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Claimant Fraud and Asset Recovery

PCB provides a world-class team of lawyers with decades of expertise working together in substantial and complex international fraud and asset recovery cases. We come up with creative solutions, and work at the great speed that is required for these cases. Our experience in building cases, and in tackling structures and other hurdles put in the way of enforcement, enables us to obtain recoveries for our clients.

We regularly act for financial institutions, state-owned banks, state bodies, multi-national corporations and high net worth individuals in tackling some of the most challenging cases. We provide insight, strategy and a seamless cross-border approach.

OUR EXPERTS

Named by Who’s Who Legal as Asset Recovery Law Firm of the year in 2019, and ranked in the top tier globally for asset recovery by Chambers & Partners, PCB is described as “skilled at obtaining global interim relief and at dealing with jurisdictional issues that arise”.

PCB has been ranked consistently by the main legal directories in the top tier of firms in England in civil fraud, being described as the pre-eminent boutique” in London’s civil fraud arena, who assist “high-end clients including banks and corporations in getting to the bottom of sophisticated fraud scenarios”.

Partners and associates have received market recognition for their expertise:

  • Anthony Riem and Trevor Mascarenhas are identified as Leading Individuals by The Legal 500 and are in the top tier for civil fraud practitioners in Chambers & Partners. They have also repeatedly been named Global Elite Thought Leaders in asset recovery by Who’s Who Legal.
  • Anthony Riem wins high praise from sources for his “commercial and pragmatic outlook” as well as his great skill in handling hugely complex asset recovery cases.
  • Trevor Mascarenhas is widely respected across the UK market for his standout work on contentious insolvency, fraud and asset tracing matters.
  • In December 2019, Anthony Riem and Trevor Mascarenhas were invited by UNCITRAL as experts in the field to attend its inaugural colloquium on international asset recovery, for which they wrote a detailed paper about potential international measures to improve recoveries in cross-border cases
  • According to Who’s Who Legal, Nick Ractliff is recommended by numerous sources for his depth of international expertise in the asset recovery space, and he is also praised by the Legal 500 for his civil fraud work.
  • Jon Felce is identified as one of only two Next Generation Partners by The Legal 500 in civil fraud and he was recognised by one legal publication as its ‘Lawyer in the News’ following one of his successes. He is a founding committee member of a community established for next generation asset recovery practitioners.
  • The Legal 500 also identifies Natalie Todd as a key individual in civil fraud.
  • Our strength in depth is recognised by Chambers & Partners, which says that “Associates there have to punch above their weight in terms of the work they do, and they are all solid and reliable as a result”.
  • Associates Rachel Turner and Camilla Cook are singled out by The Legal 500.

In addition, PCB utilises a network of international asset recovery specialists built up over a period of 30 years.

OUR TRACK RECORD

PCB is known for its tenacity in building cases and in tracing, freezing and recovering assets, often being at the cutting edge of the law on interim relief, and using the full armoury of the law in order to obtain results for clients. For example, our cases include:

  • Obtaining a judgment in excess of US$180m for deceit where the case against the defendant was always entirely built on inferences that he had procured the fraudulent documents that had misled our client into making substantial loans to his companies
  • Obtaining the first judgment which established that a search order can be granted against a third party, against whom there is no claim, which led to the discovery of previously unknown assets of the defendant.
  • Establishing the jurisdiction of the Cayman Court to grant freezing orders in support of foreign proceedings, so as to be able to freeze effectively substantial assets held through Cayman vehicles.
  • Obtaining the leading judgment on when it is appropriate to order cross-examination of a respondent to a freezing order on their asset disclosure, with the case settling shortly after that cross-examination.

