---   mtnews.jpg (5621 bytes)
blueline.gif (11170 bytes)
official.jpg (2914 bytes)  
 

 

MT FRONT PAGE

christy1.jpg (5348 bytes)
ARTHUR CHRISTY Inkombank lawyer
former US Attorney

 

Yeltsin2.jpg (22754 bytes)
"Russia is the biggest mafia state in the world, the super power of crime that is devouring the state from top to bottom."

 

freeh.jpg (3872 bytes)
"Organized crime shaped the post communist Russian banking industry and now manages it."

 

gilman.jpg (4837 bytes)
"It is truly impossible in many instances to differentiate between Russian organized  crime and the Russian state"

 

woolse1.jpg (3843 bytes)
"Russian organized crime can use its resources to corrupt institutions here in the United States. The recent case involving the Bank of New York may prove to be one such example.

 


"A substantial portion of the American taxpayer money to the IMF may now be financing the lavish lifestyles of Russian oligarchs" Dick Armey, House Majority Leader.

 

speaker.jpg (2407 bytes)
RUSSIA'S ROAD TO CORRUPTION Speaker's Advisory Group on Russia

 

Russian mob controlled bank at the heart of
the money-laundering scandal

INK6.jpg (4200 bytes)
Russian mob vs. Emanuel Zeltser

TERRORISM and
wpe3.jpg (2666 bytes)
MONEY LAUNDERING

 

 

U.S. LAWYERS HIRED AS SPIN DOCTORS FOR RUSSIAN MOB

 

 

April 30, 1999.  New York. A New York law firm, Christy & Viener, is being sued in US District Court (Southern District) by Western shareholders and creditors of a Russian bank, Inkombank. Plaintiff-shareholders allege that the firm's senior, 75 year old Arthur Christy, helped Inkombank's management to defraud the Western investors and launder their funds through an elaborate network of offshore companies. The motive? The best of them all - Inkombank's boss, V. Vinogradov, grumbled that last year alone Inkom paid Christy over $1.5 million.  Did Vinogradov get his money's worth? Yes, Christy, a former US Attorney, has been able to delay the proceedings for almost three years permitting Vinogradov and other Inkombank chiefs to remove over $56 million from the investors' reach and conceal their whereabouts. Also believed to have aided and abetted in laundering of shareholders' funds are several partners and associates of the firm, including Wayne Matus and Peter Gallagher, according to Inkombank shareholders.

Inkombank, one of the ten largest banks in Russia, has been the focus of media attention for the past two years. As most larger Russian banks, it is believed to be linked to Russian and international organized crime syndicates. Last year Russia's Federal Security Service' (FSB) leaked information of its investigation into financial ties between the kingpins of Georgia's drug network, who have been under surveillance of the law enforcement agencies, and Inkombank's Chairman, Vladimir Vinogradov and other management figures. A special unit of the Ministry of Security of Russian Georgia provided data that Inkombank's executives have been under the surveillance of Georgian law enforcement agencies in connection with investigation of organizers of channels of drug trafficking into Russia and Eastern and Western Europe. In particular, Inkombank is being monitored with respect to channels of drug trafficking from the territory of Georgia to the West through the seaport of Poti. Frequent shipments of raw cotton financed by Inkombank originate in this port. The investigation revealed the channels of cotton deliveries abroad are used by drug dealers as a cover for drug trafficking. Western law enforcement agencies also monitor this activity and expressed a special interest in receiving data concerning certain Russian participants of the "cotton" business, including Inkombank. Western agencies in Tbilisi (Georgian capital) offered the Georgian Ministry of Security to exchange information regarding participants of the financing and transportation of illicit substances. The Georgians were offered to be provided with the materials regarding Semyon Mogilevich, who controls the channels of drug trafficking through the territory of Georgia to Western Europe and the United States. Magilevich's world-wide criminal empire is believed to hold a significant stake in Inkombank through a number of its offshore companies.

Inkombank's shareholders brought the lawsuit against Christy & Viener under the American Federal RICO law, alleging obstruction of justice on the part of Inkombank's lawyers. Western investors also contend that Arthur Christy took an active part in coercing witnesses into giving false testimony by bribes and threats. The senior vice president of the investment banking firm of Smith Barney testified that Vinogradov threatened to cut his throat. Other witnesses in Inkombank's proceedings testified that they were also intimidated by Inkombank's agents who demanded that they give false evidence.

