Coop and condo conversions in Brooklyn and Queens and the Soviet Communist money laundering by the Russian Mob in the 1990-s | Influx of Russian Gangsters Troubles F.B.I. in Brooklyn (Published 1994)
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- coop and condo conversions in Brooklyn and Queens and Soviet Communist money laundering by Russian Mob in 1990-s
- coop and condo conversions in Brooklyn and Queens and money laundering by Russian Mob in 1990-s
- coop and condo conversions in Brooklyn and Queens and Soviet Communist money laundering by Russian Mob
- coop and condo conversions in Brooklyn and Queens and money laundering
- coop and condo conversions in Brooklyn and Queens
As a Brighton Beach subway train thundered overhead, a hit man pumped one fatal bullet into the back of Oleg Korataev's head. It took four rounds in the face and chest to finish off another suspected gangster, Yanik Magasayev. Alexandre Graber died thousands of miles away in a hail of automatic gunfire.
Near the Brighton Beach boardwalk, a gunman ambushed Naum Raichel, severely wounding him with three bullets in his chest and stomach. That same day in Germany, Mr. Raichel's brother, Simeon, was beaten into unconsciousness and suffered a brain concussion.
Although the five murder and assault cases occurred this year in New York, Moscow and Berlin, Federal and New York City law-enforcement officials say the crimes have a common root cause. According to the officials, a new wave of callous Russian organized-crime figures, with ties to Brighton Beach and the former republics of the Soviet Union, is responsible for the outburst of violence.
The Brighton Beach and Sheepshead Bay sections of Brooklyn have been headquarters for a smattering of emigre Russian crime gangs since the 1970's, when the Soviet Union permitted the first of about 300,000 people to emigrate to the United States. But the disintegration of the Soviet Union in 1991 spawned thousands of powerful crime gangs -- collectively known as the Russian mafia -- and some of these groups, officials warn, are establishing bases among emigre communities in the United States, particularly in South Brooklyn.
"The ones coming in now are more violent and better organized than the old-timers," says Jim E. Moody, chief of the Federal Bureau of Investigation's organized-crime section. "They are maintaining links to gangs in Moscow and other places in the old Soviet Union with money flowing back and forth."
To combat the latest organized-crime threat, the Justice Department in January elevated the Russian mafia to the highest investigative priority, the same level as the American and Sicilian Mafias, Asian organized-crime groups and Colombian cocaine cartels. Because of the magnitude of the problem in the New York area, the F.B.I. created a Russian squad in its New York office in May, the first F.B.I. unit in the country to deal exclusively with Russian criminals.
"We didn't establish the squad on a whim," said William A. Gavin, the head of the F.B.I. office in New York. "They are dangerous, and our aim is not to allow them to gain a foothold as the Italian-American families did."
A disturbing sign of the Russian mafia's emergence in America, officials acknowledged, is the arrival of Vyacheslav Kirillovich Ivankov, whom Russian police identify as a Vor v Zakone -- Russian for a "thief-in-law" -- the top criminal category in the old Soviet Union. Law-enforcement officials said they feared that Mr. Ivankov's mission is to oversee and enlarge operations involving emigre racketeers here and gangsters in Russia. 'The First Team' Extends Its Influence
In the 1970's and early 1980's, a wave of Russian-born criminals arrived in New York and lived mainly in South Brooklyn, where they concentrated largely on white-collar crimes, especially frauds involving gasoline taxes, Medicare payments and counterfeit credit cards. Because of the cold war and travel bans, this group had little contact with criminals in the Soviet Union.
The newcomers who have arrived in America in the last three years are labeled "the first team" by detectives and Federal agents. Investigators say they have not only taken over the white-collar crimes established by their predecessors but have expanded into other rackets, including narcotics trafficking, money laundering, extortion of emigre merchants and prostitution.
And Drug Enforcement Administration agents say they have uncovered concrete evidence showing that a Russian gang from Brooklyn imported heroin and for the first time sold it to mobsters working for traditional American Mafia families. Previously, veteran American mobsters imported drugs through their own networks or bought it from non-Russian suppliers.
