How the mansion bought for the state money for the Ambassador of the Republic of Kazakhstan to the USA ended up with a private owner

Google trans­lat­ed

Moldovan investors Stati dis­cov­ered in Washington a build­ing that Kazakhstan bought for its ambas­sador to the United States, but after a while it sud­den­ly found itself in … pri­vate hands. How?

To begin with, Moldovan investors Anatoly and Gabriel Stati, who have been in lit­i­ga­tion with Akorda for many years, intend to file a new law­suit against the Kazakh author­i­ties. This is stat­ed in a press release sent by rep­re­sen­ta­tives of Stati to the edi­to­r­i­al office of KZ.media .

The rea­son for the claim (we quote in the text ) was “gross vio­la­tions by the Republic of Kazakhstan of its inter­na­tion­al legal oblig­a­tions to pay for the final and bind­ing arbi­tral award ren­dered in favor of the Parties to the Statute in December 2013”.

Recall that we are talk­ing about the deci­sion to col­lect from Kazakhstan in favor of Moldovan investors Stati more than 550 mil­lion US dol­lars (as com­pen­sa­tion for dam­age, legal costs and inter­est). The Kazakh author­i­ties do not want to com­ply with this deci­sion, as a result of which the coun­try was dragged into a legal war on a glob­al scale (read the mate­ri­als about it here ).

In this war, Stati’s lawyers are solv­ing a very spe­cif­ic prob­lem — they are look­ing for the prop­er­ty of Kazakhstan for his arrest. But rep­re­sen­ta­tives of Akorda, on the one hand, are try­ing to prove that Stati are not investors, but fraud­sters who fraud­u­lent­ly built a gas pro­cess­ing plant in the coun­try, as a result of which the author­i­ties were sim­ply forced to con­fis­cate it. On the oth­er hand, they are tak­ing mea­sures to hide the prop­er­ty abroad that can be seized.

In most cas­es, states vol­un­tar­i­ly enforce arbi­tral awards. Enforcement is pos­si­ble through the 1958 New York Convention, which pro­vides for manda­to­ry recog­ni­tion and enforce­ment of arbi­tral awards in more than 160 coun­tries around the world. In this case, there is a com­pul­so­ry col­lec­tion of state prop­er­ty. But only on con­di­tion that this prop­er­ty belongs to the state at the same time, but at the same time is used for com­mer­cial purposes.

These can be shares / shares owned by the state in com­pa­nies, com­mer­cial accounts, pay­ments from third par­ties in busi­ness trans­ac­tions for the sale of goods, etc. What’s impor­tant: the prop­er­ty of embassies, con­sulates, armies and funds used for pub­lic pur­pos­es are pro­tect­ed by sov­er­eign immu­ni­ty and are not sub­ject to enforcement.

How can state prop­er­ty be hid­den? The sim­plest pro­tec­tion mech­a­nism in such sit­u­a­tions is the trans­fer of state assets to pri­vate hands. And the Stati believe that Kazakhstan is doing just that.

In the press release men­tioned above, they remind that “the courts of Belgium and the Netherlands recent­ly ruled that RK tried to hide its prop­er­ty from legal enforce­ment mea­sures through fic­ti­tious trans­ac­tions.” And accord­ing to Anatoly Stati, pres­i­dent and own­er of Ascom Group, the Ministry of Justice of Kazakhstan “imple­ments a glob­al strat­e­gy for con­duct­ing unfair lit­i­ga­tion and con­ceal­ing prop­er­ty for the pur­pose of evad­ing the ful­fill­ment of its inter­na­tion­al legal obligations.”

The announced inten­tions of Stati mean that their con­flict with the Ministry of Justice of the Republic of Kazakhstan is reach­ing a new lev­el of esca­la­tion. As a result, the cit­i­zens of Kazakhstan can learn a lot of new things about how the state assets of the coun­try are used and who owns the coun­try abroad. Especially if they hide by the “nom­i­nal sale” method to their pri­vate indi­vid­u­als. It is well known that in the 90s such “for­mal” trans­ac­tions led to a very real pri­va­ti­za­tion of state property.

So far, we have become aware of one episode that Stati’s lawyers have iden­ti­fied in the United States — in Washington.

