55 Public Square building

55 Public Square building in downtown Cleveland

 

https://www.cleveland.com/business/2020/12/justice-department-seeks-to-seize-55-public-square-through-forfeiture-over-money-laundering-allegations.html

 

CLEVELAND, Ohio – The Justice Department wants to seize a Cleveland office tower linked to a Ukrainian oligarch who is under FBI investigation for international money laundering.

Prosecutors filed documents in U.S. District Court in Miami, seeking to obtain 55 Public Square through civil forfeiture. The 22-story building, once one of the city’s prize business locations, has been muddled in financial difficulties. Its owner defaulted on a $14 million loan earlier this month.

In documents, government attorneys said the money used to buy the building came from “embezzlement, misappropriation and fraud.” The records detail a minute-by-minute breakdown of how investigators believe money was funneled from Ukraine to several businesses until it reached Cleveland.

Igor Kolomoisky

The filings are part of the government’s continued legal assault on Igor Kolomoisky, once one of the most powerful men in Ukraine. Last summer, attorneys for the Justice Department sought to seize two other properties – one in Dallas and another in Louisville, Kentucky, – that are linked to Kolomoisky. Those cases are pending.

He and his associates are accused of laundering tens of millions of dollars through U.S. real estate, with much of the money plowed into Cleveland office buildings through a series of companies under the Optima business umbrella, according to court records.

From about 2008 through 2015, Optima was one of the largest downtown landlords. It owned more than 2 million square feet of office space, and its investments in Cleveland totaled more than $100 million, according to court records.

The documents allege that Kolomoisky helped siphon $5 billion from PrivatBank, a Ukrainian lender that he and Gennadiy Boholiubov opened in 1992.

Gennadiy Boholiubov, aka: Henadiy Boholyubov)

The men fleeced the bank out of loans from about 2008 to 2016, repaid the loans with more loans and then poured some of the money into U.S. properties, according to court documents. The scheme was uncovered in 2016, and the bank was taken over by the National Bank of Ukraine.

The filings Wednesday offer much of the same boilerplate detail on Kolomoisky and Boholiubov that had been filed in August in forfeiture proceedings involving buildings in Dallas and Louisville.

But the case involving 55 Public Square offers a glimpse of how investigators think the laundering worked. On June 27, 2008, the Southern Mining Co., which was partially owned by Kolomoisky, withdrew $28.7 million from a loan it had received from PrivatBank. The loan application indicated that the money was needed to help the Ukrainian mining company, the filings show.

Parts of that amount flowed through various businesses, and it was commingled with funds from other companies, according to the filings. As the closing date drew near, the money was converted to U.S. dollars, and it bounced through PrivatBank’s Cypress office and other businesses.

In the end, Optima paid $12.8 million in an initial payment on the $34 million sales price. It obtained a mortgage of more than $21 million.

Optima had obtained $18.5 million in loans for the office tower since 2017, federal attorneys said in the filings. Earlier this month, Optima defaulted on the loans, owing more than $14.5 million on the principal, interest and property taxes to the lender, 55 Bridge Lending of Cleveland.

Cuyahoga County valued the office building, with a seven-level garage, at $20 million. Attempts to reach attorneys in the case were unsuccessful late Wednesday afternoon.

The FBI in Cleveland is conducting an ongoing investigation of Kolomoisky and Boholiubov. Federal attorneys in Miami are handling the civil forfeiture cases.

The criminal probe became public Aug. 4, when federal authorities raided the offices of Optima Management Group at One Cleveland Center at East 9th and St. Clair Avenue. Two days later, federal prosecutors sought to seize the properties in Texas and Kentucky tied to Optima.

USA DOJ ANNOUNCEMENT: Justice Department Seeks Forfeiture of 3rd Commercial Property (55 Public Square in Cleveland, Ohio) Purchased with Funds Misappropriated from PrivatBank in Ukraine

Department of Justice
Office of Public Affairs

Today, the U.S. Department of Justice filed a civil forfeiture complaint in the U.S. District Court for the Southern District of Florida alleging that commercial real estate in Cleveland, Ohio, was acquired using funds misappropriated from PrivatBank in Ukraine as part of a multi-billion-dollar loan scheme.

Deputy Assistant Attorney General Kevin Driscoll of the Justice Department’s Criminal Division, U.S. Attorney Ariana Fajardo Orshan for the Southern District of Florida, U.S. Attorney Justin E. Herdman for the Northern District of Ohio and Special Agent in Charge Eric B. Smith of the FBI’s Cleveland Field Office made the announcement.

In August 2020, two other civil forfeiture complaints were filed in the Southern District of Florida involving properties in Louisville, Kentucky and Dallas, Texas, in which it was alleged that those properties were also acquired using funds misappropriated from PrivatBank in Ukraine.  All three properties are alleged to be subject to forfeiture based on violations of federal money laundering statutes.

The three complaints allege that Ihor Kolomoisky and Gennadiy Boholiubov, who owned PrivatBank, one of the largest banks in Ukraine, embezzled and defrauded the bank of billions of dollars.  The two obtained fraudulent loans and lines of credit from approximately 2008 through 2016, when the scheme was uncovered, and the bank was nationalized by the National Bank of Ukraine.  The complaints allege that they laundered a portion of the criminal proceeds using an array of shell companies’ bank accounts, primarily at PrivatBank’s Cyprus branch, before they transferred the funds to the United States.  As alleged in the complaint, the loans were rarely repaid except with more fraudulently obtained loan proceeds.

