Kazakhstan’s fugitive banker Mukhtar Ablyazov to go to trial in U.S.

On 29 March 2021, the Southern District of New York federal court ordered trial for claims filed by Kazakhstan’s BTA Bank related to alleged theft and laundering of hundreds of millions of dollars by Mukhtar Ablyazov and Ilyas Khrapunov.

Wanted for fraud and theft in his country of origin, banker Mukhtar Ablyazov — one of the wealthiest people in Kazakhstan in the 2000s, who now lives in self-exile in France — also faces criminal charges in France. Now, he will also face trial in the U.S. on suspicion of stealing and laundering large amounts of money through a labyrinth of shell companies.

The federal court of New York is to consider claims filed by BTA Bank, whose Board of Directors Ablyazov chaired from 2005 to 2009, accusing Ablyazov and his son-in-law and former business partner, Ilyas Khrapunov, who is the son of Almaty’s former Mayor Viktor Khrapunov, who is also wanted by Kazakhstan for public funds embezzlement.

The New York proceedings on behalf of the City of Almaty and BTA Bank were initiated more than five years ago accusing defendants Ablyazov and his associates of laundering stolen money into the United States.

On 29 March 2021, United States District Court Judge Alison Julie Nathan issued a decision substantially denying the defendant’s motion and allowing all four claims (conversion; unjust enrichment; constructive trust; and a claim under New York Civil Practice Law and Rules § 5239) to go to trial.

Judge Nathan recounted in detail how Ablyazov used sham loans to his own shell companies to defraud BTA Bank, a practice described as roundtripping (or paying back “loans” from BTA with further funds stolen from BTA).

Judge Nathan’s decision denying the motion of Triadou SPV S.A, a co-defendant in the case, for summary judgment was a significant victory for BTA Bank, ensuring that BTA will be able to bring its claims against Triadou to trial and present proof of Ablyazov and Ilyas Khrapunov’s crimes in a New York courtroom.

Matthew L. Schwartz, partner at Boies Schiller Flexner LLP and counsel to the plaintiffs, said: “The City of Almaty and BTA Bank appreciate the Court’s careful attention to the evidence. Mukhtar Ablyazov, Ilyas Khrapunov, and their associates have repeatedly refused to honestly participate in the court process and have violated numerous court orders. Even so, the evidence of their crimes is extensive. Almaty and BTA look forward to presenting that evidence before a jury of New Yorkers.”

The defendant, Ablyazov, claims the case is “politically motivated,” while BTA Bank says the fraud has an epic scale.

Convicted in absentia in Kazakhstan for the embezzlement of $7 billion, Ablyazov has been living in self-exile in Europe to avoid punishment. He first settled in Great Britain, before a U.K. court ordered him to pay $4 billion in compensation of damages to BTA Bank. He refused to pay and moved to France, where he obtained the status of political refugee in September 2020.

However, on 7 October 2020, a French judge charged Ablyazov with "aggravated abuse of trust" and "money laundering".

In November 2020, a U.K. court demanded to freeze all of Ablyazov’s assets, as well as the assets of Ilyas Khrapunov in Pictet & Cie or any other Swiss bank, as well as in other banks in Monaco and Lichtenstein.

Earlier this month, in Le Monde, Ablyazov accused France of duplicity with regard to the regime in Kazakhstan.

“Ablyazov decries conspiracy in all jurisdictions trying to bring him to justice,” BTA Bank lawyers say. “He pursued such communication campaigns in Kazakhstan, Russia, Great Britain, the U.S., and now in France. Someone could believe Ablyazov before, but now it is not serious.”