Kinojuz I.P. v. IRP International Inc. et al
FINDINGS OF FACT AND CONCLUSIONS OF LAW determining that the defendants are liable to the plaintiff for $200,000 plus interest from December 5, 2007 and that the plaintiff is entitled to a declaration that the plaintiff has no liability to the d efendant Erlikh with respect to merchandise purportedly delivered to Kazakhstan. The clerk is directed to enter judgment accordingly. See annexed for detailed explanation. Ordered by Magistrate Judge Viktor V. Pohorelsky on 10/12/2016. (Pohorelsky, Viktor)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
KINOJUZ I.P. (a company under the laws of
FINDINGS OF FACT AND
CONCLUSIONS OF LAW
IRP INTERNATIONAL INC., OULIAN
DOUBININE, and IGOR ERLIKH,
POHORELSKY, Magistrate Judge:
On the basis of the admissions in the pleadings and the evidence offered at the trial of
this action, I make the following findings of fact and reach the following conclusions of law.
This action arises from the efforts of the plaintiff Kinojuz I.P. to obtain funding for
the production of a motion picture entitled “My Only.” The plaintiff is a motion picture
production company based in Kazakhstan wholly owned by Zhorabek Musabayev. The
company was formed by Musabayev in 2000 and has produced at least five movies since
then. The defendant IRP International Inc. was a New York corporation which was
founded by the defendant Igor Erlikh.1 Erlikh is a native of Ukraine and is a naturalized
citizen of the United States. The defendant Oulian Doubinine was at times relevant an
associate of Erlikh. He is a native of Kazakhstan who moved to the United States in 1996
and is a lawful permanent resident. The plaintiff was represented by counsel. The
defendants Erlikh and Doubinine represented themselves pro se. The defendant IRP was
dissolve on April 27, 2011, shortly after the lawsuit was filed, and has ceased to exist.
Musabayev estimated that the movie for which the plaintiff sought to obtain funding,
entitled “My Only,” would require about $2 million to produce. In his effort to find
investors, he was introduced to the defendant Oulian Doubinine. Doubinine had worked in
The owners of IRP were Erlikh and his son Peter. IRP has now been dissolved.
the movie industry in Kazakhstan before coming to the United States, and was purportedly
involved in the movie industry in the United States. Doubinine and Musabayev first met in
Almaty, Kazakhstan in May of 2007. During the meeting, Doubinine confirmed that he had
good connections in the movie business in the United States, and told Musabayev that he
had a billionaire business partner, the defendant Igor Erlikh, who could “multiply money.”
Doubinine said that if Musabayev was willing to transfer $1 million to Doubinine and Erlikh,
they would turn it into $2 million. Although he mentioned the defendant IRP International
Inc., and told Musabayev that the initial investment he made would go through IRP, he did
not provide any details about the business of IRP.
Doubinine and Musabayev met again in late June or early July of 2007, this time in
Shymkent, Kazakhstan where Musabayev resided.2 They had wide-ranging discussions about
various ventures, including the movie, as well as a project for importing goods that Erlikh
held in the United States to be sold in Kazakhstan at a profit to generate money for the
movie project. The goods included medical supplies as well as clothing and other necessities,
destined to be used for humanitarian purposes. Musabayev declined to engage in the project
to import goods as he was solely interested in the movie at that point.
As a result of their discussions, Doubinine prepared a handwritten contract which
Musabayev presented to his attorney for review. After the attorney made some amendments,
a typewritten version was prepared and signed by Doubinine, acting on behalf of IRP,3 and
by Musabayev, on behalf of Kinojuz. DX A.4 The contract, which is dated July 1, 2007,
called for a total budget not to exceed $3 million dollars, with Kinojuz to invest $800,000
Doubinine was accompanied by an associate, Askar Akimovych, whose name arose in
various testimony at trial, but whose relationship to the parties and to the movie project was never
Doubinine signed the contract as the vice-president of IRP. There is no evidence that he
actually held that title, but the defendants do not dispute that he was authorized by Erlikh to act on
behalf of IRP.
“DX” refers to the defendants’ exhibits; “PX” refers to the plaintiff’s exhibits; “Tr.”
followed by a date refers to the trial transcript on the date noted.
and IRP to invest $2.2 million. Kinojuz was to make an initial investment of $100,000 to be
transferred to IRP by July 10, 2007, and a subsequent investment of $700,000 to be
transferred to IRP by August 1, 2007. IRP was to make its investment of $2.2 million by
November 1, 2007. The parties would share equally in all profits, after expenses. In contrast
to what the defendants would later contend, the contract contained no suggestion that IRP
would transfer goods to Kinojuz for sale in Kazakhstan in order to raise the necessary funds
for IRP’s investment.
Kinojuz did not meet its initial obligations to transfer funds to IRP in July and August
as contemplated by the contract. Doubinine, who had prepared a timeline for production of
the movie in the interim, see DX C, returned to Kazakhstan on or about August 10, 2007.
He was accompanied this time by the defendant Igor Erlikh, whom he introduced to
Musabayev for the first time, and the three of them held meetings over the course of two
days. In their discussions, Erlikh claimed to have interests in gold mines and an insurance
company, and also mentioned the humanitarian supplies that Doubinine had previously
discussed with Musabayev. According to Musabayev, neither Erlikh nor Doubine advised
Musabayev that Erlikh had been convicted of crimes including tax fraud and money
laundering in the United States and was on supervised release after serving a multi-year term
of imprisonment. Erlikh did not discuss any specifics concerning the movie with Musabayev
during this meeting, leaving those matters to Doubinine.
