The President’s Dossier

by James A. Scott

  “The developer reports the hundred million in condo sales in his income tax filing. He deducts business expenses and, if he has a good accountant, he pays no taxes on that money. He might even get a credit. After taxes, the developer has somewhat less than a hundred million dollars in laundered Russian money. He takes a small percentage and transfers the bulk of the hundred million to an offshore account in Country 4, also controlled by the oligarchs who loaned him the original four hundred million. Since the developer paid taxes on the money, it’s clean.”

  Jill asked, “When does the developer repay the four-hundred-million-dollar loan?”

  Pavel smiled. “That’s the magic in this transaction. Never.”

  “Never? How does the bank balance its books?”

  “It doesn’t. AVB falsifies the books to show the loan has been repaid. The oligarchs don’t care. Their goal was to move the money out of Russia. It’s been moved.”

  I expected Jill to be dumbfounded, but she was clinical. “What about bank regulators and audits?”

  “The AVB branch in Moscow is regulated by the Kremlin. If an honest auditor discovered that money is missing, who would he report it to, the Kremlin?”

  The room was silent until Jill broke the spell with an observation. “I calculate the oligarchs lost three-fourths of their four-hundred-million-dollar loan on the deal. That’s expensive money laundering.”

  Pavel disagreed. “It’s not as expensive as you think. They have a hundred million in laundered cash, plus another hundred million in condos. Those are just the first two phases of the operation. The big money moves during the third phase.”

  “What happens then?” Jill was taking over my interrogation.

  “Remember, on paper, the building cost four hundred million. Since the developer has sold a hundred million in condos, the building is worth more. Through their front men, the oligarchs buy the building from the developer for six hundred million, using the hundred million in laundered cash as the down payment. The developer claims the sale on his taxes and recycles the down payment back to the oligarchs, after taking his laundering fee.

  “Now, the oligarchs have about a hundred million in cash, and they own a six-hundred-million-dollar building, with a hundred million in condos inside the building. The building is a condo hotel. So, they also get the proceeds from the sale of condos and rents generated by the hotel.”

  I asked, “How do the oligarchs pay off the building?”

  “More magic. The one hundred million is recycled through the developer and oligarchs until the building is paid for.”

  “What does the developer get for all his risk?”

  “A percentage of each laundering transaction, he’s paid to put his name on the building, and he earns an annual fee for managing the hotel.”

  I needed to get to the bottom line. “Once the smoke and mirrors are gone, how much wealth has been moved?”

  “When the down payment is recycled back to the oligarchs, they have laundered two hundred million on this one project and they own the building. Multiply the cash and property in this transaction by the number of Walldrum towers in the world and you begin to grasp the magnitude of the thefts and the scope of the money laundering activities.”

  That was a lot to grasp and it caused a few gasps. Evidently, this was news to some of the Omegas. Or were they Omegans?

  Pavel added, “If you really want your mind numbed, understand that Walldrum is just one of many real estate developers involved in operations like this.”

  It was time for me to exercise a little diplomacy and refocus this group on my needs. “That was an impressive education on money laundering, but without documentation, that part of my investigation is dead in the water. I need copies of those inaccessible bank records. The paper trail always catches the criminals.”

  “Not this time, I think,” said Pavel.

  “Why not?”

  “It won’t work because—if I may paraphrase one of your television personalities—you are playing checkers. Putin is playing three-dimensional chess.”

  “What are you talking about?”

  “The Ironside Dossier stated Putin was getting reports from Walldrum on the business activities of oligarchs in the States. Why would he care? Once Putin rewards them by letting them steal money, why would he care what they did with it—care enough to get periodic reports on their business activities?”

  “I’ll give you that, it doesn’t make sense. He could get Russian intelligence to check on the oligarchs.”

  “That’s true, but you’re missing the point. Why would Putin want reports from anyone on the oligarchs?”

  Suddenly, I knew. “Because it’s still Putin’s money. It’s not theirs.”

