Kinojuz I.P. (A Co. v. Irp Int'l Inc.

• Decision Date: 12 October 2016
• Docket Number: CV-11-299 (VVP)
• Parties: KINOJUZ I.P. (a company under the laws of Kazakhstan), Plaintiff, v. IRP INTERNATIONAL INC., OULIAN DOUBININE, and IGOR ERLIKH, Defendants.
• Court: U.S. District Court — Eastern District of New York

KINOJUZ I.P. (a company under the laws of Kazakhstan), Plaintiff, v. IRP INTERNATIONAL INC.,OULIAN DOUBININE, and IGOR ERLIKH, Defendants.

CV-11-299 (VVP)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

October 12, 2016

FINDINGS OF FACT AND CONCLUSIONS OF LAW

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.

FACTS

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 inthe 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 $800,000and 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 IRPhad 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 movie project.

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,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 beentransferred to IRP was still in IRP's account, he was otherwise unable to provide an explanation for the funds, and Bektay asked to...