How (another) Serial Criminal Got Help From Israeli Government and U.S.Gov and New York Penetrated Russian Israeli Mafia
How (another) Serial Criminal Got Help From an Israeli Government Minister
Haaretz Exclusive How a Serial Criminal Got Help From an Israeli Government Minister
Immigrant Absorption Minister Sofa Landver pursued business ties with serial criminal Gregory Lerner. Her former chief of staff had links to Alexei Zakharenko, a Russian tycoon who disappeared two years ago. New facts from police files, published here for the first time.
Gidi Weitz and Maya Zinshtein Nov 25, 2011
read more: http://www.haaretz.com/israel-news/haaretz-exclusive-how-a-serial-criminal-got-help-from-an-israeli-government-minister-1.397668
Before dawn on the eve of Independence Day in 1997, a convoy of black Mercedes made its way from Ashkelon to Ben-Gurion airport. In one of the gleaming cars was a thin man with black hair combed straight back, impeccably attired and with a square knight's ring on one finger.
Some of the vehicles carried bodyguards who were accompanying the boss, Gregory Lerner, on his way to catch a plane for New York.
At the airport, Lerner went through a quick passport check and then spent time in the VIP lounge before being taken by car to board the plane. Lerner had no way of knowing that the occupants of the car, dressed as staff of the VIP lounge who smiled at him politely, were actually undercover police. It was not until Lerner had made himself comfortable in his first-class seat that they approached and quickly took him into custody.
"From his suitcase, we seized a billion dollars' worth of notes payable to bearer," says retired police major general Moshe Mizrahi, who conducted the investigation against Lerner and would later find himself in the line of fire as a result.
Lerner's first arrest in Israel generated an ear-splitting uproar. It was exploited by politicians who portrayed the serial criminal as a victim of the brutality of the law-enforcement agencies and a symbol of the discriminatory and prejudicial attitude of the veteran Israeli society toward new immigrants from Russia. One of those whose voice rang out loud and clear amid this castigatory chorus was MK Sofa Landver, the current immigrant absorption minister in the government of Benjamin Netanyahu.
Lerner was remanded in custody several times in a Petah Tikva court, under unprecedented security. Police officers brandishing loaded assault rifles took up positions outside the courtroom. A few were stationed inside the courtroom, where they kept a close watch on the windows, in case someone opened fire from the outside. The major concern of the police was that an attempt might be made to snatch Lerner and smuggle him out of the country.
The remand requests submitted to the court by the state prosecution stated that Lerner was suspected of commissioning contract killings.
"A dyed-in-the-wool criminal," Mizrahi says. "He was in touch with the leading police targets of investigation. He was the economic consiglieri. The expert in sting operations."
Shades of 007
Gregory Lerner was born in Moscow in October 1951 to an educated Jewish family. He studied journalism, but in the 1980s became involved in the flourishing black market that bloomed in the waning days of the Communist empire. In 1982, he was arrested for theft and sentenced to five years in a labor camp. Not long before the end of his prison term the charges against him were dropped, as part of the reform measures introduced by Mikhail Gorbachev.
Lerner returned to Moscow, where fortunes were being made overnight under the perestroika regime. There he met Olga Zhelovinskaya - a meeting that would affect the course of his life. This stylish woman was married to Sergey Timofeev (Sylvester ), leader of a Russian crime gang and a prominent figure in the twilight zone of Moscow, a city bleeding from turf battles after the fall of the Iron Curtain.
In 1989, a new police investigation was conducted against Lerner, this time on suspicion of stealing money from a Moscow bank. His response was to flee to Vienna with his wife and daughter. Next stop: the Holy Land. His first home in Israel was a modest apartment in the southern seaside city of Ashkelon. In 1991, he was arrested on a visit to Switzerland. He planned to escape from the placid country in a helicopter, but before he could pull off this James Bond-like stunt, he was extradited to Russia, spent a few months in jail and returned to Israel.
Not long afterward, Lerner moved to a luxurious fortified and fenced-off villa in Ashkelon. One of the most advanced closed-circuit television systems that existed in Israel at the time was installed in the new home. A fleet of armored Mercedes was regularly parked next to the house, which was also protected by guards toting submachine guns. Lerner also bought villas for his aides and, for the next five years, he conducted his global business transactions from this neighborhood, as well as from Textile House on the Tel Aviv beachfront, where he maintained a whole floor of luxury offices complete with Chinese carpets and antique furniture.
The mobster's wife
On September 13, 1994, the crime boss Sergey Timofeev turned the ignition key of his Mercedes S-60 on Tverskaya Street in Moscow. The car instantly blew up, killing the rising mafioso. A few months later, his widow immigrated to Israel with her young son and naturally took up residence in Lerner's neighborhood of villas. She was now known as Ilana Rubinstein. Lerner and Timofeev had been not only good friends but also business associates, according to senior figures who were involved in the investigation.
During this period, Lerner approached various banks in Russia and suggested that they entrust him with tens of millions of dollars, which he would invest in various projects, including the establishment of new banks in Israel and elsewhere in joint ventures. He joined Likud and, with the ease that characterizes every tycoon who comes to Israel, started to make friends in high places. One of the most prominent was Sofa Landver. An outstanding speech therapist who became Shimon Peres' Russian teacher, head of the Association of Immigrants from the Soviet Union and a member of the Ashdod municipal council, Landver was propelled in 1996 by her diligent pupil - who is now the president of Israel - to the position of Knesset member on behalf of the Labor Party.
Betwixt and between, Landver became friendly with Lerner and tried to help him forge ties with high officials. For example, she arranged meetings between Lerner and two leading members of Labor, Benjamin Ben-Eliezer and Ehud Barak. Afterward, the two made inquiries in law-enforcement circles about Lerner and were advised to keep their distance from him - advice they took. A source who was involved in the investigation relates that Landver helped Lerner negotiate the corridors of power. A veteran political consultant who met with Lerner and Landver says that Lerner told him he would like to acquire the Bank of Israel.
Lerner promised Landver a hefty donation to underwrite an event of her new-immigrant organization, but was arrested before he could make good on the promise. Later, when the affair bearing his name burst into the headlines, a number of politicians were called in for questioning, among them Avigdor Lieberman, Natan Sharansky and Landver.
"I went to him to ask for money and was very impressed by him," Landver said at the time in a press interview. "He is very educated, very cultured and intelligent."
A few months later - a period Lerner spent in detention, having been remanded in custody until the conclusion of the proceedings against him - he was indicted on serious charges involving suspected fraud in the amount of tens of millions of dollars. Another few months went by, and Lerner and the state signed a plea bargain in which Lerner, among other points, admitted that he had tried to bribe senior Israeli politicians.
He also admitted to receiving $37 million fraudulently from Mostroy, a Russian bank, establishing a series of straw companies that he controlled, and committing numberless forgeries. He admitted to having defrauded Semion Mogilevich, who holds Russian and Israeli citizenship and is high on the FBI's most-wanted list. Throughout his detention Lerner was held in total isolation. The authorities explained that this was necessary because they had concrete, verified intelligence information that a Russian crime organization planned to assassinate Lerner.
"There was good reason for the security with which he surrounded himself before his arrest," Mizrahi says. "He used to drive around like a prime minister, and not because he wanted to impress people. He was afraid of being shot. Former senior Shin Bet men supervised his security." In 1998, Lerner pleaded guilty to the charges and was given a six-year jail sentence.
"The accused did not balk at presenting false financial statements and balances, habitually inflated the capital of the company in which he was going to invest the fraudulent funds ... and presented false reports about the company's nonexistent vast capital ... The fraud which netted the accused $50 million and the attempt to obtain a license to establish a bank or acquire an existing bank so the accused could realize his goals were 'spiced' with acts of fraud, falsification of documents and financial reports, offers of bribes to politicians and bribes to bank clerks, in order to advance the goals of defrauding the Russian banks and other acts of fraud," the verdict stated.
Lerner was also ordered to pay a fine of NIS 5 million. He did not pay it, and as a result spent two additional years in jail.
Massive political pressure
In 1998, 1,500 people, most of them new immigrants living in the center of Ashkelon, gathered for a turbulent demonstration of solidarity with Lerner. The demonstration was one of the peaks of a campaign mounted by several Russian-language newspapers on behalf of the isolated prisoner and fanned by representatives of the Russian immigrants in the Knesset. The indefatigable Sofa Landver was present at the Ashkelon demonstration, in which the crowd called for the dismissal of the justice and public security ministers, Tzachi Hanegbi and Avigdor Kahalani. Rather unoriginally, some Russian-language papers in that halcyon time compared Lerner to Dreyfus and published interviews with his supporters.
Landver, who was active in the campaign, drew a comparison between Lerner's case and that of Leonid Roitman, who was later convicted of defrauding new immigrants and sentenced to 10 years in prison.
"I cannot but compare Lerner's case to Roitman's case," she said. "That man [Roitman], who simply stole millions of dollars from new immigrants, is to this day walking about free, while Lerner, who did not hurt anyone and is suspected of all kinds of crimes that were never committed, is in prison." Landver assailed the authorities for their treatment of Lerner: "In the 50 years of Israel's existence no one suspected of economic offenses has been held in such harsh and unusual conditions," she said. If Lerner was really one of the heads of the mafia and a dangerous murderer, why did they make a deal with him?
Landver also took advantage of her parliamentary prerogatives to assist Lerner and his family. She submitted a parliamentary question to Kahalani in which she was critical of the attitude of Prison Service staff to the wife of the well-connected prisoner. She and two other MKs also demanded permission to visit Lerner in prison. Following her lobbying efforts, she and a handful of other MKs were allowed to make the visit.
In 2002, the Knesset's Interior Committee met to discuss a fateful question: the conditions of the ranking prisoner Gregory Lerner. "Lerner is being kept in isolation. He has no contact with people, he is locked in a cage - the same cage in which Ivan Demjanjuk was held," Landver lamented. She added, "We maintain that the treatment he is getting is related to the attitude of the State of Israel toward residents of the former Soviet Union. If it were someone else, he would be treated very differently." She noted that even though Lerner had served two-thirds of his sentence, he was not being released. She demanded to be an observer on the parole committee in Lerner's case, but her request was rejected. She and two other MKs waited outside the door during the committee's deliberations. Lerner's parole request was denied; he remained in prison.
In 2003, the parole committee decided to release Lerner. The attorney general, Elyakim Rubinstein, objected to the decision and appealed it in district court. "The committee should have taken into greater account the scale of the respondent's [Lerner's] offenses, which involved vast amounts of money and sophisticated and well-planned methods of fraud. In the final analysis, the concern about dangerousness, which is a central consideration in the parole committee's decisions, remains firm and should not have been ignored," the attorney general's representative argued in court. But in vain. Lerner was freed in 2003. Landver's life also changed that year: after seven years in the Knesset, she found herself outside the Israeli parliament.
In May 2003, the ex-con began to work in a company called Global Connections. The company was founded by a former director general of Yisrael Beiteinu, Ludmila Grossman, together with Edward Blau, a former adviser to the party's leader, Avigdor Lieberman. The company's business was trade in energy commodities. In September, Lerner resigned from the company and relocated to the round building of the Azrieli Towers complex in Tel Aviv. He was now connected with a company bearing the promising name of Pacific Petroleum. Ostensibly only an adviser to the company, Lerner actually controlled it. The firm promised to import gas and oil products from giant Russian energy corporations at bargain prices. In the most natural way, the trajectories of the former prisoner and the retired MK crossed again.
"After she left the Knesset, Sofa Landver came to me and said, 'It's possible to bring oil tankers to Israel in large numbers and at good prices. Gregory Lerner represents the biggest companies in Russia. Come with me to meet him.'" The speaker, a well-known businessman who was recruited by Landver to help with Lerner's new project, continues: "I had connections with Israeli energy companies. The meeting took place in the round building of Azrieli Towers. Very luxurious offices, sofas like Louis XIV. Lerner speaks broken English, so Landver translated. During the meeting I said to a person who had accompanied me, 'He looks like a big windbag to me.' We left as we came."
