The US government was so pleased with its swift seizure of a Russian oligarch’s 255-foot yacht that the Majorca of Mediterranean Island posted it last month. The $ 90 million yacht owned by Viktor Vekselberg, called Tango, was the first big prize in the government’s campaign to close ties with billionaires.
The Tango is just a sliver of the $ 1 billion in yachts, plans and artwork – not to mention the cash in the United States – that the United States has recognized as belonging to Russia’s president, Vladimir V. Putin. Ukraine. US Magistrate Judge Zia M. Faruqui, who approved the seizure, called a pursuit of a new Justice Department team called task force kleptocapture.
The reckoning may take a while.
Seizing assets, whether a yacht or a bank account, is the easy part. To be able to permanently confiscate them, the government must be able to navigate a civil coffer process known as civil forfeiture, which requires that a judge acquire assets from a crime or through money laundering. Only then does the government own its own assets, and have the power to liquidate them.
All that can take years, especially if the former owner is inclined to fight forfeiture action in court.
Hoping to speed things up – and quickly get the proceeds from seized assets Treasury Department. Although it has not provided its plan, the administration officials said the new procedure would provide adequate due process and an “expedited” review by a federal court.
The White House proposal would change the way the government handles high-dollar asset seizures. Generally, administrative forfeiture is used in lower-profile cases, where the estimated value of assets is $ 500,000 or less. Such efforts are not really designed for luxury homes or large yachts, let alone the huge sums of money that wealthy Russians have.
“The idea of a yacht or jet valued in a new area of segregated and liquidated administratively is new territory,” said Franklin Monsour Jr., a former federal prosecutor and a white collar defense lawyer in Orrick, New York.
Mr. Monsour said that the administration and Congress may be banking on a number of Russian oligarchs who would not have a new, expedited process that would subject them to US jurisdiction.
“It will likely be challenging,” he said. “And the government knows that.”
Even if prosecutors are forced to proceed in some cases through the more typical civil forfeiture process, the litigation may soon be faster than normal. Monsour said.
There are indications of the pace of picking up. On Thursday, prosecutors said that Fiji was working with the government to seize a $ 300 million mega yacht belonging to Suleiman Kerimov, a Russian gold magnate. But a signature task force may be unwilling in some cases to expose its tradecraft in tracking down assets, including a 24-page affidavit presented to a federal judge in support of a seizure was severely redacted.
The more expensive the assets the government seizes, the more reason it has to speed up the forfeiture process: the luxury property must be properly maintained, or else their value will drop before they can be sold off. them.
“For yachts that are languishing in ports, there will be assets to spend,” said Daniel Tannebaum, an expert on financial crimes at the consulting firm Oliver Wyman and former Treasury official. “Some of these assets can sit for an extremely long time.”
But more than just oligarchs are their prized possessions. Elizabeth Rosenberg, Assistant Secretary of Defense for Terrorist Financing and Financial Crimes
Over the years, Russia and its oligarchs have become skilled at using a parade of shell companies to move the British Virgin Islands to Cyprus, the Cayman Islands to Jersey by investors as tax havens. The Task Force is looking for evidence of oligarchs taking steps to illegally evade sanctions by surreptitiously transferring money and property to an unsanctioned person or business entity.
Just last month, Manhattan filed criminal charges against Constantin Malofeyev for illegally transferring $ 10 million from a US bank to a business associate in Greece. Mr. Malofeyev, who recently described Russia’s invasion of Ukraine as a “holy war,” was the subject of a sanctions order in 2014 after Russia’s invasion of Crimea.
In October, federal agents raided a mansion belonging to the Russian billionaire Oleg Deripaska in Washington and seized a wide array of assets including a Diego Rivera painting. Authorities took action in response to suspicions Deripaska has been trying to evade sanctions since moving some of his money around, Bloomberg reported last month.
US authorities have pursued assets Deripaska, an industrialist with close ties to Mr. Putin, a sanction order in 2018 that was partly in response to Russia’s meddling in the 2016 presidential election. A year later, Mr. Deripaska sued the US government, claiming that the sanctions designation was based on a rumor and a rendered him “radioactive” business community. Six weeks ago, a federal appellate court rejected his claims.
The Russia-Ukraine War and the Global Economy
A far-reaching conflict. Russia’s invasion of Ukraine has had a ripple effect across the globe, adding to the stock market’s woes. The conflict has caused dizzying spikes in gas prices and product shortages, and is pushing Europe to reconsider its reliance on Russian energy sources.
More than 530 well-connected Russians on imposed sanctions since the Russian forces invaded Ukraine in February. Andrew Adams, the federal prosecutor directing the new Kleptocapture Task Force, said most of his team’s early work involved “unprecedented” sharing of information with those individuals including US financial firms, treasury officials and overseas law enforcement groups.
Even without an asset of possession, the task force can make it difficult for the owner to make it, said Mr. Adams, a veteran federal prosecutor in Manhattan who has focused on money laundering and asset forfeiture cases.
“In the past, I would consider getting a conviction,” Mr. Said Adams. “An oligarch’s yacht for an insurance company cancel policy coverage now.”
Although it’s possible for the government to seize assets as part of a criminal case, Adams said, the government was the route to take the most likely. Doing so would require the arrest and conviction of their owners – an even more daunting process than the civil process or the expedited administrative procedure that the White House is looking for.
But even the civil forfeiture process requires the government to show evidence of criminal conduct.
In Approaching the Seizure of the Tango, Judge Faruqui said the federal government had a probable cause. Vekselberg had bought the yacht – held a series of shell companies – with “illicit proceeds and laundered funds.” Permanent confiscation will require prosecutors to establish that. Vekselberg actually committed bank fraud, money laundering or some other crime.
Although the United States imposed sanctions on wealthy Russians soon after the invasion, global efforts to seize their assets have largely outstripped Europe and the Caribbean.
About $ 30 billion in assets traded to Russian oligarchs since February. A few weeks ago, British officials said they had frozen some $ 13 billion in assets tied to just one of them: Roman Abramovich. Mr. Abramovich, one of Russia’s wealthiest men and longtime owner of London’s Chelsea Football Club, has been under pressure from British authorities. He agreed to part with the team in March as officials moved to impose sanctions, and the club said on Friday it had accepted a $ 3 billion bid from buyers of a consortium. A sports team – will be placed in a frozen British bank account.
Mr. Abramovich, who manages offshore funds with dollars of US dollars and has an interest in several steel mills in the United States, has not been sanctioned by American officials, as part of an intermediary deal with Ukraine. Russia. Mr. Adams, the leader of the Kleptocapture task force, declined to discuss the matter.
But he did offer an explanation for why his team of Russian oligarchs seem to be focused on fewer assets than in the United States: The sanctions imposed following Treasury imposed Russia’s invasion of Crimea seven years ago.
“We have had sanctions in place since 2014,” Mr. Adams. “We haven’t had a friendly country to park your money in.”