Irregularities in Apostille Result in Attorney Sanctions in Case Involving €8 Billion Bank Transactions
We have shared blogs describing the importance of the certified translation of international legal documents in a variety of contexts, including international adoptions, birthright citizenship, dual citizenship, foreign marriage and divorce, Power of Attorney, and others. But a recent case in September 2019 involving €8 billion of fraudulent bank transactions in South Korea highlights the detailed requirements and significance of an Apostille.
In today’s global economy, most corporate entities transact some level of business internationally, often in different world languages. It is common, therefore, that when international litigation arises, pleadings or original documents submitted as evidence or exchanged in discovery are drafted in a foreign language. For a litigant or a court to rely on the legitimacy of a foreign document, an Apostille must be attached to the document to certify its authenticity.
In a bizarre case in the United States District Court for the Southern District of New York (AJ Energy LLC v. Woorie Bank), one of the documents of which the authenticity was questioned was actually the Apostille itself. In fact, it was the irregularities in the Apostille that convinced the court that the Apostille and, consequently, other documents verifying eight billion euros-worth of bank transactions, were fraudulent, thereby warranting sanctions against the attorneys involved.
Legal Translation Services for the Business Transactions
In this very unique case, Plaintiff, AJ Energy LLC, was a small limited liability company based in Nevada, in the United States. The defendant, Woori Bank, operated in South Korea.
On September 21, 2015, AJ Energy executed a joint venture agreement and a “Business Asset Agreement” with a Korean company called NRG CO, Ltd (“NRG”) and Hestiun Finance Limited (“Hestiun”), a company registered in the United Kingdom, to “make and manage investments in the Republic of Korea.” According to the terms of the agreement, Hestiun was to provide three billion euros for AJ Energy and NRG to invest and manage, with the funds passing through a common account at Deutsche Bank AG, in Frankfurt, Germany. Deutsche Bank would then transfer the funds in Korean currency to Woori Bank in South Korea, and Woori Bank would then credit the funds to the account of NRG.
According to AJ Energy, Hestiun transferred the funds to the common account at Deutsche Bank, and Woori Bank pulled the funds from the common account but never credited the funds to NRG. In support of these transactions, AJ Energy submitted various exhibits, including messages sent through the Society for Worldwide Interbank Telecommunication (“SWIFT”), referencing the parties, relevant account numbers, dates of transactions, and terms of the agreement. However, the dates, account numbers, and even the identity of the parties referenced on the respective documents were inconsistent with each other.
AJ Energy further claimed that officials at Woori Bank promised to return the funds to AJ Energy (even though it was Hestiun that originally provided the funds) if AJ Energy would invest additional funds into the South Korean economy. Despite its claim that Woori Bank had already stolen three billion euros, in February 2017, AJ Energy entered a joint venture with Maybrook Financial Group Ltd (“Maybrook”) and allegedly invested another five billion euros using the same common account with Woori Bank. As with the first alleged transaction, AJ Energy claimed that Woori Bank pulled the funds from the common account but never credited the funds to AJ Energy’s account.
Once again, AJ Energy submitted documents portending to prove the transactions, however, the documents referenced the same inconsistent account numbers as the documents referencing the original transaction. One exhibit was alleged to be a letter from the Chief Financial Officer and Chief Risk Officer at Deutsche Bank, however the letter was written on “Maybrook” letterhead. Another exhibit purported to be a letter from the same officers at Deutsche Bank to the CEO/President of Woori Bank, alleging proof of the transactions and demanding that Woori Bank immediately release the funds to AJ Energy. However, the respective signatures of the Officers on the two letters did not match.
Based on these allegations and supporting documents, AJ Energy filed claims against Woori Bank for stealing the equivalent of up to $10 Billion. AJ Energy asserted claims for fraud, negligent misrepresentation, conversion, unjust enrichment, and breach of contract.
Motion to Dismiss
In response, Woori Bank filed a Rule 12(b)(6) Motion to Dismiss, claiming that AJ Energy failed to allege facts sufficient to support its claims. In determining a motion to dismiss, the court must assess the plausibility of the plaintiff’s claims. In doing so, the court may “draw on its judicial experience and common sense.” However, “a court need not feel constrained to accept as truth conflicting pleadings that make no sense . . . or that are contradicted either by statements in the complaint itself or by documents upon which its pleadings rely.”
Facially Implausible Claims that “Strain Credulity”
The court held that, on their face, AJ Energy’s allegations “strain credulity.” The court stated that, “to put it mildly,” it was “hard to believe that anyone would, after wiring and losing €3 billion, wire another €5 billion to the same bank.” The court stated that it could probably dismiss AJ Energy’s claims on that basis alone. But the court went on to note the numerous factual inconsistencies in AJ Energy’s exhibits, which rendered the basis of its claims—the two alleged wire transfers—entirely implausible. Based on the many inconsistencies, the court concluded that the transfers simply did not occur. Accordingly, the court dismissed all of AJ Energy’s claims.
