Kolomoisky in Cleveland. New details from across the ocean
While in Ukraine the case on the withdrawal of the funds of its depositors from Privatbank is covered with dust in the Office of the Prosecutor General, in the United States they continue to dissect Kolomoisky’s activities, adding juicy details to the story of the largest banking “fraud” in history.
We remind the reader that the former owners of Privatbank, Igor Kolomoisky and Gennady Bogolyubov, laundered most of the money withdrawn from Privatbank in the United States, buying assets there. To do this, they had partners – Mordechai Korf and Uriel Laber and a huge number of fictitious companies, usually with the word “optima” in the name.
The claims of American justice to the transactions of these “optimums” are always the same: loans were issued for one purpose, and spent on others, loans had to be returned from the funds earned by borrowers, and returned from new loans, moreover, taken by third companies, as collateral were not real objects, but the right to claim supplies that never existed. The main question is: how did hundreds of different “optimums” who did not conduct normal business activities, with conditional three bucks in their accounts, buy real estate in the United States for the money of loans from Ukrainian companies?
And here are new details in a recent investigation by the Pittsburgh Post-Gazette, which was released the other day and is dedicated to the Cleveland part of this story, where in its best years Optima Ventures owned more than 260 thousand square meters. m of commercial real estate.
The highlight was the Westin Hotel. It was he who hosted the US Republican Party Convention in 2016. Then-candidate Donald Trump set up his headquarters there, and in the lobby of the Westin Hotel, the future president met with reporters the next morning, after the landmark speech at the convention. Five years later, the Westin Hotel became part of the evidence in a federal investigation of how a Ukrainian oligarch was laundering hundreds of millions of dollars stolen from the largest Ukrainian bank.
Unlike Ukraine, the United States is actually investigating Kolomoisky and the company, conducting searches, arrests and building an irrefutable evidence base of abuse. But despite this, American journalists are outraged: the existence of the Optima network of companies is one of the most disturbing examples of the imperfection of American financial transparency legislation. They are concerned about the fact that Kolomoisky and the company actually bought up half of Cleveland, without disclosing any details of the agreements or their ultimate beneficiaries.
Oh, I think they would be even more impressed if they knew about the “Ukrainian” part of this story and how the money for this property left Privatbank and ended up in the United States. How the funds flowed out of credit lines for completely different purposes, split, combined with the money of other loans, withdrawn to accounts in the Cypriot branch of the bank, and already in the form of “investments” ended up in the United States.
Therefore, it is not surprising that the journey of “dirty” money around the States also turned out to be interesting. Of course, the question why the origin of the money was not properly verified is more than fair. Moreover, the 58-year-old billionaire with citizenship of several countries bought up real estate in the United States through Delaware “gaskets”, which, in fact, are designed to hide the ultimate beneficiaries of the scams. And at some point in Cleveland, one should have noticed that these unknown Delaware “optims” are concentrating too much real estate in their hands. Should have thought about it, started to check at least something. However, on the contrary, our “kings of real estate” also received generous loans from the locals for noble purposes.
For example, for the renovation of the mentioned hotel and its transformation into an elite brand. It didn’t work out a bit with elitism – no one returned the credit of 36 million dollars, the hotel was not reanimated, now court bailiffs are in charge of it, trying to sell at least something to someone in order to compensate for at least part of the potential losses.
US financial crime experts are already citing the case to support a proposal unveiled this month by the US Treasury Department to make corporate real estate agreements more transparent by requiring disclosure of ownership information. A year ago, thanks to Kolomoisky’s scam, changes were made to the corporate transparency law, requiring companies to provide the Financial Crime Fight Network with the name, date of birth, address and other information about the owners of assets, and the owner is understood to be anyone who owns more than 25% of the asset .
And what happened in Cleveland, the Americans have already dubbed the “million dollar pipeline”, the work of which is now being investigated by a grand jury.
The Cleveland “pipeline” was launched in 2008, when Kolomoisky and his partners “invested” $12.9 million in the United States by purchasing one of the city’s most famous high-rise buildings, a business center at 55 Public Square. That same year, the partners shelled out another $36 million in the US to buy One Cleveland Center. And in 2010, they transferred $18.5 million into the country through four different offshore bank accounts to purchase the Huntington Building (see fig.).
Unfortunately, this “investment boom” coincided with not the best times in Cleveland. The city suffered from decline, mortgage crisis and unemployment. This partly explains why the joy of the arrival of at least some investor turned out to be much stronger than the desire to at least superficially check the sources of origin of his “investment”.
However, according to US prosecutors, the funds came to Cleveland from the Ukrainian Privatbank according to schemes carefully created by the former management of the bank for its then owner.
By 2011, Kolomoisky had acquired two more Cleveland landmarks: a 21-story tower and the Westin Hotel. After that, Kolomoisky, through his “optims”, became the largest owner of commercial real estate in the city. For the funds of loans issued to his Ukrainian companies by his own Ukrainian bank.
According to the US Attorney’s Office, the fraudulent nature of these loans is clear, for example, the $12 million for which the One Cleveland Center was purchased is a loan issued to a ferroalloy plant in Ukraine to finance ongoing operations.
And we know a lot of such stories as a blueprint. Loans taken by the Pokrovsky GOK, Nikopol or Zaporizhzhya Ferroalloy, as a result, went to the purchase of American assets. Even more, we remember that Kolomoisky filed more than forty lawsuits here in Ukraine from the mentioned borrowers in order to obtain confirmation that these loans were repaid and the bank had no claims against his companies. The calculation is so-so, but Kolomoisky, in all seriousness, hoped to bring a piece of paper to the American court confirming the return of funds on one of the loans, and thereby convince the court of his innocence. That American court, which has already familiarized itself with the entire multi-year scheme for withdrawing money from the bank in the documents of the US Department of Justice, where it is written in black and white: partially taken loans were repaid with new loans, which allowed the scheme to last so long. That is, knowing that in the States everyone has long been aware that loans were partially repaid so that thefts would not be so conspicuous, he still hoped for something.
Well, in their investigation, our American colleagues clarify this issue and note that these expectations are in vain. According to them, the US prosecutor’s office filed a motion that the entire cash flow was built on fraud and theft. “Not only were the purposes of the loans in loan applications a lie, but also the methods of their repayment, because new loans were issued to return old ones,” prosecutors say. Therefore, the future trial of this case in the United States, let the accused not be upset, although it will not be full of surprises, but, nevertheless, will become interesting.
Recall that earlier the Pittsburgh Post-Gazette has already talked about the “achievements” of Pan Kolomoisky in the US metallurgical industry and how he bought up factories from New York to Texas with stolen money, according to US prosecutors.