BONY-We

The United States against “Russian money”

Recently, a federal judge in the Southern District of New York ordered the materials of a lawsuit arising from last year's Russian money laundering scandal at the Bank of New York (BONY) to be made public.

It hardly needs reminding that the BONY case, which began last summer during a period of intense struggle for power in Russia between Boris Yeltsin’s associates and his opponents, grew into a major international scandal that greatly damaged the prestige of the Russian government. The impressive amount of “dirty money” transactions (the Americans talk about $7 billion) immediately suggested a gigantic theft of IMF loans, budget funds or revenues from Russian raw material corporations. At worst - excess profits of the domestic drug mafia. The scandal caused a sharp deterioration in the attitude of the outside world towards Russia; in the West they started talking about “pseudo-democracy” and a “gangster state”. However, the noise soon began to die down, as it became clear that the billion-dollar transactions had nothing to do with the money of the IMF and the Kremlin. Examples appearing in a real case, as well as investigations of authoritative Western publications (for example, The Financial Times) show that we are talking about a completely different phenomenon: firms like the one involved in the Benex case provided services for evading taxes and customs duties to importers, medium-sized businesses and to private individuals, for example, when they sell expensive apartments.

It is all the more interesting now, when the political tension around the BONY case has subsided, to get acquainted not with the “leaks” that filled the world press, but with the document that was the result of an impartial investigation.

The case in question is awkwardly titled “United States of America, Plaintiff, against $15270888.69 previously held in account No. 8900261137 in the name of Sobinbank at the Bank of New York at New York, New York, Wall Street , No. 1, and $11,770.39 formerly in account No. 8900319259 in the name of the Depository Clearing Bank with the Bank of New York, No. 1 Wall Street, New York, New York, Defendants.” This is not a criminal case, but a civil lawsuit. And this is a claim not against the banks themselves, but against their assets in BONY - 15 million from Sobinbank and a small amount from DKB.

According to federal prosecutors, the lawsuit stems from an investigation into the "illegal transfer of $7 billion, primarily from Russia, through accounts at the Bank of New York." The only criminal case so far that has generated an investigation was the case of illegal banking activities and other violations brought in September last year against former BONY vice president Lucy Edwards (née Lyudmila Pritsker), her husband Peter Berlin, who emigrated to the United States in 1991, Muscovite Alexey Volkov and three companies - Benex International Co., Becs International LLC and Lowland, Inc., which had accounts in BONY, received and transferred “Russian money”. In February, Berlin and Edwards pleaded guilty and detailed what they had done to the court; their testimony mentioned only the Depository Clearing Bank (DCB).

Translation Bureau Accounts in the name of Benex and Becs (both companies were located in a one-room office on Queens Boulevard, rented in the name of the Torfinex Corporation) were opened at BONY by their president Berlin in 1996. His wife Edwards was listed as a senior employee of both companies, but in violation of the rules hid this from BONY. From February 1996 to July 1999, approximately $4.85 billion passed through the Benex account, mostly from Russia. From December 1996 to July 1999, about 2 billion passed through the Becs account. None of these companies had a banking license. In September 1997, Torfinex filed an application for a money transfer license with the New York State Banking Department, accompanied by a statement from the chairman of the board of DKB, who volunteered to vouch for it with a million dollars. On October 1, 1997, the department ordered Torfinex not to transfer money while her petition was pending, but she did not listen.

Almost all the money transferred to Benex and Becs accounts in BONY came from Sobinbank and DKB. They were transferred either directly from the Sobinbank correspondent account to BONY, or Sobinbank first transferred them to the DKB correspondent account, and from there they were transferred to the Benex and Becs accounts. (Sobinbank owned 20% of the shares of DKB. Until 1998, another bank, Moscow Business World (MDM), owned a similar stake in DKB and was also a co-owner of Sobinbank. Sobinbank opened a correspondent account with BONY in August 1996, and DKB with March 1997, and letters of recommendation were given to him by Sobinbank and MDM).

