NY Forfeiture Case Takes Off on Russian Intrigue

MANHATTAN (CN) — Before he fell four stories from his apartment in Moscow, the attorney for a dead Russian whistleblower handed U.S. prosecutors a batch of bank transactions believed to be crucial to their $230 million forfeiture case.

Entering these materials into the court docket Tuesday, a New York federal judge called the evidence “highly probative, if not indispensable, to proving the alleged activities that purportedly threatened the integrity of the American financial system.”

Prosecutors here brought the underlying case in connection to the 2007 raid of a U.S. hedge fund’s offices in Moscow.

According to charges unsealed by then-U.S. Attorney Preet Bharara, members of a Russian criminal organization used the stolen corporate identities of Hermitage Capital Management to make fraudulent claims for tax refunds, then funneled their “ill-gotten rubles” into expensive New York real estate.

The case took off when prosecutors received a Russian criminal case, sealed and bound in twine, from Nikolai Gorokhov, an attorney for onetime Hermitage auditor Sergei Magnitsky.

Both lawyer and client met tragedy in the years after the Hermitage raid.

On March 21, 2017 — the same day prosecutors formally moved to admit the Russian criminal case files that he provided — Gorokhov tumbled from his apartment and sustained severe head injuries. Magnitsky had been dead eight years by then, under mysterious circumstances in a Moscow prison.

Prosecutors introduced this flowchart as Exhibit B in a $230 million federal forfeiture action involving the laundering of fraudulent tax refunds into New York real estate.

On the same day Congress passed the Magnitsky Act, attempting to punish Russian officials tied to the 37-year-old auditor’s demise, Russia enacted a ban against then-U.S. Attorney Bharara.

Capping off Russia’s resistance — the Kremlin has refused to exchange law-enforcement files in the Hermitage case — Bharara found himself out of a job in March on orders from President Donald Trump, whose campaign team is under investigation for ties to Russia.

Prevezon Holdings, a Cypriot firm at the center of the case, tried to exclude the Russian case file as evidence, but U.S. District Judge William Pauley III overruled its objections on Tuesday.

“There is no serious dispute that the bank records, if admitted for their truth, represent evidence of a material fact,” the 15-page opinion states.

Pauley called the records “fundamental pieces to the government’s tracing analysis.”

“They will support the government’s theory that proceeds from the Russian treasury fraud were laundered through a network of accounts, and that $1.9 million wound up in Prevezon’s account,” he added.

The ruling coincided Tuesday with Trump’s firing of FBI Director James Comey, and a report by CNN that grand jury subpoenas had been issued in the Russia investigation that Comey once led.

Prevezon has not responded to an email seeking comment. Prosecutors have accused the company of using its New York subsidiaries to funnel illicit proceeds into four luxury condominiums, including units at 127 Seventh Ave., 20 Pine St., and The Alexander on East 49th Street.

“While New York is a world financial capital, it is not a safe haven for criminals seeking to hide their loot, no matter how and where their fraud took place,” Bharara announced in 2013.

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