How did Landver, between periods of serving in the Knesset, find herself collaborating with the serial offender for whom she had lobbied so intensively as an MK? Finding herself out of the Knesset, Landver scouted around for opportunities. Not long after Lerner's release, she visited his father in Ashkelon. Thereafter, everything unfolded at dizzying speed, as she herself said in her testimony to the police, here being published for the first time:
"At the end of November-beginning of December I was invited to his office at Azrieli and I spoke with Gregory Lerner. Also present was Aryeh Smolnyanisky, who was introduced to me as one of the owners of Pacific Petroleum. At their recommendation, I became a director of the company," said Landver. She acted as Lerner's ambassador to the big fuel companies in Israel. Among others, she brought two former senior figures in the Labor Party to meetings with Lerner to try to interest them in the project.
A probe by Haaretz found that Landver's closest associates, those who accompanied her in politics and later were given positions in the Immigrant Absorption Ministry, were cast in various roles in Lerner's company. Pacific Petroleum, for its part, offered tempting energy deals with the giant Russian corporations.
A Landver confidant, Colonel (res. ) Hagai Mann, currently her senior adviser at the Immigrant Absorption Ministry, was cast in the role of president of Pacific Petroleum. The role of the firm's administrative director went to Elena Meller-Semik, Landver's faithful assistant and later her ministerial chief of staff. In his police testimony Lerner said he chose the company's officials at Landver's request and provided her and the president with handsome salaries, cars and elegant offices. Landver and Mann launched vigorous talks with two major fuel companies, Paz and Dorgas.
"The idea was for Dorgas to issue a letter of credit as soon as the shipment arrived in Israel," Landver said in her testimony.
A person who was involved in the negotiations on behalf of Dorgas says that Lerner never came to the meetings. "Landver and Mann conducted the negotiations," he says. "Landver told us she had connections and that they could buy gas cheap. The connection with Lerner was not clear at first and only emerged later." Landver, in her testimony: "We did not hide the fact that Lerner was an adviser in the company." Except that Lerner was not an adviser; he pulled the strings.
"We had agreements with some of the big companies," Hagai Mann told Haaretz. "To the best of my recollection, I worked there for about half a year."
Didn't you know that Lerner was a ranking crook before you started working for him? Didn't you read the court judgments in his cases?
Mann: "I don't read court judgments. I saw working papers concerning price offers from Yukos [the now bankrupt Russian oil giant]. And with those papers I offered the merchandise."
To the biggest Israeli companies?
The gas sting
The Israeli businessman Oscar Katznelson, a co-owner of the Olimpia construction firm, struck a deal with Lerner. "He said he had an agreement to sell gas to Dorgas and an agreement with a Russian company to buy gas," Katznelson said. He showed me signed agreements. He said he needed funding, because you have to pay in cash there in order to get a cheap price."
Lerner asked Katznelson to get him interim funding of $550,000 to complete the deal. Katznelson got him the money. He had every reason to believe, as he told the police in testimony which is here being published for the first time, that the deal was kosher and authentic. "In that period a few people I knew were working for him," Katznelson said in his testimony. "Hagai Mann, a senior army officer whom I have known for many years, and Mrs. Sofa Landver, both of whom told me the deal was 100 percent safe, because they had handled it personally. They told me that the agreement with Dorgas was real, that Hagai Mann was dealing with the ship and that the ship was about to set sail and the gas was ready there. They said there was zero risk and that the expected profit was 50 percent of the total profits ... I am not familiar with gas and oil deals. I didn't know what the profits in such deals were, and that part of the deal looked completely real.
"Pressure started from Sofa Landver's assistant, whose name is Elena [Meller]. She called every day to ask me to transfer the money. We sent the first payment of $250,000 via a bank transfer to an account in Geneva ... whose number we got from Elena ... Then Elena started to put on pressure again for the second payment, and another $300,000 was transferred ... I only mediated ... I wanted to do a favor. The intention was to use the profits to acquire additional projects which my company was initiating."
Katznelson later transferred another few hundred thousand shekels to Lerner - who then obtained another $400,000 from a different patsy.
After returning from a trip to Hungary, Katznelson called the company. "Sofa or Hagai told me that everything was fine and that the ship should be leaving from Riga on time. After that it changed to Odessa. After a time, Sofa called to say that the ship was on the way and they were celebrating. A day or two later, Sofa or her assistant called me and said there were problems, that I should come urgently. When I got there they told me Gregory had collapsed ... The ship could not be found."
Lerner did indeed collapse. Katznelson, concerned that his money had gone down the drain, hurried to Lerner's residence in Ashkelon together with Landver. They found Lerner sick and exhausted. This was the death of the fictitious deal, or more accurately, the gas sting.
Enter Shoni Gavrieli
On the morning of January 28, 2004, a black Mercedes - a recurrent motif in this saga - glided into the underground parking lot of Azrieli Towers. At about 11:20 A.M., on a routine check of the first level of the parking area, the building's security personnel found a suspicious package wrapped in paper to which a cellular phone with dangling wires was attached. The police were called in; the package turned out to be an improvised explosive device. The police suspected that the device had fallen off the black Mercedes driven by Shoni Gavrieli, father of former Likud MK Inbal Gavrieli.
A few Belarus men were subsequently arrested and accused of attempting to assassinate Gavrieli as part of the gang wars for control of the illegal gambling market. The men were finally exonerated by reason of doubt.
The police investigation also found that Gavrieli had come to the building that morning to meet with Landver and Lerner about a gas deal. Landver told the police that she and her assistant, Meller, had been the go-betweens in the deal. Gavrieli said in his testimony that the meeting was about a deal "to sell crude oil from Russia to the United States." Landver, for her part, maintained that the deal involved the sale of oil and fuel products from Russia to Israel. And Lerner, in one of his versions of the events, said they talked about supplying fuel products to the Palestinian Authority.
Landver testified that she personally signed a check from Lerner for deposit to the account of the energy company Gavrieli represented. "I was asked to sign a check for $1.1 million ... Hagai Mann, myself and Elena Meller signed on the back of the check as guarantors," Landver told the police interrogators.
The company for which Gavrieli acted as a middleman was called Max Fuel Products and was controlled at the time by Koko Ovadia and Giora Sarig, a former CEO of the giant Delek fuel company. Until 2006, Ovadia, together with Dorgas, held the exclusive franchise to sell gas to the Palestinian Authority. In the late 1990s, Ovadia, who is considered close to former PA security chief Jibril Rajoub, was accused of evading the payment of excise taxes on fuel he exported to the PA. In the end, Ovadia paid a fine of NIS 12 million and the charges were dropped. Ovadia's company and Lerner's firm signed an agreement guaranteeing the supply of hundreds of thousands of tons of fuel. According to confidants of Gavrieli, the deal was not consummated because Lerner's bluff was exposed. According to one of the participants in the negotiations, the presence of a former MK in the discussions was one factor in getting them to believe that the deal was serious.
Advise and donate
In 2004, Katznelson and Lerner held a tense meeting after Lerner promised several times to return Katznelson's money, but gave him forged checks. Katznelson told Lerner that another businessman he had swindled had complained to the police about him. Lerner left the cafe where the meeting took place, went to his Azrieli Towers office, dumped documents into bags - including the company's documents - and then drove around Tel Aviv, throwing the bags into garbage bins across the city in order to be rid of potentially incriminating material.
The investigation against Lerner was conducted by the police international crime investigations unit, headed at the time by Yohanan Danino, who is now the police commissioner. It soon turned out that Lerner had set up straw companies bearing names identical to the giant Russian firms. He had made false promises and forged contracts, minutes of meetings, bank papers, certified checks and payment instructions in order to defraud investors and get his hands on their money with the aim of laundering it. He also continued to be in touch with Russian underworld bosses. For example, he told the police that he had transferred $1 million from his account in Switzerland to accounts belonging to the head of the Russian crime organization Solntsevo, Sergey Mikhailov.
Landver testified that she left the company a few months after both Lerner and his company collapsed and that she earned tens of thousands of shekels during the months in which she worked for him. "I left the company when Lerner started to drink and go crazy," she said, adding that she had turned down his request to invest the money she received from selling her apartment, $310,000, in the company. She confirmed that Lerner was the moving spirit behind all the transactions. Everyone worked with the adviser Lerner; all the oil and fuel ties were under his responsibility." The police did not ask her even one question about the interesting relations she developed with Lerner over the years.
This is the place to relate the following episode. In late 2003, while working with Lerner, Landver became head of the national federation of Russian-speaking immigrant organizations. In that capacity, she initially received expenses of thousands of shekels a month, plus a car, and in June 2005 began to receive a monthly salary. One of the association's financial statements, which was obtained by Haaretz Magazine, acknowledges receipt of a donation of NIS 50,000 from one Gregory Lerner.
Agreement with the prosecution
In mid-2004, Lerner came to the headquarters of the international crime investigations unit, not to be interrogated, but to reveal explosive information about senior Israeli figures. The meeting was preceded by negotiations between Danino and Lerner's lawyers, Hanan Gold and Moshe Friedman, which culminated in an agreement for Lerner to spill the beans in return for which the charges relating to the gas sting would be dropped.
In the course of many meetings, Lerner told harrowing stories about corrupt politicians who hold foreign accounts into which tycoons with vested interests pour millions. He promised to substantiate his testimony with documents and external evidence, but in the end could not. The police did not bother to question any of the leading political figures Lerner mentioned in order to check whether some of his fantastic stories might, after all, be true. Finally, the police and the State Prosecutor's Office decided to cancel the agreement with Lerner. In February 2006, Lerner appeared in court and admitted to the gas fraud. He now awaited the verdict.
A month later, Lerner arrived at Ben-Gurion airport, presented a passport in the name of Valery Bronstein, boarded a private plane and flew to Cyprus. He then went on to Paraguay. Ten days later, he was arrested in a hotel in Asuncion, the capital of Paraguay. His Louis Vuitton bag was found to contain more than $1 million in cash. Extradited to Israel, he was sentenced to six years in prison for the gas swindle. It then turned out that this was only the aperitif, that while Lerner was being interrogated and signing a state's witness agreement, he had been far from idle on the scam front.
This business initiative, which was devised between October 2004 and his flight to Paraguay, involved a company named Rosneftegazinvest Ltd. Lerner presented himself as a well-connected trader with expertise in the international energy market. To raise money, he opened branches across Israel and published an alluring offer in the local Russian-language media: Investors in the company would get a risk-free return higher than anything else on the market. Again some Russian media outlets provided him with a tailwind. A series of articles portrayed him as a talented entrepreneur who was returning to the business world big-time. The articles played up the close ties between his company and the Russian fuel giant Gazprom. "Rosneftegazinvest has become an integral part of Gazprom, which makes the company extremely reliable," the Russian-language weekly Globus wrote.
Lerner's dark charms cast their spell again. At least 2,500 people, nearly all of them new immigrants from the former Soviet Union, mostly old people and pensioners from the periphery, handed over all their savings - a total of at least NIS 62 million - to Lerner. Again Lerner rented luxurious offices and ran a prestigious campaign in the Russian-speaking media. Lerner was presented as a local Dreyfus who was being persecuted only because he was Russian, a philanthropist who was ready to share his profits with the downtrodden Russian masses. The wizard of frauds was presented to the new immigrants as a magnate who had contracts for large-scale oil deals. Investors were promised monthly interest of 2 percent and 29 percent a year compounded.
During the period in which Lerner promised the new immigrants a bonanza, a retired senior police officer, Meir Gilboa, who investigated Lerner's exploits, used to swim every morning in a pool in Jerusalem.
