U.S. Judge Grants Freezing Order Over $23 Million of New York Assets in Lawsuit Brought by the U.S. Attorney in the Sergei Magnitsky Case

September 16, 2013

The New York District Court has issued a freezing order for over $23 million in Manhattan property and bank accounts linked to the $230 million theft uncovered by Russian lawyer Sergei Magnitsky. The bank accounts are held at Bank of America. The court order was made at the request of the U.S. Attorney’s Office, which launched the first action in the Sergei Magnitsky case in the United States last week.

Presiding U.S. Judge Thomas Griesa said in the order:
“The Restrained persons, their attorneys, agents, employees and anyone acting on their behalf, and all persons or entities acting in concert or participation with any of the above, all relevant financial institutions, and all persons and entities having actual knowledge of this Order, shall not, directly or indirectly, transfer, sell, …or take, or cause to be taken, any action that would have the effect of depreciating, damaging, or in any way diminishing the value of property or other interests belonging to, or owed to, or controlled in whole or in part by the defendant, which property or other interests are subject to forfeiture.”

The United States commenced its action in New York on 10 September 2013 when the civil forfeiture complaint was filed by attorney for the Southern District of New York Preet Bharara. In granting the freezing order, the court referred to the U.S. Attorney’s Office complaint:
“The Complaint further alleges, in part, that in 2007, a Russian criminal organization (“the Organization”) engaged in an elaborate tax refund fraud scheme that defrauded Russian taxpayers out of approximately U.S. $230 million; that the fraud proceeds were laundered through a series of shell companies in Russia and other countries; and that some of these fraud proceeds were transferred from shell companies in the Republic of Moldova to PREVEZON HOLDINGS, which then used those funds, commingled with other funds …, to purchase multiple pieces of real estate in the Southern District of New York, which were held by the other Prevezon Entities.”

The aim of the freezing court order is to preserve the assets from dissipation.
In 2008, Sergei Magnitsky, an outside lawyer for the Hermitage Fund, uncovered the criminal conspiracy involving Russian government officials and criminals, responsible for the theft of Hermitage Fund’s Russian companies and $230 million of their tax payments, and testified about it to Russian authorities. He was then arrested by some of the same officials he had implicated, ill-treated and tortured for nearly a year and killed in Russian state custody on 16 November 2009.


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