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Billionaire arrested on Chicago corruption charges posts record $174M bail

Chuck Goudie

March 21, 2014 (CHICAGO) (WLS) -- One week after Ukrainian industrialist Dmitri Firtash was arrested in Europe on Chicago corruption charges, Firtash has made bond. But the mystery continues: what is he accused of doing in Chicago?
The 48-year-old business tycoon posted $174 million in bail money, said to be a record in Vienna where he was being held, and Firtash was ordered to remain in Austria and not return to his Ukranian home. The hope is that will prevent him from fleeing to Russia where he has deep business and, some say, organized crime connections, and where extradition to Chicago would be difficult. And Friday night the Chicago case was still cloaked in secrecy.
Federal authorities in Chicago say the FBI has been on this investigation since 2006. But the us attorney's office that now has criminal charges against Dimitri Firtash will not disclose what the specific charges are or any other details about the case. Firtash, whose billionaire status from Russian natural gas took a hit recently, was arrested on a Chicago warrant last week. He was held here in Vienna until Friday, when he made bond.
In the first extensive statement since being arrested, this Ukrainian oligarch said his Chicago arrest warrant "was without foundation, and I believe strongly that the motivation was purely political."
In Chicago, U.S. Attorney Zachary Fardon has said the arrest had nothing to do with the current political and military clash between Russia and the Ukraine.
But Firtash says, "The future of Ukraine is at a delicate and defining point. I have worked behind the scenes for many months with a variety of political and religious leaders to try and help my nation. As the largest private sector employer in Crimea, my absence from Ukraine, I believe, will further destabilise (sic) a political process that involves many people working around the clock to achieve peace."
It is not clear, and authorities have not said, which of his business interests resulted in the Chicago corruption investigation. The I-Team has found no apparent commercial or personal connections that Firtash has in Chicago.
A diplomatic cable from the U.S. ambassador in Ukraine published by Wikileaks has reported that Firtash was connected to this man, Russian mob boss Seymon Mogilevich, who is currently one of the FBI's most wanted and dangerous fugitives.
According to the Wikileaks cable, Firtash acknowledged ties to the Russian organized crime figure, stating that he needed Mogilevich's approval to get into business in the first place.
Since that 2008 cable from the U.S. ambassador, Firtash has denied having mob ties.
As for the mystery of the Chicago charges, we've learned more about what Firtash faces here from Austrian law enforcement officials, who say he is suspected of bribery and forming a criminal organization in the course of foreign business deals.

Chicago Corruption Probe Leads to Billionaire Ukrainian Oligarch

Dmitry Firtash posted a record-setting $174 million bail after the FBI sought his arrest in Austria.

Dennis Robaugh

A billionaire international business tycoon from the Ukraine, under investigation by the FBI in Chicago on corruption charges, posted a record-setting $174 million bail in Austria Friday.
But what he was doing in Chicago and why the FBI wants Dmitry Firtash in custody so badly remains a mystery. Austrian law enforcement officials told ABC 7 News in Chicago that Firtash is suspected of bribery and forming a criminal organization, but that has not been confirmed by U.S. officials.
Firtash, who made his fortune in Russian natural gas, faces extradition to Chicago. He's reputed to have ties to Russian organized crime, and authorities worry he will flee to Russia where it will be difficult to bring him back to the United States. Wikileaks has reported that Firtash is connected to Russian mob boss Seymon Mogilevich, one of the FBI's most wanted fugitives.
A Forbes investigation suggests that Firtash may not be billionaire, that others may control substantial portions of his business. How he came into his wealth and position is as murky as his presence in Chicago.
After Firtash posted bail, Austrian authorities warned him not to leave Austria for his native Ukraine.
U.S. Attorney Zachary Fardon said the arrest had nothing to do with the current political and military clash between Russia and the Ukraine, reports ABC 7 News in Chicago.
Most recently, a member of British Parliament faced questions about money he received from a Firtash business associate.

