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 preserve client confidences “touches upon vital concerns of the legal profession and the public’s interest in 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, 17th 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

11 January 2016 – On 8 January 2016, New York district court judge Thomas Griesa reversed his previous decision to disqualify lawyer John Moscow and New York law firm Baker Hostetler.

The new decision allows Baker Hostetler and John Moscow to continue acting as defence counsel for Prevezon, a Cyprus company owned by the son of a senior Russian government official, accused by the US Justice Department of acquiring Manhattan properties with the proceeds from the $230 million fraud uncovered by Sergei Magnitsky, Hermitage’s murdered Russian lawyer. Baker Hostetler previously represented Hermitage as a victim of the same crime.

The judge’s decision came three weeks after he had disqualified John Moscow and Baker Hostetler on the same set of issues, concluding it would be improper for them to continue as defence counsel given the violation of New York Rules of Professional Conduct and Baker Hostetler’s duty to their former client, Hermitage.

The US government’s case against Prevezon seeks the forfeiture of New York property and bank accounts worth US$14 million and money laundering fines. In their complaint, the government highlights millions of dollars in payments received by Prevezon from shell companies from the $230 million Russian fraud, that were falsely described as payments for over 500 Italian bath tubs and auto spare parts – goods that Prevezon never delivered to anyone.

The series of disqualification motions filed by Hermitage came as a result of Baker Hostetler and John Moscow switching from assisting Hermitage in 2008-2009 with identifying perpetrators of the US$230 million fraud and bringing its beneficiaries to the US Department of Justice, to representing the alleged beneficiaries of the same fraud against the U.S. Justice Department’s lawsuit four years later.

In 2008, Hermitage hired New York lawyer John Moscow and his law firm Baker Hostetler after Hermitage’s Russian lawyers who exposed the Russian government complicity in the US$230 million fraud came under attack from the Russian authorities.

John Moscow was a recognized expert in fighting Russian organised crime and money laundering from his previous work in the New York District Attorney’s Office. Together with his new firm, Baker Hostetler, he developed a strategy of issuing requests for information to US banks and seeking legal action from the US Department of Justice, including the forfeiture of U.S. assets of perpetrators and beneficiaries.

As a result of the work of John Moscow and subsequent work by other Hermitage lawyers, in September 2013, the US Justice Department launched a US forfeiture case in relation to Denis Katsyv’s company Prevezon in the New York district court.

Baker Hostetler and John Moscow then switched sides and began to work as defence counsel for the alleged money launderers after previously helping the victim of the same crime. Most recently, as one of defence strategies Baker Hostetler and John Moscow accused Hermitage of committing the same $230 million fraud which John Moscow was helping to defend them against in 2009.

The US Government who supported Hermitage’s motion to disqualify John Moscow and Baker Hostetler said:

“The egregious situation seen here, where an attorney for a victim attempts to switch sides to represent a beneficiary of the offence, is extremely rare, and it is even rarer that such attorney would go further and accuse his former client, the victim, of committing the offence.”

On 15 December 2015, Hermitage filed a motion with New York district court seeking to disqualify Baker Hostetler and John Moscow for breaching the duty of loyalty to Hermitage as former client, citing the New York Rules of Professional Conduct.

On 18 December 2015 judge Griesa approved Hermitage’s request to disqualify John Moscow and Baker Hostetler.

The judge then changed his mind, and last Friday reversed his decision. To justify his new decision, judge Griesa concluded that the right of Prevezon to their choice of counsel is greater than the right of Hermitage to not be betrayed by their former lawyers.

“Perhaps most importantly, disqualification would mean depriving Prevezon of its right to the counsel of its choice. While this right is not absolute, it imposes a high burden on the party seeking disqualification. The balance of the relevant factors tips toward denying the motion to disqualify,” said judge Thomas Griesa in his opinion.

In filings supporting Hermitage’s motion to disqualify Baker Hostetler, the U.S. Department of Justice warned of the chilling effect that a negative decision could have on future cases.

“Victims considering retaining attorneys to represent their interests will be aware that their counsel can be paid to accuse them of committing that very offence and to defend the perpetrator. This precedent will understandably have a “chilling effect,”… deterring crime victims from retaining attorneys to investigate and to inform the Government of offences, as those attorneys will be permitted to be turned against them by well-resourced perpetrators,” said the U.S. government.

