Alleged Money Launderers in the Magnitsky Case to Be Brought to Trial in New York on January 6, 2016

December 3, 2015

Alleged Mon­ey Laun­der­ers in the Mag­nit­sky Case to Be Brought to Tri­al in New York on Jan­u­ary 6, 2016

3 Decem­ber 2015 – On Jan­u­ary 6, 2016, the US fed­er­al court in the South­ern Dis­trict of New York, will hear the mon­ey laun­der­ing and civ­il for­fei­ture case — Unit­ed States of Amer­i­ca ver­sus Pre­ve­zon Hold­ings Ltd (No 1:13-cv-06326).  This will be the first US legal action con­nect­ed to the $230 mil­lion cor­rupt scheme uncov­ered and exposed by the late Sergei Magnitsky.

The tri­al is based on one facet of a $230 mil­lion tax rebate fraud, whose pro­ceeds pre­vi­ous­ly have been traced to Swiss banks and real estate in Dubai.

Accord­ing to the com­plaint filed by the US Depart­ment of Jus­tice, Pre­ve­zon Hold­ings Ltd received near­ly two mil­lion dol­lars con­nect­ed to the $230 mil­lion fraud scheme exposed by Sergei Mag­nit­sky, and invest­ed comin­gled pro­ceeds in mul­ti-mil­lion dol­lar prop­er­ties in Manhattan.

The com­plaint alleges that short­ly after the $230 mil­lion fraud was per­pe­trat­ed, Pre­ve­zon received sev­er­al wire trans­fers from the fraud through shell com­pa­nies stat­ing fic­ti­tious rea­sons. For exam­ple, some of the wire trans­fers were described as pay­ments for bath sets and auto parts, while Pre­ve­zon is a real estate com­pa­ny that has noth­ing to do with man­u­fac­tur­ing or trad­ing either of these goods.

Pre­ve­zon is a com­pa­ny owned by Denis Kat­syv, the 38-year old son of the vice pres­i­dent of Russ­ian Rail­ways and for­mer Trans­porta­tion Min­is­ter of the Moscow Region for­mer Trans­porta­tion Min­is­ter of the Moscow Region in Rus­sia Petr Katsyv.

The US Depart­ment of Justice’s fil­ing says: “Russ­ian crim­i­nal orga­ni­za­tion includ­ing cor­rupt Russ­ian gov­ern­ment offi­cials defraud­ed Russ­ian tax­pay­ers of approx­i­mate­ly 5.4 bil­lion rubles, or approx­i­mate­ly $230 mil­lion in Unit­ed States dol­lars, through an elab­o­rate tax refund fraud scheme. After per­pe­trat­ing this fraud, mem­bers of the Orga­ni­za­tion have under­tak­en ille­gal actions in order to con­ceal this fraud and retal­i­ate against indi­vid­u­als who attempt­ed to expose it. As a result of these retal­ia­to­ry actions, Sergei Mag­nit­sky, a Russ­ian attor­ney who exposed the fraud scheme, was false­ly arrest­ed and died in pre­tri­al detention.” 

“Mem­bers of the Orga­ni­za­tion, and asso­ciates of those mem­bers, have also engaged in a broad pat­tern of mon­ey laun­der­ing in order to con­ceal the pro­ceeds of the fraud scheme. This mon­ey laun­der­ing activ­i­ty has includ­ed the pur­chase of pieces of Man­hat­tan real estate with funds com­min­gled with fraud pro­ceeds,” says the filing.

Specif­i­cal­ly, a month after $230 mil­lion were stolen from the Russ­ian Trea­sury, over $857,000 of stolen funds were wired from Rus­sia via Moldovan shell com­pa­nies to Prevezon’s account in Switzer­land. The wire trans­fers were described as pay­ments for acrylic bath sets “Doc­tor Jet”, Sicil­ia (Italy), with dimen­sions of 190 x ¹²⁰⁄₉₅ x 65, when Pre­ve­zon did not sell these bath sets.

