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By John Helmer, Moscow 

Accused Russian bank robber Vadim Belyaev (lead picture) – US alias Vadim Wolfson – has won an order from the New York State Supreme Court dismissing the claims of his pursuers, National Trust Bank (NBT, Trust) and Otkritie Bank of Moscow, on condition he registers himself as a defendant in the same claims the two banks are making against him in a Moscow court. Judge Joel Cohen issued his order ending the eleven-month case on May 4. He has not published his reasons.

On the face of it, Cohen has done no more than conclude that he should concede jurisdiction over Belyaev and the bank claims to a Russian court, where proceedings are already under way. In practice, as the banks’ lawyers have pointed out in New York, whatever the Moscow courts decide, Belyaev, now living in New York, has no intention of complying with its judgements,   calculating that the US courts will not allow bank recovery of Belyaev’s ill-gotten gains so long as they are safely stored in US banks.

The story of the frauds committed by Belyaev and others who at one time controlled Trust Bank and Otkritie Bank is long, crooked, expensive. In Moscow Arbitrazh Court the Central Bank has estimated the total losses of Trust and Otkritie to be Rb289 billion ($3.9 billion). The Trust and Otkritie estimate of Belyaev’s take in the New York court has been about $1.4 billion. The full story can be followed here.

Left:  http://johnhelmer.net/the-crook-comes-home-to-roost-vadim-belyaevs-new-york-haven-under-court-attack-for-at-least-1-billion/    Right: http://johnhelmer.net/bidens-russia-warfighters-protect-runaway-russian-bank-fraudster-vadim-belyaev-in-new-york/  

The bank case against Belyaev in New York started on August 28, 2020. The opening claim papers reported Belyaev’s modus operandi. “As Otkritie Holding’s largest shareholder, Belyaev exercised close control over Otkritie Holding and its subsidiaries, and repeatedly used his control to siphon off assets from entities owned by Otkritie Holding for personal use and the use of his associates. Specifically, in the time period leading up to Bank Otkritie’s and NBT’s [Trust Bank] collapse in August 2017, Belyaev engaged in a number of schemes, many of which involved the same pattern and sequence of transactions, to divert money out of Bank Otkritie and NBT and into entities that he and his associates controlled.  This pattern of transactions was complex, but essentially, Belyaev would have NBT and Bank Otkritie issue loans that would then be transferred across various entities inside and outside of the official Otkritie Group … Belyaev’s collection of loyal subordinates within the Otkritie Group would paper and process the loans as if they were legitimate, but Belyaev authorized the loans knowing that they would not be repaid.”

“The loan proceeds would then be divided, combined, and transferred through an intricate network of shell entities in a series of transactions designed to obscure the source of the funds. These funds could go through dozens of transactions within a few weeks before ultimately ending up in accounts controlled by Belyaev or his associates.  As a result of Belyaev’s fraudulent loan schemes, and other acts of misconduct by Belyaev, Bank Otkritie went from being one of the top five private banks in Russia to having a deficit of US $8 billion, requiring the Central Bank of Russia to place it into temporary administration. NBT and other companies within the Otkritie Group also experienced severe financial distress, which caused some of them to declare bankruptcy or to become subjected to financial rehabilitation sponsored by the Russian state.”

“One of the primary mechanisms by which Belyaev and/or those acting at his direction engaged in fraudulent and improper transactions was through the use of a network of more than 150 shell companies, which were not officially disclosed as part of the Otkritie Group.” According to the court papers, of the 150 – called “unofficial perimeter companies” – 26 were robber hideouts, 125 were get-away vehicles.

Belyaev’s lawyers responded on November 6, 2020, asking the court to throw the case out on several grounds. One was that Belyaev had been victimised by the Central Bank’s bankruptcy procedures which he called illegal “nationalisation” of the banks. His second claim was that there was no proof he controlled the banks or that fraud was committed in the alleged loan schemes. The third of Belyaev’s defences was that the court in New York has no jurisdiction over him, even though he lives a 10-minute walk from the courthouse.

