ZeroZeroZero (30 page)

Mogilevic has always had a talent for swindles, and he’s pulled off a few of gigantic proportions, such as the one where he stole billions of dollars from the public treasuries of three Central European states—the Czech Republic, Hungary, and Slovakia—by selling them gasoline disguised as heating oil, thus avoiding those states’ extremely high taxes on auto fuel. Instead of being paid into those countries’ coffers, the monies filled Don Seva’s and his organization’s pockets. When a Hungarian gangster involved in the deal started collaborating with investigators and named Don Seva, the response was unequivocal. A car bomb exploded in downtown Budapest, killing the canary, his lawyer, and two passersby, wounding another twenty-odd people, and reducing that popular tourist street to a scene of wartime devastation.

Mogilevic decides to stay in Budapest even after his wife’s death in 1994. As for all the Mafija, one of the pillars of his fortune is arms trafficking. But now he makes an astonishing leap forward. He obtains a license to legally buy and sell arms, and thanks to his controlling a Hungarian weapons factory, Army Co-op, he manages to buy two more factories: Magnex 2000, which produces magnets, and Digep General Machine Works, a former state-owned factory, now privatized, that makes projectiles, mortars, and firearms. He is now in de facto control of the Hungarian military weapons industry. He sells arms to Afghanistan, Iraq, and Pakistan. He supplies Iran with material purloined from East German warehouses for several millions of dollars. Mogilevic is now the lord of war.

 • • • 

Another photo from the Russian album. Ivan’kov, the Little Jap, looks older now. Receding hairline, gray hair and beard, a little stoop shouldered even. He’s put on a few pounds and looks tired. But his eyes, those two slits that earned him his nickname, are still the same. And his blue-tinted glasses can’t hide their fury. Mogilevic has been busy,
but Ivan’kov hasn’t been wasting his time either. He’s used his connections, reputation, and experience to set up international arms trafficking, gambling, prostitution, extortion, and fraud and money-laundering operations, with more sophisticated and modern methods than what the New York Russians were used to. He’s established links to the Italian Mafia and the Colombian drug cartels. And to make sure he’s protected, can fight, and intimidate, he formed an army of almost three hundred men, most of whom served in the Afghan war. He quickly gained control of the Russian Jewish mafia in New York, transforming it from a bunch of neighborhood shakedown artists into a multibillion-dollar criminal enterprise. And the old-school gangsters, frightened of him and his reputation, have to accept him. According to the American authorities he’s the most powerful Russian mafioso in the United States. He’s the one who expands Mafija business in Miami, where he supplies the Cali cartel with heroin and money-laundering services in exchange for cocaine, which he then sends to Russia. The former Soviet Union starts hungering after white powder, and the Little Jap wants to corner the market. And he doesn’t hesitate to use whatever arms are necessary. Up till then Russia’s cocaine trade was run by two criminals from the former Soviet Union: the Georgian
vor
Valeri “Globus” Glugec and Sergej “Sylvester” Timofeev. The first was a pioneer drug importer in Moscow; the second, after a brief interlude with Solncevo, began collaborating with Ivan’kov. The Little Jap wanted their slices of the market. He kept trying to convince Globus and Sylvester that from then on he, the Little Jap, was the one in charge of the cocaine business. But in the end he was forced to kill them both: Globus was shot dead near one of his Moscow clubs, while Sylvester was blown to bits when he started his car.

The competition is over; Ivan’kov has won. His activities soon attract the attention of the FBI, who till then had mostly been used to dealing with the Italo American mafia and weren’t really equipped to deal with the Russians yet. In 1995 Ivan’kov has an extortion on his hands, or rather “a debt collection” of $3.5 million. Aleksandr Volkov
and Vladimir Vološin, two Russian businessmen with mysterious pasts working on Wall Street, founded Summit International, an investment company in New York in which the Chara Bank of Moscow invested, $3.5 million. But Volkov and Vološin’s company is nothing but a gigantic Ponzi scheme: The two of them promise creditors, for the most part Russian immigrants, a 120 percent annual interest rate. But in truth they don’t invest anything, spending the money instead on women, travel, and gambling. When the president of Chara Bank asks them to return the money they had “invested,” the two managers refuse. So the Moscow bank asks Ivan’kov for help, and he takes it upon himself to get the money back. In June Ivan’kov and two of his thugs nab the two traders at the New York Hilton bar and take them to Troika, a Russian restaurant in New Jersey. They threaten them—if they don’t agree to sign papers promising to give back the $3.5 million, they won’t leave the restaurant alive. The traders agree—what else can they do?—and so they save their skins. The Little Jap has won again, or so he thinks; he doesn’t yet know that the two kidnapped traders, once they are released, alert the FBI. A few days later, at dawn on June 8, 1995, they arrest Ivan’kov at Brighton Beach while he’s asleep with his girlfriend. That same day several members of his organization are picked up, including his right-hand man. Even in handcuffs, even surrounded by FBI agents, the Little Jap is arrogant and cocky. He screams, curses, kicks.

