Kazakhstan City Sues Former Mayor with U.S. Ties Alleging $300 Million Fraud, International Money Laundering Scheme Including Beverly Hills Mansions, Luxury Cars
May 13. BUSINESS WIRE. LOS ANGELES
Almaty, the largest city in Kazakhstan, announced today it has filed a lawsuit in U.S. District Court in Los Angeles against its former mayor and members of his family accusing the former official of defrauding the city of at least $300 million and running an international money laundering operation to conceal their ill-gotten gains through the acquisition of luxury cars, palatial estates, businesses and other assets in California, New York, Europe and the Middle East.
The suits accuse Viktor Khrapunov and his wife, Leila, of engaging in a scheme involving the sale of Almaty municipal assets. According to the civil complaint filed in the U.S. District Court in the Central District of California, Khrapunov used his position and influence as mayor of Almaty to illegally sell city-owned assets to benefit himself, his wife and other co-conspirators.
The lawsuit claims that while Khrapunov served as mayor from 1997 to 2004, he and his wife systematically looted city assets by arranging auctions of state-owned real estate at below market value to entities they controlled. Khrapunov then illegally granted entitlements to those assets, and the Khrapunovs later sold the property at substantially higher prices. The suit also alleges that Viktor Khrapunov misappropriated city funds and personal property.
After amassing a fortune of more than $300 million, the Khrapunovs fled to Geneva, Switzerland in 2008, according to the suit. The lawsuit also alleges that the Khrapunovs and their children, Ilyas and Elvira, violated both U.S. and Kazakh law when they set out to launder proceeds from their scheme. Ilyas Khrapunov owns a home in Beverly Hills, CA, and Elvira Khrapunov lives in Studio City, an upscale suburb of Los Angeles. In addition to civil actions against him, Viktor Khrapunov faces criminal charges in Kazakhstan, and Swiss authorities have opened an investigation into the family’s financial activities in that country.
“Khrapunov, along with his family and their cronies, took advantage of his position to siphon off hundreds of millions of dollars from the people of Kazakhstan and then went on a worldwide shopping spree to hide the money,” said David Schindler, Partner at Latham & Watkins LLP in Los Angeles. “We are confident that the United States does not want to be a money laundry for the world’s corrupt leaders, and we are seeking the return of the people’s assets that are wrongfully harbored in the United States.”
The complaints accuse Khrapunov and his co-conspirators of laundering their riches taken from Almaty by using intermediaries and corporate entities to acquire numerous assets in the United States, Switzerland and elsewhere abroad. The Khrapunovs created a lavish lifestyle for themselves and their two children, one which included the purchase of Rolls Royce and Bentley automobiles, a $32-million estate in Geneva, along with a series of Mediterranean-style mansions in Beverly Hills cumulatively valued at an estimated $18 million and a two-acre estate in an exclusive enclave in Los Angeles, CA valued at an estimated $5.7 million.
The lawsuit seeks return of the funds to the City of Almaty and an injunction against the defendants preventing them from disposing of proceeds from their alleged fraud.
In addition to the civil suit, Khrapunov faces approximately two dozen criminal charges in Kazakhstan, and other legal problems. At the request of Kazakhstan, Interpol has issued a warrant for Khrapunov’s arrest charging him with “The creation and guidance of an organized criminal group or criminal association and participation in a criminal association.” The charges also include expropriation or embezzlement of trusted property, money laundering and receiving stolen property. In Geneva, Swiss authorities are investigating Khrapunov for money laundering and have frozen the assets held by his children in two Swiss banks, Credit Suisse and Schroder and Company.
The U.S. civil case will be litigated on behalf of the City of Almaty by Attorney David Schindler and Attorney Kristen Tuey of Latham & Watkins LLP. Also named as defendants in the lawsuit are:
Demitri Kudryashov, husband of Elvira;
Madina Ablyazova, wife of Ilyas and daughter of Mukhtar Ablyazov, who is alleged to have embezzled billions of dollars out of BTA Bank between 2005 and 2009 and is wanted on criminal charges in the United Kingdom;
Various business entities, holding companies, trusts and co-conspirators in California, New York and abroad.