Coffee wars. Anvar Piriev accused of bribing enforcement authorities and raiding takeover of coffee business 

Coffee wars. Anvar Piriev accused of bribing enforcement authorities and raiding takeover of coffee business
The businessman has been accused of raiding takeover of a popular coffee chain Photo: The CrimeRussia

The confrontation between Evgeny Mikhienko, Director of Novosibirsk-based Traveler’s Coffee, and Anvar Piriev, cofounder of the coffee shop chain, has escalated to another level. Following a criminal complaint from Piriev claiming that his brand was illegally alienated, the Moscow police has initiated a swindling criminal case and conducted searches in the Novosibirsk office and residences of the company managers. Mikhienko, in turn, has submitted a letter to Alexander Bastyrkin, Chairman of the Investigative Committee of the Russian Federation (ICR), describing the abuses committed by operatives of the Ministry of Internal Affairs (MIA) of the Russian Federation allegedly assisting Piriev in the raiding takeover of the popular coffee chain.

The open conflict between structures controlled by Mikhienko and Piriev began in summer 2016. They have been struggling not for specific coffee shops or real properties – but for the right to use the company logo and franchise. According to Evgeny Mikhienko, an independent expert assessment of the brand performed in 2014 had estimated this asset at 750 million rubles ($13 million). It is currently unclear whom should the franchisees pay royalties to – because they have to sign contracts with the new franchiser. And now only the court can decide who is the legitimate owner of the franchise. Legal battles in this corporate war are ongoing with variable success. To understand the background of this long-term confrontation, it is necessary to review the entire history of the Traveler’s Coffee brand.

The first Traveler’s Coffee establishment was opened in Novosibirsk by Christopher Tara-Browne, a native of the U.S., in 1997. Initially it was just an espresso bar in a local cafe. Three years later, Traveler’s Coffee has launched its own coffee bean roasting facility. In 2001, the Traveler’s Coffee trademark has been registered with the Federal Service for Intellectual Property of the Russian Federation (Rospatent). In 2002, Anvar Piriev has become a partner of the American and they launched the first stationary coffee shop. Five years later, the first franchisee coffee shop has been opened in Krasnoyarsk. In the same year, General Director Tara-Browne and his partner Piriev have sold a portion of their shares to American investors Peter Schmidt, Ian Hague, and Richard Hainsworth. The founders’ portfolios have almost halved. The American shareholders have invested $9 million into the chain. The cash infusions have enabled the network to continue its expansion. Currently, 135 establishments (including 11 coffee shops in Novosibirsk) operate in Russia and CIS using the Traveler’s Coffee trademark; the majority of the coffee houses have been opened on the franchising basis. The headquarter is located in Novosibirsk; Traveler’s Coffee Novosibirsk Limited Liability Company manages the assets in Russia.

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In 2012, an important event has occurred; it became the key milestone in the war for the trademark rights waged by the ex-partners. All the shareholders of Traveler’s Coffee Limited Liability Company (Primary State Registration Number 1035400514632) have decided to sell the key company asset, Traveler’s Coffee trademark, to Cyprus-based Traveler's Coffee International Limited having the same composition of shareholders. In other words, this was not a market transaction – the shareholders have sold their asset to a company also belonging to them. The purpose of this sale was to make the asset more transparent for foreign investors. Anvar Piriev had approved this deal as well; he owned 21% of shares in Traveler's Coffee International Limited and was a shareholder of Traveler’s Coffee Limited Liability Company (Primary State Registration Number 1035400514632). Since the beginning of 2013, after the deal registration in the Federal Service for Intellectual Property of the Russian Federation (Rospatent), the Cypriot company has become the owner of the Traveler’s Coffee trademark. In order to manage the production facilities and coffee shop network in Russia, a new company, Traveler’s Coffee Limited Liability Company (Primary State Registration Number 1125476143836), has been established; it is a 100% subsidiary company of Cyprus-based Traveler's Coffee International Limited.

Today the Cypriot company belongs to three individuals and several legal entities that also have other assets not related to Traveler's Coffee International Limited. The individuals are Richard Hainsworth, Managing Director of the Cypriot company; company founder Christopher Tara-Browne; and his wife Svetlana (Christopher and Svetlana own together 5% of the shares). With regards to the legal entities, their main beneficiaries are trust funds controlled by U.S. citizens Peter Schmidt, Ian Hague, and Marco Dascher. Anvar Piriev was a co-owner of the company up until 2015. His share was 21%; in addition, Piriev had owned 37% to 100% in individual coffee shops of the Traveler’s Coffee chain.