They met again in Almaty a month later in September 2007, at which time Musabayev
had extensive discussions with Doubinine and Erlikh about the movie project, the
humanitarian supplies, and an insurance company that was to guarantee the plaintiff’s
investment. Doubinine and Erlikh urged Musabayev to transfer to IRP the $800,000
investment that the plaintiff was supposed to make. Although it was Erlikh’s intention that
the humanitarian supplies in his possession would constitute IRP’s investment in the movie
project, he and Doubinine did not disclose that to Musabayev. Rather, it appears that their
plan was to use Kinojuz’s $800,000 investment to pay for the humanitarian supplies that IRP
had already purchased, and then foist onto Musabayev the task of finding buyers for the
goods in Kazakhstan in order to obtain IRP’s investment in the movie.
There is no evidence that Musabayev ever agreed to such an arrangement. However,
during this visit, Erlikh also met Musabayev’s wife, a physician who was apparently interested
in building a medical center and laboratory in Shymkent, Kazakhstan, and they had
discussions about such an enterprise. Later communications between Musabayev and Erlikh
by e-mail make it clear that Erlikh provided medical supplies or equipment, or both, to either
Musabayev or his wife in connection with that medical enterprise.5 DX E-2, E-3, E-4.
There is no evidence, however, that this medical enterprise was related in any way to the
Ultimately Musabayev was not able to assemble the $800,000 investment that Kinojuz
was supposed to make. According to him, an investor who was supposed to provide the
$800,000 pulled out after he met Doubinine and Erlikh during their visit to Kazakhstan.
Musabayev thus says he sought to renegotiate the deal with Doubinine and Erlikh, and
contends that they agreed to accept an investment of $200,000 from Kinojuz.6 To reflect the
revised deal, Musabayev had a new contract drafted that called for Kinojuz’s investment to
be in that amount, with a promise by IRP to return that $200,000 to Kinojuz by January 1,
2008. PX 1. Erlikh and Doubinine deny that they agreed to any such revision, and
Doubinine denies that he signed the revised contract. Mousabayev conceded that
Doubinine’s signature and the seal of IRP that appeared on the contract had been obtained
from Doubinine in July when the original contract was signed because of a fear that the
terms of that contract would not conform to the requirements of Kazakhstan law. Thus,
The laboratory project apparently led to criminal proceedings against another individual,
Daniyar Zhanbulatov, whose relationship to the parties was never made clear. See discussion at
footnote 8, infra.
Musabayev testified that discussions about this matter took place in meetings with
Doubinine and Erlikh in Kazakhstan in November 2007, but they deny being in Kazakhstan at that
time. Erlikh’s passport confirms that he was in Kazakhstan earlier in 2007, but show no signs of
travel to or from Kazakhstan during the last months of 2007 or any time in 2008. DX H.
according to Musabayev, both Musabayev and Doubinine had affixed additional seals and
signatures on blank pages that could be appended to any revised contract that was necessary.
Whether or not the agreement was in fact renegotiated, on behalf of Kinojuz
Musabayev made a wire transfer of $199,980 to IRP’s account at JP Morgan Chase bank in
New York.7 He forwarded the money in the belief that it would be used by Erlikh to
generate additional funds to invest in the movie project. The money arrived on December 5,
2007. During the ensuing two months, Erlikh withdrew or expended all of the funds that
had been transferred. Except for $15,000 which he paid to Doubinine, supposedly to
reimburse him for travel expenses related to his trips to Kazakhstan to work on the movie,
none of the funds withdrawn or otherwise expended by Erlikh were used for any purpose
related to the movie. Rather, the funds were use for personal purchases or to repay debts
Erlikh owed to others.
Doubinine returned to Kazakhstan in February 2008 and met with Musabayev at that
point to discuss the movie project. They met several times in late February and early March,
and Doubinine eventually told Musabayev that before IRP would return the money
Musabayev had transferred, the humanitarian goods that had been mentioned in earlier
discussions would have to be sold. He said that Erlikh expected Musabayev to make
arrangements to sell the goods. Musabayev denied any responsibility to do so, but said he
would make efforts to find a buyer. He also told Doubinine that another individual, Berik
Bektay, would be producing the movie and arranged for Doubinine to meet with him.
The meeting between Bektay and Doubinine did not go well. Bektay, who had
previously invested in some of the movies produced by Musabayev, was well-schooled in
banking and finance, having been trained in the United States at the law firm of Milbank
Tweed and at the New York Stock Exchange. He had also served as president of the first
stock exchange opened in Kazakhstan in 1991 following the fall of the U.S.S.R. He met with
Doubinine and two others who had been involved in the movie in late March or early April
at a café in Shymkent. Although Doubinine assured Bektay that the money that had been
A transfer fee of $20 was apparently deducted from the transfer.
transferred to IRP was still in IRP’s account, he was otherwise unable to provide an
explanation for the funds, and Bektay asked to see the company’s records. He also inquired
about the legitimacy of the merchandise that Erlikh was offering for sale. His questions
angered Doubinine, who made statements described by Bektay as “ominous,” and the
Bektay reported back to Musabayev and advised him to sever his relationship with
Doubinine and his associates. As Musabayev wished to discuss the matter with Doubinine
directly, he and Bektay met with Doubinine and his associates later in the day at the train
station before they left to return to Almaty where Doubinine was staying. Matters were not
resolved, however, and Doubinine made “nuanced” threats, mentioning that he had
connections with “serious” people and that Erlikh would deal with him.
Over the ensuing months, Musabayev had sporadic communications with Doubinine
and met with him once at Doubinine’s apartment in Almaty. Doubinine apologized for his
conduct at the train station, and made vague promises about returning the money Musabayev
had provided to IRP. In various telephone conversations Doubinine assured him that the
$200,000 was safe and would be repaid.
