additional shares. (Am. Compl. ¶ 346.) Believing that the two men would never be satisfied, the shareholders returned the $5 million and cancelled the transfer. (Am. Compl. ¶ 347.)

Similar to the allegations concerning the NKAZ takeover, the plaintiffs allege that the Conspirators bribed the local Governor to aid in their scheme. (Am. Compl. ¶¶ 352-55.) Eduard Roussel ("Roussel"), Governor of the Sverdlovsk Oblast as of 1999, was allegedly paid for "protection" and "help" in support of the Conspirators' efforts to do business in the region. (Am. Compl. ¶¶ 352-53, 355.) Makhmudov and Chernoi allegedly paid Roussel "more than $850,000 in bribes . . . so that Roussel would allow them to use the police to take over GOK and would exercise his influence over the corrupt Sverdlovsk judiciary." (Am. Compl. ¶ 458.) These "payments were made by Pan-American and Blonde Management through banks in the United States to MDM Bank for conversions into cash for payment at the direction of Roussel." (Am. Compl. ¶ 354.)

On or about January 28, 2000, with the support of regional authorities, Makhmudov and Chernoi allegedly sent a group of armed thugs to take over GOK physically. (Am. Compl. ¶ 356.) The Conspirators then used bribes and threats of physical force to convince four members of GOK's Board of Directors to vote to remove Khaidarov as general director and to replace him with Andrey Kozitsin ("Kozitsin"), an alleged agent of the Conspirators. (Am. Compl. ¶ 357.) This vote allegedly violated GOK's charter which required five votes in order to remove the general director. (Am. Compl. ¶ 357.) The Complaint alleges that the three remaining board members asked prosecutors in the Kachkanar and Sverdlovsk areas to initiate criminal proceedings in connection with the GOK takeover. (Am. Compl. ¶ 358.) However, the Kachkanar City Court upheld the Board's vote in a decision dated February 1, 2000. (Ruling of the Kachkanar City Court dated Feb. 1, 2000 attached as Ex. 41 to Declarations of Oleg S. Kozyrev ("Kozyrev") (no date) and Samir Kapoura ("Kapoura") (no date) ("Kozyrev/Kapoura Decls.").)

To thwart any further efforts by GOK shareholders to reacquire control of the company, the Conspirators and MDM Bank allegedly arranged for GOK to incur massive false debts in February 2000. (Am. Compl. ¶¶ 371-86.) By the end of this brief period, a series of sham transactions left a small company named Leybout in possession of approximately $39 million in demand promissory notes issued by GOK. (Am. Compl. ¶¶ 373-86.) The Conspirators then caused Krasnouralskmezhraigaz ("Kras Gas"), a local natural gas company in the Sverdlovsk Region, to file an involuntary bankruptcy petition against GOK on March 24, 2000. (Am. Compl. ¶ 387.) Although the plaintiffs claim that the petition should not have been granted under Russian law because Kras Gas' receivables were not overdue, the Sverdlovsk Arbitrazh Court did just that and appointed Oleg Kozyrev ("Kozyrev") Provisional Manager of GOK on March 30, 2000. (Am. Compl. ¶¶ 388-89.) After he was appointed Provisional Manager, Kozyrev refused to recognize what the plaintiffs contend was a $7 million valid claim by Nexis arising from a "certain" loan agreement with GOK. (Am. Compl. ¶ 390.)

At the time of the GOK creditors' initial meeting, Leybout's allegedly fraudulent claims left that company with 94% of the creditor votes. (Am. Compl. ¶ 391.) At the meeting the creditors nominated Kozyrev as External Manager. (Am. Compl. ¶ 392.) On March 30, 2000, the Sverdlovsk Arbitrazh Court approved Kozyrev's appointment, having been signaled allegedly to do so by Roussel's Sverdlovsk Oblast government. (Am. Compl. ¶ 392-94.)

What came next, according to the Davis Plaintiffs, was a series of fraudulent transfers of their shares in GOK, often through defendant New Start, and ultimately to defendants Venitom, Unidale, and Investland. (Am. Compl. ¶¶ 397-423.) The plaintiffs claim that these four companies are owned and controlled by the Conspirators. (Am. Compl. ¶ 431.) Defendant Kislin allegedly arranged for the incorporation of the ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.