Hourani v. Mirtchev

• Decision Date: 08 May 2013
• Docket Number: Civ. No. 10–1618 (TFH).
• Parties: Devincci Salah HOURANI, et al., Plaintiffs, v. Alexander V. MIRTCHEV, et al., Defendants.
• Court: U.S. District Court — District of Columbia

943 F.Supp.2d 159

Devincci Salah HOURANI, et al., Plaintiffs,

v.Alexander V. MIRTCHEV, et al., Defendants.

Civ. No. 10–1618 (TFH).

United States District Court, District of Columbia.

May 8, 2013.

Stuart H. Newberger, Crowell & Moring LLP, Washington, DC, Howard W. Foster, Matthew Galin, Foster, P.C., Chicago, IL, for Plaintiffs.

Lashon K. Kell, Richard W. Beckler, Bracewell & Giuliani LLP, Stephen Sale, Sale & Quinn, P.C., Washington, DC, for Defendants.

MEMORANDUM OPINION

THOMAS F. HOGAN, District Judge.

This case involves alleged violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1961 et seq., and an alleged conspiracy to defame. Plaintiffs contend that Defendants were instrumental in devising and coordinating a vast racketeering and money laundering scheme, the goal of which was to strip Plaintiffs of their assets in multi-million dollar media businesses located in the Republic of Kazakhstan (“Kazakhstan”)and to defame Plaintiffs by publishing false statements on the website of the Embassy of the Republic of Kazakhstan (“Kazakh Embassy”) in Washington, D.C. Pending before the Court are Defendants' Motion to Dismiss the First Amended Complaint (“Am. Compl.” or “Amended Complaint”) [Docket No. 70] and Motion for Rule 11 Sanctions for Filing an Improper Amended Complaint [Docket No. 82]. The Court has considered thoroughly the parties' arguments, submissions, and the entire record herein. For the reasons below, Defendants' motion to dismiss the Amended Complaint is granted with prejudice and motion for Rule 11 sanctions is denied.

I. Background

Plaintiffs Devincci and Issam Hourani ¹ (collectively, “the Houranis”) are brothers and businessmen. Defendant Alexander Mirtchev heads Defendant Krull Corporation, a “global strategic solutions provider” with its principal place of business in the District of Columbia. Am. Compl. ¶ 13 [Docket No. 68]. According to the Amended Complaint,² which is the operative complaint for the purposes of assessing Defendants' Motion to Dismiss, the Houranis were, until 2007, very successful businessmen who operated “oil, broadcasting, and publishing companies” in the Republic of Kazakhstan. Id. ¶ 11. The specific companies at issue in Defendants' pending motions are KTK Television and Alma Media, two media companies in which the Houranis held shares. See id. ¶ 17. Plaintiffs allege that Dariga Nazarbayev,³ the daughter of the Kazakh President, Nursultan Nazarbayev, “sought to amass ownership of the nation's major media outlets” as she contemplated a political career. Id. ¶ 12. Her goal was to “have the media portray her in the most favorable light” and to secure “the vast wealth and ownership [of] such large businesses.” Id. ¶ 12. She therefore sought Defendants' assistance in actualizing her plan. Id. ¶ 13. Defendant Mirtchev allegedly agreed, from the District, to:

1) “assist [Dariga] with monetizing her control of the company,”

2) “deposit some of the proceeds of the seized businesses in western bank accounts where it would not be taxed or otherwise scrutinized,”

3) “help Dariga use the money to acquire U.S. and European currencies [which] would raise Kazakhstan's standing in the eyes of the western political establishment,” and

4) “use his influence to falsely brand the Houranis as international criminals and terrorists [to] neutralize the Houranis' ability to attack her or her father in response to the extortion of their businesses.”

Id. ¶ 16. This conspiracy, according to Plaintiffs, is consistent with Defendant Mirtchev's “Superkhan” memorandum ⁴ to the Kazakh President, in which Defendant Mirtchev advised the President on how to consolidate his power “at the expense of business leaders.” Id. ¶ 15.

Plaintiffs allege that their businesses were subsequently harassed by various government entities. Id. ¶ 17. Armed police raided their offices on June 27, 2007. See id. ¶ 18–19. Plaintiff Devincci Hourani was also under surveillance by the KNB (the Kazakh equivalent of the KGB), who were allegedly “acting at the behest of Dariga and Mirtchev.” Id. ¶ 20. Under this pressure, in July 2007, Devincci met with Dariga to try to address the situation. Id. ¶ 21. She offered to use her ties to the government to “protect” the Houranis if he would sign over his family's shares in two mass media companies, KTK Television and Alma Media. Id. The following day, Devincci, under duress, signed over to the First Presidential Fund the family's shares in these two companies. Id. Dariga subsequently “siphoned the companies' assets.” Id. ¶ 25. In the face of continued harassment, the Houranis left Kazakhstan in 2008. Id. ¶ 28. Since then, Dariga has allegedly compensated Defendant Mirtchev for his role in the extortion of Plaintiffs' assets by wiring money (partially from revenues from Plaintiffs' businesses) to the bank accounts of Defendant Krull Corporation, as well as to other bank accounts. Id. ¶¶ 29–31. Defendant Mirtchev has allegedly concealed the money from the extortion to avoid incurring tax liability. Id. ¶ 40.

