Judge Anzhelika Morozova read out the verdict in a case that would soon be four years old. Once one of the main port workers in St. Petersburg and the region, Valery Izraylit guilty, but may be free.
The verdict was announced in the Smolninsky District Court on July 12, according to a Fontanka correspondent. Izraylit was found guilty and sentenced to three years in one episode and six years in the second. But the statute of limitations had expired on the first one, and on the second he had already served everything – Izrailit was detained at the end of 2016, he spent more than three years in a pre-trial detention center and was under house arrest before the verdict, this time was included in the verdict.
The prosecution asked for 9.5 years in prison. The businessman listened to the verdict with equanimity.
Israelite was tried for fraud, legalization and criminal currency fraud. The first two compositions were discontinued after the statute of limitations expired.
The claims concerned the purchase of the yacht “Victoria” and the sale of the authorized capital of the company “Ecology Kurgolovo” of Izrailit. The prosecution found that the businessman, through his affiliated Midwest Marketing Limited, registered in the British Virgin Islands, bought the yacht from himself. The sale of the business associated with the hunting grounds, according to the prosecutor, also damaged the country’s GDP. Lawyers for the defendant insisted that both transactions were not void. The yacht was needed to participate in a round-the-world trip in the footsteps of Magellan, which was organized by the Russian Geographical Society, which means that the flag on the ship should have been white-blue-red. The yacht, after being sold for $6 million, got into a storm and got up for a long repair, the deal was terminated, and the money was returned to Izraylit’s accounts. As for the hunting grounds, the deal, the defenders and the defendant himself assured, was also clean, but again it did not take place – it turned out that foreigners could not own land in the border region of the country. Izrailit collected about two million dollars from several of his accounts and returned everything to Midwest.
In the case file there was a special declaration, which was submitted by Izrailit to the tax office after the capital amnesty announced by the president. The law prohibits its use in criminal prosecution. […]
The main asset of Izrailit – Ust-Luga JSC – some time after the arrest of the defendant was transferred to another, no less powerful port operator, Ilya Traber.
The original of this material
© Fontanka.Ru07/05/2023, Photo: Fontanka.Ru
In St. Petersburg, the judicial debate in the case of Valery Izraylit has ended. The businessman told the court how he created one of the largest ports in Russia from a bankrupt enterprise, the names of Putin, Shoigu and Potanin poured in. Now it’s up to Judge Morozova, whom the prosecution asked to send the defendant to a colony for 9.5 years.
Short introduction: Izrailit served as the head of the board of directors of Ust-Luga Company JSC, he came to build the port in the late 90s. In the last word, the businessman told how, practically with his own money and the money of his partners, he was able to pull the enterprise out of bankruptcy, and when the president arrived in Ust-Luga after the launch of the first stage, the confidence of creditors increased, and the capacity of the port followed him. According to the defendant, the company was the first example of a public-private partnership in Russia, although in those years there was no such concept in principle. Today, Ust-Luga is the fourth largest port in terms of turnover. Izraylit lamented that he could have brought even more benefits to the country if not for the criminal prosecution.
Valery Izrailit was detained at the end of 2016 and until March 2020 he was in jail. The businessman is still under house arrest. The case has been in court since the fall of 2019. He was accused of fraud, legalization of money and illegal currency transactions in two episodes. The first two cases were terminated after the statute of limitations expired, although Izraylit himself insisted on his innocence and agreed to dismiss the case, as he himself said in court, in order to end “this farce”.
Special Declaration
Shortly before the initiation of the case, Izrailit, within the framework of the capital amnesty announced by the President of the Russian Federation after the events of 2014, filed a special tax declaration. The creators of the procedure legally guaranteed the submitter of the declaration that it could not be used as a pretext or evidence in criminal cases. Nevertheless, in the reports and other procedural documents, she was mentioned more than once. The issue was considered in court, and the prosecutor’s office promised not to mention the declaration – it kept its word. However, lawyer Burkovskaya began the debate by saying that the case on foreign exchange transactions, if the guarantees given to Izraylit by the state, in principle, should not have been initiated. How the data from the declaration should not have been obtained by the FSB investigators – the document, lawyer Pavlovsky added, contains a tax secret and cannot be claimed by any state body. In her remarks, the prosecutor noted that some parasitism on this topic was not a surprise for her, and added that the court had already considered the issue of the legality of initiating a case. The defenders parried – only now, in the debate, according to the Code of Criminal Procedure, they had the opportunity to say that the initiation is illegal – the judge decides.