"One day a new immigrant from Russia approached me and said, 'I want to invest in Lerner's company, which promises steady yields.' I replied, 'The guy will cheat you. He has already been convicted in the past.' The man said, 'That's all nonsense. You see the Russian immigrants as criminals and cheats. I see him as a victim.'"
As in every basic Ponzi scheme, Lerner gave some of the investors their money back with interest, thus increasing the number of patsies. Once again he created straw companies with names identical to the Russian firms, signed fictitious documents, built a tower of lies and sucked in the investors' funds through hidden transatlantic banking channels straight into his pocket, concealing his control of the companies and accounts.
It was only when he stopped supplying the goods that the pyramid started to totter. Defrauded pensioners stormed Lerner's offices. He fled to Paraguay. When he was brought back, he was tried for the gas fraud and interrogated about the new affair: the Russian-immigrant scam.
In that same year, 2006, Sofa Landver, the former Labor MK, returned to the Knesset, this time with Avigdor Lieberman's Yisrael Beiteinu party. Appointed to head the party's public complaints committee, she became the natural place to turn for the irate investors who had lost their savings to Lerner.
Landver was appointed immigrant absorption minister in 2009. A few months later, Lerner pleaded guilty to the sting operation against the Russian immigrants and was sentenced to another 12 years in prison. His lawyer, Menahem Rubinstein, claimed in his defense that he suffers from manic depression, which leads him to take enormous risks, while developing patterns of megalomania on the one hand and total introversion on the other.
The vanished oligarch
A little more than two years ago, on August 4, 2009, the black S-class Mercedes of the young tycoon Alexei Zakharenko, 45, was found abandoned in a St. Petersburg suburb. Zakharenko - a mysterious bachelor with a stutter, who has a Ph.D. in nuclear physics, collects weapons and is fond of alcohol - has not been seen since. The Russian police think he was murdered. About two years before his disappearance, Zakharenko started to visit Israel. Even though he is not Jewish, he put on a skullcap and dreamed of settling in the Holy Land. In late 2008 he met two Israelis who would become significant figures in his short life. One of them has already played a supporting role in our story: Elena Meller, the industrious and talented close associate and chief of staff of Sofa Landver until the summer of 2009. "The relations between them were like mother and daughter, they were that close," says a source in the Immigrant Absorption Ministry. "Then, one day she just disappeared."
Meller was Zakharenko's interpreter in conversations with his first partner in the Pushkin Restaurant in Tel Aviv, the chef Ronen Dovrat-Bloch. Dovrat-Bloch told police that he paid Meller thousands of shekels for every visit of the tycoon: "Meller would take Alexei Zakharenko to all kinds of political meetings, to hook him up with politicians ... We are in the Knesset, we have connections, we will take him to Sofa Landver, to make him feel like a VIP."
Meller is responsible for bringing together Zakharenko and the man the Russians suspect of being involved in the oligarch's disappearance: Nissim Dedzhaldeti. Dedzhaldeti was declared bankrupt in the late 1990s but went on maintaining a luxurious lifestyle and was active in the "gray market."
Complaints filed with the police against the charismatic businessman, on suspicion of being involved in sting operations and making threats, led nowhere. This year, though, the state prosecution announced that Dedzhaldeti would be charged with stealing hundreds of thousands of shekels from Isramco, a fuel company, and from a businessman. The police report submitted to the court stated that Dedzhaldeti was connected with leading criminals in the past
Zakharenko and Dedzhaldeti hit it off immediately; the former bankrupt became the tycoon's partner in Pushkin and other business ventures in Israel. Meller was the interpreter and Dedzhaldeti became Zakharenko's guide in the Israeli business jungle.
"Everyone wanted Alexei as their partner," Meller said in her police testimony. "Everyone thought he was the next [Arcadi] Gaydamak."
In mid-2009 Zakharenko and Dedzhaldeti established Zakharenko Investments. Oddly, Zakharenko gave Dedzhaldeti half of the company that he had held in trust in his name. A second agreement between them guaranteed that Dedzhaldeti would receive the remaining half of the company (by means of a share-transfer bill ) should Zakharenko be incapacitated. That peculiar condition was stated orally.
"Alexei told a lawyer who was in his home ... that if anything should happen to him he wanted the company ... to be transferred to my full ownership," Dedzhaldeti told the police. Zakharenko deposited more than NIS 30 million into the company's bank account.
What was Dedzhaldeti's part in the deal? Why did he get millions from the mysterious tycoon? The former bankrupt had a simple answer for the interrogators: "They gave it to me as a gift because he wanted my business services."
Dedzhaldeti says that Zakharenko signed the share-transfer bills in his luxurious St. Petersburg penthouse in the spring of 2009. On that visit, Zakharenko hosted Dedzhaldeti and Meller - who was still chief of staff of Immigrant Absorption Minister Landver - lavishly. "He put us up in the presidential compound on the North Sea ... You need a special permit to enter the compound," Dedzhaldeti said in his interrogation.
Even before this, Dedzhaldeti was in possession of a sweeping power of attorney, promising him management of all of Zakharenko's businesses across the globe. According to Dedzhaldeti, Zakharenko signed the document "in case anything should happen to him."
Why should a 45-year-old be concerned about his future? In this thriller, any explanation is possible. A few months later, Zakharenko disappeared. A week earlier, Dedzhaldeti visited him in St. Petersburg. On the night before he disappeared, Meller and Zakharenko spoke for an hour and a half by phone, until 1:30 A.M.
Very soon after Zakharenko's disappearance, Dedzhaldeti started to behave like his heir. He now had control of tens of millions of shekels which Zakharenko had transferred to Israel. Meller, who left her job in the Immigrant Absorption Ministry just a week before the oligarch's disappearance ("I had a professional conflict with Landver," she told the police ), also enjoyed Zakharenko's money with dizzying speed.
Less than a week after his disappearance, Dedzhaldeti started to transfer NIS 50,000 a month to Meller from Zakharenko Investments. Dedzhaldeti and Meller also started to look for an apartment for the well-connected lady, who is now renting a spacious, glittering home in north Tel Aviv and driving a fine automobile.
In October 2010, Elena Meller arrived at a police station in south Tel Aviv. She told the officers a horror story. That morning, she said, she had been in a hair salon in Rishon Letzion, when an armed man in sunglasses had called to her in Russian to come outside. "He told me aggressively, in Russian ... that Alexei [Zakharenko] owed $5 million to people in St. Petersburg ... He started to get angry and said he knew for a fact that I had the money, that they knew the streets I used ... that they would not ask again and that I had to come up with the whole amount on Sunday."
Two months later, Meller was summoned to the police international crime investigations unit, this time as a suspect. The Russian police had requested that she be questioned about Zakharenko's disappearance.
At the same time, the ICIU launched an independent investigation to find out whether Meller and Dedzhaldeti had conspired to seize control of Zakharenko's assets fraudulently. When the police arrived at Dedzhaldeti's home to arrest him, he was asked if he had a safe. He denied it, but a thorough search turned up a coded safe containing currency from a large number of countries.
The police investigation revealed that a month after Zakharenko's disappearance, Dedzhaldeti and his lawyer submitted an urgent request to the registrar of companies to transfer Zakharenko Investments to Dedzhaldeti. This was one stage of the former bankrupt's takeover of the vanished tycoon's assets.
The investigation lasted several months, and last April an indictment was filed against the two for allegedly exploiting absence and committing various offenses with the aim of transferring assets of Zakharenko's to Dedzhaldeti. They are also charged with conspiring to forge Zakharenko's signature on a power of attorney which allows Dedzhaldeti to represent him and act in his name anywhere in the world.
The prosecution claims that police lab tests prove the signature on the power of attorney is not that of Zakharenko. All the accused deny the charges. Dedzhaldeti's lawyer, Moshe Israel, notes that the prosecution has backed off its allegation that his client obtained control of Zakharenko Investments fraudulently (see box ).
He's right, and the reason is simple: Zakharenko, whose English is poor and who relied on the translations of Elena Meller, is not here to testify whether he understood the meaning of his signature on the share-transfer bills and whether he promised Dedzhaldeti orally that the other half of the company would revert to him if "something happened to [Zakharenko]." It is important to note that Dedzhaldeti and Meller were not accused of being responsible for the oligarch's disappearance, even though the former was found to be lying on a polygraph test about this.
Sofa Landver's name came up in this labyrinthine investigation, too. Dedzhaldeti told the police that he met her in 2008. "A friend from Ashdod tried to persuade me to come and meet Elena and Landver, because they were familiar with the Eastern Bloc and I wanted connections there in order to connect Turkish companies with the Eastern Bloc," he related. During the investigation it turned out that Dedzhaldeti, with his controversial record, became, at least in his account, the economic brain of the minister of immigrant absorption.
"For a certain period, Dedzhaldeti helped Sofa Landver and Dimitry Apartsev, the director general of the ministry," Meller said in her interrogation. "More than that, when we went with Sofa to a meeting with the finance minister, Nissim counseled her over the phone."
Dedzhaldeti confirmed this: "For 10 months I was an economic adviser in the ministry. I helped them prepare the budget. I worked with the minister, Sofa Landver. Even though I have only an informal education, I helped the ministry get an extra NIS 200 million for the annual budget," he boasted.
Landver, though, says that "Mr. Dedzhaldeti was never employed by the Ministry of Immigrant Absorption in any position whatsoever and did not take part in the ministry's budget deliberations."
Dedzhaldeti and Meller had ties of one kind or another with politicians. Meller introduced Dedzhaldeti to, among others, Tourism Minister Stas Misezhnikov (Yisrael Beiteinu ) and the two met occasionally at social events. Not long after Zakharenko disappeared, Dedzhaldeti told various bank officials that he would see to returning the missing oligarch.
"Nissim claimed that Zakharenko had been kidnapped ... that he was being held by his captors and that Nissim was negotiating the amount of the ransom," one bank official said in his testimony to the police. No trace of Zakharenko has ever been found. The Russian police continue to believe that he was murdered.
read more: http://www.haaretz.com/israel-news/haaretz-exclusive-how-a-serial-criminal-got-help-from-an-israeli-government-minister-1.397668
HOW THE RUSSIAN MOB HAS INVADED AMERICA
ROBERT I. FRIEDMAN
From an award-winning investigate journalist comes an astonishing expose of Russian organized crime, its growing power in the United States, and its terrifying implications for the rest of the World.
RED MAFIYA by Robert Friedman is a report on some of the figures and actions of the Russian mob in the United States today. Although, there are some claims that this book is "anti-Semitic," the author is himself Jewish. Friedman was a brave author to write and publish this because of the nature of the criminals he was trying to expose.
In the past decade (1990-2000), from Brighton Beach to Moscow, Toronto to Hong Kong, the Russian mob became the world's fastest-growing criminal superpower. Trafficking in prostitutes heroin, and missiles, the Mafiya posed an enormous threat to global stability and safety. Many are Jews brought over through the auspices ofJewish aid and refugee organizations. Many of its members are brilliant and highly educated, some holding PhDs in engineering, mathematics and economics. They have been involved in pretty much everything in which illegal money is to be made: the drug trade, prostitution, sex-clubs, gasoline bootlegging to avoid excise taxes, money laundering, arms deals, extortion, possibly rigging NHL games, jewelry theft and smuggling, the list goes on and on...
The black-market corruption of the Brezhnev era proved the perfect breeding ground for organized crime. Beginning in the 1970’s Soviet emigres—including a large number of felons and murderers the USSR was happy to get rid of—began arriving in the United States and a number of them quickly established themselves as a major criminal force in New York, Las Vegas, and elsewhere.
But it was the breakup of the Soviet Union that made the Russian mob what it is today. In a weakened, impoverished Russia, it quickly became the dominant power. And it now has spread to every corner of the United States infiltrating its banks and brokerage firms and American law enforcement is just waking up to this enormous problem.
