- Print This Post Print This Post

by John Helmer, Moscow 

US Government officials are protecting some of the largest Russian fraudsters and bank robbers on condition they invest their ill-gotten gains in US real estate, bank accounts, and businesses paying US tax; and also publicly attack the Putin administration for “victimising” them. The latest of these oligarch-sized accused,  Vadim Belyaev (lead image), is facing trial in the New York State Supreme Court.

Belyaev is being sued by the state-owned Moscow banks, National Bank Trust and Otkritie Bank, for the return of about $1.2 billion in fake loans, fraudulent bond and debt-pyramid transactions he is alleged to have arranged for his own benefit, when he controlled the two banks and more than 150 offshore front companies through which he directed the cash to himself. His subordinates at the time are facing prosecution in Moscow for criminal fraud. The banks, which went bankrupt as a result of the asset stripping, remain under the administration of the Central Bank and the state  Deposit Insurance Agency (DIA). The Central Bank is the 98% shareholder of Trust Bank and 100% shareholder of Otkritie.

Belyaev, say the banks, “exercised close control over Otkritie Holding and its subsidiaries, and repeatedly used his control to misuse assets of entities owned by Otkritie Holding, and often to siphon off those assets for personal use and the use of his associates.”

Among the homes he purchased in the US, one in Westchester county of New York state accommodates his ex-wife and children. Another, a ski chalet, in Aspen, Colorado, he recently sold for $12.5 million. Another of his homes has been identified in a suburb of Phoenix, Arizona.  The town house in New York City where Belyaev and his current wife live, is palatial; Belyaev is paying rent of $80,000 per month.

Belyaev has yet to file a full statement of his defence in the New York court; that is due on February 5. He is asking the court to throw the case out on several grounds. One is that he has been victimised by the Central Bank’s bankruptcy procedures which he calls illegal “nationalization” of the banks. His second claim is that there is no proof that he controlled the banks or that fraud was committed in the alleged loan schemes. The third of Belyaev’s defences is that the court in New York has no jurisdiction over him, even though he lives a 10-minute walk from the courthouse.

The US Government is protecting Belyaev so far by granting him and his wife residency papers, together with Social Security and tax status. His name was omitted by the US Treasury when it published its list of Russian oligarchs on January 31, 2018; read that list here.  Several Russian bankers were listed, including three on the run in Cyprus and London; their banks were not as large as Trust and Otkritie when Belyaev ran them, nor are their crimes as expensive as Belyaev’s.  

The New York court is due to rule on dismissal on February 22. If  the court allows Belyaev to continue living in the US, but protected from being pursued there for his crimes in Russia, it will amount to a declaration that oligarchs who steal but pay tribute in the US will be safe. By contrast, oligarchs who stay in Moscow but pay tribute to the Kremlin will be targeted by US sanctions.

This is also the catchcry of Alexei Navalny (lead image, 2nd from right) who has called for the US and European Union to “be very clear dividing two things: Russian people who must be welcomed and treated very warmly from European Union from my perspective,  and Russian state [oligarchs who] must be treated like a bunch of criminals.”

By the time in mid-2017 when Russian bank regulators caught up with Belyaev’s schemes, they discovered  National Bank Trust’s liabilities exceeded the book value of its assets by about Rb157 billion ($2 billion). Once they took over the bank’s books, they uncovered more than Rb2 trillion ($26 billion) in suspicious loans, misstated asset values, and claims from other banks.  

Ahead of its failure in June 2017,  according to its second-quarter report,  Otkritie appeared to be the sixth largest Russian bank by volume of individual deposits (Rb573.8 billion),  and the seventh largest by value of  assets (Rb2.5 trillion).  It was an important system bank in the Russian economy; it had also participated at the Kremlin’s request in highly controversial state financing transactions, such as the privatization of Rosneft shares of 2016.

The subsequent collapse of Otkritie was even larger than the Trust failure, with the Central Bank estimating at first the state bailout cost would come to between Rb250 billion ($4.3 billion) and Rb400 billion ($6.9 billion). By last year, the bailout cost for Otkritie has reached over Rb900 billion ($11.5 billion). The combination of Trust and Otkritie is the largest bank fraud in Russian history.

Strangely, none of the published British and American databases for Russian money launderers has found a trace of Belyaev.   The archive of Navalny’s Anti-Corruption Foundation (FBK) has also ignored Belyaev and his multi-billion dollar getaway.  

At the start of the clean-up, the Central Bank regulators went after Ilya Yurov and others who had been in charge of the stealing at Trust; Yurov counter-charged Belyaev with using the Central Bank to steal Trust to Otkritie and then loot both banks. The archive of cases in Moscow, London and New York courts can be followed here.

The chase after Belyaev has been slower to start; it too is currently in the courts of Moscow, London, and New York; read the archive for Belyaev and his well-known associates.   

After lawyers for the state management of Otkritie filed in the New York court on August 28, this report last September explained the methods Belyaev had used.   The court docket with each of the papers, claims and evidence up to last week can be read here.

Source: http://iapps.courts.state.ny.us

On November 6, Belyaev replied, telling the New York judge, Joel Cohen, a newcomer on the Supreme Court bench, that he should dismiss the case because all the transactions and all the claims belong in the jurisdiction of the Russian courts;  and because Belyaev —  also calling himself Wolfson – is not subject to the jurisdiction of the New York court. The New York lawsuit was a case of claim splitting, his lawyers argued – duplicating the ongoing case in Moscow. He is also claiming to be a Russian and Cypriot citizen who only rented an apartment in New York City in order to visit his children living with his ex-wife.

