ZeroZeroZero (29 page)

Russian bosses are swathed in designer gear, from their underwear to their luggage; they have political protection, control who gets appointed to public office, and throw megaparties without any police interference. The groups are becoming more and more organized: Every clan has an
obšcak,
a kitty where a percentage of profits from crimes such as extortion and robbery are deposited, in order to cover the expenses of
vory
who end up in jail, or to pay off police and politicians. Soldiers, armies of lawyers, and highly skilled brokers are all on their payroll.

During the communist era the
vory
worked side by side with the Soviet elite, influencing every corner of the state apparatus. Under Brežnev they took advantage of the heavy stagnation of the communist economy and created an impressive black market: the Mafija could satisfy any desire as long as you could afford it. Shop and restaurants managers, heads of state agencies, government functionaries and politicians: They were all dealing in something. Every imaginable good was traded on the black market, from food to medicine. The
vory
tracked down whatever filthy capitalist goods the populace was forbidden in the name of socialism and introduced them into the homes of Party officials, thus forging an alliance between the nomenklatura and crime that was to have enormous consequences.

The fall of communism created an economic, moral, and social abyss that the Mafija was ready to fill. Generations of people out of work, penniless, often quite literally starving: The Russian organizations enrolled legions of unskilled workers. Police, soldiers, Afghan war veterans offered their services unreservedly. Former KGB members and Soviet officials placed their bank accounts and contacts in the service of organized criminal activities, including drug and arms trafficking. The transition to capitalism was armed with neither laws nor adequate infrastructure. The brotherhoods, on the other hand, had money, predatory swiftness, and intimidation tactics: Who could possibly oppose them? The so-called new Russians—those who were getting rich at dizzying speeds with the new market openings—found it was
convenient to pay a “tax” that guaranteed protection from other groups as well as helped resolve problems with slow-paying customers or competitors. The small fish had no choice but to bow their heads: There was one extortionist who went around with a pair of scissors and a severed finger: “Pay up, or I’ll cut yours off too.” The West only caught the occasional echo of exaggerated violence; for the most part it was distracted and deluded. Even the funds the United States and European countries donated to reinforce post-Soviet civil society contributed indirectly to fattening the Mafija. NGOs were the preferred recipients, for fear that the money would be pocketed by ex-communists and used to reanimate the old regime and its old bureaucrats. But much of the aid was intercepted by criminal groups and never reached its destination.

With the intoduction of new banking laws, banks began to sprout up like mushrooms. Mafiosi no longer needed to corrupt the old institutions’ executives. With their abundant cash flow and a few straw men, they could open a bank and staff it with friends and relatives, including some freshly out of jail. Then came the great plan for privatization, which was supposed to give all citizens a stake in Soviet enterprises, from colossal new energy companies to Moscow hotels. The value of the distributed stocks was low for those who already had money and power but huge for those who had trouble making ends meet. Poor people sold their shares, even below face value, to those who had the means to stockpile them, thus reinforcing the elite ranks of former Soviet managers and bureaucrats and mafiosi. The relationship between the Mafija and the government was symbiotic and long lasting, and it worked: Those envelopes stuffed with cash were handy for everyone, because everyone needed money to survive. The Mafija was everywhere. The Mafija had become the state.

In 1993, in Moscow alone there were fourteen hundred homicides linked to organized crime, as well as a shocking rise in kidnappings and explosions. Moscow was compared to Chicago in the 1920s. Businessmen, journalists, gang family members—no one was safe. People fought over the control of factories, mines, territory. Businesses and
corporations were forced either to reach an agreement with the gangs or be eliminated. According to former FBI agent Robert Levinson, who also dealt with Italian American, Sicilian, and Colombian mafias, the Russian mafia is the most violent he’s ever known. But there’s something new here: Often the Russians have college degrees, speak several languages, and introduce themselves as engineers, economists, scientists, white-collar workers. When people abroad finally begin to realize that they’re educated barbarians, it’s too late. The Mafija didn’t simply fill the power void in Russia. Its most formidable members are already operating far beyond Russia’s borders, fashioning a new world according to their own ideas.

