Russia resumes racketeering lawsuit against US bank

[JURIST] The Basmany Court in Moscow resumed proceedings Monday in a lawsuit filed by the Russian Federal Customs Service [official website] against the Bank of New York Mellon (BNYMellon) [corporate case backgrounder] under the US Racketeer Influenced and Corrupt Organizations (RICO) [text] statute. In a novel use of US law in a foreign court, Russian government lawyers are seeking $22.5 billion in damages from the bank for allegedly laundering approximately $7.5 billion transferred out of the country [BBC report] by former bank vice president Lucy Edwards and her husband Peter Berlin in the late 1990s. Both Edwards and Berlin pleaded guilty [court transcript] to US charges for the fraudulent transfers, but bank lawyers argue [press release, PDF] that its alleged involvement in the transfers would not be covered by RICO, and that the law was never intended to be used by foreign courts. BNYMellon has also said it does not intend to pay any damages awarded should a judgment be rendered against it. AP has more.

In November 2005, BNYMellon agreed [press release, PDF; JURIST report] to pay $38 million in fines in order to avoid US prosecution related to the scandal. Under that agreement, the bank paid $26 million to the government and $12 million to fraud victims, also agreeing to adopt sweeping reforms to address reporting failures under the Bank Secrecy Act [statute text; administrative materials, PDF] and ensure compliance with anti-fraud and anti-money laundering safeguards.

 

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