While many Federal law-enforcement officials portray the Russian groups as a significant problem, some state prosecutors and investigators are dubious about their overall importance in the underworld.
"We don't see any coordination from Russia or the other republics," said Eric Seidel, the chief of the organized-crime bureau in the Brooklyn District Attorney's office. "There is no evidence of large-scale violence or that the Russians are dominant in any specific racket."
Peter Grinenko, an investigator in the Brooklyn District Attorney's office who speaks Russian and has been working on Russian crime cases in the New York area for 13 years, said the emigre racketeers in America have no defined organizational structures like those of the Mafia.
"As individuals, they are into scams and shakedowns to lay their hands on money any way they can," Mr. Grinenko said. "But as organized crime groups go in America, they are a flea on a horse." Feeling Secure In Brighton Beach
In the last 20 years, about 200,000 immigrants from the former Soviet Union have settled in the city, Long Island, Westchester County and in New Jersey, with more than 50,000 living in Brooklyn, principally in the Brighton Beach area.
Since 1991, the easing of overseas travel restrictions in Russia and the other 14 former Soviet republics has led more than 140,000 visitors a year to come to America, the United States Customs Service reports. Investigators say that scores of Russian mobsters, often using fake identities, have illegally obtained visitors' visas to enter the United States.
Mr. Moody of the F.B.I. estimated that only a small fraction of Russian immigrants -- about 2,000 -- are hard-core criminals. But, of some 5,000 gangs that sprang up after the collapse of the Soviet regime, members of 29 gangs have been seen recently in America, he noted.
Investigators say that Russian criminals gravitate to Brighton Beach and nearby neighborhoods because they feel secure there and can hatch plots with little danger of being compromised by informers.
"Almost every case involving Russians is somehow linked to Brighton Beach," said Detective Dan Mackey of the 60th Precinct, which covers the neighborhood. "It's the first spot they go to when they arrive in the country."
Favorite meeting places for the Russian mobsters is the row of restaurants on Brighton Beach Avenue, a cacophonous, crowded rialto in the shadow of an elevated subway line. They also favor more sunny cafes on or near the boardwalk. F.B.I. Finds Emigres Reluctant to Inform
The F.B.I. will not disclose the size of its Russian Squad in the city, but Raymond C. Kerr, the head of the unit, said it includes Russian-speaking agents who formerly worked on counterintelligence units. The bureau periodically advertises in Novoye Russkoye Slovo, an American Russian-language newspaper, asking for "all facts and gossip about organized crime rackets, murders, frauds, illegal incomes, narcotics, counterfeiting and all kinds of criminal activities in the United States and abroad."
Alexandre Grant, an editor at the Russian newspaper who reports on organized-crime matters, said Russian emigres are unlikely to inform or to testify at trials, even if they are placed in the Federal Witness Protection Program. Under that program, participants and their families are given new identities and relocated.
"It won't work because most Russians cannot survive unless they are in a Russian community," Mr. Grant said. "They won't cooperate because even if they feel safe in the U.S. They fear someone will retaliate against their relatives in Russia."
Language and cultural barriers, the authorities concede, have blocked quick solutions to the recent gangland-style murders and shootings linked to Brighton Beach mobsters.
Fictitious Addresses, Faulty Memories
The first victim this year was Oleg Korataev, a former boxer who was convicted in the Soviet Union of robbery and assault and who was identified by Russian authorities as belonging to an organized-crime gang known as the Valiulins. In 1992, Mr. Korataev entered the country on a visitor's visa, married and settled in Trump Village in Brooklyn.
On Jan. 12, Mr. Korataev, 44, was attending a private Russian New Year's Eve party in the Cafe Arbat on Brighton Beach Avenue. At 3 A.M., he stepped outside with another man, who pulled out a .38-caliber pistol and shot Mr. Korataev fatally in the head.
