By Albert Samaha
By Amanda Dingyuan
By Anna Merlan
By Anna Merlan
By Albert Samaha
By Tessa Stuart
By Anna Merlan
By Roy Edroso
Mogilevich's early years are murky. Soviet authorities first learned of his criminal activities in the 1970s, when he was a member of the Liubertskaya crime group that operated in the Moscow suburb of the same name. He was involved in petty thefts and counterfeiting.
But Mogilevich made his first millions fleecing fellow Jews. In the mid 1980s, when tens of thousands of Jewish refugees were hurriedly immigrating to Israel and America, Mogilevich made deals to buy their assets--rubles, furniture, and art--cheaply, promising to exchange the goods for fair market value and send refugees the proceeds in ''hard'' currency. Instead, he sold their valuables and pocketed the considerable profits.
In the 1980s, he established a petroleum import-export company, Arbat International, and registered it in Alderney, one of the Channel Islands, which is known to be a tax haven. One of his partners--with a quarter share of the company--was Vyacheslav Ivankov, the legendary Russian criminal who in March 1992 became Godfather of the Russian mob in America. Ivankov was convicted in 1996 of extorting two Russian-born Wall Street stockbrokers. He now resides in Raybrook, a Federal prison in upstate New York.
In early 1990, Mogilevich fled Moscow, as did many other dons, to avoid the gangland wars that were then roiling the capital. Mogilevich and his top henchmen settled in Israel, where they received Israeli citizenship. He ''succeeded in building a bridgehead in Israel'' and ''developing significant and influential [political] ties,'' says an Israeli intelligence report.
Mogilevich is married to a Hungarian national, Katalin Papp. That marriage allowed him to legally emigrate to Budapest, Hungary, in 1991, where he began to build the foundations of his global criminal empire. He bought a string of nightclubs in Prague, Riga, and Kiev--called the ''Black and White Clubs''--that has become one of the world's foremost centers of prostitution. Monya Elson is a partner in the clubs, according to his own admission and classified FBI documents. The Black and White Club in Budapest became the hub of Mogilevich's operations. He quickly built a highly structured criminal organization, in the mode of a traditional American mafia family. Indeed, many of the organization's 250 members are his relatives.
To the consternation of international law enforcement officials, Mogilevich began to legally purchase much of Hungary's arms industry. The legitimate companies he bought include:Magnex 2000: a giant magnet manufacturer. Digep General Machine Works: an artillery shell, mortar, and fire equipment manufacturer, which was financed by a $3.8 million loan from the London branch of Banque Francaise De L'orean. Army Co-op: a mortar and anti-aircraft gun factory. Army Co-op was established in 1991 by two Hungarian nationals, both in the local arms industry, who were looking for a partner. Mogilevich has bought 95 per cent of Army Co-op through another Channel Island holding company, Arigon, Ltd., and also deals extensively with the Ukraine, selling oil products to the Ukrainian railway administration.
These transactions enabled the Mogilevich organization to become a direct owner of the Hungarian armaments industry. In 1994, he purchased a license enabling him to buy and sell weapons. Now a legitimate armaments manufacturer, one of his companies participated in at least one arms exhibition in the U.S., where it displayed mortars modified by Israel.
Like mob bosses everywhere, Mogilevich couldn't sustain his empire without the help of corrupt police and politicians. There is one documented example of a criminal associate of Mogilevich mingling with American politicians. In March 1994, Vahtang Ubiriya, one of Mogilevich's top lieutenants, was photographed by the FBI at a tony Republican Party fundraiser in Dallas, says an FBI report. Ubiriya, a high-ranking official in the Ukrainian railway administration, has a prior conviction for bribery in the Ukraine.
In Europe and Russia, the ''corruption of police and public officials has been part of the Semion Mogilevich Organization's modus operandi,'' says a classified FBI document. ''The corruptive influence of the Mogilevich organization apparently extends to the Russian security system. During 1995, two colonels from Department of the Russian Presidential Security Service . . . traveled to Hungary under commercial cover to meet with Mogilevich . . . seeking information for use in the Russian political campaign.'' An Israeli associate of Mogilevich met with the two colonels and provided intelligence. Mogilevich also paid off a Russian judge to secure Vyacheslav Ivankov's early release from a Siberian prison, where he was doing hard time for robbery and torture, according to U.S. court records and classified FBI documents.
On April 28, the German national television network ZDF reported that the BND (the German intelligence agency) had entered into a secret contract with Mogilevich to provide information on the Russian mob. The charges were made by several sources, including Pierre Delilez, a highly regarded Belgium police investigator who specializes in Russian Organized Crime. Because of this deal with the BND, police in Belgium, Germany, and Austria have complained that it is now impossible to investigate the ''Brainy Don.'' If the television report is accurate, one possible motive for BND's deal, says a U.S. law enforcement expert on the Russian mob, is that the Germans recently ''pulled their people out of Moscow because they didn't like the level of cooperation they were getting from the Russian authorities on the Russian mob.'' Gangsters, said this source, often talk to intelligence agencies about their rivals.