AKISHEV et al v. KAPUSTIN et al
OPINION FILED. Signed by Judge Noel L. Hillman on 4/5/16. (js)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
Ardak Akishev, et al.,
Civil Action No.
Sergey Kapustin, et al.,
ANNA V. BROWN
BROWN LEGAL CONSULTING LLC
1959 THE WOODS II
CHERRY HILL, NJ 08003
On behalf of plaintiffs
137 GRASSHOPPER DR.
WARMINSTER, PA 18971
Defendants appearing pro se
HILLMAN, District Judge
Presently before the Court is the motion of plaintiffs
for summary judgment in their favor on their claims against
defendants, Irina Kapustina and Michael Goloverya, for alleged
violations the Racketeer Influenced and Corrupt Organizations
Act, 18 U.S.C. § 1962(a-c) (RICO).
The claims of plaintiffs,
a group of twenty-one victims, concern a “bait-and-switch”
fraudulent scheme masterminded and operated by defendant,
Sergey Kapustin, through deceptive online advertising aimed at
luring international customers to wire funds for automobile
purchases and then switching to higher prices; misrepresenting
mileage, condition, location and ownership of these vehicles;
extorting more funds; and failing to deliver the paid-forvehicles.
For the reasons expressed below, plaintiffs’ motion
will be denied.
Plaintiffs’ brief in support of their motion for summary
judgment comprehensively summarizes their claims and the
procedural background of this labyrinthine case.
As Plaintiffs explain, Global Auto Enterprise is a
group of individuals (four family members and at least one
employee) and affiliated entities owned by the same family
members who run a fraudulent internet auto sales scheme.
fraud is commonly known to law enforcement as a “bait and
Global Auto Enterprise targets online
unsophisticated foreigners from the former Soviet Union by
advertising vehicles slightly below the market value on its
glamorous websites GlobalAutoUSA.com and EffectAuto.com.
To lure the victims Global Defendants provided false
odometer readings or did not disclose the mileage at all,
withheld the information that the vehicle had been declared
“total loss” after an accident or flooded by hurricane Sandy
with “Salvage” title issued.
They assured the victims that
the cars were in “excellent” condition.
advertised on the websites did not actually belong to any
Instead, they used images of cars and information
about them gathered from other online car sales sites to
advertise these vehicles as “bait.”
Once Plaintiffs wired the
money, the “switch” part of the fraud began.
Defendants wrote apologetic emails that claimed
unanticipated delays in delivery and refused to issue any
Months later, the buyers were offered a different
car for just a few thousand more.
Buyers - by then desperate
to get anything at all out of the deal - wired additional
Plaintiffs Kondratuk, Borzenko, Maniashin, Lisitsyn,
Pukir, Lukyanov, the Yamkoviys were pushed to make several
international wire transfers.
After the switch, even
Plaintiffs (Kobin, Telin, Borzenko and the Zverevs) who were
seemingly buying the same-priced cars also got hit with
unloading fees, port fees, transportation fees, storage fees,
customs fees, and other fees, in excess of several thousand
dollars, which were not previously disclosed to them.
was also a scheme to push the victims to cancel the purchase.
Global Auto Enterprise refused to release the cars unless
those charges were paid.
On April 4, 2014, Plaintiffs filed an Amended Complaint.
On June 3, 2014, Plaintiffs filed their Motion for an Order to
Freeze the Assets of Defendants and Expedited Discovery
Related to Assets pursuant to Federal Rule of Civil Procedure
65 (“Asset Freeze Motion”) representing the funds Plaintiffs
wired to the bank accounts of corporate Global Defendants.
September 5, 2014, the Court held an evidentiary hearing on
the Asset Freeze Motion.
On September 23, 2014, to avoid
the immediate freeze of the corporate Global Defendants’ bank
accounts, Plaintiffs and Global Defendants agreed to and the
Court entered a Consent Order, Docket No. 80, to deposit into
the registry of the Court $400,000.00 in monthly installments
within 90 days of the Consent Order and to provide expedited
discovery related to the disposition of Plaintiffs’ funds and
On October 7, 2014, in order to evade his
obligations under the Consent Order, Defendant Sergey Kapustin
filed his Chapter 13 Bankruptcy Petition (Case No. 14-30488).