Several passers-by told the police that the killer returned to the restaurant and a few minutes later left with a woman. About 100 people at the party were questioned that night, but none provided a clue to the gunman's identity or motive. Most of the partygoers gave names and addresses in the Boston area that were fictitious, Detective Mackey said.
"Everyone had amnesia," the detective added. "Oleg had a reputation of being a brutal enforcer -- a collector of debts -- and he had connections to gangs in Russia and in Toronto."
On March 23, the body of Yanik Magasayev, 22, who had been shot four times, was dumped under a mound of plastic garbage bags in a wooded area on Bay 52d Street near Shore Parkway. Detectives said that Mr. Magasayev had been arrested on a burglary charge last year and that he was under investigation for suspected extortions of emigre merchants in Brooklyn and Queens. Gunned Down On a Moscow Street
On June 16, Alexandre Graber and two other men were gunned down on a Moscow sidewalk by two killers who roared off in waiting cars. Mr. Graber, 38, had lived for the last year in the Brighton Beach area, and detectives said he was a secret partner in a Russian nightclub in Brighton Beach.
A Moscow newspaper called Today reported in June that Russian police officials said that Mr. Graber had been associated with several organized-crime groups and that he frequently visited Russia to resolve conflicts among gangsters. F.B.I. agents said that Mr. Graber's murder appeared to be related to his activities in this country.
Shortly before twilight on July 11, Naum Raichel left the Winter Garden Restaurant, which he is constructing on the boardwalk at Brighton Sixth Street. Two men blocked his way and one of them shot him three times in the chest, the police said.
Mr. Raichel was convicted in 1987 in Federal District Court in Brooklyn of extorting $20,000 from two insurance salesmen as protection payoffs. He served four years in prison and was on probation at the time of the shooting.
The same day Mr. Raichel was wounded, his brother, Simeon, who lives in Brooklyn, was severely beaten in Berlin. "We doubt that those two attacks were mere coincidence," said a detective, who spoke on condition of anonymity.
Investigators cite the case of Boris Nayfeld, 46, as an example of the evolution of Russian emigre criminals from local to international status. He immigrated to the country in the late 1970's as a religious refugee. In 1980, Mr. Nayfeld was arrested in Nassau County on a grand larceny charge, pleaded guilty to petty larceny and was placed on probation.
He again attracted attention in May 1985 when Evsei Agron was fatally shot in the vestibule of his Kensington apartment building. The police identified Mr. Agron as the leader of a gang of emigre extortionists and Mr. Nayfeld as his bodyguard and chauffeur. Mr. Nayfeld, detectives said, later worked as a bodyguard for Marat Balagula, a Russian immigrant who was convicted in 1991 of a $360,000 credit card fraud.
Mr. Nayfeld was arrested in January by narcotics agents as he was about to be driven from his $450,000 home in Egbertville, S.I., to Kennedy International Airport for a flight to Brussels.
A Federal indictment in Manhattan accused him of heading a ring that smuggled hundreds of pounds of heroin from Thailand through Poland into New York. He has pleaded not guilty to narcotics trafficking charges and is to be tried in October.
Louis Cardinali and Joseph Massima, Drug Enforcement Administration agents who worked on the case, said in an interview that Mr. Nayfeld's group sold the heroin to three men linked to Mafia crime families in New York. They declined to identify the families.
"The Russians are into narcotics for the long haul," Mr. Massima said. "They don't just have a foot in the door; they are in the house."
Mr. Moody of the F.B.I. conceded that few Russian mobsters had been convicted. "We are still trying to get a handle on them," he added. "And we will before long."
A picture caption yesterday with an article about Russian organized-crime activity in Brooklyn described incorrectly the shooting of Naum Raichel, which law-enforcement officials said was linked to organized crime. Mr. Raichel was wounded in the attack; he was not killed.
How we handle corrections
THE Russian mafia is developing into a many-armed criminal enterprise that operates with surprising sophistication in world capitals tens of thousands of miles from the onion-domed spires of Moscow.
