Son of Senior Russian Government Official to Pay US$5.9 Million to the US Treasury in the First Money Laundering Action Linked to Magnitsky Case

May 13, 2017

Press Release

For Imme­di­ate Distribution

Son of Senior Russ­ian Gov­ern­ment Offi­cial to Pay US$5.9 Mil­lion to the US Trea­sury in the First Mon­ey Laun­der­ing Action Linked to Mag­nit­sky Case

13 May 2017 – Denis Kat­syv, the son of a senior Russ­ian gov­ern­ment offi­cial, will pay US$5.9 mil­lion to the US Trea­sury in the first case in the West linked to the $230m pro­ceeds from the Russ­ian fraud that Sergei Mag­nit­sky exposed and was even­tu­al­ly killed over.

“This is a huge vic­to­ry in our cam­paign for jus­tice for Sergei Mag­nit­sky. The amount to be paid is more than triple the amount of mon­ey laun­der­ing pro­ceeds that was thus far iden­ti­fied by the US gov­ern­ment in New York con­nect­ed to Pre­ve­zon,” said William Brow­der, leader of the glob­al Mag­nit­sky Jus­tice campaign.

“This sends a clear mes­sage to the peo­ple who received that mon­ey that it’s not safe in the West and will be seized. I believe that this case will give the green light to oth­er coun­tries to fol­low suit,” said William Brow­der, who described the Mag­nit­sky jus­tice cam­paign in a New York Times best-sell­er, “Red Notice: A True Sto­ry of High Finance, Mur­der, and One Man’s Fight for Jus­tice.”

The stip­u­la­tion to pay US$5.9 mil­lion to the US Trea­sury has been signed on 12 May 2017 by Russ­ian nation­al Denis Kat­syv, in his capac­i­ty as own­er of Cyprus-based Pre­ve­zon Hold­ings and a web of oth­er off­shore com­pa­nies, includ­ing IKR, Mar­tash Hold­ings, Fer­en­coi Invest­ments Ltd and as “legal rep­re­sen­ta­tive” of Kolevins Ltd. The stip­u­la­tion will have to be approved by the US court to go into effect.

After US$230 mil­lion had been stolen by a group of Russ­ian offi­cials and orga­nized crim­i­nals, a wide “Byzan­tine” net­work of shell com­pa­nies and con­duit accounts was used to laun­der the stolen  pro­ceeds, some of which have been traced by the US Depart­ment of Jus­tice to the real estate prop­er­ties in New York pur­chased by the Kat­syv-owned Cypri­ot com­pa­ny, Pre­ve­zon Holdings.

In 2013, the US Depart­ment of Jus­tice froze Prevezon’s assets, and the case was sched­uled to go to tri­al on Mon­day, 15 May 2017. Denis Kat­syv tried to dis­miss the US Jus­tice Department’s action on the eve of the tri­al, chal­leng­ing the basis for the mon­ey laun­der­ing alle­ga­tions against him.

In an opin­ion issued five days before the tri­al, on 10 May 2017, Unit­ed States Dis­trict Judge William Pauley III dis­missed Prevezon’s motion.

The court found suf­fi­cient basis to try the case on four dif­fer­ent wrong-doings iden­ti­fied by the US Depart­ment of Jus­tice, includ­ing (1) fraud against HSBC, (2) trans­porta­tion of stolen prop­er­ty, (3) bribery of a Russ­ian offi­cial, and (4) mon­ey laundering.
In its 10 May 2017 opin­ion, the US court also upheld the US Jus­tice Department’s mon­ey trac­ing analy­sis in rela­tion to the US$230 mil­lion fraud pro­ceeds. The court found that the US Gov­ern­ment pre­sent­ed evi­dence that “the mon­ey laun­der­ing scheme was designed to con­ceal the ille­gal nature and source of the $1.9 mil­lion [traced to Pre­ve­zon] at issue,” includ­ing that “some of the accounts of the con­duit enti­ties were opened a few months before the trans­fers at issue, at the same bank on the same day;” two inter­me­di­ary accounts had “strik­ing­ly sim­i­lar pattern[s] of activ­i­ty in their bank accounts;” “the major­i­ty of their incom­ing trans­fers came from three senders, one of whom rout­ed mon­ey from an account at a bank des­ig­nat­ed by the U.S. Trea­sury as mon­ey laun­der­ing con­cern;” “a total of five accounts reflect­ing sim­i­lar pat­terns of activ­i­ty were repeat­ed­ly accessed from the same IP address,” and  that “divid­ing pro­ceeds to avoid detec­tion is a hall­mark of mon­ey laundering.”

Two days lat­er Pre­ve­zon signed the stip­u­la­tion to pay US$5.9 mil­lion to set­tle the US Jus­tice Department’s mon­ey laun­der­ing action and avoid going to trial.

Sergei Mag­nit­sky, a Russ­ian lawyer who uncov­ered the mas­sive cor­rup­tion per­pe­trat­ed sys­tem­at­i­cal­ly by Russ­ian offi­cials and orga­nized crim­i­nals, includ­ing the theft of US$230 mil­lion in 2007, was tor­tured and killed in Russ­ian police cus­tody after expos­ing it. The Russ­ian gov­ern­ment pros­e­cut­ed Sergei Mag­nit­sky posthu­mous­ly and exon­er­at­ed all offi­cials involved in the US$230 mil­lion fraud.

Sergei Mag­nit­sky’s col­leagues have been able to con­tin­ue his inves­ti­ga­tion, and uncov­ered the vast mon­ey laun­der­ing net­work span­ning mul­ti­ple juris­dic­tions and hun­dreds of con­duit accounts.

Denis Katsyv’s and Prevezon’s accounts remain sub­ject to a crim­i­nal mon­ey laun­der­ing inves­ti­ga­tion in Switzer­land con­duct­ed by the Swiss Attor­ney Gen­er­al. Switzer­land was the first coun­try to act in rela­tion to the US$230 mil­lion fraud pro­ceeds going to Pre­ve­zon accounts impos­ing account freeze in 2012.

For more infor­ma­tion, please contact:

Jus­tice for Sergei Magnitsky

+44 207 440 1777

e‑mail: info@lawandorderinrussia.org

www.lawandorderinrussia.org

billbrowder.com

twitter.com/Bill­brow­der

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