Orders for the transfer of money were usually given by ephemeral companies and “banks”, the main one of which was Sinex Bank Inc. Investigators checked all the databases available to them, but did not find Sinex Bank. From September 1996 to February 1997, Sinex regularly transferred money (a total of more than $600 million) from the Sobinbank account to the accounts of Benex and Becs. The bills indicated that Sinex was located at the address "USA" or Cliffside Park (New Jersey). New Jersey authorities told the FBI that they did not have such a bank.

From May 1997, when the DKB account was opened with BONY, until April 1999, Sinex transferred more than $2.5 billion from this account to the accounts of Benex and Becs. This money was transferred to the DKB account from the Sobinbank account. The relevant documents stated that Sinex Bank is located in Sydney, but Australian authorities deny this.

Sinex Bank had an account with an “American financial institution,” which authorities left unnamed. The documents submitted there stated that he was registered in Nauru. One of the persons who had the right to sign on this account was Torfinex President Alexey Volkov. When Sinex opened this account, he presented letters of recommendation from the chairman of the board of Sobinbank and the vice president of DKB, which stated that DKB had a long-standing business partnership with Simex. This alerted the investigators: both letters were dated October 6, 1996, while Sinex was registered only on July 3, 1996 and could not have had a long-term relationship with anyone at that moment.

Many transfers from the Sobinbank account to the Benex account were made by order of Sobinbank Limited, registered in Vanuatu. From December 1997 to February 1999, about $67 million was transferred in this way.

In November 1998, Berlin opened an account with BONY in the name of the Lowland Corporation, which, from April 1999, began to receive large sums of money that were immediately transferred to companies and individuals around the world. From April to July approximately 270 million were deposited into the Lowland account. Almost the entire amount was transferred from the Sobinbank account. The transfers were made by Commercial Pacific Bank Corp., registered in Nauru, on the orders of Flamingo Bank.

BONY and the "Russian mafia"

Evidence of the involvement of mafia structures in the BONY case is the story of the kidnapping in Moscow in June 1998 of a businessman whose name is not mentioned in the documents, but from other sources it is known that his name is Eduard Olevinsky. The kidnappers told him to transfer $300,000 to the Becs account. An acquaintance of the kidnapped person in the USA transferred the money, and Sobinbank paid it in Moscow in cash (minus commissions), and Olevinsky was released.

“In 1999, in a certain foreign country, the leader of a Russian organized crime group operating there was arrested for extortion, kidnapping and causing severe bodily harm. In February 1998, he received a transfer of $11,931 from a Becs account.” We are apparently talking about Joseph Royzis, nicknamed Grisha the Cannibal, who was arrested in the early 90s for heroin smuggling and has since been actively cooperating with Western intelligence services, which, according to Italian law enforcement agencies, did not prevent him from running into Russians there "shuttles".

“In addition, in 1997, two members of his organization, also accused of extortion, kidnapping and grievous bodily harm, received several transfers from the Benex account in excess of $1 million.”

The FBI also discovered transfers that were made from the Benex account to persons suspected of having connections with Russian organized crime groups operating in the United States. For example, in 1999, a total of about 45 thousand dollars were transferred from this account to the account of a certain person on the west coast of the United States. The recipient of this money is “the leader of a Russian organized crime group, whose activities are being investigated by the FBI, which suspects it of extortion and drug smuggling. This person was closely connected with Vyacheslav Ivankov...”

During 1999, approximately $40,000 was transferred from the Benex account to another individual “who is currently under investigation by the FBI. This person is believed to be associated with the Solntsevo group and is the front owner of a business venture financed by it in the New York area.” Now this man is under investigation by the FBI, which charges him with racketeering.

One section of the court documents is devoted to bank transactions for the purpose of evading Russian taxes and violating customs rules. For example, in 1999, about $200 thousand were transferred from a Benex account to an unnamed “US financial institution” to the account of a certain Russian. The institution asked him to provide clarification regarding these transfers. He did not answer for a long time, and then another person who had a power of attorney from him informed the institution that the money was received for a sold Moscow apartment and transferred through Benex “in order to avoid paying taxes.”

The FBI has identified cases of fraudulent contracts and invoices being used to justify money transfers made through Benex. The company, for example, allegedly purchased goods and services, and the relevant documents were signed by fictitious persons.