From the old outposts of the Soviet empire to the United States and Western Europe, Russian mafiosi are becoming more than a curious irritant to law-enforcement officials accustomed to more traditional forms of organized crime. Germany is a ``magnet'' for Russian gangs, according to authorities in Bonn; in the Czech Republic, mafiosi are alleged to dominate Prague's taxis.
Russians apparently control large sections of the prostitution business in Romania. Increasingly, Russian organized criminals are laundering their ill-gotten receipts through financial institutions and dummy corporations in the US, according to law-enforcement officials.
``A lot of money is coming in from overseas and being pushed through United States banks,'' says Raymond Kerr, head of special squad set up in New York City by the Federal Bureau of Investigation last year to investigate Russian organized crime. ``They run it through various banks and businesses here, and then send it back over there, and it comes back ... [looking like] legitimate money.''
The FBI has seen tens of millions of dollars in specific transfers sent to the US and then repatriated to Russia, Mr. Kerr says. Yet because the money launderers are so successful in evading detection, US law-enforcement officials acknowledge they have no realistic estimate of the total involved.
Criminals from all over the world have long used the US financial system to transform illegally earned proceeds into ``clean'' money. But experts say the former Soviet Union's white-collar criminals are far more sophisticated in their approaches to financial sleight-of-hand than, say, a typical South or Central American drug dealer.
Formally schooled in the way of Marx and Lenin, Russian mafiosi picked up their street smarts in the USSR's economy of scarcity, where breaking of rules was often necessary for survival. These ``criminals have had a long history and training in engaging in fraudulent activities,'' says Ronald Goldstock, director of New York State's Organized Crime Task Force, in White Plains.
According to an estimate made public last year by FBI Director Louis Freeh, at least 100,000 Russians are now members of Mafia-style organized criminal gangs. Some of them are thought to have ties to Colombian drug cartels and the Sicilian Mafia. Their reach is such that the FBI opened the agency's first office in Moscow last fall, in an effort to coordinate defensive strategy with Russian law-enforcement counterparts.
Russia is still the country that suffers the most from mafiosi activities. To hard-pressed Russian citizens it sometimes seems that gangs are threatening to take over the nation's economy even as it struggles to rebuild itself. Bombings, contract killings, and gangland-style daylight robberies are common occurrences in Moscow, where the average monthly salary is equal to what one gang member can spend at restaurants in a single day.
Yeltsin takes action
Last June, Russian President Boris Yeltsin granted his police - who are perceived as largely corrupt by the public - sweeping powers to deal with the massive problem. Thanks to the decree, Russian police can now detain organized crime suspects for 30 days without cause, search offices and homes without a warrant, and examine the finances of suspects and their relatives. Uncorroborated testimony is allowed in court, and witnesses who refuse to testify can be punished.
These expanded police powers have been widely criticized by human rights activists. Ironically, they appear to have done little to stem organized crime's growth. Estimates of the amount of capital siphoned abroad from Russia continue to be staggering, and the mafiosi's BMWs and Mercedes continue to choke the streets alongside clunky domestically produced Zhiguli and Niva cars.
President Yeltsin has increasingly placed the blame for the burgeoning mafia on people from the country's Caucasus region, particularly the breakaway territory of Chechnya. He has attempted to justify his disastrous attempt to pacify the region by saying that the Chechen people pose a ``security threat'' to Russia, via involvement in terrorism, hijackings, and counterfeiting.
Russian gangs are also well-represented in the environs of the former Soviet empire and neighbor nations. Organized criminal activity from Poland to Bulgaria can often be traced to mafiosi or their allies.
Controlling Russian gangs in Central Europe is next to impossible, given that law enforcement authorities can, in many cases, be bought. The economic hardship brought on by the transition from communism to market economics has made it easier for organized criminals to bribe their way out of just about any situation.
Russian criminals may have even managed to profit from the chaos brought on by the Balkans war. For one thing, they are thought to be a prime source of the women who work as prostitutes in the former Yugoslavia. ``The brothels in Zagreb and Belgrade are filled with women from the former Soviet Union,'' says a UN official familiar with Russia. ``There are lots of Moldavians and Ukrainians.''