We have led numerous international asset recovery cases, with assets being frozen simultaneously in multiple jurisdictions, often involving complex structures such as offshore discretionary trusts, Jersey foundations, Liechtenstein anstalts, nominee owners and complex webs of companies spanning several jurisdictions. Examples of freezing orders include:

  • £1.3bn in England
  • US$500m in England, BVI, Jersey and Guernsey
  • US$478m in England
  • €225m in England
  • US$200m in England, BVI, Cyprus and Cayman
  • £150m in England, Italy, Germany, Austria, Cyprus and BVI
  • US$150m in England and BVI
  • US$50m in Jersey, Cyprus and BVI
  • US$40m in England and Italy
  • £2m in England, Switzerland, Isle of Man and Greece
  • £1.4m in England, Belize, Belgium, Switzerland and Israel
  • £800,000 in England and Gibraltar

These have often led to settlements by which clients have recovered 7, 8 or 9 figure US dollar sums.

We also regularly act also in committal proceedings that seek to encourage compliance with interim orders. In one such case, we obtained a maximum prison sentence of 2 years against an individual for his contempts of court.

Selected Case Summaries

The Family Division extended the scope of a freezing injunction imposed on a company in matrimonial proceedings, where the company was found to be the husband's alter ego, and where the husband had sought to frustrate enforcement of a financial award in the wife's favour. The Court was persuaded to include the de facto directors of the company in a penal notice attached to the injunction so that committal proceedings could be brought against them in the event of non-compliance.
PCB acted for the Deposit Insurance Agency, the state liquidator of the collapsed Vneshprombank LLC (“VPB”) in successfully obtaining a £1.34billion worldwide freezing order and associated search order against Georgy Bedzhamov. He, together with his sister, Larisa Marcus, the former President of VPB, is alleged to have committed one of the largest banking frauds in Russia resulting in VPB’s collapse. Following the granting of the worldwide freezing order and search order there were a series of hearings in relation to a number of heavily disputed applications. These included an application by Mr Bedzhamov for an extension of time to make an application to vary or discharge the worldwide freezing and search orders. VPB opposed this application on the basis that the Court had given previous extensions of time to Mr Bedzhamov and the last minute manner in which he had made this application for a further extension. At a hearing on 22 May 2019, Mrs Justice Falk agreed and took the highly unusual step in a case of this magnitude of refusing the extension therefore halting any attempt by Mr Bedzhamov to have either the worldwide freezing order or associated search order discharged or varied.
This is a longstanding matter where PCB has acted for JSC VTB Bank (“VTB”) against Pavel Skurikhin who had given personal guarantees for loans made by VTB to his business. The business defaulted on the loans. VTB commenced proceedings and obtained judgments against Mr Skurikhin in the Russian Court. In 2014, it obtained judgments against Mr Skurikhin in the English Commercial Court to the value of approximately £20 million. These judgments are based on the common law claims arising from the Russian judgments. By way of enforcement in July 2015, VTB successfully obtained an order for the appointment of Receivers over the membership interests in an English registered LLP that owns three properties based in Italy used and occupied by Mr Skurikhin and members of his family. Although the membership interests were held for the benefit of a Liechtenstein Foundation, Berenger, the Court was satisfied that Mr Skurikhin had sufficient control of the Liechtenstein Foundation that he could be treated as the owner of membership interests in the LLP and it could be said that they were assets available for enforcement. The Court Receivers subsequently used their powers to place the English registered LLP into administration and have themselves appointed as Administrators so that they were in a position to realise its assets, particularly the three properties in Italy. Three years later in July 2018, Berenger issued an application challenging and seeking a discharge of the Receivership Order on the basis that it is not in the control of Mr Skurikhin. VTB successfully opposed the application having previously obtained orders for disclosure from and cross-examination of the Swiss fiduciary and local director who set up and managed Berenger. In a judgment dated 12 June 2019, Patricia Robertson QC (sitting as Deputy High Court Judge) dismissed the application to discharge the order for the appointment of Receivers. She considered that the discharge application was an abuse of process given that the evidence relied upon for seeking to oppose the appointment of Receiver was available to Berenger at the time of the hearing in July 2015 and it had the opportunity to deploy that evidence against the application at that hearing.