  “Exactly.”

  I asked, “Why didn’t Putin stash the money in countries with strict banking secrecy laws and put his name on the accounts? Why give it to the oligarchs to hide for him in their names?”

  The cop spoke up. “Putin was, is, and always will be KGB. The KGB never wanted its fingerprints on an operation, except to intimidate someone or an institution. During the Cold War, the KGB used assassins from Soviet satellites, like the Bulgarians, to do their dirty work. Today, it’s little green men—Russian soldiers out of uniform—fighting in the Ukraine. Deniability is in Putin’s DNA. He does not want his fingerprints on the billions he’s moving out of Russia.”

  The redhead came at us, full of passion. “If the Russian people found out Putin had billions in foreign bank accounts, in his name, they would drive him from office. That would be the end of the kleptocracy, Omega Day. So, the accounts are in the names of oligarchs. And if Putin needs a sacrificial lamb for political purposes, he can burn an oligarch, confiscate his wealth, and maintain his status as a champion of the people.”

  “So, what is Putin’s chess game?”

  Pavel answered me. “As you know, U.S. sanctions are blocking Putin and his oligarchs from their stolen money and property. Putin wants those sanctions lifted and he sees Walldrum as his best hope for that outcome. Therefore, he wants Walldrum in power as long as possible and will do whatever is necessary to keep him there. To do that, Putin must ensure that Walldrum is not tainted with money laundering for Russians. That’s the key. There is a scheme”—Pavel paused for effect—“to sever connections between the oligarchs’ money and Walldrum.”

  He looked down the table to a man who had the demeanor and dress of a mid-level bureaucrat. “Arkady.”

  Arkady leaned forward, resting his forearms on the table. “There is a special records unit at the Allgemeine Volksbank, an entire floor of accountants and clerical staff working around the clock to develop a second set of bank records that exonerate Walldrum.” Arkady smiled at me and Jill. “We learned from your master fraudster, Bernie Madoff.”

  I struggled to understand. “Didn’t U.S. investigators request the AVB records?”

  “That is correct.”

  “Did AVB provide them?”

  “Not yet. AVB will surrender the records only if your government issues a subpoena.”

  “So, what’s the point of fabricating a set of phony bank records?”

  Another member entered the conversation. He had tried to dress down with a worn, stained leather coat, but the expensive shirt beneath the cashmere sweater sent a different message. He was a neat, white-haired man with a cultured voice. I guessed he was with the Russian Foreign Ministry, but changed that assessment to Economics Ministry or banking as he spoke.

  “When the request came for the bank’s records, a meeting was called to determine how to respond to it. One course of action was simply to deliver what was requested. It was clear that delivering the documents would provide your prosecutor evidence of money laundering.

  “A second course of action was proposed: burn the Moscow branch of AVB to the ground, destroying all records. That was rejected as too obvious.

  “Consideration was also given to having AVB refuse to provide any records, using banking privacy
as a cover. That option was debated, but discarded because the U.S. would have sanctioned the entire AVB banking network. That would further cripple the ability of oligarchs to move money out of Russia or access their stolen funds abroad.

  “It was decided that AVB would deliver all subpoenaed documents, but a countervailing strategy would be employed.”

  Jill interrupted him. “I’d like to know who attended that subpoena meeting.”

  “Senior representatives of the president’s office, the bank, the ministries of Foreign Affairs and Economics, and the FSB. There was also representation from the oligarchs who have money in wealth management funds at AVB.”

  Jill insisted. “Names would help us confirm that the meeting took place.”

  Us? What’s up, Jill?

  The white-haired gentleman was adamant. “We will not provide names.”

  That didn’t work for me. “Without names or corroboration from someone at the meeting, all I have is hearsay.”

  “We are not operating in a U.S. court of law where hearsay is inadmissible. You claim to be an intelligence professional. Have you never taken action based on hearsay?”

  “I am not getting paid to report hearsay.”

