US Department of Justice Uncovers 60 New Wire Transfers through the US Banking System Connected to Magnitsky Case

December 14, 2015

US Depart­ment of Jus­tice Uncov­ers 60 New Wire Trans­fers through the US Bank­ing Sys­tem Con­nect­ed to Mag­nit­sky Case

14 Decem­ber 2015 – New court doc­u­ments show that the US Depart­ment of Jus­tice has traced 60 new wire trans­fers through the US bank­ing sys­tem con­nect­ed to the $230 mil­lion tax rebate fraud that Sergei Mag­nit­sky exposed in Rus­sia. The news comes from a civ­il mon­ey laun­der­ing case in New York involv­ing Pre­ve­zon Hold­ings, owned by a son of for­mer vice pre­mier of Moscow Region­al gov­ern­ment and cur­rent vice pres­i­dent of Russ­ian Rail­ways Pyotr Katsyv.

The US Gov­ern­ment alleges that Pre­ve­zon engaged in laun­der­ing the pro­ceeds from the $230 mil­lion fraud in Rus­sia, uncov­ered by Sergei Mag­nit­sky, and inter­na­tion­al trans­porta­tion of stolen property.

The news of 60 new US bank wire trans­fers con­nect­ed to the crime Mag­nit­sky uncov­ered is a major new devel­op­ment in the case. Pre­vi­ous­ly, the US Gov­ern­ment dis­closed only four trans­ac­tions it traced, through sev­er­al inter­me­di­ary shell com­pa­nies, to Pre­ve­zon, owned by 38-year old Denis Kat­syv, totalling US$2.75 mil­lion. The pur­pose of these four wires was described in doc­u­ments as pay­ments to Pre­ve­zon for “bath sets” and “auto spare parts” — goods Pre­ve­zon nev­er deliv­ered. Senders to Pre­ve­zon account in these four trans­ac­tions were two Moldovan com­pa­nies and a BVI com­pa­ny with no known legit­i­mate busi­ness activity.

“These four trans­ac­tions …were only part of apat­tern of at least six­ty-four wire trans­fers through U.S. banks amount­ing to mil­lions more inprop­er­ty derived from the Russ­ian fraud and sub­se­quent mon­ey laun­der­ing,” said Preet Bharara, Unit­ed States Attor­ney for the South­ern Dis­trict of New York, in the new filing.

In addi­tion to Unit­ed States Attor­ney Preet Bharara for South­ern Dis­trict of New York, the case USA v Pre­ve­zon is led by four Assis­tant Unit­ed States Attor­neys Paul Mon­teleoni, Mar­garet Gra­ham, Jaimie Nawa­day, and Cristine Phillips.

“An elab­o­rate fraud against the Russ­ian Trea­sury result­ed in the pay­ment of approx­i­mate­ly 5.4 bil­lion rubles to three com­pa­nies that had been fraud­u­lent­ly mis­ap­pro­pri­at­ed from the Her­mitage Fund, a for­eign invest­ment fund,” says the US Depart­ment of Jus­tice’s filing.

“After the 5.4 bil­lion rubles were paid, a net­work of shell com­pa­nies inside and out­side Rus­sia laun­dered these pro­ceeds. Cer­tain of these trans­fers passed through the Unit­ed States, either on their way to defen­dant Pre­ve­zon Hold­ings, or on their way to two oth­er shell com­pa­nies, Castle­front and Mega­com Tran­sit. Four trans­fers total­ing approx­i­mate­ly $2.75 mil­lion were rout­ed into and out of the Unit­ed States in this way. These con­sti­tut­ed inter­na­tion­al trans­porta­tion of stolen prop­er­ty in vio­la­tion of 18 U.S.C. § 2314,” says the US Gov­ern­men­t’s fil­ing in the USA v Pre­ve­zon case.

“The fur­ther laun­der­ing engaged in by Mega­com and Castle­front, in send­ing the funds through anoth­er com­pa­ny to Pre­ve­zon, and by Pre­ve­zon, in invest­ing the funds first in Europe and then into New York real estate, con­sti­tut­ed mon­ey laun­der­ing,” fur­ther says the US Gov­ern­ment in its filing.

A year pri­or to the US Depart­ment of Jus­tice’s action, Swiss Gen­er­al Pros­e­cu­tor froze about US$7 mil­lion on bank accounts con­nect­ed to Denis Kat­syv in Switzer­land in a relat­ed crim­i­nal mon­ey laun­der­ing inves­ti­ga­tion into pro­ceeds of the Russ­ian fraud uncov­ered by Sergei Mag­nit­sky. Denis Kat­syv unsuc­cess­ful­ly chal­lenged the deci­sion of Swiss Pros­e­cu­tor to freeze his accounts in Swiss courts.

Sergei Mag­nit­sky, a Russ­ian lawyer, uncov­ered the largest pub­licly-known cor­rup­tion case in Rus­sia involv­ing the theft of $230 mil­lion, and tes­ti­fied about it nam­ing com­plic­it Russ­ian offi­cials. He was arrest­ed by some of the impli­cat­ed offi­cials, held in pre-tri­al deten­tion for 358 days, and killed in Russ­ian police cus­tody on 16 Novem­ber 2009.  After Sergei Magnitsky’s death, the Russ­ian gov­ern­ment pro­mot­ed and hon­oured offi­cials involved in his deten­tion and death.

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

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