The United States government sought to seize financial assets and a luxury condominium in New York City from the defendant, Denis Katsyv, and his firm Prevezon Holdings Ltd.
Joon Kim, the acting United States Attorney for the Southern District of New York, said the amount of settlement that Prevezon Holdings Ltd. agreed to pay is three times greater than the amount of the fraud it is accused of committing, and more than ten times the value of its property in New York City. The settlement is still subject to court approval.
The financial fraud and money laundering case is the first tied to the Magnitsky case, which involved a $230 million tax fraud in Russia.
Channel One claimed the case “actually fell apart in the court” and called this “an important precedent in the history of the American justice.” Quoting Katsyv’s lawer, Channel One said that the Russian side’s “victory” in this case suggests the U.S. Congress adopted the Magnitsky law “based on questionable statements.”
The Magnitsky Act, passed into law by the U.S. Congress and then-President Barack Obama in 2012, is aimed at punishing Russian officials responsible for the death of Russian lawyer Sergei Magnitsky in a Moscow prison in 2009, as well as those responsible for other human rights abuses.
Russia’s state media use specific language in reporting on the Magnitsky Act. They never refer to it by its official name, but always add the descriptor “so-called,” a reflection of how the Kremlin views the law.
Christopher Swift, an international lawyer and a professor at Georgetown University, told Polygraph.info that the fact the U.S. Department of Justice decided to settle the case does not mean that it "fell apart."
“All it means is that federal prosecutors agree to drop the changes against the defendants in exchange for the defendants paying a considerable fine,” he said. “If a federal judge approves the settlement, then it will conclude the prosecution's case.”
“We cannot know precisely why federal prosecutors decided to settle the case because settlement negotiations are confidential,” said Swift. “But there is a reasonable possibility that the Justice Department took this approach because there was a low likelihood that Russia would ever extradite the conspirators to the United States.”
He added: “If that's the case here, then a settlement like this is a practical outcome. And the high settlement amount would still help the Department of Justice deter other parties from engaging in fraud and money laundering in the future.”
Swift said that the defendants in this case were facing a criminal trial and the reasonable possibility of a criminal conviction.
“They would not settle a case -- much less settle for this high amount -- unless they faced legal jeopardy,” he said. “Defendants that faced a case that was ‘falling apart’ would probably take their chances in court or settle for a much lower amount.”
British-American entrepreneur William Browder, the chief executive officer of Hermitage Capital Management, for whom Magnitsky worked as a lawyer and who initiated and advocates Magnitsky legislation worldwide, called the Channel One report “lies.”
“In this case, the government identified $1.9 million of funds connected to the crime that Sergei Magnitsky exposed,” Browder said in an email comment to Polygraph.info. “If Prevezon was so confident of their innocence, it seems strange to pay the U.S. government $6 million.”