Bath “Doc­tor Jet”

http://doctor-jet.ru/catalog/rectangular/sicilia/

The first wire to Pre­ve­zon of $410,000 came on 6 Feb­ru­ary 2008, pur­port­ed­ly for 280 bath­tubs. The sec­ond wire to Pre­ve­zon of $447,354 on 13 Feb­ru­ary 2008 pur­port­ed­ly for 306 bath­tubs. Both came from shell Moldovan com­pa­nies, Buni­con Impex and Ele­nast Com, that did not engage in any legit­i­mate activity.

In addi­tion to these wires, Pre­ve­zon received $1,108,090.55 dur­ing Feb­ru­ary and March of 2008 in pro­ceeds from the $230 mil­lion fraud scheme, accord­ing to the US Government’s complaint.

These addi­tion­al trans­fers came from a BVI com­pa­ny, described in the US Government’s fil­ing as “Company‑1,” as pur­port­ed pay­ments for “auto spare parts.” The BVI com­pa­ny, in turn, accu­mu­lat­ed funds from the same Moldova’s Buni­con Impex via two inter­me­di­ary shell com­pa­nies, Mega­com Tran­sit and Castle­front, who both had the same nom­i­nee admin­is­tra­tor, a Lat­vian cit­i­zen Volde­mar Spatz, who was list­ed as direc­tor of over 200 New Zealand companies.

“As of March 20, 2008, the real estate com­pa­ny Pre­ve­zon Hold­ings had received a total of at least $1,965,444.55 in pro­ceeds from the $230 Mil­lion Fraud Scheme from three dif­fer­ent com­pa­nies, Buni­con, Ele­nast, and Company‑1, in wire trans­fers describ­ing the funds as pre­pay­ment for san­i­tary equip­ment or for auto­mo­tive spare parts.”

The US Government’s fil­ing iden­ti­fies six fur­ther pay­ments to Pre­ve­zon made between Feb­ru­ary and June 2008 that it iden­ti­fies as “false and questionable”:

1. On Feb­ru­ary 14, 2008, Pre­ve­zon Hold­ings Ltd received $70,000 from the Belize com­pa­ny Mobin­er Trade Ltd. pur­port­ed­ly for “tech­ni­cal equipment.”

2. On May 12, 2008, Pre­ve­zon Hold­ings received 93,717.03 euros from British Vir­gin Islands com­pa­ny Gen­e­sis Trad­ing Invest­ments Ltd. pur­port­ed­ly for “com­put­er equipment.”

3. In two trans­fers on May 29 and June 4, 2008, Pre­ve­zon Hold­ings received $697,408.30 from the Belize com­pa­ny Cefron Invest Ltd. pur­port­ed­ly for “com­put­er equipment.”

4. On May 30, 2008, Pre­ve­zon Hold­ings received $272,400 from Apa­sit­to Ltd. pur­port­ed­ly for “video equipment.”

5. On June 4, 2008, Pre­ve­zon Hold­ings received $292,039.18 from the Cyprus com­pa­ny Nysorko Ltd. pur­port­ed­ly for “home appliances.”

6. On June 13, 2008, Pre­ve­zon Hold­ings received $779,128.80 from the Cyprus com­pa­ny Wel­dar Hold­ings Lim­it­ed pur­port­ed­ly for “goods.”

 “At all rel­e­vant times, Pre­ve­zon Hold­ings was not in the busi­ness of sup­ply­ing san­i­tary equip­ment, auto spare parts, tech­ni­cal equip­ment, com­put­er equip­ment, video equip­ment, home appli­ances, or oth­er goods. Dur­ing this time peri­od, these false and ques­tion­able pay­ments rep­re­sent­ed the sub­stan­tial major­i­ty of the inflows into the Pre­ve­zon Hold­ings,” says the US Depart­ment of Jus­tice in their civ­il for­fei­ture and mon­ey laun­der­ing complaint.

