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SUPREME COURT OF THE STATE OF NEW YORKCOUNTY OF NEW YORK
LEONID L. LEBEDEV,
Plaintiff,
-against-
LEONARD BLAVATNIK andVIKTOR VEKSELBERG,
Defendants.
IAS Part 39Index No. 650369/2014Hon. Saliann Scarpulla
MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’MOTION FOR SANCTIONS
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TABLE OF CONTENTS
Page
PRELIMINARY STATEMENT .....................................................................................................1
BACKGROUND .............................................................................................................................4
A. Lebedev Repeatedly Represented In Pleadings, Sworn Testimony, And Court Submissions That He Never Owned Or Controlled Coral.............................5
B. Lebedev Paid A Former Coral Director To Sign A Letter Stating That Lebedev Had No Involvement With Coral And Then Sought To Affirm The Director’s Statements In Deposition........................................................................7
C. Lebedev Denied Having The Ability To Collect Coral’s Documents .....................8
D. BNP’s Production Confirms That Lebedev’s Sworn Statements That He Has Never Owned Or Controlled Coral Are False ..................................................9
ARGUMENT.................................................................................................................................16
I. THE COURT SHOULD DISMISS LEBEDEV’S COMPLAINT PURSUANT TO ITS INHERENT POWER TO REDRESS FRAUD ON THE COURT............................17
II. THE COURT SHOULD DISMISS LEBEDEV’S COMPLAINT PURSUANT TO CPLR 3126.........................................................................................................................20
III. THE COURT SHOULD AWARD DEFENDANTS COSTS AND ATTORNEYS’ FEES PURSUANT TO 22 NYCRR 130-1.1.....................................................................21
CONCLUSION..............................................................................................................................22
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TABLE OF AUTHORITIES
PageCases
Cano v. BLF Realty Holding Corp.,243 A.D.2d 390 (1st Dep’t 1997) ............................................................................................ 21
CDR Créances S.A.S. v. Cohen,23 N.Y.3d 307 (2014) ....................................................................................................... passim
Herman v. Herman,134 A.D.3d 442 (1st Dep’t 2015) ............................................................................................ 17
McMunn v. Memorial Sloan-Kettering Cancer Center,191 F. Supp. 2d 440 (S.D.N.Y. 2002) ................................................................................ 18-19
Providian Nat. Bank v. Forrester,277 A.D.2d 582 (3d Dep’t 2000)............................................................................................. 21
Shangold v. Walt Disney Co.,2006 WL 71672 (S.D.N.Y. Jan. 12, 2006) ......................................................................... 20-21
Statutory Authorities
22 NYCRR § 130-1.1 ............................................................................................................... 4, 21
CPLR 3126........................................................................................................................... 4, 20-21
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Defendants Len Blavatnik and Viktor Vekselberg respectfully submit this memorandum in
support of their motion for sanctions, including terminating sanctions.
PRELIMINARY STATEMENT
This motion is based on evidence received on July 17, 2018 from BNP Paribas (Suisse) SA
(“BNP”) through the Hague Convention. That evidence puts the lie to an essential element of
Lebedev’s case and his sworn testimony—i.e., that he has never owned or controlled Coral
Petroleum Ltd. (“Coral”). Plain and simple, Lebedev has committed perjury to sustain his claims
against Defendants, and his claims should be dismissed for that reason.
Lebedev’s relationship with Coral has been a central issue in this case (and is now the
subject of a summary judgment motion)1 because Coral signed the 2003 Acquisition Agreement2
pursuant to which Defendants paid $600 million to Lebedev in exchange for a “full and final
settlement” and a release of “any and all rights, claims, and other entitlements … emanating from”
the transactions on which Lebedev bases his claims.3 That agreement was entered into by
corporate entities—which Lebedev says was “standard practice at the time”4—with Coral acting
for Lebedev, but it is undisputed that Lebedev received the $600 million.5 Because the Acquisition
Agreement is a complete defense, Lebedev has sought to evade it by disassociating himself from
Coral—claiming that he “never owned or controlled Coral”6 and denying that Coral was his
1 See Blavatnik’s Motion For Summary Judgment On Defendants’ Fourth Affirmative Defense (Settlement, Waiver, Payment, and Release), And Counterclaim For Indemnification, Dkt. No. 658.
2 Ex. 1 (Acquisition Agreement). “Ex. _” refers to the exhibits to the Affirmation of Richard I. Werder, Jr., filed concurrently with this motion.
3 Id. at 1 and § 2.3.
4 Ex. 2 (6/21/14 Lebedev Stmt.), ¶ 37.
5 Ex. 4 (Lebedev Dep.), at 92:2-4 (Acquisition Agreement “is a document thanks to which I was able to receive $600 million”).
6 See, e.g., Ex. 2 (6/21/14 Lebedev Stmt.), ¶ 40 (Coral was not “owned or controlled by me”); id., ¶ 43 (“I do not own or control Coral. I have never owned shares in Coral, whether legally, beneficially or otherwise.”); Ex. 5 (7/3/14
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“agent.”7 Lebedev claims that Coral was owned by Martin Bartek8—a race car driver sponsored
by Lebedev’s company, Sintez Corporation (“Sintez”)—and was “independent” of Lebedev.9 In
his Amended Complaint, Lebedev “denied any ownership of Coral,”10 and he has repeatedly
represented to this Court, the courts of four foreign countries, and Defendants that he “never owned
or controlled Coral.”11
To prevent Defendants from proving that Lebedev controlled Coral and that Coral was his
agent, Lebedev concealed documents about his relationship with Coral. Indeed, although the BNP
production proves that he operated Coral out of the same office at 29/1 Malaya Nikitskaya Street,
in Moscow, that he maintained even after filing this action,12 Lebedev did not produce a single
document relating to Coral’s operations from his own files. Lebedev went so far as to suborn
Lebedev Stmt.), ¶ 18 (“Coral is not my company and it is not under my control.”); Ex. 6 (1/20/15 Lebedev Opp. to Mot. to Dismiss), Dkt. No. 51, at 3 n.2 (“In fact, Coral … is not owned or controlled by Lebedev, nor is he an ‘affiliate’ of Coral ….”) (citing Lebedev’s testimony); Ex. 7 (5/27/16 Irish Letter Rogatory), Dkt. No. 125, at 8 (Lebedev disputing that he “owned and/or controlled Coral”); id. (“Lebedev contends that he does not now, and has never, owned or controlled Coral.”); Ex. 8 (9/16/16 Cyprus Letter Rogatory), Dkt. No. 142, at 10 (Lebedev disputing that he “owned and/or controlled Coral”); id. at 12 (“Lebedev contends that he does not now, and has never, owned or controlled Coral.”); Ex. 9 (8/9/17 Swiss Letter Rogatory), Dkt. No. 428, at ¶ 10 (Lebedev disputing that he “owned and/or controlled Coral”); id. ¶ 12 (“Lebedev contends that he has never owned or controlled Coral.”); Ex. 10 (2/10/16 Miller Letter), at 2 (“[D]espite your repeated allegations, Mr. Lebedev does not now and has never owned or controlled Coral.”).
