MATYEV et al v. KAPUSTIN et al

Filing 48

OPINION. Signed by Judge Noel L. Hillman on 4/18/2017. (TH, )

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
CHINGIZ MATYEV, et al.,
1:16-cv-00530-NLH-AMD
Plaintiffs,
OPINION
v.
SERGEY KAPUSTIN, IRINA
KAPUSTINA, MICHAEL GOLOVERYA,
VLADIMIR SHTEYN, IGOR
ZADOROZHNIY, ISKANDER
IBRAGIMOV, TRT INTERNATIONAL,
LTD., OLEG MITNIK, G AUTO
SALES, INC., GLOBAL AUTO,
INC., EFFECT AUTO SALES,
INC., SK IMPORTS, INC.,
GLOBAL CARGO OY, AUCTION AUTO
USA, INC., ATC LOGISTIC OY,
et al.,
Defendants.

APPEARANCES:
ANNA V. BROWN
MARIA TEMKIN
BROWN LEGAL CONSULTING, LLC
1076 OCEAN AVENUE
SEA BRIGHT, NJ 07760
On behalf of Plaintiffs
EKATERINA SCHOENEFELD
SCHOENEFELD LAW FIRM LLC
32 CHAMBERS STREET, SUITE 2
PRINCETON, NJ 08542
On behalf of Defendant Iskander Ibragimov
SUZANA DAS
DAS LAW LLC
555 ROUTE 1 SOUTH
SUITE 100
ISELIN, NJ 08830
On behalf of Defendants TRT International, LTD and Oleg
Mitnik

IRINA KAPUSTINA
137 GRASSHOPPER DRIVE
WARMINSTER, PA 18974
Pro Se Defendant
MICHAEL GOLOVERYA
137 GRASSHOPPER DRIVE
WARMINSTER, PA 18974
Pro Se Defendant
VLADIMIR SHTEYN
3325 WOODLAND CIRCLE
HUNTINGDON VALLEY, PA 19006
Pro Se Defendant

HILLMAN, District Judge
This case is a companion to Akishev v. Kapustin, Civil
Action No. 13-7152 (NLH/AMD).

Both cases concern a “bait-and-

switch” fraudulent scheme masterminded and operated by
defendant, Sergey Kapustin, and allegedly assisted by other
defendants.

The Plaintiffs allege that the scheme used

deceptive online advertising aimed at luring international
customers to wire funds for automobile purchases and then
switching to higher prices, misrepresenting mileage, condition
and location and ownership of these vehicles, extorting more
funds, and failing to deliver the paid-for vehicles.

Presently

before the Court is the motion of Defendants Oleg Mitnik and his
company TRT International, LTD to dismiss Plaintiffs’ claims
against them.

For the reasons expressed below, Defendants’

motion will be denied.

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BACKGROUND & DISCUSSION
For a detailed recitation of the fraudulent scheme
perpetrated by Kapustin and other various defendants, see
Akishev v. Kapustin, Civil Action No. 13-7152 (NLH/AMD), Docket
No. 272, 358, 395.

This case concerns additional Plaintiffs,

Chingiz Matyev, Sergey Smirnov, and Igor Zuev, all citizens of
Eastern Europe who, like the Plaintiffs in Akishev v. Kapustin,
used Kaputin’s websites to purchase a car from the United States
to be shipped overseas, wired money to Kapustin, but never
received any vehicle or a refund of their money. 1
The current motion to dismiss is filed by Defendant Oleg
Mitnik and his company, Defendant TRT International, LTD, which
are not parties to the Akishev action. 2

Plaintiffs claim in this

case that Mitnik and TRT financed, provided services to, and
received profit from the operation of the fraudulent New Jersey
dealerships.

More specifically, Plaintiffs claim that in 2011-

2012, Mitnik and TRT invested funds in the scheme, including
financing the bait vehicles and the luring websites, transported

1

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.
2

Although they are not named defendants, TRT and
moved to quash subpoenas served on them to appear
v. Kapustin action for depositions and to produce
have opposed the plaintiffs’ efforts in that case
discovery.
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Mitnik have
in the Akishev
documents, and
to compel

the “switched” vehicles, and received profit on their investment
in the scheme.

Plaintiffs claim that Mitnik and TRT were put on

notice of illegal activities since at least November 2013 when
the victims filed their complaint in Akishev v. Kapustin, but
nonetheless continued to participate in unlawful activities
through November 2014.
Defendants argue two bases for why Plaintiffs’ complaint
should be dismissed.

First, Defendants argue that this Court

lacks subject matter jurisdiction over this action under RJR
Nabisco, Inc. v. European Community, 136 S. Ct. 2090, 2111
(2016), which held, “Section 1964(c) requires a civil RICO
plaintiff to allege and prove a domestic injury to business or
property and does not allow recovery for foreign injuries.”
Defendants argue that the foreign Plaintiffs have not suffered
any injuries in the United States, and Plaintiffs therefore
cannot maintain their RICO claims against them, and no other
basis for jurisdiction can be exercised over their state law
claims.

The Court rejected this same argument in Akishev v.

Kapustin, and will do so again here, adopting the reasoning
expressed in that case.

