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Wednesday, August 25, 2021

Delaware Judge Presses Pause on Ukrainian Oligarchs' Legal Case in U.S.

Posted By on Wed, Aug 25, 2021 at 9:53 AM

click to enlarge Three of the Optima Ventures current and former properties: Crowne Plaza Hotel, AECOM Building, One Cleveland Center - "IMG_2485"BY JEFFPYLE IS LICENSED UNDER CC BY-NC-ND 2.0
  • "IMG_2485"by jeffpyle is licensed under CC BY-NC-ND 2.0
  • Three of the Optima Ventures current and former properties: Crowne Plaza Hotel, AECOM Building, One Cleveland Center

A Delaware judge has ruled that the U.S. case against Ukrainian oligarchs Igor Kolomoisky, Gennadiy Bogolyubov and their Miami-based lieutenants concerning a series of alleged fraudulent investment schemes should not proceed until relevant legal actions in the Ukraine play out.

Joseph Slights, Vice Chancellor of Delaware's Court of Chancery, filed the 41-page opinion Monday. He ordered that the suit, which was initially filed by Ukraine's PrivatBank in 2019, can't go forward just yet. But he denied an outright dismissal of the case, as the defendants had hoped for. 

As Scene first reported in 2019, PrivatBank alleged that Kolomoisky and Bogolyubov oversaw a scheme to fraudulently procure loans from PrivatBank, which they owned from 2006-2016, and to launder the proceeds through various shell companies around the world. They are alleged to have ultimately used those proceeds to acquire U.S. metallurgical and real estate interests.

The so-called "Optima Schemes" resulted, among other things, in the purchase of five buildings in downtown Cleveland, making the Ukrainian oligarchs' the owners of the most commercial real estate in the city for a period in 2010.

On the verge of insolvency after these practices, PrivatBank was nationalized in 2016. And ever since, legal actions have been filed in courts around the world to recover the laundered funds. But in Ukraine, several courts have ruled that the nationalization of PrivatBank was unconstitutional, as was an "anti-Kolomoisky" statute passed by Ukraine's parliament which held that courts could not restore ownership of illegally nationalized banks to former shareholders.

"Ukrainian courts are set to decide the propriety of PrivatBank’s loan practices and the constitutionality of the Anti-Kolomoisky Statute as matters of Ukrainian law," Judge Slights wrote in his Monday decision. "Were this Court to move forward with this case now, it would be forced to adjudicate these issues of Ukrainian law at the same time those issues are being litigated before judges expert in that law. The risk of inconsistent judgements is high."

Mark Ressler, attorney for Optima businessmen Mordechai “Motti” Korf and Uriel “Uri” Laber — two of the three U.S. based lieutenants — said in a statement that Judge Slights had recognized the "fundamentally Ukrainian" nature of the suit and referred to PrivatBank's claims as "baseless."

"As we have long asserted, this case stems from an internal Ukrainian political dispute that has nothing to do with Mr. Korf and Mr. Laber, who are eager to focus on their businesses and philanthropic activities.”

Slights would likely not agree that the claims are baseless. In his opinion — which was not a dismissal but a partial stay — he noted that the Defendants themselves admitted that the Optima Schemes could not be litigated anywhere but the United State, "underscoring how the issues in this Court differ from those being litigated abroad."

"Such circumstances, in my view, militate strongly against an outright dismissal of Plaintiff’s claims here," Slights wrote. "These claims will have to be litigated at some point; the question is when they should be litigated in relation to the other pending actions."

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