S.K. Innovation, Inc. v. Finpol, 041612 DCDC, 10-138 (JEB)

Docket NºCivil Action 10-138 (JEB)
Opinion JudgeJAMES E. BOASBERG, District Judge.
Party NameS.K. INNOVATION, INC., et al., Plaintiffs, v. FINPOL, et al., Defendants.
Case DateApril 16, 2012
CourtUnited States District Courts, District of Columbia

S.K. INNOVATION, INC., et al., Plaintiffs,


FINPOL, et al., Defendants.

Civil Action No. 10-138 (JEB)

United States District Court, District of Columbia.

April 16, 2012


JAMES E. BOASBERG, District Judge.

Plaintiffs are two Kazakhstani citizens and three United States corporations who seek to bring suit under the Alien Tort Statute, 28 U.S.C. § 1350, against two government agencies of the Republic of Kazakhstan. Because this Court lacks subject-matter jurisdiction under the Foreign Sovereign Immunities Act, 28 U.S.C. §§ 1330, 1602 et seq., their suit cannot proceed. Plaintiffs have also submitted a Proposed Amended Complaint that adds as defendants various Kazakhstani government officials. As it contains no allegations of fact to support this Court's personal jurisdiction over the additional proposed defendants, the Court must find that its filing would be futile.

I. Background

According to the Proposed Amended Complaint, which must for now be presumed true, Plaintiffs Serik Bektayev and Adyl Bektayev are brothers who hold Ph.D degrees and describe themselves as "prominent businessm[e]n in Kazakhstan, with substantial international business activities, including in the U.S." Prop. Am. Compl., ¶¶ 4-5. Both are currently imprisoned in detention centers in Kazakhstan. Id. Plaintiffs S.K. Innovation, Inc. and S.K. Biolfuel, Inc. are Virginia corporations of which the Bektayevs are principals and shareholders. Id., ¶¶ 1-2. Plaintiff Human Redemption Foundation is a Delaware non-profit corporation of which the Bektayevs are members and beneficiaries, and which aims to end torture and the inhuman, degrading treatment the Bektayevs allege they have suffered in Kazakhstan. Id., ¶ 3.

Defendants are two Kazakhstani government agencies: the Agency on Economic Crimes and Corruption, known as "Finpol, " and the Committee on Penal Enforcement Facilities, as well as 100 unnamed Doe defendants. Id., ¶¶ 6-7. In their Proposed Amended Complaint, Plaintiffs seek to add five Kazakhstani government officials as additional defendants. See id., ¶¶ 8-12.

Plaintiffs' Complaint is full of intrigue and misfortune for the Bektayevs, who have been active in real estate and development projects in Kazakhstan for more than a decade. See id., ¶¶ 20, 25. The story of the circumstances that led to their prosecution and imprisonment begins in 2005, when an officer of Kazakhstan's Interior Affairs Department (named as an individual defendant in Plaintiffs' Proposed Amended Complaint) allegedly accepted "an illegal financial contribution" from one of Serik Bektayev's business competitors to open a criminal investigation into his activities. See id., ¶ 32. Over the next few years, Plaintiffs plead that Serik was threatened by these competitors, who, in 2008, "made clear their demands [to Serik] to yield [his] business interests" and claimed that "they were capable [of] destroy[ing] Serik's businesses by using [Kazakhstani] law enforcement." Id., ¶ 35. In the spring of 2008, Serik became aware that Finpol was investigating him and had initiated "one or more criminal cases" against him. Id., ¶ 36.

Plaintiffs then describe a complicated scheme by which Serik's competitors sought to gain control of (or "raid") his business assets. See id. For example, the Proposed Amended Complaint alleges that one of Serik's business competitors forged a power of attorney purportedly empowering him to manage and restructure "SN, " one of the real-estate-development businesses with which Serik was involved. See id., ¶¶ 28, 37-39. This power of attorney was then "used to convert the holdings of SN and transfer the assets to another parent entity." Id. Plaintiffs plead that the fraudulent POA was then "readily used by authorities at the Ministry of Justice to take away from Serik the control over SN's assets." Id.

Around this same time, according to the Proposed Amended Complaint, Serik was hospitalized for a heart condition and potential brain tumor. See id., ¶¶ 42-44. While "Serik was in the hospital, " Plaintiffs plead on information and belief, "Finpol speedily prepared a criminal case against him, targeting SN's business and alleging financial improprieties, attributed to Serik and several of his employees." Id., ¶ 44. Plaintiffs then describe a series of physical and due-process abuses that they attribute to Defendants. On July 26, 2008, Serik was summoned from the hospital to the prosecutor's office in Almaty, Kazakhstan, where he was interrogated regarding SN's business and accounting practices. Id., ¶ 45. While there, he "felt heart irregularities" and was eventually returned to the hospital, where he had a heart attack two days later while being held in the hospital's psychiatric ward. Id., ¶¶ 45-46. On July 29, the deputy prosecutor for Almaty came to Serik's hospital room and, while Serik was unconscious following the administration of medication, read to him "an accusatory act" and sought, over his doctors' objections, to remove him to a detention center. Id., ¶ 47. Plaintiffs allege Serik attempted to resist arrest, but was beaten, drugged, and removed to the detention center. Id., ¶ 48. "On information and belief, Finpol was directing these extraordinary measures applied to Serik." Id., ¶ 49.