See Akishev v. Kapustin, 2016 WL

7165714, at *5-*8 (D.N.J. 2016) (explaining, in part, “A person
responsible for a United States-based fraudulent scheme to
defraud people overseas should not escape liability under a
federal law that permits private causes of action to redress
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that fraud simply because the scheme targets foreign citizens
over the internet”).
Defendants’ second basis for the dismissal of Plaintiffs’
complaint against them is that Plaintiffs’ claims are bare-bone
conclusory allegations that fail to meet the pleading standards
of Rule 9(b), Rule 8, and Twombly/Iqbal.
The federal RICO statute, codified at 18 U.S.C. § 1961-68,
provides, in relevant part, that:
It shall be unlawful for any person employed by or
associated with any enterprise engaged in, or the
activities of which affect, interstate or foreign
commerce, to conduct or participate, directly or
indirectly, in the conduct of such enterprise's affairs
through a pattern of racketeering activity or collection
of unlawful debt.
18 U.S.C. § 1962(c).

In order to adequately plead a violation

of the federal RICO statute, a plaintiff must allege: (1)
conduct (2) of an enterprise (3) through a pattern (4) of
racketeering activity.

Lum v. Bank of Am., 361 F.3d 217, 223

(3d Cir. 2004) (citing Sedima, S.P.R.L. v. Imrex Co., Inc., 473
U.S. 479, 496 (1985)).
A valid RICO claim must be based on one of the predicate
criminal offenses listed in 18 U.S.C. § 1962, or a conspiracy to
commit such an offense.

18 U.S.C. §§ 1962, 1964(c).

A

defendant in a racketeering conspiracy need not itself commit or
agree to commit predicate acts.
537 (3d Cir. 2001).

Smith v. Berg, 247 F.3d 532,

Rather, “all that is necessary for such a
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conspiracy is that the conspirators share a common purpose.”
Id.

Thus, if defendants agree to a plan in which some

conspirators will commit crimes and others will provide support,
“the supporters are as guilty as the perpetrators.”
United States, 522 U.S. 52, 64 (1997).

Salinas v.

Each defendant must

“agree to commission of two or more racketeering acts,” United
States v. Phillips, 874 F.2d 123, 127 n.4 (3d Cir. 1989), and
each defendant must “adopt the goal of furthering or
facilitating the criminal endeavor,” Smith, 247 F.3d at 537.
A motion to dismiss under Federal Civil Procedure Rule
12(b)(6) may be granted only if, accepting all well-pleaded
allegations in the complaint as true and viewing them in the
light most favorable to the plaintiff, a court concludes that
the plaintiff failed to set forth fair notice of what the claim
is and the grounds upon which it rests.

A complaint will

survive a motion to dismiss if it contains sufficient factual
matter to “state a claim to relief that is plausible on its
face.”

Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009).

Although a

court must accept as true all factual allegations in a
complaint, that tenet is “inapplicable to legal conclusions,”
and “[a] pleading that offers labels and conclusions or a
formulaic recitation of the elements of a cause of action will
not do.”

Id. at 678.

For claims that sound in fraud or misrepresentation the
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complaint “must state with particularity the circumstances
constituting fraud.”

Fed. R. Civ. P. 9(b).

The level of

particularity required is sufficient details to put defendants
on notice of the “precise misconduct with which they are
charged.”

In re Riddell Concussion Reduction Litigation, 77 F.

Supp. 3d 422, 433 (D.N.J. 2015) (citing Seville Indus. Machinery
Corp. v. Southmost Machinery Corp., 742 F.2d 786, 791 (3d Cir.
1984)) (other citation omitted).

“‘This requires a plaintiff to

plead the date, time, and place of the alleged fraud, or
otherwise inject precision into the allegations by some
alternative means.’”

Id. (quoting Grant v. Turner, 505 F. App'x

107, 111 (3d Cir. 2012), cert. denied, ––– U.S. ––––, 133 S. Ct.
2770 (2013)).
Plaintiffs’ complaint satisfies the Rule 9(b) pleading
requirement for their RICO claims against Defendants, and those
same allegations support Plaintiffs’ related state law claims
for common law fraud, conspiracy to commit fraud, conversion,
and unjust enrichment.

Plaintiffs allege that from 2011 through

2014, Mitnik and his company TRT knowingly funded the bait-andswitch scheme by financing bait vehicles, funding the websites
that lured Plaintiffs, and supporting the operations of the
scheme.

Plaintiffs also allege that Mitnik and TRT profited

from the scheme through Plaintiffs’ payment of purported storage
fees, shipment fees, and other charges, and that TRT was
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receiving repayments of interest and principal on its loan to
the Global defendants from the funds that Plaintiffs paid for
the vehicles.

Plaintiffs further allege that Mitnik and TRT

dealt directly with Kapustin and provided transportation
services to the Global defendants, including the shipment of
over 600 vehicles.
These allegations, when accepted as true and considered in
the context of the entire scheme described by Plaintiffs in
their complaint, are sufficient to place Defendants on notice of
the precise misconduct with which they are charged – namely, the
ongoing and knowing participation in funding and profiting from
the bait-and-switch car buying scheme that victimized
Plaintiffs.

These allegations state viable RICO claims, as well

as common law fraud and other related claims.

Defendants may

deny Plaintiffs’ allegations and ultimately demonstrate their
lack of liability for these claims, but Plaintiffs’ complaint is
properly pleaded so that the parties may proceed through the
discovery process.
Consequently, Mitnik and TRT’s motion to dismiss
Plaintiffs’ complaint against them must be denied.

An

appropriate Order will be entered.

Date:
April 18, 2017
At Camden, New Jersey

s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.

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