The Mafia Ruling Ukraine’s Mobs

Jamie Dettmer

Organized crime helped Putin grab Crimea, and may open the way for him to take more of Russian-speaking Ukraine.
DONETSK, Ukraine—I was talking to some young black-clad pro-Russian agitators at a checkpoint they’d set up on the outskirts of this city in eastern Ukraine when a shiny black Mercedes pulled up a few yards away. Some of the men from the group walked over and stuck their heads into the car. I couldn’t see who the capo was, couldn’t hear what orders he was giving, but the scene was like something from a movie about the mob. Nobody wanted to say who that was in the car. Nobody wanted to repeat what he’d said.
Such scenes are increasingly common in this contested part of Ukraine near the Russian frontier. “Bosses are starting to appear on the fringes of the protests, they are middle-aged, older and better dressed than the younger men who are in the vanguard of the protests,” says Diana Berg, a 34-year-old graphic designer. The grassroots agitation in favor of Russia has become less spontaneous and more focused in recent days.
Before and since Russia’s move to annex the Crimea, many who favor the pro-European government in Kiev have argued that these “bosses” might be provocateurs from Russia’s FSB intelligence service or Spetsnaz special forces infiltrated into Ukraine to orchestrate pro-Russian sentiment. But Berg, an organizer of the pro-Ukrainian rally last week where pro-Russian thugs stabbed a student to death, says there’s a different and in some ways more frightening explanation: the ominous hand of organized crime.
A public prosecutor, who declined to be named in this article for reasons of personal safety, says local hoodlums are operating among the pro-Russian protests in the restive eastern Ukraine, helping to direct them on the instructions of Kremlin-linked organized crime groups. He points the finger specifically at the notorious Seilem mob, which has been closely tied over the years to ousted Ukraine President Viktor Yanukovych, a onetime governor of Donetsk, who is now in exile in the Russian city of Rostov-on-Don.
“We have already seen organized crime working hand-in-hand with the Russians in Crimea,” says the prosecutor. In that breakaway Black Sea peninsula, Moscow helped install former gangland lieutenant Sergei Aksyonov as prime minister, and his background is well known. Aksyonov and his Russian separatist associates share sordid pasts that mix politics, graft and extortion in equal measure and together they helped steer Crimea into the Russian Federation. Police investigations leaked to the Ukrainian press accuse Aksyonov of past involvement in contract killings. Back in January 1996, Aksyonov was himself injured after his car overturned on the Simferopol-Moscow road during a shootout.
“Why should it surprise you,” the prosecutor in Donetsk asks, “if the same dynamic [as in Crimea] is playing out here? … Maybe there are Russian intelligence agents on the ground, but Moscow through crime networks has an army of hoodlums it can use, too.”
The international media were late to pick up on Crimea’s toxic nexus of organized crime, political corruption and politics. But across post-Soviet Ukraine the three have long been regarded as interchangeable and inseparable. And the eastern and southern parts of the country are the worst of all. “Political corruption is ingrained in eastern Ukrainian political culture,” the Jamestown Foundation, a Washington-based think tank, noted in a 2012 study.
The three regions most notorious for the closest relationships between gangsters, oligarchs and politicians—Crimea, Donetsk and Odessa—were the most resistant to the Euro-Maidan revolution that led last month to the ouster of Yanukovych. And now all three regions are at the forefront of the pro-Russian fight-back against the new national leaders in Kiev.
Taras Kuzio, a research associate at the Canadian Institute of Ukrainian Studies at the University of Alberta, who wrote the Jamestown report, says the internal political turmoil in Ukraine should be viewed through the lens of the hand-in-glove relationships between politicians, mobsters and the so-called “red directors,” managers-turned-businessmen who are steeped in the ways of Soviet-style public sector corruption and deal-making.
The red directors also have their protégés: men such as billionaire Dmytro Firtash, the gas-trading mogul who was arrested by Austrian police on suspicion of mob activity earlier this month following Yanukovych ‘s ouster. Nor are the ties limited to the Ukraine. Their tentacles embrace Moscow: Firtash has joint business ventures with Russian billionaire Arkady Rotenburg and his brother, Boris, close friends and judo sparring partners of President Vladimir Putin. The Rotenburg brothers, not coincidentally, are prominent on a U.S. sanctions list announced Thursday by President Barack Obama to target  Putin cronies.
