How Two U.S. Religious Aid Workers May Have Helped A Ukrainian Tycoon Launder Millions
20 Aug 2020

In the early 1990s, Mordechai Korf and Uriel Laber traveled to Ukraine as Jewish humanitarian volunteers as the country gained its independence and ended Soviet restrictions on religion.

Korf was still a teenager just out of a rabbinical institute when he arrived in 1991. His friend Laber, whom he met at a religious school in Detroit, came a few years later.

When they returned to the United States more than a decade later, they were — on paper at least — running a commercial empire from Miami whose assets ranged from steel and alloy plants to industrial tires and real estate that cost more than $1 billion to cobble together.

Korf and Laber purchased lavish homes in Miami Beach. Each were donating millions of dollars to Jewish charities, earning themselves reputations as generous philanthropists.

Now the story of two young humanitarian workers with little to no business experience striking it rich during Ukraine’s turbulent — and sometimes violent — transition to a market economy is under question.

They are accused by the U.S. Justice Department of helping two Ukrainian tycoons over the course of a decade launder hundreds of millions of dollars in misappropriated funds from a Kyiv-based bank and then invest the ill-gotten wealth in U.S. assets, profiting handsomely in the process.

One of the tycoons is one of Ukraine’s wealthiest and most influential citizens, a businessman who helped propel a former stand-up comedian and TV actor into Ukraine’s presidency in 2019.

That man, Ihor Kolomoyskiy, and his associate, Hennadiy Boholyubov, have denied the accusations, saying the money used to purchase the U.S. assets that Korf and Laber now run came from the sale of their Ukrainian steel business to a Russian competitor for $2 billion.

Neither the tycoons nor the Miami businessmen have been criminally charged; the Justice Department lawsuit announced on August 6 is a civil action aimed at seizing assets deemed to have been ill-gotten. The department says, however, that its investigation is continuing.

Two days prior to the Justice Department’s announcement, FBI agents raided the Miami penthouse office of Korf and Laber from which they run the companies beneficially owned by Kolomoyskiy and Boholyubov.

Korf and Laber, through their attorney Marc Kasowitz, denied the U.S. government’s allegations, asserting they were “part of an orchestrated political attack” against Kolomoyskiy and Boholyubov by shareholders of PrivatBank.

Ukraine Heritage, Dnipro Beginnings

Over the years, Korf and Laber have rarely, if ever, referred to Kolomoyskiy and Boholyubov in press releases issued by various companies sharing the name Optima. But their ties go back at least 20 years and span a wide range of industries, from telecommunications and metals to oil and gas.

The rise of Korf and Laber as wealthy businessmen began in Kolomoyskiy’s hometown of Dnipro (then still known as Dnipropetrovsk), Ukraine’s fourth-largest city and a major industrial hub with about 1 million residents.

They did not end up there randomly.

Dnipro is also the former hometown of a rabbi whom many in the Orthodox Jewish movement known as Chabad-Lubavitch consider to be a religious messiah. Korf and Laber both belong to the movement.

The rabbi, Menachem Mendel Schneerson, made reviving Judaism in Dnipro a priority as the Soviet Union eased religious restrictions. Schneerson’s father was Dnipro’s chief rabbi for decades until he was arrested by the Soviet government in 1939.

Schneerson had also officiated at the marriage of Korf’s parents in New York and sent Korf’s father to run a Chabad-Lubavitch community in Miami.

In 1990, Schneerson sent 25-year-old Rabbi Shmuel Kaminezki to Dnipro to help rebuild the Jewish community. A year later, Korf, whose father fled from Soviet Ukraine decades earlier, arrived in Dnipro. Laber came in 1994.

At the time, the country was struggling with the wrenching shift to a capitalist economy. Shortages of consumer goods were common and savvy entrepreneurs were making millions of dollars importing products from abroad.

Korf, whose formal education appears to have ended at the religious school he attended in New York, was one of them. By 1995, Korf and Laber set up a Florida-registered company called Optima International of Miami.