Ms Akhmedova was granted without notice freezing injunctions against two Liechtenstein trustees in circumstances where she had a good arguable case from which the court could infer that they had helped her husband put monetary assets out of her reach, as part of his wider strategy of evading enforcement of the £453.5 million judgment that she had been awarded in financial remedy proceedings.
In this judgment the Family Division demonstrated a willingness to assist a party to enforce a financial remedy order by allowing use of confidential documents where (i) there was evidence of deliberate attempts by the respondent to frustrate English court’s orders, and (ii) there was no evidence that the applicant acted unlawfully in accessing those confidential materials. The judgment also supplemented Mr Justice Mostyn’s prior guidance in UL v BK (Freezing Orders: Safeguards)[2014] Fam 35 with suggestions derived from the standard search order in civil proceedings. These suggestions were aimed at resolving the issues that might arise where one party to litigation had illegitimately obtained confidential or privileged documentary material belonging to another party, in circumstances where the other party was not represented by a solicitor and/or was failing to engage with the proceedings, particularly as to when the need for further intervention of the court may be necessary. Revisions were also subsequently made to the Family Division search order to give effect to the suggestions made in this judgment in order to align the Family Division Search Order more exactly with its civil counterpart in CPR PD 25A.
PCB acted for KMG International NV (“KMG”) in a successful challenge to an application to strike out its claim against the former director of DP Holding SA (“DPH”), a public limited company incorporated in Switzerland and a BVI company under the former director’s control. KMG’s claim is made in tort and based on breach of duties allegedly owed as a matter of Dutch or, alternatively, English law. The claim is connected to the enforcement of an arbitration award for US$200million obtained by KMG against DPH, which is the holding company of a diverse group of companies, “the DP Group”. KMG alleges the former director with the assistance of the BVI company wrongfully removed and dissipated a valuable asset, namely shares in a German subsidiary company, within the DP Group to frustrate the enforcement of the arbitration award. The claim involves issues of reflective loss, i.e. whether a claimant is entitled to claim loss which is not personal but reflective of the loss of another party. The most common example being a shareholder seeking to recover the loss for damage suffered to the value of its shares because of damage suffered by the company. The English law claim is stayed currently pending the decision of the Supreme Court appeal in Marex Financial Limited v Carlos Sevilleja Garcia[2018] EWCA Civ 1468. The rule against reflective loss is not recognised under Dutch law. However, in seeking to strike out the Dutch law part of KMG’s claim, the Defendants sought to argue that the rule against reflective loss should apply and is a bar to the Dutch law claims on three grounds:
  1. It is rule of procedure rather than substance so governed by the lex foriand not the lex causae and is excluded by virtue of Article 1(3) of the Rome II Regulation on the law applicable to non-contractual claims (“Rome II”) and is not a rule of law that falls within Article 15 of Rome II;
  2. It is a mandatory overriding rule of English law within the meaning of Article 16 of Rome II; or
  3. It is a rule of English public policy within the meaning of Article 26 of Rome II.
In what is thought to be the first judgment dealing with the interaction of Rome II with the rule against reflective loss in England, the Judge, Mr Christopher Hancock QC (sitting as a Judge of the High Court) dismissed the Defendants’ arguments. He concluded that the rule is clearly one that affects the substantive rights and remedies of a claimant. It is a substantive rule that has to do with the kinds of damage that is recoverable and falls within Article 15 and is not excluded by Article 1(3). It is not a rule that could be regarded as crucial to safeguarding English public interests to make it mandatory so as to override rules of Dutch law. Further, it could not be construed as a rule of public policy to the extent that it would breach a claimant’s fundamental rights, such as those guaranteed by the European Court of Human Rights.

PCB acted for the claimant, who had been defrauded of substantial sums of money by being persuaded to transfer money into a bank account belonging to an unknown person. He was granted Norwich Pharmacal relief to obtain information about the account holder and what had happened to his funds. He was granted declaratory relief in relation to the traceable proceeds of the fraud. The Court was satisfied that the evidence showed that it was strongly arguable that a fraud had been carried out and it was in the public interest for the relevant bank to provide the information necessary for the owner of the bank account to be identified because of the conduct alleged.