On October 24, 27, 28, 29 and November 3, 2014, the Court
held evidentiary hearings during which it was established that
while Global Defendants websites www.globalautousa.com,
www.effectauto.com, www.effectauto.ru (“Websites”) advertised
over 4,000 vehicles as “in stock”, Defendant Kapustin
testified only about 14 vehicles were actually owned by the
corporate Global Defendants, and some vehicles were sold twice
through the Websites to foreign customers using electronic
mail communications and international bank wire payments.
Based on the evidence presented the Court made its preliminary
finding that there was probable cause to believe that Global
Defendants hade committed at least two predicate acts of mail
and wire fraud in the furtherance of a RICO enterprise through
a pattern of racketeering activity operated through the
Internet; on October 27 and October 29, 2014, this Court
ordered that the Defendants’ corporate bank accounts to be
frozen and the Websites to be shut down immediately (Docket
Nos. 106; 110).
On November 4, 2014, corporate Global Defendants filed
their Chapter 7 bankruptcy petitions as follows: Global Auto
Sales - Case No. 14-32520; Effect Auto Sales, Inc. - Case No.
14-32521; G Auto Sales, Inc. - Case No. 14-32522; and SK
Imports, Inc. - Case No. 14-32523.
The bankruptcies were
subsequently dismissed for bad faith pursuant to Sections
105(a), 305(a), 349 and 707(a) of the Bankruptcy Code.
On February 17, 2015, Plaintiffs moved for sanctions
against Global Defendants and their counsel (“Sanctions’
Motion”) including entering a default judgment as a sanction
for their continuing litigation misconduct including numerous
fraudulent representations to the Court, dissipation of assets
in order to avoid compliance with the Consent Order,
concealment of assets in foreign jurisdictions, filing
bankruptcy petitions in bad faith for the purpose of invoking
the automatic stay and frustrating this Court’s jurisdiction,
and continuing delay resulting in significant prejudice to
On April 27, 2015, the Court held an evidentiary hearing
and granted the Plaintiffs’ Sanctions Motion.
On May 27,
2015, Plaintiffs submitted their Application to Assess Damages
for Default Judgment.
On September 4, 2015, the Court held an
evidentiary hearing and made the finding that Global
Defendants were responsible for executing and masterminding
the “bait and switch” fraud scheme targeting online
unsophisticated foreigners from the former Soviet Union and
other countries by advertising vehicles for sale below the
Defendant Kapustin, as owner of corporate
Global Defendants, exercised complete dominion and control
over the corporations and used the corporations as his alter
egos for his own purposes, making all the decisions including
the decisions to defraud Plaintiffs.
The Court further made its finding that Defendant Sergey
Kapustin and corporate Global Defendants are a group of RICO
persons, Global Companies Enterprise, associated in fact for
the common purpose of engaging in fraudulent conduct
constituting a RICO enterprise defined in 18 U.S.C. § 1961(4)
functioning together as a continuing unit, each of them
necessary to accomplish each step or aspect of the fraudulent
Defendant Sergey Kapustin and corporate Global
Defendants acted in concert for the shared goal of defrauding
overseas car buyers receiving profits from the fraudulent
This enterprise affected interstate and foreign
commerce because it exported vehicles to foreign countries and
both sent and received funds through banks in the United
States and abroad.
Defendant Sergey Kapustin, who is a person within the
meaning of RICO, managed and participated conducting the
affairs of the Global Companies Enterprise through a pattern
of racketeering activity in violation of 18 U.S.C. §1962(c),
including multiple acts of wire fraud, mail fraud, and
The Court found that Global Defendants
engaged in the pattern of racketeering activity, which
included related violations of 18 U.S.C. § 1343 (wire fraud);
18 U.S.C. § 1341 (mail fraud); 18 U.S.C. § 1956 (money
laundering); 18 U.S.C. § 1957 (engaging in monetary
transactions in property derived from unlawful activity); 18
U.S.C. § 1952 (Travel Act), 18 U.S.C. § 1912 (witness
intimidation), as included in 18 U.S.C. 1961(1).
