All this leads to a second Russian investigation involving three Browder shell companies.

Browder told the Senate committee that Magnitsky “went out, investigated, and came back with an astounding conclusion. . . that the purpose of stealing our companies was to try to steal our assets, which they didn’t succeed in doing. However, they did succeed in stealing $230 million in taxes that we paid to the Russian government from the Russian government.”

The companies were re-registered in the names of straw men and used in fake lawsuits that demanded damages for alleged contract violations. Once the damages were paid, the companies filed for tax refunds that came to $230 million. Browder says that the companies’ documents taken when his firm and Firestone Duncan were raided were to enable the re-registration. He said that he received none of the funds.

Moscow lawyer Andrey Pavlov in an interview in New York, told 100Reporters that he assisted in obtaining court orders based on the fake lawsuits claiming liabilities for the Hermitage companies that resulted in the $230 million tax refund fraud.

However, Pavlov contends that Browder knew the purpose of the raids on his company and on Firestone Duncan: authorities were looking for evidence to support Russian charges of tax evasion and illegal purchase of shares of Gazprom by his and the Ziffs’ companies. He disputes Browder’s contention that the tax investigators who did the raid were responsible for the Treasury scam.

Pavlov said the tax refund fraud he participated in was common in Russia at the time: firms agreed to settle claims from fake shell companies about bogus contract violations. The companies would then file amended tax returns to deduct the settlements, recouping money as tax refunds.

Pavlov said he was approached by Viktor Markelov, a convicted felon, who wanted to hire him. Markelov wanted Pavlov to obtain a court order based on an invented liability for the Hermitage companies, which would then lead to a claim for a tax refund. Pavlov said the refund application would require detailed information from the companies’ books for the year, which he said pointed to inside involvement. However, Pavlov said he was never told the identity of the client who would benefit from the refund scheme.

Pavlov was questioned by Russian authorities, and Markelov was convicted and sentenced to five years for the scam. At his trial, Markelov testified that one of the people he worked with to secure the fraudulent tax refund was Sergei Leonidovich. Magnitsky’s full name was Sergei Leonidovich Magnitsky.

“In October [2007] the whole Browder team knew about these claims and didn’t appeal the decision [allowing the take-over of his companies] which had been granted,” Pavlov said. “They did nothing till the money was paid out of the budget [the Russian Treasury].” This corresponds with Browder’s book, which states that he and Magnitsky found out about the theft of the companies in October 2007. Just the same, Browder didn’t immediately go to court to challenge the re-registration of the companies and the court’s decision.

However, it would appear that Browder knew, or should have known, about the theft months before. Financial documents for 2007-08 for HSBC Private Bank, which owned about 10 percent of Hermitage, state that as of July 27, 2007 Hermitage had set aside $7 million to cover legal expenses related to getting back Russian companies Hermitage owned. The document said others had taken control of the Hermitage companies to create fraudulent liabilities – and facilitate the fake lawsuit payouts. Deposed in the Prevezon case, Albert Dabbah, chief financial controller for HSBC, confirmed the document’s authenticity.