Motion for Sanctions
In addition to the claims that the court dismissed, both parties motioned the court for sanctions.
In April 2018, counsel for Woori Bank sent counsel for AJ Energy a letter, asserting that AJ Energy’s claims were “legally baseless” and premised upon “false assertions of fact.” The letter specifically asserted that if the attorneys had conducted a reasonable investigation, it would have revealed that the transfers never occurred.
The letter also noted that NRG had sued Woori Bank in South Korea and that, at the request of the South Korean court, Deutsche Bank denied the existence of any documentation confirming the transfers or the “common account.” With the letter, the attorneys included a certified English translation of Deutsche Bank’s submission to the Korean court.
Counsel for Woori Bank also sent AJ Energy’s counsel an affidavit from the Assistant Vice President of Deutsche Bank, Mohamed Kaba, attesting that there were no records of any transactions and that the transactions never occurred. The affidavit also asserted that the signatures of the other Deutsche Bank officials on the other letters “did not appear to be authentic.”
The Apostille Translation
In March 2019, AJ Energy submitted to the court an affidavit purporting to be from the CEO of Deutsche Bank, Christian Sewing, stating that all of the facts asserted by AJ Energy are true; that the documents AJ Energy submitted with its original Complaint were authorized by Deutsche Bank and are true and correct; that the transfers did occur as alleged; that the “common account” did exist; and that the affidavit from Deutsche Bank’s Assistant Vice President Kaba was not authorized by Deutsche Bank. Attached to the submitted document was an Apostille, purported to be from the Frankfurt Regional Court, certifying the authenticity of the document.
In response, Woori Bank filed a letter contending that the affidavit of CEO Sewing was a forgery. Supporting this, Woori Bank submitted an affidavit from the Vice President of Deutsche Bank’s Anti-Financial Crimes Division, Erin Donovan, asserting that the “Sewing” affidavit was fraudulent and that the “Kaba” affidavit was authorized by Deutsche Bank and is accurate. Also in the letter, Woori Bank enumerated several inconsistencies in the “Sewing” affidavit and in the Apostille. Specifically, Woori Bank noted:
(1) “formatting and syntax errors” that would be surprising to find in an affidavit from “a major international bank’s CEO”; (2) the absence of a notarial certificate, a prerequisite to authentication under international conventions; (3) the absence of a date and an apostille number in the apostille; and (4) the absence of a seal from the Frankfurt Regional Court.
In April 2019, Woori Bank filed an affidavit from Max D. Stein, the European Counsel in the Frankfurt office of Skadden, Arps, Slate, Meagher & Flom LLP, which contained correspondence with the Frankfurt Regional Court listed on the Apostille on the “Sewing” affidavit, along with a certified translation of that correspondence. In the correspondence, Stein requested confirmation from the Frankfurt Regional Court “that the Apostille allegedly coming from the Frankfurt Regional Court was in fact not issued by the Regional Court and, therefore, is a forged document.”
In response, the Frankfurt Regional Court stated:
Owing to several discernable abnormalities, there are considerable reservations regarding the authenticity of the apostille on the purported Sewing affidavit. . . . The letter noted, among other things, that the apostille was missing “the date of [its] issue” and the “reference number of” the “competent authority” purporting to sign it, and was “not placed on a public record” as required by the Hague Convention; that the Frankfurt Regional Court would not itself “confirm[ ]” a CEO’s capacity in a “stock corporation . . . by way of an [a]postille”; that the apostille did not have “a second seal impression,” which the Frankfurt Regional Court normally places on its apostilles; and that “a comparison of the signature of the commissioned judge at the Regional Court . . . shows considerable differences from the signature” in the “allegedly issued” apostille.
The Court’s Conclusion
Based on this evidence, the court concluded that the Sewing affidavit, with its accompanying Apostille, submitted by AJ Energy “is almost certainly a forgery. Nor is it a particularly good forgery.” Because the affidavit bore “numerous indicia of inauthenticity on its face,” including “various irregularities in the apostille,” its submission was, by itself, “enough to warrant sanctions, if not worse.”
As business continues to expand globally, incorporating translated documents in every language, certification of translated documents with an Apostille becomes not only critical but required in the countries who are members of the Hague Apostille Convention. Although the facts of the case described here are unique and particularly uncommon, the required use of Apostilles and the certification of international documents using professional certified translation services is essential. All Language Alliance, Inc. can assist you in the essential task of proper certified translation services for Apostilled documents. Email us from our website www.languagealliance.com for all of your legal translation needs for any language.
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*** This legal translation services blog article should not be construed as legal advice. You should always consult a lawyer regarding your specific legal needs.***