U.S. Seeks to Seize Properties Linked to Russian Tax Scheme


U.S. prosecutors seeks to seize high-end real estate they claim was bought with proceeds from a $230 million tax fraud allegedly committed by corrupt Russian officials

— The prosecutors allege the scheme took control of entities owned by U.S.-born investment fund manager Wiliam Browder

— Critics say the suit is emblematic of the Kremlin’s abuse of the legal process and has sparked tensions between the U.S. and Russia

U.S. prosecutors said Tuesday that they’re seeking to seize several luxury apartments and other high-end commercial spaces in New York that they claim were purchased with proceeds from a $230 million tax fraud allegedly committed by corrupt Russian officials.

Prosecutors said the fraud was allegedly uncovered by Sergei Magnitsky, a Russian lawyer who died in a Moscow prison in 2009 under suspicious circumstances. Mr. Magnitsky, before his death at age 37, claimed Russian police and security officials took control of entities owned by his client, U.S.-born fund manager William Browder, and defrauded the Russian government of hundreds of millions dollars in tax refunds. Mr. Magnitsky was arrested in 2008 after he provided testimony about the alleged fraud.
In July, a Russian court sentenced Mr. Browder without him being present in court to nine years in prison for tax evasion and returned a guilty verdict against Mr. Magnitsky, despite his death, on similar charges. Mr. Browder is a U.K. citizen living in London.

Critics of the Russian government have said the case is symbolic of the Kremlin’s abuse of the legal process and it has fueled tensions with the U.S., leading to a series of tit-for-tat recriminations between the nations. Russian President Vladimir Putin and other officials have denied allegations of judicial abuses in the case.

In a civil lawsuit filed in federal court in Manhattan on Tuesday, U.S. prosecutors alleged that a criminal organization, including officials at two Russian tax offices, corruptly sought tax refunds in the amount of 5.4 billion rubles, or about $230 million, on behalf of companies associated with Mr. Browder’s Hermitage Capital Management.

Lawyers for a series of holding companies that allegedly own the properties couldn’t immediately be identified for comment Tuesday.
“As alleged, a Russian criminal enterprise sought to launder some of its billions in ill-gotten rubles through the purchase of pricey Manhattan real estate,” said Preet Bharara, the U.S. attorney in Manhattan. “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.”

The properties at issue include apartments or commercial space at The Alexander, a luxury condominium building on Manhattan’s Upper East Side with floor-to-ceiling windows and white-oak floors; at the Yves Chelsea, a luxury building in Manhattan’sChelsea neighborhood where apartments feature glass cabinets and countertops and Sub Zero refrigerators and wine storage; and at 20 Pine Street, a luxury condo building that features Egyptian motifs and was formerly the headquarters for Morgan Guaranty Trust Company in Manhattan’sFinancial District, according to the lawsuit and websites for the properties.
Prosecutors didn’t reveal the value of the property they are seeking in New York.

However, Mr. Browder said the action, if successful, would effectively lead to the seizure of about $23 million in cash and real estate assets in the U.S.
For example, the price of studio apartments available for sale at 20 Pine start at $840,000 and the average price for available apartments there was $1,204 a square foot, according to the building’s website.
Any seizure by U.S. authorities would mark the largest seizure anywhere in the Magnitsky saga–about $20 million was previously frozen by Swiss authorities, and about $100,000 by Lithuania and Estonia, according to Mr. Browder.

In their lawsuit, U.S. prosecutors alleged that corrupt Russian officials took over several entities associated with Mr. Browder’s Hermitage fund and filed a series of sham lawsuits against the companies. The corrupt officials allegedly claimed the lawsuits wiped out the Hermitage entities profits and applied for and received about $230 million in tax refunds, according to the U.S. lawsuit.

Some of the proceeds were allegedly funneled to a real estate company named Prevezon and several of its entities, which purchased properties in New York, according to the U.S. lawsuit.

A spokesman for Prevezon’s owner, reportedly the son of a top government official in Moscow, didn’t immediately respond to a request for comment Tuesday.

The grandson of Communist Party U.S.A. leader Earl Browder, Mr. Browder was one of the largest foreign investors in the Russian stock market in the late 1990s and early 2000s through his Hermitage fund. He pressured state-run companies to improve their performance and advocated investment at the time in Russian firms.

However, he ran afoul of Russian authorities in 2005 when he was denied entry to the country and criminal accusations were filed against him. He has since become one of Mr. Putin’s fiercest foreign critics.

Mr. Browder has said the July decision against him and Mr. Magnitsky “will go down in history as one of the most shameful moments for Russia since the days of Joseph Stalin” and has vowed to continue fighting on Mr. Magnitsky’s behalf. The U.S. State Department also has decried the posthumous verdict against Mr. Magnitsky.

A 2011 human-rights commission report found that Mr. Magnitsky died in pretrial detention after he was beaten with rubber batons and denied medical treatment for pancreatitis.

His death became the basis for the Magnitsky Act, a U.S. law passed late last year banning Russian officials allegedly involved in Mr. Magnitsky’s death or accused of other human-rights violations from entering the U.S. or holding American assets.

Following the passage of the act, Mr. Putin signed into law a ban on the adoptions of Russian children by U.S. citizens and put similar sanctions in place against U.S. officials alleged to be involved in human-rights violations.

One of the Americans singled out by Moscow for punishment was Mr. Bharara, whose office filed the lawsuit against Prevezon and prosecuted alleged Russian arms dealer Viktor Bout. Mr. Bout was convicted of conspiracy to kill Americans and other charges in 2011 and sentenced to 25 years in prison. онлайн займ hairy girl https://zp-pdl.com/online-payday-loans-cash-advances.php https://www.zp-pdl.com займы на карту

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