‘King of cash-out’ vs. corrupt policeman: Who wins this fight?
The Tomsk court has extended the term of house arrest for Andrei Krivoshein, the principal witness in the criminal case against Konstantin Savchenko, the former Head of the Regional MIA Administration for Economic Security and Combating the Corruption. The businessman intended to prove in court that superior police officials had forced local entrepreneurs to give them bribes ‘for patronage’ – but has unexpectedly become a suspect in a criminal case pertaining to illegal banking. The investigators believe that Krivoshein was the boss of a colossal underground ‘money laundering empire’. Who is now dragging down whom? Would the ex-policeman be able to put the disgraced businessman into prison or vice versa?
A few months ago, businessman Andrei Krivoshein had proudly posed as a justice seeker waging a war against corrupt policemen. In the course of this war, Igor Mitrofanov, the ex-Head of the Administration of the Ministry of Internal Affairs (MIA) of the Russian Federation in the Tomsk Region, has lost his post in summer 2016. But now it is more and more difficult to figure out who is the hero in this story and who is the villain.
Last winter, Konstantin Savchenko, the ex-Head of the Administration for Economic Security and Combating the Corruption of the MIA Administration in the Tomsk Region, was arrested on suspicion of receiving a bribe in the amount of almost one million rubles ($17.3 thousand). On January 22, the court has ruled to remand the suspect in custody. The Head of the Administration for Economic Security and Combating the Corruption had promised the businessman to settle any issues with potential checks and audits against him and received in exchange three iPhones 5S with the total cost over 100 thousand rubles ($1.7 thousand), discount of 612.5 thousand rubles ($10.6 thousand) on purchasing a Toyota Highlander, and additional equipment and accessories for the SUV for 177 thousand rubles ($3 thousand). According to the investigation, the total cost of gifs and services received by Savchenko from Krivoshein was 913 thousand rubles ($15.8 thousand). The criminal case has been initiated based on materials collected by the Regional Directorate of the Federal Security Service (FSB) of the Russian Federation. The investigation had lasted for 6 months; the case file consists of 11 volumes. In the beginning of August, the case against Savchenko has been transferred to the regional court. Some of the hearings involving examination of classified materials were held behind closed doors. Igor Mitrofanov, thr ex-Head of the MIA Administration in the Tomsk Region, is a witness in the case against Savchenko. The former Head of the Administration for Economic Security and Combating the Corruption denies any guilt.
Igor Mitrofanov, the ex-Head of the MIA Administration in the Tomsk Region
So, what are the accusations against Andrei Krivoshein? According to the investigation, in the period since the beginning of 2012 and until the end of 2014, the Tomsk businessman, using a number of legal entities and individuals controlled by him, had been running illegal banking operations without registering a credit organization and obtaining the license. In other words, Krivoshein was the boss of a colossal underground money laundering empire, while his RemAvto car dealership business was just a ‘front’ for this empire. In a few years, he had registered several dummy companies and made illegal banking transactions for the total amount of some 487.6 million rubles ($8.4 million) through these companies; his personal gain was almost 10 million rubles ($173.2 thousand), which renders the crime “committed on an especially large scale”. He has been charged under Article 172 of the Criminal Code of the Russian Federation (Illegal Banking Activity) and faces up to 7 years behind bars. The court has decided that Krivoshein might put pressure on the witnesses and placed him under house arrest. The investigation believes that the amounts laundered through the companies controlled by Krivoshein in the last five years were, in fact, much higher than the sum above.
This supposition is supported by information provided by defense attorneys for Konstantin Savchenko at one of the court hearings during the trial of the ex-policeman. According to the defense, the following companies were involved into the cash-out operations committed by the primary prosecution witness: Meridian Limited Liability Company, Impuls Limited Liability Company, Iskra Limited Liability Company, and Sibmed Limited Liability Company. Only in 2014, some 3 billion rubles ($51.9 million) have been siphoned off through these companies affiliated with the individual enterprise of Andrei Krivoshein. The companies were lacking legally required accounting documentation, cash receipts, and vendor invoices for the rendered services. Later, many of these companies have been charged with additional tax liabilities amounting to dozens of millions of rubles.
