DENVER (CN) – A Colorado-based mining business claims that Russia’s largest oil company, Lukoil, rolled it for $1.2 billion in diamond profits and forced it to “bleed” into bankruptcy.
Archangel Diamond Corporation Liquidating Trust, assignee of the Archangel Diamond Corporation, claims that OAO Lukoil withheld its 40 percent share of diamond licenses procured by Arkhangelskgeoldobycha, or ADG, in northern Russia.
In its RICO complaint, Archangel Diamond says it teamed up with AGD in 1993. Archangel Diamond agreed to finance the exploration and development of diamond fields for which AGD was bidding, and AGD was to transfer the field licenses to a jointly owned company.
But Archangel says AGD never honored the contract.
Archangel moved from Canada to Colorado in 1997, and Lukoil, “Russia’s largest oil company and one of Russia’s most powerful economic entities,” took over AGD in 1998, according to the complaint.
Lukoil then schemed – through mail and wire fraud, money laundering, and violations of the Travel Act – “to deceive ADC [Archangel Diamond Corp.] into believing that the agreement would be honored and the diamond license transferred to the joint venture company, when it never intended to do so,” Archangel says.
“[R]ather, after obtaining as much investment as it could, Lukoil intended to bleed ADC into bankruptcy and to cause it to lose its contractual rights and investment.”
As a result of the torpedoed agreement, Archangel “was forced into bankruptcy in 2010 and lost the value of its over $30 million investment as well as over $400 million in profits which it would earn through its 40 percent share of the joint venture, plus up to $800 million in lost profits which may be generated by other diamond pipes potentially located within the scope of the diamond license,” according to the complaint.
Archangel relocated to Toronto in 2002 and united with DeBeers, the giant diamond syndicate, to pursue claims against Lukoil.
It filed a lawsuit against the oil giant in state court in 2001, which was removed to federal court in 2002. The new action was filed pursuant to Colorado’s savings statute, as no discovery had been made in the past 10 years.
Archangel seeks $3.6 billion in compensatory damages, punitive damages, attorneys’ fees and costs for RICO fraud, racketeering and unjust enrichment.
It is represented by Bruce Marks with Marks & Sokolov of Philadelphia, and Harold Bruno with Robinson, Waters & O’Dorisio, of Denver.