On July 19, 2021, the Stati applied to the fed­er­al dis­trict court of Washington (DC) with a motion for the impo­si­tion of urgent inter­im mea­sures and the seizure of real estate owned by the Republic of Kazakhstan by right of own­er­ship in the ter­ri­to­ry of Washington.

This is a build­ing that is part of the diplo­mat­ic mis­sion of Kazakhstan in the United States. In accor­dance with inter­na­tion­al agree­ments, such real estate has a sov­er­eign sta­tus and, accord­ing­ly, can­not be alien­at­ed by law­suits. Nevertheless, the Stati con­sid­ered it pos­si­ble to file such a demand in an American court, since they believe that the build­ing, which was the diplo­mat­ic prop­er­ty of Kazakhstan, is already being effec­tive­ly used for … per­son­al interests.

AND THIS FACT IS INTERESTING IN ITSELF, AND NOT ONLY IN THE CONTEXT OF STATI’S LEGAL DISPUTES WITH THE REPUBLIC OF KAZAKHSTAN.

To bet­ter under­stand how Kazakhstani prop­er­ty in Washington end­ed up in pri­vate hands, we restored the chronol­o­gy of events, using the mate­ri­als of the civ­il action filed against the Republic of Kazakhstan Civil Action No. 14-cv-1638 (ABJ) in the United States District Court for the District of Columbia.

According to the text of the state­ment of claim, the prop­er­ty his­to­ry of diplo­mat­ic rela­tions between Kazakhstan and the United States began in June 1998, when the Government of Kazakhstan, with the per­mis­sion of the US State Department, bought for its needs three real estate objects in Washington, locat­ed at 1529 O Street, NW; 1401 16th Street, NW and 1407 16th Street, NW.

The total pur­chase price, which occurred in a sin­gle trans­ac­tion, was US $ 5 million.

The build­ing, locat­ed at 1401 16th Street, was set aside for the admin­is­tra­tive func­tions of the Embassy of the Republic of Kazakhstan in the United States.

Parking has been set up at 1407 16th Street, NW.

Much more “inter­est­ing” was the address 1529 O Street — there is a two-sto­ry man­sion built in 1890. It has nine rooms, divid­ed into two parts (units).

The his­toric man­sion became the res­i­dence of the Ambassador of Kazakhstan to the United States. And for near­ly a quar­ter of a cen­tu­ry, he reg­u­lar­ly per­formed this function.

Everything changed in January 2013, when the Government of Kazakhstan decid­ed to pur­chase for its ambas­sador a larg­er and more lux­u­ri­ous res­i­dence locat­ed in the Washington sub­urb of Woodland Normanstone. Apparently, they thought that the diplo­mat­ic mis­sion does not tol­er­ate the hus­tle and bus­tle and lights of the big city. Moreover, the diplo­mat­ic mis­sion in Washington turned out to be a vul­ner­a­ble tar­get for express­ing pub­lic protests against the Kazakh authorities.

This time the price turned out to be sig­nif­i­cant­ly high­er. The ambas­sador’s sub­ur­ban man­sion, locat­ed at 2910 Edgevale Terrace, NW, cost near­ly $ 5.5 million.

The ambas­sador moved to a new res­i­dence, but the old one remained in the own­er­ship of Kazakhstan. True, now it has become known in offi­cial doc­u­ments as the “Residential build­ing of the Embassy”. This is the word­ing that Stati’s lawyers found in the doc­u­ments they received in response to a demand to pro­vide them with a list of prop­er­ties owned by the Kazakh gov­ern­ment in the United States. It meant that the build­ing had a diplo­mat­ic sta­tus, and, there­fore, the legal pro­tec­tion of the man­sion from civ­il law­suits against Kazakhstan.

But this answer did not sat­is­fy Stati’s lawyers. According to them, the man­sion on O Street per­formed func­tions that were very far from diplo­mat­ic. And to be sure of this, it does­n’t even make sense to hire expen­sive detec­tives. It is enough to type the address 1529 o street, nw dc in the search bar of a google search engine or open a google map.

The first issue will be the phrase “Russian With Natalia” — the name itself hints at a rela­tion­ship far from diplomacy. 

In fact, we are talk­ing about learn­ing Russian with Natalia. In a 19th cen­tu­ry man­sion under diplo­mat­ic cover.