For example, in 1996, approximately $272,000 was transferred from a Benex account to a certain Eastern European country. According to contracts and invoices, this was payment for magnets allegedly purchased by Benex. Perhaps we are talking about Hungary, where the Russian entrepreneur Semyon Mogilevich had a company YBM Magnex for the production of magnets (it is interesting that Mogilevich’s name does not appear in the case materials, although last year the newspapers considered him almost the main protagonist of the scandal). The magnets were allegedly shipped in August 1996 to Benex International Forest, located at 1088 Main Avenue, Clifton, New Jersey. The invoice was signed by Tom Dial, head of the company's Purchasing Department.

The check showed that a medical institution has been located at this address since 1994.

Court documents mention contracts for pharmaceutical products and toiletries that Benex allegedly traded. In fact, the prosecutor's office notes, the company has never had anything to do with either one, or the other, or the third. Other documents bore the signatures of Benex employees John Samuel and James Knowles, "fictitious individuals who never worked for Benex."

It was generally accepted that suspicious transactions in Benex's BONY accounts were reported to the authorities by rival bank Republic National. Court documents show that there were several signals, but the banks from which they came were not mentioned by name: they were all anonymously referred to as “financial institutions.”

Battle for reputation

Sobinbank, whose account in BONY was seized, hired the law firm Le Bouef, Lamb, Greene & MacRAE, LLP, which tried to bail out his money and prevent the disclosure of the case materials. As stated in the lawyers' petitions, in the statement of claim of the prosecutor's office there is not a single allegation of any illegal activities of Sobinbank: all accusations are addressed to Benex, Becs and others like them. The prosecutor's office does not claim that the seized assets came from or were intended for these defendants. She has no complaints against other Sobinbank clients.

At the moment, the court did not satisfy the lawsuit Sobinbank filed against the US government on September 13 last year under the pseudonym John Doe Bank, and its 15 million are still in the possession of New York bailiffs.

All attempts by Sobinbank to persuade the court not to make the case public were also unsuccessful. August 17th g. the former first deputy chairman of the board of the bank, Andrei Serebrennikov, filed a petition in court, in which he stated under oath that the disclosure of the case materials “would cause irreparable damage to Sobinbank”, since his “clients will not understand that the prosecutor’s office does not accuse him of anything, and They will erroneously conclude that Sobinbank is guilty of illegal activities. This will undermine the bank’s credibility and cause enormous damage to its business reputation.”

“Secondly, Sobinbank offers banking services to Russians engaged in export-import business,” Serebrennikov continued. “To service this business, Sobinbank must open correspondent accounts in foreign banks... Since Sobinbank’s account with BONY was closed in August 1999, Sobinbank had only one correspondent account left in an American bank.” According to Serebrennikov, he has information that if an American bank finds out about the seizure of Sobinbank’s assets, it may well close this account.

The prosecutor's office responded that it is customary to make the materials of civil cases public, especially since it plans to confiscate the seized assets of the plaintiff: they may be claimed by some third parties, who, by law, must be notified about this through the press. In addition, Sobinbank's troubles have long been made public; As evidence, the prosecutor's office presented a stack of clippings from American and Russian newspapers.

On August 11, a court hearing took place, at which Sobinbank’s lawyers and the prosecutor’s office tried to win over federal judge Richard Conway Casey to their side. Among other things, Sobinbank lawyer Michael Lash said that this is one of the largest banks in Russia. “In light of your words that this is one of the largest banks, I do not quite understand the consequences of the seizure of $15 million,” the judge said. “Of course, this is a little more than the amounts that you and I carry in our pockets, but, God forbid, I cannot understand how such money can affect the trust of clients and the reputation of the bank.”

“Your Honor,” Lash replied, “I completely agree with you: the loss of 15 million cannot undermine the reputation of a large bank. But the fact that the US government has seized these assets may do so.”

The prosecutor's office won, and the case materials were made publicly available so that reporters could make copies of them for 25 cents per page.

Vladimir KOZLOVSKY, New York