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MOGILEVICH INDICTED IN PENNSYLVANIA FOR RACKETEERING, MONEY LAUNDERING

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All rights reserved

Semion MogilevichPhiladelphia, April 24, 2003. A federal indictment, unsealed today, in the Eastern District of Pennsylvania, Philadelphia, Pennsylvania, charges Semyon Mogilevich and his two cohorts, Igor L'Vovich Fisherman, and Anatoli Tsoura with 45 counts of racketeering, securities fraud, wire fraud, mail fraud, and money laundering, according to the FBI crime alert. The three men are wanted for their alleged participation in a multi-million dollar scheme to defraud investors in the stock of YBM Magnex International, Inc. (YBM), a public company incorporated in Canada, but headquartered in Newtown, Bucks County, Pennsylvania. Investors lost more than 150 million dollars through the alleged scheme that included inflating stock values, preparing bogus financial books and records, lying to Securities and Exchange Commission officials, and offering bribes to accountants. The scheme to defraud collapsed on May 13, 1998, when federal search warrants were executed in Pennsylvania and trading of the YBM stock was suspended by the Ontario Securities Exchange. 

The company later pleaded guilty to conspiracy to commit securities and mail fraud.  YBM paid a $2 million fine, and agreed to pay $1 million more to reimburse investors, as part of a plea bargain. 

The indictment alleges that between 1993 and September of 1998, Semion Mogilevich (56) headed and controlled the Mogilevich Enterprise, an association which consisted of the aforementioned individuals and a network of companies in over twenty different countries which orchestrated a sophisticated scheme to defraud investors in YBM stock. The scheme was allegedly funded and authorized by Mogilevich. This complex network of corporations was set up to create the illusion that YBM was engaged in a profitable international business, primarily the industrial magnet market. Igor Fisherman served as the Chief Operating Officer of YBM on behalf of Mogilevich, who was YBM's major shareholder. Anatoli Tsoura was the Vice President of Finance for YBM's main subsidiary.

U.S. Attorney Patrick Meehan said the company was no more than "a well disguised illusion." "Books were cooked. Auditors were deceived. Bribes were paid to accountants," Meehan said, according to the Wall Street Journal report

This morning FBI agents arrested YBM's former chief executive, Jacob Bogatin, Thursday morning at his home in Richboro, an affluent town near Philadelphia.  Bogatin (56), a naturalized U.S. citizen from Russia netted more than $10 million from the YBM scheme, according to the indictment. Fisherman (51), also a naturalized Russian American, got more than $3 million and Tsoura (54), a Russian national, more than $1 million. Mogilevich skimmed over  $18 million in profits from the scheme, indictment charges. 

Jeffrey A. Lampinski, the head of  Philadelphia FBI office, traveled to Moscow and Kiev last week and met with Russian and Ukrainian law enforcement officials to ask for help in arresting  Mogilevich and his two leiutenants. Lampinsky said Russian and Ukrainian authorities promised help in locating the fugitives. However, at least one high ranking Russian official privately expressed skepticism that Mogilevich would be caught and extradited. 

Mogilevich utilizes the aliases Seva Moguilevich, Semon Yudkovich Palagnyuk, Semen Yukovich Telesh, Simeon Mogilevitch, Semjon Mogilevcs, Shimon Makelwitsh, Shimon Makhelwitsch, and "Seva", according to the FBI. 

Semyon Mogilevich, the Latter Day Don

The name Semyon Mogilevich first came to public light in 1999 in connection with the Bank of New York (BoNY)-Russian money laundering scandal. Media reports described Mogilevich as  one of the most powerful and dangerous "godfathers" in the world. US and UK intelligence agencies believe that his organization operates in Russia, Hungary, Ukraine, Belorussia, Lithuania, Israel, United States, Columbia, Pakistan, Lebanon, Germany, Austria and dozens of other countries. Mogilevich has his hand in narcotics and weapon trafficking, prostitution, money laundering, gambling and numerous other illicit trades. He is extremely clever - a quality that earned him the nick-name the "Brainy Don" - as he is callous and brutal, ruling his world-wide syndicate with an iron-fist and extraordinary sagacity. In the mid 90s Mogilevich acquired a secret interest in Russian bank Inkombank. He then used it to finance his ignoble trade, most notably drug smuggling through the Georgian port of Poti, and funnel the proceeds to his and his "banker"-partners' offshore coffers. Mogilevich was de facto ruler of Inkombank when the BoNY - Inkombank relationship was at its peak.

* * *

Semyon Yudkovich Mogilevich was born into a middle-class Jewish family in Kiev on June 30, 1946, to Genya Tevevna Shepelskaya and Yudka Mogilevich. His early years are mist-shrouded. At the age of 22, Mogilevich earned an advance degree in economics from the prestigious University of Lvov. "He was a brilliant student" recalls one of his former professors - "he had a photographic memory and he could multiply, divide and add seven digit numbers in his head instantaneously." Another former professor said that Mogilevich had a great interest in macroeconomics and "was able to see a panoramic picture of national and world economies, everybody believed he would become a great academician."

