U.S. Department of Justice Files Case to Seize Over $23 Million in Manhattan Real Estate Connected to Magnitsky Case

September 11, 2013

U.S. Depart­ment of Jus­tice Files Case to Seize Over $23 Mil­lion in Man­hat­tan Real Estate Con­nect­ed to Mag­nit­sky Case
10 Sep­tem­ber 2013 – The Unit­ed States Attorney’s Office in New York has filed a com­plaint to seize over $23 mil­lion in Man­hat­tan prop­er­ty linked to the $230 mil­lion theft uncov­ered by Her­mitage Fund’s Russ­ian lawyer Sergei Mag­nit­sky. The U.S. Attorney’s com­plaint seeks to fur­ther seize cash in con­nect­ed bank accounts and impose civ­il mon­ey laun­der­ing penal­ties, accord­ing to doc­u­ments filed today with the Man­hat­tan Fed­er­al Court.
“This is the first action in the US to seize assets con­nect­ed to the Mag­nit­sky case, — said a Her­mitage Cap­i­tal rep­re­sen­ta­tive. — It is a sig­nif­i­cant esca­la­tion in the cam­paign to bring jus­tice for Sergei Mag­nit­sky and his fam­i­ly. Sergei’s friends, col­leagues and fam­i­ly will con­tin­ue to pur­sue all the recip­i­ents of the blood mon­ey to make sure they are part­ed with the illic­it pro­ceeds, who­ev­er and wher­ev­er they are.”
The com­plaint was filed by Preet Bharara, Unit­ed States Attorney’s Office for the South­ern Dis­trict of New York, on behalf of the Unit­ed States Gov­ern­ment, who is plain­tiff in the action. Accord­ing to the fil­ing, the U.S. Government’s claims over the real estate and cash in New York arise out of the laun­der­ing of pro­ceeds of a crim­i­nal enter­prise in Russia.
“A Russ­ian crim­i­nal organ­i­sa­tion includ­ing cor­rupt Russ­ian gov­ern­ment offi­cials defraud­ed Russ­ian tax­pay­ers of approx­i­mate­ly 5.4 bil­lion rubles, or US$230 mil­lion, through an elab­o­rate tax refund fraud scheme,” says the complaint.
“In order to pro­cure the refunds, the Orga­ni­za­tion fraud­u­lent­ly re-reg­is­tered the Her­mitage Com­pa­nies in the names of mem­bers of the Orga­ni­za­tion, and then orches­trat­ed sham law­suits against these com­pa­nies,” says the complaint.
“These sham law­suits involved mem­bers of the Orga­ni­za­tion as both the plain­tiffs (rep­re­sent­ing sham com­mer­cial coun­ter­par­ties suing the Her­mitage Com­pa­nies) and the defen­dants (pur­port­ing to rep­re­sent the Her­mitage Com­pa­nies,” says the complaint.
“After per­pe­trat­ing this fraud, mem­bers of the Orga­ni­za­tion have under­tak­en ille­gal actions in order to con­ceal this fraud and retal­i­ate against indi­vid­u­als who attempt­ed to expose it. As a result of these retal­ia­to­ry actions, Sergei Mag­nit­sky, a Russ­ian attor­ney who exposed the fraud scheme, was false­ly arrest­ed and died in pre­tri­al deten­tion,” says the complaint.
“Mem­bers of the Orga­ni­za­tion, and asso­ciates of those mem­bers, have also engaged in a broad pat­tern of mon­ey laun­der­ing in order to con­ceal the pro­ceeds of the fraud scheme. This mon­ey laun­der­ing activ­i­ty has includ­ed the pur­chase of pieces of Man­hat­tan real estate with funds comin­gled with the fraud pro­ceeds,” says the complaint.
“The $230 Mil­lion Fraud Scheme is strik­ing­ly sim­i­lar to what appears to have been a fraud scheme car­ried out by the Orga­ni­za­tion in 2006 involv­ing two sub­sidiaries of Rengaz,” says the complaint.
