Russian Gas Executive Accused by U.S. of Tax Crimes

·3 min read

(Bloomberg) -- Novatek PJSC Deputy Chief Executive Officer Mark Gyetvay, whose arrest on U.S. tax charges hit the Russian gas producer’s share price, was released from custody Friday after agreeing to post an $80 million bail bond.

Gyetvay, 64, will be held under house arrest with GPS monitoring, and must surrender his passports, U.S. Magistrate Judge Douglas Frazier ruled at a brief hearing in federal court in Fort Myers, Florida.

After his arrest, the executive pleaded not guilty on Thursday to an indictment charging him with a decadelong tax evasion scheme. Prosecutors said he failed to report more than $40 million in income to the Internal Revenue Service.

Gyetvay has been a senior executive at Novatek for the last 18 years, where he has been instrumental in turning it into Russia’s largest liquefied natural gas producer. One of the most prominent American executives in the country, Gyetvay received Russian citizenship in 2019.

The Kremlin said it’s following the case because Gyetvay holds a Russian passport in addition to his U.S. citizenship. Novatek said the situation “is not affecting and will not affect the company’s operations.”

“We of course are interested in his fate,” Kremlin spokesman Dmitry Peskov said Friday. “On the other hand, he is also a U.S. citizen and as such, bears some tax obligations and we can’t intervene in these processes.”

Novatek’s share price plunged the most in 16 months, even with global energy prices near seasonal highs. Later in the day it narrowed losses to close down 1.5% in Moscow. The share decline is likely to be temporary, Moscow-based analysts said.

“He has played an important role in the company’s strategic planning and he has been pivotal in establishing the excellent relations the company has with its shareholder base,” analysts at VTB Capital said in a note.

At the hearing on Friday, the judge said Morgan Stanley would abide by an order to restrict accounts that Gyetvay held at the bank. His attorney, Matthew Mueller, said he needed more time to prepare the bail bond, noting his small law firm doesn’t normally handle such large sums through its escrow account.

Gyetvay was escorted into the hearing in handcuffs, wearing a dark polo shirt and gym shorts. After the hearing, court security officers removed his handcuffs.

Tax-Evasion Charges

Gyetvay was charged with wire fraud, tax evasion, failure to file reports of foreign bank and financial accounts, or FBARs, and other tax charges. Prosecutors said he took steps to hide his control of secret Swiss accounts. Gyetvay is also accused of submitting a false filing through a streamlined disclosure program that said his previous failure to file tax returns and FBARs was not willful.

Apart from Russian and U.S. citizenship, Gyetvay also holds an Italian passport, has about $85 million in stock in a domestic financial account and $4.4 million in other accounts, and owns valuable homes in Naples, Florida, according to the U.S.

“He has the resources to flee the United States and live lavishly for the rest of his life,” prosecutors said in a court filing on Thursday.

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

(Updates with details of court hearing)

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