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By John Helmer, Moscow

When Ukrainian warlords need a well-earned rest from fighting the civil war, there’s always Cleveland, under State Department protection, or Miami for the warm weather.

Igor Kolomoisky has accumulated more than a quarter of a billion dollars in US investments through a chain of front companies which stretch from several American states to Miami, Florida, to Cyprus, and to the Caribbean. He has also managed to keep his name out of the public record of the American transactions. But the money trail in some of his deals, and at least one of his partners, have come under scrutiny by US and state government agencies, and federal courts in several US states.

Kolomoisky himself, according to a Kiev source and a federal US court filing in December 2012, “has traveled to the United States over the past few years and should have no trouble obtaining a visa.” Kolomoisky has been in the US in recent days, reportedly on a restricted visa, in order to discuss his future and the future of his American assets with US Government officials. Public records reveal that the value of these assets has been falling sharply, and that some may be sold in debt default auctions unless Kolomoisky can persuade state and federal government agencies to provide subsidies, concessional utility rates, tax and other credits.

Sources in Cleveland, Ohio, where Kolomoisky has control over several downtown buildings and a hotel, report that his assets there have lost market value since he acquired them. “Out of state investors think they will make a ton of money,” one of the sources said. “they don’t. I don’t think [Kolomoisky] made any money [in Cleveland].”

Kolomoisky’s legal right to enter the US is controversial. It has been reported in Ukraine and Russia that he was the target of an investigation by the US Department of Justice, when Edwin Mukasey was Attorney-General, between November 2009 and January 2011; and that Kolomoisky was barred from US entry. For more, click. At the Dniepropetrovsk headquarters of Komolomoisky’s Privatbank, his spokesman refused today to confirm or deny Kolomoisky’s presence in the US. He also refused to clarify whether Kolomoisky has been denied entry to the US at any time since 2009.

In a filing in federal US court in Pittsburgh, Pennsylvania, in December 2012, Kolomoisky was reported to be “an Israeli citizen who speaks Russian but not English who[m] Sapir [Akiva Sapir, one of the defendants in the case] believes would refuse to travel and/or would be unable to obtain a visa to appear as a witness in this matter.” Kolomoisky was also identified in court as a majority stakeholder in the Warren steelmill, which was the subject of the court case; he was also the plaintiff in another US court case accusing another former Soviet figure, Boris Bannai, of fraud involving the same steelmill.

Vadim ShulmanAccording to the Pittsburgh court documents citing the Israeli Ministry of the Interior, “Kolomoisky maintains an official residence in Israel and has another residence in Israel where he stays several times a year when visiting Israel”. Kolomoisky “has previously resisted involvement in United States litigation”. The court ruled in favour of Safir, and rejected US jurisdiction for claims which had been brought by Vadim Shulman (right), a native of Dniepropetrovsk, then an Israeli passport holder and resident of Monaco. Kolomoisky’s status in the US wasn’t adjudicated.

The court papers reveal the bankrupt steel plant had been sold in 2001 to the Kolomoisky group, with Shulman holding a minority stake, for an ostensible price of $13 million. Allegedly, according to Shulman, the actual transaction price was $6.6 million and the difference allegedly siphoned off. Subsequently, the stakeholders claim to have invested $100 million in reviving steel production, including loan money from Privatbank. By the autumn of last year, however, Shulman and Kolomoisky had fallen out, and were suing each other in the British Virgin Islands (BVI), as well as in US federal courts in New York, Delaware and Ohio. How much was actually invested in Warren Steel, and where the money came from are disputed.

Last December Shulman applied for a Manhattan court order to compel Kolomoisky to open the books of his offshore companies to prove how much money, if any, he had paid or loaned to the Warren Steel venture; how much he had taken out; and how much shareholders like Shulman (read Hornbeam of Panama) might be owed. Targets identified in the court record include Kolomoisky himself, plus Divot Enterprises Limited;. 5251 36th Street LLC; CC Metal and Alloys LLC; Felman Trading, Inc.; Mordechai Korf; Optima Acquisitions, LLC; Optima Fixed Income LLC; Optima Group LLC; Optima International of Miami, Inc.; Optima Ventures, LLC;. Querella Holdings Limited; and Felman Production, LLC.

For parallel public records confirming that Kolomoisky is the principal beneficiary behind the Felman, Optima, CCMA, and Divot names, as well as Korf’s principal, read this.

A search of transaction records involving these names has turned up American office buildings and commercial real estate which Kolomoisky and his associates have bought in Ohio, Kentucky, Illinois, West Virginia, Texas, and Florida. Many of the deals have proved controversial, under-funded, or lossmaking. In Harvard, Illinois, for example, where Kolomoisky bought the former Motorola plant in 2008, his Optima takeover entity was identified in the local press as “the U.S. branch of a private, global company based in the Ukraine that has invested in oil, gas, telecommunications and manufacturing.” The purchase price in local records was $16.8 million.

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Six years later, in 2014, Kolomoisky was offering to sell the building for $37 million, but there were no takers. The electricity was switched off to the plant for non-payment; heating was cut off by the start of the winter. In October last Kolomoisky had defaulted on $329,000 in county property taxes, and was facing a delinquency sale by the county government. The sale price in the local market had dropped to $15 million.