In November 2008, matters began to take a darker turn. Doubinine met with
Musabayev at the latter’s home in Shymkent, along with an individual named Daniyar
Zhanbulatov and another individual who apparently described himself as an associate of a
criminal organization. They discussed monetary matters, and Zhanbulatov apparently
promised to make good on Doubinine’s promise to return the $200,000 investment Kinojuz
had made.8 After Doubinine left to return to Almaty, however, Zhanbulatov said he would
Zhanbulatov’s relationship to Musabayev, Doubinine, and Erlikh was never clarified. His
name appears in the amended contract Musabayev drafted, where he is described as the “financial
director” of the movie. Musabayev says he gave Zhanbulatov that position at Doubinine’s request
in order to give Zhanbulatov a basis for seeking a visa to travel to the United States, but that no
such visa was ever obtained. Zhanbulatov was also identified by Musabayev as the principal of the
insurance company that was supposedly insuring Kinojuz’s investment, and during the meeting he
told Musabayev that his $200,000 would be returned to him by February 2009. Within a day,
however, Zhanbulatov reneged on his promise saying his obligation was to Doubinine, not to
Musabayev. Apparently Zhanbulatov has since been convicted of crimes in Kazakhstan related in
not be repaying the $200,000. Upon being advised of Zhanbulatov’s change of heart,
Doubinine invited Musabayev to meet with him in Almaty and Musabayev traveled there
immediately. According to Musabayev, upon his arrival Doubinine told him he would be
meeting with an individual named Usken Makhametkulov.9 The meeting did not occur,
however, as Makhametkulov did not appear as scheduled. But some time later the same day,
Musabayev received a phone call from Makhametkulov, made from a telephone with a
number Musabayev recognized to be Doubinine’s. Makhametkulov identified himself as a
member of organized crime and told Musabayev that he still owed Doubinine $600,000,
apparently referring to the balance of the investment Kinojuz had agreed to make in the
original contract. He made a threat on Musabayev’s life, saying that Musabayev would not
leave Almaty if he did not come to Doubinine’s apartment for a meeting.
Both Musabayev and Bektay testified that Bektay then spoke with Makhametkulov by
telephone and invited him to meet with them at Bektay’s home. Makhametkulov agreed, but
never showed. As a result, Musabayev and Bektay decided to lodge a complaint with the
police. They both testified that they spoke to a police investigator who told them that
Makhametkulov was known to the police as a member of organized crime, but that the
police could do nothing as no criminal conduct had yet occurred. According to Bektay, the
investigator advised them to let the police know in advance if there was to be a further
meeting with Makhametkulov.10
After Musabayev returned to Shymkent, he continued to receive threatening
telephone calls from Makhametkulov. Several months later, in late January or early February
of 2009, Musabayev met with Doubinine in Almaty. The meeting, which took place in
some way to dealings with Erlikh. See DX E-2, E-4.
The testimony given by Doubinine concerning his relationship to Makhametkulov was
confusing and evasive. The name “Makhametkulov” appears in the time line he prepared as a
person who would be providing some services in connection with the movie. See DX C. Those
references are to an “O. Makhametkulov.” The person who was supposed to meet with Musabayev
was Usken Makhametkulov. Doubinine suggested that the two were father and son.
The plaintiff offered no documentary evidence to corroborate this complaint to the police.
Doubinine’s apartment, was attended by a number of other men including the man who had
attended the previous meeting in November, and Musabayev took most of the men to be
members of organized crime. Makhametkulov himself, however, was not among those
present. The meeting centered on the $600,000 that Doubinine said Musabayev owed for
the merchandise that Erlikh had sent to Kazakhstan. Musabayev denied owing any money,
insisting instead that Erlikh and Doubinine owed him the $200,000 Kinojuz had provided to
IRP a year earlier.
That meeting apparently marked the last time that Musabayev met with Doubinine or
any of Doubinine’s associates. He says he periodically communicated with Doubinine by
telephone and by e-mail with both Doubinine and Erlikh. He also testified that he continued
to receive threatening telephone calls every three months or so from Makhametkulov, who
said that either Musabayev or his family might suffer if he did not pay the money he owed to
Doubinine. He further asserted that Erlikh threatened him over the phone as well, but did
not elaborate on what the nature of the threat was. The plaintiff offered no documents or
telephone records to substantiate any of those communications.
Several e-mail communications between Erlikh and Musabayev in 2010, introduced
by the defendants, provide some insight into the matters in dispute between them. In
February of 2010, Musabayev wrote Erlikh in an effort to obtain information for a detective
investigating Erlikh’s dealings with Daniyar Zhanbulatov. DX E-2.11 The questions sought
information about how Erlikh came to know Zhanbulatov, the nature of his dealings with
Zhanbulatov, and whether merchandise he sent to Zhanbulatov was properly entered into
Kazakhstan. In September of 2010, Musabayev sent two e-mails to Erlikh discussing the
laboratory and medical enterprises that he and Erlikh were apparently involved in together,
and seeking to work out a solution to the difficulties that were being encountered. DX E-3,
E-4. In those e-mails, Musabayev seeks to clarify that the money he had sent to IRP was
DX E-2 is an e-mail addressed to Erlikh by Musabayev posing questions. It appears that
Erlikh typed responses to the questions into his copy of the e-mail, but there is no evidence that he
actually transmitted the responses to Musabayev.
solely for the production of the movie. DX E-4. Erlikh’s responses to those e-mails, if any,
were not introduced in evidence.