7 Ex. 5 (7/3/14 Lebedev Stmt.), ¶¶ 14-16 (denying that Coral acted as his agent); Ex. 11 (Am. Compl.), ¶ 96 (same); Ex. 7 (5/27/16 Irish Letter Rogatory), Dkt. No. 125, at 7 (Lebedev disputing that “Coral was … act[ing] as his agent for purposes of entering transactions with [Defendants]”).
8 Ex. 2 (6/21/14 Lebedev Stmt.), ¶ 38 (“Mr. Bartek was the owner of … Coral.”).
9 Ex. 2 (6/21/14 Lebedev Stmt.), ¶ 37 (Coral “was entirely independent from me”); Ex. 5 (7/3/14 Lebedev Stmt.), ¶ 11 (Coral was “independently-owned”); id. ¶ 17 (Coral was an “independent company”); Ex. 6 (1/20/15 Lebedev Opp. to Mot. to Dismiss), Dkt. No. 51, at 6 (describing Coral as “an independent entity” from Lebedev); Ex. 4 (Lebedev Dep.), at 730:3-8 (Coral was “a stranger or, if you will, an entity that was not directly connected to me”).
10 Ex. 11 (Am. Compl.), ¶ 96.
11 See note 6, supra.
12 Compare Ex. 13 (fax from Lebedev using his Sintez fax number and authorizing payment on invoice addressed to Coral at 29 Malaya Nikitskaya where Sintez and Lebedev maintained their office), with Ex. 14 (Lebedev RFA Responses), at Response No. 120 (“Plaintiff admits that, at certain points during the pendency of this action, he maintained an office in the building located at 29/1 Malaya Nikitskaya ….”) and Ex. 15 (fax from Lebedev to Kuznetsov from Lebedev’s Sintez office at 29/1 Malaya Nikitskaya).
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perjury by paying Coral’s former director, Liam Grainger, several thousand euros to sign a one-
page letter—drafted by a lawyer who worked in the law firm that represents Lebedev in Cyprus13—
falsely claiming that Lebedev “was never involved in any way in the creation or operation of
[Coral] and at no point he had [sic] the authority to give instructions to me regarding the actions
of [Coral],”14 and then having Grainger affirm that false statement at his deposition in Ireland.15
The long-awaited BNP production—which facially shows it would have been available to
Lebedev without the need for legal process—proves that Lebedev’s position on Coral is a fraud.
It proves that Lebedev: (1) was the “beneficial owner” of Coral’s assets;16 (2) was an authorized
signatory (along with his wife) on Coral’s accounts, and had full authority to buy and sell assets,
take out loans, and otherwise transact on Coral’s behalf;17 and (3) personally authorized
(frequently using Coral letterhead) hundreds of transactions, involving hundreds of millions of
dollars, in Coral’s name.18 This evidence proves that Lebedev’s repeated assertion that he “has
never owned or controlled Coral”19 is a blatant lie intended to mislead Defendants and the Court
and designed to avoid the effects of the Acquisition Agreement’s release. Lebedev’s lie has
13 Ex. 16 (3/18/15 Henkelmann email to Grainger requesting that he sign the attached letter she drafted); Ex. 17 (Henkelmann Dep.), at 216:18-22 (“Q… [D]id you write this attachment? A. I drafted the letter, yes.”).
14 Ex. 18 (3/30/15 Grainger Stmt.).
15 Ex. 19 (6/30/16 Grainger Dep.), at 20:18-25 (“Q. Let me ask you one more time: Based on your personal knowledge, today, is the statement that you signed that is Defendant’s Exhibit 13, [i.e., Grainger’s March 30, 2015 statement] to the best of your knowledge, still an accurate document? A. … I can only say to the best of my knowledge, yes.”).
16 Ex. 20 (3/1/99 Application to Open An Account) (identifying Lebedev as “beneficial owner” of Coral’s assets).
17 Id.; see also Ex. 21 (4/3/99 Coral Resolution); Ex. 22 (10/17/03 Coral Resolution); Ex. 23 (8/7/04 Application to Open an Account).
18 See, e.g., Ex. 24 (CORALBNP003263); Ex. 25 (CORALBNP003275); Ex. 26 (CORALBNP003341); Ex. 27 (CORALBNP003343-51). Lebedev provided two signature “specimens” on the form making him an authorized signatory. Ex. 20 (3/1/99 Application to Open An Account), at ‘191. The second signature appears on hundreds of payment requests that Lebedev personally authorized.
19 See, e.g., Ex. 10 (2/10/16 Miller Letter), at 2 (“Despite your repeated allegations, Mr. Lebedev does not now and has never owned or controlled Coral.”).
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resulted in years of needless discovery and other proceedings that cost Defendants millions of
dollars and burdened not only this Court but four foreign courts as well.
The Court has “inherent power to address actions which are meant to undermine the truth-
seeking function of the judicial system”—such as a “[f]raud on the court” which “injects
misrepresentations and false information into the judicial process”—by imposing “heavy
sanctions, including the striking of an offending party’s pleadings and dismissal of the action.”
CDR Créances S.A.S. v. Cohen, 23 N.Y.3d 307, 318-19 (2014). In addition, CPLR 3126 permits
the Court to dismiss the action where, as here, a plaintiff “fails to disclose information which …
ought to have been disclosed.” Further, 22 NYCRR § 130-1.1 authorizes awards of costs and
attorneys’ fees where, as here, a party has engaged in “frivolous” conduct, such as “assert[ing]
material factual statements that are false.” Such sanctions are needed to redress Lebedev’s fraud.
Accordingly, the Court should dismiss Lebedev’s Amended Complaint and award
Defendants their costs and attorneys’ fees.
BACKGROUND
Before he filed this lawsuit, Lebedev recognized that any claims he might bring against
Blavatnik and Vekselberg would require him to avoid the effect of the Acquisition Agreement. To
that end, Lebedev’s pre-suit communications employed a strategy that acknowledged his
ownership and control of Coral and characterized the transaction effected by Coral on his behalf
in the Acquisition Agreement as temporary, such that his rights were restored to him in 2010.20
Having apparently concluded that such a strategy would not yield viable claims, Lebedev
20 In March 2013, Lebedev delivered a draft complaint to Blavatnik stating that “Lebedev is the owner of … Coral”; “Lebedev, acting through Coral, entered into” the 2003 Acquisition Agreement; Coral’s signatory “signed the Acquisition Agreement on Mr. Lebedev’s behalf”; and the Acquisition Agreement effected a “transfer” of Lebedev’s “15% interest” in Defendants’ company but only through December 31, 2010, at which time his “15% interest … was to be returned to him.” Ex. 28 (3/6/13 Lebedev email to Blavatnik); Ex. 29 (Draft Complaint), ¶¶ 6, 81-88.
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abandoned the theory and adopted a new, counter-factual narrative concerning his relationship
with Coral.