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Christopher Tara-Browne

In the end of 2014, a conflict arose between Piriev and other shareholders due to a radical clash of opinions with regards to the further chain development. According to Piriev, the net profit of the head office had exceeded 60 million rubles ($1 million) in 2012. But a year later, financial issues have begun due to the crisis broken out in Russia. In 2013–2014, the total loss of the company was 80 million rubles ($1.4 million). Piriev has created a parallel structure, Traveler’s Coffee Moscow Limited Liability Company, to liaise with the coffee shops and started enticing partners away from the old company. In summer 2015, the shareholders have decided to divide the companies and signed a settlement. According to the settlement agreement, the Moscow businessman has seceded from the company shareholders and received in exchange the 100% ownership in 5 coffee shops out of the 15 ones belonging directly to the Traveler’s Coffee chain (2 coffee shops in Krasnoyarsk, one in Krasnodar, one in Vladivostok, and one in Kostroma) and 25 more franchisee establishments. In addition, a commercial concession contract has been signed with his company enabling him to use the Traveler’s Coffee trademark in Russia up until 2021.

Concurrently, Christopher Tara-Browne has ceased the operational administration and returned to the U.S. According to Piriev, Tara-Browne was suspended by the American shareholders displeased with the financial standing of the coffee chain. Christopher Tara-Browne has refuted this version: according to him, he has withdrawn from the business due to “the internal and external factors affecting Russia in 2015”. These factors made necessary to replace the company management – Tara-Browne had been looking for a successor for a long time and after a number of consultations and meetings has chosen Evgeny Mikhienko, former top manager in Yakraya Zvezda (Bright Star) company earlier involved into the development of Carl's Junior franchisee restaurants in Russia.

As a result, a pretty complicated situation arose; different interpretations of this situation by different parties have led to the conflict. Currently, two separate companies are managing the coffee chain with the same name. Piriev has created Traveler’s Coffee Moscow to manage his establishments. Other coffee shops are managed by American–Novosibirsk Traveler’s Coffee belonging to Cyprus-based Traveler's Coffee International Limited. According to the American shareholders, after the distribution of assets, the Traveler’s Coffee trademark has remained the property of the Cypriot offshore company – while Piriev could use the brand up until 2021 in accordance with the commercial concession contract. In other words, under the original agreement, Traveler’s Coffee Moscow belonging to Piriev could sell the franchise and collect royalties from franchisees. In exchange, Piriev has waived all rights to the primary asset of Traveler’s Coffee shareholders – the trademark remaining the property of the Cypriot company. Therefore, Piriev has got more liberty in selling the Traveler’s Coffee subfranchise in Russia and abroad – but nothing more.

After the distribution of assets, each company was optimistic and planned to increase the number of its coffee shops – but the franchisee partners could not understand whom to deal with. Everybody understood that the existence of two chains under the same brand creates difficulties for the trademark promotion, and any failure of one company would inevitably affect the other one. The issues began pretty soon. In mid-March 2016, the Arbitration Court of the Novosibirsk Region has ruled that Traveler’s Coffee Moscow belonging to Anvar Piriev must refund 1.5 million rubles ($26.2 thousand) (the franchise fee for the right to use the Traveler’s Coffee brand in Krasnoyarsk) to Krasnoyarsk-based Perspektiva company. The parties had signed a preliminary protocol of intentions, but the final contract was never signed. Representatives of Perspektiva claimed that the deal has fallen through due to Piriev’s failure to fulfil certain obligations. In his defense, Piriev had stated that the Krasnoyarsk partners could not agree the location of the future coffee shop with the municipal authorities, and the project was suspended as a result of this. Ultimately, Piriev has refunded the franchise fee – although he had tried to appeal this verdict for a long time.

