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NEW YORK FEDERAL COURT HOLDS MUKHTAR ABLYAZOV IN CONTEMPT

The United States District Court for the Southern District of New York on 24 October 2022 entered a final judgment, following an evidentiary hearing, in favor of claimants BTA Bank JSC and the City of Almaty and against Mukhtar Ablyazov for his repeated violations of court orders.  The judgment specifically found Ablyazov to be in contempt of an order entered by the court the year prior, and awarded Almaty and BTA Bank $140,115.60 to compensate them for their expenses related to the contempt.  The judgment also levies a fine against Ablyazov of $1,000 per day every day until he pays the judgment.

The judgment of contempt follows a 19 August 2022 order from United States Magistrate Judge Katharine H. Parker recommending that Ablyazov be held in contempt and fined, and a 21 October 2022 order of the Honorable John G. Koeltl, United States District Judge for the Southern District of New York, overruling Ablyazov’s objections to Judge Parker’s order.

In her 19 August order, Judge Parker rejected each of Ablyazov’s excuses for failing to comply with the court’s prior orders, finding, among other things:

·      The court had issued a “clear and unambiguous order” sanctioning Ablyazov, which Ablyazov was on notice of because he participated in the proceedings and objected to the sanctions order.  That objection was overruled by then-United States District Judge Alison Nathan.

·      The proof of Ablyazov’s failure to comply with the Court’s order was “clear and convincing,” and in fact admitted by Ablyazov.

·      The Court found that Ablyazov had “made no effort whatsoever” to comply with the Court’s order. 

·      Finally, the Court rejected as “without merit” Ablyazov’s attempts to blame claimants for pursuing their claims against him, finding that argument did “not excuse the blatant disregard of his discovery obligations in this action and is irrelevant to his compliance with this Court’s Orders.”

Judge Parker therefore recommended that Ablyazov be held in contempt. 

            In his 21 October order, Judge Koeltl conducted an “independent determination of the facts” and “concur[red] with the findings of Magistrate Judge Parker.”  “After an independent review, the Court adopt[ed] these findings and conclusions, which are all supported by straightforward evidence in the record and justify a finding of civil contempt.  Ablyazov has neither complied with not diligently attempted to comply with the clear and unambiguous court order”  Judge Koeltl also imposed a “coercive fine, which is thoroughly justified.”

This order represents the first time a Court in the United States has entered a final judgment of contempt against Ablyazov, and follows numerous sanctions orders against Ablyazov and his co-defendant Ilyas and Viktor Khrapunov.  Previously, Judge Parker concluded that “the Khrapunovs, and particularly Ilyas, have violated numerous obligations,” “admitted to deleting” evidence, and falsely claimed not to be able to access other evidence.  The Court likewise found that “the Khrapunovs have violated various court orders in this case,” beginning with Ilyas Khrapunov’s unauthorized leaking of confidential testimony. 

Matthew L. Schwartz, managing partner of Boies Schiller Flexner LLP and counsel to the plaintiffs, said: “The City of Almaty and BTA Bank appreciate the Court’s continued careful supervision of this matter.  Mukhtar Ablyazov, Ilyas Khrapunov, and their associates have repeatedly refused to honestly participate in the court process and have violated numerous court orders.  Holding Ablyazov in contempt of U.S. court orders, just as he has previously been held in contempt of English court orders, is an important signal that Ablyazov will be held accountable for his misconduct and is not above the law.”

The New York proceedings on behalf of the City of Almaty and BTA Bank were initiated more than six years ago accusing Mukhtar Ablyazov and his criminal associates of laundering stolen money into the United States.  As courts throughout the world have already found, Ablyazov looted billions of dollars from BTA Bank through the issuance of sham loans – conduct for which he has already been convicted and sentenced in Kazakhstan, and found civilly liable in the United Kingdom courts.  In the U.S. proceedings, the plaintiffs have gathered additional substantial evidence of Ablyazov’s crimes, along with securing the testimony of numerous witnesses to those crimes.  Trial is presently scheduled to begin before a U.S. jury in New York City on 28 November 2022.