MOSCOW, December 25 (RAPSI, Ingrid Burke) - Prevezon Holdings Ltd., owned by Russian businessman Denis Katsyv, filed a motion to dismiss a complaint by US prosecutors accusing the former and its affiliates in connection with a money laundering scheme allegedly linked to a large-scale Russian tax fraud, according to court documents filed Tuesday.
US prosecutors filed a complaint in September seeking the forfeiture of certain properties belonging to companies allegedly involved in a money laundering scheme connected with large-scale Russian tax fraud.
In part, the complaint alleges that a Russian criminal organization carried out an elaborate scheme defrauding Russian taxpayers of approximately $230 million. The complaint alleges that the proceeds of the fraud were laundered through various shell companies in Russia and abroad. Prosecutors claim that some of that money was then transferred through Moldovan shell companies to Prevezon Holdings, which in turn used those, commingled with funds from other defendant companies, to purchase an array of New York real estate.
The complaint thus alleged that the properties – listed in the complaint as Defendants in Rem – are forfeitable to the US, “as property involved in money laundering and attempted money laundering transactions, in violation of” US law, according to Wednesday’s order.
In Tuesday’s motion, the defendants assert that they stand accused in the complaint of having conducted such transactions as the purchase and sale of property – which, the motion notes, are normal functions within the real estate trade.
“What the Government does not do is connect the eleven Defendant real estate companies or their primary owner, Denis Katsyv, to the alleged crimes. The Government does not contend that any of the Defendants or Mr. Katsyv participated in the fraud, was a member of the so-called Organization, or even knew about the fraud. Facts supporting the elements of knowledge, intent, concealment, agreement, or promotion of the alleged fraud or money laundering are totally missing from the Complaint,” the defense motion states.
The motion goes on to assert that: “Although the Complaint asserts claims under virtually every possible theory of money laundering, the government fails to explain how the facts of this case fit within any of those theories.”
Prosecutors alleged that certain Manhattan properties were purchased with money fraudulently acquired through a Russian tax scheme unveiled by Hermitage Capital auditor Sergei Magnitsky, who died in a Moscow pre-trial detention center in 2009. Denis Katsyv's attorney stressed, however, that neither her client nor any of his relatives are linked with the Magnitsky case specifically or the Hermitage Fund in general.
Defendants further assert that US prosecutors conceded that they played no role in the death of Sergei Magnitsky. The motion states: “In a recent pleading, the United States concedes that Defendants were not involved in Mr. Magnitsky’s death, and explained that the references to Mr. Magnitsky’s death are in the Complaint not for pure prejudicial effect but to show the Court “the willingness of members of the Organization [which Defendants are not alleged to be part of] to hide their fraud . . .”
Magnitsky was arrested on November 24, 2008, on suspicion of having masterminded large-scale corporate tax evasion. He died while in pretrial detention on November 16, 2009, after spending a year behind bars. The case was closed after his death, only to be reopened later. Under Russian law, a person can be prosecuted after death. On July 11 Magnitsky was found guilty of tax evasion.
According to the Prosecutor General's Office, Magnitsky died of heart failure. His death evoked an international outcry, triggered amendments to the Criminal Code and a reshuffling of officials in the penal system.