Void transactions
The prosecution insists that the two disputed transactions were void, that is, Izraylit invented a pretext for transferring money abroad, which caused damage to the country’s GDP. In the first case, he bought a yacht from Midwest Marketing Limited (hereinafter referred to as “Midwest”) through an intermediary agent, the prosecutor insists that it was his own. After some time, the contract of sale was terminated and the money was returned to Izraylit in a slightly smaller amount. The prosecution claims that the yacht has belonged to the defendant since 2011, although it was listed on the balance sheet of Midwest. In the debate, lawyers pointed out that there was no evidence of this, that is, contracts, in the case.
As for the unambiguously existing contract, according to which Izraylit bought a yacht from Midwest, the deal was real, and the goal of the defendant was noble and educational. As a member of the Russian Geographical Society (RGS), he responded to the idea of repeating the path of Ferdinand Magellan’s first round-the-world trip. The navigator, as you know, did not survive, and only one ship, the Victoria, returned to the shores of Spain. Just such a name was worn by the yacht “Midwest”, which Izraylit, and he does not deny, used. For this, the lawyers noted, he entered into lease agreements, which were also presented to the court.
Travel “Victoria” as part of the expedition of the Russian Geographical Society was possible only under the Russian flag, which was the reason for her purchase. Under this Izrailit took out a loan, six million dollars went to the accounts of Midwest. But the yacht was not destined to acquire Russian “citizenship”. The ship got into a storm, was damaged and got up for a long repair. The parties terminated the purchase agreement, and the money was returned to Israelite. The loan, the defendant noted, was fully repaid, of course with interest, which only increased the same GDP. As proof of Izrailit’s intentions to send the Victoria around the world, the lawyers referred to various correspondence in which the process was discussed in detail and it was known that both the President of the Russian Geographical Society Shoigu and First Vice President Artur Chilingarov participated in the negotiations to some extent. The investigation regarded this episode as a currency transaction on forged documents on an especially large scale, and the prosecution asked for 9.5 years in prison for it. The statute of limitations expires in a few months.
The second transaction, which the prosecutor called void, concerned the purchase by Midwest of the authorized capital of the company Ecology-Kurgolovo LLC. Kurgolovo is a village near Ust-Luga, the company was registered in 2004, Izrailit bought it for a million rubles in 2009. As the lawyers of the defendant assured the court, in fact the asset consisted of land and dilapidated buildings. By the forces of Izraylit, the hunting economy turned from unprofitable into attractive. For example, a huge piece of timber was leased from the Leningrad Region for 49 years, and housing construction appeared on the territory, estimated by an insurance company at 500 thousand euros. The total assets of this LLC, lawyer Azarov assured, were 64 million rubles, or about 2 million euros. “Midwest” wanted to buy all this beauty and take Europeans to hunt in the wild Russian forests. In court, a subordinate of Izraylit, who was looking after the household, was interrogated. He said that Midwest representatives came to Kurgolovo, inspected the buildings, asked what was turned on where, and so on. The witness, the lawyers added, was glad that the deal did not go through, because otherwise he would have lost his job.
Before it turned out that foreigners could not buy this business, because Kurgolovo is located in the border zone of Russia, a deposit agreement was concluded, according to which 34 million rubles were transferred to Izraylit. The money, logically, had to be returned, although Izrailit managed to spend it on paying off a fine on one of the loans. Collected accounts in three banks. This episode was pulled on a large scale, the prosecution requested 4 years, but since the statute of limitations has expired, the case can be dropped.
The lawyers insisted that if these deals are feigned, then there must be some real ones behind them, but the accusation of the “real” plans of Izraylit did not disclose.
Victoria Ivanovna and patrons
The prosecution in the debate focused on the testimony of several witnesses – Izrailit’s niece Anna Prokhorova, who was responsible for finances in the defendant’s companies, and a certain secret witness under the pseudonym Viktoria Ivanovna – even the sex of this person was not reliably established in the process. Both were interrogated in court, but in the case of Prokhorova, the prosecution preferred to take into account only what she said to the investigators under the protocol. From her words, it appeared that Izraylit regularly, under the pretext of fictitious loans or other operations, asked his subordinates to transfer money from accounts to accounts. And there were a lot of expenses – an apartment in London (according to Izrailit – rented and with a mortgage encumbrance), an airplane (leasing), three yachts (all not owned), vineyards in Italy (the lawyers and the defendant did not say anything about them). It was also said that after the news of the criminal case, it was ordered to erase from computers all information about accounts, transfers, and so on. The prosecutor also mentioned wiretapping and correspondence, but they did not talk about the episodes imputed to Izraylit, which the lawyers repeatedly “travelled”, reducing to the idea that the prosecution is trying to create a certain image of Izraylit’s completely criminal business – and if he is all like that, then and two sane episodes can’t be legal.
