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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.

 According to company records, Katsyv's company, Prevezon Holdings Limited Cyprus, owns 30 percent of four companies that are part of Leviev’s Africa Israel group of companies. Africa Israel Ltd. The Prevezon-AFI connections can be seen in property records from New York where the companies are in business together.

Read more: Lev Leviev’s Empire: Diamonds and Real Estate Across the World

Following the Magnitsky Money

BUNICON HEADQUARTERSThis dilapidated house in Chisinau, the capital of the Republic of Moldova, is the headquarters of Bunicon-Impex SRL a phantom company that received and sent on money from the huge heist discovered by MagnitskyBy OCCRP

Novaya Gazeta story (in Russian)

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.

 He died rather than admit to a crime he didn’t do. Magnitsky was the loser.  But the winners until now have not been identified. Reporters from the Organized Crime and Corruption Reporting Project (OCCRP), Barron's and Novaya Gazeta, spent months tracking banking records and offshores companies to identify two beneficiaries of the deal: businesses of a Russian state transportation official’s son and the ex-husband of a tax official who granted the refunds.

Read more: Following the Magnitsky Money

Moscow Airport Used in Fuel Fraud

sheremetyevo airportMoscow’s Sheremetyevo Airport where ticket prices were increased as much as 50 percent to cover the cost of fuel scams.

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. Russian authorities are currently investigating one case where these same Latvian banks and proxies were involved in a chain of shell firms that sold fuel destined for Moscow’s airport to each other in a convoluted scheme that increased the price up to 40 percent.   The added costs were passed on to travelers who for years paid extra for their airline tickets in Moscow.

Between 2008 and 2010 the Russian tax authority audited the city’s main airport and the oil companies that sold fuel to it. The investigation started after the 2008 "fuel crisis", when some of Moscow airports did not have enough fuel to meet the needs of airlines. 

Read more: Moscow Airport Used in Fuel Fraud

The Latvian Proxies

ukrainian merchant vesselUkrainian merchant ship the MV Faina was carrying weapons to South Sudan when it was hijacked.

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.

And at the heart of many of these deals were two Latvian proxies: Erik Vanagels and Stan Gorin. Some of the hundreds of companies they represent, stretching from Panama to Eastern Europe, were involved in a series questionable or fraudulent businesses ranging from weapon shipments to Africa to Ponzi schemes.  It is not clear whether Gorin or Vanagels play any role beyond their proxy status but the likelihood is they do not.

Read more: The Latvian Proxies

Behind the Proxies

Feldmanis Poiss VitmanisParex basketball team featuring Poiss (with trophy), Feldmanis (first person left in bottom row) and Vitmanis (behind trophy)

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.

Proxies are persons who stand in for the real owners sometimes for a fee or sometimes because their identity has been stolen.  Proxies are used to hide the real owners sometimes for legitimate business reasons but more often because the companies are being used for corrupt or fraudulent purposes, to evade taxes or to launder money.  Proxy led companies are being used in Eastern Europe in epidemic proportions.

Vanagels and Gorin are not unique.  They show up along with a group of other Latvian proxies associated with hundreds of companies many involved in criminal behavior.

Read more: Behind the Proxies

The Invisible Empire of the Diplomat

aldermaston mallThe headquarters of Midland Consult are in the UK

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.

While the operators who run these phantom companies are important, so are the people who make such systems possible. They are the criminal services industry: the bankers, lawyers, proxies, company registration agents and offshore officials who profit from making it easy to launder money. In previous investigations, OCCRP found some

Read more: The Invisible Empire of the Diplomat

Russian Laundering Machine

MONEY LAUNDERING SCHEMEOffshore, proxy run companies figured in the laundering of money in the Hermitage case

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.

The Hermitage Capital case caused an international furore after Hermitage’s lawyer Sergei Magnitsky was allegedly tortured to death by Russian authorities after he named high ranking members of the tax authorities in the scam.

 In all, US$365 million passed through the Nomirex bank account, according to account statements obtained by OCCRP. Most of the money is unaccounted for and comes from phantom shell companies or even Asian criminal groups.

Read more: Russian Laundering Machine

The Proxy Platform

PHOTO PROXY PLATFORMA maze of companies make up a money laundering machineWhile 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.

The system is built on hundreds, maybe thousands, of ever-morphing phantom companies. They exist on paper only and appear to be run by scores of common people, who are, in fact, simply proxies.  Many are unaware that their names appear in official documents as the human face of a company. Others are naïve or don’t care.