Additionally, on December 18, 2008, Defendants Mirtchev and Krull Corporation allegedly “published” or “caused” the Kazakh Embassy to publish defamatory statements about Plaintiffs on the embassy website, mostly related to Plaintiffs' alleged terrorist ties.⁵Id. ¶ 58. Defendants' involvement in the publication of these statements was “concealed” by the Kazakh government and was only discovered by Plaintiffs in April 2010. Id. ¶ 62.

Plaintiffs' initial complaint in this action was filed on September 23, 2010. On April 12, 2012, this Court granted Plaintiffs' motion for leave to file an amended complaint. See Hourani v. Mirtchev, 282 F.R.D. 278 (D.D.C.2012) [Docket No. 67]. Plaintiffs' Amended Complaint alleges that Defendantscommitted a pattern of racketeering activity, and conspired to do so, in violation of RICO, 18 U.S.C. § 1962(c) (Count I); Defendants conspired with Dariga Nazarbayev to extort Plaintiffs' businesses in violation of RICO, 18 U.S.C. § 1962(d) (Count II); and Defendants conspired to defame Plaintiffs (Count III). Id. ¶¶ 42–65. The Amended Complaint seeks damages and injunctive relief. Id. On May 17, 2012, Defendants moved to dismiss Plaintiffs' first amended complaint. See Defs.' Mem. in Supp. of Mot. to Dismiss [Docket No. 71]. On November 6, 2012, Defendants moved for Rule 11 sanctions for filing an improper amended complaint. See Defs.' Mot. for Rule 11 Sanctions [Docket No. 82]. The Court addresses these motions in turn.

II. Defendants' Motion to DismissA. Motion to Dismiss Standard

A complaint must contain “enough facts to state a claim ... that is plausible on its face,” not merely one that is “conceivable.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007); see also Am. Fed'n of Gov't Emps., Local 2741 v. District of Columbia, 689 F.Supp.2d 30, 32–33 (D.D.C.2009). That is, the plaintiffs must “plead [ ] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). The Court must “accept as true all of the factual allegations contained in the complaint,” Atherton v. District of Columbia, 567 F.3d 672, 681 (D.C.Cir.2009), and allow the plaintiff “the benefit of all inferences that can be derived from the facts alleged,” Kowal v. MCI Commc'ns Corp., 16 F.3d 1271, 1276 (D.C.Cir.1994). However, the Court may not “accept inferences drawn by plaintiffs if such inferences are unsupported by the facts set out in the complaint.” Id. A plaintiff must show “more than a sheer possibility that a defendant has acted unlawfully,” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937, and therefore must provide “more than labels and conclusions,” Twombly, 550 U.S. at 555, 127 S.Ct. 1955. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements,” will not suffice. Iqbal, 556 U.S. at 678, 129 S.Ct. 1937.

B. Analysis of RICO Claims

The Amended Complaint alleges two violations of RICO under 18 U.S.C. § 1962(c) and (d), which state:

c) 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.

(d) It shall be unlawful for any person to conspire to violate any of the provisions of subsection (a), (b), or (c) of this section.

Count I alleges that Defendant Mirtchev ⁶ violated § 1962(c) by conducting the “enterprise,” i.e., Krull Corporation, through a “pattern of racketeering activity.” Am. Compl. ¶ 44. This “pattern” refers to Defendant Mirtchev's conspiracy to extort Plaintiffs' businesses and his laundering of some of the proceeds of the extortion through various bank accounts. Id. ¶¶ 33–41. Plaintiffs asserts that these acts constitute “racketeering activity” under 18 U.S.C. § 1961(1)(A)-(B)⁷ and § 1961(1)(A). See id. ¶¶ 29–33; Pls.' Opp'n to Defs.' Mot. to Dismiss at ECF 11 [Docket No. 73]. Count II is essentially the same as Count I, except that it is made pursuant to 18 U.S.C § 1962(d). Pls.' Opp'n to Mot. to Dismiss at ECF 11.

Plaintiffs frame their allegations as a unified conspiracy in which Defendant Mirtchev, while in the United States, “approved” of Dariga's extortion of Plaintiffs' media businesses, KTK Television and Alma Media, both of which were located in Kazakhstan. Id. at ECF 13. Dariga then “foster[ed] a campaign” in which Plaintiffs and their businesses suffered harassment and intimidation” at the hands of the Kazakh police. Am. Compl. ¶ 3. While in Kazakhstan, Dariga forced Plaintiffs to sign over their business shares. Id. ¶¶ 21–23. Dariga then paid Defendant Mirtchev for his assistance by wiring into Krull Corporation bank accounts...