Natalia Veselnitskaya: “Significant facts from the US case “USA vs. Prevezon, et al.” Part 2.

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“Significant facts from the US case “USA vs. Prevezon, et al.” Part 2.

The decision of the court was even more strongly with regard to the PACE resolution and the report of Andreas Gross. He completely excluded these documents from the case, subjecting Gross and his report to fierce criticism, as well as the entire “August” political body of the Council of Europe:

“After I read this report, I realized that it suffers from a lack of trust.

First, the Parliamentary Assembly published this report a few years after the described events. Even if this court began the countdown from the very first event of Magnitsky’s death in November 2009 — more than three years passed before the Assembly’s Legal Affairs Committee decided to appoint Gross as a Rapporteur in November 2012.

Secondly, in all likelihood, no hearings were held after the distribution of the Gross report or any draft of the said report. Although the US government claims that members of the legal committee voted to adopt a draft decision formed after Gross’s investigation without objection, there is no evidence that the relevant hearings were held with appropriate procedural guarantees

Finally, a series of events indicating the presence of certain motivational problems followed this report. The Assembly’s “earlier work” regarding the death of Magnitsky is mentioned in the Gross’s report. One of these events, which could determine the course of the investigation from the very beginning, could be the interference of William Browder into the work of the assembly.

In June 2011, Browder “suddenly appeared at a parliamentary seminar” at a meeting of the committee, which eventually authorized Gross to take part in Browder’s investigation.

Moreover, the Gross report is full of statements from witnesses sympathizing with Magnitsky and Browder. The Hermitage is known to be paid by several people and given the instructions to investigate events related to Magnitsky, and Gross spoke exactly to these people.

Despite the fact that Gross cited the excerpts from his conversations with Russian officials and the documents received from them, these references are simply buried in the abundance of statements and opinions of Browder, the Hermitage and other parties, driven by personal interests. By Gross’s own admission, he “nonetheless regrets that he was unable to speak directly with persons who were directly connected with the charges of conspiring to commit a crime” …

This statement questions the allegation that Gross “read the versions of both sides,” and this fact indicates that the conclusions contained in the report are not reliable.

Summarizing the arguments above, the court granted the request of Prevezon and excluded these documents from the case by protocol judgement of May 3, 2017. (Dkt. 723 dated May 3, 2017)

Natalia Veselnitskaya: “Significant facts from the US case “USA vs. Prevezon, et al.” Part 2.

On the same day, the Court denied the US Government to prohibit the Defendants from invoking Browder’s criminal convictions for tax frauds in Russia: In this case, even if the sentence was pronounced in the absence of the accused, basic charges of tax evasion included charges of fraud and dishonesty… these charges can say a lot, in particular, about the credibility of the witness testimony. The fact that Browder made an informed decision not to raise objections to these accusations, may be an additional reason for Prevezon to question Browder’s testimony. Prevezon can clarify this issue during cross-examination of Browder, especially after those events when Browder played an excessively active role as a non-party in the case and watched this trial from the outside. (Dkt. 723 of May 3, 2017)

Browder’s personality and behavior throughout 3 years of the case clearly irritated the judges. From the very beginning, the US Government called William Browder as the main and key informant; however, as the plot line progressed, the US Government did everything possible to either delay the trial or to distance itself from Browder. (Dkt. 289: Minutes of the court hearing of May 27, 2015, Government’s objections to Browder’s depositions in 2014, 2015 and 2017).

Browder personally handed his case over to the US authorities and submitted to the Government authorities his own evidence to support his version. However, he refused to voluntarily testify under oath, evaded the subpoena service three times, and tried to evade testimony even after it was serviced three times, showing direct contempt of the US judicial system (Browder’s deposition of April 15, 2015, pp. 12-13).

All of Browder’s arguments in refusing to accept the subpoenas came down to the fact that he regarded them as “persecution of the Russian authorities” (court debates of March 9, 2016, Browder’s sworn statements). However, after Judge Grissa watched the video[5] showing one of the services of the subpoena, when Browder literally rushed off from a process service on West 51st Street in New York, the Court decided that Browder was properly served with a subpoena in New York (protocol decision during the court debate of March 9, 2016, Dkt. 252 – order of deposition of March 10, 2015).

