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US prosecutors Tuesday filed a complaint to seize six pieces of upscale New York real estate allegedly financed through an elaborate fraud scheme uncovered by late Russian attorney Sergei Magnitsky.
US Attorney Preet Bharara said the 11 entities named in the complaint hold four luxury residential units and two high-end commercial spaces in Manhattan. The US is also seeking civil monetary laundering penalties in the latest ripple from the controversial Magnitsky case.
"Today's forfeiture action is a significant step towards uncovering and unwinding a complex money laundering scheme arising from a notorious foreign fraud," Bharara said in a statement.
"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."
The Justice Department described a complex scheme involving "sham" lawsuits whereby a Russian criminal organization in 2007 stole the corporate identities of assets associated with the investment company Hermitage Capital, ultimately netting about $230 million from the Russian treasury through fraudulent tax refunds.
Magnitsky uncovered the refund scheme and the complicity of government officials in the case being retaliated against, the Justice Department said. Magnitsky died in prison in Moscow "under suspicious circumstances," according to the agency's statement.
The defendants in the case include Prevezon Holdings, a Cyprus-based real estate company, which garnered the fund to finance the real-estate investments through a complex pattern of money laundering transfers through shell corporations, Justice said.
In July a Moscow court convicted Magnitsky of tax evasion post-humously, drawing fresh outrage in a case that has heightened US-Russian tensions. The US has criticized Russia for dropping an investigation into Magnitsky's death.
Late last year the US passed the "Sergei Magnitsky Act" which imposed a visa ban and froze the assets of Russian officials implicated in the lawyer's death.
The move infuriated Moscow, which in retaliation passed legislation prohibiting Americans from adopting Russian children.