New York Judge Allows Lawyer Who Betrayed Victims in the Magnitsky Case to Switch Sides and Defend the Alleged Beneficiaries of the Same Crime

January 11, 2016

New York Judge Allows Lawyer Who Betrayed Vic­tims in the Mag­nit­sky Case to Switch Sides and Defend the Alleged Ben­e­fi­cia­ries of the Same Crime

11 Jan­u­ary 2016 – On 8 Jan­u­ary 2016, New York dis­trict court judge Thomas Griesa reversed his pre­vi­ous deci­sion to dis­qual­i­fy lawyer John Moscow and New York law firm Bak­er Hostetler.

The new deci­sion allows Bak­er Hostetler and John Moscow to con­tin­ue act­ing as defence coun­sel for Pre­ve­zon, a Cyprus com­pa­ny owned by the son of a senior Russ­ian gov­ern­ment offi­cial, accused by the US Jus­tice Depart­ment of acquir­ing Man­hat­tan prop­er­ties with the pro­ceeds from the $230 mil­lion fraud uncov­ered by Sergei Mag­nit­sky, Hermitage’s mur­dered Russ­ian lawyer. Bak­er Hostetler pre­vi­ous­ly rep­re­sent­ed Her­mitage as a vic­tim of the same crime.

The judge’s deci­sion came three weeks after he had dis­qual­i­fied John Moscow and Bak­er Hostetler on the same set of issues, con­clud­ing it would be improp­er for them to con­tin­ue as defence coun­sel giv­en the vio­la­tion of New York Rules of Pro­fes­sion­al Con­duct and Bak­er Hostetler’s duty to their for­mer client, Hermitage.

The US gov­ern­men­t’s case against Pre­ve­zon seeks the for­fei­ture of New York prop­er­ty and bank accounts worth US$14 mil­lion and mon­ey laun­der­ing fines. In their com­plaint, the gov­ern­ment high­lights mil­lions of dol­lars in pay­ments received by Pre­ve­zon from shell com­pa­nies from the $230 mil­lion Russ­ian fraud, that were false­ly described as pay­ments for over 500 Ital­ian bath tubs and auto spare parts – goods that Pre­ve­zon nev­er deliv­ered to anyone.

The series of dis­qual­i­fi­ca­tion motions filed by Her­mitage came as a result of Bak­er Hostetler and John Moscow switch­ing from assist­ing Her­mitage in 2008 – 2009 with iden­ti­fy­ing per­pe­tra­tors of the US$230 mil­lion fraud and bring­ing its ben­e­fi­cia­ries to the US Depart­ment of Jus­tice, to rep­re­sent­ing the alleged ben­e­fi­cia­ries of the same fraud against the U.S. Jus­tice Department’s law­suit four years later.

In 2008, Her­mitage hired New York lawyer John Moscow and his law firm Bak­er Hostetler after Hermitage’s Russ­ian lawyers who exposed the Russ­ian gov­ern­ment com­plic­i­ty in the US$230 mil­lion fraud came under attack from the Russ­ian authorities.

John Moscow was a rec­og­nized expert in fight­ing Russ­ian organ­ised crime and mon­ey laun­der­ing from his pre­vi­ous work in the New York Dis­trict Attorney’s Office. Togeth­er with his new firm, Bak­er Hostetler, he devel­oped a strat­e­gy of issu­ing requests for infor­ma­tion to US banks and seek­ing legal action from the US Depart­ment of Jus­tice, includ­ing the for­fei­ture of U.S. assets of per­pe­tra­tors and beneficiaries.

As a result of the work of John Moscow and sub­se­quent work by oth­er Her­mitage lawyers, in Sep­tem­ber 2013, the US Jus­tice Depart­ment launched a US for­fei­ture case in rela­tion to Denis Katsyv’s com­pa­ny Pre­ve­zon in the New York dis­trict court.

Bak­er Hostetler and John Moscow then switched sides and began to work as defence coun­sel for the alleged mon­ey laun­der­ers after pre­vi­ous­ly help­ing the vic­tim of the same crime. Most recent­ly, as one of defence strate­gies Bak­er Hostetler and John Moscow accused Her­mitage of com­mit­ting the same $230 mil­lion fraud which John Moscow was help­ing to defend them against in 2009.

The US Gov­ern­ment who sup­port­ed Her­mitage’s motion to dis­qual­i­fy John Moscow and Bak­er Hostetler said:

“The egre­gious sit­u­a­tion seen here, where an attor­ney for a vic­tim attempts to switch sides to rep­re­sent a ben­e­fi­cia­ry of the offence, is extreme­ly rare, and it is even rar­er that such attor­ney would go fur­ther and accuse his for­mer client, the vic­tim, of com­mit­ting the offence.”

On 15 Decem­ber 2015, Her­mitage filed a motion with New York dis­trict court seek­ing to dis­qual­i­fy Bak­er Hostetler and John Moscow for breach­ing the duty of loy­al­ty to Her­mitage as for­mer client, cit­ing the New York Rules of Pro­fes­sion­al Conduct.

On 18 Decem­ber 2015 judge Griesa approved Her­mitage’s request to dis­qual­i­fy John Moscow and Bak­er Hostetler.

The judge then changed his mind, and last Fri­day reversed his deci­sion. To jus­ti­fy his new deci­sion, judge Griesa con­clud­ed that the right of Pre­ve­zon to their choice of coun­sel is greater than the right of Her­mitage to not be betrayed by their for­mer lawyers.

“Per­haps most impor­tant­ly, dis­qual­i­fi­ca­tion would mean depriv­ing Pre­ve­zon of its right to the coun­sel of its choice. While this right is not absolute, it impos­es a high bur­den on the par­ty seek­ing dis­qual­i­fi­ca­tion. The bal­ance of the rel­e­vant fac­tors tips toward deny­ing the motion to dis­qual­i­fy,” said judge Thomas Griesa in his opinion.

In fil­ings sup­port­ing Her­mitage’s motion to dis­qual­i­fy Bak­er Hostetler, the U.S. Depart­ment of Jus­tice warned of the chill­ing effect that a neg­a­tive deci­sion could have on future cases.

“Vic­tims con­sid­er­ing retain­ing attor­neys to rep­re­sent their inter­ests will be aware that their coun­sel can be paid to accuse them of com­mit­ting that very offence and to defend the per­pe­tra­tor. This prece­dent will under­stand­ably have a “chill­ing effect,”… deter­ring crime vic­tims from retain­ing attor­neys to inves­ti­gate and to inform the Gov­ern­ment of offences, as those attor­neys will be per­mit­ted to be turned against them by well-resourced per­pe­tra­tors,” said the U.S. government.

Her­mitage intends to appeal the rul­ing to the Unit­ed States Court of Appeals for the Sec­ond Cir­cuit, one of the thir­teen Unit­ed States Courts of Appeals which has appel­late juris­dic­tion over New York, Con­necti­cut, and Vermont.

For more infor­ma­tion, please contact: 

 

Jus­tice for Sergei Mag­nit­sky Campaign

+44 207 440 1777

e‑mail: info@lawandorderinrussia.org

www.lawandorderinrussia.org

Twit­ter: @KatieFisher__

www.facebook.com/russianuntouchables

 

 

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