The symbiosis of politics, organized crime and unscrupulousbiznesmeni developed quickly in Ukraine after the collapse of the Soviet Union in much the same way as it did in Russia. The ambitious, the greedy and the powerful lunged for the huge profits that could be made. The state was disintegrating. The big industries – energy, mining and metals – were being privatized, and may the most ruthless man win. “Individuals such as Yanukovych, Aksyonov and their Donetsk and Crimean allies literally fought their way to the top,” says Kuzio. In Donetsk, Yanukovych as governor “integrated former and existing organized criminal leaders into his Party of Regions,” says Kuzio.
In Crimea, “every level of government was criminalized,” according to Viktor Shemchuk, who served for many years as the chief public prosecutor in the region. “It was far from unusual that a parliamentary session in Crimea would start with a minute of silence honoring one of their murdered ‘brothers,’” Shemchuk recalled in a December interview with the Organized Crime and Corruption Reporting Project, a consortium of investigators and journalists tracking developments throughout Eastern Europe.
Donetsk was no different. A March 2006 cable from the US embassy to the National Security Council – one of several on Ukraine released by WikiLeaks—noted that Yukanovych’s Party of Regions was a “haven for Donetsk-based mobsters and oligarchs” and had commenced an “extreme makeover” with the help and advice of U.S. political consultants, including “veteran K Street political tacticians” from Washington D.C. and a onetime Ronald Reagan operative, “hired to do the nipping and tucking.”
According to the cable, Yanukovych was “tapping the deep pockets of Donetsk clan godfather Rinat Akhmetov.” Now supposedly Ukraine’s wealthiest oligarch, Akhmetov has been keeping a low profile in these early post-Yanukovych days, staying out of the limelight and issuing inoffensive statements on how important it is for everybody to get along.
Another US embassy cable from then-Ambassador William Taylor in September 2007 drilled down on how Yanukovych was centralizing Donetsk crime and political and business corruption in his party – something he would go on to do on an even larger national scale when he was subsequently elected as President in 2010. After Yanukovych became president, according to Ukrainian officials, more than $20 billion of gold reserves may have been embezzled and $37 billion in loans disappeared. In the past three years, they claim, more than $70 billion was moved to offshore accounts from Ukraine’s financial system.
The Americans have sent teams of experts to Kiev to help Ukraine’s interim leaders follow the money. “We are very interested in working with the government to support its investigations of those financial crimes,” U.S. Ambassador to Ukraine Geoffrey Pyatt told reporters last week, “and we have already, on the ground here in Ukraine, experts from the FBI, the Department of Justice and the Department of Treasury who are working with their Ukrainian counterparts to support the Ukrainian investigation.”
Many of the financial crimes are likely to trail back to Moscow. Yanukovych confidant Firtash (the gas mogul picked up in Austria) admitted during a December 2008 meeting with then-US Ambassador Taylor that he had entered the energy business with the assistance of the notorious Russian crime boss Semyon Mogilevich, who, he said, worked with Kremlin leaders.
“Many Westerners do not understand what Ukraine was like after the break up of the Soviet Union,” Firtash told the ambassador. When a government cannot rule effectively, the country is ruled by “the laws of the streets,” he said.
That’s still the rule. The old order has much to fear from reform and change and will do all it can to preserve its wealth and power—and its best bet for that to happen is to look to Russia.
For precisely that reason, rights campaigners and reformers in Ukraine’s interim government are racing against time to uncover as much of the mob story as possible. An anti-corruption panel headed by Tetyana Chornovol, an investigative journalist who was nearly beaten to death in December for her reporting, is starting in earnest to recover billions of dollars of stolen money and piece together the financial crimes of the Yanukovych regime.
The Daily Beast learned something about these operations first hand when a team from the organized crime police raided a discreet boutique hotel in downtown Kiev where this correspondent was staying.  According to the police the hotel is owned by Eduard Stavitsky, Ukraine’s former energy minister. He is now believed to be in hiding in Russia. The police searched all the rooms looking for any Stavitsky documents and combing through financial records. As one of the investigating officers told me, “We need to move fast before the cover-ups start.”

