Lev Leviev’s Empire: Diamonds and Real Estate Across the World
Denis Katsyv’s companies are closely connected to the business empire of Lev Avnerovich Leviev, the billionaire Israeli-Russian businessman whose empire stretches across the world.
Denis Katsyv’s companies are closely connected to the business empire of Lev Avnerovich Leviev, the billionaire Israeli-Russian businessman whose empire stretches across the world.
As Russian tax lawyer Sergei Magnitsky slowly died in a Russian prison from abuse and neglect, US$230 million (5.4 billion Russian Rubles) in taxes stolen from his client disappeared into a maze of phantom companies, crooked banks and offshore accounts. Magnitsky, accused of the largest tax scam in Russian state history despite being the whistleblower who reported it, knew who pulled off the theft but not who the powerful people behind them were.
Phantom companies that sold fuel to Moscow’s main airport at inflated prices were connected to a network of companies and proxies, dubbed the "Proxy Platform,” uncovered by the Organized Crime and Corruption Reporting Project (OCCRP) in a project published late last year.
Latvia, a country on the coast of the Baltic Sea and a former part of the Soviet Union, has been at the heart of a number of informal networks of companies fronted by proxies that laundered money for criminal groups. Last year, the Organized Crime and Corruption Reporting Project looked at some of these companies in its series called the Proxy Platform. The tiny country supplied both the proxies and the banks through which hundreds of millions of dollars travelled through.
Latvian citizens Erik Vanagels and Stan Gorin should be billionaires if you look at the hundreds and maybe thousands of companies they own or control. But they are not. They are proxies.
The Proxy Platform, a network of intertwined companies fronted by proxies and used for international money laundering, is made of a constantly changing set of shell companies that are channeling huge volumes of money to one another in an effort to hide the ultimate beneficiaries.
The money allegedly stolen by Russian authorities through Hermitage Capital passed through a series of front companies including Nomirex Trading Ltd. Nomirex is part of an international money laundering platform identified by the Organized Crime and Corruption Reporting Project (OCCRP) and used by several major criminals.
While governments and citizens of Eastern Europe were struggling with the recent financial crisis and trying to borrow money from international financial institutions, billions of euros circulated in the region in an illegal, parallel system that enriched organized crime figures and corrupt politicians.
Reporters for the Organized Crime and Corruption Reporting Project (OCCRP) first learned about Tormex Ltd. through a court case in the tiny Republic of Moldova. The case, about a tire deal gone badly, provides insight into the people who were using the services of the Proxy Platform, a phantom set of interlocking companies used to launder money and hide ownership.
In 2008, a Romanian who felt cheated by three Moldovan businessmen filed a civil case in an obscure courthouse in the capital of the tiny Republic of Moldova, in effect asking the authorities for help against a phantom offshore company called Tormex Ltd. Prosecutors subpoenad two years’ worth of Tormex’s bank accounts in Latvia and what they found was stunning.
The Organized Crime and Corruption Reporting Project (OCCRP) looked at more than 500 pages of transactions at Tormex’s Baltic International Bank account. OCCRP reporters tracked down scores of companies to understand exactly who was sending or receiving money from Tormex. A large quantity of the transactions came or went from phantom shell companies were traced back to proxies – some who were willing but some who were not.
Nineteen-year-old Boris Devdier wants to escape Telenesti, the small, dull city in the Republic of Moldova where he and his family struggle to make it on several hundred US dollars a month. The family is bankrupt, victims of both a hard-luck history and a worldwide economic crisis.
Reporters from the Organized Crime and Corruption Reporting Project (OCCRP) met Moldovan citizen Vadim Ciornea, aka Cascei, in the garden of a luxury hotel in downtown Chisinau, the capital of the Republic of Moldova. Ciornea, who is under indictment for fraud, described to OCCRP reporters how his company ended up doing a bogus business deal with Tormex Limited.
Nomirex Trading Limited and Bristoll Export Limited are two companies that played small roles in the transfer of funds in the Hermitage Capital Management case, one of the largest frauds in Russian history. Some US$230 million from the state budget of Russia was allegedly stolen by state officials in a case that led to the death of the Russian whistleblower, Sergei Magnitsky. Part of the money that was transferred through Nomirex and Bristoll was allegedly transformed into luxury property now in the possession of Russian tax officials.
About $1.6 trillion, or 3 percent of the world’s Gross Domestic Product was laundered in 2009, according to the United Nations Office on Drugs and Crime (UNODC).
Exactly two years after his death in a dank, frigid, rat-infested cell, Sergei Magnitsky has become a byword for the byzantine world of state-sanctioned corruption, money laundering and violence endemic in some of Russia’s political and economic elites. The brazen tactics of his persecutors seem to horrify everyone —except the Russian government, who has not held anyone involved accountable except Magnitsky himself.