ZeroZeroZero
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YBM Magnex had received several million dollars from Arigon Ltd., which among its various activities sold fuel to the Ukrainian national railway system. Mogilevic is on very good terms with the Ukrainian minister of energy and the energy companies in his native country. Among other things, it was Arigon that owned Mogilevic’s Black and White nightclub in Prague. Through Operation Sword, launched by Great Britain’s National Criminal Intelligence Service, it emerges that Arigon Ltd. is actually an offshore company registered on one of the Channel Islands, as well as the pivot of Mogilevic’s financial operations. According to investigators, it works like this: The dirty money that he and other Russian bosses make through their illegal activities in Eastern Europe flows into companies such as Arbat International (owned by the Little Jap, Solncevo, and Mogilevic) and from there is transferred to Arigon, at times passing through Mogilevic’s companies in Budapest. In turn, Arigon uses a number of checking accounts in Stockholm, London, New York, and Geneva to transfer funds to front companies around the globe, even in Los Angeles and San Diego, which are registered to Mogilevic’s associates. The money is officially laundered through Arigon, and so it can enter the legal marketplace, flowing into other projects. Thanks to Operation Sword we know that of the more than £30 million that watered the London banks, £2 million were deposited with the Royal Bank of Scotland. The money, identified merely as having an unspecified origin in Russia, was destined for Arigon. Yet in the end Operation Sword came up empty-handed, because the Russian police either could not or would not furnish Scotland Yard with evidence that the money was the fruit of criminal activity. The accusations of money laundering were dropped. But there was still some backlash. I can only imagine Mogilevic’s surprise when, a short while later, he opened a letter from the Bureau of Internal Affairs and read that he was no longer welcome in the United Kingdom.
Yet as Mogilevic’s business gradually expanded, Arigon opened new branches and offices around the world. Prague, Budapest, the United States, Canada: extremely efficient launderers of dirty money.
“Why did you set up companies in the Channel Islands?” an interviewer asked Mogilevic.
“The problem was that I didn’t know any other islands. When they taught us geography at school, I was sick that day.”
• • •
Russia’s story is one of men who knew how to profit from the transition after the fall of communism. Men who navigated without instruments during the 1990s. Men like Tarzan. Long hair, a fierce gaze, robust. Energy bursts from every pore in the photo I have in front of me and shows how apt his nickname is, even if it refers to something that happened years before it was taken. As a boy, to get attention, he jumped from the fourth story of the apartment building where he was living with his parents. They’d moved from Ukraine to Israel in the 1970s. He survived, but on that day Ludwig Fainberg became Tarzan.
He did his military service in the Israeli navy, but his height—six feet three inches—and pumped-up muscles weren’t enough for him to pass the test and fulfill his big dream of becoming an officer.
In the early 1980s he moves to East Berlin. A contact of his offers to provide him with a diploma in medicine that would fool everybody. Tarzan ends up instead with a humble dental technician degree, but it takes more than a piece of paper to make dentures and braces, as many unlucky German dentists quickly discover. At that point all he can do is to join his fellow mafiosi, and he specializes in fraud and forgery. Then he moves to Brooklyn and opens a video rental store in Brighton Beach. He marries a “pure-blooded mafia girl,” as they say in Russia: Her grandfather was a mafioso in Russia, and so was her first husband. In the United States Tarzan helps his childhood friend Griša “the Cannibal” Roizis, boss of a group of Russians in Brooklyn, to run some furniture stores that are really a front for international heroin trafficking, which also involves the Gambino and Genovese families. He also becomes friends with some higher-ups in the Colombo family. But when things in Brighton Beach start getting too shaky and several of his friends are killed, Tarzan decides to leave. In 1990 he moves to Miami, which has the second biggest group of Russian mafiosi in America. Since the 1970s many Russian immigrants there have been involved in extortion, drugs, gambling, prostitution, gem trading, and bank fraud. Tarzan starts several businesses in Florida, including Porky’s, a strip club whose slogan is “Get lost in the land of love.” In reality there’s not much love going on there: The FBI, which was keeping a watch on Tarzan from a rooftop across the street, immortalize him on video while he beats up some of his dancers outside the club.
