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News :: Globalization
FBI Tracked Alleged Russian Mob Ties of Giuliani Campaign Supporter
06 Jun 2007
rudolph the red
FBI Tracked Alleged Russian Mob Ties of Giuliani Campaign Supporter
by CPI Saturday May 26, 2007 at 03:23 PM
"...the Center reports on how political campaigns, also aggressively chasing after cash, end up with equally questionable contributions as suspected Russian organized crime figures seek to move into the U.S. political mainstream..."
By Knut Royce
"WASHINGTON, December 14, 1999 — The Center for Public Integrity is investigating how billions of dollars of allegedly corrupted money from the former Soviet Union have found a haven in the United States, despite strict anti-laundering laws. Last month, the Center reported how a small San Francisco bank became a conduit for questionable funds as it, like many other banks around the country, aggressively pursued the cash from the former Soviet Bloc. Today the Center reports on how political campaigns, also aggressively chasing after cash, end up with equally questionable contributions as suspected Russian organized crime figures seek to move into the U.S. political mainstream In future articles, the Center will show how the failure to sift the good money from bad is being replayed all over America.
A prominent commodities trader who acknowledges a business history with a reputed Soviet Bloc crime figure and a notorious arms dealer has been one of New York Mayor Rudy Giuliani's top campaign supporters. Giuliani is expected to be the Republican candidate next year for a U.S. Senate seat from New York.
Commodities trader Semyon (Sam) Kislin and his family also lavished thousands of dollars in contributions to Democratic Sen. Charles Schumer, to the Clinton-Gore re-election campaign, to former Republican Sen. Alfonse D'Amato and to a number of state and city politicians. Kislin sits on the New York City Economic Development Board.
Kislin is not alone among emigres from the former Soviet Union who have successfully established themselves in the United States while law enforcement agencies, particularly the FBI, track their alleged associations with organized crime. The Center for Public Integrity has obtained confidential law enforcement documents detailing the activities of dozens of the emigres, but authorities rarely make cases and still less share the intelligence outside their departments.
A 1996 Interpol report claims that Kislin's firm, Trans Commodities, Inc., was used by two reputed mobsters from Uzbekistan, Lev and Mikhail Chernoy, for fraud and embezzlement. And a confidential 1994 FBI intelligence report on the Brooklyn, N.Y., mob organization headed by Vyacheslav Ivankov, the imprisoned godfather of Russian organized crime in the United States, lists Kislin as a "member/associate" of Ivankov's gang. It claims that his company co-sponsored a Russian crime boss and contract killer for a U.S. visa and asserts that he was a "close associate" of the late notorious arms smuggler Babeck Seroush, who later settled in Russia.
In a telephone interview on Dec. 17, Kislin confirmed he had employed Mikhail Chernoy at Trans Commodities, but said he didn't know Ivankov. "I never met this guy; I never saw him in my life," he said. He said that someone had forged his signature to obtain the hit man's visa. And, he confirmed, "I used to do business with Babeck Seroush."
Seroush was indicted in 1984 by Giuiliani, then the U.S. Attorney for the Southern District of New York, on charges of conspiring to smuggle semiconductors and night-vision goggles to North Korea. But West Germany, where he was living, declined to extradite him to the United States.
A federal law enforcement official who has investigated Seroush said that he was an Iranian-born communist who had immigrated to the Soviet Union in the 1970s and specialized in smuggling military high-tech equipment for the Red Army.
Kislin said he met Seroush, who he said also trafficked in narcotics in Russia, through the arms dealer's former wife, who was a personal friend. "I used to go to their house on the West Side in New York City," he said.
He said one deal with Seroush involved the shipment of 40 low-powered computers to Russia via Germany in the late 1970s, when even those had to be licensed by the State Department. He said he obtained the license and arranged for their shipment to Germany. He said that during transit the computers were illegally replaced by more powerful ones not covered under the license. "They were caught in Germany and they were put in jail. But they never called me, they never asked how I did business with him."
