Hourani v. Alexander
| Decision Date | 31 July 2015 |
| Docket Number | 13–7089.,Nos. 13–7088,s. 13–7088 |
| Citation | 796 F.3d 1 |
| Parties | Devincci Salah HOURANI and Issam Salah Hourani, Appellants, v. Alexander V. MIRTCHEV and Krull Corporation, Appellees. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Howard W. Foster argued the cause for appellants/cross-appellees. With him on the briefs was Louis G. Adolfsen.
Jeffrey A. Lamken argued the cause for appellees/cross-appellants. On the briefs were Warren W. Harris, Jeffrey L. Oldham, Richard W. Beckler, Stephen Sale, and John D. Quinn. G. Robert Blakey and LaShon Kell entered appearances.
Before: TATEL, MILLETT and PILLARD, Circuit Judges.
Opinion for the Court filed by Circuit Judge MILLETT.
Two Kazakh businessmen claim that the daughter of the President of Kazakhstan extorted hundreds of millions of dollars' worth of their business assets in Kazakhstan. She did so, they claim, with the help of the defendants in this case, Alexander Mirtchev and his District of Columbia-based business, Krull Corporation. At the heart of the dispute is whether the complaint alleges sufficient domestic misconduct by Mirtchev and Krull Corporation to state a claim under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961 et seq., the Hobbs Act, 18 U.S.C. § 1951, or District of Columbia defamation law. The district court dismissed the complaint for failure to state a claim. The court also denied a motion for sanctions filed by Mirtchev and Krull Corporation. We affirm.
Congress enacted the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961 et seq., commonly known as “RICO,” to “eradicat [e] * * * organized crime in the United States by strengthening the legal tools in the evidence-gathering process, by establishing new penal prohibitions, and by providing enhanced sanctions and new remedies to deal with the unlawful activities of those engaged in organized crime,” United States v. Turkette, 452 U.S. 576, 588, 101 S.Ct. 2524, 69 L.Ed.2d 246 (1981) (quoting Organized Crime Control Act of 1970, Pub.L. No. 91–452, 84 Stat. 922, 923 (Oct. 15, 1970)).
To that end, RICO authorizes both criminal penalties, 18 U.S.C. § 1963, and civil remedies, id. § 1964, against those who engage in a “pattern of racketeering activity” through or involving an “enterprise,” id. § 1962. “[R]acketeering activity” means the commission or threatened commission of any of a long list of state and federal crimes, including “murder, kidnapping, * * * robbery, bribery, extortion,” and witness tampering. Id. § 1961(1).
RICO, however, only targets a “pattern” of such racketeering activity, which means the commission of at least two acts of racketeering within a certain period of time (generally ten years). 18 U.S.C. § 1961(5). The commission of those acts must be through an “enterprise,” which is defined to include “any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity[.]” Id. § 1961(4).
As relevant here, RICO prohibits “any person employed by or associated with any enterprise” that affects interstate or foreign commerce from “conduct[ing] or participat[ing], directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity,” 18 U.S.C. § 1962(c), or conspiring to do so, see id. § 1962(d).
In addition to criminal penalties enforced by the United States, RICO authorizes “[a]ny person injured in his business or property by reason of a violation [of the statute]” to sue in federal district court and “recover threefold the damages he sustains and the cost of the suit[.]” 18 U.S.C. § 1964(c).
The Hobbs Act makes it a crime to “in any way or degree obstruct [ ], delay[ ], or affect[ ] commerce or the movement of any article or commodity in commerce, by robbery or extortion,” as well as to “conspire[ ] so to do.” 18 U.S.C. § 1951(a). The term “extortion” in the Hobbs Act means “the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence,or fear, or under color of official right.” Id. § 1951(b)(2).
The “commerce” that the Hobbs Act polices is all “commerce within the District of Columbia, or any Territory or Possession of the United States; all commerce between any point in a State, Territory, Possession, or the District of Columbia and any point outside thereof; all commerce between points within the same State through any place outside such State; and all other commerce over which the United States has jurisdiction.” Id. § 1951(b)(3).
Because the court below dismissed the case for failure to state a claim, we accept the following facts, drawn from the amended complaint, as true. See, e.g., Klayman v. Zuckerberg, 753 F.3d 1354, 1357 (D.C.Cir.2014).
Devincci Hourani and his brother Issam Hourani are businessmen who previously owned “oil, broadcasting, and publishing companies” in the Republic of Kazakhstan. Amended Complaint ¶ 11. As relevant here, Devincci, Issam, and Issam's wife, Gulshat, owned shares in KTK Television and Alma Media Conglomerate, “the largest media holding company in Kazakhstan.” Id. ¶¶ 14, 17. Their holdings in Kazakhstan, including those media properties, were worth “hundreds of millions, perhaps billions, of dollars.” Id. ¶ 28.
