Russian Crime (long)
stew...@yahoo.com
By David Olinger and Bruce Finley
Alliances with Colombian drug dealers. A Soviet submarine for sale.
Globe-spanning networks operating under heavy encryption on the
Internet.
These are dimensions of "Russian organized crime" that top U.S. law
enforcement officials see as a major security threat for the 21st
century.
In the view of the FBI, Russian crime groups, once silent partners in a
black-market economy, exploited political chaos after the Soviet Union
collapsed and now dominate the economic life of Russia.
An FBI report presented recently to the Senate Intelligence Committee
warns that nearly half of Russia's banks are controlled by
organized-crime groups - a widespread system for laundering ill-gotten
money.
"The illegal economy is branching out and going global just as fast as
the legal economy," said Arnaud de Borchgrave, director of a Russian
crime project at the Center for Strategic and International Studies in
Washington, D.C. "Dirty money becomes clean money in nanoseconds these
days."
Among major Russian crime cases in the United States:
- In California, brothers Michael and David Smushkevich billed insurance
companies and the U.S. government for $1 billion worth of phony services
from mobile medical labs. Prosecutors say this was the biggest health
care scam in U.S. history.
- In San Francisco, Golden ADA was a diamond business with ties to the
mayor's office and to Russian President Boris Yeltsin's cabinet. Its
principal investors were charged with stealing $171 million in gold,
silver and diamonds from the Russian treasury.
- In New York, Vyacheslav Ivankov was aiming to control Russian
organized-crime activities throughout the United States, FBI officials
say. Ivankov was caught extorting $3.5 million from two Russian
businessmen in New York.
But the crime wave as presented in Congress is vaguely defined. It is
tied to corruption in general, and inseparable from the broader economic
turmoil in which Russians moved $200 billion out of their country this
past decade.
U.S. law enforcement officials say corruption in Russia hampers their
efforts to trace sources of money. And Russians in the United States
often are reluctant to cooperate with police.
Some among the 40,000 Russians in Denver fear they are tarnished by law
enforcement scrutiny and widespread bandying of terms such as "Russian
mafia." "In any community there is crime," said Sergey Shakhmayev,
editor of Word, a Russian-language newspaper. To Shakhmayev, organized
crime means drugs, prostitutes, illegal weapons, kidnappings.
"I believe here in Denver, we never hear anything like that in the
Russian community," he said.
Yet other Russians believe some of the new Russian money flowing into
Colorado - for luxury homes, Mercedes-Benzes, $1,000 bottles of wine in
Aspen - has questionable sources.
"There is mafia money here, no doubt," said Zalman Ginzburg, a
45-year-old business owner who emigrated from Latvia in 1979.
But 80 percent of the new Russian money in Colorado "is business money,"
he said.
In Colorado, an FBI investigation of Russian organized crime so far has
produced no major arrests. A majority of the Russians here are honest,
hardworking and innocent, said John Epke, director of the FBI's
organized-crime program in Denver.
"And I don't know who all the bad apples are," Epke said.
Denver Post
--
Businessman moves under cloud of suspicion
By David Olinger and Bruce Finley
As the Soviet Union collapsed, a short, stocky businessman who had
thrived as a black-market trader in Moscow - and endured the hardships
of Soviet prison - moved to Colorado.
He opened an opulent restaurant called the St. Petersburg in Glendale,
the heart of the Denver area's growing Russian community.
He bought a two-story brick house southeast of Denver with a view of the
mountains.
He quickly emerged as a popular man, from a jazz club Downtown where he
displayed his piano-playing talents to the home where he and his family
charmed friends with gourmet cooking and cultured conversation.
But in six years here, Vatchagan Petrossov hasn't been able to shake a
discomforting image. Law enforcement agencies in three countries have
fingered him as a suspected Russian mobster. Russian authorities labeled
him a criminal leader as he left. Canada banned him. FBI agents watched
his restaurant and questioned his friends in the United States.
Petrossov's restaurant "was like a gathering place of Russians," said
Jim Moody, a former director of FBI organized-crime programs, "but it
was also a gathering place of Russian organized-crime members." Now
Petrossov wants to dispel the suspicions. He says U.S. officials are
persecuting him because he stands by an imprisoned Russian friend and
relative - Vyacheslav Ivankov - whom the FBI calls a mob leader.
Six years "is ample time to make a decision on who I am," Petrossov told
The Denver Post through an interpreter. "I am just physically so tired
of explaining and proving to people that I'm not a criminal. I want to
live normally, honestly."
