Buying New York real estate with money stolen from the Russians by tax fraud. Here is a story on a civil case that explains the basic, original problem:
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Major Investor in Russia Sees Wide Fraud Scheme
By ANDREW E. KRAMERJULY 30, 2009
MOSCOW — William F. Browder, once the largest foreign investor in the Russian stock market, filed court documents in New York this week contending that other Western investors in Russia had colluded with the authorities to steal hundreds of millions of dollars through tax refunds and then laundered the money through New York banks.
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Mr. Browder was expelled from Russia in a politically tinged visa refusal in 2005, and relocated his business, Hermitage Capital Management, to London. Later, he said subsidiary companies he had formed in Russia to invest in Gazprom, the Russian gas monopoly, were used by others to acquire a fraudulent tax refund of $230 million.
Now, the filing by Mr. Ashcroft, whose law firm is based in Kansas City, Mo., suggests that companies other than his own were also used in a similar fraud. The court papers contend that at least another $100 million that foreign investors in Gazprom had paid to Russian authorities in taxes up to 2006 were later stolen in schemes involving fraudulent refunds.
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“Certain Russian officials and private citizens entered into a conspiracy to reregister to themselves three investment companies owned by the Hermitage Fund,” the filing says, with the goal to “apply for and receive fraudulent tax refunds of over $230 million from the Russian Treasury, and finally, to funnel these proceeds through bank accounts in Russia and the United States.”
More: http://www.nytimes.com/2009/07/31/business/global/31investor.html
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More history by the partner of Sergei Magnitsky who was killed in a Russian prison:
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Argument
Russia’s Crime of the Century
How crooked officials pulled off a massive scam, spent millions on Dubai real estate, and killed my partner when he tried to expose them.
By Jamison Firestone
April 20, 2011
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The story begins in July 2007, when Russian Interior Ministry officers Artem Kuznetsov and Pavel Karpov raided my law offices in Moscow and seized without a warrant two vanloads of documents and corporate seals (imprints that go along with the signature on any signed document in Russia) from companies belonging to my firm’s clients, including the Hermitage Fund, which had once been Russia’s largest foreign investor. At the time, one of my junior lawyers protested that their search was illegal. He was taken into a conference room by the officers and beaten so severely that he was hospitalized for three weeks.
A few months later, we learned that the materials seized by the police had been handed over to a criminal group that used them to fraudulently re-register the companies under the name of a frontman, the convicted murderer, Viktor Markelov. Markelov had been recently released from pretrial detention on an unrelated kidnapping and extortion charge involving the same officers, Kuznetsov and Karpov. The seized documents were also used to create $1 billion of fake backdated contracts. Markelov and two other ex-convicts were made directors of the re-registered companies and, through their lawyers, pleaded guilty in several regional courts to $1 billion in these fake liabilities. We learned this from a bailiff in the St. Petersburg court who called our office looking for hundreds of millions of dollars of assets to satisfy those claims.
At this point, Sergei got involved. He started investigating the scheme and, after a few weeks, pieced the story together through court records, registration files, and bank statements. He prepared a number of very detailed criminal complaints against the police officers and perpetrators involved in the massive fraud. These complaints were filed with the most senior Russian law enforcement authorities on Dec. 3, 2007. The police did nothing.
Three weeks later, on Christmas Eve 2007, the stolen firms under Markelov’s name applied for a refund of $230 million in taxes that the Hermitage Fund companies had paid one year earlier. It was the largest tax refund in Russian history — and it was granted in one day by Olga Stepanova, head of Moscow’s Tax Office 28, and her colleague in Moscow Tax Office 25, Elena Khimina. The money was then wired to a small Russian bank, Universal Savings Bank, owned by another convicted criminal, Dmitry Kluyev. The money then left Russia through the Austria-based Raiffeisen bank and was later funneled through Citibank and JPMorgan Chase.
More: https://foreignpolicy.com/2011/04/20/russias-crime-of-the-century/
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The company Preveson was charged with money laundering - the case that the Trump AG settled for a mere $5.9 million. The settlement will probably damage the ability of the civil litigants to make their case.
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