Russia Is Not Cooperating With US Probe Of Massive Money Laundering Scheme, DOJ Says

A key witness in the case nearly died after he fell four stories from a Moscow building last week. Now, the DOJ is accusing the Russian federation of failing to cooperate in its investigation.

Russian officials are not cooperating in a US-based money laundering probe connected to a massive Russian tax fraud, the Department of Justice claims in new court filings for the case where a witness was nearly killed after falling from his apartment window in Moscow.

The case of USA v. Prevezon made headlines worldwide last week when a key witness in the prosecution, Russian lawyer Nikolai Gorokhov, plunged from his fourth-story window one day before he was set to give testimony in a separate criminal case.

Two days after Gorokhov fell from the building, a trove of documents where entered into the docket in the Prevezon case — which charges the defendant, a Cyprus-based real estate company, with utilizing funds from a $230 million Russian tax fraud scheme to buy properties in New York City.

In one document, the DOJ claims “the Russian federation, where the fraud took place and where the initial money laundering steps were taken, has not honored the United States’s request for legal assistance.”

Prosecutors say that they have not received cooperation from the Russians but have gotten cooperation “from the governments of multiple different countries through which the fraud proceeds flowed.”

The massive money laundering scheme connected to the case dates back a decade. In 2007, investigators claim, Russian mobsters, corrupt law enforcement, and government officials conspired to steal $230 million by seizing control of companies held by The Hermitage Fund, which at the time was the largest foreign investor in Russia.

Through a series of alleged sham lawsuits — and with the sign-off of corrupt individuals within Russian tax offices — the thieves were able to pocket almost a quarter-billion dollars in taxpayer funds.

In an attempt to hide the money, investigators claim, the conspirators moved millions around the globe through a myriad of foreign companies and sketchy banks. In 2013, former US Attorney Preet Bharara brought a claim against Prevezon, which is owned by Russian national Denis Katsyv, claiming that a portion of the stolen $230 million ended up in the company’s bank accounts and was used to purchase NYC apartments. In court filings, Prevezon says the DOJ has no hard evidence to back up its claims.

The three-plus year court battle over Prevezon’s holdings is on the brink of going to trial — the case is scheduled to be put before a jury on May 15 — months after Bharara was fired by President Donald Trump.

If the DOJ wins, it will be the first time since the public became aware of the money laundering scheme that prosecutors will have successfully proven in a court of law anywhere in the world that Russian gangsters are connected to the stolen $230 million.

Because Russian officials won’t cooperate with the US prosecutors, the DOJ writes in its court filing that its lawyers will instead rely on a “confidential witness” who will “supply the bulk of the government’s evidence regarding the fraud in Russia and the transfer of its proceeds abroad through shell companies.”

According to the court record, the confidential witness is a Russian lawyer who legally obtained approximately 30,000 pages of relevant documents in a separate criminal case that includes “bank records and investigative analyses” showing how the $230 million was moved around the world.

Asked if the confidential witness referenced in the case file was Gorokhov, a DOJ spokesman told BuzzFeed News that it could not comment.

Ultimately, the judge in the Prevezon case will make the final decision on whether or not to allow the testimony – which was already videotapped in a depositon – from the confidential witness.

For years, the Hermitage Fund and advocates have tried to get the Russian government to target the individuals they believe are behind the money laundering. In 2008, Hermitage lawyer Sergei Magnitsky brought forth evidence he claimed tracked the stolen funds to accounts opened at banks controlled by Russian gangsters.

But instead of going after the individuals that Magnitsky linked to the scheme, Russian officials threw Magnitsky in jail. A year later, the 37-year-old lawyer died under suspicious circumstances in prison. Russian law enforcement then accused Magnitsky and Hermitage founder, William Browder, of hatching the tax scam against their own companies and convicted them of tax evasion. Magnitsky became the first person in Russia posthumously tried and convicted for such a crime. Browder was expelled from Russia.

Gorokhov, who in the wake of Magnitsky’s death has filed many complaints related to the money laundering scheme, was set to give testimony to a Russian court in a separate criminal investigation connected to the Magnitsky affair the day after he fell from his apartment window.

After the incident, Browder told BuzzFeed News that Gorokhov was “thrown from the fourth floor of his apartment building.” While Russian media, often controlled by the state, says he “fell while he and workers were trying to lift a Jacuzzi into his apartment.” Gorokhov was taken to the hospital in critical condition. BuzzFeed News has learned that he is recovering from his injuries and out of any mortal danger.

In the Prevezon case, the real estate company claims that the DOJ “tells two stories: one story about a $230 million Russian tax fraud, and another separate story about [Prevezon’s] legitimate real estate business,” but says that prosecutors “fail to connect the two.”

The company argues that Bharara’s former office has told “a graphic and disturbing story” about the tax fraud and Magnitsky’s death, but maintains that “[t]hose allegations are irrelevant to [Prevezon]” and “designed to inflame the reader [of the complaint] and to create prejudice against” the real estate company.

Prevezon’s attorneys did not immediately respond to a request to comment on this story.


Topics in this article

Skip to footer