Eventually, when the funds were never returned Musabayev filed the instant action in
January 2011. He testified that shortly after the lawsuit was filed he received yet another
threatening phone call from Makhametkulov, who urged him to withdraw the suit. He said
he received a similar phone call from Doubinine, who told Musabayev to think hard about
what he was doing.
In November 2011, Musabayev’s son was assaulted and suffered very serious head
injuries. The assault occurred at a wedding celebration for one of his son’s friends.
Apparently, his son was invited outside of the wedding venue and was attacked, but there
were no witnesses to the beating and he himself could neither identify his assailant nor
remember anything about the event. He was treated in the emergency room of a local
hospital whose discharge summary the following day listed, among other injuries, a
comminuted fracture of the frontal lobe of the brain. According to Musabayev, his son was
in a coma for months and remained in the hospital for two years.12 The plaintiff offered no
records to substantiate those matters, however. Nor did Musabayev offer any evidence to
support his testimony that he spent $500,000 for medical treatment.
Within two days after the assault on his son, Musabayev received a phone call from an
individual who said he was calling on behalf of Makhametkulov. The individual asked if
Musabayev “understood something,” which Musabayev took to mean that Doubinine and
Erlikh had contracted to have his son beaten. There is no evidence that Musabayev reported
this phone call to the police.
The original complaint was filed in January 2011, followed by the amended complaint
which was filed on December 18, 2012. The amended complaint asserts claims for civil
Musabayev gave conflicting testimony on the state of his son’s recovery, testifying at one
point that his son was healthy and working, Tr. Dec. 9, 2014 at 40, and at another that his son would
not be able to work until the end of 2016 at the earliest, Tr. Dec. 10, 2014 at 16. His testimony also
differs markedly from the allegations of the amended complaint, which asserts that Musabayev’s son
was in the hospital for several weeks, not two years, and was unconscious for several days rather
than four months.
RICO, conversion, money had and received, fraudulent conveyances, fraud,
misrepresentation, civil conspiracy, unjust enrichment, piercing the corporate veil,
defamation, and damage to business reputation. The complaint also seeks a declaratory
judgment that Kinojuz owes no contractual or other obligations to Erlikh or IRP.
CONCLUSIONS OF LAW
The court has subject matter jurisdiction over this case pursuant to 28 U.S.C. § 1332
as it involves an action between a citizen of a foreign country as plaintiff and citizens of the
United States as defendants.13
As an initial matter, with the possible exception of Berik Bektay, the credibility of all
of the witnesses who testified at the trial is questionable to varying degrees. The defendant
Erlikh was convicted of a multi-million dollar tax fraud and money laundering scheme and
was sentenced to a nine-year term of imprisonment. That alone calls any testimony he
offered into question. The defendant Doubinine gave inconsistent and evasive testimony,
particularly about his relationship with Makhametkulov, and his demeanor on the witness
stand gave the court little reason to rely on his testimony. Musabayev too gave inconsistent
testimony about several matters including the injuries sustained by his son. In addition,
despite numerous references in his testimony to e-mail and telephonic communications with
the defendants, he offered not a single e-mail or telephone record to corroborate that
testimony. Accordingly, in reaching the decisions below the court relies only on admissions
As there was no evidence to establish that the defendant Doubinine was a United States
citizen when this action was filed, this conclusion rests on a determination that, for purposes of
diversity jurisdiction, a lawful permanent resident of the United States is considered a citizen of the
state in which he or she is domiciled. At the time this action was filed in January 2011, the diversity
jurisdiction statute contained a provision that specifically so stated. That provision was subsequently
eliminated. The court recognizes that, as carefully and cogently explained by Judge Garaufis in H.K.
Huilin Int'l Trade Co. v. Kevin Multiline Polymer Inc., 907 F. Supp. 2d 284 (E.D.N.Y. 2012), there was a
split in this Circuit as to whether that provision afforded subject matter jurisdiction to cases in which
a non-resident alien plaintiff sued multiple defendants, one of whom was a lawful resident alien.
The court opts to follow those courts that have exercised jurisdiction in situations like that presented
here, particularly since, although it was not pleaded, the court would also have federal question
jurisdiction pursuant to 28 U.S.C. § 1331 by virtue of the plaintiff’s RICO claim.
found in the pleadings and on evidence that has been corroborated in some manner. In the
discussion that follows the court addresses each of the claims for relief made by the plaintiff.
De fam atio n , Dam ag e to B u s in e s s Re p u tatio n ,
Pie rc in g th e Co rp o rate Ve il, Civ il Co n s p irac y
Addressed first are the claims for which the court finds no support in the record or
which no basis in the law. The plaintiff has offered no evidence that he has suffered any
damage to his personal or business reputation at the hands of the defendants. The claims for
defamation and damage to business reputation must therefore be dismissed. Nor was any
evidence offered from which the court could determine to pierce the corporate veil and relief
for that claim is therefore denied as well. The claim for civil conspiracy is dismissed as civil
conspiracy is not an independent tort under New York law. Shared Commc'ns Servs. of ESR,
Inc. v. Goldman Sachs & Co., 23 A.D.3d 162, 163, 803 N.Y.S.2d 512, 513 (1st Dep’t 2005)
(citing Bell v. Alden Owners, 299 A.D.2d 207, 209, 750 N.Y.S.2d 27 (1st Dep’t 2002), leave to
appeal denied, 100 N.Y.2d 506 (2003).