“This meritless action,” Belyaev’s lawyers told the judge in November, “does not belong in any court, certainly does not belong in this Court. It arises out of an alleged liquidity crisis at two Russian banks, National Bank Trust (“NBT”) and PJSC Bank Otkritie Financial Corporation (“Bank Otkritie”), leading to their nationalization by the Central Bank of Russia (the “CBR”) and the subsequent, increasingly desperate campaign of the CBR to pin the banks’ alleged liquidity issues on anyone and everyone possibly connected to their ownership or management, regardless of the facts. Defendant Vadim Wolfson (“Mr. Wolfson”) is one of many putative defendants across multiple actions in different foreign jurisdictions where Plaintiffs and the CBR have brought overlapping claims arising out of the banks’ alleged liquidity crisis. Mr. Wolfson just happens to reside in New York. But this case’s connection to New York begins and ends there.”

“Mr. Wolfson is a Russian and Cypriot citizen. During the time period relevant to this action, he occasionally travelled to New York to visit his ex-wife and children, and now rents an apartment in New York… Those contacts to the forum are not relevant to the allegations in the Complaint, which relate entirely to events that allegedly occurred outside of New York. Accordingly, the happenstance of Mr. Wolfson’s New York apartment has little if any weight.”

Otkritie’s lawyers then filed an amended statement of their claims and arguments on November 27. More than 50 pages spelled out the details of Belyaev’s stealing methods and schemes.   Judge Cohen (right) then issued a set of deadlines for the two sides before February 22, when he may decide whether to dismiss the case, or continue the case to trial.

“Belyaev”, the banks say, “had NBT and Bank Otkritie issue sham loans in order to divert money out of the banks. Belyaev’s collection of loyal subordinates within the Otkritie Group would paper and process the loans as if they were legitimate and the loan proceeds would then be divided, combined, and transferred through an intricate network of shell entities in a series of transactions designed to obscure the source of the funds. These funds could go through dozens of transactions within a few weeks before ultimately ending up in accounts controlled by Belyaev or his associates.”

So far, the US Government has protected Belyaev by issuing him a resident visa and a Social Security account. Belyaev has not been convicted in Russia on criminal fraud or money laundering charges, and there is no Interpol red notice for his arrest. In New York he is publishing a website, Twitter stream, Youtube and other media where he is offering financial advice to US clients.

Belyaev’s properties in New York, according to the court papers – left, the family home in Westchester; right, Belyaev’s residence in Manhattan. The townhouse has four storeys, six bedrooms, eight bathrooms, two swimming pools (including an outdoor one on the roof), a wine storage, home theater, gym, and sauna. Read more. Although the Russian banks and state regulators have gone to court in London and obtained worldwide asset freeze orders against Yurov and others associated with Trust and Otkritie, no action has been taken against Belyaev.

Last week, lawyers for the banks filed their case for continuing the case to trial and rejecting Belyaev’s claim to be everywhere for his business, but nowhere for his frauds.  

Source: https://iapps.courts.state.ny.us/

“Belyaev”, the banks’ lawyers submitted on January 13, “has been sued in the United States in a courthouse ten minutes from his home and claims that he cannot be sued here either because it would be inconvenient for him. Ironically, the core of Belyaev’s argument is that Russia—the jurisdiction from which he fled—is a better forum. Of course, Belyaev is not making that argument because he actually has faith in the Russian court system or because it is more convenient for him to litigate in a forum that is more than 4,000 miles away from the one in his own backyard. Instead, Belyaev’s motion is part of a legal strategy designed to evade liability anywhere, i.e., he claims he (1) cannot be sued in England because he lives in New York; (2) cannot be sued in New York because Russia is the more convenient jurisdiction; and (3) to be sure, will argue that any judgment issued by a Russian court should not be enforced because it was rendered by the same government that “manufactured” the liquidity crisis and “pin[ned]” it on him. That type of gamesmanship should not be countenanced by this Court.”

Elsewhere in his papers, Belyaev claims that the Central Bank of Russia “manufactured” Plaintiffs’ financial troubles so that it could nationalize them, and that the Russian state is now trying  to ‘pin [Plaintiffs’] alleged liquidity issues on [Belyaev].’ ”

A month ago, the Central Bank submitted new legislation to the State Duma to give it the authority to ban control shareholders and senior executives of Russian banks, insurance companies and investment funds from fleeing the country when debt recovery and fraud investigations have started. This was not a new initiative. On September 13, 2016, Central Bank Governor Elvira Nabiullina asked President Vladimir Putin to issue the authority without delay.

Source: http://en.kremlin.ru/

“Maybe we need to adjust the legislation,” Nabiullina told Putin, “to consider this: there are laws that prevent debtors who do not pay for utilities or traffic fines from going abroad, so when bankers with such amounts of debts just leave… It is clear that you cannot obtain a court order in two days, but it is necessary to think about a system.”

“Vladimir Putin: We have to be very careful, of course, so as not to restrict the freedom of travel, but we still need to protect the government and society, and bank depositors, from all criminal acts, that much is clear. I will issue appropriate instructions to the Government and law enforcement agencies, and let us think about it together.”

More than four years have elapsed since then. Belyaev made his getaway in 2017.

Leave a Reply