Organized crime group suspected of contract killings detained in Azerbaijan

By Ilkin Izzet -
An organized crime group suspected of contract killings, robbery, theft and selling drugs were detained in Azerbaijan, according to an Azerbaijani Interior Ministry's message released on March 19.
As a result of operative search activities conducted by the Criminal Investigation Department of Azerbaijani Interior Ministry, Main Organized Crime Department and Sheki Police Department, the members of the organized crime group, consisting of 11 people, suspected of contract murder, robbery, theft and selling drugs, were arrested, the ministry said.
The police revealed the murder of 53-year-old Sheki native Oruj Shiraliyev's murder, committed April 13, 2013 in Russian city of Nizhny Novgorod. It was established that Shiraliyev's murder was ordered by his 43-year-old wife Sevinj Shiraliyeva, his 21-year-old son Burkhan Shiraliyev and a person close to their family - the 33-year-old Vusal Mustafayev.
There was a long feud between Vusal Mustafayev and Oruj Shiraliyev, according to Mustafayev's testimony given during the investigation.
To put an end to this feud and take over Shiraliyev's property, Mustafayev decided to kill him and arranged it with Shiraliyev's wife and son, he testified.
They agreed that after Shiraliyev's murder they would share his property. After reaching this agreement, Vusal Mustafayev instructed Sheki resident the 37-year-old Igbal Jumayev to find a killer. Jumayev acquainted Mustafayev with his fellow countryman the 35-year-old, Elchin Mammadov, who he promised to give $20,000 for the murder of Shiraliyev.
Elchin Mammadov told him that he would commit this crime on Russia's territory. According to a pre-agreed plan, Oruj Shiraliyev's son Burkhan Shiraliyev went to Nizhny Novgorod, where he waited for Elchin Mammadov.
There Burkhan Shiraliyev informed Mammadov about the route his father took to work and other necessary details. On April 13, 2013 Elchin Mammadov murdered Shiraliyev, stabbing him multiple times.
Following the murder, Shiraliyev's house in Sheki, minibus taxi buses and trucks were sold through the 28-year-old Rufat Nuraliyev, who posed as a crime boss, and then the money was divided. When Vusal Mustafayev and Burkhan Shiraliyev refused to pay the promised $20,000 to Elchin Mammadov, he threatened them and got half the money.
In another incident involving Vusal Mustafayev, an investigation revealed that Sheki resident Ruslan Rafiyev informed gang members that there was $200,000 and gold in the house of his acquaintance, Khanlar Huseynov.
Vusal Mustafayev along with 31-year-old Kamran Gafarov, wearing masks, came to Huseynov's house at night. Meeting him in the yard, they used a stun gun and tear gas, attacked him and tied him up, stole $1,400 and 3600 Azerbaijani manats from the house, and went into hiding.
The investigation also proved that these persons tried at different times to hack ATMs of the International Bank of Azerbaijan in Sheki.
Mustafayev and Gafarov, along with 34-year-old Mikayil Mustafayev and 38-year-old Rufat Huseynaliyev bought welding equipment and other supplies, and tried to crack several ATMs. But they did not succeed, because they did not know how to use the welding equipment. The items, used during the crime, were found at the detainees and confiscated as material evidence.
During the detention, heroin was found on each member of the gang. As a result of continuing operative search measures the police also detained persons involved in drug trafficking. The 44-year-old Ilgar Teymurov, who was previously engaged in drug trafficking, and 44-year-old Loghman Abdullayev, were detained at the crime scene.
Criminal cases under corresponding articles were launched on these facts, investigation is underway. Another investigation is underway for revealing other crimes that could have been committed by these persons.
Citizens affected by these persons' activities or having any information about them may call '102' at the Azerbaijani Interior Ministry or go to the nearest police authority.

