Russian Firm Agrees on How to Pay U.S. in Laundering Case

(Bloomberg) -- A Russian-backed company involved in a decade-long drama that touched the highest levels of the U.S. and Russian governments has finally agreed with the U.S. on how to pay a multimillion dollar settlement of a U.S. lawsuit.

Prevezon Holdings Ltd. will make good on its $6 million obligation using escrowed funds from the seizure and sale of New York apartments, according to a filing Wednesday in Manhattan federal court. The amount had grown from $5.9 million when the company reached a deal last year with U.S. prosecutors.

The dispute stemmed from $230 million in stolen Russian tax funds that were laundered out of the country and placed in bank accounts and other assets around the world, including a handful of New York luxury apartments. The matter strained relations between the two countries, leading to a ban on American adoptions of Russian orphans in retaliation for U.S. sanctions on the people involved in the theft.

It even figured in accusations of an alliance between Russia and then-presidential candidate Donald Trump that are the subject of a special counsel investigation in Washington D.C. One of Prevezon's Russian lawyers is Natalia Veselnitskaya, who met with Trump's son during the 2016 election in a meeting at Trump Tower that was sold as an opportunity for the campaign to get dirt from Russia on Hillary Clinton. 

At the time, Prevezon was battling the U.S. in court over the New York real estate seizure, as well as a criminal money-laundering investigation.

Laundering Suit Ends as Russian Firm, U.S. Claim Victory

The theft of the funds was executed through the targeting of an American-backed investment fund in Russia, Hermitage Capital. Its founder, Bill Browder, backed an investigation into the web of shell companies that moved the money.

One of the lawyers he hired, Sergei Magnitsky, died in a Russian prison after being arrested and beaten. The U.S. and several other countries have since adopted so-called Magnitsky Act sanctions against countries that engage in human rights abuses.

The U.S. case was settled in May on the eve of trial, with Prevezon agreeing to pay the judgment once some of its funds frozen in the Netherlands were unlocked. The money was released by the U.S. but then immediately re-frozen by the Dutch, who had launched their own investgation. That triggered a dispute about the payment deadline. U.S. District Judge William Pauley sided with the government in a ruling last month.

The U.S. will draw its settlement funds from proceeds of the sale of three Prevezon-owned apartments in the Wall Street and Midtown East neighborhoods of New York, while returning money from other sold apartments to Prevezon.

The case is US v. Prevezon Holdings Ltd, CA No. 13-cv-06326, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Christian Berthelsen in New York at cberthelsen1@bloomberg.net.

To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Paul Cox

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