US Targets Property Linked to Multi-Billion PrivatBank Scandal

In an effort to crack down on the hundreds of millions of dollars that were laundered through the U.S. real estate and business sectors by two former owners of one of Ukraine’s largest banks, authorities announced on Thursday that they intend to seize several of the properties involved in the scandal. 

Ihor KolomoiskyIhor Kolomoisky, a billionaire and former owner of PrivatBank. (Credit:Dnipropetrovsk Regional Council)The U.S. has filed two civil forfeiture complaints against Ihor Kolomoisky and Gennadiy Boholiubov, the previous owners of PrivatBank, on properties worth a combined US$70 million, according to a Department of Justice press release.

The complaints allege that these properties were part of “hundreds of millions of dollars in real estate and businesses” that were purchased throughout the U.S. in an effort to launder a portion of the billions that they siphoned from the bank between approximately 2008 and 2016.

As a previous OCCRP investigation describes, Kolomoisky and Boholiubov orchestrated what the former chairwoman of Ukraine’s central bank described as “one of the biggest financial scandals of the 21st century,” where they managed to clear $5.5 billion from the coffers of the bank – amounting to roughly five percent of the country’s gross domestic product.

Ultimately this financial burden was placed on Ukrainian taxpayers, who had to shoulder a $5.9 billion bailout of the bank after it was subsequently nationalized as a result of the scandal.

The $5.5 billion hole in PrivatBank’s balance sheet was also not reported by its auditor, PwC – one of the world’s largest accountancy firms – which was banned by Ukraine’s central bank from performing future audits in the country.     

As revealed in OCCRP’s investigation last year, the Justice Department memo describes how the two owners of PrivateBank “laundered a portion of the criminal proceeds using an array of shell companies’ bank accounts, primarily at PrivatBank’s Cyprus branch, before they transferred the funds to the United States.”

A recent legal complaint filed in a Delaware court on July 21 by PrivatBank asserts that the men laundered a total of $800 million into the U.S. through fraudulent loans that were issued by the bank, and then deposited them into business entities that the two men controlled.  

The bank said in the complaint that these loans were never repaid, and is now seeking hundreds of millions in damages.  

Kolomoisky and Boholyubov have denied these accusations, and have also said that the nationalization of PrivatBank was a politically motivated decision. The two have filed numerous suits that have sought to gain financial compensation for the losses they incurred from having their bank seized by the state. 

Despite never having faced any criminal charges for their alleged crimes, Bloomberg reported on Tuesday that the FBI has raided the company affiliated with Kolomoisky based on accusations that it was involved in an international fraud scheme. 

Kolomoisky, who has a triple Ukraine-Israel-Cyprus citizenship and has reportedly spent several years controlling his business empire from Switzerland, returned to Ukraine last year following the victory of President Volodymyr Zelensky, who he has strong financial ties with. 

“He is my business partner, not my boss,” Zelenskiy said of Kolomoisky in an interview prior to his presidential victory. 

Kolomoisky played a role in the impeachment hearings of U.S. President Donald Trump, and was described by American officials as a significant problem going forward for the Zelensky administration.