BTA Bank and Almaty city win jury trial against Ablyazov and Khrapunov

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BTA Bank and the city of Almaty won a lawsuit in the US against Felix Sater and his companies, which helped to invest money stolen by Ablyazov and his accomplices from BTA. The jury of the US District Court for the Southern District of New York awarded over $32 million in favor of BTA and the Almaty city administration. Mukhtar Ablyazov and Viktor Khrapunov have been accused of multi-billion dollar fraud, according to Kazinform News Agency correspondent, citing the press service of BTA Bank.

After a three-week trial, a jury of four men and five women in the US District Court for the Southern District of New York ruled in favor of BTA Bank and the city of Almaty on all claims against Felix Sater, Bayrock Group Inc., Global Habitat Solutions, and MeM Energy Partners LLC. The jury found BTA Bank and the city of Almaty to be victims of Sater’s wrongful actions, which included embezzlement, unjust enrichment, and money laundering, and awarded compensation exceeding the requested amount in damages. The total compensation amounted to over $32 million, including interest, which is higher than the initially requested compensatory damages. The session was presided over by Honorable Judge John G. Koeltl, US District Judge for the Southern District of New York.

The trial, which began on June 10, 2024, included detailed evidence of Mukhtar Ablyazov’s crimes against BTA Bank and Viktor Khrapunov’s crimes against the city of Almaty. During the trial, it was proven that Ablyazov abused his position at BTA Bank by issuing fictitious loans worth billions of dollars. This led to the collapse of the bank, which at the time of the fraud’s discovery was the third largest in Kazakhstan.

The trial provided the Almaty city administration (supported by the Ministry of Justice of the Republic of Kazakhstan) the opportunity to prove before the American court the fraud committed by former mayor Viktor Khrapunov. He abused his position by privatizing public lands and selling them at undervalued prices to companies controlled by him or his wife, as well as, in some cases, companies controlled by Mukhtar Ablyazov. Khrapunov’s fraud caused more than $300 million in damage to the city of Almaty and resulted in significant land parcels in major urban centers remaining undeveloped.

The evidence presented in court showed that the money stolen by Ablyazov and Viktor Khrapunov was combined, and Ilyas Khrapunov, Viktor Khrapunov’s son and Ablyazov’s son-in-law, was accused of laundering a significant portion of these funds. Ilyas, who was only 23 years old at the time, sought Felix Sater’s help in laundering the stolen money in the US. Sater, who was previously convicted of assault in 1993 and racketeering in 2009, including securities fraud and money laundering, helped Ilyas invest about $40 million of the stolen funds into American assets, including several real estate projects and at least two private investment projects. One of these investments was used by Sater to fraudulently obtain an investment visa for Ilyas’s sister, Elvira Kudryashova. Bayrock Group, Inc. and Global Habitat Solutions -companies wholly owned by Sater - were used to further conceal the stolen money. MeM Energy Partners LLC, fully owned by Mendel Mochkin, also assisted Sater in investing the stolen money into the US financial system.

During the three-week trial, the jury heard testimonies from various witnesses, including former employees of UKB-6, a division within BTA responsible for fraud during Ablyazov’s tenure, as well as American investors who dealt with the stolen funds, participants in the money laundering scheme, and various experts in forensic accounting, fraud and money laundering, real estate, immigration, and handwriting analysis. The jury also heard testimonies from key accomplices, including Gennady Petelin, who was presented as the legitimate source of the invested funds, Ilyas Khrapunov, who oversaw the American investments, Elvira Khrapunova, who appeared as the nominal owner of various companies, and Viktor Khrapunov and Mukhtar Ablyazov themselves.

Sater and Mochkin also provided detailed testimonies and underwent three days of cross-examination by the American attorney for BTA from Boies Schiller Flexner LLP. During the interrogation, Sater and Mochkin admitted that they invested the funds despite knowing about the fraud accusations against Ablyazov and Khrapunov, despite knowing about court decisions and global freezing orders issued by the High Court of England, and despite knowing about Ablyazov’s contempt of court conviction in England and his subsequent arrest in France. Sater and Mochkin also admitted to assisting Ablyazov, Ilyas Khrapunov, and Ablyazov’s longtime attorney, Peter Salhas, in attempts to undermine confidence in the English court rulings and orders. They disseminated false materials about corruption in English courts and proposed a propaganda campaign, including creating fake interest in stories favorable to Ablyazov on social media using an army of fake social media accounts.

With the jury’s verdict in favor of the city of Almaty and BTA Bank, the jury concluded that Sater and Mochkin knowingly laundered money stolen by Ablyazov from BTA Bank and Viktor Khrapunov from the city of Almaty. The jury also rejected Sater’s defense. Evidence showed that Sater concealed his involvement with the consultant. Just hours before the trial began, two other defendants, Daniel Ridloff and RRMI-DR LLC, settled the claims against them, agreeing to return all stolen funds to the city of Almaty and BTA. At the request of BTA and the city of Almaty, Judge Koeltl issued a ruling against RRMI-DR. The seventh defendant, Ferrari Holdings LLC, is in default; in light of today’s verdict, BTA and the city of Almaty will seek a judgment against it.

“Once again, an American jury has received comprehensive evidence of Mukhtar Ablyazov’s fraud against BTA Bank and unanimously delivered a verdict against his accomplices. Also, for the first time, an American jury has unanimously delivered a verdict in favor of the city of Almaty for fraud committed by Viktor Khrapunov. The American jury system is the gold standard of international justice, and today the jury clearly expressed its opinion. We are proud to have had the opportunity to present this evidence to the American jury and are very pleased with the verdict in favor of BTA and the city of Almaty, including the imposition of punitive damages against Felix Sater. We thank the jury for its careful consideration of the evidence,” said Matthew L. Schwartz, chairman and managing partner of Boies Schiller Flexner LLP, attorney for the city of Almaty and BTA.

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