Co n v e rs io n
“To establish a cause of action to recover damages for conversion, a plaintiff must
show legal ownership or an immediate superior right of possession to a specific identifiable
thing and must show that the defendant exercised an unauthorized dominion over the thing
in question to the exclusion of the plaintiff's rights.” Nat'l Ctr. for Crisis Mgmt., Inc. v. Lerner,
91 A.D.3d 920, 920-21, 938 N.Y.S.2d 138, 138-39 (2nd Dep’t 2012) (quoting Cusack v.
American Defense Sys., Inc., 86 A.D.3d 586, 587, 927 N.Y.S.2d 381, 383 (2nd Dep’t 2011); accord,
State v. Seventh Regiment Fund, Inc., 98 N.Y.2d 249, 259 (2002). Either tangible personal
property or a specific fund of money must be involved. Batsidis v. Batsidis, 9 A.D.3d 342,
343, 778 N.Y.S.2d 913, 913 (2nd Dep’t 2004); accord, Independence Discount Corp. v. Bressner, 47
A.D.2d 756, 757, 365 N.Y.S.2d 44, 46 (2nd Dep’t 1975).
The plaintiff’s conversion claim here rests on IRP’s use of the funds the plaintiff
transferred to IRP for purposes other than the movie project. The claim fails because
Kinojuz voluntarily provided those funds to IRP and thus no longer enjoyed either
ownership or a superior right of possession of the funds. The defendant’s dominion over
the funds was specifically authorized by the plaintiff. That the defendant misused the funds
may give rise to a claim for fraud or breach of contract, but not a claim for conversion.
Frau d an d Mis re p re s e n tatio n
Although pleaded as separate counts, the plaintiff’s claims for fraud and
misrepresentation are essentially the same and are therefore considered together. Both
claims rest on allegations that the defendants Erlikh and Doubinine made misrepresentations
about their ability to raise money to invest in the movie project in order to induce the
plaintiff to transfer $200,000 to IRP. In this context, claims for fraudulent misrepresentation
require the plaintiff to prove (1) that the defendants made a material false representation, (2)
that the defendants intended to defraud the plaintiff thereby, (3) that the plaintiff reasonably
relied upon the representation, and (4) the plaintiff suffered damage as a result of its reliance.
E.g., J.A.O. Acquisition Corp. v. Stavitsky, 18 A.D.3d 389, 390–91, 795 N.Y.S.2d 569, 570–71
(2005); Sears v. First Pioneer Farm Credit, ACA, 46 A.D.3d 1282, 1285, 850 N.Y.S.2d 219, 223
(2007); see Channel Master Corp. v. Aluminum Ltd. Sales, Inc., 4 N.Y.2d 403, 406–07, 151 N.E.2d
833, 835 (1958). The proof must be by clear and convincing evidence. Simcuski v. Saeli, 44
N.Y.2d 442, 452–53 (1978).
The plaintiff has satisfied the above elements of their claim for fraudulent
misrepresentations. The defendants Doubinine and Erlikh made a series of false
representations about Erlikh’s ability to raise money for the movie project in order to induce
Musabayev, on behalf of Kinojuz, to transfer money to IRP. They convinced Musabayev
that the money would be used to further that goal. In reliance on those representations, the
plaintiff transferred $200,000 to IRP in December of 2007. Instead of using the funds to
further the movie project, Erlikh spent the money on a number of unrelated items, including
a vacation trip to the Dominican Republic, a host of purchases of personal items and to pay
off debts entirely unrelated to the movie. Neither of the defendants have ever returned any
of the money to the plaintiff who has thus suffered a total loss of the $200,000 for which the
plaintiff is entitled to a recovery.
Mo n e y Had an d Re c e iv e d an d Un ju s t En ric h m e n t
As presented here, the plaintiff’s claims for unjust enrichment and for money had and
received are indistinguishable from one another. To prove a claim for unjust enrichment
under New York law, the “plaintiff must show that (1) the other party was enriched, (2) at
that party’s expense, and (3) that it is against equity and good conscience to permit [the other
party] to retain what is sought to be recovered.” Mandarin Trading Ltd. v. Wildenstein, 16
N.Y.3d 173, 182 (2011) (quoting Citibank, N.A. v Walker, 12 AD3d 480, 481 (2d Dep’t
2004)) (internal quotations omitted). To prove a claim for money had and received, the
plaintiff must show that “(1) the defendant received money belonging to the plaintiff, (2) the
defendant benefitted from receipt of the money, and (3) under principles of equity and good
conscience, the defendant should not be permitted to keep the money.” Lebovits v. Bassman,
120 A.D.3d 1198, 1199-2000, 992 N.Y.S.2d 316, 318-19 (2014) (quoting Goel v.
Ramachandran, 111 A.D.3d 783, 790, 975 N.Y.S.2d 428, 436 (2nd Dep’t 2013).
The plaintiff has satisfied the elements of both claims. The plaintiff provided money
to the defendant IRP. Both Erlikh and Doubinine benefitted from receipt of the money as
each received and used a portion of the funds transferred to IRP by the plaintiff. Because
the plaintiff transferred the money on the mistaken belief, induced by the misrepresentations
of Erlikh and Doubinine, that the money would be used to further the movie project, equity
and good conscience requires that the defendants return the money to the plaintiff.
Accordingly the plaintiff is entitled to recover $200,000 from them.
Read liberally, the plaintiff’s amended complaint asserts claims under subsections
1962(c) and (d) of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§
1961-1968 (“RICO”). To establish a violation of subsection 1962(c), the plaintiff must show
that the defendants conducted, or participated in the conduct, of a RICO enterprise’s affairs
through a pattern of racketeering activity. E.g., Crawford v. Franklin Credit Mgmt. Corp., 758
F.3d 473, 487 (2d Cir. 2014) (citing Cruz v. FXDirectDealer, LLC (FXDD), 720 F.3d 115, 120
(2d Cir. 2013). To establish a violation of subsection 1962(d), the plaintiff must show that
the defendants agreed with each other to commit a substantive RICO offense. Id. (citing
Baisch v. Gallina, 346 F.3d 366, 376–77 (2d Cir. 2003).