No journalist in the world knew more about the Russian mob in America than Robert Friedman. At great risk to himself, he had made connections with a number of top criminals who have gone on record about their activities for the first time. The result of his discoveries is a revelation: the Red Mafiya is everywhere. The implications—for law enforcement, the economy, foreign policy, for the American people themselves—are staggering.
Robert I. Friedman covered the Russian mob for Details, Vanity Fair, and New York for years. He is the author of Zealots of Zion: Inside Israel's West Bank Settlement Movement. He lived in the New York area.
Published in 2000 by Little, Brown and Company
The following are excerpts from the book. The hypertext links have been added using Google search to provide the reader with additional information.
THE SUPERPOWER OF CRIME
I had just returned from a vacation in June 1998 when I found out how dangerous it is to investigate the Russian mob. Mike McCall, a top agent on the FBI's Russian Organized Crime Squad in Manhattan, called me with chilling news. "I hate to be the bearer of bad tidings," he said gently, "but the FBI has reliable information that a major Russian organized crime figure has taken out a contract on your life."
Belgian journalist Alain Lallemand, an expert on Russian organized crime who has suffered through hair-raising attempts on his life, once told me that the Russian mob would leave journalists alone as long they didn't come between the mobsters and their money. In a series of revelatory articles about the growing threat of the Russian mob in such publications as New York, Details, and Vanity Fair, I had apparently crossed this dangerous line.
Stunned, I finally managed to ask McCall what I was supposed to do in response. "We are working on this just as hard as we can," he answered, "but right now we can't preclude the possibility of something happening to you, okay?" But how could I protect myself—and my wife? McCall bluntly replied that it wasn't the FBI's responsibility to offer that kind of advice. After some pleading, he at last offered a tip: "If you have the opportunity to lie low," he said simply, "take it."
At the time, I was getting ready to fly to Miami to interview a Russian crime lord nicknamed Tarzan, a man who had sold Russian military helicopters to Colombian drug barons and was in the process of brokering a deal to sell them a submarine, complete with a retired Russian captain and a crew of seventeen, when he was arrested by the Drug Enforcement Agency. McCall told me to forget about the trip to Miami, which has the second largest concentration of Russian mobsters in the United States; a hit man could easily trace me to my South Beach hotel. For that matter, he said, I should also forget about doing any more interviews in Brighton Beach, Brooklyn—ground zero for the Russian mob in America. In fact, he advised, I should consider forgetting doing any more reporting at all on the subject.
The next day, a magazine that had just published one of my exposes of the Russian criminals generously supplied me with some getaway money and a bulletproof vest. Before I could flee town, however, I noticed a thickly bearded, muscular Russian loitering around my apartment building whom I was certain I had once seen in the company of a notorious Russian don nicknamed Fat Felix. I didn't waste any more time. I quickly collected my wife and drove up to a rented hideaway in Vermont.
One week spent pacing the floors of our retreat left me restless and upset, and I resolved not to be intimidated into silence or to spend another day underground. Despite the risk, I returned to my home. As far as the FBI was concerned, however, I was on my own; they refused to tell me anything further about the death order, feebly explaining that the bureau couldn't jeopardize its "sources and methods." One sympathetic DBA agent suggested that I buy myself a .357 revolver; as he explained, although it flares when it's fired and there is quite a jolt, it's more reliable than an automatic, which can jam if not constantly cleaned.
I later learned (though not through the FBI) that the author of the anonymous death threat against me was Semion Mogilevich, the Budapest-based leader of the Red Mafiya, the most brilliant and savage Russian mob organization in the world. It was after I had written a long expose of his criminal career in The Village Voice that he put out a contract on my life, a threat that was picked up during a telephone intercept by the Central Intelligence Agency, according to the New York Times. A European law enforcement official told the Times that the contract was for $100,000. At least one key witness in the murder plot was killed before he could testify against Mogilevich, the Sunday Times of London reported.
I first began exploring the shadowy world of Russian organized crime in the late 1980s. I had spent much of my career documenting the primordial struggle between Palestinians and Jews over a tiny, bloodstained strip of land on the Mediterranean that both sides passionately love and call home. On occasion, I'd tackle such diverse stories as AIDS, prostitution, and political corruption in India. While working on an Italian Mafia story, I was introduced by a Genovese organized crime family source in New York to several of his Russian criminal colleagues, a meeting that opened a door for me into this little known, nearly impenetrable ethnic underworld. I found them to be devilishly crooked wunderkinder, who in a few years' time, I suspected, could establish a New World Criminal Order. Over the following years, I ventured into the Russians' gaudy strip clubs in Miami Beach; paid surprise visits to their well-kept suburban homes in Denver; interviewed hit men and godfathers in an array of federal lockups; and traveled halfway around the world trying to make sense of their tangled criminal webs, which have ensnared everyone from titans of finance and the heads of government to entire state security services.
In the sheltered, seaside community of Brighton Beach, I had become a polite, but persistent pest. One Brighton Beach mobster tried to bribe me; another tied me up in a frivolous, though costly, libel suit; other Russian wiseguys tried to scare me off with angry, abusive invective. Several gangsters simply accused me of being biased against Russian emigres—a ridiculous accusation, as all four of my grandparents were Jews who fled czarist Russia for America to escape religious persecution.
Ironically, the first wave of Russian mobsters used the same excuse to gain entry to America. During the detente days of the early 1970s, when Soviet leader Leonid Brezhnev had agreed to allow the limited emigration of Soviet Jews, thousands of hard-core criminals, many of them released from Soviet Gulags by the KGB, took advantage of their nominal Jewish status to swarm into the United States. The majority settled in Brighton Beach, where they quickly resumed their cruel criminal vocation.
The Russian mob may act like Cossacks, but I never seriously considered running away an option. Yet then I received a second, particularly violent death threat: "Friedman! You are a dirty f_ _king American prostitute and liar! I WILL F_ _K YOU! And make you suck my Russian D_ _K!" The obscenity-laced note was placed inside a Hallmark Valentine Day's card that teased: "It was easy finding a Valentine for someone like you." The author of the threat hadn't bothered to hide his identity. It was signed Vyacheslav Kirillovich Ivankov.
The FBI has described Ivankov as the most powerful Russian mobster in the United States. Before coming to the U.S. in 1992, he spent many years in the Gulag for a number of gruesome crimes, including torturing his extortion victims, and he had personally ordered the killing of so many journalists, police, and civilians in Russia that a ruling council of mob bosses banished him to America. He arrived with several hundred no-neck thugs led by a former KGB colonel. Using his considerable intelligence and muscle, Ivankov quickly seized control of the Russian Jewish mob, which by then had grown from a neighborhood extortion racket in Brighton Beach to a brutal, innovative, multibillion-dollar-a-year criminal enterprise.
Despite his conviction in 1996 of extorting two Russian Wall Street investors, and his subsequent sentencing to a prison term in a federal penitentiary until 2005, Ivankov, according to the FBI, had continued to issue commands from his upstate New York cell, ordering the execution of his enemies and underworld rivals. When he mailed me the handwritten death threat, the fifty-nine-year-old gangster was so brazen that he included his cell block unit and prison ID number.
This time, I phoned the FBI. McCall rushed to my cramped New York apartment, where he gingerly picked up the caustic message with rubber gloves, placing it into a clear plastic folder. The bureau later considered making Ivankov's mordant valentine part of a multi count federal indictment against the godfather. "Our idea is to put him away for life," an FBI agent told me, explaining that, the longer Ivankov was in jail, the less sway he'd have over his criminal comrades. I was asked whether I'd be willing to publicly testify against the Russian. "If it makes you feel any better, I'm on his hit list, too," admitted one top FBI official in Washington. In fact, as one of the two agents who put Ivankov in prison, so was Mike McCall. But of course, they both had badges—and guns. Still, I agreed totestify, fully aware of the fact that the witnesses who had stood up against Ivankov in the Wall Street extortion case were now living secretly in the Federal Witness Protection Program.
However perilous the situation into which I was placing myself, I was aware that in Europe and the former Soviet bloc, the dangers faced by journalists are far, far worse. "Journalists pursuing investigative stories on corruption and organized crime have found themselves at great risk," stated a 1997 report from the New York-based Committee to Protect Journalists, "especially in Russia and Ukraine, where beatings have become routine. These physical assaults have had the expected chilling effect on investigative journalism, frightening some reporters into self-censorship or even quitting the profession, while many have resorted to using pseudonyms."
In all, thirteen journalists from the Russian Federation have been killed by the mob since the fall of communism, according to the committee. In one of the worst incidents of intimidation, Anna Zarkova, a forty-year-old award-winning crime reporter, had sulfuric acid hurled in her face in downtown Sofia in May 1998. From her hospital bed, now blind in one eye, the mother of two appealed to her colleagues not to be cowed into silence. "If they don't splash acid in your face as a journalist," she said, "tomorrow they will kill you in the street as a citizen. That's how crime escalates in this country."
Russian mobsters, in the United States, simply don't play by the unwritten rules of the acceptable uses of gangland violence. Rarely has the Italian Mafia, for instance, inflicted harm on a member of the American media, prosecutors, or judges, fully aware of the retaliation that would likely result. The Russians, however, have no such prohibition. Murder, for them, is a blood sport. "We Italians will kill you," a John Gotti associate once warned a potential snitch over a government wire. "But the Russians are crazy—they'll kill your whole family."* Some eighty Russian mob-related murders still languish unsolved on the books in Brooklyn alone. "The Russians are ruthless and crazy," a retired New York City cop told me. "It's a bad combination. They'll shoot you just to see if their gunworks."
*Note: Shortly afterward, on June 12, 1986, Balagula's rival, a psychopathic hitman named Vladimir Reznikov, entered the Rasputin nightclub in Brighton Beach. Reznikov pushed a 9mm Beretta intoBalagula's skull and demanded $600,000 as the price of not pulling the trigger. He also demanded a percentage of everything Balagula was involved in. After Balagula promised to get the money, Reznikov snarled, "F--- with me and you're dead -- you and your whole f---ing family; I swear I'll f--- and kill your wife as you watch -- you understand?" See Anthony Casso, The Russian Mafia
It is no small irony that the FBI has become my guardian angel, for if not for its own sluggishness in addressing the problem, the Russian mob in the United States would never have become as powerful as it is today. Though FBI boss Louis Freeh has said that Russian criminals pose an "immense" strategic threat to America, the bureau didn't even set up a Russian organized crime squad in New York until May 1994, long after the Russian mob in America was well entrenched. It should perhaps come as no surprise that the FBI, which likewise failed to go after La Cosa Nostra for thirty-five years, is now playing a desperate game of catch-up.
Blending financial sophistication with bone-crunching violence; the Russian mob has become the FBI's most formidable criminal adversary, creating an international criminal colossus that has surpassed the Colombian cartels, the Japanese Yakuzas, the Chinese triads, and the Italian Mafia in wealth and weaponry. "Remember when Khrushchev banged his shoe on a table at the U.N. and said he would bury the West?" a baby-faced Russian gangster once asked me in a Brighton Beach cabaret. "He couldn't do it then, but we will do it now!"
With activities in countries ranging from Malaysia to Great Britain, Russian mobsters now operate in more than fifty nations. They smuggle heroin from Southeast Asia, traffic in weapons all over the globe, and seem to have a special knack for large-scale extortion. The Russian mob has plundered the fabulously rich gold and diamond mines in war-torn Sierra Leone, built dazzling casinos in Costa Rica with John Gotti Jr., and, through its control of more than 80 percent of Russia's banks, siphoned billions of dollars of Western government loans and aid,* thereby exacerbating a global financial crisis that toppled Wall Street's historic bull market in August 1998.