 • • • 

“Death is always after you,” Sergej, one of Mogilevic’s closest associates, loves to say. Sergej is an insignificant little man in rumpled clothes, and therefore very good at making himself invisible. Don Semën despises him but finds him useful: To be untouchable you can’t be vulnerable to threats. And Sergej isn’t. Everyone in Moscow knows he always carries a briefcase around with him. But only a few know what’s inside. Mogilevic never talks about it, not even with his wife. Once Sergej was kidnapped by one of Mogilevic’s rivals, a builder in the running for a public works contract from the city of Moscow. Sergej didn’t put up any resistance; he let himself be dragged into the dark basement of some anonymous high-rise on the outskirts of Moscow: no pleas; no prayers to be let go; no hint of retaliation from his powerful boss. He simply opened his briefcase, and the next day—still in his threadbare suit, looking dazed and indifferent—he knocked at Mogilevic’s door. “How did you do it?” his boss asked, actually glancing up from his laptop for once. Sergej went over to the desk and set his briefcase on it.
Click, click,
and with a swift move of the wrist he turned it 180 degrees. Mogilevic didn’t bat an eye when he saw himself with Sergej on one of his rare vacations at the Black Sea. He hadn’t remembered that Sergej had snapped that seemingly innocuous beach scene, which guarantees him
that no one will dare touch a hair on his head. He smiled, closed the briefcase, and turned it another 180 degrees.

Perhaps it was Sergej’s kidnapping, or the dangers of Moscow, now gripped by fear of gang warfare, that make Mogilevic think it might be better to get out of town. Money’s not a problem; he’s already accumulated several million dollars, which he’s made in large part thanks to his most dangerous weapon: his acumen for financial affairs. As soon as perestroika opened the doors to private enterprise he quickly set up several companies, officially for fuel import-export, and registered far from the spires of Red Square, on one of the offshore islands in the English Channel. One company is called Arigon Ltd., the other, Arbat International, of which Mogilevic controls half the stock, the other half being divided between the Little Jap and the Solncevo bosses, Michajlov and Averin. With such good friendships now signed in ink, all Mogilevic has to do is pack his bags. In 1990 he decides to move to Israel, along with his most trusted men. They’re the vanguard of the second wave of Soviet Jewish immigration, which is also the second wave of mafia importation, following that of the 1970s, which Mogilevic was so deft at exploiting. It wasn’t only innocent victims of discrimination who emigrated but thousands of criminals whom the KGB was thrilled to be rid of. Many of them landed in the United States, colonizing Little Odessa, where Ivan’kov would settle in 1992; others ended up in different parts of the world. But they stayed on good terms, as part of a global network in which Don Semën and the Little Jap merely had to insert themselves, without ever losing touch with the Russian brotherhoods.

Mogilevic becomes an Israeli citizen and establishes ties with emerging Russian and Israeli groups who sense his talent for managing the complex workings of international finance. His empire expands, thanks to the money he makes from illegal activities—drugs, arms, prostitution. But it also grows through his reinvesting dirty money in legal enterprises, such as discothèques, art galleries, factories, and all sorts of businesses, including an international kosher catering service.
According to an FBI document, he owns an Israeli bank with branches in Tel Aviv, Moscow, and Cyprus, which recycles money for Colombian and Russian criminal groups.

Yet the Promised Land is a tight fit for Don Semën: After one year there he marries a Hungarian woman, Katalin Papp, thus adding a Hungarian passport to his Ukrainian, Russian, and Israeli ones, and moves to Budapest. Officially he works as a wheat and grain dealer, but in reality he sets up a criminal organization that bears his name, with about 250 members and a hierarchical structure modeled on Italian mafias, to the point that many members are relatives of his. Budapest turns out to be a safe haven, and with the protection of corrupt politicians and policemen, his affairs prosper without too much interference. Mogilevic knows that tranquillity has a price, a price that money can’t always pay.

In 1995 two colonels from the Russian Presidential Security Service pay him an undercover visit in Hungary, where, out of prudence, only one of Mogilevic’s Israeli associates furnishes them with what they’ve come looking for: classified information to use in the Russian electoral campaign. The FBI’s words are more eloquent than any image: “‘He also ingratiates himself with the police by providing information on other groups’ activities, thus appearing to be a cooperative good citizen.”