2fIn 2011 Kolomoisky reportedly paid $77 million for this office building in Louisville, Kentucky. At present, according to agent advertising, the building has been renovated after acquisition, but it remains far from fully leased. It is also unclear how much cash Kolomoisky put down for the transaction, and how much in existing debt was transferred to Privatbank’s books. “The $77 million purchase price,” reported the Louisville Business First, “was paid partially in cash and partially through the assumption of an existing mortgage, according to the deed. The deed does not indicate how much of the purchase was made with cash or the value of the mortgage that was assumed.”

The public faces for Optima in US property records and local media reporting are Chaim Schochet (lead image, 3rd from left), head of Optima Ventures’ Cleveland investments; and Mordechai Korf (2nd left), head of Optima Holdings in Miami. Schochet appears in this Cleveland newspaper report by Michelle Jarboe McFee: “in downtown Cleveland, he might be the most important guy you’ve never heard of.”

In fact, a city market source says, “Schochet isn’t important. He is someone’s family member who was put there to do a job.” Kolomoisky’s name has not been reported explicitly in the Cleveland media, although McFee’s report of 2012 provides a link to him if the reader clicks on “the principals of the Privat Group, one of Ukraine’s largest business and banking groups.”

Another source claims that District Attorney Steven Dettelbach and FBI field office chief Stephen Anthony have almost certainly investigated property investment deals conducted by foreign-owned groups seeking to qualify for investment visa and naturalization benefits through an entity called Cleveland International Fund (CIF). This is one of many regional investment centres established around the US to attract foreign investors with matching projects to meet the federal government’s requirements for the EB-5 immigrant investor scheme.

Eddy ZaiCIF was established in 2009 by Cleveland businessman, Eddy Zai (right), a year after Kolomoisky and Korf started buying Cleveland real estate. US court documents and an FBI release indicate that Zai and his companies were investigated for fraud and bribery, and by 2013 Zai had been convicted, sentenced to prison, and ordered to pay $23 million in restitution.

Court documents show that prosecutors believed that CIF was “funded exclusively with funds that Zai improperly received through his bribery scheme”. There is no reference to the Cleveland assets which Kolomoisky had acquired during the period of the investigation. Local sources and the Cleveland media report that in 2011 CIF was a participant in the joint venture Optima arranged with Sage Hospitality, a hotel developer in Colorado, to renovate Cleveland’s Crowne Plaza Hotel, and reopen it as the Westin Hotel. The outlay for Kolomoisky was reported to have been a part-share of $9 million for the distressed asset. The renovation cost of $64.5 million was funded in part by CIF.

A press release by the FBI and the Cleveland District Attorney identifies Zai’s wrongdoing as having taken “place from December 2003 through March 2010.”

When Kolomoisky and his men first arrived in Cleveland to buy real estate, one informed source claims “there were rumours flying around”. The Zai investigation did not identify any wrongdoing on Optima’s part.

Korf is the chief executive at Optima in Miami. He is one of several children of a Ukrainian-born rabbi, Abraham Korf. In the picture, Abraham is at front. Mordechai is in the rear, first from left.

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Source: http://archive.constantcontact.com

The rabbi’s organization claims that “under the harsh rulership of Stalin, working long hours at an early age to help his family survive, life for young Abraham Korf in hunger-stricken Communist Russia was fraught with struggle. Throughout the long and cold winter nights, Abraham wished in his heart of hearts to be sent to Yeshiva (Rabbinical Academy or College) to study Torah. When the opportunity arose for Abraham and his brothers to study in a secret underground Yeshiva, their first lesson was to lay low and out of sight in order to avoid detection by the Communist government.”

Mordechai (aka Motti) Korf describes himself as “co-founder of Optima International, a private investment firm with holdings in several businesses located throughout the United States and Eastern Europe.” Other sources, including a 2013 Optima filing in West Virginia, report that Kolomoisky is Korf’s principal and control shareholder. The West Virginia filing provides this chart of Kolomoisky’s ferroalloy businesses, their locations, and Korf’s role in each:

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CLICK TO ENLARGE

Korf first appears in the archive of the Kyiv Post in 2001 when he was Kolomoisky’s agent in a raid against Daewoo, the South Korean shareholder in a Dniepropetrovsk mobile telephone company, Ukrainian Radio Systems (URS). Here is that report. At the time Daewoo claimed it had invested $70 million in URS and its managers were running the company until their visas were cancelled. Daewoo ended up selling its 49% stake to Kolomoisky companies in Cyprus; no price was published. Korf admitted at the time that “Privatbank is our strategic investor.”

In Cleveland at present Kolomoisky controls at least four office buildings; his stake in the Westin Hotel appears to be less than controlling. The first asset to be bought, One Cleveland Center (below, left), was acquired in 2008 for a reported price of $86.3 million. The Penton Media Building (centre) cost a reported $46.5 million. The transaction for 55 Public Square was reported at $34 million, and the Huntingdon Building (right), $18.5 million. Total, $185.3 million.

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Schochet manages the assets but has no ownership stake; he reports to Korf. City real estate sources warn that the market value of the assets at acquisition has probably deteriorated while the debt remains the same, or has been growing. A bid by Kolomoisky’s group for $25 million in state building preservation credits has failed. An attempt to persuade the Cuyahoga County administration to lease , then buy the Huntingdon Building was rejected. Kolomoisky’s men had threatened to demolish the building if they didn’t get their way.

“The combined occupancy of Optima’s buildings is 74%”, reported a local business medium in June 2013. “[The assets] have not been a particularly strong performer,” a city real estate specialist said last Friday. “Cleveland hasn’t been a successful experiment for them.”

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