A por­tion of the stolen $230 mil­lion funds were laun­dered through sev­er­al shell com­pa­nies into Pre­ve­zon Hold­ings Ltd., based in Cyprus, accord­ing to the court fil­ing. The court doc­u­ments indi­cate that two Russ­ian nation­als were reg­is­tered as share­hold­ers of Pre­ve­zon, includ­ing Tim­o­fey Krit (dur­ing the peri­od from 29 August 2006 to 18 June 2008) and Denis Kat­syv, the son of a for­mer Moscow region­al gov­ern­ment offi­cial (since 19 June 2008). Prevezon’s bank account was owned by Alexan­der Lit­vak, named as a busi­ness part­ner of Kat­syv in the filing.
Accord­ing to the court doc­u­ments, the pay­ments traced by the U.S. Depart­ment of Jus­tice to Pre­ve­zon came from two Moldovan shell com­pa­nies, Ele­nast and Buni­con-Impex which held accounts at Ban­ca de Economii, which in turn received funds orig­i­nat­ing from the $230 mil­lion from the Russ­ian trea­sury from Krainiy Sev­er, a Russ­ian bank whose license was removed for vio­la­tions of anti-mon­ey laun­der­ing regulations.
Accord­ing to the court fil­ing, the stat­ed pur­pose of pay­ment to Pre­ve­zon from Buni­con was “pre-pay­ment for san­i­tary equip­ment”. How­ev­er, this descrip­tion was at odds with an expla­na­tion pro­vid­ed sub­se­quent­ly by a PR rep­re­sen­ta­tive of Mr Kat­syv who explained the trans­fers as derived from a deal between Mr Krit, a pre­vi­ous share­hold­er of Pre­ve­zon, and his friend, Mr Petrov, who “agreed joint­ly to devel­op a busi­ness based on invest­ments in and man­age­ment of prop­er­ty. Under the agree­ment Mr Petrov was to trans­fer funds to Pre­ve­zon for this pur­pose.” Accord­ing to Mr Katsyv’s rep­re­sen­ta­tive, funds from Buni­con and Ele­nast were accept­ed by Pre­ve­zon because Mr Petrov was “antic­i­pat­ing repay­ment through these com­pa­nies of a debt owed him by a third par­ty, Mr Kim.”
Some of the infor­ma­tion iden­ti­fy­ing the flow of illic­it funds came from whistle­blow­er Alexan­der Perepilich­nyy who died mys­te­ri­ous­ly at the age of 44 in Sur­rey, UK, in Novem­ber last year. The cause of his death remains unex­plained. As a result of the infor­ma­tion he pro­vid­ed, five coun­tries in Europe have now opened crim­i­nal inves­ti­ga­tions, with some freez­ing funds traced to the pro­ceeds from the $230 mil­lion fraud uncov­ered by Sergei Magnitsky.
Sergei Mag­nit­sky tes­ti­fied about the crim­i­nal con­spir­a­cy to Russ­ian author­i­ties in 2008, was 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.
The inves­ti­ga­tion for this fil­ing in New York was car­ried out by the Office of Home­land Secu­ri­ty Inves­ti­ga­tions Divi­sion and sup­port­ed by New York Coun­ty Dis­trict Attorney.

Link to the Press Release of New York Coun­ty Dis­trict Attorney
http://www.justice.gov/usao/nys/pressreleases/September13/PrevezonHoldingsForfeiturePR.php

Link to the Com­plaint of New York Coun­ty Dis­trict Attorney

http://www.justice.gov/usao/nys/pressreleases/September13/PrevezonHoldingsForfeiturePR/U.S.%20v%20Prevezon%20et%20al.%20Complaint.pdf

For fur­ther infor­ma­tion please contact:

Her­mitage Capital
Phone: +44 207 440 1777
Email: info@lawandorderinrussia.org
Web­site: http://lawandorderinrussia.org

Face­book: http://on.fb.me/hvIuVI
Twit­ter: @KatieFisher__

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