Legal News

Scheduled to Argue RICO, Russians Pull No-Show

By Dan Slater

As if Russian courts weren’t unpredictable enough, Bank of New York Mellon was thrown a new curve ball today in its battle with the Russians. One of the central questions in the case — which we blogged back in June — centers on whether the U.S. RICO statute applies in foreign courts.

Quick background: The Russian Federal Customs Service is suing BONY over an illegal wire transfer scheme from the 1990s, when two Russian émigrés — one of whom worked for BONY — moved $7.5 billion to American accounts from Russia via unlicensed wire transfers. They later pleaded guilty to various offenses under U.S. law. BONY, under a non-prosecution agreement with the DOJ, acknowledged failure to properly monitor wire transfer activity and paid a fine of $14 million. Now the Russians claim they, too, should be awarded a fine, to the tune of $22.5 billion (not a typo), and are basing their argument on the RICO statute.

Now Fortune’s Roger Parloff is reporting that that the Russian Federal Customs Service failed to send a representative to appear in a Moscow court for the resumption of pretrial hearings. Damien Marshall, a Boies Schiller & Flexner partner who’s repping BONY along with Jonathan Schiller, told Parloff that Judge Lyodmila Pulova said the customs service had faxed her a petition requesting a delay until Oct. 15, and explaining only that the the service’s lawyers were busy with other matters. LB Note to Russia Federal Customs Service: Gin up a better excuse next time!

Judge Pulova was similarly unimpressed. She overruled the request and agreed to hear testimony from two of the bank’s U.S. experts — including former attorney general Richard Thornburgh, who’s now a counsel at K&L Gates. When the witnesses finished, Pulova put off continuation of the hearing until Nov. 13.

When Parloff reached out to the Russian’s lawyer, Steven C. Marks — the Florida plaintiffs lawyer with a specialty in plane crashes — he did not immediately respond, though the receptionist at Marks’s Moscow hotel confirmed that Marks had checked in. Strange.

And here’s another curiosity of the case: The defense is using Gregory Joseph as a RICO expert. Today, Joseph reportedly presented an 80-slide PowerPoint presentation to the court, explaining why he believes that the case would require the court to interpret U.S. criminal laws. Why is it strange that Joseph was in Moscow today? Well, if you remember, Dear LB’er, Joseph is repping Citigroup in its battle with Wachovia and Wells Fargo.

Full post as published by Law Blog - WSJ.com on October 06, 2008 (boomark / email).