Trouble began for the Houranis in June 2007, when armed agents of the KNB (the Kazakh offshoot of the KGB) raided the Hourani family's offices. Amended Complaint ¶¶ 18–20. In the following weeks, “pressure from various authorities mounted” under the direction of Dariga Nazarbayeva, daughter of Kazakhstan's President, Nursultan Nazarbayev. Id. ¶¶ 20–21.1 Devincci met with Nazarbayeva in July 2007, and she then “offered to use her influence with the government to try to ‘protect’ his family's businesses from further harassment if he would sign over his family's shares in the mass media companies in which they held interests[.]” Id. ¶ 21. Devincci, “believ[ing] that he had no choice but to capitulate to her demand,” id. ¶ 22, and acting “under duress,” signed the paperwork to turn over his, Issam's, and Gulshat's shares in KTK and Alma Media “to Dariga for her use,” id. ¶ 23. Elsewhere, though, the amended complaint alleges that Devincci signed over the shares to the “First Presidential Fund.” Id. ¶ 21. The amended complaint does not explain what that Fund is or whether Dariga Nazarbayeva controls it.
According to the amended complaint, Nazarbayeva, who “had no official title in Kazakhstan,” Amended Complaint ¶ 34, was attempting “to amass ownership of the nation's major media outlets” in “contemplat[ion of] a political career as a possible successor to her father,” id. ¶ 12. She thus “sought to have the media portray her in the most favorable light,” as well as to secure “the vast wealth and ownership such large businesses would confer.” Id.
The complaint further alleges that Dariga sought the assistance of the defendants in this case, Alexander Mirtchev and his “global strategic solutions” consulting firm, Krull Corporation. Amended Complaint ¶ 13. Both Mirtchev and Krull Corporation are based in Washington, D.C. Id. Nazarbayeva's plan to amass control of Kazakh media was alleged to be “consistent with” Mirtchev's earlier recommendation to President Nazarbayev, made “in a memorandum informally known as the ‘Superkhan’ document, in which Mirtchev had counseled the President of Kazakhstan on how he could consolidate power for himself and his family at the expense of business leaders.” Id. ¶ 15.
According to the complaint, Mirtchev agreed to help Nazarbayeva gain control of the Houranis' assets. His specific role in the scheme is alleged to have taken three forms. Amended Complaint ¶ 16. First, he “agreed to assist [Nazarbayeva] with monetizing her control” of the Houranis' assets. Id. Second, he agreed to “deposit some of the proceeds of the seized businesses in western bank accounts where it would not be taxed or otherwise scrutinized.” Id. Third, “Mirtchev agreed to use his influence to falsely brand the Houranis as international criminals and terrorists.” Id.
The Hourani brothers filed suit against Mirtchev and Krull Corporation in the United States District Court for the District of Columbia in September 2010. That first complaint gave a somewhat different version of events. In particular, the initial complaint had the Kazakh Government, rather than Dariga Nazarbayeva, expropriating the Houranis' assets. See Original Complaint ¶¶ 106, 126. The expropriation was alleged to be a specific step in executing the plan outlined in the “Superkhan memorandum,” rather than merely “consistent with” it. Compare Original Complaint ¶ 131, with Amended Complaint ¶ 15.
Other documents that the Houranis filed initially with the district court purportedly tied Mirtchev to the Superkhan memorandum, including a letter from the Deputy Prosecutor General of Kazakhstan, Ashkat Daulbaev, to the Kazakh Ambassador to the United States, that identified Mirtchev as responsible for the campaign of intimidation and expropriation against the Houranis. See Houranis' Opposition to Initial Motion to Dismiss ¶ 19; Declaration of Devincci Hourani ¶¶ 16–20 [JA 289–290]; Declaration of Issam Hourani ¶ 30. [JA 279]
Mirtchev and Krull Corporation challenged the Daulbaev letter and other documents as forgeries and moved to dismiss the complaint. The Houranis then filed an amended complaint, which is the version at issue in this appeal. As amended, the complaint contains no mention of the Daulbaev letter, although it does still reference the Superkhan memorandum. The complaint now alleges that Mirtchev conspired to, and did, violate RICO by engaging in criminal activity through the Krull Corporation, in violation of 18 U.S.C. § 1962(c) and (d). Amended Complaint ¶¶ 42–52. The specific predicate racketeering crimes alleged are money...
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