When the U.S. government tried to deport Petrossov in 1994, a federal
immigration judge ruled in his favor. In 1995, he was a subject of a
grand jury investigation that produced no indictment, according to his
lawyer, Walter Gerash. Aside from the deportation case, his court record
in the U.S. shows not even a speeding ticket.
Federal investigators "have nothing" on Petrossov, Gerash said.
The story of Vatchagan Petrossov exposes the enigma of so-called Russian
organized crime - often heralded as a major international problem. While
top U.S. law enforcement officials warn of weapons deals and
sophisticated scams, Russians with criminal ties living in America's
heartland can be difficult to judge.
Russian President Boris Yeltsin has lamented that crime seems to be one
of his ailing superpower's leading exports. U.S. officials have spent
millions of taxpayer dollars a year to study and combat Russian crime.
The U.S. Senate has investigated Russian organized crime at length,
including interviews of Russian NHL hockey players believed to be
targets of extortion. In New York, an FBI Russian organized crime squad
arrested nearly 100 people this past year.
But top federal investigators are the first to admit that few kingpins
are among them. "That's the problem," said Joel Campanella, a senior
U.S. Customs intelligence agent in New York who is familiar with
Petrossov. "Without stats (convictions of leading criminals), people can
say there's no problem."
The crux of Russian organized crime is money laundering, federal
investigators contend. To prove money laundering, they have to
investigate in Russia. And in Russia, chaos and corruption complicate
efforts to track the millions flowing out of the country each month.
In Petrossov's case, investigators have produced no proof that his
wealth came from anything other than legitimate business in Russia. They
have relied on Petrossov's ties to the reputed chiefs of Russian
organized crime in the United States and Canada.
To the FBI, Vyacheslav Ivankov was a notorious gangster sent from Russia
"to control all Russian organized crime in the United States," Moody
said.
To Petrossov, Ivankov is the godfather of his 5-year-old son, a folk
hero - and a distant relative. Ivankov's first wife, who lives in a
suburb southeast of Denver, is a cousin of Petrossov's mother.
Petrossov still visits Ivankov, who is serving a 9 1/2-year federal
prison sentence in New York for extortion. "Certainly this deepens my
situation in the eyes of certain agencies," Petrossov said. "But this
has nothing to do with any businesses or any sort of business
activities. It is just my human obligation."
The Denver Post reviewed documents and conducted interviews about
Petrossov and found:
- In 1993, months after Petrossov obtained a visa to enter the United
States, a letter from V.B. Rushailo, chief of the Russian Ministry of
Internal Affairs' organized-crime unit in Moscow, warned U.S. officials
that Petrossov was considered to be a criminal.
Petrossov replied that Russian documents were not to be trusted. The
authorities "have the audacity to write all sorts of false information
about their citizens," he said.
- In 1996, Canadian authorities stopped Petrossov at their border and
banned him from Canada. Sgt. Reg King, supervisor of a Royal Canadian
Mounted Police unit in Toronto specializing in Eastern European
organized crime, said several Russian sources in Canada identified
Petrossov as a member of vory v zakone, or "thieves-in-law" - an elite
criminal group that formed in Soviet prisons.
"We believe he's a leader of organized crime in Eastern Europe," King
said.
Petrossov called the accusation baseless.
- Active FBI agents cannot discuss current investigations. But Moody,
who retired in 1996 as chief of FBI organized crime programs, said
agents thought Petrossov was a Denver-based leader of the Russian mafia
and "involved in continuing illegal activities." He acknowledged,
however, that the FBI couldn't prove Petrossov had committed any crime.
Meanwhile, Petrossov accused FBI agents of damaging his business and
reputation by interrogating his friends and offering green cards to
induce people to testify against him. He didn't provide any names.
- Petrossov has close ties to Vyacheslav Ivankov.
When Petrossov's son was baptized at All Saints of Russia Orthodox
Church in Denver, Ivankov attended as the baby's godfather.
When FBI agents arrested Ivankov in New York, Petrossov offered his home
and restaurant in a bid to secure Ivankov's release on bail. He also
attended Ivankov's trial and defended him in a New York Daily News
interview as a "hero to the masses." When Ivankov applied for a Colorado
driver's license, he listed Petrossov's home as his residence. When
Ivankov's son Gennadi wanted a Colorado driver's license, he listed a
home down the street owned by Alexandre Makropoulo, Petrossov's partner
at the St. Petersbur g restaurant.
Petrossov defended Ivankov as a deeply religious man and an inspiring
presence who was framed by powerful enemies in Russia - "an honest,
normal citizen who did not violate any of the laws here in the United
States, yet who was unfortunately convicted."
- According to Canadian officials, Petrossov spoke regularly with the
man deported last year as the alleged leader of the Russian mob in
Canada: Vyacheslav Sliva, Ivankov's brother-inlaw.