The Proposed Amended Complaint further catalogues abuses that Serik suffered while awaiting trial and sentencing in the detention center in Almaty. It recounts numerous beatings, see, e.g., id., ¶¶ 48, 58, 60; a host of untreated medical ailments, see id., ¶¶ 50-51, 53, 68; an official plot to kill him, see id., ¶¶ 54-57; his three suicide attempts, see id., ¶¶ 87, 90, 95; a defective pre-trial investigation, see id., ¶¶ 69-71; trial sessions fraught with "endless violations of the minimum procedural standards, " see id., ¶ 73; and a very irregular conviction and sentencing. See id., ¶¶ 92-97.

With respect to Serik's business interests, Plaintiffs allege that some unnamed third party used the fraudulent POA to vest control over SN in a Russian entity, ZAO Mars Systems of Radiolocation (Mars). Id., ¶ 75. They further allege that the real beneficiaries of the transfer were Serik's business competitors in Kazakhstan. Id., ¶ 76. Additionally, "[a]s a part of the prosecution, " Plaintiffs allege Finpol froze the assets of SN, Serik, and his family. Id., ¶ 80. "On information and belief, all that was [] done and endorsed by Finpol, to allow special interests to take control of those assets, to suppress Serik's and Adyl's resistance, and to resell those assets to third parties." Id., ¶ 81.

Plaintiffs allege a similar series of events involving Serik's brother Adyl, who served as the principal of a Kazakhstani company called ABK-5 TOO. Id., ¶ 99. Like Serik, Adyl heard rumors that his competitors wanted to obtain his realty assets and raid his businesses. Id., ¶ 100. Plaintiffs allege that after an investigation into Adyl was opened, the ABK-5 office "was raided, on information and belief, by certain authorities, believed to be Finpol's officers, " who took "cash and documents held at the office" and "confiscated certain original[] sets of documents" from ABK-5's accountant. Id., ¶¶ 108-09. Instead of having "the documents audited by a certified government body, on information and belief, Finpol's officers passed the documents to a private accounting company, not licensed for audit, which was to prepare an accusatory document, doing so in collusion with those who ordered such an audit." Id., ¶ 109.

Adyl was subsequently charged with an economic crime alleging that he failed to "fulfill his obligations [to] the shareholders in the development project Naurys." Id., ¶¶ 110. On October 6, 2008, Adyl was arrested and has since been detained in the detention center in Astana, Kazakhstan. Id. Plaintiffs assert that while there, like Serik, Adyl has been beaten, id., ¶ 111; has suffered severe medical ailments for which he received inadequate treatment, id., ¶¶ 112-14; has been threatened by Finpol investigators, id., ¶ 115; and continues to be detained despite a court ruling that at least a portion of his detention has been unlawful. Id., ¶ 117.

On January 25, 2010, Plaintiffs brought this suit against Finpol and the Committee on Penal Enforcement Facilities asserting one claim under the Alien Tort Statute (ATS), also known as the Alien Tort Claims Act, 28 U.S.C. § 1350. See Prop. Am. Compl., ¶ 149. Defendants initially moved to dismiss the Complaint on April 5, 2010, under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). Plaintiffs opposed the motion on July 23, 2010. Following the D.C. Circuit's issuance of its opinion in Doe v. Exxon Mobile Corp. , 654 F.3d 11 (D.C. Cir. 2011), last July, the Court permitted Defendants to rebrief their Motion to Dismiss and denied the original Motion as moot. In accordance with the new briefing schedule approved by the Court, Defendants filed a new Motion to Dismiss on September 2, 2011. Plaintiffs filed their Opposition on October 16, and Defendants filed a Reply on October 31. The Motion is now ripe. Also ripe for decision are two motions subsequently filed by Plaintiffs that seek leave of the Court to amend the Complaint to add additional defendants. The Court will consider each of these motions in turn.

II. Legal Standard

A. Motion to Dismiss

In evaluating Defendants' Motion to Dismiss, the Court must "treat the complaint's factual allegations as true... and must grant plaintiff the benefit of all inferences that can be derived from the facts alleged.'" Sparrow v. United Air Lines, Inc. , 216 F.3d 1111, 1113 (D.C. Cir. 2000) (quoting Schuler v. United States , 617 F.2d 605, 608 (D.C. Cir. 1979)) (internal citation omitted); see also Jerome Stevens Pharms., Inc. v. FDA , 402 F.3d 1249, 1253 (D.C. Cir. 2005). This standard governs the Court's considerations of Defendants' Motions under both Rules 12(b)(1) and 12(b)(6). See Scheuer v. Rhodes , 416 U.S....

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