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

www.lawandorderinrussia.org

Twit­ter: @KatieFisher__

www.facebook.com/russianuntouchables

www.billbrowder.com

Comments

• Link