U.S. Says Not So Fast in Tax-Fraud Trial of Novatek’s Gyetvay

(Bloomberg) -- U.S. prosecutors who said last week they have an “exceedingly strong” tax-fraud case against a top American executive at Russian gas producer Novatek PJSC now want to delay his trial to gather more evidence from overseas.

The request to push back Mark Gyetvay’s Nov. 1 trial date by at least six months was filed Wednesday with a federal judge in Florida. Gyetvay, Novatek’s deputy chief executive officer, was accused in a Sept. 22 indictment of failing to pay taxes on $40 million in income and hiding $93 million in Swiss bank accounts from the Internal Revenue Service.

Under the Speedy Trial Act, U.S. defendants are entitled to a trial within 70 days of their indictment. Judges often are willing to push back trials in complex white-collar cases, if both sides agree. Prosecutors in the Gyetvay case asked for more time even though the gas executive, who pleaded not guilty and denies wrongdoing, opposes the request.  

“We are going to do everything we can do to ensure Mr. Gyetvay’s constitutional rights to have a trial occur within 70 days of the indictment,” his attorney, Kevin Downing, said in an interview.

In their filing, prosecutors said courts routinely push back trials when other countries haven’t acted on requests for evidence. They said Russia and Cyprus provided evidence, while the U.K. and Switzerland have not. A “court challenge has been leveled in Switzerland” that could take “several months if not longer” to resolve, according to the filing. 

Last week, prosecutors initially asked a judge to detain Gyetvay without bail, saying he could flee his southwest Florida home, that he holds passports from the U.S., Russia and Italy, and “the evidence against him is exceedingly strong.” Gyetvay was released on an $80 million bond, with GPS monitoring and house arrest. He also surrendered his passports.

At a hearing Thursday, a judge relaxed his bail terms, saying the defendant no longer had to be held under house arrest. He must remain under GPS monitoring and a curfew at night. 

Last week, Gyetvay took to Twitter to say he’ll fight the charges.

Gyetvay was one of more than 30,000 Americans who sought to avoid stiff tax penalties by declaring they had innocent reasons for failing to disclose offshore holdings. Under the so-called streamlined program, U.S. residents paid penalties of 5% of their undisclosed offshore assets. But they got no guarantees they wouldn’t be prosecuted.

Another 54,000 Americans took a more arduous route in voluntarily disclosing their offshore accounts to the IRS, including their dealings with bankers and advisers. They faced penalties of as much as 27.5% of their assets, as well more than $8 billion in back taxes and other penalties. But the government agreed to never prosecute them over the disclosures.

Prosecutors said in court documents last week that Gyetvay filed a false voluntary disclosure “under a program for which he did not qualify, in which he lied about the reason for his failure to comply with his U.S. tax obligations.” 

In an interview, Downing said: “All of the financial information included on the tax returns filed in the voluntary disclosure is true and correct.” 

The case is U.S. v. Gyetvay, 21-cr-83, Middle District of Florida (Fort Myers).

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