A Federal judge criticized Browder for making illusory claims of threats to his safety: “Apparently the credible threats did not prevent him from going on The Daily Show on February 3, Fox and Friends on February 3, appearing on Sirius on February 3, going on CNBC Squawk Box on February 3, going on MSNBC on February 5, going on Greg Greenberg’s program on February 6th. Apparently the threats didn’t prevent him from doing that.” (March 9, 2016, Hearing testimony at 45). Addressing Browder’s lawyer during the October 23, 2014 debate, Judge Griesa noted: “If your client isn’t telling the truth, that’s your client’s problem and he can be impeached. If he tells the truth, he’s got no problem.” (Dkt. 164, transcript of October 23, 2014)

When Browder finally testified under oath, he refused to reveal sources, although the entire cause of action on money laundering initiated by the Government was provided by Browder. The answer “I don’t know” was given more than 200 times. (Browder’s deposition of April 15, 2015, pp. 128-129; 132-133, Agent Hyman’s Deposition, pp. 53-55, 167). Browder’s testimony was so ineffective that even the Wall Street Journal criticized his evasive testimony. (http://www.wsj.com/articles/hedge-fund-managers-credibility-questioned-in-russian-laundering-case-1431557601).

Browder failed to save his face even during the second deposition in London in March 2017, which also took place on the compulsory decision of the US Judge Pauley of February 27, 2017 (Dkt. 566 Order of Deposition of February 27, 2017), who rejected Browder’s and the US Government’s attempts to dress up Browder as a “fringe,” called it an “innuendo” and stressed Browder’s active role “in providing information to the government, its ruthless media blitzkrieg and its long-term, but unsuccessful attempts to avoid giving testimony” (Id.).

Just as in 2015, two years later, his most popular answer to all questions on the facts was “I don’t know.” (Browder’s deposition of March 16, 2017)

Such behavior of Browder is predictable, since for the first time in his entire long history of creating an image of a political victim, he was forced to take an oath and answer the questions of professionals, court attorneys who took his legend apart.

Back in 2015, the US lawyers for the defense of the Russian side stated to the Court: “In the course of the discovery, an inaccuracy of the Russian Treasury fraud story was revealed (“Fraud against the Treasury”) set forth in the first, second and third complaints. It was fabricated and deftly sold by William F. Browder to politicians in this country and abroad to thwart his arrest on charges of tax fraud in Russia. This publicly communicated information was completely swallowed up by the Government, which included it in its complaint without an investigation, which, as described by this Court, “causes concern.” However, while under oath, Browder himself testified that he had sanctioned the allegedly wrongful actions, which were stated in three complaints, and that he was aware of the events, which, as stated in the complaints, he was not aware of. By its motion [note – seeking release of the US Government from the obligation to prove the story of the theft of funds from the Russian Treasury – Dkt. 398 and 399 of November 3, 2015] The Government seeks to avoid embarrassment at a hearing with a version that the Defendants proved incorrect”; [in the complaints] repeating Browder’s story with veneration about corrupt Russian tax officials, state-sanctioned torture and murder, a puppet judicial system and a villainous, and absolutely indefinite criminal “Organization.” [However] from the disclosed materials it can be concluded that Browder stole funds from the Russian Treasury or at least knew about the fraud before it was committed. (Dkt. 418, 420, 421, 422, 423 of November 17-18, 2015 – Objections of the Defendants to the US Government’s motion of November 3, 2017 Dkt. 398, 399 with the declaration by a Russian lawyer, Natalia Veselnitskaya, transcripts of depositions of journalist Oleg Lurye, statements under oath by Kirill Kabanov, as well as key US witnesses W. Browder, D. Firestone, P. Wrench, M. Wilson, Y. Alexandrou, K. Argiridou, a statement by the representative of HSBC SWISS A. Dabbach, with court documents, affidavits, powers of attorney, reports of the Hermitage Fund companies)

Natalia Veselnitskaya: “Significant facts from the US case “USA vs. Prevezon, et al.” Part 2.

The theses and arguments cited in the above paragraph, that the case is political against the Russians, and that the embezzlement itself could have been organized by Browder, who had the opportunity and the motives for this, were heard by the US Court, which on November 30, 2015, refused to release the US Government from a burden of proving the version of the theft from Russia, rewritten from Browder’s words, who, on top of all, has not been in Moscow since 2006. The court recognized as indisputable the fact that “USD 216 million was stolen from Russia,” but “There are a lot of things that are hotly debated.” Explaining his denial to the Government, the Court stated that “during the trial, it will be necessary to present evidence on these things that form the basis of the case. I cannot imagine a trial that would have started without this basic evidence of what happened in Moscow.” (Dkt. 446 Court debate on the summary judgment of November 30, 2015)

Such a dangerous turn of the plot did not suit the US Government and apparently frightened Browder. Immediately after they reviewed the arguments of the US lawyers for the defense of the Russian side, and the court refused to release the US Government from proving Browder’s story, the latter, on the eve of a continued deposition appointed by the court, after which the jury trial was to begin, using the fact of communication several years before the trial with one of Prevezon’s lawyers, filed a lawsuit about the disqualification of Prevezon’s lawyers – Baker & Hostetler. It disrupted the proceedings for almost a year. After lengthy court hearings at the appeal stage in December 2016, the Court decided to remove Baker Hostetler from the case and instructed Prevezon to hire new lawyers. (Dkt. 541). In May 2017, the US Government dropped the complaint, having concluded a relevant agreement with the Defendants, approved by the Court (Dkt. 716 of May 15, 2017).