Petrossov contended that Sliva committed no crime in Canada and noted
that Russian authorities have filed no charges against him. "He is just
residing in Moscow," Petrossov said.
- Ivankov sent money to Denver, according to a document obtained by The
Post. In 1993, $400,000 was wired from a New York bank to Denver for the
purchase of an Arapahoe County house by Ivankov's ex-wife and their
sons. The money came from Slavic Inc., which FBI officials called
Ivankov's money-laundering company.
Corporate papers list the official head of that now-dissolved company as
Viacheslav Fetisov, the Detroit Red Wings hockey star who retired this
year to become an assistant coach for the New Jersey Devils. Fetisov
declined to be interviewed.
- According to Canadian investigators, Sliva stated in his application
to enter Canada that he was coming to visit a friend - NHL star Valeri
Kamensky of the Quebec Nordiques, the team that moved to Denver and
became the Colorado Avalanche.
Kamensky has told The Post he does not remember such a request.
U.S. Senate investigator Michael Bopp said he'd heard Kamensky might be
a target of extortion, but that when he asked to interview the hockey
player, Kamensky never returned his call.
When immigration officials tried to deport Petrossov from Colorado,
lawyer Phil Alterman defended him as a courageous man hounded in Russia
for his beliefs and ultimately imprisoned on false charges.
A Russian of Armenian descent, Vatchagan Sergeyevich Petrossov was born
in Baku, Azerbaijan, in 1945, the son of painter Sergei Petrossov. His
family moved to Moscow in the mid-1960s, where he lived until 1973.
As a student, he was known for denouncing a communist system that
prohibited religious worship, free speech and free enterprise. He
refused to take a job from the government, choosing instead to trade
consumer goods under the unofficial system that the Soviet elite
tolerated as long as it wasn't too obvious.
But Petrossov lived brashly - an "anti-communist lifestyle," in the
words of a friend.
Communist authorities questioned and threatened him. In 1973, they
arrested him on a train clacking through Kazakhstan and charged him with
gambling - a crime treated like robbery in the Soviet Union - and with
raping a woman in Moscow.
After a trial in neighboring Uzbekistan, Petrossov was sentenced to 12
years and seven months in prison.
He began his sentence in a maximum-security prison, where he was
confined underground for two years. Later, after filing appeals that
reached Sarkis Kalustyan, an Uzbekistan government investigator, he was
transferred to a minimum-security prison.
Kalustyan concluded that the woman who accused Petrossov of rape was a
prostitute paid by communist authorities - a common practice under
Soviet rule.
"My office did not have jurisdiction over anything other than the
conditions of his confinement," Kalustyan said in a sworn statement that
Alterman filed in Petrossov's deportation case. "However, at the time I
was very familiar with the charges against him and I hereby certify that
these charges were a total fabrication."
Petrossov was released from prison in 1983, and a Moscow people's court
expunged his criminal record in 1989. In a changing political climate,
he thrived again in business.
Petrossov said he created Agroplast, a company that manufactured plastic
bags and had "enormous success." He said he also served as a bank
officer and as commercial director of a trading company called
Intercross.
According to R.J. Reynolds Tobacco International, Intercross imported
$40 million worth of cigarettes between 1990 and 1992. "We are pleased
to confirm Mr. Petrossov's high standard of integrity and financial
responsibility," said a testimonial signed by Stanley Bark, sales and
marketing director for R.J. Reynolds.
Yet "the economic situation in Russia was very, very scary," Petrossov
said. "Criminal behavior was at its height. And I thought for myself
that the environment was not suitable to raise my child, and I decided
to leave." Visa requests denied
In July 1992, Petrossov went to the U.S. Embassy in Moscow and applied
twice for a visa to enter the United States. U.S. officials denied both
requests and entered his name on a list of rejected applicants.
Three days after the second denial, Petrossov presented a fresh passport
at a U.S. consulate in Riga, Latvia, where the list had not been
updated. He slipped through the U.S. security system, said a U.S. State
Department spokeswoman who spoke anonymously.
"He was sophisticated enough to be able to obtain a visa under
fraudulent means," she said. "He qualified for the visa because he told
them he was coming in as a businessman. He probably had the money and
the means. ... If he were to apply today, with the technology we have
today, using his own name, we would be able to detect him." Petrossov
entered the United States via Toronto in August 1992.
Visa application forms require applicants to list any previous criminal
arrests or convictions, even if they have been expunged. Petrossov did
not mention his arrest or prison record.
