New York Federal Court Disqualifies Lawyer John Moscow and BakerHostetler in Magnitsky Money Laundering Case
December 21, 2015
New York Federal Court Disqualifies Lawyer John Moscow and BakerHostetler in Magnitsky Money Laundering Case
21 December 2015 – The federal court in New York has disqualified lawyer John Moscow and his firm, BakerHostetler, who represented the alleged Russian recipients of money laundering proceeds from the US$230 million Russian fraud that Sergei Magnitsky uncovered, in a civil forfeiture case brought by the US Department of Justice. The case alleges money laundering of proceeds of Russian fraud into multi-million dollar Manhattan real estate by Prevezon, a company owned by a son of former Vice-premier of the Moscow Region and the current Vice-president of Russian Railways Pyotr Katsyv.
John Moscow and BakerHostetler had originally worked for Hermitage in 2008 to defend Hermitage against unfounded accusations relating to the fraud, including (among other projects) by tracking the stolen US$230 million and its recipients, and bringing the evidence of this complex Russian fraud which victimised Hermitage, to the US Department of Justice. On Hermitage’s behalf, John Moscow personally presented the findings from the Hermitage’s and Sergei Magnitsky’s investigations of the $230 million fraud to the U.S. Attorney’s Office.
On 25 November 2008, one day after Sergei Magnitsky’s arrest by corrupt Russian officials on false charges, John Moscow also became involved in Hermitage’s legal actions to free Sergei Magnitsky from Russian detention. Prior to his arrest, Sergei Magnitsky gave testimony to Russian authorities implicating Russian officials in the theft of Hermitage’s Russian companies and of US$230 million the Hermitage’s companies had paid to the Russian government.
One year later, on 16 November 2009, Sergei Magnitsky was killed in Russian police custody before he could testify in an open trial.
In 2013, John Moscow and BakerHostetler switched sides, and went from representing Hermitage to representing Russian-owned Prevezon, an alleged beneficiary of the US$230 million fraud, that Sergei Magnitsky’s investigation had led to after his death. The US Department of Justice has traced to Prevezon nearly US$2 million of the US$230 million fraud proceeds and more funds in false and questionable transactions. The US court has frozen about US$14 million in Prevezon’s assets, including bank accounts and several Manhattan properties.
In November 2015, John Moscow and BakerHostetler made filings on Prevezon’s behalf in which they explicitly accused Hermitage of committing the US$230 million fraud that they originally have been hired to defend against.
On 15 December 2015, Hermitage filed a motion to disqualify BakerHostetler and John Moscow.
In Judge Griesa’s opinion, issued on 18 December 2015, the U.S. Court for Southern District of New York ordered:
“The court is now convinced that it would be improper for BakerHostetler and Moscow to continue as counsel to defendants. …Hermitage’s motion to disqualify BakerHostetler and Moscow as counsel to defendants is granted.”
Hermitage Capital’s representative said of the disqualification of John Moscow and BakerHostetler:
“This disqualification is a stark reminder that lawyers can’t switch sides just because there is money being offered to them.”
Under Rule 1.9 of the New York Rule of Professional Conduct, lawyers are not allowed to betray their former clients. In particular, the rule says:
“A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person’s interests are materially adverse to the interests of the former client unless the former client gives informed consent, confirmed in writing.”
Hermitage became the victim of the US$230 million fraud in 2007 when a Russian criminal organisation, comprising FSB, Interior Ministry and tax officials and headed by a convicted fraudster Dmitry Klyuev, raided offices of Hermitage and its law firm in Moscow, unlawfully seized statutory and financial documents for its corporate Russian subsidiaries. Using those documents, the Russian crime group forged contracts and powers of attorney, fraudulently re-registered the stolen Hermitage companies to felons previously convicted for violent crimes, and through sham court proceedings obtained about US$1 billion judgments against the stolen Hermitage companies, in order to claim US$230 million in purportedly “overpaid” taxes.
The fraudulent US$230 million tax refund was granted by Russian tax officials, who were members of the crime group, in one day, and paid out two days later to two small Russian banks, where fraudsters had opened bank accounts, and then laundered through Russian banks and around the world.
Through efforts of Hermitage and law enforcement authorities around the world, about US$40 million connected to the US$230 million fraud uncovered by Sergei Magnitsky have been identified and frozen.
BakerHostetler is an “Am Law 100 law firm” with more than 900 attorneys and 14 offices. John Moscow is a former New York prosecutor and a partner at Baker Hostetler.
For more information please contact:
Justice for Sergei Magnitsky
+44 207 440 1777
e‑mail: info@lawandorderinrussia.org
Twitter: @KatieFisher__
www.facebook.com/russianuntouchables
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