Antitrust Law Daily Wrap Up, RICO—2d Cir.: Failure to plead domestic injury dooms overseas RICO extortion claims, (Jan 20, 2026)

By Martin A. Steinberg, J.D.

Kazakh officials and private business partners allegedly conspired to wrongfully detain and coerce a Kazakhstani businessman into signing unfavorable agreements to secure his release from prison, thereby stripping him of valuable business interests.

The Second Circuit affirmed dismissal of a RICO suit, holding that the National Security Committee of Kazakhstan is immune from suit under the Foreign Sovereign Immunities Act and that the remaining defendants could not be sued under RICO because the plaintiff failed to plausibly allege a domestic injury. Although the court clarified that RICO’s domestic-injury requirement is not jurisdictional, it concluded that the alleged racketeering activity and resulting harm were overwhelmingly foreign in nature, that use of U.S. financial channels alone was insufficient to establish a domestic injury, and that the proposed amended complaint would therefore be futile, warranting denial of leave to amend, and affirmance of the district court’s judgment (Yerkyn v. Yakovlevich, No. 24-2962 (2d Cir. Jan. 16, 2026)).

Background. The plaintiff, Amirkhanov Yerkyn, his wife, and Defendants Klebanov Alexandr Yakovlevich and Kan Sergey Vladimirovich (the “Individual Defendants”) were the sole shareholders of an influential energy company in Kazakhstan, Central Asian Power-Energy Company (CAPEC). Founded during Kazakhstan’s economic privatization in the 1990s, CAPEC now provides electricity to almost all of northern Kazakhstan and is valued at around $450 million. In 2004, CAPEC acquired Eximbank of Kazakhstan (Eximbank), at which time Amirkhanov became chairman of the bank’s board.

The plaintiff alleged that his business partners secretly misappropriated funds from Eximbank, routing money through New York intermediary banks and affiliated entities in Dubai and the U.S. to conceal the transactions and pay bribes to senior Kazakh officials. According to the complaint, the defendants later conspired with Kazakhstan’s National Security Committee (NSC) to frame the plaintiff for corruption, leading to his arrest and three-month detention in 2018. During this detention, he claimed to have been subjected to psychological pressure and forced to sign a series of agreements to secure his release, including transferring his ownership stake in CAPEC, assuming Eximbank’s liabilities, and waiving legal claims against related companies and individuals. After unsuccessful litigation efforts in Kazakhstan, the plaintiff filed suit in federal court in New York, seeking to invalidate the coerced agreements and recover damages, later proposing amended claims under RICO and related statutes.

The plaintiff appealed from a district court judgment dismissing his claims against the alleged conspirators and denying him leave to replead violations of the RICO Act, 18 U.S.C. §§ 1961–1968. On appeal, the plaintiff challenged the district court’s determination that the proposed second amended complaint (SAC) was futile because he did not adequately allege a domestic injury under the RICO statute.

The proposed SAC included new claims alleging violations of the RICO statute, the Alien Tort Statute, and the Torture Victim Protection Act, U.S.C. § 1350, as well as state-law claims for unjust enrichment, misappropriation, and conversion. The SAC also proposed adding as defendants Lodestar, Forte, Massimov, and various other “individuals and entities, presently unknown” who “participated and aided in the scheme.”

Foreign Sovereign Immunities Act (FSIA). The Second Circuit held that the NSC is immune from suit under the Foreign Sovereign Immunities Act (FSIA) and that no statutory exception applies. The FSIA provides the exclusive basis for subject-matter jurisdiction over foreign sovereigns and their instrumentalities, and immunity is presumed unless a specific exception applies.

The court rejected the plaintiff's argument that the “commercial activity” exception applied because the NSC allegedly detained him to facilitate financially beneficial transactions for private actors. The court explained that the alleged conduct amounted to an exercise of sovereign police and prosecutorial power, which is inherently governmental in nature and not commercial, regardless of any alleged profit motive. Relying on Supreme Court precedent, the panel concluded that coercive detention and law enforcement actions, even if abusive or corrupt, do not constitute market-like conduct comparable to that of private actors. See Saudi Arabia v. Nelson, 507 U.S. 349 (1993). As a result, the court ruled that it lacked subject-matter jurisdiction over all claims against the NSC and affirmed dismissal on FSIA grounds.