The pattern of the racketeering activity began no later
than some time in 2008 resulting in an investigation by
Attorney General for the State of New Jersey Division of
Consumer Affairs of deceptive conduct by Global Auto
Enterprise, resulting on November 19, 2010 in a consent
judgment for injunctive relief, civil penalties, legal fees
and restitution to victims.
The scheme continued in 2012 when
Global Defendants committed predicate acts of racketeering
towards Plaintiffs Yamkoviys, and continued through February
2014, when Defendants committed acts of wire fraud towards
Global Defendants continued the pattern by
filing fraudulent bankruptcies.
Global Defendants’ acts were
arranged and ordered so as to exhibit both a relation between
the predicate acts and the threat of continuing unlawful
Defendants’ numerous acts of mail fraud, wire fraud, and
financial fraud were open-ended and occurring on an ongoing
and daily basis targeting overseas car buyers from
GlobalAutoUSA.com and other websites registered by Global
Defendants with the intent to defraud foreign buyers.
Plaintiffs were directly and proximately harmed by Global
Defendants’ predicate acts of racketeering, including wire
fraud, mail fraud, and Travel Act violations, which resulted
in ascertainable financial losses to the Plaintiffs.
Plaintiffs now seek judgment in their favor on the same
RICO claims against Irina Kapustina and Michael Goloverya.
Kapustina was the accountant for the Global Auto entities, as
well as being listed as “president” of some of the entities.
Goloverya was also listed as “president” of one of the Global
Auto entities and had a signature stamp created so that he, or
anyone else, could sign his name to corporate documents, such
as invoices and tax returns.
Kapustina is the former spouse
of Kapustin, and they have a young child together.
is Goloverya’s mother, but Goloverya has no relation to
Plaintiffs argue that these defendants were active
participants in the RICO scheme to defraud plaintiffs.
Plaintiffs argue that Kapustina and Goloverya diverted illgotten funds to personal accounts and otherwise had control
over the Global Auto entities’ bank accounts funded by
plaintiffs and other victims.
In contrast, Kapustina and
Goloverya argue that they too were victims of Kapustin, simply
pawns in his car fraud scheme, and had nothing but the most
basic involvement with the Global Auto entities.
Subject Matter Jurisdiction
The Court has subject matter jurisdiction over this
action pursuant to 28 U.S.C. § 1331 and 18 U.S.C. § 1964(c).
The Court has supplemental jurisdiction over state law claims
under 28 U.S.C. § 1367.
Summary Judgment Standard
Summary judgment is appropriate where the Court is
satisfied that the materials in the record, including
depositions, documents, electronically stored information,
affidavits or declarations, stipulations, admissions, or
interrogatory answers, demonstrate that there is no genuine
issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law.
Celotex Corp. v.
Catrett, 477 U.S. 317, 330 (1986); Fed. R. Civ. P. 56(a).
An issue is “genuine” if it is supported by evidence such
that a reasonable jury could return a verdict in the nonmoving
Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
A fact is “material” if, under the governing
substantive law, a dispute about the fact might affect the
outcome of the suit.
In considering a motion for summary
judgment, a district court may not make credibility
determinations or engage in any weighing of the evidence;
instead, the non-moving party's evidence “is to be believed
and all justifiable inferences are to be drawn in his favor.”
Marino v. Industrial Crating Co., 358 F.3d 241, 247 (3d Cir.
2004)(quoting Anderson, 477 U.S. at 255).
Initially, the moving party has the burden of
demonstrating the absence of a genuine issue of material fact.
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
moving party has met this burden, the nonmoving party must
identify, by affidavits or otherwise, specific facts showing
that there is a genuine issue for trial.
withstand a properly supported motion for summary judgment,
the nonmoving party must identify specific facts and
affirmative evidence that contradict those offered by the
Anderson, 477 U.S. at 256-57.
A party opposing
summary judgment must do more than just rest upon mere
allegations, general denials, or vague statements.