The Supreme Court has explained that under RICO “an enterprise includes any union
or group of individuals associated in fact” and that RICO reaches “a group of persons
associated together for a common purpose of engaging in a course of conduct.” Boyle v.
United States, 556 U.S. 938, 944-45 (2009) (citing United States v. Turkette, 452 U.S. 576, 583
(1981). Such an enterprise “is proved by evidence of an ongoing organization, formal or
informal, and by evidence that the various associates function as a continuing unit.” Id.
(quoting Turkette, 452 U.S. at 583). As defined in RICO, racketeering activity may consist of
any of a number of criminal offenses, commonly known as predicates, and a pattern of
racketeering activity consists of, inter alia, at least two acts of racketeering activity. Crawford,
758 F.3d at 487. “To prove such a ‘pattern,’ a civil RICO plaintiff also ‘must show that the
racketeering predicates are related, and that they amount to or pose a threat of continued
criminal activity.’ ” Id. (quoting H.J. Inc. v. Northwestern Bell Telephone Co., 492 U.S. 229, 239
(1989). The plaintiff may establish the requisite continuity by evidence of “either an ‘openended’ pattern of racketeering activity (i.e., past criminal conduct coupled with a threat of
future criminal conduct) or a ‘closed-ended’ pattern of racketeering activity (i.e., past criminal
conduct “extending over a substantial period of time”).” GICC Capital Corp. v. Tech. Fin.
Grp., Inc., 67 F.3d 463, 466 (2d Cir. 1995).
The plaintiff alleged that the RICO enterprise here was an association in fact
consisting of the defendants IRP, Doubinine and Erlikh. The plaintiff contends that the
predicate acts of racketeering activity in which the enterprise engaged included mail and wire
fraud, money laundering, receipt and transportation of stolen property, extortion, threat of
murder, and obstruction of justice.
Although the plaintiff has adequately proved that the defendants engaged in wire
fraud in violation of 18 U.S.C. § 1343, interstate receipt and transportation of property
acquired by fraud in violation of 18 U.S.C. § 2314, and multiple instances of money
laundering in violation of 18 U.S.C. § 1957, all of which constitute RICO predicates under 18
U.S.C. § 1961(1), the plaintiff has failed to prove the requisite continuity to establish a
pattern of racketeering activity. The wire fraud was committed in December 2007 when the
plaintiff transmitted the fraudulently obtained funds to IRP by wire transfer from
Kazakhstan to the United States. The same conduct constituted transportation of money in
foreign commerce in the execution of a fraud. The instances of money laundering occurred
in December 2007 and January 2008 as Erlikh engaged in various monetary transactions with
those funds. The evidence does not establish, however, that the remaining acts of
racketeering alleged by the plaintiff were undertaken in furtherance of the enterprise.
Taking first the acts of extortion about which Musabayev testified, they fail to
constitute racketeering acts for two reasons. First and foremost, they do not fall within the
definition of racketeering acts under section 1961(1). To constitute a racketeering act within
that section, extortion must be committed in violation of state law or in violation of the
Hobbs Act, 18 U.S.C. § 1951. See 18 U.S.C. § 1961(1). According to Musabayev, all of the
acts of extortion were committed on foreign soil by foreigners with no known connection to
the United States, and therefore do not constitute violations of the law of any state. Nor do
they constitute extortion in violation of the Hobbs Act, because there is no evidence that the
extortions had any affect on “commerce” as defined in the Hobbs Act. “Commerce” under
the Act means commerce that has some connection to the United States. See 18 U.S.C. §
1951(b)(3). As there is no evidence that Kinojuz or Musabayev, at whom the extortions here
were aimed, ever engaged in or intended to engage in any commerce in the United States,
even a “depletion of assets” theory would not serve to satisfy the commerce element. See,
e.g., Calabrese v. CSC Holdings, Inc., 283 F. Supp. 2d 797, 810 (E.D.N.Y. 2003); see generally
United States v. Perrotta, 313 F.3d 33, 36-40 (2d Cir. 2002); United States v. Jones, 30 F.3d 276,
285 (2d Cir. 1994).
Second, and perhaps more importantly, there is insufficient evidence that the
extortionate efforts were in furtherance of the enterprise. According to Musabayev, the
person at the center of the extortionate efforts was Usken Makhametkulov, who along with
associates engaged in various threatening communications with Musabayev. There is no
evidence, however, that Erlikh knew Makhametkulov or any of the other persons alleged to
be involved in the extortions. There is no evidence that he in any way procured any of the
extortionate efforts in which they engaged. There is no evidence that he himself made any
extortionate threats to Musabayev. In fact, Musabayev testified that he had no phone
conversations with Erlikh before the lawsuit was filed. Tr. Dec. 9, 2014 at 33. Based on the
evidence, Erlikh’s participation in the enterprise alleged by the plaintiff was limited to his role
as a supposed financier for the movie.