Germany, however, may be the Russian mafia's true home-away-from-home. Straddling the divide between the struggling East and prosperous West, Germany has become a magnet for Russian gangs, authorities say. Eastern Germany, especially Berlin, has become a major Russian mafiosi base of operations.
Several factors made Germany attractive for the Russian mafia. First, the former Soviet Union, followed by Russia, maintained a military garrison in eastern Germany from the end of World War II until August 1994. The military's presence presented Russian gangs with unique opportunities to engage in arms smuggling and other activities. And even though the Russian army has now departed, the mafia has had enough time to establish a nearly unassailable beachhead in Berlin.
Second, some German officials believe lenient prison-sentencing practices have encouraged Russian organized criminals to set up shop in Germany. They know that if they are caught in Germany, they will not spend long behind bars.
However, Matthias Weckerling, an official at the German Justice Ministry, says that handing out stiffer sentences wouldn't solve the Russian mafia scourge. ``The question of draconian sentences preventing organized crime is something that we really don't believe,'' Mr. Weckerling says. ``The debate should not be on sentences, but on surveillance.''
German law currently prohibits law-enforcement officers from using wiretaps and other methods of covert surveillance. That makes it harder for German officials to detect and arrest Russian gang members.
Without quick action, the Russian mafia may quickly expand their operations in the West. Eckart Werthebach, chief of the office for the Protection of the Federal (German) Constitution, warns that Russian intelligence agents are teaming with Russian organized criminals to engage in industrial espionage and other economically detrimental action.
``The number of legal-resident people we have identified [as spies] must be massively reduced,'' Mr. Werthebach said in an interview with Focus, a German weekly.
Money-laundering scams
For the United States, the major Russian mafia problem centers not so much on their physical presence as on their money. A typical case goes like this: First, a Russian mafioso illegally sells some precious commodity, such as gold or irreplaceable icons, in Europe. Then, instead of directly pocketing ill-gotten German marks or US dollars, the criminal funnels the funds through a US bank or dummy corporation.
Another common scam is for a Russian official to purchase, say, half a million dollars in goods from abroad, but have a friendly company invoice him for a million. With this paperwork, he can now pass off the goods as worth more than they are, and pump a half- million dollars in ill-gotten money through his firm, laundering it into legitimate-appearing proceeds. Bribes often lubricate the system.
Just who are the criminals? In the US, those who collaborate in the money laundering are both Russian nationals and Soviet emigres with American citizenship. Typically, they work together for particular projects and then disband, rather than obeying one boss for a lifetime, as in the Italian Mafia, according to Mr. Goldstock of New York's Crime Task Force.
Together, these groups have assembled what the FBI calls a ``surprising number'' of sham companies. In one recent case, Russian organized criminals cheated the US government of $14.6 million between October 1991 and December 1992 by setting up a series of dummy companies to sell gasoline without paying taxes. Invoices purportedly made out by one of the sham companies showed taxes had been paid, when they had not. The address of the ``company'' was that of a Russian emigre living in a boarding house.
Complicating the difficulty of law enforcement is that, in many instances, businesses in Russia are send money abroad legally under loopholes that lessen taxes, say financial experts. ``It can actually be true that you have to pay more than 100 percent taxes on profit'' in Russia, said Gerhard Pohl, manager of the World Bank's Russian and Eastern European finance department in Washington.
One popular legal haven is Cyprus, which has a dual- taxation treaty with Russia but a considerably lower tax rate. Some of this legal money is often transferred to the US, partly because of solid investment opportunities.
But the resulting mix of legal and illegal Russian funds makes it all the more difficult for US law enforcement agencies to weed out the dirty money.
``We are doing every measure right now in order to establish controls of this money out of our country,'' says Sergei Dimitriyev, an official at the Russian Embassy's trade representation office in Washington. But he adds that Russia must also improve the overall investment atmosphere to give Russian businesses an incentive to keep their money at home.
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