Ablyazov and family: all on board to cross the Atlantic/II

Ablyazov and family: all on board to cross the Atlantic/II

The chase after funds stolen by and on behalf of Kazakhstan’s master swindler Mukhtar Ablyazov and the former mayor of Almaty Viktor Khrapunov is in full swing again. BTA, Ablyazov’s one-time bank, just managed to squeeze $40 million from the pocket of a real estate tycoon in New York, who feared holding the money any longer would lead to criminal prosecution for whitewashing. And more is on the way, thanks to a Belgian accomplice of both Khrapunov and Ablyazov, who decided to blow the whistle after having been dumped by the gang.

by Charles van der Leeuw
First part: Ablyazov and family: all on board to cross the Atlantic/I

If one thing is clear, it seems now that the names of Ablyazov and Khrapunov can be expected to appear in a single breath wherever they reach the public domain. Such a case has made headlines of late if it were only because the name Donald Trump popped up in the process (se previous episode). A key figurehead in the “American connection”, ,the Morocco-born property tycoon Joseph Chetrit, has now tried to avoid criminal prosecution by paying out the victims of the multi-billion thefts by the Kazakh couple as it seems up to or close to the $40 billion he attempted to launder through the sale of uppity apartments in real estate in Manhattan to which Trump’s name is connected with a similar face value, as reported on November 12 by Bloomberg.

“Joseph Chetrit, the developer of the most expensive New York City apartment ever listed for sale, settled a lawsuit claiming he helped launder money stolen from Kazakhstan by pouring it into two ritzy condominium projects,” the article reads. “The city of Almaty, the former capital of the central Asian nation, and BTA Bank JSC, the country’s third largest bank, voluntarily dismissed their claims against Chetrit and his development firm The Chetrit Group LLC, according to a Thursday letter to the judge overseeing the case. BTA Bank and Almaty had claimed that Chetrit conspired to hide $40 million in real estate deals on behalf of two men who stole billions of dollars from Kazakhstan. Former BTA Bank Chairman Mukhtar Ablyazov and ex-Almaty Mayor Victor Khrapunov, whose families are related by marriage, fled the country and sought to shield their stolen wealth with investments around the world, according to the complaint.”

“No employees and no offices”

As it seems, the deal has given both claimants the bulk of the money reported stolen back. While withholding details on the affair, both BTA and the City of Almaty have tried to make it clear that the settlement means by no means the end of their pursuit after the embezzled funds – whether they involve Khrapunov, Ablyazov or both. “Almaty and BTA Bank have reclaimed a significant asset that was traceable to the billions of dollars that were stolen from them,” the news agency quoted their lawyer Matthew Schwartz of Boies, Schiller & Flexner LLP as noting in a statement dated November 10. “BTA Bank and Almaty have also secured the cooperation of an important witness as they continue to pursue their claims.”

That witness is likely to be one of Chetrit’s men of confidence on this side of the Atlantic, the Belgian property skimmer Nicolas Bourg, who was director of a Swiss mailbox firm named Triadou SPV S.A. during the entire period of its existence between 2011 and 2014 as one of the Khrapunov’s many cover-up firms. Throughout the period, he “worked closely with Ilyas on all aspects of Triadou’s operations and management, and executed most of Triadou’s investments, including those in the United States,” in the words of an astoundingly frank statement sent by him in writing to the New York court of law. “At Ilyas’s direction, I formed a series of entities under the laws of Luxembourg for the purpose of investing his family’s funds in real estate. One of these entities was Triadou, an investment vehicle wholly owned and controlled by SDG [Swiss Development Group – ChvdL]. SDG itself was owned and controlled by Ilyas and his family, and used to conceal the movement and investment of his family’s money, including that of Ablyazov. Triadou is a shell entity for SDG, and has no corporate presence separate from SDG. Triadou had no employees and no offices or headquarters. […] Monthly meetings occurred in Geneva between myself, Ilyas, Peter Sztyk (an advisor of Ilyas) and, at times, my longtime business partner, Laurent Foucher. The agenda at each meeting was to discuss all investments of the Ablyazov-Khrapunov family’s’ money (i.e., not only money invested through SDG or Triadou).”