  “And we are not getting paid to talk to you! We are here at the risk of our lives. Do you want to listen to us or not!”

  Tension was high in the room. I asked, “Is there any vodka here?”

  Everyone relaxed a notch. A guy in coveralls with dirt under his fingernails went to the office and returned with a fifth of vodka and a collection of mugs, glasses, and jelly jars. The bottle made one trip around the table and came back half empty.

  Pavel interrupted our moment of togetherness by announcing, “It’s getting late.”

  I asked, “What’s the strategy to deal with the records AVB plans to deliver to our investigators in response to subpoenas?”

  Arkady, who had been sidelined by the subpoena discussion, resumed his story. “As I said, there is a records unit at the AVB developing a second set of bank records that exonerate Walldrum.”

  “If our investigators get copies of the originals, what’s the point of making a phony set?”

  “To discredit the originals. If Walldrum is tried or impeached, there will be a discovery process, yes? Your prosecutor must provide copies of the subpoenaed AVB records. Walldrum’s attorneys will ask AVB for the same records given to your prosecutor. AVB intends to provide the forged records. Therefore, the special prosecutor’s records will be different from the ones Walldrum’s defense team gets from AVB. The defense will claim that your special prosecutor altered their copies to falsely implicate Walldrum.”

  I finished his scenario. “And, at best, the jury will be convinced there’s a conspiracy against Walldrum. At worst, they’ll be confused. Americans won’t know who is telling the truth. The case will be dismissed and Walldrum remains in the presidency doing Putin’s bidding.”

  “Yes,” agreed Arkady.

  It was mind-boggling, but what about the past year wasn’t. I said, “I need proof. If I can’t have names, I want to see samples of documents AVB will provide in response to the subpoena and the same documents that have been altered.”

  Arkady was prepared. “I have documents. Pavel said you would want proof.”

  The group cleared half of the table and Arkady laid out copies of original money transfers and other bank records side by side with the altered ones. I pulled out my pocket-size tourist camera and took photographs. As soon as I snapped the last frame, Arkady scooped up the documents, threw them into a trash can, and put a match to them. The fellow who had delivered the vodka grabbed the can and left the room.

  “Convinced?” asked Pavel.

  I was … almost, but Moscow Rule Number 3 is: everyone is potentially under opposition control. Arkady—and this whole group, for that matter—could be selling me a boatload of snake oil at the direction of the FSB.

  I told Arkady, “I want to visit the unit that prepares the fake records.”

  He was shocked. “That is impossible.”

  For a group conspiring against oligarchs, the mafia, and the might of the Russian Federation, these guys had a narrow conception of what was possible. I had to change that or go around it. “Why is it impossible?”

  “The floor,” Arkady replied, “is restricted to workers, a bank supervisor who oversees the operation, security staff, and a FSB officer, who visits regularly.”

  “How often does the FSB officer come?”

  “Once every two weeks. He gets a progress report from the floor supervisor.”

  “Does the same FSB officer come each time?”

  “Usually. Sometimes his supervisor is with him.”

  “When was the last FSB visit?”

  “Yesterday.”

  “Tell me about your unit: location, access procedures, floor plan, work routine, and names and ranks of the FSB officers who visit the unit.”

  Pavel interrupted me by announcing to the group, “Sorry, but it’s time to go, everyone.” The group dispersed and began loading into vehicles parked in the shop.

  I took Arkady aside. Jill made a move toward us. I gave her a wave off. She raised her eyebrows and stayed put, while Arkady gave me some quick answers to my questions.

  When he finished, I promised, “I’m coming to see that unit, Arkady.”

  He saw I was serious. Arkady took a digital storage thumb drive from his pocket and showed it to me. “Buy two of these. They must be exactly like this one. If you come to the bank, bring them with you. I will try to have two identical drives on my desk. You must exchange yours for mine without attracting attention.” He gripped my forearm. “Make this work. Omega is depending on you to get this information to your investigators. It is very dangerous for all of us.”

