Sunday, January 27, 2008

Mogilevich Arrested (Update)

MOSCOW, Russia -- Semyon Mogilevich, a suspected organized-crime boss who is wanted by the Federal Bureau of Investigations for alleged fraud and racketeering, has been arrested along with Arbat Prestige owner Vladimir Nekrasov.

A screen grab from Russia's "Vesti" news program showing Mogilevich's detention.

A posse of about 50 armed police commandos detained Nekrasov and Ukrainian-born Mogilevich near the city's World Trade Center, the Interior Ministry said Friday.

The Ukrainian security service, the SBU, has investigated the purported involvement of Mogilevich with RosUkrEnergo, the controversial gas trader that acts as a middleman in Russian gas exports to Ukraine.

Mogilevich, 61, was using the name Sergei Shnaider when detained.

Mogilevich's lawyer, Alexander Pogonchenkov, confirmed in a Friday interview that his client was born in Ukraine as Semyon Mogilevich, but has changed his name to Sergei Shnaider.

The Ostankinsky District Court placed Mogilevich and Nekrasov under arrest on suspicion of large-scale tax fraud late Thursday, Moscow City Court spokeswoman Marina Malygina said.

Mogilevich, has been wanted by the FBI on racketeering, fraud and money-laundering charges since 2003. He is believed to have been living in Moscow for several years.

State television showed footage Friday of Mogilevich as police held him and some bodyguards up against a car. It also showed footage of the seldom-photographed Mogilevich in custody wearing jeans, a leather jacket and a cap.

Both Pogonchenkov and Nekrasov's lawyer, Alexander Dobrovinsky, said they would appeal the arrests Monday.

Pogonchenkov said his client had no relation whatsoever to Arbat Prestige.

The two suspects "are not business partners, just good acquaintances," Pogonchenkov said.

The arrest of Mogilevich comes as newly appointed Ukrainian Prime Minister Yulia Tymoshenko is stepping up calls for Gazprom and Ukraine to cut out RosUkrEnergo from its role as middleman in Russian gas exports.

The SBU in 2005 investigated the trader over possible ties to Mogilevich. The probe was dropped, however, following a change of leadership at the SBU.

Tymoshenko is scheduled to visit Moscow next month for talks with Russian officials, and is expected to push for the contract with RosUkrEnergo to be canceled, a December pricing agreement to be ditched and transit fees for Russian gas to be raised.

In Davos last week, however, President Viktor Yushchenko opposed calls for higher tariffs.

The Ukrainian investigation into RosUkrEnergo, during Tymoshenko's previous term as prime minister, was closed after she was fired by Yushchenko in September 2005.

The head of the SBU under Tymoshenko, Oleksandr Turchynov, later claimed in an interview that the order to close the investigation had come directly from Yushchenko.

No one at Tymoshenko's press office answered calls Sunday.

In January 2006, RosUkrEnergo, jointly owned by Gazprom and billionaire Ukrainian businessman Dmytro Firtash, emerged as the major beneficiary of the bitter gas-price dispute between Russia and Ukraine, winning control over the flow of Russian and cheaper Central Asian gas to Ukraine.

Robert Shetler-Jones, chief executive of Firtash's holding company, Group DF, on Friday denied any business links between Mogilevich and companies connected to RosUkrEnergo.

Since RosUkrEnergo was handed the export monopoly in 2006, Tymoshenko has repeatedly vowed to end RosUkrEnergo's role in the Russian-Ukrainian gas trade, which she has dubbed "criminal," and pledged to start buying gas directly from Gazprom.

In October, Dmitry Medvedev, first deputy prime minister and Gazprom chairman, seemed to back the demands, when he said Gazprom could move to "give up" the opaque intermediary structures involved in gas exports to Ukraine.

On Friday, state energy firm Naftogaz Ukrainy abruptly pulled out of talks with RosUkrEnergo and Gazprom over gas prices and debt, a RosUkrEnergo spokesman said, Bloomberg reported.

Zeev Gordon, an Israeli lawyer who has represented Mogilevich in the past, said by telephone Sunday from Tel Aviv that Mogilevich had always denied any links to RosUkrEnergo and Firtash.

Gordon confirmed that he had personally worked previously for Firtash in 2003, when he acted as a trustee for several months to help him set up RosUkrEnergo's predecessor as middleman in Russian-Ukrainian gas supplies, Eural Trans Gas, in Hungary.

Gordon insisted that this coincidence in no way meant that there were any ties between Mogilevich and Firtash.

Firtash's representative, Shetler-Jones, also denied reports in the Russian and Ukrainian media that identified Firtash as a major stakeholder in Arbat Prestige.

"Neither Group DF nor Mr. Dmitry Firtash personally has any interest in or affiliation with Arbat Prestige. Dmitry Firtash also does not directly or indirectly own shares in this company," Shetler-Jones said in a statement.

Dobrovinsky, the lawyer for Arbat Prestige owner Nekrasov, also denied that Firtash had any stake in the cosmetics firm.

The U.S. indictment against Mogilevich dates back to a 2003 case in Philadelphia in which he and two associates were accused of manipulating stock of the Pennsylvania-based company YBM Magnex.

The FBI notice on Mogilevich says he set up a "complex network of corporations" to "create the illusion that YBM was engaged in a profitable international business, primarily the industrial magnet market."

He and the two other suspects were charged with 45 counts of racketeering, securities fraud, wire fraud, mail fraud and money laundering, according to the FBI web site, which states that Mogilevich "should be considered armed and dangerous."

A U.S. Embassy spokeswoman said the United States was "not involved in the recent investigations and arrests in Russia." The two countries do not have an extradition treaty.

The embassy spokeswoman referred all questions to the U.S. Justice Department, which did not return calls for comment Friday.

Pogonchenkov, Mogilevich's lawyer, said Friday that Mogilevich changed his name to Sergei Shnaider after getting married.

Malygina, the Moscow City Court spokeswoman, said the suspect was born in 1946 and officially worked as a consultant in a company called Evergate Ltd. Mogilevich and Nekrasov have been placed under arrest for two months, Malygina said.

Mogilevich has used 17 different names and holds passports from several countries, Itar-Tass reported, citing a law enforcement source.

Pogonchenkov said his client had only a Russian passport. "He does not have any other citizenships," Pogonchenkov said.

Mogilevich has been based in Moscow for seven or eight years and has not left the country for the past few years "for obvious reasons," said Gordon, the Israeli lawyer.

Mogilevich's former wife, Olga Shnaider, a 33-year-old lawyer linked in the Russian media to Arbat Prestige, was also questioned by investigators Friday, Interfax reported, citing law enforcement sources.

But Yevgeny Shedlov, a lawyer for Shnaider, said Sunday that investigators had denied that they had detained her and that her whereabouts were a mystery. Shnaider had not been in contact with her relatives or lawyers since Friday evening, Shedlov said.

"We have not heard anything from her," he said.

Asked whether Shnaider worked with Arbat Prestige, Shedlov said that as a lawyer she had the right to choose her clients. "Lawyers can work with whomever they want, including Arbat Prestige. It doesn't mean that they necessarily commit crimes," he said.

Source: The Moscow Times

2 comments:

Jon said...

Is Olga Shnaider related to Alex Shnaider?

http://en.wikipedia.org/wiki/Alex_Shnaider

Alex said...

Interesting. Kiev keeps churning high-profile fraud case. US Embassy got busted recently http://uslegalvisa.blogspot.com/2009/12/visa-fraud-scheme-in-us-embassy-in-kiev.html