Hermitage intends to appeal the ruling to the United States Court of Appeals for the Second Circuit, one of the thirteen United States Courts of Appeals which has appellate jurisdiction over New York, Connecticut, and Vermont.

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

Yuri Chaika

22 December 2015 – Sergei Magnitsky’s mother has demanded answers from Russian General prosecutor Chaika over his hysterical letter containing false information about Sergei Magnitsky published last week in Russian newspaper Kommersant. Chaika’s letter was a response to Russian blogger Alexei Navalny’s explosive video about the corruption and abuse of office involving Chaika’s two sons and senior prosecutors in the country.

In Chaika’s 14 December 2015 letter to Kommersant, he claimed that Sergei Magnitsky had never investigated the $230 million theft from the Russian budget.

In Sergei Magnitsky’s mother’s application to the General Prosecutor’s office which was filed at the end of last week, she refuted Chaika’s false statements and placed the responsibility on Chaika himself for the cover up of the $230 million theft and its perpetrators implicated by Sergei Magnitsky in sworn testimony.

“The information you have disseminated inflicts pain on a mother who lost her son, it is not based on facts, it has not been corroborated by courts, and it is refuted by documents, including the criminal case files about Magnitsky’s death,” said Ms. Magnitskaya to Prosecutor Chaika.

“Thanks to Sergei Magnitsky’s investigation which he conducted on instruction from his client – the Hermitage Fund – the theft of 5.4 billion rubles [$230 million] was uncovered, and reported to you on 25 July 2008 in an application seeking to investigate the fraud and prosecute its perpetrators. In response your senior aid Bumazhkin replied that the investigation had been terminated …due to the lack of crime. Your aid also reported that the outcomes of this investigation were under control of the General Prosecutor’s Office,” said the application from Ms. Magnitskaya.

“It follows that under the control and with knowledge of the Russian General Prosecutor’s Office headed by you, perpetrators who committed a grandiose theft of 5.4 billion rubles from the budget, remained for a long time free, had opportunity to destroy evidence of their crime and continue it unhindered through laundering the proceeds stolen from the Russian people via bank wire transfers,” said Ms. Magnitskaya’s application.

Sergei Magnitsky’s mother’s application asks Chaika whether the information he had disseminated was his personal opinion, or his official conclusion as General prosecutor of Russia tasked by Russian president to personally oversee all cases connected to Sergei Magnitsky. The reply from Prosecutor Chaika to Magnitsky’s mother application is yet not known.

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

www.billbrowder.com

21 December 2015 – The federal court in New York has disqualified lawyer John Moscow and his firm, BakerHostetler, who represented the alleged Russian recipients of money laundering proceeds from the US$230 million Russian fraud that Sergei Magnitsky uncovered, in a civil forfeiture case brought by the US Department of Justice. The case alleges money laundering of proceeds of Russian fraud into multi-million dollar Manhattan real estate by Prevezon, a company owned by a son of former Vice-premier of the Moscow Region and the current Vice-president of Russian Railways Pyotr Katsyv.

John Moscow and BakerHostetler had originally worked for Hermitage in 2008 to defend Hermitage against unfounded accusations relating to the fraud, including (among other projects) by tracking the stolen US$230 million and its recipients, and bringing the evidence of this complex Russian fraud which victimised Hermitage, to the US Department of Justice. On Hermitage’s behalf, John Moscow personally presented the findings from the Hermitage’s and Sergei Magnitsky’s investigations of the $230 million fraud to the U.S. Attorney’s Office.

On 25 November 2008, one day after Sergei Magnitsky’s arrest by corrupt Russian officials on false charges, John Moscow also became involved in Hermitage’s legal actions to free Sergei Magnitsky from Russian detention. Prior to his arrest, Sergei Magnitsky gave testimony to Russian authorities implicating Russian officials in the theft of Hermitage’s Russian companies and of US$230 million the Hermitage’s companies had paid to the Russian government.

One year later, on 16 November 2009, Sergei Magnitsky was killed in Russian police custody before he could testify in an open trial.