An academic career however did not entice the future crime emperor. Russian police records reveal Mogilevich’s ties with a Moscow gang known as Lybretskaya in early 70s. At the time, the young Mogilevich was primarily involved in small time fraud and black market currency machinations. He was caught and twice served terms of three and four years in Russian prisons for  "currency offenses."

In the 1980s Mogilevich found a niche in the then emerging immigration of Russian Jews to Israel. After receiving "exit visas" from Russian authorities, Jewish families were often given only a few days to leave the country and allowed to take out only bare essentials. Mogilevich would persuade them to leave all their possessions with him promising to sell them and sent the proceeds to their new homes in Israel.

Many immigrating families at the time owned expensive art objects, jewelry and other valuable items, exportation of which was strictly forbidden by Soviet authorities. Thus Mogilevich’s proposition appeared quite alluring. Mogilevich made a small fortune selling the property of thousands of departing families. He sent nothing to them in Israel correctly calculating that these people would have absolutely no recourse.

In 1990 Mogilevich decided to immigrate to Israel himself. By that time he had parlayed his "Jewish proceeds" into a fortune by craftily investing in various illicit enterprises, including weapons trafficking and prostitution. He arrived in Israel a millionaire, highly respected in the emerging Russian underworld as a shrewd operator who was capable of putting together complex international schemes. Several of Mogilevich’s top lieutenants immigrated with him.

Mogilevich became an Israeli citizen and made contacts with top Russian-Israeli organized crime figures, expanding his international crime syndicate. Expert-economist Mogilevich continued to acutely invest in everything from night-clubs to precious metals and stones, to liquor distilleries. At the same time Mogilevich continued to develop his world-wide networks of prostitution, weapon-running and drug smuggling. Mogilevich always operated through a complex web of offshore companies which he created.

In 1991 Mogilevich married Katalin Papp, a Hungarian citizen and a year later he moved to Hungary and settled down in Budapest. Marrying a Hungarian accorded Mogilevich the opportunity to obtain a Hungarian passport and by 1992 he was simultaneously a citizen of 4 countries: Russia, Ukraine, Israel and Hungary. He likes to refer to himself as "a citizen of the world."

Mogilevich decided to make Budapest the home of his growing criminal empire, which by that time operated on five continents. In Hungary he continued investing in legitimate enterprises, night clubs, restaurants and other liquor establishments. His major acquisition was a so-called Army Co-Op, a military plant producing anti-aircraft guns and surface-to-air missiles. His criminal organization was emerging as one of the world's largest and most feared international organized crime groups.  Mogilevich fashioned it after the Sicilian Cosa Nostra but added "a unique Russian touch", according to one Hungarian intelligence official. Mogilevich befriended many Hungarian politicians and law enforcement officials thanks to payoffs and his charismatic personality.

Under their protection, Mogilevich’s organization flourished and expanded. He had de facto his own private army of enforcers numbering in the hundreds. Mogilevich preferred to recruit veterans of Soviet special forces who fought in the USSR war in Afghanistan and were known for their extreme viciousness. Mogilevich’s highly trained killers carried out his nefarious orders in over thirty countries, including Israel, Germany, Canada and the United States. Anyone standing in his way was tortured and murdered, his body conspicuously left gruesomely mutilated "for educational purposes," as one of his top enforcers, the infamous and universally feared Igor Tkachenko, once said. When Tkachenko was himself murdered in Budapest, Mogilevich’s "enforcement department" was headed by two brothers, Igor and Sergei Korolev, whose particular brand of brutality made them somewhat of a legend.

In 1993, Mogilevich joined forces with the Solntsevo crime syndicate, one of Moscow’s dominant crime families. Together the Mogilevich and Solntsevo syndicates invested in a joint venture which purchased antiques, precious stones and art stolen from churches and museums in Russia and Eastern Europe.

Mogilevich’s wife died in December of 1994. Initially he considered returning to Russia but decided to remain in Budapest. A year later he married his long time mistress, Russian-Israeli, Galina Alexeyevna Telesh-Jambulskaya. Apparently the relationship between Mogilevich and Telesh started long before their marriage, as their son was born in September of 1990. Mogilevich also has children from his prior marriages: a daughter Mila, born in 1972 and a son Yuly born in 1983.

Mogilevich continued to expand his armament cartel. To complement the Army Co-OP, he also acquired Magnex 2000, a large magnet manufacturer and defense contractor, and the Digep General Machine Works which manufacturs artillery shells and mortar. These acquisitions gave Mogilevich virtual control of the Hungarian war industry.