According to other sources, some 7 billion rubles ($121.3 million) have flown through the accounts of Krivoshein A.A. Individual Enterprise in 2012–2014 – supposedly, from the dummy companies under his control (Internet Bank Client contacts provided either his telephone number or the number of his accounting department). Out of that amount, 6.2 billion rubles ($107.4 million) have been withdrawn by Krivoshein in cash or transferred to his personal accounts. Then the funds were transferred from the personal accounts in large sums – mostly, to individuals. Below are several dummy companies identified by Novotomsk Internet portal:
1. Stroitelnaya Companiya (Construction Company) Limited Liability Company – 517 million rubles ($8.9 million), Primorskii krai;
2. Biznes Stroy-NN Limited Liability Company – 140.2 million rubles ($2.4 million), Nizhny Novgorod region;
3. Kiprei Limited Liability Company – 128 million rubles ($2.2 million), Moscow;
4. PROFIT Limited Liability Company – 211.9 million rubles ($3.7 million), Moscow;
5. Okonnye Tekhnologii (Window Technologies) Limited Liability Company – 8.1 million rubles ($140.3 thousand);
6. Asinoneftesklad Limited Liability Company – 12.8 million rubles ($221.7 thousand);
7. Gazservis Closed Joint Stock Company – 17.7 million rubles ($306.6 thousand);
8. Sibtransavto Limited Liability Company – 3 million rubles ($51.9 thousand);
9. TIZ Servis Limited Liability Company – 5.8 million rubles ($100.5 thousand);
10. Geosibproekt Limited Liability Company – 9 million rubles ($155.9 thousand);
Based on the results of closed tax audits, even larger amounts have been siphoned off through these companies in 2015 – some 10 billion rubles ($173.2 million). This also supports the allegation that RemAvto company was just a ‘front’ for illegal operations of the Tomsk businessman.
Interestingly, the information about the ‘money laundering empire’ has popped-up during the trial of Konstantin Savchenko. Tomsk residents openly say that the trial of the ex-Head of the Administration for Economic Security and Combating the Corruption looks more like a trial of Krivoshein. It is obvious that the businessman – a victim of the police abuse – had himself swindled dozens of people for hundreds of millions of rubles. Most ex-employees of Andrei Krivoshein summoned to the trial of Savchenko had told the court not about the defendant, but about the cash-out operations of their former boss and how they were forced to open dummy companies to cash out funds. Apparently, such testimonies have resulted in the institution of a criminal case against Krivoshein and were used at his trial.
Evgeny Semenov, a former employee, involved into the cash-out operations, has provided details of the smoothly running illegal scheme and, upon completion of his testimony, wrote in the courtroom a report to the Investigative Committee of the Russian Federation (ICR). According to him, Krivoshein has cashed out over 20 billion rubles ($346.5 million) though Semenov and other employees – heads of dummy companies. Krivoshein was charging a 2–4% commission for his cash-out services depending on the sum. Semenov was a manager in RemAvto; he was selling cars belonging to Savchenko and buying new ones for his wife. He became employed with RemAvto in 2011 and knew Andrei Krivoshein since their school years. In August 2012, the employer had offered him to register an individual enterprise to facilitate the work. The individual enterprise has been registered in Seversk; then Semenov was asked to open bank accounts and order client cards with the maximum cash withdrawal limit. The individual enterprise had never performed any ‘real’ work. Registration documents had been produced by the RemAvto accounting department; the seal and electronic signature of individual entrepreneur Semenov were kept in the accounting department as well, and a power of attorney was issued to enable the female accountants to perform operations on behalf of the newly-registered businessman and represent him in all institutions.
Krivoshein had provided instructions to Semenov on a regular basis: where, when, and how much money to withdraw. Then the cash was delivered to the RemAvto accounting department, handed over to the accountants without any receipts, and put to the strongbox. Semenov used to withdraw up to 750 thousand rubles ($12.9 thousand) per day using his three client cards. According to him, this was the primary business of all companies established as per Krivoshein’s instructions. Semenov believes that there were some 10 such companies, including limited liability companies.