Christy's firm was unavailable for comment. In the pleadings filed with the Federal Court and the Disciplinary Committee, Christy vehemently denied any mischief on his part. Christy maintains that he has done nothing wrong and only zealously advocated the interests of his client Inkombank. Christy & Viener alleges that Inkombank's former lawyers conspired with Inkombank's Western shareholders and their lawyers to bilk Inkombank out of six million dollars. However, the investors assert that Christy does not even represent Inkombank as an institution, and was retained by the mob linked management faction which currently controls Inkombank. Shareholders contend that Arthur Christy's firm was retained not for its legal expertise but because of Christy's political clout. Christy's regalia include a number of illustrious political posts such as US Attorney for the Southern District of New York and President of the New York City Association of the Bar. Shareholders maintain that Christy is now parlaying his political capital for the seven digit fees paid him by Russian financial racketeers to thwart legal proceedings against them in the US.

Says Boris Kuznetsov, a prominent Moscow lawyer who represents Hoverwood Limited, a party which recently settled with the plaintiffs: "Arthur Christy at first claimed to be Hoverwood's attorney. He even accepted service of process on Hoverwood's behalf and then caused Hoverwood to default. Only after Hoverwood filed a complaint against Mr. Christy with the Disciplinary Committee of New York's First Judicial Department, did he completely change his tune and vigorously deny ever being an attorney or taking any action on behalf of Hoverwood." Mr. Kuznetsov said that Hoverwood will file other complaints against Christy & Viener and also intends to bring legal actions against them in the US and other jurisdictions.

In the past two years Russian organized crime's threat to the West has been universally acknowledged. The report of the recently completed two year study of the Center for Strategic and International Studies quotes FBI Director Louis Freeh summarizing the gravity of these concerns by "stat[ing] bluntly that ROC [Russian Organized Crime] 'is the greatest long-term threat to the security of the United States.'" The study concluded that "the impact of ROC on the future stability of democratic Russia is the key threat for the United States identified in this study. A second serious threat is the transnational activities of ROC groups which involves the rapid and difficult-to-counter expansion of their illicit operations internationally."

Respecting Russian organized crime's proliferation within the Russian banking industry, the study concluded that the "OC [organized crime] shaped the post-communist [Russian] banking industry and now manages ... it." The report warns: "Further complicating the economic experiment in Russia is the systematic corruption within the financial community ... Banks are central components of ROC activity both as a primary target for extortion and as the main vehicle for extensive money laundering. These activities are initiated on a transnational basis as evidenced by the appearance of ROC activity in Cyprus, the Caribbean Islands, and other offshore banking centers the world over."

The CSIS Task Force emphasized that the Russian mafia's expansion into Western Europe and the US represents "a profound challenge" to law enforcement in the West, particularly in financial criminal activity such as sophisticated fraud schemes, bank and securities fraud and manipulation and laundering of drug money. The study points out that ROC, having gained control over major Russian banks, bribed officials and legislators to gain preferential treatment or obstruct unfavorable legislation, and have commenced investments in the US with billions in laundered money. FBI Director Freeh pointed out that "the United States is presented with a well-organized, well-funded, sophisticated and brutal conspiracy." CIA Director John Deutch testified in 1996, that, " ... corrupt officials supply the crime syndicates with export licenses, customs clearances, tax exemptions and government contracts .... Officials of law enforcement and security services provide criminals with protection from arrest and prosecution."

Testifying before the House Foreign Relations Committee on October 10, 1997, Mr. Freeh stated that at the present time "... the majority of [the Russian] banks are controlled by organized crime" His testimony was corroborated by Arnaud de Borchgrave of CSIS who gave evidence that two thirds of the Russian economy is "under the sway of organized crime" including most of its 1.740 banks; and by Giovanni de Gennaro, Deputy Director of the Italian National Police, who testified that the "Italian organized mafia figures [have been] investing money, operating in St. Petersburg banks." In June of 1993, the St. Petersburg branch chief Inkombank, Boris Yakubovich, was killed execution style, for resisting the mob's takeover of that major Russian bank.

