Russia Wields RICO Law Against U.S. Bank

Racketeering Law Applied In Moscow Court In $22.5B Lawsuit Against Bank Of New York Mellon

(AP)  Russian authorities are hoping to make legal history by applying an American racketeering law in a Moscow court as they seek to recover billions of dollars in damages from the Bank of New York Mellon.

Hearings resume Monday in the Russian Federal Customs Service's $22.5 billion lawsuit against the bank, which was at the center of a major money-laundering scandal in the late 1990s.

The lawsuit couldn't come at a more sensitive time, as U.S. banks are facing substantial writedowns following the subprime mortgage crisis.

In a highly unusual move, Russia has brought the case under a famous U.S. law used to fight organized crime, and both sides have drawn on the expert opinion of some of America's best-known legal minds in preparing their case.

The Russians have brought in Harvard law professor Alan Dershowitz and Robert Blakey, one of the authors of the 1970 statute on racketeer-influenced and corrupt organizations, or RICO. Bank of New York Mellon lawyers are fielding Richard Thornburgh, a former U.S. attorney general and Pennsylvania governor.

The RICO statue has never been successfully ruled on in a foreign court, according to lawyers. If the Moscow court agrees to apply the U.S. law, some lawyers predict it would open the floodgates for a slew of similar claims.

"Corporations would be buried under RICO claims in Russian courts in the next six months," said Ivan Marisin of Clifford Chance, the bank's lead counsel.

Others are less convinced it would set a precedent, given the unique nature of the suit.

In one of the world's best-known banking scandals, Lucy Edwards, a Russian emigre and a vice president at Bank of New York, and her husband Peter Berlin, were accused of illegally moving $7.5 billion of Russian money into accounts at the bank, before sending the money to accounts worldwide.

The pair pleaded guilty to conspiracy to launder money. They were fined, put under house arrest for six months and given suspended sentences.

The Russian authorities are claiming lost tax revenues on those transfers.

Bank of New York, which later merged with Mellon, was never charged with money laundering activities. It paid a non-prosecution fee of $14 million to U.S. federal prosecutors in 2005.

But two years later, American litigation lawyers - working for a 29 percent contingency fee - filed the Russian claim, based on the RICO provision that they can claim treble the amount of estimated damages.

Bank of New York's lawyers argue that RICO can only be applied when there is proof of criminal activity. In this case, they argue, the bank was not charged with a crime, and Edwards and her husband admitted only to conspiracy to launder money.

But Steven Marks of the Podhurst Orseck law firm, one of the U.S. lawyers for the Russian side, claims that the 2005 settlement was an admission of guilt and that the civil RICO law requires a lower burden of proof.

Russian efforts to reach a settlement have been rebuffed, the plaintiffs say. Marisin, the lawyer for Bank of New York, told a hearing in early July that the plaintiffs approached the bank before the case was filed, asking for a much lower amount compared to the damages currently being sought.

Analysts and legal experts are divided on the merits of the case.

Maxim Kulkov, a Russian lawyer not acting for either party, says the Russian side's arguments are "pretty convincing." Others insist the Russian case is weak and was being brought in Moscow because Russian courts often rule in favor of the government.

In any case, Bank of New York says it does not intend to pay out in the event of an adverse ruling, and has not set aside a provision for the claim.

Ken Thomas, an independent economist retained by the Russian side, warned in a recent letter to U.S. Federal Reserve Chairman Ben Bernanke that an adverse ruling could damage the bank's financial standing and pose a serious systemic risk to U.S. financial markets.

[obama441]

This is HILARILOUS! Between the Russkies and the Mexicans, we''''''''re gonna have nothing left (but a bunch of ransacked empty houses!)Posted by ApprxAm ..he,he yep you got that right sucker!! and over two million muslims already living in the US...

[dittohead9]

After reading the comments posted I do have a few questions that I would kindly appreciate to be answered. 1. How exactly is, so called, big business corrupt? 2. How are banks corrupt? 3. Specific examples of U.S. Federal Government corruption. 4. Since when is a country using it''s military to solve a problem after diplomacy has failed wrong? 5. Do you know how a democracy and republic work, and as implimented by the U.S Constitution? 6. Do you know the benefits of capitalism vs Marxist thought? 7. How exactly is a bank supposed to know that money is "dirty"? 8. Have you ever considered the fact that nearly every government in the history of man has done things that it''s denizens don''t know about? 9. If the U.S. of A is so corrupt ,as some of you say, with little concern for it''s citizens welfare; why dont you move else where such as France, Germany, Russia, or China. 9a. Is it because you cant live without the benefits of living in America?

[whitemale08]

...while you at it, set charges against Darth Cheney and George Wookie. We need regime change over here and fast.

[rbburnerjr]

Watch Bush''s cronies run and hide now.

[impeach__w]

Why can''t RICO be used on the Bush administration. We have a Crime! Many of them, which were not concocted by only one senior official.