PCB acted for the claimant bank in seeking to commit the defendants for contempt of court by failing to disclose assets in breach of court orders. The defendants did not attend the hearing and the court proceeded in their absence. In view of their deliberate decision not to attend the hearing so that they could be cross-examined, the veracity of their account could not be tested and the court was entitled to conclude that it was implausible. The bank established to the criminal standard of proof that Mr Chernyakov had deliberately and intentionally disobeyed the court's order to produce statements and had given false evidence on affidavit with the intention of interfering with the course of justice. There was no doubt that that breach was in order to hide assets from the bank. The Court also found there was a deliberate and intentional breach of the orders made against Ms Erokhova. The maximum sentence of two years' imprisonment was imposed on Mr Chernyakov. Although she had had a 10-month-old child, Ms Erokhova was sentenced to four months' imprisonment.

PCB acted for the claimants in what is believed to be the first reported judgment regarding the jurisdiction of the Court to grant a search order against a third party. PCB had obtained a third party disclosure order against the respondent in respect of documents relevant to enforcement proceedings against the defendant. The disclosure provided led the claimants to believe that there had been serious non-compliance and that the respondent had been complicit in the production by the defendant of forged evidence. Accordingly PCB sought and obtained a search order against the respondent on the basis that the court had jurisdiction to make such an order (a point that has apparently not been considered by the Court in any previous case). The respondent sought to argue that (i) such an order could not be granted after judgment against the defendant, alternatively (ii) the Court could not grant such an order wider than the terms of the third party disclosure order. The court rejected both grounds and upheld the search order. The court also granted permission to use documents obtained from the search order for purposes of committal proceedings against the defendant and the respondent.

PCB acted for the claimant casino in relation to the enforcement of a judgment of £2.3m. Having obtained a worldwide freezing order, PCB sought to have the defendant committed to prison for his failure to disclose his assets. PCB successfully resisted an application to adjourn the committal hearing. The defendant was found beyond reasonable doubt to be in contempt of court and was sentenced to 10 months imprisonment.

PCB acted for the claimant in respect of US$17m invested with the defendant, alleging fraudulent misrepresentation and breach of fiduciary duty. The defendant disputed jurisdiction on the grounds that he was not domiciled in England and that the proceedings should be stayed as Russia or Belarus was clearly a more appropriate forum than England. PCB successfully resisted the jurisdictional challenge, with the Court finding that the claimant had the better of the argument on domicile, and even if the issue of appropriate forum arose, neither Russia nor Belarus were a more appropriate forum.

PCB acted for the claimant bank seeking to enforce Russian judgments in the sum of approximately £150m against the defendant. A worldwide freezing order had been obtained by PCB and we were able to demonstrate that the asset disclosure provided had been unsatisfactory. Applying the principles in Jenington v Assaubayev (another successful PCB case on cross-examination), the Court concluded that this was an appropriate case for the defendant to be cross-examined on his asset disclosure.

PCB acted for the claimants seeking to enforce costs orders and judgments in excess of US$20m. Having obtained an order for oral examination of the defendant as a judgment debtor, the claimants were not satisfied that the defendant had complied with his obligations to provide various bank statements and other documents relating to his assets. PCB therefore brought committal proceedings against the defendant. The Court found beyond reasonable doubt that the defendant was in contempt in a number of respects and adjourned the hearing in order to provide the defendant with an opportunity to disclose missing documents.

PCB acted for the claimant bank. The bank alleged unlawful means conspiracy to defraud the bank by the diversion of assets to companies controlled by the defendant. The bank sought to amend its claim to allege that it had been induced by fraudulent misrepresentations to make loans to companies of US$150m. The defendant resisted the amendment and sought to strike out the claim or have it summarily dismissed, on the basis that the primary facts alleged by the bank were insufficient. PCB successfully resisted the defendant’s application and was granted permission to amend its claim, on the basis that the claim in fraud could be pleaded on the basis of inferences to be drawn from the primary facts.