There is certainly evidence, albeit disputed, that Doubinine was in some way
connected to the extortions about which Musabayev testified. According to Musabayev, it
was Doubinine who tried to arrange a meeting between Musabayev and Makhametkulov, and
who invited Musabayev to a meeting at his apartment which included a number of other
persons that Musabayev took to be members of organized crime. In addition, as noted
above, Makhametkulov was listed on a time line prepared by Doubinine related to the
production of the movie. See DX C. Although not proved at trial, there are various
allegations in the amended complaint about obligations Doubinine had incurred to
Makhametkulov and others whom he purportedly hired for the movie project, and that it was
these obligations that led to the efforts at extortion. Thus, to the extent that extortions
actually occurred, and the evidence on that point is not strong,14 they appear equally likely to
have been aimed at furthering a separate scheme contrived by Makhametkulov or by
Doubinine, or the two of them acting together, not the enterprise alleged in the amended
For much the same reasons, the evidence of obstruction of justice offered by the
plaintiff is insufficient to establish that the enterprise engaged in a continuing pattern of
racketeering activity. The evidence consisted of two telephone calls Musabayev received,
Aside from corroboration by Bektay concerning some “ominous” statements made by
Doubinine at a meeting at a railway station, the only evidence concerning the extortionate
communications was the uncorroborated testimony of Musabayev. No records of telephone calls
were offered to substantiate that any of the telephone communications attributed to
Makhametkulov were actually made. Nor was a single e-mail between Musabayev and Doubinine
introduced that might have disclosed the nature of their communications during this period of time.
one made by Makhametkulov and one made by Doubinine, in which they each urged
Musabayev to discontinue the lawsuit that was filed in January 2011. According to
Musabayev, Makhametkulov told him he “would be in a worse situation if I do not take my
lawsuit back.” Tr. Dec. 9, 2014 at 33. In the phone call with Doubinine, Doubinine told
him he “needed to think very well about this lawsuit.” Neither of those statements are
sufficiently threatening to constitute witness tampering that would violate 18 U.S.C. § 1512.
Moreover, these efforts to dissuade Musabayev from continuing with the lawsuit are not
sufficiently connected to the enterprise because they do not directly implicate IRP and
Erlikh. Indeed, by the time the phone calls were made in June or July of 2011, IRP had been
dissolved and could not have been part of the enterprise.
Musabayev did provide confused and conflicting testimony about a telephone call he
received from Erlikh in March 2012 prior to his appearance at a deposition scheduled in this
lawsuit. At one point he said he received the phone call before the litigation commenced.
Tr. Dec. 9, 2014 at 34. This was in conflict with his earlier testimony that he did not have a
phone conversation with Erlikh before he started the lawsuit. Tr. Dec. 9, 2014 at 33. Later,
when again asked about the phone call, he said it occurred in March 2012, after the lawsuit
had been commenced. Tr. Dec. 9, 2014 at 41. Initially, he characterized the phone call as
threatening, Tr. Dec. 9, 2014 at 34, but when asked what Erlikh said specifically, he testified
that “He told me that we have just a regular personal conversation. If not, then I would have
serious problems later.” Tr. Dec. 9, 2014 at 42. For his part, Erlikh disputes Musabayev’s
characterization of the telephone call, saying his purpose in making the call was to offer a
resolution of the lawsuit. Tr. Dec. 11, 2014 at 122-24. In any event, the statements
Musabayev attributed to Erlikh are too ambiguous to constitute witness tampering in
violation of 18 U.S.C. § 1512. The court recognizes that this phone call occurred only
months after the assault of Musabayev’s son, which would make a reference to “serious
problems” more ominous. But in the absence of any evidence that Erlikh was himself aware
that the assault had occurred, and in view of Erlikh’s testimony disputing the nature of the
telephone call, the court is unable to conclude that any reference to serious problems, if
those words were actually uttered, was intended to be a threat of physical force aimed at
preventing Musabayev from testifying at the deposition.
Finally, the court is unable to conclude that the assault on Musabayev’s son in
November 2011 constitutes a racketeering act within the meaning of RICO or that it was
related to the enterprise. The assault was committed on foreign soil and therefore does not
constitute a crime in violation of any state law. Nor, for the reasons stated above, would it
constitute a violation of the Hobbs Act.15 The only connection between the assault and the
enterprise is a mysterious telephone call that Musabayev said he received days after the
assault from a person purporting to be calling on behalf of Makhametkulov and suggesting
that the assault was related to the ongoing extortionate efforts in which Makhametkulov was
then engaged. But, as noted above, those extortionate efforts have not been adequately
linked to the enterprise alleged here.
Moreover, although the incident as related by Musabayev is most serious, his
conflicting testimony about the severity of the injuries, as noted above, gives rise to some
doubts both about the incident itself and its purported relationship to the enterprise. No
documentary evidence was offered to substantiate the surgery about which Musabayev
testified, the years of treatment that his son has supposedly undergone, or the hundreds of
thousands of dollars purportedly spent on it. The court also finds it curious that Musabayev
apparently never informed the police about the phone call he received, despite the fact that it
was directly connected to a supposedly criminal assault. According to the advice given to
In closing argument the plaintiff’s attorney suggested that the assault constituted retaliation
against a witness in violation of 18 U.S.C. § 1513. The suggestion fails because no testimony had yet
occurred which would serve as the basis for any such retaliation. Counsel also suggested that
violations of 18 U.S.C. §§ 1958 and 1959 occurred which would serve as predicate acts. Section
1958 prohibits the use of interstate commerce facilities in connection with a murder for hire in
violation of the law of any state or of the United States. Aside from the fact that the assault was not
sufficiently proved to be connected to the enterprise, to the extent that the assault may have
constituted an attempted murder for hire, there is no showing that such a murder would have
violated the laws of any state or of the United States as the assault took place in Kazakhstan and
there was no evidence that any facilities of interstate commerce were used. Section 1959, which
prohibits violent crimes in aid of racketeering activity, is not a predicate act under section 1961(1).
