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U.S. wants to seize assets tied to Russian tax refund scheme

A picture of lawyer Sergei Magnitsky is seen on his grave in the Preobrazhensky cemetery in Moscow March 11, 2013. REUTERS/Mikhail Voskresen
A picture of lawyer Sergei Magnitsky is seen on his grave in the Preobrazhensky cemetery in Moscow March 11, 2013. REUTERS/Mikhail Voskresen

By Bernard Vaughan

NEW YORK (Reuters) - U.S. authorities are looking to seize luxury apartments and other property they say Russian companies used to launder proceeds from a $230 million tax fraud.

The scheme was uncovered by Sergei Magnitsky, a lawyer who died in a Russian jail, U.S. prosecutors said in a civil complaint filed in New York on Tuesday.

According to the complaint, the organization stole corporate identities belonging to the Hermitage Fund, an investment fund operating in Russia, and used them to make fraudulent claims for tax refunds.

"As alleged, a Russian criminal enterprise sought to launder some of its billions in ill-gotten rubles through the purchase of pricey Manhattan real estate," Manhattan U.S. Attorney Preet Bharara said in a statement.

The organization included officials at two Russian tax offices, Olga Stepanova and Yelena Khimina, who approved the refunds of approximately $230 million, according to the complaint. Stepanova and Khimina could not be immediately reached for comment.

"While New York is a world financial capital, it is not a safe haven for criminals seeking to hide their loot, no matter how and where their fraud took place," Bharara said.

The complaint said Magnitsky, who was hired by Hermitage to investigate, faced retaliatory criminal proceedings after uncovering the scheme and the involvement of Russian officials. He died on November 16, 2009, while in pretrial detention.

In July, Magnitsky was found guilty of tax evasion in a posthumous trial that drew rebukes from the European Union, the U.S. State Department and human rights groups.

Russia's Interior Ministry said Magnitsky died of heart failure, according to the complaint. But in 2011, the Kremlin's own human rights council concluded that Magnitsky was probably beaten to death.

The U.S. Congress has since passed the Magnitsky Act, which bars Russians believed to have been involved in his death or other severe human rights abuses from entering the United States. President Barack Obama signed the legislation in December.

According to the lawsuit, the scheme was orchestrated by Dmitry Klyuev, identified as owner of Universal Savings Bank in Russia. Klyuev could not be immediately reached for comment.

Two Russian Interior Ministry officials, Artyom Kuznetsov and Pavel Karpov, were also members of the organization, according to the lawsuit.

Kuznetsov was an officer in the tax crimes unit of the Interior Ministry's Moscow division who took part in police raids on the offices of Hermitage and its law firm in 2007, Reuters previously reported.

Kuznetsov also oversaw the arrest of Magnitsky after he testified about the $230 million tax fraud, according to the lawsuit.

Officials at the Russian Interior Ministry were not immediately available for comment on Tuesday. Lawyers for the defendant companies, which include Prevezon Holdings Ltd, could not immediately be reached for comment.

(Additional reporting by Thomas Grove, editing by Matthew Lewis and David Gregorio)

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