Hunt for Moscow Financier Owing Millions Leads to Mojave
13 Nov 2020

German Lillevali can thank the coronavirus for getting out of an immigration facility in the California desert, but his troubles are far from over.

The former financier had changed his name and left Moscow two years ago owing clients millions before being detained in the U.S. for overstaying his visa. After a judge released him to reduce overcrowding to avoid a Covid-19 outbreak at the detention center, his next challenge is to dodge deportation to Europe where he faces multiple investigations.

The dual Russian and Estonian citizen had fled in 2018, leaving his clients in the dark about the fate of their investments and his company, GL Financial. Then he emerged in California in February, according to a U.S. ruling, having traveled on a passport bearing the name of Herman Heinmann.

Word of his reappearance has sparked a fight by former clients to claw back some of their missing money. His former clients, who include managers at Novartis AG and Levi Strauss & Co., learned only belatedly that the Swiss operations he boasted of consisted of a Geneva mailbox with a “GL” label stuck to it, and a shuttered Zurich workspace devoid of furniture.

Today, GL Financial’s website which once also touted affiliates in Belize, Cyprus and London no longer exists, and the Swiss unit is in liquidation.

“Lillevali has not carried out any of his promised ‘investment activities’ since 2015-2016,” Tigran Pogosyan, who has sued him in the U.S., said in a message to Bloomberg. The U.S. lawsuit alleges that Lillevali defrauded his clients.

Pogosyan isn’t the only one after Lillevali. A Russian court has issued a warrant for his arrest and Geneva prosecutors are investigating criminal complaints against the 56-year-old.

The U.S. judge who oversaw Pogosyan’s case described Lillevali’s fund as a “Ponzi scheme.” Swiss prosecutors, treading more cautiously, also said it bore the hallmarks of a possible Ponzi scheme.

The “money was used by Lillevali to create an appearance of business activity (in the absence of actual activity) in the U.K., Cyprus, Latvia, Estonia, Switzerland, Luxembourg and other countries,” Pogosyan said, echoing the claims in his lawsuit.

Lillevali was detained about three months ago and sent to an Immigration and Customs Enforcement facility in California’s Mojave desert. By mid-October, he had no further hearings scheduled and was facing imminent deportation, according to an ICE official who spoke to Bloomberg. But before he could be deported, Lillevali was released on Oct. 19 as a federal judge tried to reduce overcrowding to cut the spread of the virus.

A message left at the facility that an officer said would be passed to Lillevali while he was still in detention wasn’t returned. Minju Cho, an American Civil Liberties Union attorney, said the group only represented Lillevali as as part of a general class action lawsuit for detainees held at the ICE facility in Adelanto, California. The ACLU said it has no further information about his case.

Out of the detention center for now, Lillevali must stay at an undisclosed residence where’s he’s subject to electronic monitoring, according to the terms of his release.

Neither Russia nor Estonia will say if they’re actively seeking his extradition, but he will be arrested by Russian authorities if he enters the country, according to a Moscow court ruling. The U.S. judge who released Lillevali said his bail is dependent on a final decision on his deportation, which would be to Estonia, as he entered the U.S. on an Estonian passport.

Three years ago, Lillevali touted his investment firm as a market-beater that used a “radically new approach” based on artificial intelligence and “complex algorithms. The high-flying Muscovite would hand out 10,000 euro ($11,800) debit cards for Milan shopping sprees to his top employees.

Barely a year later, his firm GL Financial group and millions in clients’ assets disappeared with him, prompting Russian and Swiss clients to accuse him of embezzlement and money laundering.

False Promises

In Geneva, prosecutors are evaluating a criminal complaint filed by Lillevali’s former clients. A lawyer for the investors is asking the prosecutors to seek his extradition to Switzerland. That request based on criminal allegations “should take priority” over the U.S. practice of deporting people to their country of origin, said Paul Peyrot, a lawyer who represents some of Lillevali’s former clients.

“Lillevali needs to be prosecuted in Switzerland in order to send a strong signal to fraudsters worldwide,” Peyrot said.

But the Swiss will have competition if they seek his extradition.

Six former clients filed a criminal complaint against him in September 2018 in Estonia, and a second in Russia a month later, according to a U.S. lawsuit. A spokeswoman for Estonia’s justice ministry said she had no information about the case.

In Moscow, Lillevali was charged with fraud in January and has been on an international wanted list since May 28, according to a local court ruling. He faces two months detention from the moment he is extradited or arrested in Russia, according to a June ruling.

By Hugo Miller, Bloomberg, 11 November 2020

Read more at Bloomberg

RiskScreen: Eliminating Financial Crime with Smart Technology

Advance your CPD minutes for this content, by signing up and using the CPD Wallet