Mobster on Thin Ice

By Lucy Komisar and Ivan Feranec, Aug 6, 2002

For Alimzhan Tokhtakhunov, 53, called Taivanchik (the Taiwanese) because of his Asian features, the plot to get an Olympic gold medal for Russia’s top figure-skaters was small-time.

The Russian mafia don who was arrested July 31 for fixing skating contests at the Salt Lake City summer Olympics reminds one of Al Capone, who was put away for tax evasion, because the government couldn‘t get enough evidence against him for murder, extortion and criminal racketeering.

The Russian was caught by Italian financial police tapping his phones in a money-laundering investigation. They informed the U.S., which last month secretly indicted him on charges he bribed skating judges. The U.S. now has moved to extradite him. He could get up to 10 years in U.S. prison and $500,000 in fines if convicted of the current charges: conspiracy to commit bribery and conspiracy to commit wire fraud related to a sports event. It‘s a chance to lock up a man who is guilty of a lot more than simply sports competition fraud.

For Alimzhan Tokhtakhunov, 53, called Taivanchik (the Taiwanese) because of his Asian features, the plot to get an Olympic gold medal for Russia’s top figure-skaters was small-time. The U.S. complaint calls him a “major figure in international Eurasian Organized Crime” who has been involved in “drug distribution, illegal arms sales and trafficking in stolen vehicles.”

Italian police had put Tokhtakhounov under surveillance after getting reports of large amounts of money transferred from the United States to Russian citizens in Italy. They revealed after his arrest that between 1996 and 2001, about $50 million was transferred from the Bank of New York through Azimut Ltd., a shell company in the Cayman Islands, and then to the Russians. It was part of an operation into BoNY money-laundering that the U.S. Justice Department investigated and then closed a few years ago. Italian police tapped Tokhtakhounov‘s phone, because he was known as a Mafioso to police in the West.

The FBI had cited him in an August 1996 report prepared by its Intelligence Section, Organizational Intelligence Unit, and entitled “Semion Mogilevich Organization.” The report, excerpts of which these reporters obtained, said, The Mogilevich Organization is tied to two other major OC [organized crime] groups – the Vyacheslav Ivankov Organization and the Solntsevskaya Organization – and also to Euroasian crime figures Monya Elson and Alimzhan Tokhtakhounov. Their operations and contacts overlap in some instances, as evidenced by meetings, joint investments, and silent partnerships in firms engaged in OC activity. (In 1995, the FBI would arrest Ivankov for extortion in New York; he was convicted and sent to federal prison for 9 years and 7 months.)

Czech police reports said that Tokhtakhounov controlled Russian crime groups active in Western Europe and acted as intermediary for newly arrived criminal bosses. The Czech police rap sheet on him includes:

1991: Departure from the USSR for Germany where he organized illegal arms deals partly from the stock of the Soviet Army;

1992: A search of his house turns up the business card of known Russian mobster Semion Mogilevich;

1993: He moves to Paris to escape German police inquiries;

1994: He meets with Ivankov and other major Russian crime leaders in Vienna to discuss division of interests in Moscow casinos; in July, he hosts representatives of Russian and Uzbek organized crime groups on his yacht Saravona in the Mediterranean Sea.

In October, Tokhtakhunov meets in Tel Aviv with Mogilevich, Gigori Loutchansky, Solntsevo mafia boss Sergei Mikhailov, and a representative of Ukrainian president Leonid Kuchma, believed by western intelligence to be involved in illegal arms trafficking. They discussed dividing spheres of influence in the export of strategic raw materials.

He represents an export division of the Association of the 21st Century, Moscow, one of whose heads is alleged crime leader Yossif Kobzon.

1995: In April, failing to get a visa extension, he is deported from France.

1996-97: Western authorities suspect him of involvement of trafficking in drugs, arms and antiquities and of participation in extortion. His Israeli citizenship is cancelled when it is proved that he obtained it illegally, through a false marriage on the basis of false documents.

Among his contacts, Czech police listed Arkady Gaydamak, object of an international arrest warrant for illegal sale of weapons to Angola.

Tokhtakhunov is part of the criminal establishment targeted in June by European law enforcement in “Operation Spiderweb.” Police in Italy, France and elsewhere arrested 50 people who were moving billions of dollars a year in profits from Russian crime groups trafficking in drugs, arms and people, and from extortion, murder-for-hire and fraud. They reported that the money was channeled offshore, through the Bank of New York, and then to Europe to be invested in legitimate business, or returned to mafia-controlled enterprises in Russia.

