
Ukrainian Billionaires Allegedly Laundered Money in the US - anigbrowl
https://gijn.org/2019/06/14/document-of-the-day-how-ukrainian-billionaires-allegedly-laundered-money-in-the-us/
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cududa
Now here’s the crazy part. Cleveland has a rich history of money laundering.
The FBI recently broke up a mob related group in 2012 being ran through The KD
Group.

Funny enough, KD Group is a primary beneficiary of this ”new” money
laundering: [https://m.clevescene.com/scene-and-
heard/archives/2019/06/11...](https://m.clevescene.com/scene-and-
heard/archives/2019/06/11/how-ukrainian-oligarchs-secretly-became-the-largest-
real-estate-owners-in-downtown-cleveland)

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divan
In Ukraine many people strongly believe that Kolomoyskiy has sponsored
presidential campaign for Zelenskiy - comedian, who played president on TV (on
the TV channel "1+1" that belongs to Kolomoyskiy) and won elections.
Supposedly he now has a direct influence on Mr. Zelenskiy and the new
government.

~~~
Mikeb85
Zelensky is sponsored by an oligarch, meanwhile Poroshenko and Tymoshenko were
oligarchs themselves...

It really doesn't matter though, Zelensky was a protest vote against the
status quo and everything that entails.

~~~
bitL
So Kolomoyskiy observed the wave that swept US, UK, IT and almost FR, and
decided to orchestrate a similar situation with his own chosen puppet? Dude's
pretty smart...

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Muromec
Ukrainian politics was always a TV show with a ton of populism and anti-
establishment vibe was always there, so it’s the other way around — toxic
electoral culture spilled over to the West.

When politics turns into a show it’s obvious that professional showman beauts
amateurs.

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hn_throwaway_99
Admittedly, I didn't read every link in the article, but this quote is almost
unbelievable to me: \---- From 2006 through December 2016, the total movement
of funds (credits) into the [ultimate beneficiary owners’] laundering at
PrivatBank Cyprus was $470 billion, which amounts to approximately double the
Gross Domestic Product of Cyprus during the same period. \---- Nearly half a
_trillion_ dollars??? That would make them the richest men in the world, many
times over. How can that be possible?

~~~
liara_k
A few possibilities:

First, the amount appears to be the total through a bank, where this number
would be aggregated over a several (possibly many) individuals.

Second, the amounts reported do not reflect the total funds laundered (illicit
funds made to appear legitimate) but the total revenue stream, which would be
offset by liabilities. For example, one laundering technique I've read about
involves buying real estate and selling it at an inflated price to someone who
has the illicit funds. For example, A has illicit cash and wants to transfer
it to (apparently) legitimate profits by B. B buys a property for $1m. B sells
the property to A1 for $2m. B keeps the $1m difference as profit. A1 later
sells the property at a loss, and the cycle is complete. Repeat this a few
thousand times, but probably with a smaller % margin. But assuming a 100%
margin (and the whole laundering effort being exactly this scheme) that'd be
$450B total revenue but $225B actually laundered.

Interesting side effect: This pushes up the cost of housing in an area until
the launderers abandon it, at which point demand and purchase volume dries up
significantly and valuations sink. Additional profit could be made off this
market manipulation.

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myth_drannon
That's how Vancouver got its house prices - money laundering by Chinese
nationals.

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robertAngst
Source?

~~~
swatkat
[https://www.bloomberg.com/news/features/2018-10-20/vancouver...](https://www.bloomberg.com/news/features/2018-10-20/vancouver-
is-drowning-in-chinese-money)

[https://globalnews.ca/news/5259196/home-prices-in-metro-
vanc...](https://globalnews.ca/news/5259196/home-prices-in-metro-vancouver-
increased-by-5-due-to-money-laundering-report/)

[https://business.financialpost.com/news/fp-street/dirty-
cash...](https://business.financialpost.com/news/fp-street/dirty-cash-probe-
finds-booming-vancouver-china-luxury-car-trade)

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Mikeb85
Is this even real? First of all, the dollar amount is unbelievable. Second,
it's not being reported on most of the Ukrainian news sites I frequent (or
it's well hidden). Third, it's far, far bigger than the missing funds as
reported by most media (5.5B).

