On a blustery February morning in 2011, Chris Hardman waited anxiously inside a Big Yellow Self Storage center in north London. A banner fastened to the box- shaped building’s facade read “Get some space in your life.” All Hardman wanted to do was see the contents of storage unit E2010.
Hardman, a fraud litigator at Hogan Lovells International LLP, was hunting for $6 billion that had disappeared two years earlier from his client BTA Bank JSC, the No. 1 commercial lender in Kazakhstan at the time. Armed with a court-issued search order, he felt his hopes mount as a workman cut through the storage unit’s padlock, he recalls.
Inside E2010, Hardman found 25 boxes of documents, data- storage tapes and a computer server, according to court records, Bloomberg Markets magazine will report in its February issue. The treasure trove included a spreadsheet listing hundreds of interconnected offshore shell companies, Hardman says; many had been used to misappropriate the bank’s assets.
“It was one more piece of evidence, one more piece of the jigsaw,” Hardman, 44, says. “But the moment of elation will come when we get the money back for our client.”
Hardman is the lead lawyer on a team tackling what may be the biggest financial fraud case since Bernard Madoff’s $17 billion Ponzi scheme blew up in 2008. The squad’s chief strategist is John Howell, a financial-crime consultant with a taste for target shooting who’s based in the London suburbs.
The financial brain is Pavel Prosyankin, a one-time investment banker for Credit Suisse Group AG who’s overseeing BTA’s asset-recovery process. The crew is bolstered by a posse of private detectives from Diligence Inc., a London-based corporate-investigations firm.
Their mission: find and recover $6 billion that BTA says was stolen by Mukhtar Ablyazov, the bank’s chairman from 2005 to 2009, and then secreted in scores of shell companies stretching from Moscow to the British Virgin Islands.
After five years of globe-trotting litigation and investigation, the team has managed to recover only “several hundred million dollars” so far, Prosyankin, 42, says, declining to be more specific.
Having fled Kazakhstan to London and more recently the French Riviera, Ablyazov, 50, has testified in British civil courts that he didn’t embezzle $6 billion or commit fraud. And the former banker, who’s now jailed near Marseilles, has denied criminal fraud charges brought by prosecutors in Kazakhstan, Russia and Ukraine. Today, a French court in Aix-en-Provence ruled in favor of extraditing Ablyazov to Russia and Ukraine, with Russia taking priority. Ablyazov’s lawyers vowed to appeal the decision to the Court of Cassation in Paris.
Hardman and his team are part of a wave of professional asset hunters whom banks and investors are calling upon as billions of dollars disappear into the largely unregulated offshore economy. Irving Picard, the court-appointed trustee in the Madoff case, has filed more than 1,000 lawsuits in the U.S. and Europe to claw back money from clients who escaped the fraud before it collapsed.
Picard and his law firm, BakerHostetler LLP, had racked up more than $800 million in fees and recovered $9.5 billion as of Jan. 9, according to court records and the trustee’s website.
Since 2011, Irish Bank Resolution Corp., a state-owned entity comprising Ireland’s two biggest failed lenders, Anglo Irish Bank Corp. and Irish Nationwide Building Society, have been locked in litigation with one-time billionaire Sean Quinn.
Dozens of lawyers and investigators have scoured shell companies in Ireland, Russia and Ukraine for evidence that Quinn and his family are hiding his wealth instead of paying back his Anglo Irish debt of 2.8 billion euros ($3.8 billion). Quinn, who filed for bankruptcy in 2011, served nine weeks in jail in 2012 after an Irish judge found he’d violated a court order by moving his assets.