Ukrainian billionaire arrested on Chicago corruption charges

Chuck Goudie

 March 14, 2014 (CHICAGO) (WLS) --  A billionaire Ukrainian business tycoon was arrested Friday on corruption charges in Chicago. Now, federal authorities here say they are moving to extradite the rich industrialist from overseas.
This has been a major story playing out in Europe the past 36 hours: the arrest of Dmitry Firtash, one of Ukraine's wealthiest and influential oligarchs. It was being reported that Firtash was arrested at the request of the FBI on American charges, but there were no details. A short time ago, we learned that the 48-year-old business mogul is being held on charges from a corruption case here in Chicago. Federal prosecutors say that they will be moving to extradite him from overseas to appear on the charges in a Chicago courtroom.
He may be the best known businessman in the Ukraine, and one of the wealthiest in the world. As he made a fortune buying and selling Russian natural gas, there have been years of whispers and innuendoes about his conduct and connections with Russian organized crime-- allegations he has always denied.
Tonight, Firtash is in state custody in Vienna, Austria, arrested by the country's organized crime unit on a provisional warrant from the FBI in Chicago.
Austrian officials say Firtash is alleged to have paid bribes and formed a criminal organization. To whom the bribes were paid, how much and for what isn't clear tonight and a spokesman for U.S. Attorney Zach Fardon in Chicago isn't providing further details, saying the case is sealed except for the arrest and extradition information.
His company employs 100,000 people across a wide range of industries from chemicals and banking to television stations, of which he owns eight overseas.
Firtash's arrest is not connected to the continuing political violence between Ukraine and Russia, according to federal authorities here in Chicago and a spokesperson for Firtash.

According to a statement on the billionaire's website, his arrest is related to an investment project dated 2006. The incident was a misunderstanding, the statement claims, and will be resolved in the nearest future.

Ukraine Billionaire Firtash Jailed in Vienna on FBI Warrant

By Jonathan Tirone and Alexander Weber

Dmitry Firtash, the Ukrainian billionaire who made his fortune importing Russian natural-gas, was arrested in Vienna days ahead of a Crimean vote that may trigger financial penalties aimed at Russia.
Firtash, 48, was taken into custody yesterday by the organized-crime unit of the Austrian police on a warrant issued by the U.S. Federal Bureau of Investigation, according to a statement by the country’s Interior Ministry today.
He is alleged to have paid bribes and formed a criminal organization, according to the warrant, issued after an FBI investigation that began in 2006, the ministry said. His lawyers and spokesmen didn’t immediately respond to phone calls.
This is “an absolutely seismic development on so many different levels,” wrote London-based Standard Bank Plc chief economist Timothy Ash in a note. “It sends a strong message to Russia that the West is willing to go down the financial sanctions route -- unless it backtracks over Crimea and over broader policy towards Ukraine.”
Russian officials and businessmen are said to be bracing for sanctions that may target Russian foreign reserves, banking assets and company lending. Citizens of the Black Sea Crimean peninsula, where Russia operates a navy port, are scheduled to vote on whether to secede from Ukraine on March 16. Many Russians see their country’s annexation of the Ukrainian territory as inevitable.
100,000 Employees
“Historically, he had close ties to Russia via the energy sector, and perhaps even to Putin,” Ash said. “Firtash is probably in the top two of Ukrainian oligarchs in terms of wealth/influence across borders.”
Firtash is a co-owner of RosUkrEnergo AG, once Ukraine’s sole importer of Russian natural gas. He controls his assets through Group DF, which employs 100,000 people in Ukraine.
He also owns eight television stations and last year paid $2.5 billion for InterMedia Group Ltd., which operates the country’s biggest TV channel. While Forbes estimates his fortune at $673 million, a 2008 secret U.S. cable said he was previously worth $5 billion and “had low-balled his true worth.”
Firtash’s Group DF agreed to buy Intesa Sanpaolo SpA (ISP)’s Ukrainian unit Pravex Bank Jan. 23, adding to its acquisition of Nadra Bank in 2011, according to Group DF’s website. The purchase hasn’t been completed yet, pending regulatory and antitrust approvals in Ukraine.
Extradition Request
“The arrest took place without incident,” the ministry said in the statement.
Vienna’s criminal court will decide whether Firtash will stay in custody and eventually face extradition proceedings, Nina Bussek, a spokeswoman for the Vienna prosecutors, said via telephone, adding that the U.S. filed an extradition request.
The billionaire’s detention is linked to an investment from 2006, Group DF said on its website.
Firtash’s RosUkrEnergo did business with Austria’s Raiffeisen Bank International as far back as 2006. Austria’s company register shows Firtash was involved in three companies near the Vienna district where he was arrested.
Ukraine’s businessmen should engage in dialog with their Russian counterparts to resolve the conflict between the two countries over the southern region of Crimea, Group DF said March 9 in a statement on its website.
To contact the reporters on this story: Jonathan Tirone in Vienna at jtirone@bloomberg.net; Alexander Weber in Vienna at aweber45@bloomberg