[https://en.m.wikipedia.org/wiki/PrivatBank](https://en.m.wikipedia.org/wiki/PrivatBank)

~~~
Muromec
5.5B is the bank itself. Think about how much money Firtash, Ahmetov,
Timoshenko and Kolomoyski together siphoned through gas prices, coal and
electricity trickery in like 20 years.

Could be half a trillion easily.

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selimthegrim
I mean, was he just attracted by the presence of lots of Ukrainians?

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VectorLock
Why Cleveland I wonder?

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cududa
There was already a large mafia infrastructure for laundering money is my
guess. It was big through the 90’s, got busted, then got busted again in 2012
by the FBI for money laundering through real estate.

Some of the properties mentioned in the full complaint were owned by KD Group,
the company at the center of the early-2010’s mob money laundering scheme

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rolltiide
Why would private parties file suit under any of these statutes? The Ohio RICO
act lollll, these are matters for the state

Could it be just to bring attention to them in the civil suit and then hope
the department of justice comes in with the criminal sanctions and asset
freezes? Maybe PrivatBank makes a little money in the process?

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Jerry2
Why aren't the DoJ and FBI involved in this yet? International money
laundering should be prosecuted severely.

~~~
sumedh
I think FBI gives more priority to terrorism cases now instead of white collar
crime.

~~~
ncmncm
White Collar Crime is Official Policy now. Interfering with White Collar Crime
is now a crime.

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Muromec
Sounds like opportunities have risen since this guy[1] got a state-funded home
for himself

[1]
[https://en.m.wikipedia.org/wiki/Pavlo_Lazarenko](https://en.m.wikipedia.org/wiki/Pavlo_Lazarenko)

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viach
Looks like they can let you launder whatever amount you want, till you behave.

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partiallypro
Is this not what Manafort was essentially charged in aiding?

~~~
cududa
Nope, but it should be. But it does up an entirely unexplored avenue into
foreign election interference

~~~
thephyber
It might also be worth looking into whether FinCEN is still putting
pressure[1] on these two zip codes.

[1] [https://therealdeal.com/miami/2016/01/13/secret-buyers-in-
mi...](https://therealdeal.com/miami/2016/01/13/secret-buyers-in-miami-could-
be-exposed/)

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miohtama
Here is the original article - boingboing is just a copy-paste post
[https://gijn.org/2019/06/14/document-of-the-day-how-
ukrainia...](https://gijn.org/2019/06/14/document-of-the-day-how-ukrainian-
billionaires-allegedly-laundered-money-in-the-us/)

It links to this commentary which is much more interesting to read
[https://www.atlanticcouncil.org/blogs/ukrainealert/how-
kolom...](https://www.atlanticcouncil.org/blogs/ukrainealert/how-kolomoisky-
does-business-in-the-united-states)

Looks like the claim is that they misappropriated clients funds and invested
it in USA under companies whose control can be linked back to them.

I am somewhat puzzled how this could fly under the radar of US banks... this
is much bigger deal than the recent Danske Bank scandal in Estonia.

~~~
ChuckMcM
Seems likely there was a failure of the FinCen Know Your Customer (KYC) rules.
I like the plot twist in the filing:

 _" Kolomoisky is now reported to have made a return to Ukraine for the first
time in several years, a decision which is believed to be linked to the recent
victory in the Ukrainian presidential election of the television star and
comedian Mr. Volodymyr Zelenskiy, behind whom Kolomoisky is widely reported as
being the principal power and financial backer. Press reports speculate that
there is a deal between Mr. Kolomoisky and Mr. Zelenskiy: in exchange for
Kolomoisky’s support, Mr. Zelenskiy will ensure the return of PrivatBank to
the ownership of Mr. Kolomoisky in order to circumvent any pending or
threatened litigation against Kolomoisky."_ \--
[https://www.atlanticcouncil.org/images/royaltyfree/kolomoisk...](https://www.atlanticcouncil.org/images/royaltyfree/kolomoisky_case.pdf)

That is some serious corruption allegations right there.

From a financial controls perspective it seems like the US government was
pursuing these folks (according to the complaint) so somebody was making
complaints.

~~~
ChuckMcM
Seems like an interesting strategy to use ill gotten gains to elect a pliable
television personality to the role of chief executive, Then once that is
accomplished pressure them so that they will use the power of the office to
obstruct any attempt to bring the criminals to justice.

Pretty far fetched though, you would have have someone on the inside running
your faux campaign, etc. Perhaps I'm reading too much Stieg Larsson.

~~~
Muromec
It’s not far-fetched it’s just a regular day out here.

Previously it was the other way around — to be in office yourself and book
profits for your son in law (Kuchma—Pinchuk) or other related person. Conflict
of interest? Never heard about that.

This was commercialized and outsourced at some point, but only at MP level, so
you could enjoy Presidential impunity yourself.

Zelensky happened as a controlled exit strategy because all other contenders
had highly toxic reputations to assume office for themselves after being in
some office or another for nearly 30 years, so it was a chance that somebody
really from the outside would get ir

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djstein
water is wet

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empath75
Jokes on them, though: They bought _Cleveland_