Semenov has become concerned about the collaboration with Krivoshein after one of the trips to Moscow. Following the plan developed by his boss, he has withdrawn 30 million rubles ($519.2 thousand) and handed over to certain people. Then he has withdrawn another 33 million rubles ($571.7 thousand) – and this attracted the attention of the bank security service. The security officers were interested where could a newly-established individual enterprise get such huge amounts of money. They explained Semenov that such operations seem illegal and might bring him into some serious trouble. Upon his return to Tomsk, Semenov told Krivoshein that he is not interested in such work anymore and wants to close the individual enterprise. Later the tax service has charged Semenov Individual Enterprise with additional tax liabilities amounting to several dozens of millions of rubles. A lien has been registered on his apartment, his car seized, and a monthly penalty interest imposed on Semenov. Of course, Semenov has addressed his employer – the initiator of the individual enterprise registration – for help. Krivoshein had promised to sort the things out, but instead fired the troubled employee. Now Semenov can not find an official job – all Tomsk-based employers are shocked with the amount shown on the execution writ issued against him.
Several other ex-employees of Krivoshein are in the same stalemate situation: each of them owes 30–45 million rubles ($521.6–782.5 thousand) to the government in tax arrears of dummy companies registered by them.
The ‘empire’ of Krivoshein had attracted the attention of law enforcement authorities for the first time back in 2014, after an unscheduled audit of Seversk-based Meridian company by the Federal Tax Service (bankruptcy proceedings against the company were ongoing at that time). The tax authorities have charged Meridian with additional tax liabilities in the amount of 18 million rubles ($311.8 thousand) and then started charging additional tax liabilities on individual enterprises affiliated with the company. In total, these individual enterprises have been charged with more than 100 million rubles ($1.7 million) in personal income tax. The people working for the ‘Tomsk cashier’ have found themselves owing huge amounts to the government – while Krivoshein had abstracted himself from these debts. It can’t be ruled out that the institution of a criminal case against the policeman was a revenge of the businessman to his uniformed ‘patrons’ for their failure to help him in the resolution of these financial issues.
Konstantin Savchenko, the ex-Head of the Administration for Economic Security and Combating the Corruption of the MIA Administration for the Tomsk Region
Savchenko believes that Krivoshein had slandered him out of fear. Allegedly, Krivoshein was afraid to share the fate of Ilia Bekkerman, his competitor in the cash-out business, whom he had earlier turned in to the police. Bekkerman remains in custody since 2015; he has been charged under part 2 of Article 172 of the Criminal Code of the Russian Federation (Illegal Banking Activity). But unlike Andrei Krivoshein, Bekkerman already had issues with the law and was prosecuted in the past.
Back in 2012, the Administration for Economic Security and Combating the Corruption of the MIA Administration in the Tomsk Region under command of Savchenko had received information that some person comes every day to branches of Promregionbank (the bank went bankrupt in 2016) and withdraws big amounts from accounts belonging to various legal entities. The person signs payment documents to transfer the funds to other individuals. No one in the bank had ever seen representatives of these legal entities. Based on the results of a police check, some 400 criminal cases had been initiated under Article 186 (Making, Custody, Carriage or Sale of Counterfeit Banknotes or Securities) and Article 187 of the Criminal Code of the Russian Federation (Making or Sale of Counterfeit Credit or Debit Cards, and other payment documents). This person had been registering legal entities on behalf of citizens who were totally unaware that they perform business operations and have accounts in Promregionbank opened in their names. Neither were the people aware that they had been withdrawing money, signing payment documents, and making wire transfers.
