******************** POSTING RULES & NOTES ********************
#1 YOU MUST clip all extraneous text when replying to a message.
#2 This mail-list, like most, is publicly & permanently archived.
#3 Subscribe and post under an alias if #2 is a concern.
*****************************************************************
NY Times, Sept. 15, 2018
How a Ukrainian Hairdresser Became a Front for Paul Manafort
By Andrew E. Kramer
KIEV, Ukraine — At first glance, what happened to Yevgeny G. Kaseyev
hardly seems like misfortune.
Without his knowledge, he says, unknown individuals set up multiple
companies in his name and deposited tens of millions of dollars into
those companies’ bank accounts.
“Sometimes it seems fun,” Mr. Kaseyev, a 34-year-old hairdresser, said
with a shrug during an interview. “I’m a secret millionaire.”
Until the authorities came calling, that is, seeking $30 million in back
taxes.
One of the people who did business with a company opened under Mr.
Kaseyev’s stolen identity didn’t mean anything to him. But the name
certainly caught the eye of investigators in the United States: Paul J.
Manafort.
Mr. Manafort, who worked for a decade as a political consultant in
Ukraine before becoming chairman of the Trump campaign in 2016, made a
deal worth hundreds of thousands of dollars with the shell company under
the hairdresser’s name. It was called Neocom Systems Limited, according
to a Ukrainian lawmaker.
This was just one example of the kind of complex financial arrangements
that caught the attention of the special counsel, Robert S. Mueller III,
and led to Mr. Manafort pleading guilty to criminal charges on Friday in
Federal District Court in Washington.
Looking into tax evasion by Mr. Manafort, Mr. Mueller’s investigators
found a web of offshore companies, some of which had directors who, like
Mr. Kaseyev, did not even know their identities were being used.
Mr. Manafort was convicted in August on eight counts of financial fraud
and evading taxes on millions of dollars he earned as a consultant for
pro-Russia political forces in Ukraine. He avoided a second federal
trial by pleading guilty on Friday to conspiracy to defraud the United
States, largely through the use offshore companies, and conspiracy to
obstruct of justice.
There is nothing new about Mr. Manafort’s use of shell companies to hide
and launder money. Nor is it surprising that Mr. Manafort should seek to
use the scheme of fake directors, say analysts of Ukrainian corruption.
It is a common form of subterfuge in former Soviet states, though hardly
unique to them.
But the role — and sometimes the plight — of the people whose identities
were used has gone mostly unnoticed.
“It’s a frequent problem,” Daria Kalenyuk, head of the Anticorruption
Action Center, said of the directors, who stand to take the fall if
prosecutors investigate.
Sometimes the directors are lawyers or victims of identity theft, she
said. But usually “it’s people who are either alcoholics or in poor
health, and who simply sell their passports for about $20.”
One of the risks to this scheme is that the fake directors might try to
claim the millions held in their names. But Ms. Kalenyuk could not
recall one instance of that happening.
“You need to have some knowledge and education to know how to do that”
in the tax havens like Cyprus or the British Virgin Islands, where such
companies are typically established, she said.
“Usually, they don’t know how to do it,” she added. “And even if they
did, it’s a risky business to take over a company from a powerful
businessman engaged in corruption.”
The companies set up with Mr. Kaseyev’s identity had bland names like
April Limited and Neocom Systems Limited. For example, in 2009, Mr.
Manafort signed an invoice for $750,000 addressed to Mr. Kaseyev as
director of Neocom Systems.
That was news to Mr. Kaseyev when the invoice was first revealed
publicly in 2017 by the Ukrainian lawmaker Serhiy A. Leshchenko. At the
time, Mr. Manafort’s spokesman, Jason Maloni, suggested that the
document might be fraudulent.
Neocom Systems did not come up at Mr. Manafort’s first trial, nor was it
mentioned in the plea agreement he signed on Friday. But Rick Gates, a
former employee who became the star witness for the prosecution,
testified that Ukrainian oligarchs had paid millions of dollars to Mr.
