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Courthouse News Service Courthouse News Service

It Never Rains, but It Pours on Tymoshenko

MANHATTAN (CN) - Former Ukrainian Prime Minister Yulia Tymoshenko, whose recent imprisonment on corruption charges in her homeland was denounced as political payback from her successor, faces a federal lawsuit here from a gas company that claims she owes it $18.3 million.

Tymoshenko, an economist, became wealthy in the gas industry before she became a leader of the 2004-2005 Orange Revolution, in which the rigged electoral victory of Viktor Yanukovych was canceled, and Viktor Yushchenko was elected president in a second round of voting.

Yushchenko fulfilled a campaign promise and appointed Tymoshenko prime minister, though political infighting caused him to dismiss her 7 months later.

She became prime minister again in a coalition government with Yushchenko in 2007, though the two became increasingly hostile to one another.

When their old political enemy Yanukovych defeated Tymoshenko in the February 2010 presidential election, Tymoshenko denounced it as rigged, though she remained prime minister under Ukraine's parliamentary system.

Yanukovych forced her from office and Tymoshenko became the administration's most vocal and visible critic. In an April lawsuit this year, Tymoshenko claimed the Yanukovych administration had dismantled Ukraine's independent judiciary by gaining the "allegiance of at least 16 of the 20 members on the Supreme Council of Judges."

Corruption charges against her followed, and on Oct. 11 this year, after a trial in which Yanukovych testified against her, Tymoshenko was sentenced to 7 years in prison for abuse of power, and was ordered to pay Ukraine $188 million.

The charges included claims that Tymoshenko had exceeded her power as prime minister by ordering Naftogaz, Ukraine's national energy company, to sign a natural gas deal with Russia.

Critics of Yanukovych claim he threw her in prison because she was likely to defeat him in the next election. Tymoshenko compared her sentencing to Stalin's purges. The United States, the European Union and Russia all condemned the verdict.

On Friday, Nov. 2, three weeks after her sentencing, Massachusetts-based Universal Trading & Investment Co. (UTICo) sued Tymoshenko in Manhattan, trying to collect on a 6-year-old judgment from another U.S. court.

In its 27-page federal complaint, UTICo accuses Tymoshenko of decades of corrupt dealings through her company, United Energy Systems of Ukraine (UESU).

"Tymoshenko became UESU's founder in 1995 and has become a garnishee unlawfully holding UESU's assets under her personal control," the complaint states. "Apart from her business activities, Tymoshenko has also engaged in a political career in Ukraine, twice rising to a position of a Prime Minister, using government positions to advance the interests of UESU. Both times Tymoshenko was removed from those positions on allegations of corruption. Tymoshenko has faced numerous criminal charges alleging bribery, conversion and fraud. In October of 2011 she was convicted in Ukraine was further charged, in a new case, with the financial crimes as the principal of UESU."

UTICo accused UESU of racketeering in Boston Federal Court in 1997. Discovery dragged on for almost 8 years until UTICo won an $18.3 million default judgment.

"[I]n connection with UTICo's judgment ultimately entered on July 7, 2005 of UTICo's judgment [sic], Tymoshenko intensified her efforts to circumvent its collection, acting in an enterprise with UESU," UTICo's complaint states. "When the outcome in UTICo's litigation was already clear, Tymoshenko paid $125,000 to an intermediary to bribe the judges of the Supreme Court to make a decision shielding UESU and its principals from liability. On information and belief, the sources was [sic] UESU's proceeds. It is well established in the public domain and follows from the charges in Ukraine that Tymoshenko paid other bribes to obtain decisions favorable to making UESU judgment-proof."UTICo claims that "Tymoshenko, illegally interfering into the judiciary in Ukraine, obtained on August 19, 2005 a decision, lifting the government's lien on UESU's assets for about $62.8 million. On November 18, 2005 Tymoshenko illegally forced the Supreme Court's closing all UESU-related charges."

UTICo demands the $18.3 million, and treble damages, on a slew of charges, including RICO conspiracy, conversion, unjust enrichment, and fraudulent conveyance.

It is represented by Peter Joseph of New York City and George Lambert of Washington.

Editor's Note: An earlier version of this article incorrectly identified UTICo as being from the Ukraine instead of Massachusetts. Courthouse News regrets the error.

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