Lack of Domestic Injury. The court next addressed the plaintiff’s RICO claims against the individual defendants and held that, although the district court erred in treating the domestic-injury requirement as jurisdictional, dismissal was still warranted because the plaintiff failed to plausibly allege a domestic injury as required under RJR Nabisco v. Eur. Cmty., 579 U.S. 325 (2016). Although the district court dismissed the RICO claims for lack of subject-matter jurisdiction, the Second Circuit clarified that RICO’s domestic-injury requirement is not jurisdictional. Instead, the panel affirmed dismissal on Rule 12(b)(6) grounds, holding that the plaintiff failed to plausibly plead a domestic injury and that amendment would therefore be futile.

Private civil RICO plaintiffs must allege and prove a domestic injury to business or property, and courts must conduct a context-specific inquiry focusing on the nature of the alleged injury, the racketeering activity that caused it, and the geographic locus of the injury’s aims and effects. Applying this framework, the court found that the core alleged misconduct and harm were overwhelmingly foreign. The alleged conspiracy was conceived and executed primarily in Kazakhstan by Kazakh actors, involved Kazakh companies and government authorities, and centered on the plaintiff’s detention and coerced execution of agreements in Kazakhstan.

Although the plaintiff alleged that defendants routed funds through New York financial institutions as part of wire fraud, bank fraud, and money laundering schemes, the mere use of U.S. banking infrastructure does not, by itself, convert an otherwise foreign injury into a domestic one. Accepting such a theory, the court warned, would effectively nullify the domestic-injury requirement whenever international financial transfers pass through U.S. institutions.

The plaintiff further argued that he suffered a domestic injury because the coerced waiver of claims allegedly prevented him from pursuing potential legal actions against a Delaware-based company. The SAC alleged six predicate crimes that “directly caused” the plaintiff to sign the waiver: (1) wire fraud in violation of 18 U.S.C. § 1343; (2) bank fraud in violation of 18 U.S.C. § 1344; (3) money laundering in violation of 18 U.S.C. §§ 1956–1957; (4) the payment of bribes in violation of 18 U.S.C. § 201; (5) extortion in violation of 18 U.S.C. § 1951; and (6) theft and conversion in violation of New York Law. On appeal, Amirkhanov asserted that the economic harm caused by the defendants’ misuse of U.S.-based financial systems, including the relinquishment of his otherwise actionable U.S. claims against the Delaware-based Forte, constituted a domestic injury.

The court rejected this argument on pleading grounds, noting that the proposed amended complaint did not allege that the waiver explicitly covered Forte, did not plausibly establish that Forte was an alter ego of the individual defendants, and relied on conclusory assertions unsupported by factual detail. The court emphasized that plaintiffs cannot cure pleading deficiencies through appellate briefing and must allege sufficient facts in the complaint itself to support alter ego liability and downstream injury.

The court also distinguished the Supreme Court’s decision in Yegiazaryan v. Smagin, 599 U.S. 533 (2023), where domestic injury was found because the defendant engaged in U.S.-based conduct specifically designed to obstruct enforcement of an existing U.S. judgment. Here, by contrast, the plaintiff had no U.S. judgment, and the alleged racketeering activity was not directed at undermining domestic court processes or property interests located in the United States. The court concluded that both the conduct and its primary effects remained foreign in character.

Ultimately, the panel held that the plaintiff failed to allege facts showing that his business or property injury was grounded in the United States. Although the district court improperly characterized the defect as jurisdictional, the court affirmed dismissal on Rule 12(b)(6) grounds and upheld denial of leave to amend as futile. Because no viable federal claim remained, the court further ruled that supplemental jurisdiction over the plaintiff’s state-law claims was unavailable.

The Case is No. 24-2962.

Judge: Sullivan, R.

Attorneys: Irina Shpigel (Shpigel Law P.C.) for Amirkhanov Yerkyn. Craig Tarasoff (Kirsch & Niehaus PLLC) for Klebanov Alexandr Yakovlevich.

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