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U.S. Targets Additional $1.1 Million Tied To Magnitsky Fraud Scheme

Lawyer Sergei Magnitsky, who died in pre-trial detention, died in 2009.
Lawyer Sergei Magnitsky, who died in pre-trial detention, died in 2009.

WASHINGTON -- U.S. authorities are attempting to seize an additional $1.1 million allegedly derived from the tax fraud scheme that was exposed by Russian whistleblower Sergei Magnitsky before his death in a Russian prison.

U.S. prosecutors allege the funds were received by the Russian-owned, Cyprus-based company Prevezon Holdings as part of a scheme to steal $230 million from Russian state coffers.

With the fresh allegations, prosecutors are seeking a total of $1.9 million in a civil forfeiture case against Prevezon, whose pricey Manhattan real estate has been frozen pending a judgment.

Prevezon's Russian owner, Denis Katsyv, denies the allegations.

The frozen properties, with an estimated total value of more than $11 million, include luxury Manhattan apartments.

Under U.S. law, this real estate could be seized as well if the properties are ruled to have been “involved in the money laundering,” U.S. Attorney Preet Bharara wrote in an October 31 letter to Judge Thomas Griesa of the U.S. District Court for the Southern District of New York.

Bharara has asked for a delay in the proceedings to allow prosecutors to file an amended complaint that includes the new allegations.

Bharara is also proposing to lessen Prevezon’s financial burden during the proceedings by limiting the court-ordered asset freeze against the company to around $14 million. In September 2013, the court originally froze “any and all assets” held by Prevezon.

“We will file the amended complaint promptly after the court grants us leave to do so,” an official with Bharara’s office said in e-mailed comments to RFE/RL.


Katsyv’s legal team has asked the court to reject the prosecutors’ request for a delay in the case, saying the funds cited in the new allegations were accounted for in the original complaint and were already frozen by the court.

If U.S. prosecutors succeed in the action, it would be the first asset seizure connected to the tax fraud uncovered by Magnitsky, who died in 2009 in pre-trial detention after being repeatedly denied medical care.

Magnitsky's supporters say his death was punishment for his whistleblowing.

In July 2013, Russia convicted Magnitsky of tax fraud posthumously.

Katsyv’s legal team has accused U.S. prosecutors of relying too heavily on information provided by Magnitsky’s former boss, U.K.-based businessman William Browder, in building their case.

Bharara pushed back against those claims in his October 31 letter, adding that the allegations in the new complaint “were derived principally from other sources” and based on information “not, to the government’s knowledge, known to Browder at all.”

Katsyv is the son of Pyotr Katsyv, a wealthy former transportation minister for the Moscow region who last month was named a vice president at state-owned Russian Railways, which is headed by Russian President Vladimir Putin’s close associate, Vladimir Yakunin.

With additional reporting by RFE/RL's Luke Johnson in Washington

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    Carl Schreck

    Carl Schreck is an award-winning investigative journalist who serves as RFE/RL's enterprise editor. He has covered Russia and the former Soviet Union for more than 20 years, including a decade in Moscow. He has led investigations into corruption, cronyism, and disinformation campaigns in Russia and Central Asia, as well as on poisoning attacks against Kremlin opponents and assassinations of Iranian exiles in the West. Schreck joined RFE/RL in 2014.

RFE/RL has been declared an "undesirable organization" by the Russian government.

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