City of Almaty v. Ablyazov, 226 F. Supp. 3d 272

Background

Almaty and BTA (the "Kazakh Entities") allege that Kazakh officials (including Ablyazov and the Khrapunovs) embezzled billions in Kazakhstan and laundered proceeds through foreign vehicles culminating in investments by SDG/ Triadou in New York real estate.
Triadou, a Luxembourg/Suisse-controlled special-purpose vehicle, invested embezzled funds in NYC projects (Flatotel, Cabrini) and later executed transactions alleged to be sham liquidations and undervalued assignments to conceal the theft.
The Kazakh Entities filed RICO (18 U.S.C. § 1961 et seq.) crossclaims alleging patterns of racketeering (money laundering, wire/mail fraud, etc.) and seeking treble damages under § 1964(c).
Triadou (joined by Ablyazov and the Khrapunovs) moved to dismiss, arguing RICO claims are extraterritorial after RJR Nabisco and thus barred because the alleged injury was suffered in Kazakhstan.
The district court previously denied dismissal on Rule 9(b)/12(b)(6) grounds but invited supplemental briefing after RJR Nabisco; following that briefing the court dismissed the RICO claims with prejudice for failure to allege a domestic injury under RJR Nabisco.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether §1964(c) permits private RICO suits for injuries suffered abroad	Kazakh Entities: domestic predicates in U.S. (money laundering, investments) causally connected to their losses, or separate U.S. property injuries, so injury is domestic	Triadou: injury is looting of Kazakhstan assets occurring in Kazakhstan; U.S. conduct was only post-theft laundering/ concealment and cannot convert a foreign injury into a domestic one	Held: §1964(c) requires a domestic injury; Kazakh Entities alleged losses were suffered in Kazakhstan and RICO claims dismissed
Whether location of predicate acts controls domestic/foreign inquiry	Kazakh Entities: domestic predicates with nexus to losses make injury domestic	Triadou: situs of injury is independent; predicate location alone cannot make a foreign injury domestic	Held: location of injury is independent inquiry from predicate acts; predicate location insufficient to render injury domestic
Whether post-theft laundering/ U.S. investments can be proximate cause of injury	Kazakh Entities: laundering and U.S. transactions were integral and had sufficient causal nexus	Triadou: misappropriation was complete in Kazakhstan before U.S. acts; U.S. acts only concealed or maintained control and did not proximately cause the original loss	Held: post-theft U.S. acts only concealed or facilitated retention; not alleged as indispensable to the theft, so they do not transform the foreign injury into a domestic one
Whether any separate U.S. property injury was plausibly alleged	Kazakh Entities: Triadou’s below-market assignment and continued control diminished Kazakh property interests in U.S. assets	Triadou: Kazakh Entities have no cognizable property interest in the U.S. assets at issue, and assignment did not reduce value of any Kazakh-owned property	Held: Court found no plausible allegation that Kazakh Entities suffered a distinct injury to property in the U.S.; attempts to identify such injuries fail

Key Cases Cited

RJR Nabisco, Inc. v. European Cmty., 136 S. Ct. 2090 (2016) (private RICO plaintiffs must allege and prove a domestic injury under §1964(c))
Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for pleading)
Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (antitrust/pleading standard and plausibility test)
Hecht v. Commerce Clearing House, Inc., 897 F.2d 21 (2d Cir. 1990) (elements required to state a private RICO claim)
Sack v. Low, 478 F.2d 360 (2d Cir. 1973) (economic injury generally felt where plaintiff resides; accrual/situs principles)