Court Orders U.S. Firm to Pay Ukraine
federal judge has ordered...
A federal judge has ordered an Oregon company to pay $60 million to a Ukrainian government entity in a civil-racketeering lawsuit that has revealed a web of companies allegedly tied to fraudulent schemes in Eastern Europe and Afghanistan, according to The Wall Street Journal.
U.S. District Court Judge Ann L. Aiken entered a default judgment late Friday against Oregon-basedOlden Group, ordering it to pay triple the amount sought by a Ukrainian government entity that alleged it was overcharged for vaccines by Olden and a Ukrainian company.
The lawsuit, filed last year, stems from an investigation ordered by Ukrainian President Viktor Yanukovych`s internal government watchdog unit into medical purchases during the prior administration, according to the complaint. The probe, assisted by U.S. investigative firm Kroll Inc. and others, led to the Oregon lawsuit brought by Ukrainian medical-procurement agency Ukrvaktsina.
The probe revealed a web of offshore companies registered in the U.S. and tied to Olden that have allegedly been involved in past fraudulent schemes, according to the report by Kroll. One of the firms was named in documents filed as part of the Justice Department`s overseas bribery case against Daimler AG last year and another has been banned by the World Bank from bidding on contracts. Olden couldn`t be reached for comment.
The Oregon lawsuit alleged that Olden entered into sham contracts with the Ukrainian firm, Interfarm LLC, to submit phony customs declarations that misrepresented the prices paid for vaccines. The money Interfarm obtained from overcharging the Ukrainians was laundered using U.S. and Latvian bank accounts, the lawsuit alleged. Interfarm couldn`t be reached.
The judge entered a default judgment after Olden failed to answer the complaint.
Bardia Fard, an attorney for Olden, called the judgment a "big technicality" not based on the facts of the case, and said the suit was politically motivated. It is unclear how Olden will proceed, said Mr. Fard, of the Acumen Law Group LLC in Chicago.
Mark MacDougall, a partner at Akin Gump Strauss Hauer & Feld who represents Ukrvaktsina, said, "Our client`s aim is to vigorously enforce this U.S. District Court judgment and to use every legal tool to identify where the Ukrainian government`s money went—and get it back."
According to Oregon state records, the defendant in the Oregon case, Olden, is owned by two companies, Worldwide Management Corp., an entity that lists its address as a post office box in Belize, and International United Holding AG, based in Niue, a tiny island in the South Pacific that regulators world-wide have criticized as being used as a tax and money-laundering haven.
The two firms are shareholders of numerous companies incorporated by Oregon resident Charles Mathias and Delaware resident W. Rick Fletcher, according to records from the secretary of state`s office in Oregon.
Mr. Mathias declined to comment on the Olden judgment or the other allegations. He said he registered his numerous firms "on behalf of several Eastern European organizations." Mr. Fletcher couldn`t be reached.
In 2005, the state of Oregon ordered Mr. Fletcher to stop incorporating companies that have financial titles in their name after he registered a number of such firms, including Middle East Bank Corp., according to state records. Oregon law prohibits the use of financial titles in the names of companies that aren`t engaged in such businesses.
Mr. Mathias, the registered agent for Olden, has registered about 2,764 companies in Oregon, according to state records.
One of the companies, United Petrol Group, was named as one of several companies in the DOJ`s case against Daimler AG in which Daimler pleaded guilty to violations of the Foreign Corrupt Practices Act and agreed to pay $185 million. In court filings, the DOJ said a Daimler subsidiary entered into sham contracts with United Petrol Group in 2000 to bribe city officials in Latvia. No charges have been filed against United Petrol Group.
Mr. Mathias is also the registered agent for Ronberg Gruppe LLC, according to Oregon state records. In September, the World Bank placed Ronberg on its blacklist, banning it from bidding on contracts for "having engaged in fraudulent practices" related to a project in Afghanistan, the World Bank said at the time.