“Pedro” and the “Father-in-Law”

The statement also confirms that the relation between Ablyazov and the Khrapunov family went far beyond the bedroom: “Ilyas repeatedly informed me that the person who gave him final approval for all deals was Ablyazov. Ilyas stated to me that he was managing a large amount of Ablyazov’s money, and for that reason, Ablyazov was the ultimate decision maker on all of Triadou’s investments. According to Ilyas, he had significant freedom in the management of various investments, but the final decisions were always received directly from Ablyazov. This arrangement was confirmed for me on several occasions when I observed that Ilyas needed to wait for Ablyazov’s approval before authorizing a particular Triadou investment or payment. 10. Ilyas told me that he often used a company named Telford International Limited (“Telford”) to move Ablyazov’s funds to execute these deals. Ilyas informed me that Telford was an Ablyazov investment entity used to conceal and move his funds, and was controlled by Eesh Aggerwal, a financial advisor loyal to Ablyazov.” Further down, Bourg notes that Ilyas’ name used to appear on the team’s agenda under the pseudonym “Pedro,” while Ablyazov is referred to either as the “Father-in-Law” or the “Stepfather”.

It was trough Bourg via the latter’s agent Eric Elkain that Chetrit ended up involved in the operation. “Ilyas agreed to invest with Chetrit through Triadou in a number of real estate opportunities in New York City. These included investments in the Flatotel and the Cabrini Medical Center condominium conversion developments in New York City,” Bourg relates. “Chetrit held a 75% interest in the Flatotel, while 25% of the development was owned by another developer, David Bistricer. Chetrit had created a series of limited liability entities, including CF 135 FLAT LLC and CF 135 West Member LLC, to hold his 75% interest in the Flatotel. Chetrit offered to sell half of the Chetrit Group’s 75% investment in the Flatotel to Triadou. Under this agreement, Chetrit would manage the development of the Flatotel while Triadou would passively invest capital. Profits would be split equally between Triadou and Chetrit, but Triadou would be responsible for 70% of CF 135 West Member LLC’s capital obligations. It was estimated that Triadou would ultimately need to provide at least $40 million in capital for the deal. At Ilyas’ direction, after he obtained Ablyazov’s approval, I agreed to this proposal.”

After successive difficulties to transfer the money from the Cyprus-based FBME, or Federal Bank of the Middle East, the $40 million were transferred directly from Switzerland to Chetrit’s private account as the gang feared to draw attention from the U.S. Department of the Treasury’s Financial Crimes Enforcement Network which kept the Lebanese-held bank under surveillance until it was blacklisted in late July 2015. The FBME established back in 1982 as a subsidiary of the Federal Bank of Lebanon SAL, controlled by the Lebanese brothers Ayoub-Farid Michel Saab and Fadi Michel Saab. Lebanon was in the worst period of its civil war then, culminating in a particularly murderous military invasion by Israel, and everybody holding some money was in a hurry to get it out of the country by hook or (mostly) by crook. After the war, the bank continued to function as a tool to funnel money away with not to many questions asked, till by the end of last year the authorities in Cyprus withdrew its banking licence.

Know-Your-Customer

The “move to the west” with the aim of diverting Ablyazov’s and Khrapunov’s ill-gotten gains, was soon to show that the west is no longer just as wild as it used to be, and especially now that more and more of the former’s connections had become exposed, nevertheless proved to carry some risks of its own, and the need for a new smkescreen became urgent. “After Triadou’s investment in the Flatotel, and after Telford began funding that investment, Ilyas purported to sell SDG to a friend of his, Philippe Glatz,” Bourg declares. “At that time, Glatz was held out as the owner and President of SDG, but in reality, Ilyas continued to run all aspects of the company, ostensibly as an “external adviser” to SDG. The supposed sale of SDG to Glatz was conducted in 2013 as if it were a real transaction, with money changing hands from Glatz to the Khrapunov family. However, Ilyas informed me that the money paid by Glatz for SDG was itself loaned to Glatz by Ilyas, thus creating an apparent sale, but effectively leaving the parties in the same position financially. This sham sale of SDG to Glatz was directly in response to banks’ refusals to move money for SDG, and was intended to increase SDG’s investment opportunities.”

