Fortune Analyzes Bank of New York RICO Case

For the last couple months, we've been tracking the strange suit filed by the Russian Federal Customs Service against the Bank of New York Mellon. The Russian government, represented by Miami plaintiffs lawyer Steven Marks, sued the bank in a Russian court for its involvement in illicit wire transfers of $7.5 billion. The Russians--in a weird cross-border reliance on U.S. law--are demanding $22.5 billion under the Racketeer Influenced and Corrupt Organization Act.

Earlier this summer, Marks and his team of experts told a Russian court why the government should be permitted to sue under RICO. Next month Bank of New York's team--which is led by Boies, Schiller & Flexner partners Jonathan Schiller and Damien Marshall--will get its chance to argue why the Moscow court does not have jurisdiction over such a case.

In the current issue of Fortune, writer Roger Parloff sidesteps the RICO debate to highlight what may be a fundamental flaw in the Russian government's case. Parloff reports that Marks' case depends significantly on a joint press release that the U.S. Attorney's offices in Brooklyn and Manhattan issued when the Bank of New York signed a non-prosecution agreement for its role in the illicit wire transfers. In that release, the Justice Department wrote that the bank had "admitted its criminal conduct." But it turns out that BONY made the admission in connection with another investigation, this one involving fraudulent loan applications at one of the bank's branches. Last month, both U.S. Attorney's offices amended the joint press release to clarify that the statement of wrongdoing referred only to the loan application case.

Parloff asked whether that amendment was a major setback to Marks's RICO case for the Russian government. But Marks, in an e-mail statement to Parloff, insisted that it wasn't. "It is absolutely amazing that Justice would amend the release some three years later during pending civil litigation to potentially help the wrongdoer," he wrote. "This should be troubling to all of us, that Justice is apparently subject to such influence and that the bank has so much power."

Marks added that since BONY took "responsibility" for the actions described in the non-prosecution agreement, it has essentially admitted criminal wrongdoing. Parloff asked Marks why responsibility automatically equals criminal guilt. "Please tell me that you are kidding," Marks responded. "This was a criminal investigation, not a civil one, so what other responsibility could the U.S. Justice Department and law enforcement attorneys who prosecute criminals possibly mean?"

Source : Am Law