A. Lebedev Repeatedly Represented In Pleadings, Sworn Testimony, And Court Submissions That He Never Owned Or Controlled Coral
Since filing this action, Lebedev has maintained—in this Court,21 and in England, Ireland,
Cyprus, and Switzerland22—that he “does not now and has never owned or controlled Coral.”23 A
vast amount of time, effort, and money has been spent as a result of Lebedev’s representation “that
he does not own or control Coral”;24 his assertions that “he has never owned or controlled Coral”;25
and his counsel’s representations that he had no ability to obtain Coral documents.26
Lebedev testified that he did not own or control Coral, and never had.27 He testified that
Coral was an “independent entity”28 owned and controlled by Martin Bartek.29 He testified that
21 Ex. 6 (1/20/15 Lebedev Opp. to Mot. to Dismiss), Dkt. No. 51, at 3 n.2 (“In fact, Coral … is not owned or controlled by Lebedev, nor is he an ‘affiliate’ of Coral ….”) (citing Lebedev’s testimony); Ex. 10 (2/10/16 Miller Letter), at 2 (“Despite your repeated allegations, Mr. Lebedev does not now and has never owned or controlled Coral Petroleum.”).
22 See note 6, supra; see also Ex. 30 (7/11/14 English proceeding transcript), at 12 (Lebedev’s Counsel: “Mr Lebedev is quite clear that he never owned Coral, whether legally, beneficially, or otherwise and does not own or control it.”); id. at 15 (Lebedev’s Counsel: “Coral was an independent company, it wasn’t his company in the sense that he owned the company, or had control over it.”). Lebedev has testified that he stands by all his testimony in the English proceeding. See Ex. 4 (Lebedev Dep.), at 84.
23 See note 6, supra.
24 See, e.g., Ex. 31 (Stipulation and Order), Dkt. No. 432, at 2 (“WHEREAS, Lebedev alleges … that he does not own or control Coral, and has separately informed Defendants that he does not have the ability to procure evidence from Coral.”); Ex. 11 (Am. Compl.), ¶¶ 94-96 (“Lebedev denied any ownership of Coral”). Indeed, Lebedev took Defendants to task for asserting “that Lebedev was lying about his ownership of Coral.” Id. ¶ 96.
25 See, e.g., Ex. 9 (8/9/17 Swiss Letter Rogatory), Dkt. No. 428, ¶ 12; see also note 6, supra.
26 Ex. 10 (2/10/16 Miller Letter), at 2 (claiming Lebedev could not collect Coral documents because Lebedev “has never owned or controlled Coral”).
27 See note 6, supra.
28 Ex. 2 (6/21/14 Lebedev Stmt.), ¶ 37 (Coral was “entirely independent from me” and “an independent company”); Ex. 5 (7/3/14 Lebedev Stmt.), ¶ 11 (Coral was “independently-owned oil trading company”); id. ¶ 17 (Coral was an “independent company”); Ex. 6 (1/20/15 Lebedev Opp. to Mot. to Dismiss), Dkt. No. 51, at 3 n.2 (“In fact, Coral … is not owned or controlled by Lebedev, nor is he an ‘affiliate’ of Coral ….”) (citing Lebedev’s testimony).
29 Ex. 4 (Lebedev Dep.), at 6:21-7:5 (“Q. How did you first become aware of Coral Petroleum? A. At first, from my partner, Mark Garber, I met Swiss citizen Martin Bartek. Primarily, it was in the basis of economic advice. And soon after that, he introduced his company, Coral Petroleum.”); Ex. 2 (6/21/14 Lebedev Stmt.), ¶ 38 (“Mr. Bartek was the
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Bartek introduced him to Coral as a trading partner for Sintez after Coral already had a well-
established reputation as a trading company.30 He testified that his relationship with Coral was
limited to appointing it to receive funds for him from Defendants,31 and that he paid Coral “a small
commission” for that service.32 He testified that, “[s]ince Coral was not my company … I could
not be sure as to who controlled its bank accounts.”33 He testified that “it could not be under any
circumstances” that he “routinely directed payments to be made out of” the Coral account at BNP
into which Defendants paid over $13 million for him in late 2002 and early 2003.34 He testified
that the name Hilarious Bagdasarianz—the BNP employee to whom he sent literally hundreds of
faxes directing payments from Coral’s account—“is completely unknown to me.”35 And he
testified that, when, after filing this lawsuit, he used the Russian word for “control” in describing
Coral as a company “which I control” in an interview about the case,36 he meant it only in a limited
sense—i.e., “observation or supervision.”37 These are just a few examples of Lebedev’s false
testimony.
owner of a well-known oil trading company … called Coral ….”); Ex. 30 (7/11/14 English proceeding transcript), at 11 (Lebedev’s Counsel: “Coral was ultimately owned by Mr. Bartek”); id. at 86-87 (Lebedev’s Counsel: “we believe the position to be that the beneficial owner of Coral is Bartek”).
30 Ex. 4 (Lebedev Dep.), at 6-8.
31 Ex. 2 (6/21/14 Lebedev Stmt.), ¶¶ 38, 40, 44; Ex. 5 (7/3/14 Lebedev Stmt.), ¶ 15.
32 Ex. 32 (6/22/18 Lebedev Rule 19-a Statement), Dkt. No. 778, ¶ 43; Ex. 4 (Lebedev Dep.), at 119:16-20 (“Mr. Bartek … was receiving a commission for the receiving and for the accounting of [my] monies.”). Coral received about $13.3 million for Lebedev, so the “small commission” (1.5%. see Ex. 33 (Trust Agreement), § 5.1) would have been about $199,500.
33 Ex. 5 (7/3/14 Lebedev Stmt.), ¶ 19.
34 Ex. 4 (Lebedev Dep.), at 397:15-19.
35 Id. at 398:2-11.
36 Ex. 34 (2/11/14 Vedomosti Interview), at 3.
37 Ex. 35 (7/10/14 Lebedev Stmt.), ¶ 3.
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B. Lebedev Paid A Former Coral Director To Sign A Letter Stating That Lebedev Had No Involvement With Coral And Then Sought To Affirm The Director’s Statements In Deposition
Lebedev’s effort to disassociate himself from Coral is not limited to his own testimony. In
late 2014 and early 2015, Lebedev orchestrated a false statement by a former Coral director, Liam
Grainger.38 In November 2014, Lebedev asked Victoria Henkelmann to provide evidence “that I
was not involved in the co-ownership or participation in the management of Coral.”39 Henkelmann
is a German lawyer who worked with Lebedev’s Cyprus lawyer, Theophanis Philippou.40 She
worked for years with a Sintez lawyer named Vadim Ibadov—a close associate of Lebedev’s41
who Lebedev retained to collect evidence for this case.42
At Lebedev’s request, Henkelmann drafted a statement for Grainger—before speaking with
Grainger about whether the facts were true43—and sent it to Grainger with an “assur[ance] that we
will cover all possible expenses and will award your cooperation.”44 She emphasized that “it is
vital to mention that Mr. Lebedev was/is in no way involved or related to [Coral] in any kind and
that all communication and instructions always came from Mr. Bartek and/or his employees” and
she drafted language to that effect.45 On Lebedev’s behalf, Henkelmann paid Grainger €4250 for
38 Ex. 18 (3/30/15 Grainger Stmt.).
39 Ex. 36 (11/3/14 Lebedev Letter to Henkelmann).
40 Ex. 37 (5/2/18 Hearing Tr.), at 15.
41 Id. at 52-56.
42 Ex. 38 (6/28/17 Lebedev Aff.), ¶¶ 31, 33-34.
43 Ex. 19 (6/30/16 Grainger Dep.), at 18-19.
44 Ex. 16 (3/18/15 Henkelmann email to Grainger requesting that he sign the attached letter she drafted).
45 Id. As Coral’s current director, Henkelmann could have examined its records, including its records at BNP, and easily determined that this statement was false. Indeed, she had her Swiss counsel review the BNP documents before they were produced in response to this Court’s request. Ex. 37 (5/2/18 Hearing Tr.), at 18:24-19:18.
