By Maria Tsvetkova and Steve Gutterman
MOSCOW (Reuters) - Sergei Magnitsky, a Russian lawyer who died in prison in suspicious circumstances, was found guilty of tax evasion on Thursday in a posthumous trial that has further damaged President Vladimir Putin's reputation in the West.
The Moscow court also convicted Magnitsky's former client William Browder, a British investment fund boss who has led an international campaign to expose corruption and punish Russian officials he blames for Magnitsky's death in 2009.
Browder, tried in absentia, was sentenced to nine years' jail in the case, which deepened U.S. and European Union concerns over human rights and the rule of law in Putin's Russia.
"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 is unlikely to be extradited from Britain to Russia, said in an emailed statement.
Amnesty International called Magnitsky's prosecution - Russia's first posthumous trial - "deeply sinister", saying it "set a dangerous precedent that could open a whole new chapter in Russia's worsening human rights record."
The European Union said the trial sent "a disturbing message to those who fight corruption in Russia". The U.S. State Department said it was "disappointed by the unprecedented posthumous criminal conviction against Sergei Magnitsky."
Russian authorities said they pushed ahead with the posthumous trial in order to ensure justice was done. Prosecutors had accused Magnitsky and Browder of failing to pay 522 million roubles ($16 million) in taxes.
Putin's spokesman, Dmitry Peskov, declined to comment on Thursday.
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.
A judge threw out a case against a senior prison official, the only person to face trial over Magnitsky's death, after Putin signalled that Russian authorities should not be blamed.
"Mr Magnitsky has been declared a criminal on the basis of unconvincing evidence, while neither the corruption scandal he uncovered nor the circumstances of his death have been clarified," Maja Kocijancic, a spokeswoman for EU foreign policy chief Catherine Ashton, said in a statement.
"This is a revealing illustration of the state of the rule of law in Russia," she said, adding that the EU was "raising the Magnitsky case with the Russian authorities at all levels".
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 have increased between the former Cold War adversaries since Putin returned to the Kremlin 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.
U.S. Senator Ben Cardin, a Democrat and author of the Magnitsky Act, called the ruling "shameful" but said "we have come to expect this sort of behavior from the Putin regime."
"What this does is continue the downward spiral of Russia's reputation as a law-abiding state and member of the international community," Cardin said in a statement.
U.S. State Department spokeswoman Jen Psaki told reporters: "We continue to call for full accountability for all those responsible for Magnitsky's wrongful death and will continue to support the efforts of those in Russia who seek to hold those individuals accountable."
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 - a position shared by the EU and Amnesty International.
Russia's own human rights ombudsman, Vladimir Lukin, also criticized the posthumous trial. "In that case, let's put Ivan the Terrible on trial," the Interfax news agency quoted Lukin as saying, in a reference to the 16th century tsar.
Browder says he and Magnitsky were targeted by the authorities in retaliation for exposing large-scale corruption.
His Hermitage Capital said in a statement: "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."
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, committed 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.
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 proved its claim that Magnitsky, acting in Browder's interests, had organized and implemented a large-scale tax evasion scheme.
Browder's court-appointed lawyer said he would appeal.
Prosecutor Svyatoslav Slobodin said Browder would be arrested if he entered the country, but Russia's chances of jailing him are slim.
Interpol has refused to include Browder on its international search list after deciding that Russia's tax evasion case against him was "predominantly political".
(Additional reporting by Alexei Anishchuk in Moscow, Adrian Croft in Brussels, and Patricia Zengerle and Arshad Mohammed in Washington; Editing by Douglas Busvine and Mark Trevelyan)