MOSCOW, March 29 – RAPSI. A US federal court in New York dismissed claims filed by businessman Leo Raizberg asserting that he had fallen victim to a Russian security firm’s fraudulent investment scheme, according to a copy of the decision obtained by RAPSI.

Gulfstream Security Systems was established in the direct aftermath of the dissolution of the Soviet Union, and has become a giant in Russia’s private security market.

Around 1994, plaintiff Leo Raizberg decided to invest $300,000 in the young company. He did so through his wholly owned New York corporation Misash Security Systems with the understanding that the investment had constituted a purchase of 20.18% of the company.

Shortly thereafter, Raizberg began receiving payments that he believed to be ownership profits connected with his investment in the company.

According to Raizberg these payments remained consistent in size and frequency until, “Beginning in or around 2008, however, these payments began to get smaller and arrive less frequently, and then ultimately ceased.”

Raizberg contacted the man with whom he had agreed to invest in the company years earlier and asked why the payments had decreased. The man allegedly responded that Raizberg had been compensated for his investment.

He and Misash then filed the present lawsuit against Gulfstream and several connected individuals. The amended complaint featured six claims: breach of contract, two fraud claims, unjust enrichment, conversion, and breach of fiduciary duty.

The defendants filed a motion to dismiss, alleging that Raizberg should be judicially estopped from pursuing the present claim based on conflicting positions asserted by the plaintiff in earlier bankruptcy proceedings.

In April 2001, Raizberg filed for bankruptcy in New York. At the time, Raizberg vowed that he had no “[s]tock and interest in incorporated and unincorporated businesses” nor any “[i]nterest in partnerships or joint ventures.” These assertions were later supported by a trustee’s report, and Raizberg was relieved of his debt.

The doctrine of judicial estoppel bars parties from asserting claims inconsistent with a prior legal position. The decision cites relevant case law in explaining: “[w]here a party assumes a certain position in a legal proceeding, and succeeds in maintaining that position, he may not thereafter, simply because his interests have changed, assume a contrary position.”

Considering Raizberg’s bankruptcy filing, the court held that judicial estoppel would be appropriate in this case.

The court explained: “Raizberg’s position before this Court is ‘clearly inconsistent’ with his earlier position before the bankruptcy court. In the bankruptcy proceeding, Raizberg represented that he held no stock or corporate interests. The entire SAC, however, is premised on the allegation that as a result of Raizberg’s $300,000 investment in 1994, Raizberg has maintained a ‘highly valuable’ interest in Gulfstream.” (Internal citations omitted.)

The court further noted that it would not be necessary to assess the facts to better understand whether Raizberg made false statements during bankruptcy proceedings or during the present proceedings. For purposes of applying judicial estoppel, it is enough that Raizberg’s present position is “squarely inconsistent” with his former one.

Raizberg’s claim was dismissed with prejudice.