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his one-page statement,46 and Grainger signed it, asserting that, “to the best of my knowledge, Mr.
Lebedev was never involved in any way in the creation or operation of [Coral].”47 At Grainger’s
deposition, Lebedev’s counsel used that document to elicit testimony affirming that the now
demonstrably false statements it contains were “accurate.”48
C. Lebedev Denied Having The Ability To Collect Coral’s Documents
Given the importance of Lebedev’s relationship with Coral, Defendants sought discovery
on this topic from Lebedev, Coral, and numerous third parties. Lebedev repeatedly represented
that he had no ability to obtain Coral’s documents.49 Despite his acknowledged business
relationship and his admissions that he used Coral to facilitate his business dealings with
Defendants, Lebedev produced nothing from his own files about his relationship with Coral.
Coral—now controlled (at least nominally) by Henkelmann—tried to frustrate Defendants’ efforts
at every turn, even filing a frivolous objection to BNP’s production of documents, only to withdraw
the objection immediately after the Special Master held a hearing on it but before he could rule.50
As a result, until earlier this month, most of the discovery Defendants had obtained on
Coral came from public records and third parties with limited visibility into Coral’s operations or
its relationship with Lebedev. That changed on July 17, 2018, when Defendants received
46 Ex. 19 (6/30/16 Grainger Dep.), at 12-13, 22; Ex. 17 (Henkelmann Dep.), at 31-32, 176-78, 196-97. Grainger was paid from the Cyprus bank account of Agragorn Holdings, which until at least 2013 was a 100% subsidiary of Coral, and is the entity to which the $600 million was paid for Lebedev’s benefit. See id.; see also Ex. 1 (Acquisition Agreement), § 4.1. Thus, although Henkelmann claimed Coral transferred Agragorn to a “German national” in 2013 (Ex. 17 (Henkelmann Dep.), at 198), Lebedev controlled its accounts in 2015.
47 Ex. 18 (3/30/15 Grainger Stmt.).
48 Ex. 19 (6/30/16 Grainger Dep.), at 19-22.
49 See, e.g., Ex. 31 (Stipulation and Order), Dkt. No. 432, at 2 (“WHEREAS, Lebedev … has separately informed Defendants that he does not have the ability to procure evidence from Coral.”).
50 Ex. 39 (5/15/18 Special Master’s Discovery Order), Dkt. No. 652.
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documents produced by BNP in response to letters rogatory that this Court approved last year.51
Those documents are nothing short of explosive.
D. BNP’s Production Confirms That Lebedev’s Sworn Statements That He Has Never Owned Or Controlled Coral Are False
The BNP documents prove that: (1) Lebedev was the “beneficial owner” of Coral’s
assets;52 (2) Coral’s directors granted Lebedev and his wife general powers of attorney to act for
Coral;53 (3) Coral’s directors (including Grainger) authorized Lebedev and his wife to open and
control Coral’s bank accounts;54 (4) Lebedev had full signing authority over Coral’s BNP account,
while Bartek could not direct any payments from the account;55 and (5) the passports of Lebedev
and his wife were delivered to BNP when Coral’s account was opened.56 The documents also
51 Coral maintained a small account at Allied Irish Banks which was used to deposit Coral’s agency fee and pay expenses required to maintain its existence as an agency company. See, e.g., Ex. 40 (2003 Coral Financial Stmt.), at 1, 6. Lebedev produced an unauthenticated Coral ledger covering 1999-2003. Ex. 41 (Coral Ledger). All Coral banking activity reflected in that ledger was conducted through BNP or its predecessor.
52 Ex. 20 (3/1/99 Application to Open an Account) (identifying Lebedev as the “beneficial owner” of Coral’s assets and Lebedev and his wife as authorized signatories). Bartek signed the disclosure form identifying Lebedev as the beneficial owner, which gives the lie to Lebedev’s assertion that “the beneficial owner of Coral is Bartek.” See Ex. 30 (7/11/14 English proceeding transcript), at 86-87; id. at 11 (Lebedev’s Counsel: “Coral was ultimately owned by Mr. Bartek”).
53 Ex. 21 (4/3/99 Coral Resolution) (identifying Lebedev and his wife as signatories and granting powers of attorney); Ex. 22 (10/17/03 Coral Resolution), at ’100. Lebedev was empowered “generally to do any other act not specifically prohibited by the By-laws of the Corporation,” and this authority remained valid until BNP received notice of a change. Id. There is no evidence that Lebedev’s authority was ever changed. Accordingly, his assertion that he could not obtain Coral documents is false—he could have gone to BNP and asked for them.
54 Id.
55 Ex. 21 (4/3/99 Coral Resolution) (identifying Lebedev and his wife as signatories and granting powers of attorney); Ex. 20 (3/1/99 Application to Open an Account), at ’191 (identifying Lebedev as “beneficial owner” and signatory); Ex. 23 (8/7/04 Application to Open an Account) (identifying Lebedev and his wife as signatories and his wife as “beneficial owner”), at ’176; id. at ’185-86 (providing that Bartek and his company are “third parties” not entitled to give instructions for the account). Grainger signed documents giving Lebedev full authority over Coral’s account, and naming Bartek as a “third part[y]” with limited authority. See id. at ’176-77, ’185-86. He also signed a document designating Lebedev’s wife as the beneficial owner. Id. Coral did not produce these documents in response to the Court’s letters rogatory, and they were not available for Grainger’s deposition. They show that Grainger’s testimony was false. Defendants do not contend that Grainger knowingly lied, but the true facts were known to Lebedev (who allowed his counsel to elicit false testimony without apprising Grainger of those facts) and available to Henkelmann (who procured the false testimony while serving as a Coral director and having a right to access Coral’s documents).