*Note: See Russia Mafia Investments: Russia Capital Flight - Offshore Red Mafia Schemes
During an August 21, 2002 raid on the BANK OF NEW YORK ( BONY ), U.S. federal investigators seized the files of Ms. Natasha Gurfinkel Kagalovsky, a senior vice
president who supervised the East Europe division of BANK OF NEW YORK ( BONY ). Ms. N.G. Kagalovsky and BANK OF NEW YORK London (UK) vice president, Ms.Lucy
president who supervised the East Europe division of BANK OF NEW YORK ( BONY ). Ms. N.G. Kagalovsky and BANK OF NEW YORK London (UK) vice president, Ms.Lucy
Edwards, were suspended.
Tutored in the mercenary ways of a brutal totalitarian state riddled with corruption, the Russians have developed a business acumen that puts them in a class by themselves. Many of today's foremost Russian mobsters have Ph.D.'s in mathematics, engineering, or physics, helping them to acquire an expertise in advanced encryption and computer technology. "Hell," a senior Treasury Department official remarked, "it took them about a week to figure out how to counterfeit the $100 Super Note," which was unveiled in 1997 with much fanfare as "tamper-proof."
More ominously, U.S. intelligence officials worry that Russian gangsters will acquire weapons of mass destruction such as fissionable material or deadly, easily concealed pathogens such as the smallpox virus — all too readily available from poorly guarded military bases or scientific labs — and sell these deadly wares to any number of terrorist groups or renegade states.
In North America alone, there are now thirty Russian crime syndicates operating in at least seventeen U.S. cities, most notably New York, Miami, San Francisco, Los Angeles, and Denver. The Russians have already pulled off the largest jewelry heist and insurance and Medicare frauds in American history, with a net haul exceeding $1 billion. They have invaded North America's financial markets, orchestrating complex stock scams, allegedlylaundering billions of dollars through the Bank of New York, and coolly infiltrating the business and real estate worlds. The Russian mob has even penetrated the National Hockey League, where many players have either been its victims or become Mafiya facilitators, helping the mob sink its roots further into American soil. There is even fear that NHL games may be fixed. "The Russians didn't come here to enjoy the American dream," New York State tax agent Roger Berger says glumly. "They came here to steal it."
Russian mobsters in the United States aren't just Italian wiseguy wannabes. Merging with the even more powerful Mafiya groups that have flourished in post-perestroika Russia, they have something La Cosa Nostra can only dream about: their own country. Just as Meyer Lansky ran Cuba for a short time until Castro seized power in 1959, the Russian mob virtually controls their nuclear-tipped former superpower, which provides them with vast financial assets and a truly global reach. Russian President Boris Yeltsin wasn't exaggerating when he described Russia as "the biggest Mafia state in the world" and "the superpower of crime."
To further the deception, current Russian president Vladimir Putin continually rails against Russian Mafia leaders like Berezovsky and Gusinsky, issuing a steady stream of indictments, as if the Russian government is actively pursuing these international criminals. Of course, it’s all a ruse. As I have reported in my World Affairs Briefs, Spanish intelligence documented five visits last year that Putin made to Berezovsky’s villa in Spain just prior to Yeltsin’s downfall and Putin’s rise to power.
In 1993, a high-ranking Russian immigration official in Moscow told U.S. investigators that there were five million dangerous criminals in the former U.S.S.R. who would be allowed to immigrate to the West. It's nearly impossible for the State Department to weed out these undesirables because the former states of the Eastern bloc seldom make available the would-be émigré’s criminal record.
"It's wonderful that the Iron Curtain is gone, but it was a shield for the West," Boris Urov, the former chief investigator of major crimes for the Russian attorney general, has declared. "Now we've opened the gates, and this is very dangerous for the world. America is getting Russian criminals. Nobody will have the resources to stop them. You people in the West don't know' our Mafiya yet. “You will, you will!"
* * *
For nearly a year, the FBI promised to prosecute Ivankov for his death threat—or at least punish him by taking away some of his basic privileges. When they refused to act, I went to the Committee to Protect Journalists, which contacted the New York Times. On March 5, 1999, Pulitzer Prize-winning reporter Elaine Harden wrote a front-page Metro section story about the death threats. "I was a good soldier for a long time," I told Harden, "but then I felt like a billy goat on a stake. I have been exposed too long and the people making these threats have gone unpunished too long."
Within days after Harden called the FBI for comment, Ivankov was transferred in the middle of the night from his comfy cell at Ray Brook Correctional Institution, amedium-security federal prison near Lake Placid, New York, to the maximum-security prison at Lewisburg, Pennsylvania. The Times reported that Lewisburg would impose considerably tighter security restrictions on him because of the threat. "I want him to know I am behind this punishment," I told the Times. "And I want him to know that he cannot threaten the American press the same way the Mafiya does in Russia.
When the international press, bankers, and law enforcement officials professed outrage at the announcement that Red Mafiya boss Semion Mogilevich* was allegedly behind the laundering of as much as $7 billion through accounts at the Bank of New York, it recalled the scene in Casablanca when the corrupt butworldly wise Vichy prefect masterfully played by Claude Rains told Humphrey Bogart's Rick that he was "Shocked, just shocked!" that gambling was going on in Rick's cabaret. In fact, intelligence officials and government leaders had known since the early 1990s the true state of affairs in the former Soviet Union. The CIA alone claims to have published more than a hundred reports since 1998 for the American foreign policy establishment documenting crime and corruption in Russia—a society where everything from submarines for the likes of Tarzan to fissionable material for Mogilevich was for sale. The agency reported that the Russian mob and its cronies in government and big business have looted the country into a condition resembling medieval beggary: the economy has declined every year since 1991. More than 40 percent of the country's peasants are living in abject poverty, suffering through Russia's third Great Depression this century. In the unforgiving fields, peasants are killing each other over potatoes. Social indices have plummeted. Workers' minuscule paychecks come late or not at all. Horrific terrorist bombings, apparently the responsibility of rebellious Islamic republics, about which the authorities can seem to do nothing, are causing a further erosion of the public's trust of the government.
*Note: Mogilevich was born into a middle-class Jewish family. At the age of 22 he earned a degree in economics from Lviv University.
Mogilevich was referred to in the media as the “BILLION DOLLAR DON”
Semion Mogilevich, AKA “Seva” and called “The Billion Dollar Don” and “The Brainy Don”, has been on the FBI’s Most Wanted List since 2003. Mogilevich and associates are wanted in connection with dealings in YBM Magnex International Inc. In 1997 and 1998, journalists exposed the presence of Mogilevich, Sergei Mikhailov and others associated with the Russian Mafia behind YBM Magnex, then a public company trading on Canada’s Toronto Stock Exchange (TSE). YBM was fronted by a former Premier of Ontario and other prominent Canadian businessmen. On May 13, 1998 dozens of agents for the FBI and other US government agencies raided YBM’s headquarters in Newtown, Pennsylvania. Shares in the public company, which had been valued at $1 billion on the TSE, became worthless. In 1999 the BBC television program Panorama first interviewed Mogilevich for a documentary that looks at transnational criminal activities from the street to the boardroom. Part 1 of 4 Part 2 of 4 Part 3 of 4 Part 4 of 4
The 1996 FBI report said Mogilevich was involved in “weapons trafficking, nuclear materials trafficking, prostitution, drug trafficking, dealing in precious gems, and money laundering.” It said he was active in the U.S., as well as the Czech Republic, Austria, Russia, the Ukraine, the U.K. France, Slovakia, and Israel.
At the same time on Moscow streets are more Mercedes per capita than any place on earth, and the number one concern of the city's nouveau riche is how to avoid paying taxes and hide their fortunes offshore. They revel away nights in gaudy sex clubs and expensive restaurants, gorging themselves on South American jumbo shrimp washed down with vodka and cocaine. Disputes are settled with bursts of submachine gunfire. It is a classic fin de siecle society erected on a seemingly limitless supply of dirty money.
No post-Soviet institution has been immune from corruption, and even investigators have been investigated, often for good reason. Vladislav Selivanov, head of the Interior Ministry's Organized Crime Division, admitted in a July 1998 press conference that a probe of the Federal Security Service, the successor to the old Soviet KGB, resulted in several criminal prosecutions and the dismantling of the service's organized crime unit on the grounds that it had ties to the Russian mob. A few months later, during a bizarre news conference in Moscow, a group of mid-ranking FSB agents wearing sunglasses and ski masks declared that their once-vaunted agency harbored thugs, extortionists, and Mafiya hit men.*
*Note: CONTRACT KILLERS CONFESS TO MANEVICH'S MURDER. Four ethnic Russians arrested earlier this month have confessed to the August 1997 murder of St. Petersburg Deputy Governor and privatization chief Mikhail Manevich, Russian news agencies reported on 21 July. Three were arrested in the Osh region of Kyrgyzstan and the fourth in Uzbekistan. Vladislav Selivanov, the head of the Interior Ministry's crime-fighting division, said the four have been charged with a series of contract killings in numerous Russian cities from 1993-1997. The group was flown to Moscow on 21 July under tight security conditions. In the Russian capital, Interior Ministry investigators, the Prosecutor-General's Office, and the Federal Security Service are preparing evidence, "Kommersant- Daily" reported. Selivanov told a press conference there is "no objective evidence" suggesting the involvement of the group in the March 1995 killing of influential television journalist Vladislav Listev, but he added "there is a basis for this supposition," "Nezavisimaya gazeta" reported on 22 July.
To make matters worse, the country's few political reformers have been sacked or killed. The Duma is a den of thieves, as was Yeltsin's inner circle. The same has even been alleged of Yeltsin and his family, who have purportedly taken a million dollars' worth of kickbacks from a Swiss contractor that renovated the Kremlin. But corruption and influence-peddling are a national plague in Russia as old as the czars. No one in Russia can purchase anything of value without a cash-laden handshake.
Astonishingly, both the Bush and the Clinton administrations have unwittingly helped foster the Russian mob and the untrammeled corruption of post-Soviet Union Russia. When the CIA was asked in 1992 by Kroll and Associates, working on behalf of the Russian government, to help locate $20 billion that was hidden offshore by the KGB and the mob, the Bush national security policy team declined to cooperate. The Bush group rationalized, according to Fritz Ermath, a top CIA Soviet policy analyst writing in The National Interest, "that capital flight is capital flight. It doesn't matter who has the money or how it was acquired even if by theft; so long as it is private, it will return to do good things if there was a market."
Of course, that never happened, yet it did not prevent the Clinton administration from handing billions in aid to Russia without any accountability. With the vigorous support of the United States another $20 billion of International Monetary Fund loans has been deposited directly into Russia's Central Banksince 1992. However well intentioned, the Clinton administration simply has no way to deliver "economic aid that will give benefits directly to the people," as Brent Scowcroft, Bush's national security adviser, has asserted. The chastened Russian Central Bank, admitting that it lacked any mechanism to monitor aid money once it was deposited, initiated an investigation to determine if the funds were stolen, and if so, whether they were part of the monies passed by Mogilevich and others through the Bank of New York.*
*Note: One Ukrainian suspected of participation in the Edwards–Berlin scheme is the organized crime baron, Semion Mogilevich. Thus, it may have been Mogilevich’s underlings that Lucy Edwards had in mind when she commented in her confession that she was “aware that personnel from DKB were on occasion . . . afraid to leave the bank because they said customers with machine guns were waiting for them”.
Moreover, Fairfax had found that Igor Fisherman, YBM’s Chief Operating Officer, maintained a long-standing friendship with Mogilevich. Indeed, it seems Mogilevich “had access to bank accounts at a key Eastern European YBM subsidiary run by Fisherman
Until the Bank of New York fiasco, the top rungs of the U.S. foreign policy establishment refused to acknowledge the Russian government's staggering corruption. In 1995, the CIA sent Vice President Al Gore, who had developed a "special" relationship with then Russian prime minister Viktor Chernomyrdin, a thick dossier containing conclusive evidence of his widespread corruption. Gore's friend had become a multibillionaire after he took over Gazprom, the giant natural gas monopoly, with holdings in banking, media, and other properties. The CIA said it cost $1 million merely to gain entry into Chernomyrdin's office to discuss a business deal. It was also alleged, though Chernomyrdin denied it, that he was among the oligarchs who had been stealing the country's resources after the fall of communism.