Defendant sentenced in Taiwanchik US organized-crime case

MOSCOW, February 28 (RAPSI, Ingrid Burke) – Nicholas Hirsch, a defendant who pleaded guilty to conspiracy to commit wire fraud in a high-profile US criminal case targeting Russian-American organized crime, was sentenced Tuesday to two years’ probation, 300 hours’ community service, and a $5,000 fine.
In an indictment unsealed by US prosecutors in April, Hirsch was charged alongside 33 co-defendants in connection with two alleged Russian-American criminal enterprises accused of having laundered tens of millions of dollars through such means as the operation of at least two international bookmaking operations. 
According to the statement accompanying the indictment, the bookmaking organizations catered to extremely wealthy clients in the US, Russia, and Ukraine.
Describing the two organizations, the prosecution statement claimed: “One enterprise, the Taiwanchik-Trincher Organization, run by VADIM TRINCHER, is alleged to have laundered tens of millions of dollars from Russia and the Ukraine through Cyprus and into the U.S. The other enterprise, the Nahmad-Trincher Organization, run by ILLYA TRINCHER, the son of VADIM TRINCHER, is alleged to have been financed by, among other entities, a prestigious art gallery in New York City.”
The statement noted that Hirsch faced 20 years in prison along with three years of supervised release, as well as a fine of either $500,000 or twice the amount of money gained from the alleged crimes, or twice of that lost by the victims on a charge of conspiracy to commit wire fraud.
Hirsch pleaded guilty to the single count of conspiracy to commit wire fraud in October.
In a sentencing memo filed on February 11, Hirsch pleaded with the court to consider him in his entirety, not merely for the conduct that led to the present charges, urging: “Nicholas Hirsch accepts full responsibility for his conduct and now comes before this Court to accept the consequences of his actions. He understands that the path that brings him before Your Honor was forged of his own free will and poor decision. He is truly sorry for his actions.”
The memo went on to emphasize the upstanding life he left behind: “He has compromised a promising career in the financial services industry, built through a decade of hard work, and tarnished an otherwise impeccable reputation. He has disappointed family and friends. For this, he blames no one but himself.”
According to the memo, the plea agreement stipulated a $25,000 forfeiture and a sentencing guideline ranging from four to ten months of custodial service, further providing that the defense team could argue for a below-the-range sentence.
A week later, prosecutors filed a submission stating that imprisonment for a term ranging between four and ten months would be appropriate.
Prosecutors stated, “Hirsch’s offense was motivated by pure greed,” adding, “It is troubling that Hirsch committed this fraud despite having enjoyed an excellent upbringing, education and career.”
Hirsch’s probation terms stipulate that he is prohibited from possessing a firearm, ammunition, destructive devices, and dangerous weapons. Furthermore, he will be required to cooperate with DNA collection as directed by his probation officer. He will be required to provide his probation officer with access to his financial information if he fails to pay his fine, as well.