In a few months, 27 complaints and 5 lawsuits against Traveler’s Coffee Moscow for the total amount of 10 million rubles ($174.4 thousand) had been filed with arbitration courts, including accusations of illegal use of a registered trademark. One of the ‘last straws’ for the trademark owners was the opening of Piriev’s Traveler’s Coffee establishment in Frankfurt. In March 2016, the owners of the brand have submitted to Rospatent an application to terminate the commercial concession (franchise) contract with Piriev on a unilateral basis. After the application registration in Rospatent, coffee shops managed by Anvar Piriev had either to close, or change their names, menus, interiors, etc. to avoid resemblance to the Traveler’s Coffee chain, or sign new contracts with the Novosibirsk-based company. But Piriev has appealed in court the unilateral termination of the concession contract and continued using the Traveler’s Coffee trademark by managing his own coffee shops and offering the franchise for sale. The legal battles were ongoing for the entire summer 2016 with variable success. In August, the Arbitration Court of Moscow has dismissed the claim filed by Traveler’s Coffee Moscow against Cyprus-based Traveler's Coffee International Limited requiring to annul the termination of the commercial concession contract. The plaintiff had tried to appeal the termination of the contract with Traveler's Coffee International Limited resulting in his deprivation of the right to sell the Traveler’s Coffee franchise. Novosibirsk-based Traveler’s Coffee became the only franchiser of the coffee chain. But in fall 2016, the owners of the brand have become aware that they do not own it anymore. In October, the Federal Service for Intellectual Property of the Russian Federation (Rospatent) has registered an agreement for disposition of the rights transferring the ownership of the Traveler’s Coffee trademark from Cyprus-based Traveler's Coffee International Limited to Traveler’s Coffee Moscow.

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Evgeny Mikhienko    

It turned out that Piriev had submitted to Rospatent sale documents for the trademark signed on behalf of the Cypriot company by Alexey Nechaev, its former Managing Director, in August 2016. Based on these documents, a decision has been made to alienate the exclusive right of Traveler's Coffee International Limited to that trademark. The shareholders have condemned this as a raiding takeover of the company by Piriev. On October 10, 2016, Richard Hainsworth, the current Managing Director of the Cypriot company, has stated that “the company shareholders had neither provided their consent nor signed any documents to sell the brand”. The market value of the trademark was estimated in 2014 at 750 million rubles ($13 million). According to the shareholders, if they had agreed to such a deal, they would request to compensate the investments in the amount of $9 million as a minimum and render an invoice for the actual cost of the company plus the investments as a maximum. Not a single penny was transferred to Traveler's Coffee International Limited. On the same day, Alexey Nechaev has confirmed that he had signed the sale agreement “in accordance with the company regulations”. But the decision of the Board of Directors of Traveler's Coffee International Limited of September 30, 2015 states that the Managing Director can not “perform any actions involving the transfer and distribution of shares, transfer of bonds, assignment of assets, issuing promissory notes, and any deals with company assets” at his/her sole discretion. In other words, Nechaev had not right to make this deal on behalf of the company.

Upon stating that the deal is illegal because none of the shareholders had provided consent for the alienation of the primary asset, the former trademark owners have filed a lawsuit against Traveler's Coffee Moscow Limited Liability Company with the Moscow Arbitration Court. Concurrently, the shareholders and owners of the Novosibirsk trademark have submitted to the Prosecutor General’s Office a request to check the actions of Piriev against Article 159 (swindling) and part 6 of Article 185 (abuse in the issue of securities) of the Criminal Code of the Russian Federation and also check whether the actions of officers of the Federal Service for Intellectual Property of the Russian Federation fall under the crime of professional misconduct category. A copy of the request has been submitted to the Presidential Executive Office. Documents proving the fraudulent nature of the deal were attached to all the applications.

The reaction was prompt – although not exactly same as expected. 24 hours after the registration of the trademark alienation agreement in favor of structures controlled by Anvar Piriev in Rospatent, operatives of the Department for Economic Security and Combating the Corruption of the Ministry of Internal Affairs (MIA) of the Russian Federation have arrived to the warehouse and production facilities of the enterprise in Novosibirsk. The law enforcement officers announced that all products ready for realization are to be arrested – but after negotiations, they have seized only boxes with coffee and cups and two days later, upon sorting out all the details, returned everything back. The seizure of products would considerably hinder the operations of the chain managed by Novosibirsk-based Traveler's Coffee and consisting of more than 70 coffee shops. Evgeny Mikhienko, Director of the chain, has supposed that the actions of the MIA operatives could be instigated by the application filed by Anvar Piriev in the framework of this raiding takeover. Representatives of the Novosibirsk company have found out that the Moscow businessman had filed this application a few days prior to the recognition of the trademark his property.

In December 2016, the Moscow Arbitration Court has dismissed the lawsuit filed by the Cypriot shareholders claiming the ownership of the Traveler's Coffee trademark. After losing the case in the first instance, the attorneys for the company have filed an appeal. Piriev, inspired by the victory, decided to deliver the final blow to his competitors. In two days, operatives of the MIA Administration for the Western Administrative District of Moscow have collected evidence and initiated a criminal case against unidentified persons under part 4 of Article 159 of the Criminal Code of the Russian Federation (swindling). According to the investigation, shareholders and Christopher Tara-Browne, one of the founders of the famous Traveler's Coffee chain, could forge the trademark alienation agreement back in 2012.