  Roger that, Arkady.

  He got into a sedan. Someone turned out the building lights and opened the bay doors. We watched the vehicles quietly roll out of the shop, headlights off. The shotgun rider returned our pistols.

  Jill and I climbed into the van with Pavel and he drove us to the farm. We didn’t talk. There was plenty for everyone to think about. The Omega Group had exposed itself to us, but my concern was that Jill and I had exposed ourselves to them. If there was a FSB informant in that shop, he—or she—knew about us and saw our faces.

  Outside of our bunkhouse, I let Jill start for the door and said, “Go on up. I’ll be there in a minute. I need a word with Pavel.”

  Jill glared at me, turned, and went into the barn.

  Standing in the darkness I said, “Pavel, after I visit that records unit, the FSB will be onto Jill and me. I need to plan for our departure. Do you have any hackers in Omega?”

  “Of course.”

  “I need one to hack into your airline flight and crew schedules.”

  “You want to hack into Aeroflot?”

  “Yes.”

  Pavel sighed and looked at me like I was out of my mind, but he nodded.

  At last, I had asked for something that wasn’t impossible. Progress in small steps.

  “What do you want to know?” Pavel asked.

  “I want a list of flights leaving Moscow for Panama City during the next two weeks and names, addresses, and photographs of crew members scheduled on those flights.”

  “Yes, and I want a new Mercedes with a good heater and air-conditioning.”

  Old Pavel had a sense of humor. He just shook his head and got into the van. Before he drove off, he leaned out of the window and said, “First, we try without the hacker. We have friends at Aeroflot. Give me a couple of days.”

  When I got up to the bunkhouse, Jill was pacing and angry. “What were you and Pavel talking about?”

  “It doesn’t concern you, yet.”

  “Why are you still keeping me in the dark, Max?”

  “I’m not keeping you in the dark. I’m telling you what you need to know when you need to know it.” I had something else to set Jill straight on. “You asked questions that
interrupted the flow of my conversation with the Omegas. Don’t do that again. I’m a trained listener and interrogator. I know how I want to guide the conversation. Bowen assigned you as my assistant. You’re not my partner.”

  “You didn’t mind me being your partner in St. Petersburg when those two pimps had the drop on you at Tatyana’s apartment.”

  “You did what was necessary to get us out of there. As I remember, you wrote your job description the day we met: crack shot, karate chop, and resident ass-kicker. You’re the muscle here, not the mastermind. Stick to your specialties and we’ll get along fine.”

  Jill didn’t reply. She made a show of checking her pistol, jacked a round into the chamber, and shoved the gun under her pillow.

  CHAPTER 22

  THE NEXT MORNING, we had a breakfast of eggs, sausages, bread, and tea, delivered by a middle-aged man in farm work clothes. He ignored Jill and said to me, “Pavel called. The message from your sister is that your mother is better. You can visit her today at the hospital near Gorky Park.”

  That was a message from Sherri. She wanted to see me.

  Later that morning, the farmer drove Jill and me to the nearest Metro station and we rode the train to Gorky Park where the crowds were large enough for us to blend in. As we left the train, Jill peeled off to watch my back. When I got to the park, Sherri was walking near our prearranged meeting point. I didn’t see Tony-D, but I was sure he was there watching her back. I sauntered over to Sherri. There was excitement in her eyes. We made a show of the long-lost greeting and walked hand in hand down the path.

  “What’s up?” I asked.

  “I connected a reporter to a hotel maid, Anya Koslowskaya. Both were killed about the same time by persons unknown. I used the information in the maid’s obituary to locate her family. They were angry that Anya’s murder was never solved. Her mother was eager to help when I told her we were looking into it. She told me that Anya worked at the Riga-Ritz until a few weeks before she was killed. She gave me the name of Anya’s best friend, Yulia. Yulia was also a maid in the Ritz, same floor, same shift as Anya. Both of them were reassigned to another Intourist hotel on the same day.”