Simultaneously Mogilevich developed powerful contacts in the Muslim Middle East, including with top officials in Iraq, Pakistan, Iran and Afghanistan. These countries became the primary market for his weapon sales - both "legal" and illegal. Mogilevich structured a deal selling $20 million worth of armaments stolen from East Germany to an Iranian buyer. The weapons included ground-to-air missiles and a dozen armored personnel carriers, according to a Mossad officer, who spoke on condition of anonymity.

By the mid-90s, Mogilevich’s ever growing illicit international multimillion dollar transactions required extensive banking contacts. Hiding behind a web of offshore shell companies became progressively more difficult as banks around the world were adopting a more cautious approach to Mogilevich-style "banking" and money movement. Mogilevich could no longer afford to be just a bank "customer." A need arose for an "equity partnership" with a bank that would be able and willing to both finance large international schemes and funnel the proceeds through his shell corporation world-wide. Mogilevich set his eye on Inkombank, by then one of Moscow’s largest privately owned banks with $3 billion in assets. What made Inkombank especially attractive to Mogilevich was its vast network of correspondent accounts, which Inkombank maintained with banks around the globe, including with such major banks as Bank of China, Union Bank of Switzerland, Swiss Bank Corp., and Deutchebank. In the US, Inkombank maintained its largest correspondent relationship with the Bank of New York. This was particularly crucial to the Brainy Don’s empire, as most of the world trade, legal and illegal, was effected in US dollars.

Because of its rapid expansion, Inkombank was short on liquidity and Mogilevich offered to "help." A secret deal was struck between Inkombank’s then chairman, Vladimir Vinogradov and Mogilevich’s representatives, whereby in exchange for $65 million, and a promise to help gain Inkombank's entree into the world’s arms market (which Vinogradov desperately sought,) Mogilevich’s front entities were given 23% in Inkombank’s equity. This gave the "latter day Don" de facto control over Inkombank.

The don kept his part of the bargain. In late 1996 he used his connections and muscle to help Inkombank’s bid for 25% of the common stock of the Sukhoy, maker of the coveted Russian SU fighter jets. Arguably the world’s most advanced military aircraft, of which some are capable of carrying nuclear weapons. Countries like Iraq, Iran, India and Libya have gladly paid $30 to 50 million per aircraft and Sukhoy had generated $1 billion in sales in the three year period after Inkombank became its largest shareholder, accordingly to Russian intelligence sources. The proceeds were largely funneled from the Inkombank-Cyprus branch through BoNY correspondent accounts - to various offshore firms, including Brasset, Footnote and Bridge Investments, controlled by Vinogradov and Mogilevich.

Having Inkombank as a player in his multifaceted empire, propelled Mogilevich to the very top of global organized crime networks. He had now entered "the big time" and was able to participate in major deals. Running conventional arms around the world no longer fitted the don’s newly found "stature" and he attempted to move into the nuclear weapons black market. He financed the 1997 theft of six thousand pounds of enriched uranium from a Warsaw Pact storage facility intending to sell it to a Middle East buyer and deliver it through the former Soviet republic of Tajikistan. The deal was negotiated in the Czech resort of Karlovy Vary but Czech intelligence and security forces were able to stop it days before the fissile material was to be shipped to the Middle East. The uranium was safely recovered and Mogilevich’s partners in crime, J. Vagner, a nuclear physicist, Z. Sindlauer, a Prague police official and A. Sczerbinian, a Tadjik entrepreneur, were arrested. Mogilevich however was able to buy his way out with large bribes and by arranging for the disappearance of key witnesses. Intelligence sources said that this was the largest known theft of nuclear material ever.

According to filings in Federal court in New York, in mid-1998, The Bank of New York security personnel raised concerns to BoNY CEO Thomas Renyi about the association and apparent close ties between Mogilevich and Konstantin Kagalovsky, the husband of Natasha Kagalovsky, BoNY’s senior vice president in charge of its Eastern European Division. Renyi personally "interviewed" Kagalovsky about the matter but no action was taken. Court documents also show that BoNY was linked to at least two Hungarian banks, MKB Bank and CIB Bank, that have been the subject of FBI investigations concerning their ties to Semyon Mogilevich. Both MKB Bank and CIB Bank were involved in circular transactions for substantial amounts that were listed on Inkombank’s statement for its BoNY accounts in November and December 1993. In addition, law enforcement authorities in Latin America have investigated transactions whereby Mogilevich, or persons under his control, gave Kagalovsky wire transfer instructions to move funds through BoNY for the Cali drug cartel through Brazilian banks to offshore companies.

The FBI "wanted" alert warns that Mogilevich may be armed and dangerous and asks anyone with information about him to contact his local FBI office or the nearest US embassy. 

 


 

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