After paying $14 million three years ago to settle criminal allegations of money laundering by a former Russian employee, the Bank of New York is now being sued by Russian officials, represented by legendary attorney Alan Dershowitz, for $22.5 billion.
Believing the bank got away with a “slap on the wrist” from the U.S., Russian officials are seeking to make the newly merged corporation pay up by invoking the RICO Act, and shareholders are already spooked about the potential outcome.
Bloomberg: Bank of New York Corp. paid $14 million three years ago to settle U.S. criminal allegations that an employee conspired to illicitly transfer money out of Russia. Now, officials in Moscow want their cut — $22.5 billion in damages for alleged money-laundering.
In a case instigated by a Florida attorney who made his name filing personal-injury lawsuits against airlines, Russia is going after the company, now called Bank of New York Mellon Corp., using a civil variant of the U.S. anti-racketeering law conceived to put mobsters behind bars. It’s the first time a government other than the U.S. has tried to use the Racketeer Influenced and Corrupt organisations Act, better known as RICO.
The legal fight unfolding in the Russian capital is more than a courtroom oddity featuring testimony for the plaintiff by Harvard law professor Alan Dershowitz and G. Robert Blakey, the principal author of the RICO statute. The case is spooking shareholders when Chief Executive Officer Robert Kelly hoped to reap the benefits of last year’s merger of Bank of New York and Mellon Financial Corp. The deal created the world’s biggest custody bank, safeguarding $23 trillion for investors.
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