A Kazakhstani Figure Accused of Money Laundering Finds New Role in Litigation Finance

A recent rev­e­la­tion involv­ing Ilyas Khrapunov, a Kazakhstani indi­vid­ual accused of orches­trat­ing hun­dreds of mil­lions of dol­lars laun­der­ing from the largest city in Kazakhstan and a cen­tral bank, has sparked con­tro­ver­sy as he aligns him­self with his brother’s lit­i­ga­tion finance start­up. According to records from the Swiss busi­ness reg­istry and a court affi­davit, Ilyas Khrapunov has assumed the con­sul­tant posi­tion at Litigation Partners, SA, found­ed by his broth­er Daniel Khrapunov in February.

Shady Past And Current Endeavors

Money Laundering And Exile

Ilyas Khrapunov, pre­vi­ous­ly accused by a fed­er­al judge of estab­lish­ing shell com­pa­nies exclu­sive­ly for mon­ey laun­der­ing pur­pos­es, has now posi­tioned him­self as an exter­nal advi­sor to Litigation Partners. The lit­i­ga­tion finance firm, based in Geneva, spe­cial­izes in com­plex lit­i­ga­tion, main­ly focus­ing on dis­putes relat­ed to for­mer Soviet Union countries.

Litigation Partners: A Controversial Venture

The Industry Landscape

Litigation finance, a decade-old indus­try boast­ing approx­i­mate­ly $13.5 bil­lion in assets under man­age­ment, involves investors fund­ing law­suits in exchange for a por­tion of the award if the case suc­ceeds. Although major mar­kets for this indus­try include the US, UK, and Australia, Switzerland has seen the pres­ence of notable firms like Burford Capital and Omni Bridgeway.

Lack Of Transparency And Regulation

The industry’s growth can part­ly be attrib­uted to the min­i­mal reg­u­la­tion and trans­paren­cy sur­round­ing fun­ders. While some US courts have start­ed advo­cat­ing for more dis­clo­sure, Switzerland, where Litigation Partners oper­ates, has yet to see sig­nif­i­cant reg­u­la­to­ry pushes.

Funding Origins And Controversial Figures

Litigation Partners’ cap­i­tal sources and the extent of its fund­ing remain undis­closed in the pub­lic domain. Daniel Khrapunov claims that the start­up funds were derived from a 2020 sale of Swiss-based real estate ini­tial­ly pur­chased by his moth­er in 2004. His par­ents, Viktor and Leyla Khrapunov are in exile in Switzerland after being con­vict­ed in absen­tia in 2018 of defraud­ing Almaty, Kazakhstan’s largest city, of at least $300 million.

Past Financial Misconduct And Current Ventures

The Beverly Hills Connection

Daniel Khrapunov, now 27, and his sis­ter Elvira Kudryashova were impli­cat­ed in a California LLC named 628 Holdings, alleged­ly using funds loot­ed from Almaty to pur­chase prop­er­ties. Despite claims in a law­suit filed by Almaty, the law­suit was dis­missed in 2018 due to juris­dic­tion­al constraints.

Denial And Educational Pursuits

In response to ques­tions about his role in 628 Holdings, Daniel Khrapunov refut­ed any involve­ment in the alleged crimes, stat­ing he was a full-time stu­dent in Switzerland. Meanwhile, Ilyas Khrapunov, a key play­er in man­ag­ing fam­i­ly for­tunes, is cur­rent­ly involved in a master’s law pro­gram with aspi­ra­tions of becom­ing a lit­i­ga­tion consultant.

Recent Legal Troubles And Financial Struggles

Judgment And Financial Strain

In July 2023, a US District Judge upheld a $200 mil­lion ver­dict in favor of BTA Bank against a unit of Swiss Development Group (SDG), a com­pa­ny set up by Ilyas Khrapunov for real estate deals in the US. Despite finan­cial strug­gles, includ­ing a $221,000 judg­ment, Ilyas Khrapunov revealed his involve­ment with Litigation Partners in a court update.

Little Oversight In Switzerland

Unlike the US, where bat­tles over dis­clo­sure are inten­si­fy­ing, Switzerland lacks sig­nif­i­cant reg­u­la­tion in the lit­i­ga­tion finance sec­tor. While the Swiss Federal Supreme Court deemed lit­i­ga­tion fund­ing per­mis­si­ble in 2004, pro­vid­ed fun­ders act inde­pen­dent­ly, there is a notable absence of strict oversight.

Industry Insider’s Perspective

Isabelle Berger, Chief Investment Officer at Nivalion, a Swiss-based enti­ty reg­u­lat­ed by the Swiss Financial Market Supervisory Authority, high­light­ed the industry’s adher­ence to rules. Despite the lack of strict reg­u­la­tions, Berger believes that the market’s size may deter new entrants.

In sum­ma­ry, the inter­twin­ing of Ilyas Khrapunov with his brother’s lit­i­ga­tion finance start­up rais­es eye­brows, espe­cial­ly giv­en the family’s con­tro­ver­sial past and ongo­ing legal bat­tles. The evolv­ing land­scape of the lit­i­ga­tion finance indus­try and Switzerland’s min­i­mal reg­u­la­to­ry envi­ron­ment add fur­ther com­plex­i­ty to this unfold­ing saga.

Original arti­cle source: JDJournal