The dancers don’t get a regular paycheck; they live on tips and percentages on drink orders, which are constantly being lowered. Tarzan boasts that all he has to do is point at a woman in any adult magazine for his agent to call her and bring her to the club, where Tarzan fucks her till she drops.
Porky’s becomes the place where—between slugs of vodka and a striptease—Russians and Colombian narcos or their go-betweens gather for meetings. Among Tarzan’s many friends are guys like Fernando Birbragher, a Colombian on excellent terms with both the Cali cartel, for which he recycled more than $50 million in the early 1980s, and Pablo Escobar, for whom he purchased yachts and sports cars. Then there’s Juan Almeida, one of the biggest traffickers of Colombian cocaine in Florida, who keeps in contact with the Colombian cartels through a luxury car rental agency in Miami and other cover businesses. Almeida and Tarzan live the good life aboard their yachts, and every now and then they decide out of the blue to take a helicopter to Cancún for lunch, to eat a plate of mariscos.
Women, success, money. Tarzan has them, but the sea still calls to him, the sea that since his childhood in Odessa has meant space, possibility. It still rankles him that he wasn’t accepted into the naval academy. Well, if the sea doesn’t want him, he’ll conquer the sea. His plan: procure a Soviet Tango class submarine for the Colombian narcos. Tarzan is a huge admirer of old Tango submarines. He’s followed the history of their construction from afar and knows they’ve made some really amazing improvements: increased firepower and open ocean operation capacity. Sure, with time, even these supermodern subs were surpassed. But Tarzan fell in love with them, and there’s no ruling the heart. The problem is that Tarzan is a boastful blabbermouth. One day at the Babushka, another one of his restaurants in Miami, his friend Griša Roizis introduces him to Aleksandr Jasevic, an arms dealer and heroin trafficker who is actually an undercover DEA agent. Tarzan doesn’t know that his friend is also collaborating with the DEA. A couple of courses and a few vodkas into their meal, he’s already told them about his ties to the Colombian narcos and the deals he’s doing for them, including the submarine.
Cannibal Roizis would later become a reference point for penniless young Italian couples. Near Naples, where he moves following his collaboration with the DEA, he opens a furniture store whose selling point is super low prices: full kitchens and living rooms within everyone’s means. There’s a line outside his store: engaged couples ready to make the big leap who unknowingly help launder the Cannibal’s dirty money while furnishing their future love nests. He’s making deals with the Italian Mafia with one hand while he’s still collaborating with the DEA with the other. Cannibal has always liked the smell of sawdust, so much so that he sets up his own office just a few yards from the loading dock where the Russians he’d brought with him unload furniture and appliances day and night. He’s even had a desk made for himself out of simple plywood. Everyone who deals with him is fascinated by his tic: He rubs his palm voluptuously across the wooden surface and then holds his fingers to his nose. He tells his most loyal men that the intoxicating aroma reminds him of his childhood. Another thing he really enjoys is screwing over honest Russians working in Italy. He’ll shake down plenty of Russian entrepreneurs until the Italian police manage to reconstruct his movements and nab him in Bologna, charging him with mafia association.
But to get back to the submarine deal: Tarzan’s lawyer
insists that his client is simply a braggart, someone who loves boasting about things that he couldn’t possibly really do or provide. For the investigators, however, it was further proof of an alliance between criminal organizations of the former Soviet Union and the Colombian narcos: The narcos would supply the Russians with cocaine to transport to and distribute in Europe while the Russians would guarantee the Colombians arms and launder narco-dollars for them, especially in Miami, New York, and Puerto Rico. Tarzan’s businesses were decisive in creating a link between the Mafija and the Colombian cartels. Though the submarine deal was never finalized, others during that same time were. Deals like the 100 kilos of cocaine hidden in crates of freeze-dried shrimp from Ecuador and destined for St. Petersburg, or the fleet of MI-8 Soviet army helicopters that Juan Almeida wanted so badly: Tarzan helped him acquire them for the modest price of $1 million each. “Escobar’s men are going to fly these,” Tarzan would apparently say. “So we had to gut the whole interior, get rid of the seats, find a thousand ways to stuff in as much coke as possible.”
