Grablis v. OneCoin Ltd.

Background

Donald Berdeaux and Christine Grablis sued OneCoin Ltd. and several individual defendants in a putative class action alleging that they defrauded investors through a cryptocurrency Ponzi scheme. This opinion addressed the plaintiffs’ renewed motion for permission to use alternative methods to serve OneCoin, Ruja Ignatova, Sebastian Greenwood, and Irina Andreeva Dilinska with the lawsuit papers.

The court had previously denied the plaintiffs’ request without prejudice because they had not shown that they had taken reasonable steps to serve the defendants or that the proposed methods would satisfy due process. The plaintiffs renewed their request under Federal Rules of Civil Procedure 4(f)(3) and 4(e)(1). Rule 4(f)(3) permits court-ordered service on individuals in foreign countries by methods not prohibited by international agreement. Rule 4(e)(1) permits service on an individual in the United States under applicable state law. The court also had to determine whether the proposed methods were reasonably calculated to notify the defendants about the case and give them an opportunity to respond.

Court’s Analysis

The court found that the plaintiffs had provided enough factual support to show a diligent search for the unserved defendants. It also found that Rule 4(f)(3) applied to OneCoin because the company was located in the United Arab Emirates, which the opinion states was not a signatory to the Hague Convention. The rule also applied to Ignatova, Dilinska, and Greenwood because their addresses were unknown.

For OneCoin, the plaintiffs showed that it had a registered office and headquarters in Dubai. They also showed that related entities had operational websites referencing OneCoin and ties to the Dubai office. Although emailing the related entities alone likely would not be enough, the court found that the combined methods were reasonably calculated to notify OneCoin. It authorized service by United States International Registered First Class Mail to the Dubai office, email to OneCoin’s onecoin.eu addresses and the addresses of three related entities, and messages to OneCoin’s and the related entities’ social-media accounts.

For Ignatova, the court was skeptical that the onecoin.eu email account remained operational because the most recent evidence of her use of it was from October 2016 and the website was no longer operational. The court also questioned whether her social-media accounts were genuine or active. Nevertheless, it authorized service by United States International Registered First Class Mail to OneCoin’s Dubai headquarters with instructions that the materials be forwarded to Ignatova, messages to her social-media accounts, and email to her onecoin.eu address. The plaintiffs had to notify the court in writing whether the email bounced, and service would not be considered proper unless no delivery error was received.

For Dilinska, the plaintiffs relied only on allegations in their amended complaint to show that she had used a onecoin.eu email account. The court stated that it was not required to accept those allegations as true on this motion and did not authorize the same alternative methods unless the plaintiffs provided evidence that Dilinska had used the account.

For Greenwood, the plaintiffs offered no evidence that the proposed email addresses belonged to him or that the proposed social-media accounts were likely to reach him. The court also noted that the plaintiffs had not confirmed whether the United States Department of Justice had custody of Greenwood. The court stated that delivering the summons and amended complaint to the prosecutor’s office in related criminal proceedings might be sufficient, but the plaintiffs first had to confirm that the Department of Justice was willing to assist.

Ruling

Judge Valerie Caproni granted in part the plaintiffs’ motion for alternative service. The plaintiffs could serve OneCoin and Ignatova using the methods proposed in their motion papers, subject to the court’s reporting and proof-of-delivery requirements. The court denied without prejudice the plaintiffs’ request for permission to use alternative service against Dilinska and Greenwood. The Clerk was directed to terminate the open motion at docket entry 71.