Don Semën has a few other tricks to help keep problems away; He never takes part in his group’s day-to-day operations, never gets his own hands dirty, thereby making the work of the forces of order and justice trying to nail him extremely difficult. What’s more, he pays Hungarian ex-cops to keep him informed of any police investigations involving him. Thanks to his managerial skills, his financial savvy, and his extremely talented staff, who are experts in cutting-edge computer technology, Mogilevic becomes one of the world’s most powerful bosses. He creates his own private army, largely composed of
specnaz
and Afghan war veterans, who are famous for their brutality. To cover his prostitution business, he uses a chain of nightclubs, the Black and White Clubs, which he operates in partnership with Solncevskaja and
Uralmaševskaja, another Russian crime group. In 1992 Mogilevic organizes a strategic meeting with the leading Russian prostitution bosses at Budapest’s Atrium Hotel. He makes them a proposal: Invest $4 million of prostitution profits to open more Black and White Clubs in Eastern Europe. Don Semën recruits young women from the former Soviet Union, gets them legitimate cover jobs, and puts them to work in the new clubs. He even hires bodyguards to protect them. Business thrives: The girls are beautiful and make tons of money. During the same period Mogilevic contacts some Latin American organizations: His girls are perfect for drug dealing. They’re the ones who caress rich gentlemen from East and West, who undress them and give them pleasure. And Don Semën, whom the girls call Pàpa, really does feel like a father. From his viewpoint prostitution is a kind of welfare: His girls don’t fall into the hands of drunken brutes, and some of them even manage to put something aside for the future.

But Pàpa has to get angry sometimes. There’s another Russian, Nikolaj Širokov, who’s trying to move in on the Budapest prostitution racket, and who goes about the city protected by his goons. He has a weakness, though. Women aren’t merely a business for him; he can never get enough of them. Our brainy Don needs to find a woman with real class, irresistibly gorgeous, wave her under Širokov’s nose like a jewel too precious to pass off to clients, and then wait for the right moment. At the end of 1993 Mogilevic strikes. Širokov is eliminated in Budapest, along with two of his bodyguards. End of competition in the capital city on the Danube.

Mogilevic doesn’t enjoy using such brutal means, however, and is always quite happy to leave the job to one of the groups he’s associated with. The Brainy Don prefers to speculate. As soon as the Berlin Wall shows signs of crumbling, he starts changing rubles into hard currency, into German marks.

In 1994 Mogilevic manages to infiltrate Inkombank, a Russian banking colossus with a network of accounts in the biggest banks in the
world (Bank of New York, Bank of China, UBS, and Deutsche Bank), and to take control of it: This allows him to have direct access to the world financial system and to recycle proceeds from his illegal businesses easily. In 1998 Inkombank is dismantled for improper conduct on the part of its directors, violation of banking laws, and failure to honor its obligations toward its creditors. His business is booming, and Mogilevic becomes the object of several worldwide investigations, from Russia to Canada. But the
vor
recycles his identity just as he does his money: Seva Moguilevich, Semon Yudkovich Palagnyuk, Semen Yukovich Telesh, Simeon Mogilevitch, Semjon Mogilevcs, Shimon Makelwitsh, Shimon Makhelwitsch, Sergei Yurevich Schnaider, or simply “Don Seva.” A ghost with the gift of ubiquity and a sense of irony.

As in the case of the Fabergé egg scam.

At the beginning of 1995, again in partnership with Solncevo, he acquires jewelry stores in Moscow and Budapest to cover his traffic in precious stones, antiquities, and artworks stolen from Russian churches and museums, including the Hermitage in St. Petersburg. But his project is far more ambitious and sophisticated, to the point of using the world’s most prestigious auction house: Sotheby’s. Mogilevic and his associates purchase a shed just outside Budapest and stock it with the most up-to-date equipment for restoring antique jewels and setting precious stones. Mogilevic watches the preparations from outside the building, arms crossed over his prominent paunch. Now he needs to find talented artists capable of replicating the most famous golden eggs of all time, Fabergé eggs. Don Semën activates his network of contacts and within a week he hires two internationally noted Russian sculptors. He promises them a lot of money and steady work. Sure, they’ll have to remain in a shed on the outskirts of Budapest for the next few months, but it’s still better than what they can find back home. Original Fabergé eggs in need of restoration arrive at the Budapest factory from collectors and museums all over the former Soviet zone. The two sculptors produce perfect copies, which are sent back to Russia. Meanwhile, the
real eggs find their way to London and are sold by Sotheby’s auctioneers, who unwittingly constitute the final link in the chain.