Many larger Russian banks, such as Inkombank, maintain a fully staffed "department" called "Otdel Polivaniya"- (Department of Besmirching) which employs sophisticated facilities and techniques in order to corruptly influence public officials in Russia and abroad, and to prejudice the powers that be against anyone who threatens to expose the unlawful endeavors of the mob faction which controls the institution. Backed by the virtually unlimited resources of the Russian syndicates, the "Departments'" activities range from retaining "political" law and public relations firms in the US, Cyprus, and other Western countries to bribing Russian and Western officials, fabricating and planting bogus "documents" in public files and coercing false testimony in judicial proceedings world-wide.

Notably, top Russian public officials openly acknowledge the problem of the organized crime takeover of the Russian economy. For example, Russian Minister of Internal Security Kulikov, publicly admitted to seeing no solution to the problem of mafia control of the Russian banks but the re-nationalization of privately owned banks. Major Gromov of the Russian Tax Police told a September 19, 1994, Conference of the Financial Crimes Enforcement Network (FINCEN) that "almost all Russian banks are corrupt." Finally, Russian President Yeltsin himself called his own country "the biggest mafia state in the world, the super power of crime that is devouring the state from top to bottom."

Organized crime proliferation and domination of legitimate business and public institutions is hardly new. The Italian Cosa Nostra has built and managed the glitziest hotels and casinos in Las Vegas and controlled the largest New York labor unions. Colombian drug cartels offered to pay the Colombian national debt in exchange for passing constitutional amendments prohibiting extradition of Colombian "narcotraficantes." However what sets the Russian mafia as a breed apart is a unique sophistication and understanding of the system and ability to manipulate it via the use of US power brokers such as "political" law firms, major accounting firms, commercial and investment banks, political lobbyists, and prominent public relations image makers. Of course none of these liaisons represent the "Russian mafia" - they represent "Russian banks." A January 1996 cover story of New York Magazine, titled "The Money Plane", provides a broad perspective of the threat to Western economies by the organized crime takeover of Russian banks. The report notes that "the more savvy Russian hoods have hired sophisticated money managers and international lawyers to move their dirty money."

It is incredible says Kuznetsov, that Americans commission these multi-million dollar studies on the Russian mafia and at the same time permit their lawyers to lobby its cause in exchange for exorbitant fees. As much as I do not want to quote Lenin, smiles Kuznetsov, perhaps he was right when he said that Capitalists are willing to sell you the very rope with which you'll hang them.

The controversy in the US courts has been going on since late 1994 with no end in sight. However whatever (and whenever) the outcome will be, Inkombank's image in the international banking community has been severely tarnished. More importantly, aspersions have been cast upon the neophyte Russian commercial banking system. Russian mass media reported an apparent cover-up by officials of the Central Bank of the Russian Federation, Russia's principal banking regulatory body. Allegations of corruption at the very top of the Bank of Russia stemmed from the enigmatic hushing of the findings of a surprise audit of Inkombank by the Russian Central Bank's investigators in 1996. The report issued on June 7, 1996, revealed that Inkombank "via use of various bookkeeping machinations" attempted to conceal losses amounting to 998,2 billion rubles (approximately US$200 million) and artificially inflated its retained earnings by 1,35 trillion rubles (approximately US$250 million). Investigators concluded that Inkombank was virtually insolvent largely due to bad loans to "questionable entities." Inkombank's chief, Vinogradov, attempted to calm fears of the bank's potential failure by stating that the Bank of Russia's report was preliminary and that a subsequent report was issued showing a more stable picture of the bank's financial position. However Vinogradov declined to make this "subsequent" report public. This unwillingness "to come clean", combined with the allegations of Inkombank's laundering cash for Russian-Georgian drug cartels, increases concerns that Russia's major financial institution has become a ticking time bomb. END

 


Prospective Witness Murdered

The Russian press widely reported the execution style murder of a senior auditor for the Central Bank of Russia, Lubov Tarasova, in Moscow in October of last year. Sources close to the Inkombank lawsuit in New York reported that the plaintiffs contemplated calling Ms. Tarasova to testify regarding Inkombank's frauds against its shareholders. 


FOLLOW-UP

On May 2, 2001, the Supreme Court of the State of New York entered a $78 million judgment against Inkombank for Inkombank's fraud against its shareholders. 

Bank of New York
mobdeal.gif (7890 bytes)
Russian mob scandal

Copyright US-Russian Press Club, Inc. All rights reserved.

 

 

 

 

 

 

HITBOX
COUNTER