In 1994, U.S. Immigration and Naturalization Service authorities tried
to deport Petrossov for failing to mention his previous arrest. The case
in federal immigration court in Denver focused on his criminal record in
Russia and whether the expungement excused him from mentioning it.
The references Alterman presented in Petrossov's defense ranged from
Felix Komarov, president of Rolls Royce of Moscow, to the Rev. Steven
Allen of All Saints of Russia Orthodox Church in Denver, who baptized
Petrossov's son. "I have found Mr. Petrossov to be an honest, upright,
and hardworking person," Allen wrote in a letter dated Nov. 30, 1994.
"He's a very charming person," Allen said recently. "I have no further
evidence to know anything different." Federal Immigration Judge J.P.
Vandello ruled that Petrossov should have mentioned the criminal
convictions even though "the crime was a political crime on a trumped-up
charge." He then waived the charge of misrepresentation and let
Petrossov stay in Colorado, taking into account his clean record here,
his investments and his son Edward, born a U.S. citizen.
"He is not a threat to the security of the United States," the judge
said.
Long before his deportation case was settled, Petrossov had burst onto
the Colorado culinary scene with a Russian restaurant that offered
beluga caviar by the ounce and showgirls by the dozen.
From the beginning, the St. Petersburg was an unusual restaurant.
Petrossov and Alexandre Makropoulo, equal partners in the venture, had
bought a large Glendale restaurant whose previous owner had gone
bankrupt. Together they had renovated it lavishly, creating a 200-seat
main dining room around a stage where scantily dressed Russian women
danced in cabaret-style shows.
Colorado consultants who helped design the St. Petersburg restaurant
recalled that the million-dollar renovation was financed with cash.
Whether the money "came directly from Russia or from some offshore bank
or another source, I don't know," said Allen Thurman, a former
University of Denver professor hired as an engineering consultant. "From
my viewpoint, there was an awful lot I didn't want to know." Joe McLeod,
the construction contractor, said he saw nothing suspicious about the
St. Petersburg owners. "As far as my dealings went, they were always
very professional," he said.
But Larry J. Clark, a restaurant consultant dismissed by the owners soon
after he helped open the St. Petersburg, said "you knew something was
weird" about their business.
"Everything was in cash," he said. The owners bought homes with cash,
bought luxury cars with cash and renovated the St. Petersburg with
"very, very expensive stuff," always with cash or large checks written
on a Colorado bank account.
The cash seemed to come from business deals that could bring huge sums
on a weekend, Clark said. "They'd have absolutely zero money, wonder
where their next glass of milk was coming from."
Then Petrossov would go to Toronto, "and they'd get fat on cash," he
said.
Petrossov kept a "big old safe" in a locked room separate from the
manager's office, where he sometimes held closed-door meetings with
people described as investors from Canada and New York, Clark said.
He said the owners did not seem concerned that the entertainers, fed and
housed at the St. Petersburg's expense, cost more than the restaurant
was making. He said he once told them, " 'If you think the dance troupe
will increase your business $500,000 to $750,000 a year, it's worth it.
If not, it will cost you money.' That didn't seem to bother them." In
Glendale, the St. Petersburg hosted parties for local Russians. It
attracted gourmet diners curious about its borscht, potato dumplings and
sturgeon Nievsk y.
And it attracted the FBI.
"I know Ivankov was there," Jim Moody said. "As I recall, two or three
other thieves-in-law that visited the United States stopped there."
Petrossov said he never did business with Ivankov, "but nevertheless,
the attention that was given to me on the part of these agencies such as
the FBI was quite aggressive." Makropoulo and his wife, Jane Kaykov,
said they know nothing about Ivankov or his family and have no idea why
Gennadi Ivankov would have listed a house they owned as his address when
applying for a C olorado driver's license.
"Today, everyone thinks if you're Russian, you must be connected to the
mafia," Makropoulo said, calling that a form of discrimination.
Over time, Glendale officials wondered how the St. Petersburg managed to
stay in business. Often it looked empty. Four months after it opened, a
restaurant reviewer noted that he and his companion were its only diners
on a Wednesday night.
The St. Petersburg "never had much revenue," said Theresa Teeters,
Glendale's liquor license official.
In November 1996, according to Glendale liquor license records,
Petrossov sold the St. Petersburg to a group of investors who renamed it
Maverick's steak house.
Those records list the new principal owner as Tigran Makarian, a New
York businessman who also directs a private company in midtown Manhattan
called PetroEnergy International.
Petrossov, an officer of PetroEnergy International, called it "a
know-how company that develops new technologies in oil production" but
that has no customers yet. An oil and gas research firm in New York said
it could find no information about PetroEnergy International. Makarian
did not return phone calls concerning his company.
