Opinion ID: 791130
Heading Depth: 2
Heading Rank: 2

Heading: The Charged Racketeering Scheme

Text: 5 During the 1990s, Norex acquired a 60% interest in Yugraneft, with the remaining 40% owned by another Russian oil company, OAO Chernogorneft. Norex alleges that, by the end of the decade, defendants had hatched a scheme to take over Yugraneft by means of various RICO predicate acts of mail and wire fraud, extortion, interstate and foreign travel in aid of racketeering enterprises, and money laundering. See 18 U.S.C. §§ 1961(1)(B), 1962. While many of these predicate acts allegedly occurred entirely in Russia, others involved wiring money through United States banks to bribe officials in Russia, to buy corporate assets in Russia, or to hide the profits of allegedly illegal activities in Russia. In its brief before this court, Norex asserts that defendants resident in the S.D.N.Y. masterminded and controlled the scheme out of that district. Appellant's Br. at 11-12 (emphasis omitted). Although Norex's factual allegations are complex, we briefly outline those relevant to resolution of this appeal.
6 In 1999, an audit of Yugraneft's books and records raised questions regarding the adequacy of the initial capital contribution made by Chernogorneft. As a result, Norex's equity interest in Yugraneft was increased and Chernogorneft's reduced. Meanwhile, Chernogorneft, now controlled by TNK, found itself unable to repay Yugraneft for 70,000 metric tons of oil, part of a larger oil loan made in 1993. At the same time, another company in which TNK also owned a substantial interest owed Yugraneft payment for 102,000 metric tons of oil. 7 In November 1999, TNK official German Khan met with Norex Chairman Alex Rotzang in San Francisco and demanded that Yugraneft forgive the aforementioned oil debts, threatening that otherwise TNK would run over Yugraneft like a steamroller, because TNK eliminate[s] those who go against us. Compl. ¶ 199. The following year, in August 2000, Khan urged Yugraneft General Director Lyudmilla Kondrashina to settle the oil debt for 30% of its value, threatening that a refusal would leave Yugraneft with nothing because TNK had its own people at all levels of government. Id. ¶ 202. Khan repeated the 30% offer in January 2001, warning Kondrashina that, unless she agreed, TNK would take over Yugraneft. He stated that any litigation to challenge such a takeover would prove futile because TNK `controlled' Russia's Supreme Arbitration Court. Id. ¶ 206.
8 In fact, extensive litigation did ensue in Russian courts regarding control of Yugraneft, with results generally adverse to Norex. 3 Of particular relevance to this appeal is a lawsuit filed by TNK in Siberia on June 25, 2001, seeking to invalidate a large portion of Norex's equity interest in Yugraneft on the ground that Norex's capital contribution in the form of know how had been improperly valued. Norex insists that it was never properly served in this action, which the parties refer to as the Know-How Case. It further contends that TNK corrupted the court proceedings, obtaining an ex parte injunction on June 26, 2001, that barred Norex from voting the disputed Yugraneft shares at shareholders' meetings. Thereafter, the defendants purportedly fabricated the minutes of a June 28, 2001 Yugraneft shareholders' meeting to reflect the transfer of corporate control from Norex to TNK. Defendants then forcibly seized control of Yugraneft operations, employing armed guards to threaten workers and cut off telephone and internet lines. 9 In July 2001, Yugraneft's former officers secured a court order enjoining TNK's designee from acting as Yugraneft's General Director. On August 1, 2001, when Kondrashina and two attorneys sought to enforce the order, TNK agents attempted to bribe Kondrashina, offering her the position of Deputy Mayor of Nizhnevartovsk if she would cease opposing their efforts. At the same time, they threatened the lawyers, warning one, We know who you are and where you live, id. ¶ 238, and stating to the other, Do you have life insurance? You might need it because anything can happen. It might happen that some drunk will meet you near your house and nobody will be able to trace it to anything, id. ¶ 248. During this encounter, a TNK agent was overheard making a telephone call instructing his listener to have the chief judge of the Nizhnevartovsk Regional Court dismiss the injunction. A dismissal order by the chief judge was, in fact, entered the next day. 10 Norex claims that in the ensuing months defendants stripped Yugraneft of its assets, selling its oil through TNK, laundering the proceeds through various defendant corporations, and using New York banks to effect wire transfers of approximately $24 million from Yugraneft's accounts. 11 In January 2002, the Russian court held a final hearing in the Know-How Case and entered a default judgment against Norex, reducing its equity interest in Yugraneft to 20%. Although the Russian court ruled that Norex had been given notice of the action by mail as provided in Article 10 of the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, November 15, 1965, see generally 20 U.S.T. 361, 363, 658 U.N.T.S. 163, 169-71, Norex disputes both the applicability of that convention to the Know-How Case and the fact of any such notice. The parties apparently agree that the adverse decision in the Know-How Case now effectively bars Norex from challenging the legality of TNK's takeover of Yugraneft in a Russian court, preventing its present pursuit in Russia of the disputed issues that are at the core of its Southern District complaint. See Appellant's Br. at 26-28, 30-31; Appellee's Br. at 22, 24. 4 12
13 Norex sued the defendants in the Southern District of New York in February 2002. The defendants moved to dismiss on a variety of grounds, including forum non conveniens. After reviewing extensive submissions, the district court granted forum non conveniens dismissal. See Norex Petroleum Ltd. v. Access Indus., Inc., 304 F.Supp.2d at 584. Norex timely appealed to this court.