This takes us back to the original owner of the Traveler's Coffee brand – Traveler’s Coffee Limited Liability Company (Primary State Registration Number 1035400514632) incorporated in Moscow in 2003 and replaced in 2012 by Novosibirsk-based Traveler's Coffee Limited Liability Company (Primary State Registration Number 1125476143836), while the trademark has become the property of the Cypriot company as per the shareholders’ decision. The criminal complaint was submitted to the police by Azamat Inderbiev, Director of the original Traveler's Coffee Limited Liability Company having ties with its former co-owner Anvar Piriev. It turned out that the liquidation procedure for the company that had ceased all financial and economic operations in 2012 was not completed. One of its shareholders was Traveler's Coffee Limited incorporated in Gibraltar; its director was Christopher Tara-Browne. Everybody, except for Anvar Piriev whose concession contract was terminated in spring 2016, had forgotten about the not-completely-liquidated structure. Eager to return the brand, Piriev has remembered the old company and revived it. But why?

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Anvar Piriev

On May 22, 2016, a document has emerged; according to it, Christopher Tara-Browne, owner of the Gibraltar-based company, decided to sell 75% in the charter capital of the old company existing only on paper. Nikolai Bogatyrev, Director of Traveler’s Coffee Limited Liability Company, was responsible for the registration of that deal, Azamat Inderbiev was the purchaser. On March 26, 2016, an agreement of purchase and sale has been signed, the selling price was 860,700 rubles ($15 thousand). Then Umar Salamov, a native of Chechnya, current IBO World Light Heavyweight Champion, WBO European Light Heavyweight Champion, and close relative of the Security Director of Traveler's Coffee Moscow belonging to Anvar Piriev (by the way, currently it belongs to a totally different person, although a member of the Chechen diaspora as well), has been appointed the Director of the Gibraltar company. Letters have been sent to franchisees on behalf of the ‘new old’ company requesting them to pay royalties to and purchase products from the company of Anvar Piriev. Because the Moscow and Novosibirsk companies had identical names, the partners were confused, and some deals have been mistakenly made not with the Novosibirsk-based trademark owner. In addition, a number of lawsuits were filed against Novosibirsk-based Traveler’s Coffee Limited Liability Company (Primary State Registration Number 1125476143836) and Traveler's Coffee International Limited at the instigation of Piriev. The plaintiffs had claimed that the sale of the brand and other assets in 2012 was illegal. The most interesting is that Anvar Piriev, who had sold, together with other shareholders, the Traveler’s Coffee trademark to Cyprus-based Traveler's Coffee International Limited in 2012 – i.e. to himself, had been working in that company for three more years being its shareholder and then continued using its trademark in the framework of the concession agreement for almost a year. In summer 2016, the contract with Piriev was terminated on a unilateral basis, thus, depriving him of the right to use the trademark – and he has suddenly awakened and conceived that during all these years, he was a victim of the fraud unaware that the brand had been sold without his consent. Anvar Piriev had attempted to retrieve the trademark on behalf of the old Traveler's Coffee in the arbitration court concurrently with the similar lawsuits filed by Traveler's Coffee Moscow. But Azamat Inderbiev and Anvar Piriev have lost all the lawsuits filed on behalf of Traveler’s Coffee Limited Liability Company (Primary State Registration Number 1035400514632). Therefore, in the end of November 2016, they have submitted a criminal complaint to the Investigative Unit of the MIA Administration for the Western Administrative District of Moscow. Two days later, on December 1, 2016, a criminal case №11601450700000970 has been initiated against unidentified persons. The investigators have ignored the fact that the written decision to sell 75% in the charter capital of Moscow-based Traveler’s Coffee signed and sealed by Christopher Tara-Browne was an obvious forgery. The seal affixed on the document shows Cyprus instead of Gibraltar. The CrimeRussia possesses a statement of Christopher Tara-Browne saying that he had never given the direction to alienate a share in the charter capital and make such a deal. The original seal of the sole participant of Traveler's Coffee Limited is affixed on the document, and it is different from the seal affixed on the agreement of purchase and sale of the share in the company’s charter capital. All these documents have been provided to the investigators. In addition, Evgeny Mikhienko has submitted a criminal complaint to the MIA Administration for the Western Administrative District of Moscow. But the criminal complaint was forwarded to Grozny – the place of residence of Azamat Inderbiev – and lost in transit.

