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Cmty. Fin. Group, Inc. v. Republic of Kenya

United States Court of Appeals for the Eighth Circuit

November 15, 2011, Submitted; December 15, 2011, Filed

No. 11-1816


 [*979]  WOLLMAN, Circuit Judge.

Community Finance Group, Inc. and its general manager Andrew Vilenchik (collectively referred to as "CFG" or "plaintiffs"), appeal the district court's1 dismissal of their claims for lack of subject matter jurisdiction under Rule 12(b)(1) of the Federal Rules of Civil Procedure. Because the Foreign Sovereign Immunities Act of 1976 (FSIA), 28 U.S.C. §§ 1330, 1602 et seq., applies to all defendants and no exception to sovereign immunity exists in this case, we affirm.2

According to CFG's amended complaint, in October of 2008, Vilenchik commenced discussions with John Saina, a United States citizen and former Kenyan national who previously worked for the Kenyan police, concerning opportunities for purchasing gold for CFG. Saina explored such opportunities in Kenya on CFG's behalf. CFG ultimately contracted with Zilicon Freighters, Ltd. to purchase 300 kilograms of gold for $6 million. CFG and Zilicon, through representative Illunga Ngoei (Illunga), agreed that CFG would establish a $350,000 escrow account with Miller & Company to cover Kenyan taxes, customs fees, and storage associated with the transaction. Later, CFG instead wired the $350,000 to a bank account of Great Lakes Auto Tech Int'l Ltd. (Great Lakes), a holding company of Zilicon, apparently to expedite customs payments and export. CFG and Great Lakes facilitated the transfer through Bay Forex Bureau, a Kenyan-licensed foreign exchange bureau.

The Kenya Central Bank verified the $350,000 transaction on June 16, 2009. The next day, Paul  [**3] Kazungu, a Kenyan customs officer, informed CFG that a permit from the United Nations was necessary before the gold could be released for export. On June 18, 2009, two individuals claiming to be officials with the Nairobi United Nations office told CFG that the gold derived from a consignment confiscated by Kenyan customs officials that also contained diamonds and that CFG would be required to purchase the entire consignment. CFG became suspicious, retained a Kenyan lawyer, and filed a complaint with the Kenya Central Bank Fraud Investigations Department (BFID). Police then arrested Illunga.

On June 26, 2009, Kenyan police brought CFG representatives to the customs office at Kenyatta International Airport, where the representatives were informed that the gold had been removed from the airport and was being stored at the Kenya Central Bank. During the BFID investigation, various currency, check cards, and bank statements of Illunga were seized, and ten of Illunga's Kenyan bank accounts were frozen. In February of 2010, the Kenyan police informed CFG that Illunga's prosecution had been put on hold. This was CFG's last communication with the Kenyan police. None of CFG's $350,000 has been  [**4] returned, and  [*980]  CFG never received any gold. In addition, plaintiffs have discovered that the Kenyan attorney they retained also represents the Kenya Central Bank.

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663 F.3d 977 *; 2011 U.S. App. LEXIS 24846 **

Community Finance Group, Inc.; Andrew Vilenchik, Appellants, v. Republic of Kenya; Kenya Revenue Authority; Kenya Department of Customs; Kenya Central Bank, Appellees.

Subsequent History: Related proceeding at Cmty. Fin. Group, Inc. v. Stanbic Bank Ltd., 2013 U.S. Dist. LEXIS 88949 (D.N.J., June 25, 2013)

Related proceeding at, Motion granted by, Dismissed by Cmty. Fin. Grp. Inc. v. Stanbic Bank Ltd., 2015 U.S. Dist. LEXIS 89904 (S.D.N.Y., July 10, 2015)

Prior History:  [**1] Appeal from the United States District Court for the District of Minnesota.

Cmty. Fin. Group, Inc. v. Republic of Kenya, 778 F. Supp. 2d 983, 2011 U.S. Dist. LEXIS 26626 (D. Minn., 2011)


foreign state, gold, commercial activity, customs, sovereign immunity, investigate

Civil Procedure, Appeals, Standards of Review, De Novo Review, Jurisdiction, Subject Matter Jurisdiction, General Overview, International Law, Foreign Sovereign Immunities Act, Subject Matter Jurisdiction, Sovereign Immunity, Burdens of Proof, Exceptions, Commercial Activities, Expropriation, Noncommercial Torts, Discretionary Functions