Six months after settling a civil prosecution that touched Trump business associates and intersected with the death of a whistleblower who uncovered massive tax fraud in Russia, that company’s lawyer is now suggesting it may abandon the deal.
Prevezon Holdings attorney Faith Gay told Southern District Court Judge William H. Pauley III that the company still wants the six-month old deal, in which it agreed to pay $5.9 million without admitting guilt days before the case—alleging the company had used Manhattan real estate to launder some of the profits from the $230 million Russian tax scheme—was headed to trial. But, Gay said, there may be a fundamental disagreement between the company and the feds about their agreement that could undo it—“and maybe if there wasn’t a meeting of the minds, there is not a contract.”
Despite settling its civil case, the Manhattan U.S. Attorney’s Office reportedly has an outstanding criminal investigation into Prevezon’s alleged involvement with money laundering.
Under the terms of the civil settlement reached in May 2017, Prevezon had to pay the U.S. government $5.9 million within 15 business days of the U.S. asking Dutch authorities to release their hold on a $3 million transfer to Prevezon from another company.
The U.S. government says it asked the Netherlands to release the hold on Oct. 10, meaning the Prevezon payment would have been due Oct. 31. But attorneys for the Russian company say the U.S. prosecutors also informed them that the money would not actually be released, because the Dutch are freezing it as part of their own, new, criminal investigation, also related to the company’s holdings and the Russian tax fraud.
Assistant U.S. Attorney Paul Monteleoni told the judge that the Dutch freeze was not altogether a surprise for Prevezon owner Denis Katsyv. Over the course of negotiations starting back in 2015, the two sides had discussed “specifically what would happen if the Dutch government didn’t pay,” Monteleoni said. But the discussions “petered out” at that time, and prosecutors eventually stripped out failsafes against such a scenario—including one that would have allowed Prevezon to “rip up the agreement and proceed to trial.”
Gay, the current Prevezon lawyer, said those negotiations were largely conducted with lawyers for the company who were later dismissed by the court for conflicts of interest since they’d previously worked for the businessman, Bill Browder, a longtime bogeyman for Russian authorities who’d made millions in Russia before running afoul of the Putin regime and leaving the country. Afterward, his Russian lawyer Sergei Magnitsky uncovered a alleged $230 million tax fraud in the country, was arrested by Russian authorities, and died in a Russian jail under mysterious circumstances.
“It appears to us the government knew of this plan of the Dutch while negotiations were taking place,” Gay said. “My client has nothing to pay with! Everything else is restrained.”
In court filings, Prevezon’s lawyers cried foul over the timing of the Dutch investigation, saying it was tied to a complaint filed against Prevezon in the Netherlands by Browder the day after the settlement in the New York case was announced.
Browder has championed the Magnitsky Act, a 2012 law that sanctioned Russian human rights violators by limiting their access to the U.S. banking system. Other countries have followed suit, and the sanctions—which have harmed oligarchs closely tied to President Vladimir Putin, who’s aggressively pushed to undo them as—made Browder a prime target for acolytes of the Russian regime, who allege widespread collusion between Browder and prosecutors, and claim that he was the real financial criminal.
The funds frozen in the Netherlands belong to AFI Europe, a part of billionaire investor Lev Leviev’s Africa Israel Investments group. The Soviet-born diamond and real estate tycoon was who sold Jared Kushner, President Trump’s son-in-law and senior adviser, floors in the old New York Times building in 2015. This transaction is reportedly being reviewed by special counsel Robert Mueller because of Kushner’s swift and profitable refinancing of the project earlier this year.
Prevezon bought a 30 percent stake in four Dutch AFI companies in 2008. At the time, the company was owned on paper by a Russian student, who sold a 100 percent stake in Prevezon to Denis Katsyv later that year for just $50,000, according to prosecutors.
In 2014, the U.S. government asked the Netherlands to freeze $3 million that AFI Europe was returning to Prevezon. Prosecutors say interest from the AFI Europe investment mixed with laundered money to buy property in Manhattan developed by a sister company of AFI Europe.
Dutch prosecutors have been conducting a criminal investigation into Prevezon’s alleged involvement in money laundering since Oct. 10, according to the Dutch financial newspaper Financieel Dagblad. (Prevezon funds are also currently frozen in Switzerland.)
Prevezon’s payment of the $5.9 million settlement would trigger the U.S. release of another $10 million in its funds and assets, currently frozen by the government, according to the settlement.
The Manhattan civil case was settled suddenly, days before it was scheduled to go to trial in May 2017. The settlement prompted renewed speculation months later, after Nataliya Veselnitskaya, a Russian attorney associated with the case, was revealed to have met with Donald Trump Jr., Jared Kushner, and Paul Manafort in Trump Tower that June. Veselnitskaya says that she used that meeting—arranged by publicist Rob Goldstone, who promised that she would bring the Trump campaign dirt on Hillary Clinton—to discuss Russia’s harsh laws limiting international adoptions that were passed as a form of payback for the Magnitsky Act sanctions.
Veselnitskaya had been denied a U.S. visa for previous litigation, but was able to travel here under a limited exception from the Department of Justice known as “immigration parole.” That expired in early 2016 and was not renewed, although she was able to briefly travel here on a visa in the summer of 2016. Veselnitskaya and her client, Prevezon owner Denis Katsyv, were both denied immigration parole to attend Thursday’s hearing.
She was allowed to phone in, but a former prosecutor told The Daily Beast that her presence wouldn’t have made a difference.
“The reality is, when you are investigated by multiple entities, sometimes you are getting attacked on multiple fronts,” Renato Mariotti, a former assistant U.S. attorney in Illinois’ Northern District, told The Daily Beast. “Those are some of the perils of being the subject of an investigation into financial misconduct.”
And Gay’s hints at getting the settlement tossed have little hope unless “they have more than innuendo,” Mariotti added.
“Ultimately, the United States government is not responsible for what the Dutch are doing,” he said.
—with additional reporting by Nadette de Visser