May 23, 2017

Russian Money-Laundering Case Unexpectedly Settled

Involving
Natalia Veselnitskaya

The Justice Department unexpectedly settles major Russian money-laundering case U.S. v. Prevezon, for which Veselnitskaya had represented the defendant.


The resolution of a money-laundering case involving the Russian holding company Prevezon Holdings has fueled suspicions that Russian money-laundering efforts may have played a role in the Russian government’s support for Trump.

In 2008,  the Justice Department accused Prevezon of receiving “at least $1,965,444 from [a] $230 million fraud scheme” and investing the profits “in various New York properties. (Prevezon has ”denied any involvement in money laundering.”) The fraud scheme is allegedly linked to the same crimes that led to the passage of the Magnitsky Act. The lawyer Sergei Magnitsky was instrumental in uncovering what he alleged to be a complicated scheme whereby Russian government officials were defrauding Hermitage Capital, the investment fund of Bill Browder, one of the largest foreign investors in the country; Prevezon was accused of fraudulently obtaining tax refunds from the treasury as part of the scheme. After Magnitsky made his revelations, he was allegedly tortured until he was found dead in his prison cell in November 2009. The Magnitsky Act, which was passed in 2012, retaliated against the abuse of Sergei Magnitsky by freezing assets of certain high-ranking Russian officials. Russia promptly retaliated by banning all U.S. adoptions of Russian children.

Initially, the prosecutor for the case was the US attorney for Manhattan Preet Bharara; however, Bharara was fired in March 2017 after refusing to resign at Attorney General Jeff Sessions’ request (unrelated to the Prevezon case.) In May, just two days before U.S. v. Prevezon was set to go to trial, the Justice Department, which initially sought $14 million in the suit, settled with Prevezon for just under $6 million. Prevezon did not admit guilt as part of the settlement.

. Prevezon was represented in the case by the Russian lawyer Natalia Veselnitskaya, who also attended the June 9 meeting at Trump Tower, where she reportedly discussed the issue of “adoptions.” This has led some of Trump’s critics to suggest that the Justice Department’s sudden decision to settle the case may be connected to the meeting, though no concrete evidence to this effect has been identified to date.

At the time, neither the existence of the June 9 meeting nor Veselnitskaya’s involvement was public information. Nevertheless, given Trump’s prior comments about potentially rolling back sanctions on Russia, the unexpected settlement prompted speculation that the Trump administration had made some sort of deal to resolve the case, which increased with the revelation that the same lawyer who attended the June 9 meeting also represented Prevezon in the case and that Trump had reached out to Bharara multiple times in advance of Bharara’s firing.

The Magnitsky Act
Trump Administration