Reuters/Tatyana Makeyeva
A woman holds a sign with Magnitsky's portrait during a protest in Moscow last December. It says, "Dead in fight against the system of thievery."
The Russian Investigative Committee said it hadn't found any evidence that a crime was committed in arresting and imprisoning Magnitsky, who died of untreated pancreatitis in a Russian prison in 2009, the AP reports.
Magnitksy's death has been a source of some controversy. The Russian government's human rights council announced two years ago that prison officials may have tortured Magnitsky and refused to give him medical treatment for the pancreatitis he developed in prison.
President Vladimir Putin later contradicted this, and said he died of heart failure, according to Reuters
Magnitsky was thrown in jail in 2008 after exposing the alleged $230 million tax fraud committed by high-level tax and law enforcement officials. He had been working for Hermitage Capital, a hedge fund owned by American-born businessman Bill Browder.
Although Magnitsky's been dead for three years, he and Browder are on trial for tax evasion in Tverskoy District Court in Moscow. In the country's first posthumous trial, Russian officials allege Magnitsky helped Hermitage evade $16.8 million in taxes.
In the wake of Magnitsky's death, Browder has lobbied for "Magnitsky Acts" in the UK and America.
The Magnitsky Act, which Congress passed in December, was designed to blacklist several Russian officials who were allegedly involved in the Russian tax scandal, barring them from entering the US. The Kremlin found the bill insulting and vowed that "an adequate response would be certainly forthcoming."
Later that month, Putin fired back with a law banning Americans from adopting Russian children, further souring US-Russian relations.
Browder's team hasn't given up their quest to avenge Magnitsky's death. A Heritage Capital spokesman said the decision "confirms that the Russian state has officially decided to defend those who tortured and killed Sergei Magnitsky," AFP reported.