Read more: The Proxy Platform

Opening the Door: Proxy Platform Revealed

Lilian-Pintea-policeman-1The Moldovan policeman who investigates the Tormex fraud waits outside Chisinau Court House

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 a Chisinau Court, reporters found the case of Alecu Mihu, a Romanian tire dealer that is suing his former Moldovan business partners over defrauding him of US$437,176. The vehicle for their theft was Tormex Ltd, he says.

Mihu met three Moldovan businessmen in 2005 in the Romanian town of Focsani where he ran a tire warehouse. Serghei Harghel, Serghei Ceban and Vitalie Molodoi told Mihu they could supply industrial tires made at Belshina – a Belarusian plant well-known for tires since the Soviet times.

Read more: Opening the Door: Proxy Platform Revealed

The Phantom Accounts

BALTIC INTERNATIONAL BANKHundreds of million of Tormex money poured through the Latvian bank

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.

It seemed that more than US$680 million a year was pouring through Tormex’s accounts. 

Those bank records opened a window for reporters from the Organized Crime and Corruption Reporting Project (OCCRP) to a world where crime is measured in billions.

Read more: The Phantom Accounts

Tormex Users: A Proxy World

PROXY FACTORYA maze of companies and proxies make a money laundering platform

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.  Here is a sample of the findings:

In February 2008 a small Moscow company, NPP Kvadro OOO, sent US$36,584 to Tormex’s account in Latvia. NPP Kvadro was established in November 2007 and its sole shareholder and director is Aleksandr Lokatkin from Moscow.

Read more: Tormex Users: A Proxy World

Slum Millionaire - The Moldovan Proxy

PH DEVDIER DEVDIERBoris Devdier on social networks

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.

Devdier’s father left long ago. When he was 10, his mother Zinaida was stricken with cancer. She manages, despite health problems, to sell pots in the market for money to keep the family afloat. Last November, Moldova Agroindbank took her to court over a US$2,500 (29,885 Moldovan Leu) debt.

Despite all that, her teenage son has emerged as an unlikely figure in a multi-million dollar fraudulent business network under investigation in the European Union (EU).

Read more: Slum Millionaire - The Moldovan Proxy

The Money Carousel

PH MODUS VADIM CIORNEA 2Vadim Ciornea, aka Cascei, is in the middle of a gang war in the tiny Republic of Moldova. He was badly beaten this summer by his opponents.

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.

Tormex is one of the companies OCCRP has identified as being part of a set of intertwined, proxy-run companies that were involved in laundering money for organized crime and corrupt state officials. More than US$680 million ran through Tormex’s accounts.  Many of the deals resembled Ciornea’s deal with Tormex.

Ciornea said no actual business ever took place. He said he had a contract with Melide Ltd for pipes he planned to sell to Moldovagaz.

Read more: The Money Carousel

Money from Moldova

BUNICON HEADQUARTERSThe registered office of Bunicom-Impex. Bunicom sent US$1.2 million to offshores.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.

Both Nomirex and Bristoll were sent money from another mystery company from the Republic of Moldova: Bunicon-Impex. In all, Bunicon sent US$1.2 million to the two companies.

Read more: Money from Moldova

Laws Still Needed to Combat Laundering

WACHOVIAWachovia bank was bought out after it laundered Mexican drug money

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).

Criminals and corrupt politicians hide bribes, embezzled government funds, and other illicitly earned cash in legal structures such as offshore shell companies, foundations and trusts and then launder most of that—70 percent—through commercial banks into the global financial system, according to the UN.

Though money can travel across borders in an instant, legislation allowing it to be tracked is mostly confined to traditional state borders. International organizations and sovereign states know about the problem but have not stopped it.

Read more: Laws Still Needed to Combat Laundering

Death of a Lawyer

IMG 9592Lawyer Sergei Magnitsky died in police custody

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.  The tactics are also on display in the persons involved in the Proxy Platform: the Moldovan fraudsters, the offshore registration agents who feign ignorance, and the organized criminals and corrupt politicians who launder their money.  In fact, some of the same companies identified in the Proxy Platform were involved in the spiriting away of funds from the Russian treasury in the Magnitsky case.

Read more: Death of a Lawyer

Latvian Bank Woes

cash money

Latvia has made itself into an important transit hub between Russia and other former Soviet republics and the West by capitalizing on its location, Russian language and deep understanding of the “Soviet mentality.”

“We are closer than Switzerland,” is how one of the country’s larger commercial banks put it in a 1990’s slogan.

Latvia is the financial center of the Baltic States and houses 32 banks, 10 of them branches of foreign banks.  Foreign deposits represented 41 percent of all deposits in the banking system in mid-2011, according to the Latvian Association of Commercial Banks.

Read more: Latvian Bank Woes

Laundering at a Family Bank

Coming soon...