The public knew he was crooked in 2009. Big banks helped him stash millions until 2017.
01 Dec 2020

By Will Fitzgibbon, ICIJ, 30 November 2020

ICIJ — JPMorgan Chase, America’s largest bank, helped move millions of dollars for a New Jersey con man long after he was first accused of ripping off customers looking for good deals on the used cars of their dreams.

Many borrowed from family and friends to pay car dealer Sergey Kapustin for vehicles that had been hurricane-damaged or, in some cases, didn’t even exist.

JPMorgan, a Wall Street banking giant, told the U.S. Treasury Department in 2015 that it had moved money for Kapustin, his family members and his companies, according to confidential reports filed with the U.S. Treasury Department’s Financial Crimes Enforcement Network, known as FinCEN.

Two years later, U.K.-headquartered Standard Chartered Bank told FinCEN that it, too, had moved money for Kapustin, according to documents.

JPMorgan and Standard Chartered Bank helped move $9.3 million for Kapustin and his companies after he was first publicly accused of fraud in 2008, according to an analysis of the documents and other records by the International Consortium of Investigative Journalists.

BuzzFeed News provided thousands of leaked FinCEN reports to ICIJ, which coordinated the efforts of more than 400 reporters in the FinCEN Files investigation. The probe revealed that banks continued to profit from moving criminals’ money after promising U.S. authorities that they would crack down on financial crime.

In reporting Kapustin’s story, ICIJ examined leaked FinCEN documents and hundreds of pages of court filings. Reporters spoke with lawyers and victims around the world.

“In my nine years as a judge, I have never seen someone so willing to lie and cheat and steal than you,” U.S. District Judge Noel L. Hillman said in 2015 during a civil case brought by victims against Kasputin.

Years later, a different U.S. federal judge jailed Kapustin for money laundering after he tricked customers in Russia and other former Soviet republics into buying used cars from the U.S. that were not delivered or were damaged by storms.

Kapustin was “cruel,” “cold” and “calculating in taking advantage of these individuals,” U.S. District Judge Susan D. Wigenton said.

Kapustin, 51 and who says he has limited English, asked his daughter, Maria Kapustina, to respond to questions.

“He’s not a bad guy,” Kapustina said. “He didn’t intentionally defraud a bunch of people and lose the business that he built from the ground up.”

The 2007-2008 financial crisis and Hurricane Sandy, which damaged cars that Kapustin was unable to recoup through insurance, sent the company into a tailspin, she said. “He acknowledges that he messed up along the way somewhere and that perhaps he should have gone about some things differently,” Kapustina said.

Kapustina rejects the negative characterizations of her father, who she describes as hardworking, hands-on with customers and unmaterialistic. It can be easy to misread him in court, she said. “He doesn’t smile often, he’s very serious, he’s a big Russian guy…But that’s every stereotypical Russian man.”

Kapustina was eating breakfast at home with her family around New Year’s Day when the FBI came to arrest her father. She was shocked. “You can’t treat any person like that, no matter what they do,” Kapustina told ICIJ. “It was as if you’d just caught a murderer or a mass drug dealer.”

For years before the federal court cases, Kapustin’s victims — hundreds of them — told anyone who would listen that the car salesman was bad news. They grumbled on online chat groups, pleaded with U.S. embassies and the FBI, and hired attorneys.

Kapustin’s reputation preceded him. Various banks, which opened at least 11 accounts for him and his companies, were among the last to notice.

Irina Glazunova, an accountant from the northern Russian city of Murmansk, recalled her last phone call with one of Kapustin’s employees, in 2013. She was trying to locate the second-hand Lexus she’d purchased.

The employee laughed, she said, and told her, “We are crooks.” Then, she said, he threatened legal action: “Come get me across the ocean … and we will sue you.”

Kapustin made use of a ready arsenal of legal threats as he pocketed millions from victims who were promised cheap used cars from the U.S. Some never arrived. Others, snapped up at salvage auctions, had been submerged during Superstorm Sandy in 2012. The victims in Ukraine, Russia and Kazakhstan lost from $6,000 to $65,000 each, according to the judgment in a lawsuit filed by nearly two dozen victims in U.S. federal court in New Jersey.

Kapustin and his accomplices operated “slick Internet websites” advertising bargains on gently used vehicles but often had no cars to sell, the lawsuit claimed. They used images of cars pilfered from other online car-sales sites to lure customers in a “bait and switch” scheme,  the suit alleged.

In 2015, Judge Hillman ruled in the victims’ favor and ordered that 17 of them be repaid. For many customers, however, it was already too late. Kapustin’s companies “diverted” money to foreign bank accounts after customers asked a federal court to freeze his assets, victims alleged. Judge Hillman ruled that Kapustin’s companies filed “fraudulent bankruptcies” to avoid payouts.

Glazunova began to suspect that Kapustin was a crook in 2013. A dozen lawsuits alleged that he was as early as 2008. New Jersey’s attorney general said Kapustin’s car dealership had knowingly misled customers in a 2009 false-advertising complaint.

Despite the trail of allegations, JPMorgan and Standard Chartered moved Kapustin’s money — even after U.S. authorities fined the banks and placed them on probation for helping other criminals move illicit funds.

In all, according to court and bank records, at least two other banks with U.S. operations allowed Kapustin to shift cash through their accounts: Wells Fargo Bank and Rhode Island-headquartered Citizens Bank.

Read more at the International Consortium of Investigative Journalists

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