MOSCOW (Reuters) ? A case against a US citizen accused of committing a ?large-scale fraud? against a Bermuda-based mutual fund has taken a major step forward.

Russian prosecutors confirmed on Friday that they had issued an international arrest warrant for businessman Leonid Rozhetskin involved in the sale of a quarter of Russia?s third largest cell phone operator, MegaFon.

The Moscow prosecutor?s office accused Rozhetskin of stealing $40 million from Bermuda?s IPOC which should have been used to buy 25.1 percent of MegaFon.

?The investigation has by now collected enough proof uncovering Leonid Rozhetskin as committing large-scale fraud,? the prosecutor?s office said in a statement.

?Due to this, the Moscow prosecutor?s office has issued a decree seeking Rozhetskin as a defendant ... and issuing an international arrest warrant against him.?

Rozhetskin?s spokeswoman Debra Reed said she was unaware of the move. ?Leonid Rozhetskin has done nothing wrong,? she said in a statement e-mailed to Reuters.

Rozhetskin is a US citizen, and Russian media have reported that he divides his time between Britain, France and the United States.

The dispute began in 2003 when Rozhetskin?s company LV Finance sold 25.1 percent of MegaFon to Alfa Group, the investment vehicle of Russia billionaire Mikhail Fridman, for $300 million.

IPOC challenged the purchase saying it had a prior option which gave it the right to buy the MegaFon shares.

The case has been followed closely because a Swiss tribunal ruled earlier this year that IPOC?s real master was Russian Telecommunications Minister Leonid Reiman. Reiman has denied this.

Reed said in her statement that Rozhetskin had filed a complaint in September with US District Court in New York against Reiman, accusing him of engineering a smear campaign against Rozhetskin.

IPOC and LV Finance have crossed swords many times in international courts but no court has issued a final ruling.

In June, IPOC filed a suit in a New York court alleging Alfa conspired with Rozhetskin to steal the fund?s 25.1 percent stake in MegaFon through money laundering, bribery, wire fraud and other criminal acts.

Other stakeholders in MegaFon include Nordic telecoms giant TeliaSonera with 43.9 percent and Telekominvest, whose owner is a former business associate of Reiman, with 31.3 percent. Reiman denies any connection with Telekominvest.