His criminal activities in Florida didn’t show a lack of ambition. He owned immense cannabis fields in the Everglades, with an airstrip in the middle for landing loads of Jamaican marijuana.
Tarzan was charged with thirty counts, including criminal association, arms trafficking, and fraudulent data transmission. He risked spending the rest of his life behind bars but decided to negotiate with the American justice system. In exchange for testifying against Almeida and providing information about some Mafija big shots, all charges against him were dropped except for extortion. In the end he was only sentenced to thirty-three months in prison, after which he was extradited to Israel. All he had left was a few hundred dollars, a pale mirage of the vast fortune he had built in nearly two decades of life in America.
• • •
Tarzan’s tale is the tip of the iceberg that is the story of the Mafija’s growing interest in drug trafficking. Before the fall of communism the Soviet Union played only a marginal role in the distribution chain and in consumption. But in the years following it the demand for drugs in Russia grew consistently. What’s so amazing is the speed with which it has grown, especially among the young. Because heroin is relatively affordable, consumption in Western Europe had always been associated with conditions of marginalization. But in Russia young people of all social classes began using it, not just the poor or down-and-out. It became an unstoppable wave that expanded the market to the most remote parts of the country. The variety of drugs expanded as well: to get high or to forget their problems, Russian users now had access to any and every substance, just like any American or European kid.
During the Soviet era, most of the drugs in Russia were locally produced cannabis or opium derivatives, products diverted from pharmaceutical factories and offered on the illegal drug market. In some parts of the country you couldn’t even get a buzz except by sniffing toxic substances such as glue, acetone, or gas, or by using powerful anesthetics with hallucinogenic effects. When the Soviet regime collapsed, imports proliferated, prices dropped, and the drugs of the West—cocaine and ecstasy—finally made their way onto the market. At first cocaine use was limited to those Russians who could afford to spend the equivalent of three months’ average salary. There was an invasion of substances that found fertile ground in part because of the breakup of neighboring states: wars, open borders, and an army of illegal immigrants unable to find work in the legal economy. For many of them—as in the rest of the world—drug dealing was the only way to earn a living. But the decisive step came with the opening toward the Western Hemisphere, first the United States and Canada, then Latin America and the Caribbean. That part of the world had a high demand for arms, and Russia a notable supply of Soviet military weapons. That part of the world had a massive supply of drugs and a need for money laundering, and Russia, a sizable demand for drugs and a significant supply of outlets for dirty capital. It’s a done deal. At first it was merely a convergence, a symmetrical exchange between two sides of the ocean: Soviet arsenals were making organized crime in the former Soviet empire richer and more powerful, just as the white powder was doing for the Central and South American cartels. But business contacts with the narcos and the exponential growth of profits, combined with the shared necessity to reinvest and launder money, strengthened their bonds. In Latin America and the Caribbean especially, the Russians found the same conditions of governmental weakness that had favored the Mafija’s growth: corruption, widespread illegality, porous banking systems, accommodating judges. Added to this was the ease with which Russian bosses could obtain citizenship, thanks to obliging governments.
The Russian organizations proved useful to the narcos looking for less risky money-laundering networks and methods—services for which they kept up to 30 percent of the earnings. The Russian mafiosi’s other privileged activities in Latin America were prostitution, extortion, usury, kidnapping, fraud of every kind, counterfeiting, child pornography, and car theft. Solncevskaja, Izamailovskaja, Poldolskaja, Tambovskaja and Mazukinskaja are at home in Mexico, as are mafia cells from former Soviet bloc countries.
