Ukrainian Billionaire Called Coercive Fraudster

MANHATTAN (CN) – Ukrainian billionaire Dmitry Firtash and his bank seized a $50 million soybean plant through “a campaign of fraud, physical threats, coercion and corruption,” the plant’s former owners claim in court.
     Brothers Ilya and Vadim Segal, the New York-based owners of Dancroft Holdings, sued Firtash and Nadra, the Ukraine’s eighth-largest bank, in New York County Supreme Court.
     The 31-page complaint describes a battle between some of the most powerful businessmen in the Ukraine.
     Firtash, a natural gas tycoon, had been mentioned in a previous lawsuit in New York that alleged a conspiracy to imprison “Orange Revolution” leader Yulia Tymoshenko on behalf of current Ukrainian President Viktor Yanukovych.
     Tymoshenko, who ran on an anti-corruption platform, tried to break the allegedly monopolistic control of Firtash’s company RusUkrEnergo, until she was defeated and arrested by Yanukovych on allegations of abuse of power.
     This new lawsuit by the Segal brothers accuses Firtash of using his connections with the Yanukovych administration to muscle in on (nonparty) Kakhovka Prom Agro, an agricultural company said to supply half of the soybean products in the Ukraine.
     Kakhovka had accepted loans of at least $19 million from Nadra in 2007, the Segals say in their lawsuit.
     A year later, Nadra struggled during the global financial crisis, and a Firtash-owned company expressed interest in acquiring 50 percent of the bank, according to the complaint.
     “Though no formal agreement was reached, upon information and belief, Firtash began to exert control over Nadra in 2008,” the complaint states.
     The Segals claim that Firtash lured them into a “sham agreement” on July 1, 2009 that purported to absolve Kakhovka of its debts to Nadra.
     “In reality, defendants had no intention of honoring the agreement,” the complaint states.
     Instead, Firtash and Nadra filed “sham lawsuits” in the Ukraine to strip them of their assets, the brothers say in the complaint.
     The Segals claim that Firtash’s political cronies made the outcome predetermined.
     “As a result of Firtash’s intimate connections to the government, there is no fair and impartial forum for plaintiffs’ grievances in the Ukraine,” the complaint states.
     A Ukrainian court heard only from Nadra before ruling against Kakhovka, according to the complaint.
     The country’s appellate court upheld that decision by October 2010, the Segals say, calling that enforcement swift.
     On Dec. 22, 2010, “an armed group of approximately 100, consisting of Nadra’s security services and representatives of the enforcement service, seized control of the plant,” the complaint states.
     Nadra and Firtash squandered the plant’s assets and filed for bankruptcy less than two months later, the Segals say in the complaint.
     The Segals claims that Firtash then flexed his political muscle to initiate an international manhunt to bring criminal proceedings against the Segal brothers.
     “Upon information and belief, on June 8, 2011 the official website of Interpol announced official international retrieval of the Segals, known as ‘Red Notices,'” the complaint states. “The U.S. Department of Justice describes Red Notices as ‘the closest instrument to an international arrest warrant in use today.'”
     The Segals claim these notices prevent them “from traveling not only within Ukraine but in any country party to the European Convention on Extradition of Criminals of 1957.”
     “Active Red Notices also subject the Segals to possible extradition to Ukraine from other nations,” the complaint states.
     The Segals demand punitive damages for breach of contract, unjust enrichment, fraud, conspiracy, aiding and abetting, injurious falsehood and other charges.
     They are represented by Joseph Goldberg with Hodgson Russ.

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