Musabayev by the police investigator to whom he and Bektay reported the first instance of
intimidation he says he suffered, the police could not open an investigation until a criminal
act had occurred. Now that a potentially criminal act had occurred, if the phone call had
been reported to the police, an investigation into the phone call could have been opened
which might have yielded evidence linking whoever made it to Makhametkulov, a person
supposedly known to the police as a member of organized crime. Given all of these factors,
the sparse evidence offered by the plaintiff is simply insufficient to establish that the assault
was part of the pattern of racketeering activity alleged here.
The plaintiff is left then only with the racketeering acts directly related to the fraud in
obtaining the $200,000 transferred to IRP. These are simply insufficient to meet the
“continuity” requirement of RICO. “Predicate acts extending over a few weeks or months
and threatening no future criminal conduct do not satisfy this requirement: Congress was
concerned in RICO with long-term criminal conduct.” H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S.
229, 242 (1989); accord, e.g., First Capital Asset Mgmt., Inc. v. Satinwood, Inc., 385 F.3d 159, 181
(2d Cir. 2004) (“this Court has never found a closed-ended pattern where the predicate acts
spanned fewer than two years”). Accordingly, the plaintiff has failed to establish his RICO
Frau d u le n t Co n v e y an c e
The plaintiff’s claims to set aside fraudulent conveyances proceeds under the Debtor
and Creditor Law, N.Y. Debt. & Cred. Law §§ 270-281, under which a creditor may set aside
a conveyance “as against any person except a purchaser for fair consideration without knowledge of the
fraud at the time of the purchase.” Id. § 278 (emphasis added). Although the plaintiff has
identified a number of conveyances made by IRP with the funds obtained from the plaintiff,
there is no evidence that any of the conveyances were made without fair consideration or
that the persons receiving the funds had any knowledge of the fraud alleged by the plaintiff
here. The court therefore has no basis for setting any of the conveyances aside.
De c larato ry Ju d g m e n t
The plaintiff seeks a declaratory judgment from the court determining that it “never
contracted to buy, obtain, or otherwise accept for selling any merchandise from Erlikh or
IRP,” and that it never contracted with persons “purportedly hired” by Doubinine.
Amended Complaint ¶ 197.
Under the Declaratory Judgment Act, a federal court may “declare the rights and
other legal relations” of an interested party in a “case of actual controversy within its
jurisdiction.” 28 U.S.C. § 2201(a). There must exist a “definite, concrete, and substantial”
controversy to sustain jurisdiction under the Declaratory Judgment Act, however. ED
Capital, LLC v. Bloomfield Inv. Res. Corp., 155 F. Supp. 3d 434, 443-44 (S.D.N.Y. 2016), aff'd in
part and vacated in part on other grounds, — Fed. Appx. —, No. 16-331-CV, 2016 WL 4499756
(2d Cir. Aug. 26, 2016) (citing Muller v. Olin Mathieson Chem. Corp., 404 F.2d 501, 504 (2d
Cir.1968). The analysis is the same as that applicable to the “case or controversy” standard
embodied in Article III of the United States Constitution. Id. (citing Dow Jones & Co., Inc. v.
Harrods, Ltd., 237 F. Supp. 2d 394, 406 (S.D.N.Y. 2002). Moreover, even where jurisdiction
exists, federal courts have “unique and substantial discretion” to decline to hear a declaratory
judgment action. Wilton v. Seven Falls Co., 515 U.S. 277, 282 (1995).
The only potentially definite, concrete and substantial controversy between the
plaintiff and the defendants concerns the question whether the plaintiff contracted with
Erlikh to buy, obtain or accept for sale any merchandise delivered to Kazakhstan. Issue was
sufficiently joined on that question through the testimony of Musabayev, who said Kinojuz
never agreed to do so, and Erlikh, who said that Musabayev owed him money for
merchandise he had delivered to him. There is evidence that Erlikh and Musabayev, as
distinguished from the plaintiff Kinojuz, were in some manner involved in business dealings
that included merchandise of some kind that Erlikh delivered to Kazakhstan. However, the
contemporaneous communications between Erlikh and Musabayev corroborate Musabayev’s
position that those dealings were separate from the movie business of Kinojuz. See DX E-4.
Accordingly, Kinojuz is entitled to a declaration that it has no contractual obligations to
Erlikh with respect to any merchandise Erlikh or IRP delivered to Kazakhstan. As
Musabayev is not himself a party to this action, the judgment does not extend to any
contractual obligations he individually may owe to Erlikh.
Pre ju d g m e n t In te re s t
Under New York law, prejudgment interest is to be awarded for sums recovered
“because of an act or omission depriving or otherwise interfering with title to, or possession
or enjoyment of, property.” N.Y. C.P.L.R. § 5001(a). Recoveries for fraud fall within this
section. See, e.g., Huang v. Sy, 62 A.D.3d 660, 661-62, 878 N.Y.S.2d 398, 400 (2nd Dep’t 2009);
Eighteen Holding Corp. v. Drizin, 268 A.D.2d 371, 372, 701 N.Y.S.2d 427 (1st Dep’t 2000).
Interest is at the rate of 9% per annum, N.Y. C.P.L.R. § 5004, and runs from December 5,
2007, the date when the fraudulently obtained funds were transferred, see N.Y. C.P.L.R. §
For the foregoing reasons, the plaintiff Kinojuz I.P. is entitled (1) to an award of
$200,000 plus prejudgment interest at 9% per annum from December 5, 2007, to be paid
jointly and severally by the defendants, and (2) a declaratory judgment that it owes no
contractual obligations to the defendant Igor Erlikh relating to any merchandise delivered by
Erlikh to Kazakhstan. The clerk is directed to enter judgment accordingly.
Viktor V. Pohorelsky
VIKTOR V. POHORELSKY
United States Magistrate Judge
Brooklyn, New York
October 12, 2016
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