Ex-head of the port “Ust-Luga” Izrailit made the last word in court

The Smolninsky District Court of St. Petersburg heard the last word of the former Chairman of the Board of Directors of Ust-Luga Company JSC Valery Izrailit. The businessman is accused of particularly large-scale fraud (part 4 of article 159 of the Criminal Code of the Russian Federation), money laundering (part 4 of article 174.1 of the Criminal Code of the Russian Federation) and of conducting foreign exchange transactions using non-residents’ accounts (paragraph “a” of part 3 of Art. 193.1 of the Criminal Code of the Russian Federation). The trial on the merits with the presiding judge Anzhelika Morozova dragged on for four years – it has been ongoing since September 2019.

The prosecutor asked for Izrailit to be sentenced to 9.5 years in prison to be served in a penal colony of general regime. The defendants of the defendant asked the court to issue a verdict of not guilty, since, in their opinion, the criminal prosecution was initially illegal – Izraylit had no intent to commit a crime. Moreover, lawyers believe that the charge is political in nature.

On May 2, 2023, the court terminated the criminal prosecution against the businessman for fraud and money laundering due to the expiration of the statute of limitations for these episodes of crimes. Thus, by the end of the trial, Izrailit had two episodes left from the charges against him about the transfer of funds to the accounts of non-residents using forged documents (parts 2 and 3 of article 193.1 of the Criminal Code of the Russian Federation) in the amount of $2 million.

The first episode deals with the purchase of the Victoria yacht from Midwest Marketing Limited. The prosecution alleges that Izrailit has owned the yacht since 2011 and, accordingly, purchased it from himself in 2014. The second transaction, which the prosecution considers illegal, is related to the purchase of LLC Ecology-Kurgolovo – we are talking about a plot of land in the village of Kurgolovo near Ust-Luga.

Criminal cases on these episodes were initiated on October 25, 2017. In the debate of the parties, lawyer Victoria Burkovskaya said that during 2014, after the introduction of the first sanctions against Russia in connection with the annexation of Crimea, a decision was made to form a mechanism for the return of capital to Russia, which received called “capital amnesty”. According to her, it was a way to counteract the pressure of unfriendly states on the Russian economy and it was aimed at returning capital and protecting entrepreneurs from unreasonable and illegal criminal prosecution.

In June 2015 (that is, two years before the initiation of a criminal case), the law “On the Voluntary Declaration of Assets and Bank Accounts by Individuals” was adopted, according to which the fact of submitting a declaration and documents, as well as the information contained in the declaration and documents and (or) the information attached to the declaration cannot be used as a basis for initiating a criminal case and cannot be used as evidence in a criminal case, Burkovskaya noted.

In 2019, the same explanations were given by the Presidium of the Supreme Court – a declaration cannot be evidence of guilt. The guarantees provided by the capital amnesty law apply to “any other act provided for by the Criminal Code”, even if the crime is not subject to amnesty. The conflict between the Code of Criminal Procedure, the law on investigative activities and the law on the amnesty of capital should be resolved in favor of the latter, according to the clarifications of the Supreme Court.

The lawyer also pointed out that the FSB investigation, when deciding to initiate a case, relied both on the special declaration itself (obtained contrary to the absolute ban) and on information from it (after examining the special declaration, the FSB officers had no doubts that they had previously received information contained in a special declaration). “The overwhelming majority of the evidence presented by the prosecution contains information from a special declaration,” the lawyer said at the trial. At the same time, according to the laws adopted in Russia, data from special declarations in connection with sanctions should not be used to initiate criminal cases, she stressed.

Investigators estimated the damage from the actions of the entrepreneur at almost 4 billion rubles.

In the debate, Izraylit insisted that all his criminal prosecution was the result of civil and financial illiteracy. “If I entered into a contract for the sale of a yacht, then there were motives and the contract was expedient,” he noted.

Izrailit was detained in 2016 and was in a pre-trial detention center until 2020. During the course of the proceedings, he was transferred to house arrest. Over the four years of the process, 150 meetings were held and more than 250 people were interrogated, including the president of PJSC “Transneft» Nikolai Tokarev, ex-Deputy Minister of Transport and a member of the board of trustees of the Sailing Federation Viktor Olersky, a beekeeper, secret witnesses and other specialists.

In addition to the five examinations conducted in the case, as part of the judicial investigation, the court went to Ust-Luga to examine material evidence, namely pipes, which the defense measured with an ordinary ruler, and also, as noted in the Joint Press Service of the Courts of St. Petersburg, resolved the issue of walks for dogs and cats of Israelite.

Judge Morozova retired to the deliberation room to pass the verdict, which will be announced on July 12.