Kmart Corp., 260 F.3d 228, 232 (3d Cir. 2001).
To prove a claim under the federal civil RICO statute, a
plaintiff must show: (1) conduct (2) of an enterprise (3)
through a pattern (4) of racketeering activity.
See 18 U.S.C.
§ 1962(c); Sedima, S.P.R.L, v. Imrex Company, Inc., 473 U.S.
479, 496 (1985).
A RICO enterprise exists only where (1)
there is “an ongoing organization, formal or informal”; (2)
“the various associates [of the enterprise] function as a
continuing unit”; and (3) the enterprise exists “separate and
apart from the pattern of activity in which it engages.”
United States v. Turkette, 452 U.S. 576, 583 (1981).
pattern of racketeering activity will exist only where there
are at least two predicate acts of racketeering.
U.S.C. § 1961(5); Sedima, 473 U.S. at 496 n.14.
One major element of a RICO enterprise is that it is “a
continuing unit that functions with a common purpose.”
v. United States, 556 U.S. 938, 948 (2009).
Even though RICO
participants “need not have been the masterminds of the scheme
to defraud, . . . the evidence must indicate that the
defendants had knowledge of the fraudulent nature of the . . .
operation and willfully participated in the scheme with the
intent that its illicit objectives be achieved.”
States v. Pearlstein, 576 F.2d 531, 540-41 (3d Cir. 1978).
In this case, the alleged participants in Kapustin’s RICO
scheme argue vehemently that they were pawns used by Kapustin
to perform certain administrative actions related to the
establishment of the Global Auto entities, as well as the dayto-day accounts payable functions.
Kapustina and Goloverya
adamantly deny that they participated in Kapustin’s ruses of
the international car buying customers, and they identify
themselves as victims of his schemes, albeit in a different
way from plaintiffs.
Plaintiffs have provided tangible, undisputable proof
regarding defendants’ actions in their respective positions
with the Global Auto entities.
Plaintiffs argue that all
their evidence shows that defendants are liable as supporters
of the enterprise, and that their failure to withdraw from the
enterprise after their lawsuit was filed demonstrates a
continued participation in the RICO scheme.
What is disputable, and actually disputed by defendants,
is the “common purpose” element of a viable RICO violation.
Defendants dispute that they willfully participated in the car
fraud scheme with the intent that its illicit objectives be
Defendants do not deny their positions as
“presidents” or their accounting duties, but they contend that
they did not participate in perpetuating the car bait-andswitch activities.
The Court recognizes that the direct and circumstantial
evidence presented by plaintiffs suggests that these two
defendants, at a minimum, passively acquiesced to Kapustin’s
The Court cannot determine on summary
judgment, however, at least one element of a successful RICO
violation claim – the shared purpose requirement.
Kapustina and Goloverya acted as a unit with Kapustin to
facilitate the fraud, or whether these defendants were simply
pawns used by Kapustin, is a disputed issue that hinges on
credibility determinations that the Court cannot make.
The Third Circuit has stated that “participation as a
principal requires possession of the specific intent
associated with the various underlying predicate offenses.”
Genty v. Resolution Trust Corp., 937 F.2d 899, 908 (3d Cir.
Even though “civil RICO requires no special mens rea
beyond that associated with commission of a pattern of the
individual predicate offenses, when . . . liability is
premised on violations of the federal mail fraud statute, 18
U.S.C. § 1341, the defendants must have knowledge of the
illicit objectives of the fraudulent scheme and willfully
intend that those larger objectives be achieved.”
must be for the jury to decide whether Kapustina and Goloverya
had knowledge of Kapustin’s illicit objectives of the
fraudulent car bait-and-switch scheme, and whether they
willfully intended that Kapustin’s efforts to defraud car
buyers would be realized.
For the reasons expressed above, plaintiffs’ motion for
summary judgment in their favor on their claims that
defendants Irina Kapustina and Michael Goloverya violated RICO
must be denied.
An appropriate Order will be entered.
Date: April 5, 2016
At Camden, New Jersey
s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.
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