He’s found guilty of extortion and sentenced to nine years and eight months in the federal prison at Lewisburg, Pennsylvania. Four years go by, by which point it’s clear that the Lewisburg jail isn’t enough for someone like the Little Jap, who has no problem getting drugs delivered to him, and according to the FBI, sending orders to his men on the outside. The bars of the maximum security penitentiary in Allenwood await him.

 • • • 

At about the same time as Ivan’kov’s arrest in the United States the forces of order in the Old World start getting serious about stifling the
exuberance of certain Russian expatriates. On the evening of May 31, 1995, an endless stream of customers enters the U Holubů restaurant in Prague, for a special evening. No one notices the two big refrigerator trucks parked outside. They’re all white, no signage, and anyone who looked at them more closely would have noticed that the tires show no trace of wear. But maybe the guests are in a hurry to get inside. It’s a dinner in honor of a friend, and the Russian cabaret performer is supposed to be really hilarious. A few hours earlier, at the Czech Republic’s organized crime squad headquarters, a diligent employee made a rather extravagant request: “I’m going to need a couple of refrigerated trucks, and I need them fast.”

“May I ask what for?”

“Clean up. Very discreet.”

Despite the fact that the squad is navigating in stormy financial waters, the request is granted. The operative gets on it and phones a cousin who owns a trucking company. Inside the restaurant the show was under way. Two hundred people guffaw at the cabaret performer’s jokes, and he exits the stage to wild applause. Now it’s time for the Russian chanteuse. While they wait, the customers chat merrily and clink glasses in endless toasts. The lights are dimmed, silence falls. Spotlights illuminate ropes being lowered from above, and some audience members rub their hands in anticipation of some seductive acrobatics. The first one to land on the stage is a brawny special forces agent. His machine gun pointed, his jaw drops when he manages to look around and realizes how many Mafija big shots are in the room. He quickly collects himself, and as soon as his partners arrive, he shouts at the top of his lungs—nobody move! They expect the restaurant to become a slaughterhouse any second, but no one opens fire, no one says a word or bats an eye. Those under arrest march silently out of the restaurant in an orderly and composed fashion. Among them are the girls from the Black and White. Only then does anyone notice the two big refrigerator trucks, even more resplendent and white under the full Moon. The special agents inside breathe a sigh of relief. They’ve got the
Solncevo heads as well as other leading Mafija figures, who will have to be released the next day, since they’re not carrying weapons. But Mogilevic’s not there. “My plane was late,” he says during an interview, as impassive as a walrus. The interviewer isn’t intimidated and asks if the girls at his clubs went to bed with the clients. Mogilevic stares at him as if he were addressing an idiot child: “There weren’t any beds there. It was a standing bar, with tables.”

 • • • 

By now the Brainy Don operates unopposed in Ukraine, the United Kingdom, Israel, Russia, Europe, and the United States, and he maintains relations with organizations in New Zealand, Japan, South America, and Pakistan. He has total control of Moscow’s Sheremetyevo International Airport. From an FBI report it appears that one of his lieutenants, who is stationed in Los Angeles, met with two New York Russians linked to the Genovese crime family to develop a plan for shipping toxic American medical waste to Ukraine, to the area of Chernobyl, probably with kickbacks to local decontamination authorities. The Don’s imagination knows no limits. It’s 1997, and Mogilevic has several tons of enriched uranium on hand, apparently one of many gifts from the fall of the Berlin Wall. Warehouses are full of weapons; he just has to figure out how to be the first to claim them. The Brainy Don arranges a meeting at the Karlovy Vary spa; he loves that place. The buyers are seated across the table from him, distinguished Middle Eastern men. Everything seems to be going smoothly, but the Czech authorities blow the deal.