Reports by the FBI and Interpol, the international law enforcement intelligence-sharing agency, claim that Trans Commodities, Inc., had laundered millions of dollars and was used for fraudulent banking documents by the Chernoys in the early 1990s as the brothers engineered the takeover of much of Russia's metals industry, notably aluminum, through alleged embezzlement, money laundering and murder.
Kislin said he had been thoroughly investigated by the FBI and has never been charged with a crime. He acknowledged that Trans Commodities employed Mikhail Chernoy as the company's manager between 1988 and 1992, but said he knew Lev Chernoy only in passing. "Mikhail Chernoy is the best man I ever knew," he said.
The FBI report claims that in the early 1990s, Mikhail Chernoy was "doing business as Transcommodities (sic), a New York based trading company which is known to have laundered millions of dollars from Russia to New York."
The 1996 Interpol report, citing Russian police, says that the Chernoy brothers were "also involved in business—ferrous metals—with the American company Trans Commodities Inc. The Tchernyis (sic) were suspected of letter of credit fraud in conjunction with this company as well as incorporation of fictitious companies and fictitious contracts and embezzlement of funds."
Denies Laundering Funds
Kislin denied that his firm had ever laundered funds. "Never, never," he said.
New York FBI spokesman Joseph Valiquette, told that the Center was preparing an article about Kislin based in part on FBI documents, declined to comment.
What the FBI and other law enforcement organizations knew or suspected was never shared with the public.
To his neighbors and friends, the 64-year-old Kislin, who immigrated from Odessa, Ukraine, in 1974, is an enormously successful businessman who generously shares his wealth with charitable causes.
And to Giuliani, Kislin is one of his staunchest supporters. Kislin and his wife, Ludmila, gave Giuliani a total of $14,250 in direct contributions between 1994 and 1997.
In addition, when Giuliani's campaign chest approached the maximum he could spend for re-election in 1997, $9.7 million, Kislin was one of several top backers of the mayor who supported the Liberal Party, which had endorsed the mayor and helped finance his campaign, according to The Village Voice. One of Kislin's companies gave $30,000 to the Liberals. Kislin also kicked in $7,700 to Jules Polenetsky, who was running with Giuliani for the city's office of public advocate and could share political advertisement costs with the mayor. Giuliani's campaign manager had asked the mayor's major contributors to help finance Polenetsky's campaign.
In 1996, Kislin hosted a fund-raiser for Giuliani, a former hard-charging federal prosecutor, at the Lido Restaurant in Brooklyn. And last May 25, Kislin also was a co-chair for a Giuliani fund-raiser at the Sheraton New York Hotel and Towers. The bash raised $2.1 million for his probable run for the Senate next year.
"I did a lot of fund raising for Giuliani," Kislin acknowledged. "He's a good man, doing a good job for the city of New York."
Bruce Teitelbaum, the spokesman for Giuliani's Senate campaign exploratory committee, refused through an aide to comment on Semyon Kislin's support of Giuliani. Teitelbaum refused to return calls himself. The mayor's press secretary, Sunny Mindel, said "I don't know anything about the mayor's contributors," and referred the question to Teitelbaum. The campaign did return a $2,000 check last August that it had received at the Sheraton Hotel fund-raiser from Philip Castellano, son of the late racketeer Paul Castellano, even though the younger Castellano has never been accused of a crime.
Arik Kislin, Semyon's nephew, contributed $1,000 to the mayor in 1995.
According to New York corporate records, Arik Kislin is chairman of Blonde Management Corp., 459 W. 15th St. in Manhattan. In the early 1990s, Blonde shared space with Trans Commodities and co-sponsored the person alleged by law enforcement agencies to be a hit man, Anton Malevskiy, for the U.S. visa, according to the 1994 FBI report. Malevskiy, an acknowledged friend of the Chernoys, also is reputed to be the head of one of Russia's top mob families, Moscow's Izmaylovo gang.
A 1996 Interpol report based on several ongoing investigations of the Chernoys at the time claimed that Blonde Management also was controlled by the Chernoy brothers and that this company, too, is "a money laundering company target of U.S. law enforcement." Citing the Russian national police, Interpol said that the brothers, natives of Uzbekistan and now Israeli citizens, are "suspected of money laundering, embezzlement of funds, contract killing."
