Ukrainian Billionaires Allegedly Laundered Money in the US

https://gijn.org/2019/06/14/document-of-the-day-how-ukrainian-billionaires-allegedly-laundered-money-in-the-us/

by anigbrowl • 7 years ago

140 53 7 years ago

empath75• 7 years ago

Jokes on them, though: They bought _Cleveland_

miohtama3• 7 years ago

Here is the original article - boingboing is just a copy-paste post https://gijn.org/2019/06/14/document-of-the-day-how-ukrainia...

It links to this commentary which is much more interesting to read https://www.atlanticcouncil.org/blogs/ukrainealert/how-kolom...

Looks like the claim is that they misappropriated clients funds and invested it in USA under companies whose control can be linked back to them.

I am somewhat puzzled how this could fly under the radar of US banks... this is much bigger deal than the recent Danske Bank scandal in Estonia.

sctb• 7 years ago

Thanks, we've updated the link from https://boingboing.net/2019/06/14/kyivland.html.

cududa6• 7 years ago

Better link: https://m.clevescene.com/scene-and-heard/archives/2019/06/11...

Goes way more in depth, giving local history on some of the construction projects.

ChuckMcM2• 7 years ago

Seems likely there was a failure of the FinCen Know Your Customer (KYC) rules. I like the plot twist in the filing:

"Kolomoisky is now reported to have made a return to Ukraine for the first time in several years, a decision which is believed to be linked to the recent victory in the Ukrainian presidential election of the television star and comedian Mr. Volodymyr Zelenskiy, behind whom Kolomoisky is widely reported as being the principal power and financial backer. Press reports speculate that there is a deal between Mr. Kolomoisky and Mr. Zelenskiy: in exchange for Kolomoisky’s support, Mr. Zelenskiy will ensure the return of PrivatBank to the ownership of Mr. Kolomoisky in order to circumvent any pending or threatened litigation against Kolomoisky." -- https://www.atlanticcouncil.org/images/royaltyfree/kolomoisk...

That is some serious corruption allegations right there.

From a financial controls perspective it seems like the US government was pursuing these folks (according to the complaint) so somebody was making complaints.

miohtama3• 7 years ago

Also another Ultimate Beneficial Owner is in Israel which has a spotty history of extracting financial criminals to US.

To make sure you have a local community support when things start to heat up, I would not be surprised by

- How much London real estate these businessmen own

- How much money also was poured into Israel communities

ChuckMcM2• 7 years ago

Seems like an interesting strategy to use ill gotten gains to elect a pliable television personality to the role of chief executive, Then once that is accomplished pressure them so that they will use the power of the office to obstruct any attempt to bring the criminals to justice.

Pretty far fetched though, you would have have someone on the inside running your faux campaign, etc. Perhaps I'm reading too much Stieg Larsson.

hlkps• 7 years ago

Well, it's Russia... the land of the oligarchs.

baybal2• 7 years ago

Seems likely there was a failure of the FinCen Know Your Customer (KYC) rules

In this case, it seems nothing has failed. From what I read, news of this were all around, and they knew their customer more than very well.

Anybody going to launder that much of money can setup or buy his own bank and hire an army of financial lawyers to keep it compliant on paper.

All those CFT, KYC laws do sound as completely nonsensical and ineffectual in light of that. Why to go after money laundry clients, when they should really go after the bank laundry owner

pjc502• 7 years ago

That kind of money can buy a lot of silence.

djstein• 7 years ago

water is wet

VectorLock• 7 years ago

Why Cleveland I wonder?

notfromhere• 7 years ago

There's a decently sized Ukrainian population

cududa6• 7 years ago

There was already a large mafia infrastructure for laundering money is my guess. It was big through the 90’s, got busted, then got busted again in 2012 by the FBI for money laundering through real estate.

Some of the properties mentioned in the full complaint were owned by KD Group, the company at the center of the early-2010’s mob money laundering scheme

danans• 7 years ago

I suspect that if you look hard enough at many areas that have a significant turnover in high value real estate transactions, you will find examples of international money laundering like this. NYC is widely believed to be a hotbed of this activity, and likely many other US cities are, also.

divan• 7 years ago

In Ukraine many people strongly believe that Kolomoyskiy has sponsored presidential campaign for Zelenskiy - comedian, who played president on TV (on the TV channel "1+1" that belongs to Kolomoyskiy) and won elections. Supposedly he now has a direct influence on Mr. Zelenskiy and the new government.

Mikeb854• 7 years ago

Zelensky is sponsored by an oligarch, meanwhile Poroshenko and Tymoshenko were oligarchs themselves...