Gore angrily returned the report, scribbling a barnyard epithet across the file, according to the New York Times, and declared that he did not want to see further damning reports about Russian officials. It is unlikely, then, that he read the classified FBI file claiming that two colonels in the Russian Presidential Security Service had traveled to Hungary in 1995 to pay Mogilevich for information on the upcoming Russian political campaign, which was then allegedly passed on to Chernomyrdin. "The corruptive influence of the Mogilevich organization apparently extends to the Russian security system," asserts the FBI report.
"The bottom line is that Clinton and Gore had lots of warning about Russian corruption under Yeltsin's banner of reform," wrote political columnist David Ignatious in the Washington Post. "And the question continues to be: Why didn't the administration do more to stop it?"
The most charitable explanation, which now seems tragically ironic, is that they truly believed they were helping the ex-Soviet Union make a meaningful transition to democracy and a free market economy.
"The American political establishment didn't want to hear about Russia's corruption," says Jack Blum. "They believe they're looking at nascent capitalism, and they are flat-ass crazy. A bunch of thugs run the country. They have stolen everything that isn't bolted down, moved it offshore, and then globalized their criminal business."
It was only a matter of time before the Russian mob tried to buy its way into the American political system that has contributed to it so generously, if inadvertently. In New York, for instance, they almost succeeded. The invitations had been mailed, the menu prepared, and everything had been arranged down to the last detail for a $300 per couple, black-tie fund-raiser for then Governor Mario Cuomo on October 10, 1994, at Rasputin—the garish nightclub then owned byMonya Elson and the Zilber brothers. But on the eve of the event, the Cuomo campaign canceled. Officially, the explanation was a scheduling conflict; discreetly and quite unofficially, federal investigators had warned the Cuomo campaign that Rasputin was a bastion of the Russian Mafiya.
A few months before the Cuomo fund-raiser occurred, there was a similar misjudgment, and one that represented a serious lapse in national security. Grigori Loutchansky, a Latvian-born convicted felon and president of the Austrian-based NORDEX, a multinational trading company, had been implicated in everything from major money laundering to smuggling nuclear components. House Speaker Newt Gingrich once said that U.S. government officials believed Loutchansky had shipped Scud missile warheads to Iraq from North Korea. The ubiquitous Loutchansky was also a former business associate of both Chernomyrdin and Semion Mogilevich, according to the CIA and other Western intelligence officials. Yet somehow this enormously wealthy underworld rogue was invited to a private Democratic National Committee fund-raising dinner for Clinton in 1993. During coffee, Clinton turned to the mobster to ask a favor: would he pass a message along to the Ukrainian government requesting it to reduce its nuclear stockpile? Clinton then posed for a photograph with the grinning hood, which Loutchansky later liberally passed out among his cronies, greatly enhancing his stature among corrupt government officials and the criminal underworld. When the photo of the men shaking hands was eventually published in a Russian newspaper, the CIA analyzed it to see if it was a fake. When they discovered it was genuine, agency officials were aghast. "Loutchansky had one thing in mind: legitimization," a congressional investigator probing Russian organized crime explained. "He wanted U.S. citizenship and he wanted to buy a U.S. bank."
In July 1995, the DNC invited the mobster to a $25,000-a-plate fund-raising dinner for Clinton at the Hay Adams Hotel in Washington. At the last minute, the security services provided information on Loutchansky and the State Department denied him a visa, which he had obtained in Israel. He was subsequently banned from entering the United States, Canada, Hong Kong, and England.
The mobsters were not easily dissuaded, however. In September 1995, not long after the Loutchansky ban, his partner at NORDEX, Ukrainian mob boss Vadim Rabinovich, attended a Clinton-Gore fund-raiser at the Sheraton Bel Harbor Hotel in Miami. Rabinovich came as a guest of Bennett S. LeBow, the chairman of Brooke Group Ltd., parent of Liggett, a cigarette manufacturing company. (LeBow refused to comment.)
Rabinovich, who by his own account once served an eight-year jail term in Ukraine for theft of state goods, should not have even been in the United States, let alone attending a gala for the president, for he was on a State Department Watch List that bans aliens from entering the United States to commit crimes.Nevertheless, he, too, cleverly managed an all-important photo op, squeezing in between a smiling Clinton and Gore. That picture, too, appeared in the Eastern European press, greatly adding to the mobster's reputation.
The Republicans have not been immune to the Russian mob's advances, either. In March 1994, Vahtang Ubiriya, one of Mogilevich's top criminal lieutenants, was photographed by the FBI at a tony Republican party fund-raiser in Dallas, says a confidential FBI report. Ubiriya, a high-ranking official in the Ukrainian railway administration, has a prior conviction for bribery in that country. A friend of Mogilevich for some twenty-five years, he has been involved with him in extortion, fraud, and illegal currency operations there.
This was not Mogilevich's only attempt to manipulate the U.S. political system. After the INS and the State Department denied visas to YBM employees arriving from Budapest and Ukraine, Jacob Bogatin* contacted the FBI office in Philadelphia for an explanation. Rebuffed, Bogatin—who had donated $2,250 to the National Republican Committee and an additional $500 to the National Republican Congressional Committee, a soft money account, between April 1996 and April 1998 — called upon Pennsylvania Republican congressman Jim Greenwood for help obtaining the visas. "I remember when they came to visit me and they brought all those brochures, and I remember how impressed I was that such a high-tech enterprise was there in the Newtown industrial park," Congressman Greenwood recalled. "And I remember thinking, 'Gee, I wonder how they had escaped my attention.' Normally when there is a particularly interesting high-tech industry in your district you become aware of it and often take a tour."
*Note: For example, Jacob Bogatin, president of YBM Magnex, a Pennsylvania firm that produces magnets, made five contributions totaling $2,750 to the National Republican Congressional Committee from 1996 to April 1998, according to Federal Election Commission records. One month after the last contribution, federal agents raided the company in a money-laundering probe of Magnex and its silent owner, notorious Hungarian mobster Semion Mogilevich.
Greenwood's staffers petitioned the State Department on Bogatin's behalf, requesting a reason for the denial of the visas. After it was "nonresponsive, I then made personal calls to the State Department to get to the bottom of it, and I was essentially told that what I ought to do is talk to the FBI," said Greenwood. "We arranged for FBI representatives to come to my office in Washington." Greenwood recalled that the agents told him in confidence that Russian godfather Semion Mogilevich was running YBM and that it was under investigation for money laundering among other crimes. They also said that Bogatin "had to know" what was going on. "It took a hell of a lot of gall if Bogatin was aware of this and [yet he] sat with a U.S. congressman, demanding that our government [allow] their employees back into the country," Greenwood angrily declared.
By the dawn of the new millennium Russian mobsters were lavishing millions of dollars in contributions on Democratic and Republican politicians. In New York City, commodities mogul and alleged wiseguy Semyon (Sam) Kislin has been one of mayor Rudy Giuliani's top campaign supporters. Kislin, various relatives, and his companies, raised or donated a total of $64,950 to Giuliani's mayoral campaigns in 1993 and 1997. A Ukrainian immigrant well known among the Russian Jewish community in South Brooklyn. Kislin has also made generous donations to Democratic Senator Charles Schumer as well as other state politicians.
Note: A prominent commodities trader who acknowledges a business history with a reputed Soviet Bloc crime figure and a notorious arms dealer has been one of New York Mayor Rudy Giuliani’s top campaign supporters. Commodities trader Semyon (Sam) Kislin and his family also lavished thousands of dollars in contributions to Democratic Senator Charles Schumer, to the Clinton-Gore re-election campaign, to former Republican Senator Alfonse D’Amato and to a number of state and city politicians. Kislin sits on the New York City Economic Development Board.
According to a confidential December 1994 FBI report and underworld sources, Kislin is a member of the Ivankov organization. These sources say that Kislin's New York commodities firm has been involved in laundering millions of dollars, and co-sponsored a U.S. visa for a man named Anton Malevsky, who is a contract killer and head of one of Russia's most bloodthirsty Mafiya families.
Kislin's donations to charities and politicians bore fruit in 1996 when he was appointed to be a member of New York City's Economic Board of Development Corporation. On December 2, 1999, Giuliani reappointed Kislin to the board, stating in a letter that his "service is deeply appreciated." Kislin has denied any ties to the Russian mob, insisting at a December 1999 press conference that "I have done nothing evil."
Although the Russian Mafiya's invasion of American politics is still in its infancy, it already poses a huge threat to U.S. national security interests abroad. The mob dominates Russia, and has Eastern Europe in a bear hug. It is also turning Western Europe into its financial satrapy, and the Caribbean and Latin America have quickly become sandy playpens for coke and weapons deals with Colombian drug lords. There are few nations where the Russian mob does not hold some influence, making efforts to combat it ever more difficult.
A striking example is Switzerland, where the Mafiya has been drawn by the country's world-renowned, highly secretive banking system. "There are three stages of Russian Mafiya penetration," Jean Ziegler, a university professor in Switzerland has explained. "When the Soviet Union broke up, Switzerland was the laundering place for immense fortunes. Then Mafiya leaders started sending their children to expensive private schools here. Now we are in the third stage, where some of theMafiya dons are transferring their operational headquarters to Switzerland—and that is very dangerous." More than six hundred Russian dons have moved to Switzerland, and, according to Swiss court documents, more than $60 billion of Russian mob money has been laundered through its banks.
In one of Switzerland's first strikes against a major Russian gangster, Sergei Mikhailov was arrested in October 1996 in Geneva for money laundering and for his leadership of the Solntsevskaya crime family. Headquartered in Moscow, the Solntsevskaya mob openly operated out of a stylish commercial office building at Leninsky Prospekt, where it controlled much of the city's gambling, casino, and banking business, as well as prostitution, drugs, the city's used car trade, and the Vnukovo airport, the city's principal cargo terminal. It also owned real estate from Malaysia to Monaco, setting up a labyrinth of fictitious international firms and offshore accounts to launder money received from the sale of narcotics, arms**, and extortion. At the time he was apprehended, Mikhailov was living in a quaintchateau outside Geneva, where he drove around in a blue Rolls-Royce, maintained a $15,000-a-month clothing budget, and doted on his wife and two children. He traveled on a Costa Rican diplomatic passport and had been appointed that country's honorary consul to Moscow.
**Note: Another notorious arms smuggler is Yair Klein who was born in British-occupied Palestine in 1943, the son of hardcore Zionist settlers. He is a member of the Ariel Sharon Generation, a tough Jewish warrior mofo. A veteran of the IDF’s special forces, Klein fought in the Six Day War and Yom Kippur War.
Inside Mikhailov's lavish home, police found sophisticated Israeli military devices that allowed him to eavesdrop on secret Swiss police radio communications and to tap telephones. They also discovered a trove of documents listing front companies he allegedly used to launder money from drugs and arms sales. Investigators learned that Mikhailov had invested millions of his laundered dollars in America: he had bought a Brighton Beach disco called Nightflight, which he owned with Ivankov. He acquired another club in Los Angeles. He also purchased a car dealership in Houston with a local who agreed to send red Jeep Cherokees to him in Geneva so he could give them as gifts to friends. The Texan had no idea of the danger to which he was exposing himself when he began to pocket Mikhailov's money, and though the furious gangster sent a hit man to Houston, the killer was captured by the police.
