Note: To enforce two civil default judgments against Senol Taskin (Beneficiary) entered by the United States District Court for the Southern District of Florida, the Bank of Mongolia (Issuer) commenced an action in Ontario, Canada. The Ontario Superior Court of Justice, Hoy, J. allowed the petition for enforcement in part.

The US court had found Beneficiary civilly liable for US$67,639,921.62 under US Anti-Racketeering laws (RICO) and for civil theft. It ruled that Beneficiary, in concert with Burton Greenberg and George Chalmers (Fraudsters), represented that they could raise US$1 billion for Issuer's affordable housing project in Ulaanbaatar, Mongolia. Because Issuer's obligations were not considered "bankable" by international banks, Fraudsters induced Issuer to issue "Guarantees" in favor of Fraudsters with a collective face value of US$200 million to demonstrate that Issuer was a "serious player".

When Fraudsters failed to convince any bank to advance funds on the Guarantees, Fraudsters convinced Issuer to supply US$200 million of commercial letters of credit supposedly for commodities transactions. Beneficiary devised the language for the letters of credit, which were to have been used to boost Issuer's reputation and were to be returned to Issuer at maturity. However, fraudsters presented artificial documents under them, drawing more than US$24 million, using various banks around the world, and used the proceeds for their own purposes.

Beneficiary argued that the judgment should not be enforced in Ontario since the US court did not have jurisdiction over him because he lacked a "real and substantial connection" to Florida necessary for enforcement of a foreign judgment under Ontario conflict of law rules. The Judge ruled that Beneficiary's continual conduct of business in Florida while working for a company with offices in Florida, the fact that Beneficiary held a position as an officer in a Florida-based company, and the fact that the charges arose from Beneficiary's contact with Florida were sufficient to establish a real and substantial connection to Florida, giving the US court jurisdiction over Beneficiary.

Beneficiary also raised the defense of fraud and alleged a breach of natural justice in that fraudulent or forged evidence was used to establish jurisdiction. The Judge dismissed Beneficiary's allegations, reasoning that because Beneficiary chose not to participate in the Florida case, he could not now object to the evidence admitted there.

Beneficiary argued that enforcement of the judgment should be suspended until the resolution of a motion praying relief from judgment based on mistake, fraud, or newly discovered evidence filed with the US court. Despite an experienced belief that Beneficiary's motion for relief from a judgment or order would fail, the Judge postponed enforcement of the judgment until disposal of the motion. The Judge noted that if the motion fails, Issuer will be entitled to recover the judgment from Beneficiary plus costs totaling US$52,269.89 and if the motion succeeds, Beneficiary will be entitled to recover costs totalling US$40,880 from Issuer.



The views expressed in this Case Summary are those of the Institute of International Banking Law and Practice and not necessarily those of ICC or the other partners in DC-PRO.