Pre­ve­zon said in their defence that the funds came from Moldo­va to their Swiss account from a Russ­ian investor called Mr Petrov, accord­ing to a PR rep­re­sen­ta­tive of Denis Kat­syv, cit­ed in the US Government’s com­plaint: “Representative‑1 stat­ed that the funds involved in the Feb­ru­ary 2008 Buni­con and Ele­nast Trans­fers derived from a deal between Krit [asso­ciate of Denis Kat­syv] and “his friend, a Mr. Petrov.” Representative‑1 claimed that “Mr. Petrov” and Krit “agreed joint­ly to devel­op a busi­ness based on invest­ments in and man­age­ment of prop­er­ty. Under the agree­ment Mr. Petrov was to trans­fer funds to Pre­ve­zon for this pur­pose.”

The US Government’s com­plaint also asserts that Denis Kat­syv, the own­er of Pre­ve­zon Hold­ings Ltd, had pre­vi­ous issues con­nect­ed to mon­ey laun­der­ing in the State of Israel. In the Israeli pro­ceed­ings, a com­pa­ny whol­ly owned by Kat­syv, had 35 mil­lion shekels (worth approx­i­mate­ly U.S. $8 mil­lion in 2005) con­fis­cat­ed by the State of Israel as part of a set­tle­ment based on the State of Israel’s alle­ga­tions that the com­pa­ny had vio­lat­ed Israel’s Pro­hi­bi­tion of Mon­ey Laun­der­ing Law.

The US Gov­ern­ment seeks in this action to seize the Man­hat­tan prop­er­ties and US assets of Pre­ve­zon Hold­ings and impose mon­ey laun­der­ing penalties.

The case was brought to the atten­tion of the US Gov­ern­ment by the Jus­tice for Sergei Mag­nit­sky cam­paign in Decem­ber 2012. It is one of many inves­ti­ga­tions around the world into the ben­e­fi­cia­ries of the $230 mil­lion fraud uncov­ered by Sergei Magnitsky.

A year before the US Gov­ern­ment launched its suit against Pre­ve­zon Hold­ings in the US court, in Sep­tem­ber 2012, the Swiss Gen­er­al Pros­e­cu­tor froze the accounts of Denis Kat­syv, Pre­ve­zon Hold­ings and relat­ed per­sons in con­nec­tion with the same $230 mil­lion fraud. When Denis Kat­syv sought to unfreeze his accounts in the Swiss courts, his appli­ca­tion was rejected.

Today, about US$40 mil­lion have been frozen world­wide in the legal pro­ceed­ings con­nect­ed to the $230 mil­lion fraud and mon­ey laun­der­ing, includ­ing in Switzer­land, France, Lux­em­bourg and Monaco.

Jus­tice for Sergei Mag­nit­sky cam­paign has been assist­ing the pros­e­cut­ing author­i­ties to seek jus­tice and iden­ti­fy ben­e­fi­cia­ries of the crime exposed by Sergei Mag­nit­sky and those who ben­e­fit­ed from his mur­der in Russ­ian police cus­tody six years ago, in Novem­ber 2009, after he tes­ti­fied about the com­plic­i­ty of Russ­ian Inte­ri­or Min­istry offi­cials in the largest known tax refund fraud in Russ­ian history.

“Since the death of Sergei Mag­nit­sky, Russ­ian offi­cials involved in his wrong­ful arrest, tor­ture and mur­der, have been exon­er­at­ed, hon­oured and pro­mot­ed. As it has proven impos­si­ble to get jus­tice inside Rus­sia today, we are look­ing out­side of Rus­sia for infor­ma­tion on who ben­e­fit­ed from the crime Sergei Mag­nit­sky uncov­ered so that they face jus­tice,” said a rep­re­sen­ta­tive of the Jus­tice for Sergei Mag­nit­sky campaign.

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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