Azarov’s lawyer told the court that none of the witnesses and not a single piece of paper said that Izraylit was not really going to carry out a deal on Ecology-Kurgolovo – except for a secret one, and Viktoria Ivanovna found out about the sale of the yacht and hunting facilities only in 2016 year. In addition, this witness turned out to be personally unfamiliar with the same Prokhorova, but for some reason deeply immersed in the affairs of Izraylit, she / he did not share the source of his knowledge with the court.
The defenders noted that in court Prokhorova said that she had testified under pressure, she was simply shown some seized documents, described what they said, and after that Anna agreed with what she saw. She said in court that she did not know anything about the hunting deal and that she could not confirm her testimony. According to the lawyer, law enforcement officials called her husband and visited her daughter, and she herself was strongly recommended to agree to the witness protection procedure. However, the prosecutor said in his remarks, he also gave advice to Izraylit – he offered to go abroad. Allegedly, drugs were found during the search.
Another witness, the lawyer said, even admitted in court that he had given false testimony during the preliminary investigation – during the searches, three cartridges were found in her casket. She, too, was advised to enter into a protection agreement.
The lawyers mentioned a search in the garage in the absence of the searched person, interrogation in the office of the deputy chief physician during a hypertensive crisis of the interrogated person, witnesses who were simultaneously in two places, and a lawyer named Pochuev, who defended both the accused and the witness at once.
And for textbooks
The prosecution believes that Midwest was under the control of Izrailit, which means that he carried out all the operations as if on his own. But a legal entity and an individual have different rights and obligations, lawyers shared their knowledge. As an example, lawyer Burkovskaya cited the case of Solomon v. Solomon, which is written about in legal textbooks – it was this precedent that laid the foundation for the idea that with the full identification of the company and its beneficiary, the liability of a limited liability company is not limited. “It’s as if Potanin took the Norilsk Nickel machine and moved it to his dacha. This is theft, ”lawyer Azarov gave an analogy. The property of the company is not equal to the property of its owner, lawyer Burkovskaya concluded and added that even if we assume that Izrailit controlled Midwest, then, based on the norms of the law, there was no ban on such transactions. Yes, and if you follow the logic of the prosecutor, then in the chain of legal entities associated with Midwest, Izrailit had only 50%; who the owners of the second half – the prosecution did not disclose. Again, if we talk about the pretense of transactions, then the second party to the contract must also have intent. “There is not a single evidence of intent on the part of a legal entity. Even the composition of the founders has not been officially established, and the directors have not been interrogated,” lawyer Pavlovsky added.
In addition, the defenders noted that Izrailit was charged with violating currency laws, while the currency control authorities had no claims against Izrailit. Again, he had legally opened accounts in foreign banks and, by law, nothing prevented him from transferring money abroad directly, without any “silly crimes.” “According to the logic of the author of the indictment, Izraylit realized a fantastically complex criminal scenario. First, he transferred money from abroad to Russia in order to take it and return it abroad in 2016. The authors of the accusation read bad detective stories in childhood, ”said Azarov’s lawyer.
The accusation did not take into account that all the money allegedly transferred illegally was returned by Izraylit voluntarily and long before the initiation of the case. He had no intent, and the case does not indicate who the criminal actions were directed against, what the damage is expressed for, for whom adverse consequences occurred and, in the end, who is the victim.
Izrailit himself called what was imputed to him “monstrous stupidity” and noted that he received income from dozens of foreign and domestic companies. “I was not the owner of General Motors, although I would have been glad, but I had their shares,” Izrailit dreamed. At the end of the debate, he remembered the principle of “Occam’s razor”: “One should not multiply things unnecessarily.”
In the last word, Izraylit said that he hoped to hear from the prosecutor an apology for the illegal initiation of a case, but instead, a “cannibalistic” request for 9.5 years in prison was made.
The defendant thanked the court for his patience and left for his cottage on Mednoye Lake driving a Lexus, accompanied by the same car – hardly the Federal Penitentiary Service, more likely guards. […]