According to the data pre­sent­ed to the court by Stati’s lawyers, a com­pa­ny called Russian With Natalia was estab­lished in 2017 and is indeed locat­ed in the for­mer man­sion of the Ambassador of Kazakhstan to the United States.

In fact, it is a lin­guis­tic school with a turnover of 371 thou­sand dol­lars a year. True, this com­pa­ny is not run by Natalya at all, but by a man named Sergei — Sergei Tsoi.

According to Stati’s lawyers, Mr. Tsoi has noth­ing to do with Kazakhstani diplo­ma­cy, although he feels quite con­fi­dent in the ambas­sador’s res­i­dence. So con­fi­dent that (accord­ing to the data pre­sent­ed in the state­ment of claim) he placed there anoth­er own com­pa­ny — Modern Style Construction LLC, also known as MSC LLC-Kitchen Bathroom.

The firm itself was incor­po­rat­ed in the state of Maryland with the aim of refur­bish­ing the bath­rooms and kitchens of American cit­i­zens. But Tsoi start­ed his busi­ness from the res­i­dence of the Ambassador of Kazakhstan.

How Mr. Tsoi man­aged to infil­trate diplo­mat­ic ter­ri­to­ry is not known for cer­tain. Moreover, there is no data on Tsoi’s polit­i­cal and fam­i­ly ties in the polit­i­cal top.

On the com­pa­ny’s cor­po­rate web­site , Sergei Tsoi talks about how he got to the United States. His fam­i­ly of four emi­grat­ed there in 1999, with a total of $ 1,500.

The fur­ther his­to­ry of Sergei Tsoi looks lit­er­al­ly like an “American dream” — ini­tial­ly Tsoi’s par­ents worked for hire (his father was a painter, and his moth­er was in a restau­rant). But in 2004, the fam­i­ly decid­ed to cre­ate their own small busi­ness, which took from Tsoi (who at that time was still a young man) from 12 to 16 hours a day.

Judging by the fact that there are about 15 peo­ple in the cor­po­rate pho­to, the com­pa­ny has emerged from the stage of a fam­i­ly busi­ness and is quite suc­cess­ful. But how the suc­cess sto­ry of Tsoi’s com­pa­nies turned out to be con­nect­ed with the diplo­mat­ic prop­er­ty of Kazakhstan is com­plete­ly incomprehensible.

Meanwhile, Sergei Tsoi’s suc­cess­ful busi­ness may turn out to be a fatal cir­cum­stance that could deprive Kazakhstan of a man­sion, the cost of which, appar­ent­ly, has long exceed­ed $ 10 mil­lion. Commercial activ­i­ty, accord­ing to Stati’s lawyers, auto­mat­i­cal­ly deprives the state prop­er­ty of its diplo­mat­ic status.

But this is gen­er­al­ly under­stand­able not only for lawyers — either diplo­ma­cy or busi­ness. Although in the case of the Kazakh embassy, ​​every­thing turned out to be mixed. And the main ques­tion here is — how could such a thing happen?

The first and most obvi­ous assump­tion is that some­one from the admin­is­tra­tive staff of the diplo­mat­ic mis­sion sim­ply rent­ed an idle room for rent, not real­ly cal­cu­lat­ing the con­se­quences of such actions. But not a fact.

Moreover, there is one more strange cir­cum­stance, which is con­tained in a foot­note to the text of the claim. It men­tions the tes­ti­mo­ny giv­en by the employ­ee of the Ministry of Finance of the Republic of Kazakhstan Kalymzhan Ibragimov to Stati’s lawyers.

On May 9, 2019, Ibragimov offi­cial­ly announced that only THREE real estate objects belong to the Republic of Kazakhstan in Washington. One is the actu­al embassy, ​​and the oth­er two are for the embassy staff. Where the fourth object from the gen­er­al list of Kazakhstan’s diplo­mat­ic prop­er­ty in Washington “dis­ap­peared” remains behind the scenes.

Anyway, this was exact­ly the answer that Stati was very pleased with. Now the build­ing, which hous­es the star­tups of Sergei Tsoi, can be with­drawn in favor of the affect­ed investors.

But it will be very fun­ny if Stati’s law­suit expos­es the fact of “grab­bing” a man­sion in the cen­ter of Washington by some enter­pris­ing Kazakhs oper­at­ing under the pro­tec­tion of diplo­mat­ic status.

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