Manafort through an array of offshore companies with obscure names like
Novirex, Firemax and Telmar.
Mr. Kaseyev said he first became aware of his unwitting role in the
creation of at least three Ukrainian front companies a decade ago, when
the tax police contacted him in 2007 about his purported $30 million tax
liability at Regional Insurance Union, a company he had never heard of.
His passport had been stolen in a burglary a year earlier.
The scale of unpaid taxes, he said, suggested that there were larger
sums moving through the company.
A slender, soft-spoken young man then just getting his start as a
beautician, and hence unlikely to have amassed such wealth, Mr. Kaseyev
said he was able to quickly convince the police of the identity theft.
Yet the companies continued to be used in deals, and one, April Limited,
still appears to be open for business, a corporate registry shows.
Some homeless men have achieved a measure of fame among activists who
track corruption in the former Soviet states because they pop up so
often at the head of multimillion dollar companies.
One man identified in the Ukrainian media as a homeless Latvian named
Erik Vanagels has been listed as the owner of hundreds of companies in
Britain, Cyprus, Ireland, New Zealand, Panama and elsewhere. Companies
in the network also helped finance the private zoo and sprawling estate
of the former Ukrainian president, Viktor F. Yanukovych, who was the
main client of Mr. Manafort.
Mr. Manafort’s finances also intersected with companies of Mr. Vanagels
and another Latvian whose name was used as a director, Stan Gorin. Among
the murky transactions these companies engaged in was an $18 million
deal to sell Ukrainian cable television assets to a partnership put
together by Mr. Manafort, called Pericles, and financed by a Russian
oligarch, Oleg V. Deripaska, according to a Cayman Islands lawsuit and
Cypriot corporate records.
Milltown Corporate Services, a front company in Mr. Gorin’s name, for a
time controlled the television assets.
In another notable case, the police in Ukraine last year questioned a
barefoot man, Arkady Kashkin, who during interrogation accepted their
offer of slices of pizza. He turned out to be named as a director of one
of several related companies that had bought $1.5 billion in Ukrainian
bonds, according to court records.
In that case, first reported by Al Jazeera, Ukrainian prosecutors said
that an oligarch who has since fled to Russia, Serhiy V. Kurchenko, was
the actual manager of the company registered in Mr. Kashkin’s name. A
judge fined Mr. Kashkin for willingly allowing his identity to be used
in fraud.
Neocom Systems Limited, Mr. Kaseyev’s company, which was opened a decade
ago in the Central American nation of Belize, surfaced in relation to
Mr. Manafort’s dealings in early 2017, several months after the longtime
Republican Party strategist had been pushed out as Mr. Trump’s campaign
manager over his Ukraine work.
The invoice had been left in the Kiev office of Mr. Manafort’s political
consulting business, Davis Manafort International. In the invoice, Mr.
Kaseyev’s name is transliterated into English as Evgeniy Kaseev.
Mr. Leshchenko, the Ukranian lawmaker, publicized the find after first
providing the originals to the F.B.I. Mr. Leshchenko said that the
company was a front and that Mr. Kaseyev had no control over its operations.
This was not the first time Neocom Systems had surfaced in a corruption
investigation. In a 2012 money laundering and stock fraud case in
Kyrgyzstan, the country’s central bank listed it as a shell company used
for payments by Asia Universal Bank, which was seized by Kyrgyz
officials amid money laundering allegations.
It is not clear how much money, in total, passed through that company or
through others opened in Mr. Kaseyev’s name.
He now spends his days working at a beauty salon in Kiev for the
equivalent of about $8 a haircut. He is also a certified colorist.
The best part of his day, he said, comes from seeing the new “sense of
self-confidence” in his clients as they leave his chair, examining their
fresh new look.
Iuliia Mendel contributed reporting
_________________________________________________________
Full posting guidelines at: http://www.marxmail.org/sub.htm
Set your options at:
http://lists.csbs.utah.edu/options/marxism/archive%40mail-archive.com