Investigators learned that apart from the tranquil Geneva suburbs, Mikhailov's favorite hangout was Miami. After his men committed murders in Europe and Russia, they would check into the Fontainebleau Hotel "where they would stay by the beach and wait for the heat to cool off," according to retired FBI agent Robert Levinson. But before hitting the soft white sand, the mobsters liked to stop at a nearby Sports Authority, where they bought snazzy jogging outfits to preen for South Beach's glamorous models.
Although Mikhailov insisted, typically, that he was a simple businessman, he is a career criminal with an excellent strategic mind. Born on February 7, 1958, in Moscow, the onetime waiter was first convicted in the Soviet Union in 1984 of theft and perjury, according to a classified Russian document. He was later investigated for murdering a casino owner and a banker. In 1989 he was arrested for extortion, but the victim found it judicious to recant.
The Swiss authorities were confident that they had an excellent case against the mobster, but on the eve of Mikhailov's Swiss trial, a Dutch father and son who hadengaged in some questionable business dealings with Mikhailov in Moscow were executed gangland-style. The father was stabbed in the eye and bled to death; his son was gunned down. Soon afterward, Moscow's chief of police sought political asylum in Switzerland; claiming he was threatened by Mikhailov's men. The press was targeted, too. Veteran Russian mob reporter Alain Lallemand of Le Soir in Brussels was threatened after he wrote a series about Mikhailov that apparently displeased the mobster. Lallemand was warned by several intelligence services that Mikhailov had scheduled his assassination, and the reporter and his family went underground for a month. The police captured an ex-Belgian gendarme in Brussels who was about to carry out the contract.
Despite these intimidation tactics, the trial went forward, with a total of ninety witnesses being issued protective vests and placed under close guard. The key witness against Mikhailov was Robert Levinson, the ex-FBI agent based in Miami who specialized in the Russian Mafiya. Some foreign intelligence agents, however, were dismayed when they saw his briefing book, which seemed to primarily consist of warmed-over FBI gossip. Why hadn't the bureau dispatched active agents with more current material that would hold up as evidence? asked Pierre Delilez. "They are always telling the European intelligence agencies to share. They share nothing." Lallemand, however, insists that the FBI's material was excellent, though the best of it never made it into evidence.
Meanwhile, Mikhailov had succeeded in securing a high-profile paid expert witness for his defense: former U.S. Attorney General Ramsey Clark. Clark has become something of a heretic for having taken on a series of unpopular cases like representing a German SS guard who the U.S. government said massacred Jews during World War II and then illegally gained citizenship.
Clark was first approached by a young Russian lawyer representing Mikhailov, who thought an American with his prestigious legal pedigree would be of great help to his client. Clark politely declined, but Mikhailov's men persevered over the next several months. A group even came to his downtown Manhattan office and asked him to slam the FBI with a "slap suit" that would keep their evidence out of Swiss court. Clark informed them that they didn't have a legal theory that would stand up in an American courtroom.
Finally, Mikhailov's lawyers convinced Clark to look at Levinson's FBI briefing book and some documents that they had obtained in discovery. After reading the material, Clark changed his mind. The FBI reports reminded him of the kind of malicious, untested gossip the bureau had used when it wanted to bring down civil rights leaders. "It was American criminal imperialism," he stated.
Even though the burden of proof was on Mikhailov— under Swiss law, he had to prove that he was not the head of a mob family—Clark skillfully helped dismantle Levinson's testimony, not only showing its inconsistencies, but arguing effectively that the bulk of it was built on rumor, hearsay, and derived from unverifiable anonymous sources. Levinson could neither read nor write Russian, Clark declared, but more importantly, the ex-FBI man's intelligence files—or information culled from them—would almost certainly never be allowed into evidence in a U.S. court of law.
Yet Clark's defense alone could not have vindicated the mobster. At least as damaging to the Swiss authorities' case was the fact that several Russian prosecutors working with the Swiss were suddenly and inexplicably fired, after which the Russian government reneged on its previous promises to send crucial documents to Geneva.
Mikhailov, who had been held in a Swiss prison for two years, was acquitted in December 1998. "My heart is full of gratitude," he announced at an airport press conference. "I love you." He was then quietly deported to Moscow aboard an Aeroflot jet. The acquittal was a devastating blow to both Swiss and international law enforcement who had been battling the Russian mob, and it was followed by the usual round of fmger pointing. "The next time we try a major Russian mob boss, we are going to need a watertight case," said Pierre Delilez, who believes that the FBI intentionally fumbled the case, perhaps in order to be able to use Mikhailov as an intelligence agent. James Moody, meanwhile, blamed Levinson for a poor performance. In truth, it was Mikhailov's power, money, and international connections that had succeeded in winning his release and enabling him to continue his glorious criminal career.
The Swiss, meanwhile, are still struggling with the intractable problem of the Russian mob. Ziegler says the only way to derail their inexorable advance is to ban Russian banks from operating in Switzerland, since most of them are controlled by gangsters. Some Swiss banks have already adopted a blanket policy of not accepting any Russian clients. On September 3, 1999, Swiss authorities announced that they had frozen fifty-nine bank accounts, and asked Swiss banks to provide information on the two dozen Russians who held them. Yet in a country where it is not illegal to bribe a public official, the Swiss skirmish against the Russian mob smacks of the Marx Brothers going to war against a mythical kingdom in Duck Soup.
Of all the nations where the Russian mob has established a presence, none has been more deeply compromised than the State of Israel, America's staunchest ally in the volatile Middle East. More than 800,000 Russian Jews have made aliyah or settled in Israel since the first massive wave of immigration in the 1970s. The Russians took advantage of Israel's most sacred law—the Right of Return, which guarantees Jews the right to return to their ancestral homeland, where they would receive citizenship and live as free men and women outside the odious yoke of anti-Semitism. "The Russians are a blessing," said Israel's top political columnist Nachum Barnea, who stands in public awe of their brilliant intellectual gifts in a variety of fields.
But just as in Brighton Beach, Russian immigration to Israel has brought a more unwelcome element—the vor v zakonye and their criminal minions. Ten percent of Israel's five million Jews are now Russian, and 10 percent of the Russian population "is criminal," according to NYPD notes of a briefing in Manhattan by Israeli police intelligence official Brigadier General Dan Ohad.
"There is not a major Russian organized crime figure who we are tracking who does not also carry an Israeli passport," says senior State Department official Jonathan Winer. He put the number at seventy-five, among whom are Mogilevich, Loutchansky, Rabinovich, and Kobzon.
Many of the mobsters who have Israeli citizenship, such as Eduard Ivankov and Sergei Mikhailov, are not even Jewish. In the mid-1990s, an Israeli police sting—code-named Operation Romance—netted, among others, a high-ranking Interior Ministry official who was taking payoffs from Mikhailov and convicted KGB spyShabtai Kalmanovitch* to issue passports to dozens of Russian gangsters, according to Brigadier General Hezi Leder, the Israeli police attache in Washington, and classified FBI documents. (Kalmanovitch, after serving time in an Israeli prison for treason, became one of Moscow's most notorious mobsters and frequently returns to Israel.)
*Note: Rabbi Greenwald was involved in the transfer of Shabattai Kalmanovich from the USSR to Israel. However, in 1987 Kalmanovitch was arrested in Tel Aviv and charged with being a KGB spy and sentenced to nine years in prison in 1987 for spying for the Soviet Union. He was released from prison after five years and returned to Russia. On November 2, 2009, Kalamovitch was assassinated in Moscow, Source: http://en.wikipedia.org/wiki/Ronald_Greenwald#Shabattai_Kalmanovich
Russia's criminal aristocracy covets Israeli citizenship "because they know Israel is a safe haven for them," said Leder. "We do not extradite citizens."
"The Russians then use the safe haven to travel around the world and rape and pillage," added Moody.
The country has also remained attractive to gangsters because "Israel is good for money laundering," explained Leder. Under Israeli law, banks can accept large cash deposits with no questions asked. In one instance, a corrupt ex-deputy prime minister of Ukraine smuggled $300 million of illicit cash into Israel in several suitcases, and deposited it into a bank, as Israeli Minister of National Security Moshe Shahal told a gathering of intelligence heads in June 1996. "I've watched Russian mobsters exchange suitcases full of cash out in the open at the Dan Hotel's swimming pool," laughed an American underworld crime figure. "Israel is a country that encourages people to come and invest money," said Leder. "There is no mechanism to check the origin of the money."
Israeli police officials estimate that Russian mobsters have poured more than $4 billion of dirty money into Israel's economy, though some estimates range as high as $20 billion. They have purchased factories, insurance companies, and a bank. They tried to buy the now defunct, pro-Labor Party Davar daily newspaper, and the pro-Likud Maariv, the nation's second largest newspaper. They have even put together a koopa, or a pool of money, for bribes and other forms of mutual support. One of Leder's greatest fears is that the Russians will compromise Israel's security by buying companies that work for the military-industrialcomplex. The mobsters, in fact, attempted to purchase a gas and oil company that maintains strategic reserves for Israel's military. "They could go to the stock market and buy a company that's running communications in the military sector," he complains.
Insinuating themselves throughout the country, Russian dons have bought large parcels of impoverished development towns, taking over everything from local charities to the town hall. For instance, Gregory Lerner, a major Russian crime boss who arrived in Israel with huge amounts of money, allegedly owns everything from fashionable restaurants to parts of several port city waterfronts.
"Do you know what Gregory Lerner did in Ashkelon?" Leder asked me during an interview in New York. "His mother was three times in the hospital there. He bought new medical equipment and dedicated it to his mother] It's the way the mobsters wash their name." They do so, he explains, in order to build up grassroots support and openly influence politicians*—or even run for elective office. Leder worries that one day three or four Russian gangsters who have bought their legitimacy will win Knesset** seats, take over a key committee, and be in an ideal position to stop an important piece of anti-crime legislation, such as a proposed bill to criminalize money laundering.
Note: Does this not sound familiar to what is now occurring in the United States with lobbies representing a foreign nation such as AIPAC* who financially support gentile politicians running for office who are pro Israel and Jewish American congressmen , senators and government appointees ** who posses a strong dual loyalty.
One of Leder's worst fears came true when Russian gangsters handpicked several candidates to run for local and national offices, according to the minutes of a classified Israeli cabinet meeting held by the Committee of the Controller in June 1996. And in May 1997, Israeli police launched a probe into allegations thatLerner attempted to bribe former Prime Minister Shimon Peres, among other Knesset members and cabinet ministers. The investigation was inconclusive, however, and no charges were filed.*
*Succumbing to persistent pressure from the Russian government, the Israeli police finally arrested Lerner in May 1997 as he was about to board a flight to the United States. He was charged with attempted bribery, defrauding four Russian banks of $106 million, and attempting to set up a bank in Israel to launder money for the Russian Mafiya. Lerner pleaded guilty to bank fraud and bribing government officials on March 22, 1998, after having fiercely maintained for months that he was a victim of an Israeli government plot to discredit Russian emigre entrepreneurs.
One politician already ensnared in the web of organized crime is Russian-born Natan Sharansky, the head of the Russian Yisrael Ba-Aliya and minister of the interior in the government of Prime Minister Ehud Barak. Because of his resistance to the Soviet regime and his strong and open identification with Judaism, he suffered a long, brutal confinement in the Gulag before international pressure led to his release. In Israel, the charismatic dissident was lionized by the Jewish people, and he became a power broker for the large and growing Russian emigre community, whom he helped integrate into a rigid society that sometimes seemed jealous of the talented new Russians.
However, Sharansky has publicly admitted that his party has accepted campaign contributions from NORDEX president Grigori Loutchansky. Officials from the U.S. Congress, the State Department, and the CIA pleaded with Sharansky to sever his ties to Loutchansky. "We told Sharansky to stop taking money from Loutchansky," says Winer. "We told him about [Loutchansky's] MO: bribery, influence peddling, that he was a bridge between foreign governments and traditional organized crime."