As alleged in the complaints, in the United States, associates of Kolomoisky and Boholiubov, Mordechai Korf and Uriel Laber, operating out of offices in Miami, created a web of entities, usually under some variation of the name “Optima,” to further launder the misappropriated funds and invest them.  They purchased hundreds of millions of dollars in real estate and businesses across the country, including the properties subject to forfeiture: the office tower known as 55 Public Square in Cleveland, Ohio, the Louisville office tower known as PNC Plaza, and the Dallas office park known as the former CompuCom Headquarters.  The buildings have a combined value of more than $60 million.

A complaint is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

FBI’s Cleveland Division is investigating the case with support from FBI’s International Corruption Unit, IRS Criminal Investigation, and U.S. Customs and Border Protection.  International Unit Chief Mary K. Butler, Senior Trial Attorney Michael C. Olmsted, Trial Attorneys Shai D. Bronshtein and Peter Steciuk, and Law Clerk Robert Blaney of the Criminal Division’s Money Laundering and Asset Recovery Section and Assistant U.S. Attorney Adrienne Rosen of the U.S. Attorney’s Office for the Southern District of Florida are handling these cases.  The Justice Department’s Office of International Affairs has provided substantial assistance in the investigation.

The Kleptocracy Asset Recovery Initiative is led by a team of dedicated prosecutors in the Criminal Division’s Money Laundering and Asset Recovery Section, in partnership with federal law enforcement agencies, and often with U.S. Attorney’s Offices, to forfeit the proceeds of foreign official corruption and, where appropriate, to use those recovered assets to benefit the people harmed by these acts of corruption and abuse of office.  In 2015, the FBI formed International Corruption Squads across the country to address national and international implications of foreign corruption.  Individuals with information about possible proceeds of foreign corruption located in or laundered through the United States should contact federal law enforcement or send an email to [email protected] (link sends e-mail) or https://tips.fbi.gov/.

The year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.

BACKGROUND: Justice Department Seeks Forfeiture of 2 Commercial Properties (500 West Jefferson Street, Louisville, KY, 7505 + 7171 Forest Lane, Dallas, Texas) Purchased with Funds Misappropriated from PrivatBank in Ukraine

Department of Justice
Office of Public Affairs

Both Properties Worth a Combined $70 Million

The United States filed two civil forfeiture complaints today in the U.S. District Court for the Southern District of Florida alleging that commercial real estate in Louisville, Kentucky, and Dallas, Texas, both acquired using funds misappropriated from PrivatBank in Ukraine, are subject to forfeiture based on violations of federal money laundering statutes.

Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division, U.S. Attorney Ariana Fajardo Orshan for the Southern District of Florida, U.S. Attorney Justin E. Herdman for the Northern District of Ohio, and Special Agent in Charge Eric B. Smith of the FBI’s Cleveland Field Office made the announcement.

The complaints allege that Ihor Kolomoisky and Gennadiy Boholiubov, who owned PrivatBank, one of the largest banks in Ukraine, embezzled and defrauded the bank of billions of dollars.  The two obtained fraudulent loans and lines of credit from approximately 2008 through 2016, when the scheme was uncovered, and the bank was nationalized by the National Bank of Ukraine.  The complaints allege that they laundered a portion of the criminal proceeds using an array of shell companies’ bank accounts, primarily at PrivatBank’s Cyprus branch, before they transferred the funds to the United States.  As alleged in the complaint, the loans were rarely repaid except with more fraudulently obtained loan proceeds.

As alleged in the Complaints, in the United States, associates of Kolomoisky and Bogoliubov, Mordechai Korf and Uriel Laber, operating out of offices in Miami, created a web of entities, usually under some variation of the name “Optima,” to further launder the misappropriated funds and invest them.  They purchased hundreds of millions of dollars in real estate and businesses across the country, including the properties subject to forfeiture: the Louisville office tower known as PNC Plaza, and the Dallas office park known as the former CompuCom Headquarters.  The buildings have a combined value of approximately $70 million.

A complaint is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

FBI’s Cleveland Division is investigating the case with support from FBI’s International Corruption Unit, IRS Criminal Investigation, and U.S. Customs and Border Protection.  International Unit Chief Mary K. Butler, Senior Trial Attorney Michael C. Olmsted, Trial Attorneys Shai D. Bronshtein and Peter Steciuk, and Law Clerk Robert Blaney of the Criminal Division’s Money Laundering and Asset Recovery Section and Assistant U.S. Attorney Adrienne Rosen of the U.S. Attorney’s Office for the Southern District of Florida are prosecuting the cases.  The Justice Department’s Office of International Affairs has provided substantial assistance in the investigation.

The Kleptocracy Asset Recovery Initiative is led by a team of dedicated prosecutors in the Criminal Division’s Money Laundering and Asset Recovery Section, in partnership with federal law enforcement agencies, and often with U.S. Attorney’s Offices, to forfeit the proceeds of foreign official corruption and, where appropriate, to use those recovered assets to benefit the people harmed by these acts of corruption and abuse of office.  In 2015, the FBI formed International Corruption Squads across the country to address national and international implications of foreign corruption.  Individuals with information about possible proceeds of foreign corruption located in or laundered through the United States should contact federal law enforcement or send an email to [email protected] (link sends e-mail) or https://tips.fbi.gov/.

The year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.