US Appeals Court to Hear Emergency Motion on Disqualification of Lawyer John Moscow in the Magnitsky Case in New York

January 18, 2016

US Appeals Court to Hear Emer­gency Motion on Dis­qual­i­fi­ca­tion of Lawyer John Moscow in the Mag­nit­sky Case in New York

18 Jan­u­ary 2016 – The Unit­ed States Court of Appeals for the Sec­ond Cir­cuit has agreed to an emer­gency hear­ing to be held at 10 am on Fri­day, 22 Jan­u­ary 2016, on an appli­ca­tion from Her­mitage Cap­i­tal Man­age­ment seek­ing to sus­pend the case of US vs Pre­ve­zon, to hear an appeal which will deter­mine whether lawyers with a seri­ous con­flict of inter­est should be allowed to remain on the case.

Hermitage’s appli­ca­tion aris­es out of U.S. law firm Bak­er Hostetler and its part­ner, John Moscow, switch­ing sides in the Russ­ian mon­ey laun­der­ing case from rep­re­sent­ing the vic­tim – Her­mitage, to rep­re­sent­ing the ben­e­fi­cia­ry of the crime – Pre­ve­zon Holdings.

Her­mitage said in sup­port of its motion for stay in the legal proceeding:

“A stay pend­ing appeal is in the pub­lic inter­est. A lawyer’s oblig­a­tion to pre­serveclient con­fi­dences “touch­es upon vital con­cerns of the legal pro­fes­sion and the public’s inter­estin the scrupu­lous admin­is­tra­tion of justice.”

Hermitage’s motion is sup­port­ed by the US Depart­ment of Jus­tice, who said to the Appeals Court that the con­duct of Bak­er Hostetler rep­re­sents an “unheard of”, “extreme­ly rare” and “egre­gious” case of con­flict of inter­est giv­en that the law firm not only switched sides but went fur­ther by accus­ing Her­mitage, its for­mer client, of the crime of which Her­mitage has been the victim.

“The egre­gious sit­u­a­tion seen here, where an attor­ney for a vic­tim attempts to switch sides to rep­re­sent a ben­e­fi­cia­ry of the offense, is extreme­ly rare, and it is unheard of that such attor­ney would go fur­ther and accuse his for­mer client, the vic­tim, of com­mit­ting the offense. Accord­ing­ly, courts have sel­dom been called upon to rule on such an extreme con­flict, often because it is sim­ply not done,” said the US Depart­ment of Jus­tice in their affir­ma­tion of Hermitage’s motion.

On 18 Decem­ber 2015, the dis­trict court judge Thomas Griesa in the South­ern Dis­trict of New York grant­ed Hermitage’s motion to dis­qual­i­fy Bak­er Hostetler and John Moscow, find­ing it would be improp­er for Bak­er Hostetler to con­tin­ue to rep­re­sent defen­dants Pre­ve­zon Hold­ings because of Bak­er Hostetler’s pri­or rep­re­sen­ta­tion of Her­mitage. How­ev­er, on 8 Jan­u­ary 2016, Judge Griesa reversed his deci­sion rul­ing that Prevezon’s right to the choice of lawyers was more impor­tant than Hermitage’s right to not be betrayed by for­mer counsel.

Pre­ve­zon Hold­ings is owned by the son of a senior Russ­ian gov­ern­ment offi­cial and, accord­ing to the U.S. Depart­ment of Justice’s law­suit, has been involved in laun­der­ing pro­ceeds from the US$230 mil­lion fraud uncov­ered by Hermitage’s late lawyer Sergei Mag­nit­sky. The US Depart­ment of Jus­tice, hav­ing traced pro­ceeds stolen in Rus­sia to Prevezon’s real estate prop­er­ties in Man­hat­tan, filed a civ­il law­suit seek­ing mon­ey laun­der­ing fines and for­fei­ture of US$14 mil­lion in Prevezon’s US assets. After the assets were frozen, Pre­ve­zon sought the ser­vices of John Moscow and Bak­er Hostetler. In spite of the obvi­ous con­flict of inter­est, John Moscow and Bak­er Hostetler agreed to rep­re­sent alleged ben­e­fi­cia­ries of the US$230 mil­lion crime – ignor­ing the fact that they had been pre­vi­ous­ly hired by Her­mitage to iden­ti­fy and bring to jus­tice per­pe­tra­tors and ben­e­fi­cia­ries of this crime.

On 13 Jan­u­ary 2016, Her­mitage filed an emer­gency motion to sus­pend the pro­ceed­ings in the asset for­fei­ture case against Pre­ve­zon until the issue of John Moscow and Bak­er Hostetler’s dis­qual­i­fi­ca­tion is resolved.

In sup­port­ing the Hermitage’s motion, the US Depart­ment of Jus­tice stated:

“After tak­ing almost $200,000 of Hermitage’s mon­ey to attempt to pre­vent Her­mitage from being accused of com­mit­ting the fraud, [Bak­er Hostetler’s part­ner] Moscow is now tak­ing the mon­ey of an alleged ben­e­fi­cia­ry of the very same fraud to him­self accuse Her­mitage of com­mit­ting the fraud.”

“Allow­ing the tri­al to take place in this fash­ion, and to expose Her­mitage to such irrepara­ble injury at the hands of its for­mer coun­sel, would be a mis­car­riage of jus­tice set­ting a prece­dent that would severe­ly harm crime vic­tims’ inter­ests and could chill the coop­er­a­tion of vic­tims with law enforce­ment,” said the US Jus­tice Depart­ment in its filing.

The US$230 fraud and mon­ey laun­der­ing case was uncov­ered by Hermitage’s Russ­ian lawyer, Sergei Mag­nit­sky, who was tor­tured and killed in Russ­ian police cus­tody after he had giv­en tes­ti­mo­ny impli­cat­ing Russ­ian gov­ern­ment offi­cials in the scheme. To per­pe­trate the US$230 mil­lion fraud, the Russ­ian crim­i­nal organ­i­sa­tion stole three Russ­ian com­pa­nies belong­ing to the Her­mitage Fund and then sought an ille­gal refund of US$230 mil­lion of tax­es pre­vi­ous­ly paid by those companies.

When Hermitage’s Russ­ian lawyers report­ed the offi­cials involved, the lawyers them­selves became sub­ject of retal­i­a­tion from Russ­ian author­i­ties. In 2008, Her­mitage hired Bak­er Hostetler’s part­ner John Moscow to pro­tect Her­mitage and its lawyers and exec­u­tives from the retal­i­a­tion. Mr. Moscow had pre­vi­ous­ly been a spe­cial­ist in com­bat­ing Russ­ian organ­ised crime and cor­rup­tion in the New York Dis­trict Attorney’s office. He assist­ed Her­mitage with the iden­ti­fi­ca­tion of the ben­e­fi­cia­ries of the US$230 mil­lion fraud and liais­ing with the US law enforce­ment in bring­ing those ben­e­fi­cia­ries to jus­tice. Sev­er­al years lat­er the US Depart­ment of Jus­tice traced some of the US$230 mil­lion pro­ceeds to Man­hat­tan prop­er­ties owned by Pre­ve­zon and filed a law­suit in which John Moscow and Bak­er Hostetler appeared for Prevezon.

The hear­ing will take place in New York in the Thur­good Mar­shall U.S. Cour­t­house, 17^th floor, Room 1703 lat­er this week, on 22 Jan­u­ary 2016.

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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