Of course, the operatives have asked bank employees and managers how could this happen. The violations uncovered in Promregionbank and criminal prosecution of the perpetrator have become the first practical experience in the identification of illegal cash-out operations. The first person prosecuted for that offence was Tomsk-based businessman Ilia Bekkerman. He was convicted in two criminal cases submitted to the court in 2012 and 2014 and sentenced to conditional terms. The list of companies used by Bekkerman in his cash-out operations became known to the public from a verdict of the arbitration court – Bekkerman had filed an arbitration claim to annul the decision of tax authorities charging him with a tax crime.
According to the court records, “based on the analysis of documents attached to the case file (expert assessments, copies of cheques, etc.), it is concluded that the amount of funds cashed out by the Plaintiff in the period of 2009−2011 was 206,115,500 rubles ($3.6 million), including:
1. 32,795,000 rubles ($568.1 thousand) in the year of 2009, including the following organizations:
- Start Limited Liability Company – 1,485,000 rubles ($25.7 thousand);
- TekhPromSnab Limited Liability Company – 31,310,000 rubles ($542.4 thousand).
2. 67,517,500 rubles ($1.2 million) in the year of 2010, including the following organizations:
- Start Limited Liability Company – 6,726,500 rubles ($116.5 thousand);
- Cascade Limited Liability Company – 21,080,000 rubles ($365.2 thousand);
- Continental Limited Liability Company – 11,930,000 rubles ($206.7 thousand);
- Universe Limited Liability Company – 2,400,000 rubles ($41.6 thousand);
- Takelazh Service Limited Liability Company – 25,381,000 rubles ($439.7 thousand).
3. 105,803,000 rubles ($1.8 million) in the year of 2011, including the following organizations:
- Continental Limited Liability Company – 2,300,000 rubles ($39.8 thousand);
- Universe Limited Liability Company – 9,960,000 rubles ($172.5 thousand);
- Gallon Limited Liability Company – 6,500,000 rubles ($112.6 thousand);
- Takelazh Service Limited Liability Company – 87,043,000 rubles ($1.5 million).
Bekkerman had registered the dummy companies for cash-out operations with 4% commission before 2011 – while the criminal liability under Article 173.1 (Unlawful Establishment (creation, re-organization) of a Legal Entity) and Article 173.2 of the Criminal Code of the Russian Federation (Unlawful Use of Documents for Establishing (creating, re-organizing) a Legal Entity) was introduced only in December 2011; therefore Ilia Bekkerman managed to avoid liability for these deeds.
In May 2015, based on materials collected by the Administration for Economic Security and Combating the Corruption through almost 9 months, the Investigations Directorate of the MIA Administration in the Tomsk Region has initiated the first criminal case under Article 172 of the Criminal Code of the Russian Federation (Illegal Banking Activity). In June 2015, another criminal case has been initiated under the same Article based on different materials. Ilia Bekkerman was a suspect in one of these cases, and Andrei Krivoshein had directly contributed to his prosecution. According to Savchenko, at that time the police was unaware of Krivoshein’s involvement into cash-out operations. But investigative activities were performed against persons having financial relations with Krivoshein. Savchenko does not rule out that the businessman had supposed that, sooner or later, the operatives would come for him and decided to make a preemptive move.
‘King of cash-out’ Andrei Krivoshein
Who is now dragging down whom? Would the ex-policeman be able to put the disgraced businessman into prison or vice versa? Only the court can determine this. Prior to the witness testimonies against him, Krivoshein was a hero and victim in the public perception – but now he and Savchenko are on the ‘same bench’. It is hard to believe that Krivoshein could smoothly run large-scale financial machinations for years without some ‘enforcement’. The cash-out business involves lots of issues and requires a good ‘cover up’. It is quite possible that both Savchenko and Mitrofanov were involved into it.
The defense for Krivoshein believes that the criminal case against him is a trick to deflect attention away from the police corruption. Elena Surda (she acts as a defense attorney not only for Krivoshein, but also for Ilia Bekkerman, his competitor in the cash-out business turned in to the police by Krivoshein a year ago) says that her client has been arrested “in a hope that he would be busy with his own problems and abandons his cause pursued up until now. This is a noble cause – he was really fighting the corruption in the Tomsk region”.
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