A technicality ruling by the Fourth Circuit will see Roman Balanko and VictoriaBank hold $13.1 million in stolen Zeek Rewards sufferer funds.
The dispute over the funds started in 2016. In a nutshell the funds had been laundered by Payza, who in flip laundered the funds by VictoriaBank, who in flip laundered the funds by Financial institution of New York Mellon, who in flip laundered the funds by Balanko’s firm PaymentWorld.
PaymentWorld in flip laundered the funds by a Russian financial institution.
Three days after this switch to Tusar Financial institution, PWHK routed the funds to an account for PaymentWorld Restricted Russian Federation at Grasp Financial institution in Russia.
Grasp Financial institution closed quickly thereafter, and people funds seem like past restoration.
We’ve beforehand lined how PaymentWorld and VictoriaBank are in cahoots (and by proxy Balanko).
After being laundered by a Russian financial institution, the stolen $13.7 million is believed to be in Roman Balanko’s possession.
The Receiver has been preventing to get the funds returned for distribution to Zeek victims. Balanko and VictoriaBank have been fought tooth and nail in opposition to this.
The Receiver’s second attraction was filed after VictoriaBank prevailed on a movement to dismiss (particulars of the unique granted attraction right here).
On remand, the district court docket granted Victoriabank’s renewed movement to dismiss.
The district court docket decided that it had no energy beneath the Federal Guidelines of Civil Process to order jurisdictional discovery as to Victoriabank, as a result of Victoriabank was a non-party over which there was no preliminary discovering of jurisdiction.
The district court docket finally concluded that the Receiver couldn’t exhibit private jurisdiction even beneath the decrease prima facie commonplace of proof and granted the movement to dismiss.
The Receiver argued the court docket had jurisdiction as a result of
Victoriabank used its BNYM correspondent account in New York to position the proceeds of the scheme out of the Receiver’s attain.
The Fourth Circuit disagreed.
Even assuming that Victoriabank is topic to jurisdiction beneath New York’s longarm statute, the Receiver makes no effort to determine how that jurisdiction extends to North Carolina.
This failure is deadly to the Receiver’s argument.
The Western District of North Carolina can’t train jurisdiction pursuant to New York’s long-arm statute.
The Receiver’s second argument, that VictiroaiBank knowingly violated the 2012 Freeze Order, additionally fell flat.
The Receiver concedes that he by no means correctly served Victoriabank within the instantaneous contempt continuing.
Accordingly, the Receiver’s freeze-order concept of jurisdiction fails.
The Fourth Circuit upheld the District Courtroom’s granting of VictoriaBank’s movement to dismiss.
We admire that right now’s ruling hamstrings the Receiver’s efforts to recompensate the ZeekRewards victims. However we can’t flout due course of within the identify of recompense.
For the foregoing causes, the district court docket’s judgment is AFFIRMED.
And similar to that, Roman Balanko will get to maintain $13.7 million stolen from Zeek victims.
Whereas the Zeek Receivership nonetheless managed to return upwards of 81% on legitimate sufferer claims, Balanko finessing victims out of $13.7 million is a little bit of a blow.
Trying ahead the VictoriaBank litigation was the final activity the Receivership needed to see by.
I count on a closing distribution will probably be introduced in some unspecified time in the future, after which the Receivership will probably be dissolved.