The ruling by the US Court of Appeals for the Second Circuit instructed a court in New York where the case is being heard to dismiss lawyer John Moscow and the law firm BakerHostetler from representing Prevezon, a Cyprus-based company allegedly tied to a $230 million tax fraud scheme.
The law firm was originally hired in 2008 to provide information to Hermitage Capital, the Guernsey-based investment fund and asset management firm whose staff member, Sergei Magnitsky, uncovered the fraud in 2007.
Magnitsky was arrested in Russia in 2008 and died in a prison cell in 2009 after testifying that Russian interior ministry officials were involved in the massive theft of state funds.
In 2013, BakerHostetler switched sides, choosing instead to represent Prevezon, which is accused of laundering a portion of the tax fraud money into real estate in Manhattan.
The court found BakerHostetler breached its duty of loyalty and confidentiality by switching sides of the case.
Hermitage hailed the decision, saying in a statement on its Law and Order in Russia blog that it was a “precedent-setting decision” and it “upheld the rights of crime victims in seeing that their lawyers do not switch sides to represent crime perpetrators.”
In 2012, the United States Congress passed the so-called Magnitsky Act, is aimed at sanctioning individuals tied to his death.
