Convicted Russian Felon Hires Top-Flight Counsel from His Prison Cell to Liquidate the Companies He Stole from the Hermitage Fund and Erase the Records of a $230 Million Tax Fraud

March 15, 2010

15 March 2010 – Two emi­nent Russ­ian lawyers, Marat Fetyukhin of Kazan Uni­ver­si­ty and Kon­stan­tin Egorov of the Russ­ian Acad­e­my of Jus­tice, have been retained by the con­vict­ed felon Vic­tor Markelov to liq­ui­date the Her­mitage Fund com­pa­nies stolen by Markelov and his asso­ciates in 2007 in what was the ini­tial step in a fraud to steal $230 mil­lion from the Russ­ian gov­ern­ment. If Messrs. Fetyukhin and Egorov are suc­cess­ful in the liq­ui­da­tion of the stolen Her­mitage com­pa­nies, all rel­e­vant cor­po­rate records and finan­cial evi­dence of the $230 mil­lion embez­zle­ment will be destroyed. On 15 March, a Russ­ian court is going to review their peti­tion. Markelov was con­vict­ed in 2009 for the theft of $230 mil­lion of tax­es paid by the Russ­ian com­pa­nies of the Her­mitage Fund, one of the largest tax­pay­ers in Russia.

Kon­stan­tin Egorov is a mem­ber of the Kazan branch of the Russ­ian Acad­e­my of Jus­tice and direc­tor of the Kazan-based law firm, StroiKap­i­tal, which spe­cialis­es in bank­rupt­cies and the liq­ui­da­tion of com­pa­nies (their price list is avail­able at http://law-kazan.ru/services/registration). Marat Fetyukhin is an Asso­ciate Pro­fes­sor in the Legal Depart­ment of Kazan Uni­ver­si­ty. He spe­cialis­es in com­mer­cial court arbi­tra­tion, a judi­cial process often mis­used in Rus­sia for the mis­ap­pro­pri­a­tion of com­pa­nies. In par­tic­u­lar, this process was employed by Markelov and his asso­ciates as part of the sophis­ti­cat­ed theft – via a Kazan-based com­mer­cial court, OOO Detox – of the Her­mitage Fund’s Russ­ian com­pa­nies in 2007.

On 10 March 2010, Fetyukhin and Egorov appeared before the Moscow Appeals Court to scup­per the return of the stolen Her­mitage Fund com­pa­nies to their orig­i­nal and law­ful own­er, as had been sanc­tioned by the Moscow Region­al Arbi­tra­tion Court. This same court had also inval­i­dat­ed all changes exe­cut­ed by Markelov in the cor­po­rate reg­istries of the Her­mitage Fund com­pa­nies, includ­ing those relat­ing to their own­er­ship and direc­tors. The appoint­ment by Markelov, from his prison cell, of two new high-pro­file Kazan lawyers is part of the lat­est attempt to obstruct this deci­sion of the court.

Markelov, a for­mer sawmill fore­man, is cur­rent­ly serv­ing a 5‑year year sen­tence at Sara­tov prison for the $230 mil­lion fraud against the Russ­ian state. The ulti­mate des­ti­na­tion of the funds stolen remains unknown. No state offi­cials have been con­vict­ed for their involve­ment in the fraud despite numer­ous com­plaints from Her­mitage, HSBC and oth­ers detail­ing the com­plic­i­ty of state offi­cials in the crime.

William Brow­der, CEO of Her­mitage Cap­i­tal com­ment­ed, “Vik­tor Markelov remains the fall guy for the crim­i­nal group behind the com­plex $230 mil­lion fraud against the Russ­ian state. This for­mer sawmill employ­ee is the only per­son con­vict­ed in what is the largest tax fraud in Russ­ian his­to­ry. One won­ders how Markelov is able, from the con­fines of his prison cell, to finance and orches­trate these high-lev­el legal pro­ceed­ings attempt­ing to cov­er the tracks of the crim­i­nal group. Who is pay­ing his legal bills and spon­sor­ing the ongo­ing fraud?”

The theft of the Her­mitage com­pa­nies and $230 mil­lion from the Russ­ian peo­ple was orig­i­nal­ly exposed by Hermitage’s lawyer, Sergei Mag­nit­sky, who lat­er tes­ti­fied about the involve­ment of Russ­ian Inte­ri­or Min­istry offi­cials in the crime. A month after his tes­ti­mo­ny, Mag­nit­sky was arrest­ed by the direct sub­or­di­nates of those same offi­cials. He was detained for almost a year with­out tri­al, and tor­tured in order to force him to retract his pre­vi­ous tes­ti­mo­ny and incrim­i­nate him­self. Mag­nit­sky refused. He died in cus­tody on 16 Novem­ber 2009 at the age of 37.

Jami­son Fire­stone, the Man­ag­ing Part­ner of Fire­stone Dun­can, the law firm where Mag­nit­sky worked, com­ment­ed, “Even after tor­tur­ing and killing Sergei Mag­nit­sky, this crim­i­nal group is still try­ing to cov­er-up their crime. The Russ­ian author­i­ties must pros­e­cute the indi­vid­u­als behind both the theft of $230 mil­lion from the Russ­ian state and the ille­gal deten­tion, tor­ture and mur­der of Sergei Magnitsky.”

For fur­ther information:
+ 44 20 7440 1777
info@lawandorderinrussia.org

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