A federal appeals court this month disqualified the BakerHostetler law firm and one of its partners from representing a firm linked to the tax fraud Russian lawyer Sergei Magnitsky exposed before he died in a Russian prison.
The U.S. Second Circuit Court of Appeals instructed a district court in New York to disqualify partner John Moscow and BakerHostetler from representing Cyprus-based Prevezon Holdings.
BakerHostetler first represented Hermitage Capital in 2008. A fund managed by Hermitage, which is controlled by London-based William Browder, made investments into Russia.
Magnitsky uncovered a $230 million tax fraud against the fund in 2007. He alleged involvement by Russian officials and mobsters.
Magnitsky was arrested in 2008 and died in a Russian prison in 2009. His family and Browder said he was denied medical attention after becoming sick. The Russian government said he died of natural causes.
In 2013, BakerHostetler started working for Prevezon.
The company is linked to the DOJ’s 2013 civil forfeiture case against assets allegedly derived from the fraud against the Hermitage fund. Included in the civil forfeiture action is Manhattan real estate owned by Prevezon worth about $2 million.
The second circuit found that BakerHostetler breached its duty of loyalty and confidentiality by switching sides in the case.
The U.S. adopted the Magnitsky Act in 2012. It imposes sanctions on those responsible for the 36-year-old lawyer’s detention, abuse, or death. It also reaches those who concealed his mistreatment or were involved in or benefited from the criminal conspiracy he uncovered.
Browder isn’t a party to the DOJ’s civil forfeiture action. But he filed a motion asking the federal court to disquality BakerHostetler and Moscow from representing Prevezon because of their conflict.
Richard L. Cassin is the publisher and editor of the FCPA Blog.