Russian Firm Tied to Trump Tower Meeting Balks at Settlement PaymentBy
U.S. may file request with judge to enforce agreement terms
Prevezon represented by lawyer who met with Donald Trump Jr.
A Russian-controlled firm is balking at paying a $5.9 million settlement to the U.S. that let it avoid a trial which threatened to expose an intricate international money-laundering scheme.
Prevezon Holdings Ltd. says it agreed to pay the U.S. once the government of the Netherlands released 3 million euros ($3.5 million) belonging to it that were frozen. Since the money hasn’t been released, Prevezon says it’s not obligated to pay the settlement.
The payment dispute stems from a decade-long drama tied to a $230 million Russian tax fraud and reaches the highest political levels in Moscow and Washington. Prevezon is represented by Natalia Veselnitskaya, a lawyer who also sat down with President Donald Trump’s son during the 2016 election campaign, in a meeting that was sold as an opportunity for Trump’s campaign to get dirt from Russia on Hillary Clinton.
In May, Acting U.S. Attorney Joon Kim announced the $5.9 million settlement from Prevezon late on a Friday, just days before the trial was set to begin in Manhattan.
In a court filing on Monday, New York prosecutors said Prevezon hasn’t paid anything and may miss a Tuesday deadline to complete the transaction. The prosecutors are seeking a new hearing and may file a request to enforce the terms of the agreement.
Prevezon said on Tuesday in a letter to the judge that it doesn’t believe the deadline had been triggered because the funds in the Netherlands remain frozen. The company’s lawyers also asked the judge to direct the U.S. to provide permission for Veselnitskaya to enter the country to attend court.
In a civil lawsuit filed by Kim’s predecessor, Preet Bharara, the U.S. claimed a network of shell companies including Prevezon spirited the $230 million in stolen taxes out of Russia, with some of the money finding its way into New York real estate. The theft involved defrauding an American-led investment fund operating in Russia, Hermitage Capital, and contributed to a decade of frosty relations between the U.S. and Russia, in part because of subsequent sanctions imposed by the U.S.
Trump fired Bharara in March. But the issue continues to figure in the ongoing U.S. investigation of Russian meddling in the presidential election. Interpol has rejected Russia’s request to arrest Hermitage Capital founder Bill Browder, who has backed an investigation into the tangled web of shell companies. One of Browder’s lawyers, Sergei Magnitsky, complained to Russian authorities that Hermitage was a victim of a fraud and was later arrested. The 37-year-old died in a Russian prison in 2009, triggering a diplomatic standoff between Moscow and Washington.
Democrats on the House Judiciary Committee asked the Justice Department in July to explain the decision to settle the case. Seventeen House Democrats asked Attorney General Jeff Sessions in a letter whether the involvement of Veselnitskaya, whom they called a "Kremlin-connected attorney," may have helped prompt the deal, given her meeting with Trump Jr.
Under the terms of the settlement, the U.S. was to lift a freeze on Prevezon’s funds in the Netherlands, and the company was to pay the settlement within 15 days of that. The Netherlands unfroze the money at the U.S.’s request on Oct. 10, but the Netherlands immediately froze the funds again because of a separate money-laundering investigation being conducted by authorities in that country, according to the court filings.
“Prevezon has advised the government that, in light of the seizure, it may refuse to make the required payment as due, and has requested extra time for its owner to ‘consider his options,’” prosecutors said in a letter to the judge, adding that Prevezon may seek to void its payment obligation altogether.
In its response, Prevezon said the Netherlands started its investigation in response to a complaint from Browder. It added that “because of the importance of this matter and the unusual circumstances of this case,” if further court hearings are held, Veselnitskaya and Prevezon’s owner, Dennis Katsyv, be allowed to attend.
It’s not clear what options the U.S. has to enforce the terms of the settlement. Apartments that were bought with the Russian money have been sold, and about $10 million from the proceeds remains frozen in an escrow account in the U.S.
Bloomberg reported last month that despite the civil settlement, the money-laundering network that moved the funds is the subject of an ongoing U.S. criminal investigation.
A spokesman for Kim declined to comment.
The case is US v. Prevezon Holdings Ltd, CA No. 13-cv-06326, U.S. District Court for the Southern District of New York (Manhattan).
— With assistance by Billy House