On January 13, 2021, the banks’ lawyers countered: “the core of Belyaev’s argument is that Russia—the jurisdiction from which he fled—is a better forum. Of course, Belyaev is not making that argument because he actually has faith in the Russian court system or because it is more convenient for him to litigate in a forum that is more than 4,000 miles away from the one in his own backyard. Instead, Belyaev’s motion is part of a legal strategy designed to evade liability anywhere, i.e., he claims he (1) cannot be sued in England because he lives in New York; (2) cannot be sued in New York because Russia is the more convenient jurisdiction; and (3) to be sure, [he] will argue that any judgment issued by a Russian court should not be enforced because it was rendered by the same government that ‘manufactured’  the liquidity crisis and ‘pin[ned]’ it on him. That type of gamesmanship should not be countenanced by this Court.”

With Judge Cohen (right) due to hear courtroom argument from the two sides on May 4, Belyaev’s lawyers at Gibson Dunn & Crutcher filed a letter the day before. Belyaev had changed his defenders at the last minute. On February 5, when he presented his argument for sending the case out of New York to Moscow, he was employing the firm of Boies Schiller & Flexner. Two months later, they were removed, and in their place four lawyers from Gibson Dunn filed their appearances. On May 3, they wrote to tell Judge Cohen that a new lawsuit in Moscow was fresh evidence that Cohen should reject jurisdiction for himself. This Moscow case was one “which we only recently became aware [of], and we look forward to tomorrow’s hearing.”

There had been a new development in the case, they claimed. “I respectfully write to bring to Your Honor’s attention,” said Randy Mastro, “the claim that National Bank Trust (“NBT”), one of the two Russian Bank Plaintiffs in this action, recently filed in Russia before the Moscow Arbitrazh Court relating to issues raised here.”  

“That Russian filing [on March 11], a copy and certified translation of which are attached as Exhibit A, asserts a claim for damages in the amount of RUB 107 billion (approximately $1.4 billion) against Otkritie Holding JSC (“Otkritie Holding”) and several former executives of Otkritie Holding and/or Plaintiff PJSC Bank Otkritie Financial Corporation (“Bank Otkritie”) as ‘controlling persons’ of NBT (“NBT’s Russian Claim”). Otkritie Holding was the vehicle through which Mr. Wolfson held beneficial interests in both Bank Otkritie and NBT, and NBT’s Russian Claim is premised on alleged mismanagement and/or misconduct during a period in which NBT was being managed and rehabilitated by Bank Otkritie and then Otkritie Holding. NBT’s Russian Claim overlaps with both this action and the previously-filed proceeding against Mr. Wolfson in Russia (the “Russian Insolvency Proceedings”) in that, among other things, NBT’s Russian Claim is asserted under the same provision of the Russian Bankruptcy Law—Article 189.23(5)—as Count III of the Amended Complaint here and as the Russian Insolvency Proceedings.”

A chart of the Russian litigation by the banks against Belyaev and his associates was presented, together with parallel court cases in London and New York:

Source: https://iapps.courts.state.ny.us/

“The glaring absence of Mr. Wolfson from NBT’s Russian Claim lays bare the deliberate strategy of these Russian state-owned entities to pick and choose the forum in which to sue Mr. Wolfson, not on the basis of which forum is most appropriate to hear the relevant case brought against him, but according to what these Russian state actors believe will effectuate their strategy of hounding Mr. Wolfson in multiple jurisdictions across the globe.” What the lawyers told the judge they were looking forward to materialised the next day. .

On May 4 Cohen decided without further ado to dismiss the banks and release Belyaev. His order refers to “reasons stated on the record after the oral argument”;  to date these have not been published by the court. Cohen’s ruling runs for five short paragraphs. Russia was the appropriate forum for the bank claims, not New York City, and the case was dismissed “conditioned upon the Defendant [Belyaev] accepting service of process (or analogous local procedure) in Russia.”

Source: https://iapps.courts.state.ny.us/

Lawyers for Otkritie Bank in Moscow and New York were asked why Belyaev changed his lawyers at the last minute, and why the judge has not published the customary statement of reasons. They were also asked to say if they intend to appeal. There has been no reply.

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