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U.S. charges Russian businessman Tinkov with tax fraud, seeks extradition

Tinkoff Bank Board Chairman attends the St. Petersburg International Economic Forum

MOSCOW (Reuters) - Russian businessman Oleg Tinkov, founder of TCS Group <TCSq.L>, has been charged with filing false tax returns, the U.S. Department of Justice said, and could face a maximum of six years in prison if extradited to the United States.

TCS is the parent company of Tinkoff Bank, a pioneer of online banking technology with more than 10 million customers in Russia and the country's second-largest credit card issuer after the market leader Sberbank <SBER.MM>.

Tinkov allegedly concealed $1 billion in assets and incomes when renouncing his U.S. citizenship in 2013, the justice department said in a statement on Thursday.

It said he faces two counts of making false tax claims, both of which carry a maximum sentence of three years, and could also face a period of supervised release, restitution and monetary penalties.

A spokesman for Tinkov declined to comment. Tinkov did not immediately respond.


INDICTMENT ALLEGATIONS

The Justice Department indictment alleges that, following TCS' initial public offering (IPO) on the London Stock Exchange in October 2013, Tinkov "beneficially owned more than $1 billion worth of the bank's shares."

Tinkov, who became a naturalised U.S. citizen on Sept 10, 1996, the indictment said, renounced his U.S. citizenship shortly after the IPO without reporting the constructive sale of his worldwide assets to the U.S. Internal Revenue Service (IRS).

The Justice Department said its international affairs department was assisting with his extradition.


ECCENTRIC CHARACTER

In his book published two years ago Tinkov, now 52, said he decided to found the TCS Group in November 2005 during a visit to the British Virgin Islands, where he stayed with his friend and chairman of Virgin Group Richard Branson, on the Briton's privately-owned Necker Island.

Market players have always kept an eye on Tinkov, known for his eccentric behaviour and sometimes provocative public comments, often made via social networks, as he still owns a 40.4% stake in the group, with the remainder held mainly by large western funds.

"The indictment increases the risk that Oleg Tinkov will be forced to sell his TCS shares," BCS Global Markets said in a note.

At current market value, Tinkov's stake is worth $1.8 billion, according to Reuters calculations. By 0945 GMT, shares in TCS were down 9.9% in London.

Tinkov was arrested in London last week in connection with the indictment, but TCS said he was released on bail and was expected to remain in London while taking part in court hearings initiated by the IRS.

The court hearings do not affect the functioning of either TCS's board of directors or the management board of Tinkoff Bank, TCS said, because Tinkov is attending the proceedings in his capacity as a private individual.


(Reporting by Tom Balmforth and Alexander Marrow, additional reporting by Tatiana Voronova;Writing by Maria Kiselyova and Alexander Marrow;Editing by Kim Coghill/Katya Golubkova/Elaine Hardcastle)