## Facts

- The City of Almaty and BTA Bank JSC sued Mukhtar Ablyazov, Ilyas Khrapunov, and Triadou SPV S.A., alleging a transnational scheme to steal and launder billions of dollars.
- Plaintiffs alleged that Viktor Khrapunov, as Almaty’s mayor, misappropriated public assets and property proceeds through entities he controlled.
- Plaintiffs alleged that Ablyazov, as BTA Bank’s former chairman, siphoned more than $6 billion through fraudulent loans to entities he owned or controlled.
- Plaintiffs alleged that the Ablyazov and Khrapunov families coordinated to move stolen funds out of Kazakhstan and conceal them through shell companies and sham transactions.
- Plaintiffs alleged that conspirators routed funds through a Swiss real-estate company and then used Luxembourg entities, including Triadou, to invest in U.S. assets.
- Through Triadou, defendants allegedly invested embezzled funds in New York City real-estate projects, including the Flatotel and Cabrini Medical Center projects, using U.S. banking channels and escrow accounts.
- Plaintiffs alleged that, as foreign proceedings and freezes intensified, defendants liquidated New York real-estate holdings and moved value out of the United States via below-market assignments and improper payments to facilitate transactions.
- Defendants moved to dismiss the First Amended Complaint on grounds including extraterritoriality of civil RICO, lack of domestic injury, lack of personal jurisdiction, forum non conveniens/comity, and pleading defects in state-law claims.

## Issues

1. Whether the civil RICO claims were impermissibly extraterritorial after *RJR Nabisco* and whether plaintiffs sufficiently alleged a domestic injury to business or property.
2. Whether the complaint plausibly alleged a RICO enterprise, a pattern of racketeering activity, and qualifying predicate acts tied to the alleged laundering and transfers.
3. Whether the court could exercise specific personal jurisdiction over Triadou and Ilyas Khrapunov based on New York real-estate investments and related transactions.
4. Whether dismissal or abstention was warranted under forum non conveniens or international comity given parallel foreign proceedings.
5. Whether related New York law claims were adequately pleaded and sufficiently connected to New York-based conduct and harm.

## Decision

- The court denied the motions to dismiss in substantial part, allowing the core civil RICO claims and closely related claims to proceed.
- Applying *RJR Nabisco*, the court held that the alleged scheme had a significant domestic component, including use of U.S. financial channels and New York real-estate investments, and was not pleaded as purely foreign racketeering.
- The court held plaintiffs adequately alleged a domestic injury for purposes of § 1964(c), based on allegations tied to U.S.-based laundering, placement, and alleged dissipation of assets connected to New York transactions.
- The court held the complaint sufficiently alleged a RICO enterprise and pattern, including allegations of coordinated laundering, wire transfers, and transactions designed to conceal beneficial ownership and move proceeds.
- The court found specific personal jurisdiction over Triadou and Ilyas Khrapunov, concluding the New York real-estate activities and asserted direction or control over those activities constituted suit-related forum contacts consistent with due process.
- The court declined to dismiss on forum non conveniens or comity grounds, finding New York’s interest substantial and defendants had not shown an alternative forum was clearly more appropriate.
- The court dismissed or narrowed certain secondary claims or theories that lacked required specificity or were otherwise deficient, while leaving the main case intact.

## Legal Principles

- Civil RICO may reach conduct with foreign elements when the pleaded RICO violation is anchored in domestic conduct and/or predicates with domestic application, and the plaintiff plausibly alleges a domestic injury to business or property under § 1964(c).
- A domestic-injury allegation may be supported where the pleaded harm is tied to U.S.-based laundering, investment, concealment, or dissipation of assets connected to the plaintiff’s property interests, not merely the initial foreign theft.
- A RICO enterprise and pattern may be plausibly pleaded through allegations of an associated group and entities engaging in repeated, related transactions (including laundering and fraudulent transfers) over time to further a common purpose.
- Specific personal jurisdiction may be exercised over foreign defendants who purposefully direct or conduct New York transactions central to the alleged wrongdoing, where the claims arise from those forum contacts and jurisdiction is reasonable.
- Forum non conveniens and comity dismissal requires a strong showing that an adequate alternative forum is clearly more appropriate and that domestic adjudication would be improper given competing sovereign interests; substantial local interests in policing alleged laundering through local markets weigh against dismissal.

## Conclusion

The court largely permitted the action to proceed, holding that plaintiffs plausibly pleaded civil RICO and related claims based on alleged laundering of stolen foreign funds through New York real-estate investments and U.S. financial transactions, supported by domestic-injury allegations and New York-specific jurisdictional contacts.


City of Almaty v. Ablyazov, 226 F. Supp. 3d 272 (S.D.N.Y. 2016)