56 Ex. 22 (10/17/03 Coral Resolution), at ’106-07.
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show that BNP relied on Lebedev’s reputation, not Bartek’s, for any obligations that Coral would
incur to BNP.57
Contrary to Lebedev’s testimony that Bartek owned Coral,58 when Coral opened the BNP
account in 1999, Coral identified Lebedev as the “beneficial owner.”59 And in direct conflict with
Lebedev’s testimony that Bartek introduced him to Coral after Coral had become “a well-known
oil trading company that had a good reputation” under Bartek’s direction,60 Coral’s directors
passed a resolution in February 1999—shortly after Coral was created—giving Bartek only limited
authority over the account that Coral used for trading purposes (and not including the ability to
cause funds to leave the account).61 That resolution, which was passed when Coral had not yet
begun trading (or doing anything else for that matter),62 provided that it was Lebedev, not Bartek,
who was empowered to conduct business using the account.63 Thus, the BNP documents
conclusively prove that Lebedev, not Bartek, owned and controlled Coral—including any activities
that Coral may have engaged in as an oil and gas trader.
BNP also produced voluminous documentation showing that Lebedev personally directed
hundreds of millions of dollars of payments from Coral’s account in the years 2001-2003 in
57 Ex. 42 (10/15/98 Schroders Banque Letter regarding Lebedev’s creditworthiness).
58 Ex. 2 (6/21/14 Lebedev Stmt.), ¶ 38.
59 Ex. 20 (3/1/99 Application to Open An Account), at ’187-88.
60 Ex. 2 (6/21/14 Lebedev Stmt.), ¶ 38.
61 Ex. 21 (4/3/99 Coral Resolution).
62 The ledger produced by Lebedev indicates that Coral did not commence trading until July 1999. See Ex. 41 (Coral Ledger). That activity was conducted using the BNP account that Lebedev controlled. Id. The evidence shows, therefore, that Lebedev was intimately familiar with Coral, and had obtained control over Coral’s business, before Coral began doing business, and that he was involved in Coral’s activities from their inception.
63 Ex. 21 (4/3/99 Coral Resolution).
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documents to which his signature was affixed and that were sent to BNP from his office at Sintez.64
Indeed, by the Fall of 2002—when Lebedev claims Bartek first introduced him to Coral and
“proposed Coral as the company to receive the income due to me” from Defendants65—Lebedev
had personally directed over a hundred million dollars in payments from Coral’s account.
This Court’s request to BNP called for, among other things, “[a]ll correspondence … with
Coral or anyone purporting to act on Coral’s behalf between January 1, 2001 and December 31,
2003, including all requests to distribute, wire or otherwise transfer funds from the BNP Paribas
Account.”66 BNP did not object to this request and appears to have made a full production. It
produced hundreds of orders to transfer funds from the Coral account to pay invoices, make loans,
buy shares in companies, and consummate other transactions dating from April 13, 2001 to
December 10, 2003. Every one of those transfers was authorized by Lebedev.67 Based on the
BNP production, Coral did not spend a nickel unless Lebedev directed the payment.
Bartek, on the other hand, was not authorized to—and based on BNP’s records did not—
direct a single payment on Coral’s behalf. Rather, Bartek’s company ECU Finance corresponded
with BNP with respect to administrative aspects of Coral’s account that did not involve the
expenditure of money by Coral. In exchange for doing so, ECU Finance received a small
consulting fee from Coral—paid from the BNP account that, during the relevant time period, was
64 See, e.g., Ex. 43 (9/4/01 Lebedev fax instructing BNP to make payments to Sintez); Ex. 44 (8/22/01 Lebedev fax instructing BNP to make payments to Sintez); Ex. 45 (12/6/02 Lebedev fax instructing BNP to make payments to Sintez and VINIP); Ex. 46 (12/18/03 Lebedev fax instructing BNP to make payment to Sintez).
65 Ex. 2 (6/21/14 Lebedev Stmt.), ¶ 38.
66 Ex. 9 (8/9/17 (8/9/17 Swiss Letter Rogatory), Dkt. No. 428, at Schedule A.
67 Virtually all of these authorizations used the same Sintez fax number that Lebedev used to advise Defendants to name Coral as the Holder of the $200 million Promissory Note and to make payments to Coral on his behalf. CompareEx. 15 (9/18/2002 fax “By order of L.L. Lebedev” and identifying Coral as the company to represent Lebedev’s interests with respect to the Promissory Note) (faxed from Sintez number 095-937-0269); with Ex. 47 (CORALBNP002590-97), at ‘90 (same fax number on Lebedev instruction to BNP to make payments from Coral’s account).
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beneficially owned by Lebedev and, in later years, his wife.68 Lebedev’s testimony that Coral was
Bartek’s company cannot be squared with these newly produced documents.
The hundreds of transfers that Lebedev directed from the BNP account, which Coral had
advised BNP was beneficially owned by Lebedev, included payments to Coral’s account in Ireland
for the agency services Coral was providing to its principal;69 payments to service providers in
Ireland for administrative services, including those required to maintain Coral’s existence as an
agency company;70 payments to Bartek’s company for consulting services and accounting fees;71
payments to Lebedev’s company Sintez;72 and payments to Ilya Sanochkin,73 who purportedly ran
Coral’s Moscow Representative office74 and signed the 2003 Acquisition Agreement pursuant to
which Lebedev admits he disposed of his alleged right to receive income from Defendants’ joint
68 Ex. 20 (3/1/99 Application to Open An Account) (identifying Lebedev as the “beneficial owner” and an authorized signatory along with his wife); Ex. 23 (8/7/04 Application to Open an Account) (identifying Lebedev as signatory and his wife as beneficial owner).
69 E.g., Ex. 48 (CORALBNP002506-07) (reflecting payment of Coral’s invoice for “Provision of Agency Services for the year ended 17th June 2002”).
70 E.g., Ex. 49 (CORALBNP002574-77) (Lebedev using Coral letterhead); Ex. 13 (CORALBNP002478-80); Ex. 50 (CORALBNP002692-94); Ex. 51 (CORALBNP002842-44); Ex. 52 (CORALBNP003059-60); Ex. 53 (CORALBNP003775-76).
71 E.g., Ex. 54 (CORALBNP002884-87) (Lebedev letter on Coral letterhead directing payment to ECU Finance for “payment of management fees”); Ex. 55 (CORALBNP002474-76) (fees for consulting); Ex. 56 (CORALBNP002525-26) (consulting fees); Ex. 57 (CORALBNP002530-31) (preparation of accounting); Ex. 58 (CORALBNP002609-10) (accounting fees); Ex. 59 (CORALBNP002696-702) (preparation of accounting); Ex. 60 (CORALBNP002796-802) (accounting fees).
72 E.g., Ex. 47 (CORALBNP002590-97). These documents relate to the earliest in time payment from Coral to Sintez reflected in the BNP production. The payment was authorized by Lebedev. Lebedev’s witness, Nikita Belous, who claims to have received instructions from Bartek and Ilya Sanochkin rather than from Lebedev (see Ex. 66 (6/19/14 Belous Stmt.), ¶ 6), clarified Lebedev’s instructions to BNP and therefore was well aware that Lebedev controlled Coral’s trading activity. And while Belous claims to have been working for Coral at the relevant time (id. ¶ 4), he communicated with BNP on behalf of Lebedev and Coral using a Sintez email account. Ex. 67 (Belous email).
