14 December 2015 – New court documents show that the US Department of Justice has traced 60 new wire transfers through the US banking system connected to the $230 million tax rebate fraud that Sergei Magnitsky exposed in Russia. The news comes from a civil money laundering case in New York involving Prevezon Holdings, owned by a son of former vice premier of Moscow Regional government and current vice president of Russian Railways Pyotr Katsyv.
The US Government alleges that Prevezon engaged in laundering the proceeds from the $230 million fraud in Russia, uncovered by Sergei Magnitsky, and international transportation of stolen property.
The news of 60 new US bank wire transfers connected to the crime Magnitsky uncovered is a major new development in the case. Previously, the US Government disclosed only four transactions it traced, through several intermediary shell companies, to Prevezon, owned by 38-year old Denis Katsyv, totalling US$2.75 million. The purpose of these four wires was described in documents as payments to Prevezon for “bath sets” and “auto spare parts” – goods Prevezon never delivered. Senders to Prevezon account in these four transactions were two Moldovan companies and a BVI company with no known legitimate business activity.
“These four transactions …were only part of a pattern of at least sixty-four wire transfers through U.S. banks amounting to millions more in property derived from the Russian fraud and subsequent money laundering,” said Preet Bharara, United States Attorney for the Southern District of New York, in the new filing.
In addition to United States Attorney Preet Bharara for Southern District of New York, the case USA v Prevezon is led by four Assistant United States Attorneys Paul Monteleoni, Margaret Graham, Jaimie Nawaday, and Cristine Phillips.
“An elaborate fraud against the Russian Treasury resulted in the payment of approximately 5.4 billion rubles to three companies that had been fraudulently misappropriated from the Hermitage Fund, a foreign investment fund,” says the US Department of Justice’s filing.
“After the 5.4 billion rubles were paid, a network of shell companies inside and outside Russia laundered these proceeds. Certain of these transfers passed through the United States, either on their way to defendant Prevezon Holdings, or on their way to two other shell companies, Castlefront and Megacom Transit. Four transfers totaling approximately $2.75 million were routed into and out of the United States in this way. These constituted international transportation of stolen property in violation of 18 U.S.C. § 2314,” says the US Government’s filing in the USA v Prevezon case.
“The further laundering engaged in by Megacom and Castlefront, in sending the funds through another company to Prevezon, and by Prevezon, in investing the funds first in Europe and then into New York real estate, constituted money laundering,” further says the US Government in its filing.
A year prior to the US Department of Justice’s action, Swiss General Prosecutor froze about US$7 million on bank accounts connected to Denis Katsyv in Switzerland in a related criminal money laundering investigation into proceeds of the Russian fraud uncovered by Sergei Magnitsky. Denis Katsyv unsuccessfully challenged the decision of Swiss Prosecutor to freeze his accounts in Swiss courts.
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
Twitter: @KatieFisher__