The road to Operation Spiderweb began in 1998, when Russian police asked the FBI to help find a Russian businessman‘s $300,000 ransom payment. The money had been transferred from the victim‘s San Francisco bank, through the Bank of New York, to an offshore account and finally to Sobin Bank in Moscow. Sobin was controlled by Aleksandr Mamut, head of administration for President Boris Yeltsin. BoNY-to-offshore-to-Sobin was a well-traveled route. In August 1999, when a leak made the BoNY operation public, U.S. investigators acknowledged that Russians had laundered at least $7 billion though accounts at the bank, a major U.S. institution with important Russian business.

Peter Berlin and Lucy Edwards, a Russian couple in New York, had set up shell companies that opened BoNY accounts. Edwards was the bank‘s Eastern European vice president. However, the Justice Department called BoNY money-laundering scandal “just” a Russian tax-evasion scheme.

In 1999, after the Berlin and Edward were indicted for money laundering, they plea-bargained and talked. The FBI passed their intelligence to French and Italian investigators, and the Europeans realized the money laundering they were investigating was part of a giant combine. They found that beginning in 1996, Russian crime groups had used BoNY to launder $3 billion a year.

Italian prosecutor Enrico di Nicolas, coordinating Operation Spiderweb, wrote Bologna chief investigating magistrate Paolo Giovagnoli March 16 asking for warrants to arrest 101 people and put 49 under investigation. Most were Russian; many were Italian or French. Among those on the confidential detention request list, obtained by these reporters, the only individuals singled out for detailed mention were Grigori Loutchansky, Semion Mogilevich and Yossif Kobzon. However, they were not arrested; Di Nicolas and Giovagnoli did not respond to queries asking why.

Di Nicholas in his letter said Loutchansky, a leader of the Russian Mafia, controls the French company Kama Trade, a laundering-network centerpiece. He said it linked to Nordex, which Loutchansky founded in Vienna in 1989 at the behest of the Communist Old Guard to move cash from looted state and party assets and later from crime activities. Loutchansky said through his London attorney that he had won libel actions against such charges. It is completely untrue that I have been involved in the mafia, in money laundering or in any other criminal activity, he said.

The prosecutor said Mogilevich, based in Budapest, was a source of dirty money from drug trafficking, prostitution, illegal commerce of precious objects and art, extortion and money laundering. He said Mogilevich is active in Los Angeles, Miami, Philadelphia and St. Diego as well as Moscow, Prague and Tel Aviv. British authorities identified $200 million that companies or individuals linked to Mogilevich shipped through the London office of BoNY in 1998-99.

The 1996 FBI report said Mogilevich was involved in “weapons trafficking, nuclear materials trafficking, prostitution, drug trafficking, dealing in precious gems, and money laundering.” It said he was active in the U.S., as well as the Czech Republic, Austria, Russia, the Ukraine, the U.K. France, Slovakia, and Israel. The FBI said the center of his financial operations was Arigon Ltd, registered in the Channel Islands and using banks in New York, Geneva, London and Stockholm. Front companies in the U.S. were FNJ Trade Management Corp. in Los Angeles and YBM Magnex in Newtown, Pa.

Mogilevich was asked for comment through Arigon in Prague, but he did not respond.

According to Di Nicolas, Kobzon (called the Russian Sinatra), operated in New York, Los Angeles and Miami, as well as in Russia and Europe. The singer, twice elected to the Russian parliament, was allegedly involved in arms trafficking, and the United States denied him a visa several times, most recently in January 2001. Kobzon was contacted through his son-in-law Yuri Rapoport and through his office in Moscow, but he did not choose to comment.

The BoNY network was clearly a major Russian crime operation, yet Justice Department scrutiny into the bank‘s wrongdoing was dropped a few years ago after bank officials promised to improve examination of clients‘ identities and suspicious transfers. New York District Attorney Robert Morgenthau said in June at a conference on dirty money at Washington‘s Brookings Institution, a centrist think tank, that the department didn’t dig deeply enough. They didn‘t want anyone else investigating, either. According to a high official in Morgenthau‘s office, U.S. authorities told him not to pursue the case and cut him off from information.

The New York DA ran into similar federal displeasure a decade ago, when he brought criminal charges against leaders of the Pakistan-based Bank of Credit and Commerce International (BCCI), which collapsed in a mega-fraud that made $8 billion disappear. An investigation by the Senate Subcommittee on Terrorism, Narcotics and International Operations, headed by Sen. John Kerry (D-Mass), revealed that the CIA had used BCCI to finance clients, including Osama bin Laden. The first Bush administration may have blocked deeper probes to avoid embarrassment.

These cases show the danger of letting criminal networks fester. The Russian mafia has been strengthening its operations in the West. Tokhtakhounov‘s fixing the Olympic skating competition is minor compared to the impact of Russian crime groups‘ each year using billions of dollars of dirty money to buy into legitimate business throughout America and Europe. BCCI provides another lesson. The bank‘s number two official, Khalid bin Mafouz, got only a minor fine in the U.S., though he never told where the vanished billions went.

Ivan Feranec is a Czech journalist in Prague.

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