In 2013, John Moscow and BakerHostetler switched sides, and went from representing Hermitage to representing Russian-owned Prevezon, an alleged beneficiary of the US$230 million fraud, that Sergei Magnitsky’s investigation had led to after his death. The US Department of Justice has traced to Prevezon nearly US$2 million of the US$230 million fraud proceeds and more funds in false and questionable transactions. The US court has frozen about US$14 million in Prevezon’s assets, including bank accounts and several Manhattan properties.

In November 2015, John Moscow and BakerHostetler made filings on Prevezon’s behalf in which they explicitly accused Hermitage of committing the US$230 million fraud that they originally have been hired to defend against.

On 15 December 2015, Hermitage filed a motion to disqualify BakerHostetler and John Moscow.

In Judge Griesa’s opinion, issued on 18 December 2015, the U.S. Court for Southern District of New York ordered:

“The court is now convinced that it would be improper for BakerHostetler and Moscow to continue as counsel to defendants. …Hermitage’s motion to disqualify BakerHostetler and Moscow as counsel to defendants is granted.”

Hermitage Capital’s representative said of the disqualification of John Moscow and BakerHostetler:

“This disqualification is a stark reminder that lawyers can’t switch sides just because there is money being offered to them.”

Under Rule 1.9 of the New York Rule of Professional Conduct, lawyers are not allowed to betray their former clients. In particular, the rule says:

“A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person’s interests are materially adverse to the interests of the former client unless the former client gives informed consent, confirmed in writing.”

Hermitage became the victim of the US$230 million fraud in 2007 when a Russian criminal organisation, comprising FSB, Interior Ministry and tax officials and headed by a convicted fraudster Dmitry Klyuev, raided offices of Hermitage and its law firm in Moscow, unlawfully seized statutory and financial documents for its corporate Russian subsidiaries. Using those documents, the Russian crime group forged contracts and powers of attorney, fraudulently re-registered the stolen Hermitage companies to felons previously convicted for violent crimes, and through sham court proceedings obtained about US$1 billion judgments against the stolen Hermitage companies, in order to claim US$230 million in purportedly “overpaid” taxes.

The fraudulent US$230 million tax refund was granted by Russian tax officials, who were members of the crime group, in one day, and paid out two days later to two small Russian banks, where fraudsters had opened bank accounts, and then laundered through Russian banks and around the world.

Through efforts of Hermitage and law enforcement authorities around the world, about US$40 million connected to the US$230 million fraud uncovered by Sergei Magnitsky have been identified and frozen.

BakerHostetler is an “Am Law 100 law firm” with more than 900 attorneys and 14 offices. John Moscow is a former New York prosecutor and a partner at Baker Hostetler.

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

www.billbrowder.com

18 December 2015 – In a ground-breaking move, United States Senate unanimously passed the Global Magnitsky bill. The bill officially called, “S.284 – Global Magnitsky Human Rights Accountability Act”, directs the President to sanction human rights violators from anywhere around the world. The specific sanctions are visa bans, asset freezes, and public placement on the US Treasury’s OFAC registry.

“This is the new technology for fighting human rights abuse and an important legacy for Sergei Magnitsky who gave up his life fighting for the truth in Russia,” said Bill Browder, author of “Red Notice”, a book dedicated to Sergei Magnitsky.

In December 2012, the US Congress adopted the Sergei Magnitsky Rule of Law Accountability Act, which imposes visa and financial sanctions on violators of rights of human rights defenders in Russia.

The bill is named after Sergei Magnitsky, a Russian lawyer, who uncovered the largest publicly-known corruption case in Russia involving the theft of $230 million. Sergei Magnitsky 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.

The Global Magnitsky bill was sponsored in the Senate by U.S. Senator Ben Cardin, and had 10 co-sponsors:

Sen Blumenthal, Richard [CT] – 1/28/2015

Sen Coons, Christopher A. [DE] – 7/23/2015

Sen Cruz, Ted [TX] – 2/25/2015

Sen Durbin, Richard [IL] – 1/28/2015

Sen Kirk, Mark Steven [IL] – 1/28/2015

Sen Markey, Edward J. [MA] – 1/28/2015

Sen McCain, John [AZ] – 1/28/2015

Sen Rubio, Marco [FL] – 1/28/2015

Sen Shaheen, Jeanne [NH] – 1/28/2015

Sen Wicker, Roger F. [MS] – 1/28/2015

The next step is for the House of Representatives to consider the bill.

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

www.billbrowder.com