Brazilian mining company Vale SA is seeking to compel discovery from a Manhattan real estate corporation in a long-running effort to recover funds from an alleged billion-dollar fraud perpetrated by BSG Resources and its owner, Beny Steinmetz.
In the motion filed Wednesday in New York federal court, Vale suggested that Perfectus — a real estate company linked to Steinmetz — suddenly changed counsel in the middle of the proceedings specifically to obstruct the discovery process.
The new attorneys, located overseas, refused to engage with Vale after the switch happened in March, the company said.
“Perfectus is not merely a U.S.-based third party in which Steinmetz appears to have invested the proceeds of his fraud, but it is Steinmetz’s own investment vehicle,” Vale told the judge.
Vale filed a motion to pursue discovery in New York last year to use in its long-running international fight with Steinmetz and his companies. In the motion, Vale accused Steinmetz of “fraudulently inducing” Vale to invest more than a billion dollars in iron ore claims he obtained through bribery.
According to Wednesday’s motion, “the lion’s share” of Vale’s initial $500 million payment “was immediately funneled up from BSGR” through two parent companies, “of which Steinmetz and his family are the sole beneficiaries.”
In its 2020 discovery motion, Vale claimed that “Steinmetz’s investments in New York real estate grew significantly in number and scale shortly after receiving the proceeds of Vale’s $500 million payment in 2010.” Steinmetz became a “benefactor” to real estate companies HFZ and Signa Holdings, and he and his associates invested some of these ill-gotten funds “in valuable and iconic real estate located in Manhattan” through joint ventures with the two companies, the motion said.
In 2019, HFZ and Signa acquired the Chrysler Building, around the same time the London Court of International Arbitration ordered BSGR to pay Vale $2.2 billion for making false or misleading statements.
When BSGR failed to pay, Vale sued Steinmetz, five former BSGR employees, and parent companies Nysco Management Corp. and the Balda Foundation for $1.85 billion in U.K. civil court.
In a separate case before a New York federal judge that seeks to enforce the arbitration order, Vale argued that the court has personal jurisdiction over Steinmetz, who acts as BSGR’s “alter ego,” siphoning corporate funds for his personal benefit.
Steinmetz was convicted by a Swiss tribunal in January and sentenced to five years in prison on charges of forgery and bribery of a foreign official. According to Swiss court records, Steinmetz, “with no prior knowledge of mining,” promised to pay the fourth wife of Guinea’s then dictator $8.5 million to secure claims to a giant iron ore deposit, and then destroyed evidence of the bribery. He is appealing the judgment.
Counsel for Vale told Law360 that “Vale is committed to pursuing Steinmetz and his fellow defendants, tracking the proceeds of the fraud against the company.”
Other respondents Vale believes to be linked to Steinmetz and the fraud proceeds are Fine Arts NY LLC, Tarpley Belnord Corp., Bryan Cave Leighton Paisner LLP and Kenneth L. Henderson.
Counsel for Steinmetz could not be reached for comment.
Perfectus and Tarpley are represented by Joseph Z. Hellerstein of Hellerstein & Co., and Robert J. Cleary and William C. Komaroff of Proskauer Rose LLP.
Fine Arts NY is represented by Altumash Nauman Mufti of Selendy & Gay PLLC.
Henderson and Bryan Cave are represented by Jessica Holly Fischweicher and Matias Ricardo Gallego-Manzano of Bryan Cave Leighton Paisner LLP.
Vale is represented by Elizabeth Vicens and Jeffrey Rosenthal of Cleary Gottlieb Steen & Hamilton LLP.
The case is Vale International SA et al., case number 1:20-mc-00199, in U.S. District Court for the Southern District of New York.
–Additional reporting by Christopher Crosby and Caroline Simson. Editing by Adam LoBelia.
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