Arik Kislin, in a telephone interview, would say only that he owns Blonde Management. Asked to discuss what role, if any, the Chernoys have had with the company, he said, "Any involvement with any people that I know is not something I'm willing to discuss."
Asked whether Blonde Management co-sponsored Malevskiy for a U.S. visa, he initially said, "That I have no clue about." Later, he added, "During the course of doing business over the years a lot of names have come to this office, so I don't know."
Semyon Kislin told the Center that Blonde Management is owned by Mikhail Chernoy, and that Arik Kislin is the salaried manager of the firm.
Chernoys Never Charged or Convicted
Though targets of investigations throughout much of Western Europe, Russia, Israel and the United States, the Chernoy brothers have never been convicted. Mikhail in 1996 once was arrested and detained briefly in Switzerland as a Russian organized crime suspect.
Giuliani's prospective Democratic opponent, first lady Hillary Rodham Clinton, returned a $1,000 contribution several weeks ago after the newsmagazine U.S. News & World Report disclosed it had been given by the wife of one of Bulgaria's alleged top racketeers, Ilia Pavlov, who lives in the United States.
Underscoring these questionable contributions is the demonstrable failure by campaign staffs to ferret out good money from bad when the donors—as in the cases of the Kislins and Pavlov—are immigrants whose alleged criminal associations are well-publicized in their countries of origin but have never been reported in the United States. The contributions also illustrate how businessmen from the former Soviet Bloc, some with questionable backgrounds, have been moving into the political mainstream of America over the past decade.
For example, Jacob Bogatin, president of YBM Magnex, a Pennsylvania firm that produces magnets, made five contributions totaling $2,750 to the National Republican Congressional Committee from 1996 to April 1998, according to Federal Election Commission records. One month after the last contribution, federal agents raided the company in a money-laundering probe of Magnex and its silent owner, notorious Hungarian mobster Semion Mogilevich.
In 1994, a San Francisco diamond company headed by a young Russian businessman contributed $25,000 to the unsuccessful California gubernatorial campaign of Democrat Kathleen Brown and lavished money on other California politicians. The following year it was discovered that the firm, Golden ADA, had been part of a massive scheme to plunder hundreds of millions of dollars in jewelry from the Kremlin's vault.
Only rarely are funds returned or prospective donors told to keep the money. One such instance was in 1995, after the National Security Agency intercepted a conversation between the reputed Latvian racketeer Grigori Loutchansky and a New York businessman in which they reportedly discussed contributing $25,000 to the Democratic Party so that Loutchansky could attend a dinner with President Clinton at the Mayflower Hotel in Washington, two sources told the Washington Post.
Other Campaign Beneficiaries
Giuliani was not the only nationally prominent politician to accept campaign contributions from the Kislins. In 1995, Semyon and Ludmila gave $2,000 to the Clinton-Gore primary committee. Semyon, Ludmila, son David and daughter Regina each gave $2,000 in 1998 for Schumer's successful Senate campaign. Semyon also chipped in $1,000 for the campaign of Schumer's opponent, D'Amato, for whom the Kislins also held a fund-raiser, and Ludmila gave the Bob Dole campaign a modest $250 for his unsuccessful presidential race in 1996.
Josh Isay, Schumer's chief of staff, acknowledged knowing that Kislin was a contributor. He said he would seek a comment from the senator but never called back. D'Amato did not return several calls to his Manhattan office seeking comment.
Because nothing critical of Kislin has appeared in the U.S. press, New Yorkers, especially politicians and the Russian-Jewish émigré community in Brooklyn, view him as a prosperous commodities trader who is a generous supporter of the United Jewish Appeal and of the state of Israel. He has contributed hundreds of thousands of dollars to the UJA, according to published accounts, and donated $1.5 million to build a college library in Sha'ar Hanegev in Israel.
