On September 10, 2013, US Attorney for the Southern District of New York, Preet Bharara, on behalf of the US government filed a complaint against the civil confiscation of the assets of the Prevezon Group belonging to a Russian citizen. (Dkt. 1-complaint by the US Government of September 10, 2013) . Then the US Attorney officially stated that “this case is the first case to apply Magnitsky’s law adopted in December 2012 against those who, according to the US, were involved in the death of Sergei Magnitsky, who, according to US lawmakers, as a result of his illegal criminal prosecution and torture of corrupt officials who stole hundreds of millions of dollars from the Russian budget, and whom Magnitsky exposed.”.
The complaint claims to expose a large-scale fraud scheme for embezzling $230 million from the Russian treasury by an unidentified secret criminal organization that has infiltrated the Russian authorities (1 – US Government complaint, 22-28). The allegations suggest that the US government should have conducted a large-scale investigation in several jurisdictions, including Russia, Cyprus, Israel, Switzerland, Germany and the United States. However, this was not done. The US government interrogated one witness and his colleagues, and also verified their data using their own information on the Internet and the Magnitsky Law, adopted in December 2012 in the US. (deposit by a representative of the US government, a special agent who checked a complaint under the affidavit, Todd Hyman – see deposit on March 3, 2014, 53: 6-55: 4, 174: 5-14, Dkt. 80 March 21, 2014).
This witness was a former American citizen who, for tax reasons, renounced his American citizenship in 1998, now a British subject, William F. Browder, Director of the Hermitage Capital Management Limited (Guernsey) (Id.)
Browder personally took the complaint against Prevezon to the US Attorney’s Office in December 2012 after the Magnitsky Act lobbied by the same Browder was passed by the US Congress, and before it was signed by President B. Obama. (Dkt. 281, 281-1: Browder’s deposition in the USA of April 15, 2015). This event also occurred immediately after Alexander Perepelichny died, the only person who provided Browder with the banking documents not related to tax frauds, but based on which Browder claims his employees “traced the stolen money” (Id.). The Russian side is deprived of the opportunity to interview Perepelichny due to his death under unclear circumstances immediately after he became aware of the real purpose of Browder’s representatives cooperation with him (Dkt. 1 of September 10, 2013, a claim on behalf of Hermitage of December 4, 2012, a claim by Browder’s lawyers to Switzerland in 2011, Perepelichny’s deposition by the Swiss Prosecutor’s Office in April 2012).
For 3.5 years of existence of this case, the US filed 3 versions of the complaint, changing its claims once a year, but never changing the description of events in Russia in the so-called Magnitsky case who allegedly exposed the embezzlement of tax funds, for which he was arrested, and later died in tortures. (Dkt. 1: US Complaint of September 10, 2013, Dkt. 174: Amended US Complaint of November 5, 2014, Dkt. 381: Second Amended US Complaint of October 23, 2015).
These events are a key and prevailing part of each of the 3 versions of the complaint, and were supported by the US Magnitsky Act, by the non-existent report of the Human Rights Council in Russia, however, mentioned in the US Act, and by the PACE Resolution “Refusing impunity for the killers of Sergei Magnitsky” based on a report by Andreas Gross, which chronologically describes Browder’s version of the embezzlement of taxes from the Russian treasury preceded by stealing three Russian companies from the Hermitage Fund, and his legend of the Russian authorities retaliating him and Magnitsky who “exposed the scam”, Magnitsky was arrested, tortured and subjected to a post-mortem criminal charge, and Browder was subjected to political persecution via Interpol (Dkt. 402, 402-6 – statement by Gross with PACE resolution attached with his own report “Refusing impunity for the killers of Sergei Magnitsky”, and references to the US Magnitsky Act in each of the 3 versions of the Complaint, 73 Dkt. 1, 174, 381)
All of these “pillars” as the connecting links of Browder’s story about embezzlement of funds from the Russian budget, which were allegedly stolen by an unknown Russian government organization that was allegedly exposed on Browder’s instructions by his “lawyer” Magnitsky, for which he was arrested and beaten, which resulted in his death and post-mortem charge – were reasonably argued by the American lawyers of the Russian side, which resulted in all the above documents (in p. 6) being removed from the case either by the Federal Attorney himself, or by a court decision in connection with the petitions filed by the Russian side.