In 1998 an FBI report identifies money laundering as Don Semën’s principal activity in the United States, and reveals both his and Solncevo’s interest in YBM Magnex International, a Pennsylvania-based company with branches in Hungary and Great Britain, which officially produces industrial magnets. Valued at close to a billion dollars and quoted on the Toronto stock exchange, the company’s principal stockholders include two women named Ljudmila: the wives of Sergej
Michajlov and Viktor Averin, the two leaders of the Moscow brotherhood. Mogilevic and his associates had noticed that the Canadian Stock Exchange is poorly regulated, so a company listed on the Toronto exchange would be a perfect cover for getting in and concealing illegal Mafija capital in their North American markets. In the space of just two years the value of YBM Magnex stock rose from a few cents to more than twenty dollars a share. On paper it seemed as if the investors were making vast sums, and the company was even listed among the three hundred most important securities on the Toronto Exchange. But in May 1998 the FBI pays a visit to the YBM offices in Newtown, Pennsylvania, and seizes everything: hard drives, faxes, invoices, shipping receipts. The stock price plummets in just a few hours, and Mogilevic is accused of defrauding American and Canadian investors. In practice the company conducted business through a series of front companies—boxes within boxes—empty containers that served only for moving money around. FBI suspicions were confirmed by the Newtown YBM office itself: A company that allegedly invoiced $20 million and had more than 150 employees couldn’t possibly be headquartered in a small wing of a former schoolhouse. This gigantic fraud cost investors more than a $150 million.

YBM Magnex had received several million dollars from Arigon Ltd., which among its various activities sold fuel to the Ukrainian national railway system. Mogilevic is on very good terms with the Ukrainian minister of energy and the energy companies in his native country. Among other things, it was Arigon that owned Mogilevic’s Black and White nightclub in Prague. Through Operation Sword, launched by Great Britain’s National Criminal Intelligence Service, it emerges that Arigon Ltd. is actually an offshore company registered on one of the Channel Islands, as well as the pivot of Mogilevic’s financial operations. According to investigators, it works like this: The dirty money that he and other Russian bosses make through their illegal activities in Eastern Europe flows into companies such as Arbat International (owned by the Little Jap, Solncevo, and Mogilevic) and from
there is transferred to Arigon, at times passing through Mogilevic’s companies in Budapest. In turn, Arigon uses a number of checking accounts in Stockholm, London, New York, and Geneva to transfer funds to front companies around the globe, even in Los Angeles and San Diego, which are registered to Mogilevic’s associates. The money is officially laundered through Arigon, and so it can enter the legal marketplace, flowing into other projects. Thanks to Operation Sword we know that of the more than £30 million that watered the London banks, £2 million were deposited with the Royal Bank of Scotland. The money, identified merely as having an unspecified origin in Russia, was destined for Arigon. Yet in the end Operation Sword came up empty-handed, because the Russian police either could not or would not furnish Scotland Yard with evidence that the money was the fruit of criminal activity. The accusations of money laundering were dropped. But there was still some backlash. I can only imagine Mogilevic’s surprise when, a short while later, he opened a letter from the Bureau of Internal Affairs and read that he was no longer welcome in the United Kingdom.

Yet as Mogilevic’s business gradually expanded, Arigon opened new branches and offices around the world. Prague, Budapest, the United States, Canada: extremely efficient launderers of dirty money.

“Why did you set up companies in the Channel Islands?” an interviewer asked Mogilevic.

“The problem was that I didn’t know any other islands. When they taught us geography at school, I was sick that day.”

 • • • 

Russia’s story is one of men who knew how to profit from the transition after the fall of communism. Men who navigated without instruments during the 1990s. Men like Tarzan. Long hair, a fierce gaze, robust. Energy bursts from every pore in the photo I have in front of me and shows how apt his nickname is, even if it refers to something that happened years before it was taken. As a boy, to get attention, he jumped
from the fourth story of the apartment building where he was living with his parents. They’d moved from Ukraine to Israel in the 1970s. He survived, but on that day Ludwig Fainberg became Tarzan.