The US vs. Prevezon ended with the settlement agreement with the complete withdrawal by the US Government of the accusation according to Browder’s story, and admitting the fact that none of the Defendants, including their Russian beneficiaries, had nothing to do with the events described in the complaint and in the Magnitsky Act. In exchange for the withdrawal and the complete release of assets around the world, Prevezon paid $ 6 million in overall costs, which, as expressly stated in the agreement, does not constitute confiscation or penalty (Dkt. 716, of May 15, 2017, as amended in Dkt. 762 of March 8, 2018).

At this time, this turn did not suit Browder, and then, as Judge Pauley said, “before the ink dried on the settlement agreement approved by the Court,” Browder continued his attacks on Prevezon’s lawyers, claiming more than $ 1 million as their costs of their removal, and after the US Government’s denial to sue Prevezon in exchange for partial compensation of their costs, launched an attack on Prevezon in the Netherlands on the same grounds. Judge William G. Pauley, in his decision of March 30, 2018, regarded this as coordinated tactics in order to undermine the settlement agreement achieved by Prevezon with the USA. (judgment of March 30, 2018, Dkt. 763)

By the same decision, Judge Pauley noted: “Despite their status as non-parties to the case, Hermitage and Browder in many ways darkened this litigation, but none of this was more important than their participation in the Russian Treasury fraud.” (Id.)

As the Court pointed out, lawyers at Prevezon stated in their objections that “Hermitage did not lose control over its portfolio companies, and that Browder “authorized allegedly inappropriate actions and was aware of the events that, according to the complaint, he was not aware of.” Moreover, Baker Hostetler stated that Browder recklessly repeated his false story of the government in order to “prevent his arrest for tax fraud in Russia.” In fact, “Browder and his proxies were involved in a number of cases of misreporting to commit fraud, distance themselves from it, and shift it on Russian authorities wanting Browder for another tax fraud committed by his companies.” During the oral debate on the partial summary judgment motion, Baker Hostetler doubled down as part of its strategy, claiming to the District Court: “and, Your Honor, it all boils down to the Government claiming there was an organization, an unnamed, mysterious organization that did all this, and the evidence indicates that Hermitage and Mr. Browder did all this. This is the essence of the dispute.” (objections to the total production of Dkt. 418 Transcript of the hearing of November 30, 2015, ECF 446, p. 36:20-24.) (Section 5 of the decision of March 30, 2018).

The judge did not consider these statements baseless, stating that “the fact that Baker Hostetler was ultimately disqualified does not mean that [these] statements did not have a plausible basis.” (judgment of March 30, 2018, Dkt. 763)

In the end, the Judge denied Browder and Hermitage recovery of the legal costs of disqualifying Prevezon lawyers, and admitted that the actions of Prevezon’s lawyers were in good faith, arguing that “collecting evidence from various parties, including Hermitage, and questioning Browder on issues that indicated the possibility that would later question the position of Hermitage and Browder that they were victims of fraud by the Russian government (Id.).

This decision ended, as Judge Pauley put it, a longstanding saga – US vs. Prevezon Group owned by a Russian citizen.

 

Confirmation

 

All documents you can find on https://pcl.uscourts.gov/pcl/index.jsf

 

  1. 1-13-C~1
  2. 1-13-cv-06326-TPG Doс 252 Order 10 марта 2015
  3. 113 – 2014-9-12 Memo of Law in Support of Motion to Quash
  4. 114-1 2014.09.14
  5. 114-2 2014.09.14
  6. 114-3 2014.09.14
  7. 114-4 2014.09.14
  8. 188_2014_12_10_OPPOSITION_TO_THE
  9. 281. File Stamped Copy of 5-13-15 Letter 2015.05.13
  10. 281_1_13_6326_File_Stamped_Copy
  11. 566_2017_02_27_second_deposition
  12. 716. STIPULATION AND ORDER
  13. 759. 20180202 OPINION & ORDER
  14. 763_2018_03_30_OPINION_ORDER

 

© Nataliya Veselnitskaya

 


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