It really doesn't matter though, Zelensky was a protest vote against the status quo and everything that entails.

bitL• 7 years ago

So Kolomoyskiy observed the wave that swept US, UK, IT and almost FR, and decided to orchestrate a similar situation with his own chosen puppet? Dude's pretty smart...

hn_throwaway_99• 7 years ago

Admittedly, I didn't read every link in the article, but this quote is almost unbelievable to me: ---- From 2006 through December 2016, the total movement of funds (credits) into the [ultimate beneficiary owners’] laundering at PrivatBank Cyprus was $470 billion, which amounts to approximately double the Gross Domestic Product of Cyprus during the same period. ---- Nearly half a trillion dollars??? That would make them the richest men in the world, many times over. How can that be possible?

pjc502• 7 years ago

Even Ukrainian prosecutors think they "only" stole $40bn. https://www.bbc.co.uk/news/uk-42950097

Mikeb854• 7 years ago

The OP is about different oligarchs... Not the same case.

cududa6• 7 years ago

Laundering that amount doesn’t mean they accrued that much profit on it. If you spent any time in Cleveland in 2006 versus 2019 the hundreds of billions in redevelopment seems pretty ...reasonable

selimthegrim3• 7 years ago

Downtown is nicer but not that much nicer.

Waterluvian• 7 years ago

Can each dollar be moved many times to accumulate a much larger "total movement of funds"?

liara_k2• 7 years ago

A few possibilities:

First, the amount appears to be the total through a bank, where this number would be aggregated over a several (possibly many) individuals.

Second, the amounts reported do not reflect the total funds laundered (illicit funds made to appear legitimate) but the total revenue stream, which would be offset by liabilities. For example, one laundering technique I've read about involves buying real estate and selling it at an inflated price to someone who has the illicit funds. For example, A has illicit cash and wants to transfer it to (apparently) legitimate profits by B. B buys a property for $1m. B sells the property to A1 for $2m. B keeps the $1m difference as profit. A1 later sells the property at a loss, and the cycle is complete. Repeat this a few thousand times, but probably with a smaller % margin. But assuming a 100% margin (and the whole laundering effort being exactly this scheme) that'd be $450B total revenue but $225B actually laundered.

Interesting side effect: This pushes up the cost of housing in an area until the launderers abandon it, at which point demand and purchase volume dries up significantly and valuations sink. Additional profit could be made off this market manipulation.

selimthegrim3• 7 years ago

I’m pretty sure you can still buy houses in Slavic Village sans copper wiring for the low thousands

myth_drannon• 7 years ago

That's how Vancouver got its house prices - money laundering by Chinese nationals.

viach• 7 years ago

Looks like they can let you launder whatever amount you want, till you behave.

cududa6• 7 years ago

Now here’s the crazy part. Cleveland has a rich history of money laundering. The FBI recently broke up a mob related group in 2012 being ran through The KD Group.

Funny enough, KD Group is a primary beneficiary of this ”new” money laundering: https://m.clevescene.com/scene-and-heard/archives/2019/06/11...

selimthegrim3• 7 years ago

I mean, was he just attracted by the presence of lots of Ukrainians?

Mikeb854• 7 years ago

Is this even real? First of all, the dollar amount is unbelievable. Second, it's not being reported on most of the Ukrainian news sites I frequent (or it's well hidden). Third, it's far, far bigger than the missing funds as reported by most media (5.5B).

https://en.m.wikipedia.org/wiki/PrivatBank

Muromec5• 7 years ago

5.5B is the bank itself. Think about how much money Firtash, Ahmetov, Timoshenko and Kolomoyski together siphoned through gas prices, coal and electricity trickery in like 20 years.

Could be half a trillion easily.

Jerry2• 7 years ago

Why aren't the DoJ and FBI involved in this yet? International money laundering should be prosecuted severely.

sumedh• 7 years ago

I think FBI gives more priority to terrorism cases now instead of white collar crime.

ncmncm• 7 years ago

White Collar Crime is Official Policy now. Interfering with White Collar Crime is now a crime.

Muromec5• 7 years ago

Sounds like opportunities have risen since this guy[1] got a state-funded home for himself

[1] https://en.m.wikipedia.org/wiki/Pavlo_Lazarenko

rolltiide• 7 years ago

Why would private parties file suit under any of these statutes? The Ohio RICO act lollll, these are matters for the state

Could it be just to bring attention to them in the civil suit and then hope the department of justice comes in with the criminal sanctions and asset freezes? Maybe PrivatBank makes a little money in the process?

partiallypro• 7 years ago

Is this not what Manafort was essentially charged in aiding?

cududa6• 7 years ago

Nope, but it should be. But it does up an entirely unexplored avenue into foreign election interference

thephyber• 7 years ago

It might also be worth looking into whether FinCEN is still putting pressure[1] on these two zip codes.

[1] https://therealdeal.com/miami/2016/01/13/secret-buyers-in-mi...

Ukrainian Billionaires Allegedly Laundered Money in the US

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