Thus, lawyers of the Russian side twice moved to remove the US Magnitsky Act from the body of evidence of the case, motivating, in particular, that “The actions taken by the Congress in 2012 are irrelevant to the events that occurred in Russia, Switzerland, Moldova, Latvia, or elsewhere in 2007 and 2008, and to a large extent this is a political action by the Congress – caused by the PR campaign launched by William F. Browder – does not make the subsequent fact more or less likely in the framework of this legal process” (Dkt. 462 of December 8, 2015 – Pre-trial motion by Defendants No. 5 seeking to remove references to the Magnitsky Act), “The Government cannot rely on the establishment and assessment of facts by the Congress in connection with the Magnitsky Act to prove facts it cannot prove […] The conclusions of the Congress cannot replace undisputed evidence” (Id.), and “The defendants are not accused of having participated or even known about the Russian fraud with budget funds or about Magnitsky’s alleged actions or his fate. Accordingly, the evidence concerning Magnitsky’s alleged investigation of the fraud, any retaliatory actions against him, or the reaction of the United States in the form of the so-called Magnitsky Act, are not an evidence of anything related to the Defendants. (Dkt. 582 of March 23, 2017, pre-trial motion No. 2, Dkt. 670 (response to objections of April 21, 2017)
Besides, declarations and petitions were filed by the lawyers of the Russian side, refuting the allegations both in the Complaint (pp. 66-67 Dkt. 1, 174, 381), and in the US Magnitsky Act that the Council on Human Rights under the President of the Russian Federation, by its decision (Report), acknowledged the fact that Magnitsky had investigated the embezzlement of funds from the Russian treasury, and invalidated his arrest and accusation, the fact he was beaten by 8 guards, and that Magnitsky was tortured while in the detention center, resulting in his death. Lawyers proved that the Council never delivered such a document, and the information itself was provided after Magnitsky’s death by Browder’s representatives. (Dkt. 418-419 of November 17, 2015 – objections by the Defendants with the Declaration of Kirill Kabanov attached, Dkt. 459 of December 8, 2015 concerning removal of references to the Report of the Human Rights Council in Russia)
The defense attorneys for the Russian side also filed motions to remove Magnitsky’s story supported by the like-named US Act, as a diversion from the merits of the case: “the evidence related to the alleged investigation and death of Magnitsky, especially when combined with the fact that the United States passed the law in response to Magnitsky’s death, can inflame the jury artificially and inappropriately lead the jury to “avenge” Magnitsky by punishing the Defendants who are Russians and who allegedly laundered the proceeds of a fraud allegedly investigated by Magnitsky. (Dkt. 582 of March 23, 2017, pre-trial motion No. 2); “allowing the submission of Magnitsky’s materials in this case will lead to unnecessary delays and wasting judicial resources, since the Defendants will be forced to refute them with evidence showing, inter alia, that: (i) Magnitsky was not a lawyer; (ii) Magnitsky was not arrested for investigating the Russian Treasury fraud, but on suspicion of assisting William Browder in committing a tax fraud which Browder was eventually found guilty of in Russia, and (iii) Magnitsky was not beaten to death by Russian officials, and died as a result of an unrecognized medical condition.” (Id.)
In response to these motions by the Defendants, the US Government stated it did not intend any longer to refer to the 2012 Report of the Human Rights Council in Russia and the US Magnitsky Act (Dkt. 646 of April 6, 2017 – US Memorandum), asking the court to only leave in their reasoning concerning PACE Resolution with the report of the Swiss MP Andreas Gross and Magnitsky’s story.
On May 3, 2017 the Court, having listening to the arguments of the Parties, ruled out any reference to the arrest, detention, death and the alleged subsequent persecution of Magnitsky, recognizing this as a maneuver to divert the jurors to listen to John Le Carré style tales about an international conspiracy, instead of focusing their attention on real issues” (second protocol decision of May 3, 2017, Dkt. 723). Here the Court indicated there were no reasons to “refer to Browder’s close relationship with Magnitsky, or that Browder had any moral obligations towards Magnitsky”. (Id.). By the same ruling, the Court approved the Government’s waiver to refer to the Magnitsky Act: “The Government stated it did not intend to submit to the court any evidence related to the international reaction to Magnitsky’s death, including the adoption of the Magnitsky Act in the United States. This Court agrees that such evidence shall not be considered at the trial.” (Id.)
Сontinued in the second part of the article…
 Hereinafter, this designation stands for the number of the document from the electronic case file “USA v. Prevezon”
 Full name of the Magnitsky Act – the Russia and Moldova Jackson–Vanik Repeal and Sergei Magnitsky Rule of Law Accountability Act of 2012, Act 112-208, of December 14, 2012, 126 Stat 1496.
 Hereinafter, any references are made to the US District Court for the Southern District of New York, which had case No. 13-CV-6326 in its docket.
All documents you can find on https://pcl.uscourts.gov/pcl/index.jsf
- 1-13-cv-06326-TPG Doс 252 Order 10 марта 2015
- 113 – 2014-9-12 Memo of Law in Support of Motion to Quash
- 114-1 2014.09.14
- 114-2 2014.09.14
- 114-3 2014.09.14
- 114-4 2014.09.14
- 281. File Stamped Copy of 5-13-15 Letter 2015.05.13
- 716. STIPULATION AND ORDER
- 759. 20180202 OPINION & ORDER
- 81.1 2014.03.03. Deposition of TODD S. HYMAN
- 422-10 2015.10.06_extract from Deposition of TODD S. HYMAN
- 422-14 2015.10.06_extract from Deposition of TODD S. HYMAN
- 465-3 2015.10.06_extract from Deposition of TODD S. HYMAN
- 531-1 2015.10.06_extract from Deposition of TODD S. HYMAN
Natalia Veselnitskaya – official website