[apprxam]

I hope there will still be Chilis around when the AMerican economy falls aparts and the Chinese, Russians, Volvo and the Mexican Resorts takes over our failing, lying banks. Argentina is having a f*ckin'' field day laughing at us right now. We should be ashamed ourselves in this country. For nearly seven years we''ve been killing Iraqis and chasing ***, distracted by the RePugnaCons and Phil ''phuckin'' Gramm and his friends has been robbing us blind. [Dems ain''t sh*t either. We are begining to learn that NAFTA was just B.Clinton''s & the other Third-Wayers/DLC way of paying off rich people debts. It''s time that the people take over GM & Ford plants, implement usuary laws, freak the courts and their bullsh*t decisions favoring rich companies, free rich peoples'' from our money and property]

[apprxam]

This is HILARILOUS! Between the Russkies and the Mexicans, we''''re gonna have nothing left (but a bunch of ransacked empty houses!)

Thank you republicans and democrats, you''''re the greatest!

Posted by tvtoy1000

I swear that this would be the funniest thing I''ve ever heard if only it wasn''t so da*n scary!

Due to International Resources, international Law WILL Cease Criminals free Travel thruout the Earth! And then Islamic Law WILL be applied to these Criminal Factions, which will enable the police Authority''s to Administer Imediate Punishment, and then call the Coriner to retrieve the spent carcus. Just because Earhly resources are DEMANDING a limited expence be used to house people that are REPEAT Offender''s & Wicked,... and do not care for others God given rights!

[apprxam]

On another blog [far, far away] I''ve heard it said that after Iraq & Iran, that Russia will be the last oil rich country to be under the thumb of either the U.S. or China. That their was a concerted effort to weaken Russia during the 90''s so that their oil could be "democratized", too. At first I didn''t believe it, but this guy, Cheney, is capable of anything as long as he and his weak friends in D.C. & Texas don''t have to get their hands dirty. These men are greedy, lying cowards.

[patriot12436]

sharncedar
Do not deceive yourself we have as much corruption as any other country.

[patriot12436]

apprxam
I agree, i hope this is only the beginning to start cleaning house and will continue to the highest levels.

[apprxam]

The Chief of BP flees Russin jurisdiction; RICO suits filed against an American bank, military activity in Cuba for the first time in about 16 years. The nationalization of selected foreign companies can''t too far behind. The fact that no one is going to do a d*mn thing about it should strike Bush & Crime Friends as ironic. Maybe? The ''Soul-of-Putin'' is rising to the surface, and after we gave them the moral authority to crush the Chechnian Rebels from breaking away. Who''d thought that placing missiles at their doorstep; egging on the Ukranians; siding with the Georgian government over Ossettia would back-fire?

What type of policy papers are this administration reading? AEI? Heritage Foudation? The Krystols. Yeah... to the spreading of democracy. Next stop, Canada.

[edintex]

ole Edintex blaming the lawyers. Some of these guys will never, ever, metamorph from their cocoons.
Posted by BajaJohn1 at 05:38 PM : Jul 27, 2008

Thats "GOOD OLE EDINTEX" to you Baja!

[apprxam]

Send Gramm, Kissinger, Ollie North and the other a-holes to Iraq first, then to the Hague to join Charles Taylor and the jerks in Zimbabewe & the Sudan.

Then, if he doesn''t have his 20th heart attack by Jan 10, 2009, Prick Cheney to Afghanistan to look for Bin Laden on the front line with the USMC.

[apprxam]

PAtriot, the only answer to this be the wholesale extradition of anyone: (1)charged with money laundering, (2)any bank manager not naming names and dates and orders from corp.,(3)10% of all bank executives and 100% of investment bankers above the rank of assist VP, (4)All CEO''s, no matter the industry who''s made a lifetime total of $10 million since 1992, (4) Any CEO in any financial institute, and I mean any!!! (5)all white-collar criminals associated with financial institution with internation connections [BNY,CitiGrp,JPMCHASE] (6) All Ivy League, top tier or 2/3 tier dept heads, chairs, emirati, Prof, Assoc Prof and Deans of Business schools and economic, free-market, think tankers since 1980.

And that Texas as*hole, Phil ''Ph*ckin'' Gramm.

Enough is enough, already. The CEO Ninties are finally coming to an end.

[patriot12436]

credibility2
RICO applies to organized crime, if these bankers aren''t organized i don''t know who is.

[patriot12436]

eddom949
Why should tax payers bail out these criminals. They pay their ceos millions every year and they now screwed the soviets. Let then soviets win againstthem in court and collect from them.

[Michael Arnold]

This is HILARILOUS! Between the Russkies and the Mexicans, we''re gonna have nothing left (but a bunch of ransacked empty houses!)

Thank you republicans and democrats, you''re the greatest!

[eddom949]

Everybody chip in 90 bucks! All 250 million of us! ;)

[apprxam]

Nixon violated Bretton-Woods in 1972, denying France and other access to their gold reserves, defaulting on debts the U.S. owed. During the 90''s, BushI/Clinton insisted that Russia continue economic reform, even though it was killing Russia''s culture, starving Russian people and facilitated the cleptocratic period in which the Oligarch 7/8 looted the nation government.

Also, the Bank of New York, which really wasn''t a bank, hid money from the CIS governments, probably with ex-KGBers in the U.S.

Now if only the U.S. Justice Dept could follow suit, or are they still controlled GHW Bush.