Sharansky simply refused, arguing that he needed the money to resettle the tidal wave of Russian emigres. "When we warned Sharansky," says the congressional investigator, "to stop taking money from Loutchansky, he said, 'But where am I going to put them,'" referring to the huge influx of Russian Jewish refugees. '"How am I going to feed them? Find them jobs?'" He figures Loutchansky is just another source of income.
"Sharansky is very shrewd," the congressional investigator continued. "He knows better. It was a cynical [decision] . He did take money. Then he asked, 'Why shouldn't I?' The CIA warned him that Loutchansky was trying to buy influence through him and his party for [the] Russian Organized Crime/Russian government combine. We told Sharansky that Loutchansky is a major crook." (Sharansky declined to comment.)
Ignoring all the warnings, Sharansky introduced Loutchansky to Benjamin Netanyahu prior to Israel's 1996 national elections. The Israeli press reported thatNetanyahu received $1.5 million in campaign contributions from Loutchansky, a charge the prime minister hotly denied. "The Likud is corrupt, and Bibi [Netanyahu] is disgusting," says Winer. "He's had meetings with Loutchansky and Kobzon—criminals promoting their own interests."
Kobzon's influence in Israel may exceed that of even Loutchansky and Mogilevich. "Kobzon has big [political] connections in Israel," says Leder. For instance, in January 1996, Kobzon was detained upon his arrival at Israel's Ben Gurion International Airport "because of his ties to the Russian Mafiya," Labor Party Knesset member Moshe Shahal said in his cramped Knesset office in Jerusalem. Shahal, at the time the country's security minister, intended to send the mobster back to Russia, but then the phones started ringing in the chambers of high government ministries. Kobzon's friends in Israel petitioned the minister of the interior, the minister of transportation, and Foreign Minister Shimon Peres, who finally ordered the airport police to free Kobzon and let him enter the country. Peres, who was being pressed by the Russian ambassador, told Shahal that he relented to avoid a messy incident with the Russian government. (The following year, Kobzon flew toIsrael in his private jet to pick up Marat Balagula's eldest daughter, who lives in Netanya, to bring her back to Moscow to celebrate his sixtieth birthday.)
With two decades of unimpeded growth, the Russian Mafiya has succeeded in turning Israel into its very own "mini-state," in which it operates with virtual impunity.
Although many in international law enforcement believe that Israel is by now so compromised that its future as a nation is imperiled, its government, inexplicably, has done almost nothing to combat the problem. In June 1996 Leder, then chief of Israeli police intelligence, prepared a three-page classified intelligence assessment that concluded: "Russian organized groups [had] become a strategic threat" to Israel's existence. He documented how they were infiltrating the nation's business, financial, and political communities**. Shahal used the report to brief Prime Minister Yitzhak Rabin, Shin Bet, Israel's FBI, and Mossad, and provided his own recommendations on how to uproot the Russian mob. Before Rabin had a chance to act on the plan, he was assassinated by a right-wing Jewish religious zealot in Tel Aviv following a peace rally. Shimon Peres subsequently set up an intra-agency intelligence committee on the Russian mob after reading Leder's report, but did little else. Leder's report was shelved by Netanyahu, according to Shahal.
**Note: It could, can, is happening in the U.S.A. Read Benjamin Ginsberg's The Fatal Embrace: Jews and the State, which deals with the rise and fall of Jews in different societies. Outlining Jewish power since the Middle Ages, Ginsberg notes that Jews helped kings expand and centralize their realms; in mediæval Spain, for example, Jews were closely tied to the monarchies, largely, but not solely, in thefinancial sphere.
In the liberal revolutions and in the development of liberal states, Jews propagandized the public and financed liberal groups. In France, Jews helped establish the Third Republic in the 1870s; their influence loomed especially large in the republic's anti-clerical campaigns. Jewish financial and media power also provided the underpinning for the Weimar Republic, whose depiction as the Judenrepublik by anti-Semites was not far from the mark. In late 19th-century Britain, the Jewish-dominated press championed imperialism, which benefited Jewish finance. And during the early stages of the Soviet regime, Jews were numerous in leadership positions, especially in the secret police and the propaganda agencies, which they dominated.
Despite some questionable interpretations, The Fatal Embrace is of immense value for its candid discussion of Jewish power, especially since it is authored by a Jew who identifies closely with Jewish interests. It is must reading for anyone interested in this taboo but critically important subject.
"Israel is going to have to do something," says James Moody. "They could lose their whole country. The mob is a bigger threat than the Arabs."
Leder agrees: "We know how to deal with terrorist organizations. We know how to deal with external threats. This is a social threat. We as a society don't know how to handle it. It's an enemy among us."
Why should Americans be concerned about the global explosion of Russian organized crime and the concomitant corruption in Russia? The simple answer is that the nuclear-capable behemoth is on the verge of a political and economic meltdown. "The Russian [people] are deeply humiliated," Brent Scowcroft, Bush's national security adviser, has said. "They have lost their superpower status and they are turning against the U.S. and against the West." In historical terms, the closest analogy to the financial situation in Russia is the Versailles Treaty at the end of World War I, when the Western allies demanded reparations from the Germans. Huge amounts of capital were forced out of Germany, so impoverishing the nation that it helped set the stage for Hitler. "That is the only parallel we have of a vast change in a society, accompanied by massive decapitalization—and look at the consequences," said Jack Blum, who is consulting with the House Banking Committee in itsinvestigation of Russian money laundering. "Russia is three times our size and has nuclear weapons. Why should we care? Excuse me. Common sense says you have to care mightily."
It should also by now be abundantly clear that the Russian Mafiya is made up of multipurpose, entrepreneurial master criminals. "Once funded, once flush, with the billions of dollars they ripped off, these boys are in business doing every shape, manner, and form of crime globally," Blum continued. "So it was Russians who were doing the gasoline daisy chains in New York, New Jersey, and Long Island, in which billions of dollars in excise tax was ripped off; it's Russians who are screwing around with Colombians, figuring out how to deliver weapons to them. Should Americans not care about that? That's going on right here.
"If nothing else, Americans should worry that they'll drive up the price of real estate in the Hamptons," Blum said with a sarcastic laugh.
"The Hamptons are filling up with Russians," Mike Morrison, a criminal investigator with the IRS told me. "When we ask them where they got the money to purchase their house or business, they produce a document from Uncle Vanya in St. Petersburg who says it's a gift. There is nothing we can do."
Meanwhile, Russian mobsters move easily in and out of the United States on visas "that they get in Israel to dance through our clearance process/' says Blum. Or they obtain visas as employees of shell corporations like YBM, or as friends of NHL hockey players, or as "film consultants," as Ivankov did. "So should we worry about that?" asks Blum. "Of course!"
America's vast wealth* will always be an irresistible target for the Russian Mafiya, and their most sophisticated scams are likely to cause the most damage: their devious financial machinations on Wall Street, their money laundering, their infiltration of prestigious institutions like the NHL. Should we worry about that? In a few years, predicts James Moody, the Russian mob will be bigger than La Cosa Nostra in America. And perhaps GE, and Microsoft, too.
*Note:Yoav Shamir’s Documentary “Defamation”. Listen to the words of the taxicab driver and Yoav Shamir’s grandmother
GOD BLESS AMERICA
It's a warm summer day Bobby Sommer looks like a 1 shell-shocked grunt in a "World War II movie. A detective in the 61st Precinct in Brighton Beach, he is clearly on the verge of surrendering to a force that has him outgunned, outfinanced, and outwitted. A Russian crime group bought the building directly across the street from his station house, and the gangsters have been photographing detectives as they saunter in with their snitches. It took the police about a year to wise up. Sommer is sometimes followed by Russian thugs at the end of a shift. "I'm tailing them, and they are tailing me," says the fifty-something cop, who wears cheap leather boots and a worn expression.
Sommer's gray metal desk is cluttered with case files. More than half are Russian mob-related. Arrayed across the criminal debris are glossy photos ofdismembered Russian crime victims. "If you cut off the head, and the arms and feet are missing, too, you can't get a positive identification on the torso. It's brilliant," he says dejectedly.
"You can't work a homicide in Brighton Beach," Sommer continues, gloom settling in his face like the pall of smoke after a heavy battle. "The Russians don't talk.Someone could get whacked in a club in front of a hundred diners, and nobody would see anything. So they will kill with impunity."
Russian organized crime incubated in Brighton Beach for twenty years before the city and federal government tried to stop it, he says angrily. By then, it hadmerged with even more powerful organized crime syndicates that prospered in Russia after perestroika. Sommer says he barely has a budget to pay for snitches. How is he supposed to stop a Byzantine global crime menace?
"Why are we being victimized by non citizens who can run to Israel or Russia and can't be extradited? The Russian gangsters have told me that they've come here to suck our country dry. My uncle died on the beaches of Normandy defending this country. How did the Russian mob become so entrenched? They are into Social Security, Medicare, and Medicaid fraud. Why is it that every ambulance service in Brooklyn is run by the Russian mob? Why are so many oftheir doctors practicing without a license? They have invaded Wall Street from boiler-room operations to brokerage houses. Nothing is too small for them to steal. Even the guys with the multimillion-dollar Medicare scam still have to have their food stamps. The first generation are all thieves. Maybe the second generation will become a little more American."
A few blocks away, in one of the tidy Art Deco apartment buildings that line the seaward side of Brighton Beach Avenue in Brooklyn, a big Russian is sprawled on his back on a leather workout bench. A masseur kneads his lumpy body. The living room, where he spends hours every day, is decorated like the interior of a coffin, with wallpaper painted to resemble gathered gray satin. He watches a thirty-two-inch color TV in a mirror.
"The police steal the drugs and kill everybody," he says, while a Russian-language movie blares in the background. "I've seen it before."
The Russian has an enormous chest and huge belly, but his legs are spindles. The masseur helps him sit up. Two large craters are sunk deep into his fleshy white back.They were made by dumdum bullets that shattered his spine.
The Russian was once an imposing figure, standing over six foot four—a man who favored floor-length black leather jackets with ermine collars. He was wearing his favorite jacket, a .45 concealed inside, when an assassin on a motorcycle shot him on a Brooklyn street corner in full view of a busload of schoolchildren several years ago. A onetime heroin and arms trafficker, he says that an ex-business partner commissioned the hit to settle a score. Before the ambush, he had been one of the top gangsters in Brighton Beach. Even after the shooting, he was working, running an extortion ring at Kennedy Airport from his wheelchair. He "taxes" Russians $1,000 to retrieve their shipped goods from Aeroflot.
Lifted onto his bed by his son and the masseur, the Russian sighs, appearing more like a young Buddy Hackett than a notorious criminal. "Look what they did to me," he says softly. "Look how everybody has to step over me. They ruined my life."
Yet talking about the Russian Mafiya reinvigorates him. "The Russians are stronger than the Italians," he says assuredly. He doesn't mean tougher—yet. He means wealthier. "Saudi Arabia is small potatoes," he boasts. "The U.S. goes into Moscow with $100 million of aid, and the mob walks out with $105 million.They have so much money it would take years to count it with a computer."
The big Russian brags about the way the mob's tentacles have spread around the world in a few short years. "For Russians, enough is never enough. If a Russian makes $20 million, he wants $40 million. They never know when to stop. There is a saying in Russia: The house is burning and the clock is ticking.' It means you have to keep making money every minute.
"Even Russian racketeers and crooks want their children to be doctors and lawyers. But some of the kids have learned that they can make more money bybeing crooks," he says somberly. "Young Russian kids with MBAs are getting jobs on Wall Street. They are setting up all kinds of scams. They'll hurt a lot of people. There'll be a lot of suicides.
"In this country, it's so easy to make money," the Russian says. "I love this country. I would die for it."*
*Note: OH! YEAH???