In an interview in 2017, he recalled his early days in Ukraine, saying that he began trading products such as light bulbs and hammers “back and forth.”

On a larger scale, Korf and Laber began buying up shares of oil and natural gas companies as part of a privatization process that, like Russia, Ukraine undertook in the 1990s. For savvy investors, it became a way to take control of major companies. The industrial center of Dnipro had some of the country’s most attractive assets.

A media strategist who published a glowing post about the two men in 2019 alluded to a famous line from a U.S. comedy film, The Blues Brothers, to describe their supposed remarkable success. “In the history of great partnerships, few people can attribute their origins to having been on a Mission from God,” the article said. “Mordechai Korf and Uriel Laber fit that bill.”

According to the post, published on the financial blog Seeking Alpha, Korf and Laber set up tables near factories to buy shares from workers — a common practice in those days — and sell them a year or two later “for a tidy profit.”

RFE/RL sent questions to Korf and Laber regarding their participation in the privatization process, including where the men got the money to buy shares in the first place. They declined to answer.

When contacted by RFE/RL regarding his post, the author of the article said he did not work for Korf and Laber and declined to answer any further questions.

Exactly when and how Korf and Laber began working with Kolomoyskiy and Boholyubov, who consolidated stakes in Ukrainian energy companies in the 1990s, is unclear.

The Justice Department said the Miami businessmen sold a stake in Optima to Kolomoyskiy and Boholyubov, but did not give details on the timing, size, or cost of the transaction. Korf and Laber declined to say when they sold the stake.

By 2000, Korf and Laber were doing business with the tycoons on various investments, including privatizations and acquisitions, according to the Seeking Alpha article. Kolomoyskiy and Boholyubov eventually named Laber to the board of Ukrnafta, Ukraine’s largest oil producer.

In a 2002 book about Jewish diaspora communities, Laber was quoted as saying that he was introduced to his “Russian partners” — an apparent reference to Kolomoyskiy and Boholyubov, as many people in eastern Ukraine speak Russian as their first language — by Kaminezki, the rabbi who arrived in Dnipro in 1990.

Kolomoyskiy and Bohlyubov, who have Israeli citizenship, are close to Kaminezki and major supporters of Jewish culture in Ukraine and abroad.

“I didn’t know who was honest and who wasn’t, who we could work with, all the problems you run into in this part of the world. Without [Kaminezki] saying that ‘this is an honest person’ we wouldn’t have known,” Laber was quoted as saying. “Anyone can introduce you to another person; the point here is the reliability. He knows what’s up, basically.”

Kaminezki’s characterization of Kolomoyskiy — as recounted by Laber — clashes with those who view the tycoon as among the country’s worst corporate raiders.

Kaminezki’s connections went beyond the local Jewish community to the city’s most influential people. In 2008, he was recognized by a Ukrainian publication as one of the 15 most “powerful foreigners” in the country.

Telecom Battle

There is little public information about the various investments the Miami businessmen made with the tycoons in Ukraine.

One investment in which Korf was involved in the early 2000s related to a Ukrainian telecommunications venture that he and Kolomoyskiy fought to take control of, according to several Kyiv Post articles.

As part of the fight for the operator, called Ukrainian Radio Systems, the two reportedly ordered that a group of Koreans who were helping manage the operation be physically removed from a company building.

In 2010, Korf was sued in Florida by two Ukrainian investors who accused him of stealing a 10 percent stake in the operator and parking it in an offshore shell company. That stake was later sold to a bigger Russian telecom operator for $23 million.

The lawsuit ultimately went nowhere: one of the investors later dropped out, while the other settled with Korf, according to court records.

By Todd Prince, RFE/RL, 19 August 2020

Read more at RFE/RL

RiskScreen: Eliminating Financial Crime with Smart Technology

Count this content towards your CPD minutes, by signing up to our CPD Wallet

FREE CPD Wallet