The investigation of the criminal complaint submitted by Piriev was not very active until the end of March – when Traveler’s Coffee Moscow has finally lost the right to use the Traveler’s Coffee trademark as per verdict of the arbitration court. Then, according to Evgeny Mikhienko, the real lawlessness has begun.

In the framework of the case pertaining to the illegal sale of the trademark by unidentified persons, a group of Moscow operatives had arrived to Novosibirsk in February 2017; they questioned the management of the Novosibirsk-based company and seized the requested documents. On April 20, some 15 Moscow officers have arrived again. This time, without a court decision, based only on a request from the investigator, they have searched residences of Evgeny Mikhienko and Sergei Mikheev, financial consultant of the Novosibirsk-based company, and the Novosibirsk office of Traveler’s Coffee. The policemen have seized company’s servers, laptops, and hard drives; according to Evgeny Mikhienko, this could completely disrupt the work of the third largest coffee chain in Russia operating for 20 years. The operatives have even seized cell phones of the witnesses.

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A number of abuses have been committed in the course of the investigation. The Managing Director of Novosibirsk-based Traveler’s Coffee has submitted letters to the Prosecutor General’s Office and ICR asking to check the legitimacy of actions of the Moscow policemen. In his letter to Alexander Bastyrkin, Chairman of the ICR, Evgeny Mikhienko states that the police officers who had arrived to his residence to perform a search were plainclothed and attempted to break the door when he refused to let them in. They “had prevented him from calling the attorney in a blunt manner”, treated an elderly woman, Evgeny’s mother-in-law, rudely, and even pressurized psychologically his children by asking them to bring seals “hidden by their father somewhere”. In the Novosibirsk office of Traveler’s Coffee, an operative had punched the company’s Marketing Director in the face for asking what’s going on. The investigative actions had continued for 20 hours non-stop. The company personnel believe that the policemen had made all efforts to completely paralyze the work of the head office – which was the sole purpose of their actions. According to his letter to Bastyrkin, Mikhienko possesses evidence that people of Anvar Piriev had paid $300 thousand to the Moscow police officers for that operation.

It is necessary to note that the searches in the Novosibirsk office looked, in fact, like a retaliation of Piriev in the war for the trademark. The point is that after numerous court hearings, in the end of March 2017, the 9th Arbitration Court of Appeal has ruled to annul the previous verdict in favor of Anvar Piriev, thus, recognizing the right of Traveler's Coffee International Limited to the Traveler's Coffee trademark. Based on this decision, representatives of the Novosibirsk-based company managed by Evgeny Mikhienko have submitted in the end of April an application to reinstate their right to that brand to Rospatent. The resolution is expected in mid-May.

Apparently, this is not the end of the trade war. Every party has its own ‘aces in sleeves’. Anvar Piriev still relies on the police support and accuses the former partners of swindling. His complaints are processed promptly by the police. On the other hand, criminal complaints on raiding submitted to the police by Mikhienko are gathering dust for several months. The situation may change should the ICR launch an inquest into the facts reported by the Novosibirsk businessman. Especially if his accusations of prejudice brought against the operatives of the of the MIA Administration for the Western Administrative District of Moscow are confirmed. The party of Evgeny Mikhienko does not intend to accelerate the resolution of the problem with monetary infusions and relies solely on the law; Mikhienko believes that the law enforcement structures should do their job and investigate the facts provided in the criminal complaint submitted by the Novosibirsk-based company in October 2016 and alleging that the assignment of rights to the famous trademark committed by Alexey Nechaev, former Managing Director of Traveler's Coffee International Limited, was illegal. Should such an inquest be carried out, both Anvar Piriev and his accomplice might be prosecuted for swindling. Should the investigators thoroughly review all documents pertaining to the old Moscow-based Traveler's Coffee currently managed by the Chechen diaspora and find out who had forged the signature of Christopher Tara-Browne and affixed the Cypriot seal instead of the Gibraltar one on the sale documents, the number of suspects in the swindling case may increase drastically.

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In the meantime, some partners of Traveler's Coffee Moscow became aware that the company does not own the brand anymore and are currently trying to recover their money from Piriev. In particular, hearings of the bankruptcy case against Traveler's Coffee Moscow have started in the Moscow Arbitration Court in the end of April. The bankruptcy lawsuit has been filed by Olga Abrosimova, a representative of a franchisee company. Anvar Piriev considers this an intrigue of his competitors and states that such lawsuits against his business are being filed only at the prompting of Evgeny Mikhienko who had allegedly promised the franchisee companies to buy up some debts in order to drive the company of the Moscow businessman to bankruptcy.

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