Change Edition

Luxembourg courts should hear Rothschild fraud claim, US judge says
lawsuit

Luxembourg courts should hear Rothschild fraud claim, US judge says

12.11.2021 From our online archive
Russian oil magnate's claims that bank’s Luxembourg unit conspired with others to siphon off fortune should be heard in Grand Duchy, judge ruled
The Luxembourg-branch of the bank is located near the Cloche d'Or shopping centre
The Luxembourg-branch of the bank is located near the Cloche d'Or shopping centre
Photo credit: Pierre Matgé

A former Russian oil magnate’s lawsuit to recover half of his lost $150 million (€131 million) fortune from the Edmond de Rothschild bank was dismissed by a judge in New York.

The US was the wrong forum for the case, because most of the evidence, defendants and transactions were overseas, State Supreme Court Justice Joel Cohen ruled on Thursday. 

Sergey Bogdanchikov, who rose from the son of a schoolteacher and a farm mechanic on the Russian steppe to lead the energy giant Rosneft at one time, filed the case in New York last year. 

He claimed that the bank’s Luxembourg unit conspired with a Manhattan investment manager and a couple from a New York City community popular with Russian emigres to siphon off his fortune through inflated fees and kickbacks while hiding behind “the luster and reputation” of the Rothschild name. Hovering over the case was the allure of Swiss banks as the world’s safest repositories of wealth.

Dismissal of the New York claims against the Brighton Beach couple requires them to make a filing within 14 days to show they accept the jurisdiction of the Luxembourg courts for Bogdanchikov’s case against them there, the judge said. If not, the case can resume in New York, he said. 

The ruling means the couple is “now obliged to face justice in Luxembourg,” Alexey Bogdanchikov, Sergey’s son, said in a statement. “We will continue to seek full compensation from Bank Edmond de Rothschild despite this court ruling on technical grounds,” he added.  

The bank has denied wrongdoing. A Rothschild spokeswoman in Geneva on Thursday declined to comment on the case’s dismissal. A lawyer for the couple has also denied wrongdoing, and declined to comment on Cohen’s ruling. 

The investment manager settled with Bogdanchikov in September. 

©2021 Bloomberg L.P.