The multibillionaire Mogilevic was declared persona non grata in Hungary, the United Kingdom, the Czech Republic, and other Western countries. But their decisions could not undo what he and his associates had managed to create in those few decisive years of undisturbed freedom. It doesn’t matter much that he returned to Russia, as did the Little Jap, who, after being released from a U.S. penitentiary, was extradited to stand trial for the murder of two Turks on the eve of his departure for America. After the trial, in which he was exonerated for lack of evidence, Ivan’kov was free to dive back into the streets of Moscow: All the witnesses swore they’d never seen his slanted eyes. He lived quietly, without drawing attention to himself, until July 2009, when a killer gunned him down in front of a Thai restaurant. A new feud had broken out, he’d chosen the wrong side, and this time he didn’t get away with it. A thousand or so people joined in Orthodox chants and prayers at a cemetery, which was guarded on the outside by armed police fearing reprisal by the rival group. Brotherhoods from all over the former Soviet Union, from Georgia to Kazakhstan, laid wreaths, and vory from the entire country came to pay their final respects to one of their own, one of the last leaders of the old guard. But Mogilevic was missing. He’d only recently been released from jail and may have preferred to keep his distance from his old friends.
The fact that Mogilevic, after years of living so undisturbed that he even agreed to be interviewed by the BBC, was arrested in 2008 for tax fraud perpetrated through a chain of beauty supply shops, almost seems like a joke. If so, the one doing the laughing was the “world’s policeman”—the Americans. In 2009 the FBI add Mogilevic to their ten most wanted list, alongside Mexican cartel killers, pedophiles, people who exterminated entire families. There are much more serious charges, such as criminal association, but the one given the most play is the YBM Magnex scam. It doesn’t much matter what they use to nail him as long as the charge will hold up in court. It’s the same technique that’s been used since Al Capone’s Chicago days; it works because the implacable U.S. prison regime is often more feared than the chance of death: The Colombian cartels started crumbling when narcos began being extradited to the United States. Mogilevic has already been jailed in Russia, but Russia and the United States do not have an extradition treaty. He’s eventually released on bail, for once paying openly and legally. The spokesperson for the ministry of the interior declares that the accusation is not serious enough to prolong his arrest. About two years later the judges decide to drop all charges. Why was Semën Mogilevic held in a Moscow jail for a year and a half? There are lots of theories. The most delicate one has to do with the dispute over gas supplies between Russia and Ukraine, where in addition to Gazprom and Naftogaz Ukrainy—the energy giants controlled by their respective states—there’s a third company, registered in Switzerland: RosUkrEnergo, 50 percent of which belon
gs to Gazprom while the other half can be traced to a Ukrainian oligarch, Dmitro Firtaš. RosUkrEnergo is the joker, in fact, the card that puts an end to the hostilities that in 2006 produced a brief shutdown in the flow of gas from Russia to Ukraine, which caused huge damages throughout Europe, since their energy supplies have to go through Ukraine’s conduits. RosUkrEnergo meets Gazprom’s price and then resells for a third of that in Ukraine. It manages to maintain this imbalance by buying Turkmen gas, which is cheaper, but also because it is licensed to sell on the world market without a fixed price. In 2008 Julija Timošenko, whose rise to prime minister is linked to her role in the Orange Revolution, adopts a tough stance with Vladimir Putin. One of her most stubbornly held objectives is the exclusion of RosUkrEnergo, since there is no need of an intermediary between Gazprom and Naftogaz. But the crisis hasn’t yet reached its peak. In early January 2009, due to the Ukrainian energy company’s debts to Gazprom and RosUkrEnergo, once again Russia stops the flow of gas to Ukraine and drastically reduces supplies to the rest of Europe, threatening to bring the economy of the entire continent to its knees and to let its people freeze in the dead of winter. Slovakia declares a state of emergency. The crisis lasts for over two weeks and starts to become worrisome even for those countries able to plug the leak through other channels. On January 17, after increasingly feverish discussions in Moscow involving leaders of the European Union, the Russian and Ukrainian prime ministers finally reach a ten-year agreement that, among other things, stipulates the exclusion of RosUkrEnergo. Yet it is precisely because of that agreement, which she fought for with such determination, that Julija Timošenko will stand trial in 2011 and be condemned to seven years imprisonment for abuse of office, an offense that the Ukrainian parliament decriminalizes in February 2014. Ex-president Viktor Janukovic, who was deposed during the popular revolt known as Euromaidan, and who had defeated Timošenko in the 2010 elections, would see that RosUkrEnergo received billions of dollars in compensation for supplies lost because of the Timošenko agreement.