City of Almaty, Kazahkstan v. Mukhtar Ablyazov

Background

The City of Almaty and BTA Bank, together called the Kazakh Entities in the opinion, sought to recover funds allegedly embezzled in Kazakhstan and laundered in the United States. They alleged that some funds went to Triadou SPV S.A. and asserted claims including unjust enrichment and conversion. The opinion focused on the Flatotel, a Manhattan project in which Triadou indirectly held an interest.

The parties filed five motions under Federal Rule of Evidence 702 to exclude expert testimony. Rule 702 governs when a qualified expert may offer opinions based on specialized knowledge. Applying the reliability and relevance standards associated with Daubert, the court evaluated the experts’ qualifications, methods, data, and ability to assist the jury. The court noted that weaknesses generally affect the weight of testimony rather than whether it may be admitted.

S. Ilan Guedj

The court denied BTA’s motion to exclude Guedj’s testimony. Guedj offered an economic valuation of Triadou’s interest in the Flatotel. The court found him qualified based on his education, teaching, publications, and experience in business valuation, even though he did not have experience conducting real-estate appraisals under professional appraisal standards.

The court also found reliable Guedj’s use of a discounted-cash-flow method, together with discounts for lack of marketability, lack of control, and present value. The court concluded that BTA’s challenges to Guedj’s assumptions, use of studies, and calculations were principally matters for cross-examination. Guedj could testify that the sale price fell within a range predicted by academic literature, but the court excluded under Rule 403 his characterization of the price as “fair and reasonable” because that phrase could confuse the jury and had little additional probative value.

Thomas Tener

The court granted in part BTA’s motion to exclude Tener’s testimony. Tener reviewed appraisals concerning the Flatotel but did not conduct his own appraisal or develop an independent opinion of value. The court held that statements asserting that another appraisal overstated the property’s value were opinions of value under the Uniform Standards of Professional Appraisal Practice and could not be offered because Tener had not completed the procedures required for an independent valuation.

The court did not exclude Tener’s opinions about the quality of the BDO appraisal, including whether its analysis was complete, accurate, adequate, relevant, or reasonable, so long as he did not indicate a direction of value. The court also ruled that the appraisal values reached by the Miller Cicero and Metropolitan Valuation Services reports were not admissible for their truth on the record then before the court. Tener could discuss the quality of the Miller Cicero appraisal, but could not use his testimony to present its valuation to the jury. The court did not make a final determination that the appraisals could never be admitted as business records; it found that Triadou had not identified evidence establishing the necessary foundation at that time.

Ryan Pisarik

The court denied BTA’s motion to exclude Pisarik’s testimony. Pisarik was offered as a rebuttal expert to BTA’s expert, Bruce Dubinsky, concerning the alleged movement of BTA funds through transactions involving Tradestock and Triadou. The court found that Pisarik’s experience in forensic accounting, financial investigations, fraud examination, and anti-money-laundering work qualified him to analyze the evidence.

The court concluded that Pisarik used a reliable method and that his analysis could help jurors evaluate Dubinsky’s opinions. Disagreements about the evidence and alleged factual errors were matters for cross-examination rather than grounds for exclusion. The court also held that Pisarik, as a rebuttal witness, did not have to offer his own affirmative account of where Triadou’s funding originated.

Jennifer Sims Vu

The court granted in part Triadou’s motion to exclude Sims Vu’s testimony. Sims Vu could not testify about what measure of value New York law required or whether New York law permitted particular discounts, because those would be impermissible legal conclusions. She could, however, offer an expert opinion based on legal assumptions supplied by Triadou’s counsel.

The court allowed Sims Vu’s use of weighted academic studies to calculate a benchmark discount for lack of marketability. It excluded any testimony relying on her numerical adjustments based on the Mandelbaum factors because her report did not explain how she selected those numerical values, and reliance only on professional judgment was insufficient. The court rejected Triadou’s argument that Sims Vu’s valuation was improper affirmative testimony from a rebuttal expert, finding that it addressed the same subject matter as Guedj’s report and could serve as rebuttal.

Tarig Kozouz

The court granted in part Triadou’s motion to exclude Kozouz’s testimony. Kozouz could testify that Triadou did not regularly keep financial books and records consistent with standard accounting practices. He could also analyze and summarize complex financial transactions, including transactions by which proceeds from Triadou’s United States investments were allegedly transferred to other corporate entities.

The court excluded Kozouz’s opinion that Triadou’s lenders acted or failed to act in an “economically rational” manner because the opinion lacked adequate support and addressed a matter that lay jurors could decide. Kozouz could testify about whether documents showed that certain loans were repaid or that lenders sought repayment after default, but he could not testify about whether conduct was economically rational or what conduct he would have expected based on his experience. His testimony could not simply repeat the evidence or provide a narrative history of the case.

Disposition

The court denied BTA’s motion to exclude S. Ilan Guedj’s expert testimony; granted in part BTA’s motion to exclude Thomas Tener’s expert testimony; denied BTA’s motion to exclude Ryan Pisarik’s expert testimony; granted in part Triadou’s motion to exclude Jennifer Sims Vu’s expert testimony; and granted in part Triadou’s motion to exclude Tarig Kozouz’s expert testimony. The court denied the parties’ motions for oral argument on the expert motions as moot. Judge Nathan stated that the order resolved docket numbers 1274, 1277, 1299, 1305, 1308, 1311, and 1387.