73 E.g., Ex. 61 (CORALBNP002980) (Lebedev letter on Coral letterhead referencing “Services Agreement”); Ex. 24 (CORALBNP003263) (same); Ex. 62 (CORALBNP002630) (referencing “Services Agreement”); Ex. 63 (CORALBNP002686) (same); Ex. 64 (CORALBNP002770) (same). Notably, Lebedev directed payment of Sanochkin’s services fee in the very month in which Sanochkin signed the Acquisition Agreement. Ex. 65 (CORALBNP003780-81).
74 Ex. 66 (6/19/14 Belous Stmt.), ¶ 6 (“The head of [Coral’s] Moscow Representative Office was Mr. Ilya Sanochkin.”).
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venture company.75 Indeed, Lebedev personally authorized payment of the €225 in administrative
fees incurred in granting Sanochkin power of attorney to sign the Acquisition Agreement.76
The payments also included large unsecured and interest-free loans to Lebedev’s company,
Trade Concept Limited (“TCL”), as well as payments to TCL’s creditors;77 payments to fund large
loans to companies—i.e., Negusneft, Sintezneftegaz, and Sintez78—that Lebedev owned;79 and
payments by which Coral bought shares in other entities.80 Thus, Lebedev was controlling and
funding not only Coral’s day-to-day activities but also Coral’s extraordinary lending and
investment transactions.
The BNP documents show that all Coral activities that involved spending money were
authorized by Lebedev, and Lebedev alone. Notably, many of the payments that Lebedev
authorized, totaling hundreds of millions of dollars, occurred well before he supposedly agreed
with Bartek to have Coral serve as his “nominee” to receive payments from Defendants’ company
and before those payments were made. Thus, contrary to Lebedev’s sworn statements, his
relationship with Coral did not start or end with Coral’s receipt of his money from Defendants.
Nor was the relationship limited to ensuring the safe handling of the money Lebedev received from
75 Ex. 2 (6/21/14 Lebedev Stmt.), ¶ 54 (“I chose [to] sell the income rights … back to Messrs Blavatnik and Vekselberg.”).
76 Ex. 87 (6/9/03 Sanochkin POA); Ex. 88 (CORALBNP003775-76) (invoice for POA and Lebedev fax authorizing payment for invoice relating to POA).
77 E.g., Ex. 68 (CORALBNP0002742-57); Ex. 69 (CORALBNP002766-69); Ex. 70 (CORALBNP00002921-25).
78 See, e.g., Ex. 71 (CORALBNP003180-82) (Lebedev directs $1.5 million payment on Coral loan to Sintez); Ex. 72 (CORALBNP003078) (Lebedev directs $4.5 million payment on Coral loan to Negusneft); Ex. 73 (CORALBNP002634-40) (Lebedev directs $2.37 million payment on Coral loan to Sintezneftegaz).
79 Ex. 4 (Lebedev Dep.), at 264:8-265:10 (Lebedev owned approximately 90% of Negusneft until 2015); Ex. 74 (Sintezneftegaz Sale Agreement), at p. 3 and § 8.1(c) (indicating that, until 2012, Lebedev was the sole shareholder of Sintezneftegaz); Ex. 38 (6/28/17 Lebedev Aff.), ¶¶ 6-10 (Lebedev owned 40% of Sintez Corporation until the end of 2002, when he transferred his stake to “certain business partners”).
80 E.g., Ex. 75 (CORALBNP003058) (funding increase of capital of OOO Vinip and purchase of shares in ; Ex. 76 (CORALBNP002986) (funding purchase of shares on ; Ex. 77 (CORALBNP002545)
(funding purchase of shares in OOO Vinip and Zivma). Notably Zivma is an asset that Henkelmann testified is still owned by Coral. Ex. 17 (Henkelmann Dep.), at 231; Ex. 78 (3/1/18 Henkelmann Aff.), ¶ 6.
PARTY GGG
PARTY GGGG
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Defendants. Lebedev literally controlled everything that Coral did, including Coral’s trading
activities.
* * * * *
Several conclusions are unavoidable from this newly available evidentiary record.
First, Lebedev—and not Bartek—beneficially owned Coral’s assets at all relevant times.
Second, the facts that (1) Lebedev personally authorized the payment of the agency fees
that Coral charged as an Irish agency company and the administrative expenses necessary to
maintain Coral’s existence as an Irish agency company, and (2) the payments were funded with
money from an account beneficially owned by Lebedev, show that Coral was serving as an agency
company for Lebedev and that Lebedev—and not Bartek—was Coral’s principal.
Third, the payments that Lebedev directed Coral to make to Bartek’s company ECU
Finance confirm Bartek’s role as a mere service provider, not Coral’s owner. Bartek’s company
provided administrative services, and, contrary to Lebedev’s testimony that Bartek used Coral to
engage in oil and gas trading,81 every payment for every purchase of oil and gas was directed by
Lebedev. Bartek—Coral’s supposed owner—was never authorized to spend Coral’s money,
which is inconsistent with ownership. And Coral paid Bartek’s company using funds beneficially
owned by Lebedev—making it crystal clear that his services were for Lebedev’s benefit, and
further confirming that Lebedev (not Bartek) was Coral’s principal.82
Fourth, the BNP documents reflect that Coral was engaged in oil and gas trading—often
with Lebedev’s company Sintez. This activity is consistent with Coral’s status as an Irish agency
81 Ex. 4 (Lebedev Dep.), at 6-8.
82 Bartek’s company described Lebedev as “our client” in communicating with BNP about payment instructions that Lebedev had delivered on Coral’s behalf and other matters. Ex. 79 (CORALBNP002837-39); see also, e.g., Ex. 80 (CORALBNP002564).
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company. The purpose of such a company is to engage in transactions for the account of a principal
rather than for its own account.83 The fact that Lebedev controlled the account through which
Coral’s activities—including oil trading—were conducted and funded shows that Lebedev was the
principal of this Irish agency company which engaged in activity for Lebedev’s benefit.
Fifth, the fact that Lebedev authorized large unsecured, interest-free loans to his company
TCL,84 paid TCL’s expenses, and funded loans to other companies that he owned from a Coral
account that he beneficially owned further confirms that Coral was not the “independent company”
he has claimed it was. Independent companies do not loan each other money without security or
interest. Such a practice is consistent with common ownership and, therefore, Coral’s loans to
TCL show that Lebedev also owned Coral.
BNP’s production also includes account statements85 that reflect Coral’s receipt of the
$13.3 million that Defendants caused to be paid to Coral for Lebedev between October 2002 and
January 2003—but no payment of that money to Lebedev. Lebedev’s funds were pooled with
other Coral funds and used at Lebedev’s direction to conduct Coral’s business. This is, of course,
wholly inconsistent with the kind of relationship Lebedev has testified he had with a supposedly
“independent” company.86 But it all makes sense in light of the newly produced evidence proving
83 Ex. 81 (Roberts Dep.), at 16:26-17:1, 58:18-59:19 (Coral’s auditor stating that Coral’s “principal objective” was “to effectively engage in agency activities with principals”); id. at 41:10-25 (“Coral never made and lent money in its own right, and had no right to do it, or entered into any transactions other than agency-related transactions.”); Ex. 82 (6/29/16 Grainger Dep.), at 103:3-11 (Former Coral director stating that, “[g]enerally [in] an Irish agency company, Coral in particular … none of the assets would be beneficially owned by Coral …. They may have been in the name of Coral but they wouldn’t be beneficial assets of Coral ….”); Ex. 83 (O’Donovan Dep.), at 40:14-24 (Former Coral director testifying that the representations in Coral’s Financial Statements that its “principal activity … was acting as a general agent” were true).
