By Maria Tsvetkova and Steve Gutterman
MOSCOW (Reuters) - A Moscow court found the late investment fund lawyer Sergei Magnitsky guilty of tax evasion on Thursday in Russia's first posthumous trial, a verdict that will further undermine President Vladimir Putin's reputation in the West.
The court also convicted Magnitsky's former client William Browder, a Briton who has spearheaded an international campaign to expose corruption and punish Russian officials he blames for Magnitsky's death in a Moscow jail while awaiting trial in 2009.
Browder, tried in absentia, was sentenced to nine years in prison in the case which has shown the dangers faced by Russians who challenge the authorities under Putin and deepened U.S. and European concern over human rights and the rule of law.
"Today's verdict will go down in history as one of the most shameful moments for Russia since the days of Josef Stalin," Browder, who lives in Britain and is unlikely to be extradited to Russia, said in an emailed statement.
Magnitsky died after a year in jail during which he said he was mistreated and denied medical care in an effort to get him to confess to tax evasion and give evidence against Browder, the head of investment fund Hermitage Capital Management.
The Kremlin's own human rights council has said there was evidence suggesting Magnitsky, 37, was beaten to death. Yet Putin has dismissed allegations of torture or foul play and told the nation last year that he died of heart failure.
Nobody has been convicted for Magnitsky's death, and a judge threw out a case against a senior prison official who was the only person to face trial, after Putin signaled that Russian authorities should not be blamed.
After lobbying by Browder, the U.S. Congress passed the Magnitsky Act, which bars Russians believed to have been involved in his death or other severe human rights abuses from entering the United States, and freezes their assets there.
President Barack Obama signed the legislation last December, adding to strains that increased between the former Cold War adversaries after Putin returned to the Kremlin for a new six-year term in May 2012.
Putin, who accuses the United States of using human rights concerns as a pretext to meddle in Russia's affairs, swiftly retaliated by imposing similar measures on Americans and also barring U.S. couples from adopting Russian children.
"SHOW TRIAL"
Russian authorities closed the case against Magnitsky after his death but reopened it in 2011. His family said it was illegal to try a dead man without the consent of his relatives.
"This show trial confirms that Vladimir Putin is ready to sacrifice his international credibility to protect corrupt officials who murdered an innocent lawyer and stole $230 million from the Russian state," Hermitage Capital said in a statement.
Browder, whose fund was once the largest investor in Russian equity markets, says Magnitsky's arrest was engineered by the same police and tax officials he had implicated in the alleged theft through fraudulent tax refunds.
He and his supporters have documented what they say is evidence that officials involved in the case had vastly enriched themselves, with homes, cars and other property far out of reach of their state salaries.
The case "shows the lengths that Putin is ready to go to retaliate against anyone who exposes the stealing and corruption he presides over," Browder said, adding that the government had inflicted "malicious pain" on Magnitsky's grieving family.
Putin's spokesman, Dmitry Peskov, declined to comment on the verdict or Browder's remarks.
Magnitsky's mother, Natalya, declined to attend a trial she called an "outrage against the memory of my son". The court appointed defense lawyers after she and Browder refused to do so.
The courtroom cage reserved for defendants stood empty as judge Igor Alisov read the verdict, saying the state had proven its claim that Magnitsky, acting in Browder's interests, had organized and implemented a large-scale tax evasion scheme.
Prosecutors had accused Magnitsky and Browder of failing to pay 522 million roubles ($16 million) in taxes.
Browder's court-appointed lawyer said he would appeal the verdict.
Browder was barred from Russia in 2005 as Hermitage found itself under increasing official pressure after he voiced criticism of corporate governance at large Russian companies.
Prosecutor Svyatoslav Slobodin said Browder would be arrested if he entered Russia, but Russia's chances of jailing him are limited.
Interpol has refused to include Browder on its international search list after deciding that Russia's tax evasion case against him was "predominantly political."