But in Russia some of the major newspapers, including Rossiyskaya Gazeta, which is owned by the government, have cast him in a darker light. Gazeta claims that Semyon Kislin and the Chernoy brothers formed Trans Commodities in 1990 as an early vehicle for the takeover of the metals industry as it was being privatized.
Russian published accounts also cite a company called Blonde Investment as part of the scheme. In an interview last year with the business weekly Delevoi Vtornik, former Russian privatization czar Vladimir Polevanov accused several of the businessmen involved in the takeover as being "criminals. I mean first and foremost the authorities of the Blonde Investment Corporation and its branch firms, among whom were quite a number of well-known criminals, such as Mikhail and Lev Chornys (sic), S. Kislik (sic) . . ."
A company called Blonde Investment Corp. also has been registered at the 15th Street address of Blonde Management since 1995, according to Dun & Bradstreet, the provider of business information.
Arik Kislin denied that a company called Blonde Investment was registered at the address of his Blonde Management. "I don't know what Blonde Investment is," he said. "It has nothing to do with me."
Semyon Kislin, too, said he had never heard of Blonde Investment.
According to Russian authorities, the Chernoys in the early 1990s defrauded the Russian Central Bank of more than $100 million through an elaborate scam involving dozens of fictitious companies. The brothers then used the funds as seed money as they and a London-based holding company, Trans World Group, through a maze of offshore companies and alliances, rapidly gained control of Russia's aluminum industry and acquired a large stake in the processing and distribution of other metals and petroleum products.
Kislin said Mikhail Chernoy tried to enlist him as "cover" or "legitimate front" in the plan to grab control of the aluminum industry, but that he declined. "I said aluminum is not for me," Kislin said. "I cannot do with aluminum because aluminum is a very dangerous business (in Russia)." Indeed, what followed has been dubbed "The Aluminum Wars" by the Russian press, as many businessmen, most of whom opposed the Chernoy takeover, were killed.
Kislin said that the brothers obtained licenses "to buy the aluminum for $10 and sell it for $1,500" by bribing top Russian officials. "The corruption is unbelievable," he said.
And, he said, he severed his business relation with Mikhail.
In the mid-1990s, Russian investigators asked U.S. law enforcement for assistance in tracking allegedly embezzled funds that had been laundered in the United States around 1993. One of the Russian companies allegedly shipping money to be laundered by three "affiliated" companies in the United States was Magic Ltd., according to a federal law enforcement official who did not want to be further identified. He said that Trans Commodities was one of those "affiliated" companies identified by the Russian authorities.
It is unclear whether U.S. investigators provided the Russians with significant information.
But Kislin said that he and his company were cleared of any suspicion in that investigation and that he received a letter from the U.S. Attorney's Office in Los Angeles in 1996 notifying him that he no longer was a target. He provided the Center with a copy of the letter, which says, in part, that the prosecutors had "declined to pursue a civil penalty action against Trans Commodities or Sam Kislin."
Kislin Praises Chernoy
Some of Kislin's business associates clearly have questionable, if not criminal, backgrounds. Mikhail Chernoy has been target of investigations in Europe, Russia and the United States. Kislin said that the FBI "asked me many things about Mikhail Chernoy and I said exactly what I am telling you now. Mikhail Chernoy is the best man I ever had as a partner."
Then he added, "Maybe he did something that I don't know, but he never did something wrong in what I told him to do."
Asked if perhaps it was Chernoy who forged his signature on a Trans Commodities letterhead to obtain a visa for hit man Malevskiy, since Malevskiy was a friend, Kislin said, "It could be Chernoy. Chernoy could take this (letterhead) and sign it, but I cannot say yes, because I can't prove it." He said the FBI told him that its handwriting specialists told him they were convinced that it was not Kislin's handwriting, but did not try to match Chernoy's.
He said he thinks that some time after the Chernoys launched their takeover bid of the aluminum industry, Mikhail left the partnership. "I believe he left this aluminum because I tried to explain to him, this aluminum is going to end with a very difficult situation for you, Misha.'" Recent Russian press accounts say that Mikhail has had a falling out with Lev.