Maverick's closed as a restaurant earlier this year, then reopened as a
nightclub that has been drawing huge crowds to Glendale.
It is managed by Arsen Arsenian, a cousin of Makarian, who also served
as a Russian interpreter during The Post's interview with Petrossov.
In August 1992, the month Petrossov entered the United States, several
Russians formed a new corporation in New York that appeared to be headed
by hockey star Viacheslav Fetisov.
But the man who really ran Slavic Inc. was Vyacheslav Ivankov, who went
to Brooklyn in January 1993 and, according to FBI officials, used Slavic
as a vehicle to launder organized crime receipts and obtain fraudulent
visas for his associates.
In June 1993, Slavic Inc. wired $400,000 to Colorado. The recipient:
Lidia Slutsky, a Russian woman who spoke no English and had no driver's
license when she bought a $400,000 house in Arapahoe County that month.
She now owns the house with Vyacheslav Ivankov's sons Gennadi and
Edward.
Tipped by Moscow police, FBI agents watched Vyacheslav Ivankov closely
from the moment he entered the United States. In 1995, they arrested him
in New York on federal extortion charges.
The case concerned Alexander Volkov and Vladimir Voloshin, two
Russian-born businessmen with their own criminal records whose small
Wall Street investment firm had received an undocumented $2.6 million
loan from a Moscow bank.
They agreed to meet with an Ivankov emissary only after Voloshin's
father was fatally beaten in a Moscow subway, a murder that remains
unsolved, said Raymond Kerr Jr., head of the FBI's Russian
organized-crime squad in New York.
At a New Jersey restaurant, Volkov and Voloshin were compelled to
promise payments of $3.5 million - nearly a million dollars more than
they had received from Moscow - to a bank account in the Bahamas.
But first they had gone to the FBI, which had been listening to Ivankov
and his associates discuss the extortion plot on a wiretapped telephone.
At trial, Ivankov claimed he was trying to collect money stolen from a
Moscow bank. A federal appeals court recently upheld his conviction in
an opinion that found Ivankov ultimately ordered Volkov and Voloshin to
put the entire $3.5 million into an account he controlled.
Meanwhile, in Toronto, Canada's East European organized crime squad had
been listening to the international telephone calls of a newcomer who
used several languages to conduct what sounded like a takeover of
Russian crime activities in Canada.
On a wiretapped telephone, Canadian investigators said, they heard Sliva
extorting business people, making death threats and discussing the
division of payments with his brother-in-law, Vyacheslav Ivankov, in New
York.
Sliva "was here to obtain permanent status in Canada and then assume
control of Russian-based organized crime activities here," said Glenn
Hanna, an investigator who testified at a hearing that led to Sliva's
deportation to Russia last year.
During this time, Sliva and Petrossov also "communicated with each other
on a regular basis by phone, sometimes daily," said Sgt. King, who
worked with Hanna on the case. King said he never heard Petrossov
discuss anything criminal with Sliva. The two men talked about
strategies for helping Ivankov and "about many other organizedcrime
figures in Eastern Europe and Western Europe," he said.
On Aug. 12, 1996, Canadian border officials stopped Petrossov as he
tried to enter on a business visit. They held him for questioning by an
immigration official and an organized crime investigator, then released
him the next day with a warning that he was barred permanently from
Canada.
King said several factors entered that decision, among them Petrossov's
relationships with Sliva and Ivankov, the number of Russians in Canada
who claimed Petrossov is an organized-crime leader and Petrossov's own
reluctance to give details about his visit.
Today, law enforcement authorities are still watching Petrossov and
several other Russians in Denver. "It's a matter of putting the puzzle
together," said INS investigator Rob Cruz.
John Epke, head of the FBI's organized-crime unit in Denver, said his
office has "an ongoing investigation of Russian organized crime." But
nobody in Epke's office speaks Russian, an indication that Russian
organized crime is not a high priority. "We know it's a problem," Epke
said. "The problem with the FBI is there are a lot of other problems
going on right now."
Referring to the Canadian decision to bar Petrossov, Epke emphasized
that it's easier to stop someone at an international border than it is
to build a criminal case. "I've got to see some proof" of a criminal
act, he said.
Epke said he had not seen evidence that Ivankov transferred $400,000
from his company in New York to Colorado. He called the wire transfer
"very interesting." Nor had he seen the Russian government document,
available in public court files, identifying Petrossov as a criminal
authority.
Shown a copy, he expressed some puzzlement at the INS' handling of
Petrossov's case.
Deportation is up to the INS, not the FBI, Epke said.
"They do the best they can with what they've got," he said. "Sometimes
it works out. Sometimes it doesn't."
Denver Post