PCB acted for the claimant bank in bringing claims to enforce Russian judgments for around US$40m in England. The defendant raised a defence that the Russian judgments were procured by fraud and/or that the English court should decline to enforce the judgments on the basis of public policy. In particular, he alleged that the judgment had been granted as part of a “corporate raid” in order to acquire his business and that as the claimant was a state-owned bank, it was impossible for him to get justice from the Russian court. PCB was able to persuade the English Court that the defence was without substance and summary judgment was granted in favour of the bank.

PCB acted for the claimant bank in relation to a substantial claim in deceit and breach of contract, which included worldwide freezing order relief in the sum of US$200m and ancillary freezing orders in the BVI and Cayman. In England, the case reached the Supreme Court on issues relating to piercing the corporate veil, choice of law and appropriate forum. In the English Court of Appeal there was additionally the issue of whether the claimant suffered loss caused by the alleged deceit given that it had entered into a participation agreement with another bank that passed on all of the risk. In the BVI, issues arose as to whether it was appropriate for the BVI Court to grant relief that overlapped with the English freezing order. In the Cayman Court of Appeal, the issue was whether the Cayman Court could grant freezing order relief in support of the English proceedings. PCB established that the Cayman Courts could indeed grant such relief.

PCB acted for the claimant, a company connected to a large bank to which claims of the bank against the guarantor of loans had been assigned. The claimant brought proceedings in Russia against the guarantor and at the same time, PCB obtained freezing orders in the BVI, Jersey and Cyprus, and interim receivership orders in Cyprus in order to preserve a complex structure through which substantial Russian real estate assets were held. PCB alleged that assets held by a Jersey foundation were in truth still owned by the guarantor, alternatively that the transfer of those assets to the foundation should be set aside as a transaction to defraud the claimant. At the same time, having obtained judgments in Russia for US$40m (and judgments in Jersey and BVI on the back of the Russian judgments), PCB successfully applied to the BVI Court for the appointment of an interim receiver over the guarantor’s beneficial interest in 2 BVI companies. Those BVI companies had the power to change the management of the Jersey foundation, so as to be able to take control of it for the purposes of winding it up or making a distribution to the guarantor, either of which would have led to successful enforcement. The case subsequently settled.

PCB acted for the claimants in obtaining permission to serve the proceedings alleging deceit, conspiracy and dishonest assistance on the defendant out of the jurisdiction. The defendant challenged the jurisdiction, alleging that he was not properly served, that England was not the appropriate forum and that there was no reasonable prospect of the claim succeeding. All of those arguments were rejected by the High Court. On appeal, the Court of Appeal rejected the forum argument but set aside service on the basis that the defendant had not been properly served and it was not appropriate for service to be validated retrospectively. PCB persuaded the Supreme Court that the case raised issues of general public importance such that permission to appeal should be granted, before ultimately winning the appeal. This is now the leading case on alternative service out of the jurisdiction.

PCB acted for the claimants in a US$500m claim alleging deceit, conspiracy and breach of fiduciary duty against the former directors and shareholders of a gold mining company. Freezing orders were obtained at the outset in England, BVI, Jersey and Guernsey and Search Orders were granted in respect of 3 premises. There followed extensive interim applications, including in respect of the adequacy of the defendants’ asset disclosure. Despite the defendants spending over £1m in legal fees on the asset disclosure exercise, the Court was persuaded by PCB that there remained questions to be asked and cross-examination of two of the defendants was the appropriate course.

PCB were instructed by the receiver of a convicted tax fraudster to collect in his worldwide assets to satisfy a confiscation order. One asset was a claim in the name of an Irish company which had been dissolved and struck off. PCB applied to restore the company but, as there was a potential limitation defence that might arise whilst the company was being restored, PCB obtained permission to bring proceedings in the name of the dissolved company. PCB successfully resisted a challenge in the Court of Appeal to the grant of that permission.

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