Though he says the FBI is a good organization, Kislin is scornful of the bureau's choice of investigative targets. He said he once "tried to meet with director (Louis) Freeh to explain to him how wrong the FBI in New York was doing. They don't catch the professional crooks, who are in the mafia and who are laundering money. They just want to put everything on Mikhail Chernoy, on Sam Kislin, on people who have kosher business."
Kislin seems to have been an enormously successful in the commodities trade, even as he avoided aluminum. In June 1995 the Interfax news service quoted Kislin, during a visit to Russia, as saying that he planned to buy $450 million worth of metals there that year, as well as to invest an additional $120 million to $130 million in two large steel mills. Told of this account, Kislin laughed, and said the dollar amounts were "exaggerations."
He said that Trans Commodities dealt only with pig iron and steel, though it once also supplied urea, a fertilizer, to Russia.
The Chernoys and Trans World Group's chairman, David Reuben, have denied any wrongdoing and separately have taken out ads in the Russian press and elsewhere denouncing the public accusations, claiming they are being victimized by unscrupulous and jealous competitors.
Today, Trans World posts annual sales of $7 billion. It is the world's largest seller of aluminum ingots, the bulk form of processed aluminum, and controls about 10 percent of the world's supply. It and affiliated companies, many of them owned by the Chernoys, control some of Russia's largest smelters, including Bratsk, Sayanogorsk and Krasnoyarsk, which account for more than 40 percent of Russia's aluminum production, as well as other metals plants.
The group's dominance came at an enormous price. Among the businessmen killed were the vice president of the Krasnoyarsk plant, Vadim Yafyasov, who opposed the Chernoy takeover, and Felix Lvov, the Russian representative of a competing American company, AIOC, which pulled out of Russia after the killing.
The man appointed by Lev Chernoy as chairman of the Krasnoyarsk plant, Anatoly Bykov, is a Siberian organized crime warlord whom the Russians are trying to extradite from Hungary to face charges of murder and money laundering.
Some Chernoy associates, such as International Olympic Committee member Shamil Tarpishchev, have been denied U.S. visas. "People in the (U.S.) consulate were asking, how come you know the entrepreneur Mikhail Chernoy?" Tarpishev, President Boris Yeltzin's tennis coach, told Moscow Izvestiya last year. But the Chernoys themselves seem to have had no trouble traveling to the United States. Publicly available research data, for instance, shows that Lev Chernoy has used three Arik Kislin residences as addresses on at least three different occasions from June 1993 to April 1997. Mikhail Chernoy also used those same residences as addresses at least four times from April 1993 to March 1997.
Here is a partial list of prominent politicians who have received campaign donations from Kislin and other people mentioned in police reports. Records were checked from 1994 to the most recent available.
Recipient Amount Source of Funds
Kathleen Brown $25,000 Golden ADA contribution to gubernatorial campaign
Alan Hevesi $11,000 Sam, David and Henry Kislin
Rudoplh Giuliani $14,250 Semyon and Ludmila Kislin, direct contributions, 1994 and 1997. Kislin hosted a fund-raiser for Giuliani at a Brooklyn restaurant: amount raised unknown.
Rudolph Giuliani $1,000 Arik Kislin, 1995.
Jules Polenetsky $7,700 Kislin contribution when Polenetsky ran with
New York Liberal Party $30,000 Kislin donation during Giuliani mayoral campaign on that ticket.
Clinton-Gore $2,000 Semyon and Ludmila Kislin, primary committee 1995.
Hillary Clinton $1,000 Wife of an alleged Bulgarian top racketeer, Ilia Pavlov. The money was subsequently returned.
National Republican Congressional Committee $2,750 Jacob Bogatin, president of YBM Magnex, donations in 1996 and 19997.
Charles Schumer $8,000 Sam, Ludmila, son David and daughter Regina, $2,000 each, 1998.
Former Sen. Alfonse D'Amato $1,000 Sam Kislin
Bob Dole $250 Ludmila Kislin
Sources: Federal Election Commission, New York Campaign Finance Board, Guiliani campaign and news reports"