“I observed that this sham sale to Glatz created its own issues for SDG. In one instance, a potential investment in Porto Heli, Greece failed when a financial institution, Black Sea Trade & Development Bank (“Black Sea”), declined to provide funding when its Know-Your-Customer due diligence of SDG determined that Glatz did not have the financial resources to actually purchase SDG,” Bourg relates. “Greencos S.A., the company through which Mr. Glatz acquired SDG, has a charter capital of [Swiss francs] 100,000 and its financial strength is estimated by D&B at [Swiss francs] 90,000. How and where Greencos and Mr. Glatz found the [Swiss francs] 10 million that was used to recapitalize SDG is unclear.”

It was the disclosure of Ilyas’ attempt to acquire property on the American West Coast that made the bell toll for Triadou, and with it for Bourg. “In 2014, I learned that the City of Almaty, Kazakhstan had filed an action in the state of California against members of the Khrapunov family, seeking to seize real estate investments the Khrapunov family owned in that state. In response to this lawsuit, Ilyas directed me to begin liquidating Triadou’s assets in New York so that funds could be removed from the United States and concealed elsewhere. Specifically, Ilyas instructed me to liquidate Triadou’s investment in Flatotel and the Cabrini Medical Center as quickly as possible,” Bourg’s statement reads. “I contacted Chetrit, explaining that the threat of the litigation in California required Triadou to liquidate and transfer their assets out of the United States. Chetrit offered to repurchase Triadou’s interest in the Flatotel at a substantial discount from the price originally paid by Triadou, and return the capital invested in Cabrini. By this point, based on the state of the New York high-end real estate market and the progress of the Flatotel development, the value of Triadou’s investments in the Flatotel and Cabrini had increased substantially beyond the approximately $40 million originally invested and I estimated that they would be worth more than $100 million. In or about August of 2014, at the direction of the Ilyas, upon Ablyazov’s approval, Triadou’s interests in the Flatotel and Cabrini Medical Center were assigned back to Chetrit for a price including $21 million in deferred compensation, representing a fraction of the fair market value of the property.”

“Unpleasant and unproductive.”

It seems that Triadou has got a follow-up in the “Compagnie Privee de Conseils et d’Investissements S.A.” in Geneva, after the former’s closure, preceded by the dumping of its director. “I ceased to be paid by SDG, and was then terminated from Triadou,” Bourg bitterly notes – which clearly explains his decision to blow the whistle on his former employers. “I was owed significant sums by Ilyas and SDG in connection with my work for Triadou and other SDG entities, representing both my compensation and costs for Triadou’s registration under the laws of Luxembourg, which I had personally advanced and which SDG had promised to reimburse. When I requested that SDG reimburse these costs and pay my compensation, Ilyas stated that the money owed to me belonged to his father-in-law, Ablyazov, and thus he could not release it. I subsequently communicated with Ilyas, but these conversations were unpleasant and unproductive.”

Not only in the USA the world braces for more headlines concerning the Khrapunov/Ablyazov files. Almost simultaneously with the revelations concerning the “Belgian connection” of the Khrapunov laundering network, a “French connection” has popped in the form of a blue-chip leisure spot in Saint-Gervais-les-Bains in the French Alps, near the upper-class ski resort of Mont d’Arbois. The building, known as Hotel-Restaurant Igloo, and its surrounding grounds, according to the local newspaper Le Dauphine, the site has been bought on Octooober 13 this year by a Libyan businessman called Abdul Basit Igtet for the sum of 2.2 million euro, from the original owner which is no one else than Ilyas Khrapunov through his Swiss Development Group. After several years of renovation works, the contractor halted them in 2013, and later used his right to put the building on sale to cover his bills to Ilyas none of which had ever been paid. But the newspaper disclosed that Leyla Khrapunova has intervened to get the sale declared void by a French court and start a new sales campaign, this time on SDG’s behalf, deeming that the site’s face value is a lot more than just €2.2m. But the risk she is taking that the court might decide to check where the money SDG had bought the property with in the first place originally came from – a question the answer to which looks obvious.

by Charles van der Leeuw
First part: Ablyazov and family: all on board to cross the Atlantic/I

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