U.S. accuses Kolomoisky, Bogolyubov of money laundering, embezzlement

The U.S. Justice Department accused on Aug. 6 former
Privatbank shareholders Igor Kolomoisky and Gennadiy Bogolyubov of embezzling
and defrauding the bank of millions of dollars, which they used to buy
commercial real estate. The government filed two civil complaints alleging the
two billionaires used funds misappropriated from Privatbank to acquire two U.S.
office buildings worth a combined USD 70 mln, making them subject to forfeiture
based on violations of federal money laundering statutes. The two obtained
fraudulent loans and lines of credit from approximately 2008 through 2016, when
the scheme was uncovered, and the bank was nationalized by the National Bank of
Ukraine, said a press release. The complaints allege they laundered a portion
of the criminal proceeds using an array of shell companies’ bank accounts,
primarily at Privatbank’s Cyprus branch, before they transferred the funds to
the U.S. As alleged in the complaint, the loans were rarely repaid, except with
more fraudulently obtained loan proceeds.

As alleged in the complaints, the U.S. associates of
Kolomoisky and Bogolyubov, Mordechai Korf and Uriel Laber, operating out of
offices in Miami, created a web of entities, usually under some variation of
the name Optima, to further launder the misappropriated funds and invest them,
the press release said. They purchased hundreds of millions of dollats in real
estate and businesses across the country, including the properties subject to
foreclosure: the Louisville office tower known as PNC Plaza, and the Dallas
office park known as the former CompuCom headquarters.

Federal agents also confirmed the two billionaires
acquired four skyscrapers in Cleveland between 2008 and 2013, reported the
washingtonpost.com news site. They traveled to Ukraine for their investigation,
most recently in February, when they met with Prosecutor General Ruslan
Riaboshapka (shortly before his dismissal) and investigators with the National
Anti-Corruption Bureau. The Cleveland real estate is among the subjects of an
ongoing federal grand jury investigation for the alleged laundering of hundreds
of millions of dollars by the pair. Optima firms invested a total of USD 250
mln in U.S. real estate, the news site said.

On Aug. 4, agents with the U.S. Federal Bureau of
Investigations and Internal Revenue Service conducted a search of the Cleveland
office of Optima Management Group, a firm owned by Kolomoisky, confiscating
dozens of boxes of documents and computers, local media reported. A search was
also conducted the same day in Miami.

As his response to the events, Kolomoisky denied any
criminal activity. “All the investment in the U.S. were made with my personal
funds that I gained in 2007-2008 in agreement with EVRAZ and the revenue from
other businesses, which was deposited with Privatbank,” he told the
pravda.com.ua news site on Aug. 7. EVRAZ is a global steel and mining company
based in Russia.

Zenon Zawada: It’s
significant to note that these are civil complaints, not criminal charges
against Kolomoisky and Bogolyubov. However, given that they have already been
accused by the U.S. Justice Department of money laundering and embezzlement
(among other crimes), criminal charges are likely in the pipeline. That
prospect is among the reasons why Kolomoisky arranged for the presidential
candidacy of Volodymyr Zelensky, who built his career in media companies owned
by the billionaire.  

Though Kolomoisky can fight the forfeitures without
being in court, criminal charges will likely require that he appear. That would
lead to the U.S. seeking Kolomoisky’s extradition, since we don’t expect him to
go to the U.S. on his own will. Zelensky will have to reject such a request as
part of his obligation to his alleged sponsor. Yet Kolomoisky will have to
prepare for the prospect of not having that safeguard in the President’s Office
sooner than 2024, given that the slide in Zelensky’s poll ratings is
accelerating.

Besides IMF-required legislation approved
this year, these accusations offer added insurance that
Kolomoisky will not regain control over Privatbank. We believe they mark the
peak of Kolomoisky’s influence in Ukraine, which will wane once criminal
charges are filed in the U.S. He has also made many powerful enemies in this
part of the world. Even if Kolomoisky manages to wrest Ukraine away from the
West and IMF (which we don’t expect in the least), he will be of no use to the
Russians, who resent him for undermining the Russian Spring rebellions of 2014.