84 Ex. 4 (Lebedev Dep.), at 30:6-32:10, 97:24-98:3 (by 2001 or 2002, Lebedev was “the 100 percent owner of” Trade Concept); see also id. at 133:9 (“I am Trade Concept”).
85 Ex. 84 (CORALBNP000200-43).
86 Ex. 2 (6/21/14 Lebedev Stmt.), ¶¶ 37-40.
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that the funds Coral received for Lebedev were paid into an account that Lebedev beneficially
owned and which Lebedev, not Bartek, controlled.87 Only Lebedev could withdraw funds from
that account. And the BNP statements, like the unauthenticated Coral ledger that Lebedev
previously produced,88 do not reflect any payment of the “small commission” that Lebedev says89
he paid to Coral.90 These facts are consistent with Lebedev having owned and controlled Coral,
for it would have made no sense to pay a commission to himself for receiving his own money.
BNP’s production is devastating to Lebedev’s position, but the coup de grâce is a letter he
sent to BNP on Coral letterhead requesting that BNP close “our account” and transfer the funds to
another bank with which Lebedev did business.91 As with all of Lebedev’s directions, BNP
promptly complied.92 It could not be any clearer that Coral was Lebedev’s company, not Bartek’s,
and that Lebedev has consistently lied to the Court and Defendants about his lack of ownership
and control of Coral in order to advance his claims in this action.
ARGUMENT
“[W]hen a party lies to the court and its adversary intentionally, repeatedly, and about
issues central to the truth-finding process, it can fairly be said that the party has forfeited the right
to have the claim decided on the merits.” CDR Créances, 23 N.Y.3d at 321 (internal quotation
marks and brackets omitted). The Court has both inherent and statutory authority to dismiss the
complaint as a sanction for actions “designed to undermine the judicial process and thwart the non-
87 See notes 16-18, supra.
88 Ex. 41 (Coral Ledger).
89 Ex. 32 (6/22/18 Lebedev Rule 19-a Statement), Dkt. No. 778, ¶ 43.
90 Ex. 84 (CORALBNP000200-243).
91 Ex. 85 (CORALBNP000199); Ex. 42 (10/15/98 Schroder’s Banque Letter to BNP) (“We hereby confirm having known Mr. Leonid[] Lebedev for several years.”).
92 Ex. 86 (CORALBNP000198).
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offending party’s effort to assert a claim or defense by the offending party’s repeated perjury or
falsification of evidence.” Id. at 319. Such a sanction is warranted here.
I. THE COURT SHOULD DISMISS LEBEDEV’S COMPLAINT PURSUANT TO ITS INHERENT POWER TO REDRESS FRAUD ON THE COURT
The Court has “inherent power” to redress a “[f]raud on the court.” Id. at 318. “Fraud on
the court involves willful conduct that is deceitful and obstructionistic, which injects
misrepresentations and false information into the judicial process so serious that it undermines the
integrity of the proceeding;” it “warrants heavy sanctions, including the striking of an offending
party’s pleadings and dismissal of the action.” Id. at 318-319 (internal quotation marks and ellipses
omitted). “Dismissal is most appropriate in cases like this one, where the conduct is particularly
egregious, characterized by lies and fabrications in furtherance of a scheme designed to conceal
critical matters from the court and the nonoffending party; where the conduct is perpetrated
repeatedly and willfully, and established by clear and convincing evidence ….” Id. at 321; see
also Herman v. Herman, 134 A.D.3d 442, 442 (1st Dep’t 2015) (upholding dismissal sanction
where party’s conduct was “dilatory, evasive, obstructive and ultimately contumacious,” and
“prejudiced [the other parties] by impeding their ability to obtain true discovery and by forcing
them to spend enormous amounts of money and time to prove their case”) (internal quotation
marks and brackets omitted).
“[I]n order to demonstrate fraud on the court, the nonoffending party must establish by
clear and convincing evidence that the offending party has acted knowingly in an attempt to hinder
the fact finder’s fair adjudication of the case and his adversary’s defense of the action.” CDR
Créances, 23 N.Y.3d at 320 (internal quotation marks omitted). That standard is easily satisfied
here. Lebedev’s ownership and control of Coral is a central issue and a key element of Defendants’
release defense. To evade the release, Lebedev has maintained the lie that he “has never owned
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or controlled Coral.” He advanced this now-demonstrably false claim in: (1) sworn statements to
the English High Court; (2) his Amended Complaint and opposition to Defendants’ motion to
dismiss; (3) letters rogatory that this Court sent to courts in Ireland, Cyprus, and Switzerland; (4)
discovery correspondence and briefs to the Court; and (5) his deposition under oath.93 Lebedev
even paid another witness to bolster the lie that he “was never involved in any way in the creation
or operation” of Coral.94
The BNP production proves that Lebedev’s repeated denial of his ownership and control
of Coral is a fraud. During the relevant period, Lebedev: (1) was the “beneficial owner” of Coral’s
assets;95 (2) was an authorized signatory on Coral’s accounts;96 and (3) personally authorized
hundreds of transactions worth hundreds of millions of dollars in Coral’s name.97 There can now
be no dispute that Lebedev’s assertions that he has “never owned or controlled Coral”—and
Grainger’s suborned statement that Lebedev “had no involvement in Coral’s operations”—were
knowingly false and designed to bolster Lebedev’s position on a central issue. See, e.g., CDR
Créances, 23 N.Y.3d at 321-23 (affirming decision to strike defendants’ answers and entering
default judgment where defendants engaged in “lies and fabrications in furtherance of a scheme
designed to conceal critical matters”); McMunn v. Memorial Sloan-Kettering Cancer Center, 191
F. Supp. 2d 440, 460-62 (S.D.N.Y. 2002) (dismissing action where plaintiff “intentionally and in
93 See note 6, supra; see also Ex. 4 (Lebedev Dep.), at 6:21-7:7 (testifying that Bartek owned Coral); id. at 372:10-23 (Coral did “not represent any of my interests.”).
94 Ex. 18 (3/30/15 Grainger Stmt.).
95 Ex. 20 (3/1/99 Application to Open An Account) (identifying Lebedev as the “beneficial owner” and an authorized signatory along with his wife);
96 Id.; see also Ex. 21 (4/3/99 Coral Resolution) (identifying Lebedev as authorized signatory and granting him power of attorney); Ex. 22 (10/17/03 Coral Resolution) (identifying Lebedev and his wife as signatories).
97 See note 18, supra.
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bad faith repeatedly lied about where she was living for the purpose of unfairly bolstering her
claim”).
Moreover, Lebedev concealed evidence of his ownership and control of Coral. He did not
produce any of the documents obtained from BNP in discovery, but he plainly could have. First,
Lebedev faxed many of the payment instructions to BNP from his office at 29/1 Malaya
Nikitskaya, which he maintained until after filing this action.98 Given that he transacted hundreds
of millions of dollars through Coral for years, it strains credulity that he would have no records of
these transactions in his files. Second, as the “beneficial owner” of Coral’s BNP account, Lebedev
communicated with BNP on an almost daily basis, and he could have asked BNP to produce these
documents upon Defendants’ request at the outset of discovery in 2016. Instead, he claimed that
he could not do so because, “[d]espite [Defendants’] repeated allegations, Lebedev has never
owned or controlled Coral.”99 Were it not for Defendants’ efforts to obtain the BNP documents
via the Hague Convention, Lebedev might have succeeded in concealing the truth; but such efforts
would have been unnecessary if Lebedev had simply told the truth. See McMunn, 191 F. Supp. 2d
at 460 (“Only [defendant’s] extraordinary efforts and related expenses revealed the elaborate
fabrication.”).
CDR Créances is on point and confirms that dismissing Lebedev’s complaint is the proper
sanction. A central issue in CDR Créances was whether the father and son defendants, Maurice
and Leon Cohen, “conspired to avoid repayment [of converted loan proceeds] by denying their
ownership and control over entities used to conceal the converted funds.” 23 N.Y.3d at 311.
98 Ex. 14 (Lebedev RFA Responses), at Response No. 120 (“Plaintiff admits that, at certain points during the pendency of this action, he maintained an office in the building located at 29/1 Malaya Nikitskaya, where Sintez Group was also located.”).
99 Ex. 10 (2/10/16 Miller Letter), at 2.
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“Maurice stated he did not own any of the defendant entities,” and “Leon denied that he or any
member of his family had any ownership interest in any of the defendant entities plaintiff alleged
he and his father controlled.” Id. at 314. The Cohens’ statements were lies, and they sought to
bolster their lies by persuading the managers of the defendant entities to testify that the Cohens
“did not control any of [those] entities.” Id. The Court of Appeals held that striking the Cohens’
answers and entering a default judgment was appropriate because their lies and “subornation of
perjury” showed that they “intentionally sought to deceive the court and the plaintiff.” Id. at 322-
23.
The same is true here. Lebedev has lied about his ownership and control of Coral at every
turn—and suborned perjury from a former Coral director in exchange for thousands of euros—in
order to frustrate Defendants’ efforts to prove that Lebedev released his claims under the
Acquisition Agreement that Coral entered into on his behalf. Lebedev’s lies have “undermine[d]
the truth-seeking function” of the Court, they were “deceitful and obstructionistic,” “perpetrated
repeatedly and wil[l]fully,” and “warrant[] heavy sanctions, including striking [Lebedev’s]
pleadings and dismissal of the action.” See id., at 318-319, 321; see also Shangold v. Walt Disney
Co., 2006 WL 71672, at *5 (S.D.N.Y. Jan. 12, 2006), aff’d, 275 F. App’x 72 (2d Cir. 2008)
(“Because [plaintiffs] have tainted evidence at the heart of their dispute with Defendants and then
sought to conceal it, they have forfeited their right to litigate this case and no sanction short of
dismissal will suffice to deter future misconduct.”).
II. THE COURT SHOULD DISMISS LEBEDEV’S COMPLAINT PURSUANT TO CPLR 3126
CPLR 3126 provides that where a party “fails to disclose information which the court finds
ought to have been disclosed,” the Court has broad authority to issue an order, inter alia,
“dismissing the action … or rendering a judgment by default against the disobedient party.” CPLR
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3126; see also CDR Créances, 23 N.Y.3d at 317-18. Dismissal is a particularly appropriate
sanction where, as here, the conduct was “willful and contumacious.” See Cano v. BLF Realty
Holding Corp., 243 A.D.2d 390, 390 (1st Dep’t 1997).
By asserting under oath that he “has never owned or controlled Coral,” and refusing to
produce documents showing that, in fact, he was the beneficial owner of Coral’s assets, Lebedev
has “fail[ed] to disclose information which … ought to have been disclosed.” Lebedev’s conduct
was also “willful and contumacious.” He obviously knew that his assertions that he “has never
owned or controlled Coral” were lies, and he has repeated those lies for years. Accordingly, a
judgment of default and dismissal is warranted under CPLR 3126.
III. THE COURT SHOULD AWARD DEFENDANTS COSTS AND ATTORNEYS’ FEES PURSUANT TO 22 NYCRR 130-1.1
Under 22 NYCRR 130-1.1, a court may, in its discretion, award costs—including
“reasonable attorney’s fees”—for “frivolous” conduct. 22 NYCRR § 130-1.1(a); Providian Nat.
Bank v. Forrester, 277 A.D.2d 582, 583-84 (3d Dep’t 2000).
Conduct is frivolous if “it asserts material factual statements that are false.” 22 NYCRR
130–1.1(c)(3). “In determining whether the conduct undertaken was frivolous, the court shall
consider … [(1)] the circumstances under which the conduct took place, including the time
available for investigating the legal or factual basis of the conduct; and [(2)] whether or not the
conduct was continued when its lack of legal or factual basis was apparent, should have been
apparent, or was brought to the attention of counsel or the party.” Id.; see also Shangold, 2006
WL 71672, at *5-6 (plaintiffs’ false statements warranted dismissal and an award of attorneys’
fees because, “[f]or more than two years, Plaintiffs have imposed substantial burdens on
Defendants including attorneys’ fees, costs and the attendant inconvenience and distraction of
defending this litigation”).
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Lebedev clearly has asserted “material factual statements that are false.” Moreover, the
“circumstances under which the conduct took place” and “whether … the conduct was continued
when its lack of … factual basis was apparent” support sanctions because Lebedev knew that his
efforts to disassociate himself from Coral were based on lies and designed to avoid the dismissal
of his action. This case would have been far more efficient, and discovery could have concluded
years ago, if Lebedev had not lied about his ownership and control of Coral.
CONCLUSION
For these reasons, Lebedev’s Amended Complaint should be dismissed with prejudice, and
Defendants should be awarded their costs and attorneys’ fees to be determined by the Court after
taking proofs.
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Dated: July 30, 2018New York, New York
QUINN EMANUEL URQUHART& SULLIVAN LLP
By: /s/ Richard I. Werder, Jr. Richard I. Werder, Jr.Stephen A. BroomeRon HagizKimberly E. Carson51 Madison Avenue, 22nd FloorNew York, New York 10010Tel: 212-849-7000
GANFER SHORE LEEDS & ZAUDERER LLP
Mark C. Zauderer360 Lexington AvenueNew York, New York 10017Tel: (212) 922-9250
Attorneys for Defendant Len Blavatnik
WHITE & CASE LLP
By: /s/ Paul B. CarberryPaul B. CarberryOwen C. PellIsaac S. Glassman1221 Avenue of the AmericasNew York, New York 10020Tel.: 212-819-8200
Attorneys for Defendant Viktor Vekselberg
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