New Arbitration Planned In $5B PrivatBank Laundering Case

By Caleb Symons      

Law360 (May 20, 2022, 5:29 PM EDT) — Two men accused of helping launder millions of dollars stolen from PrivatBank in Ukraine said Thursday they plan to seek arbitration over the U.S. government’s efforts to seize an office complex in Dallas that federal officials say they financed with the stolen money.

In a joint filing with U.S. Department of Justice prosecutors, the Miami-based businessmen — Mordechai Korf and Uriel Laber — told a Florida federal court the two sides have agreed to temporarily pause those proceedings, although for different reasons.

Korf and Laber, whom prosecutors say laundered the stolen PrivatBank funds through the so-called Stemmons Towers, argued Thursday that those claims “overlap” with similar allegations against them involving another Dallas office park that are already set for arbitration. That case, which concerns their 2010 purchase of a 19.5-acre complex known as the CompuCom Campus, is slated for consideration by an International Centre for Settlement of Investment Disputes tribunal.

Korf and Laber told the Southern District of Florida court they plan to file for arbitration in the Stemmons Towers case within the next three months.

In that forfeiture suit — one of several the men face over their real estate deals using the allegedly laundered money — federal prosecutors say they used those funds to maintain and improve the 200,000-square-feet Stemmons Towers after acquiring the office complex in 2008.

Korf and Laber, whom the government says helped former PrivatBank owners Ihor Kolomoisky and Gennadiy Boholiubov invest billions of dollars they stole from the bank in U.S. properties, bought Stemmons Towers for $7.6 million through their real estate holding firm. That company, Optima Ventures LLC, is also the subject of ongoing civil forfeiture cases involving a 31-story tower in Louisville, Kentucky, and a 22-story office building in Cleveland, both of which the Miami businessmen are accused of buying with laundered money.

Stemmons Towers was acquired in the same way as the CompuCom Campus and those other properties, according to prosecutors, who say the funds were “filtered through the bank accounts of companies associated with Kolomoisky and Boholiubov” that were held by PrivatBank.

From 2011 to 2018, Korf and Laber spent more than $1 million in laundered PrivatBank money to pay for the buildings’ operating expenses, including maintenance and mortgage costs as well as property taxes, the government said in its January complaint against the men. Stemmons Towers also “facilitated the broader money laundering scheme,” prosecutors allege, as the Optima Ventures subsidiary that owned the property transferred $6.7 million back to its parent company over more than a decade.

Federal officials seek to collect payment on a $5.7 million loan that an unrelated company used to acquire Stemmons Towers in December 2019.

In their new filing, however, Korf and Laber say that issue should be arbitrated under the U.S.-Ukraine Bilateral Investment Treaty.

Optima Ventures and its subsidiary groups have already filed notices with the ICSID seeking arbitration over the CompuCom Campus and the Cleveland building. That request was registered in March 2021, and two arbitrators were appointed to the case last year — one each by Optima Ventures and the U.S. government.

It’s unclear whether the Stemmons Towers case would be added to those proceedings or filed on its own.

Justice Department prosecutors consented Thursday to a stay in that forfeiture suit, but for a different reason: The Stemmons Towers case should be paused, they say, because its immediate continuation would “adversely affect an ongoing criminal investigation.”

The government cited its stay request in the CompuCom Campus civil suit last year, in which it said discovery could expose confidential sources of information and investigative means it’s using in a criminal probe of the PrivatBank laundering allegations.

The U.S. claims that laundering scheme forced the Ukrainian government to nationalize the bank in 2016 with a $5.5 billion bailout to stave off economic disaster. Korf and Laber helped the former PrivatBank owners buy property in the U.S. beginning in 2008, according to prosecutors.

In an August 2020 lawsuit seeking to seize those sites, the government said Kolomoisky and Boholiubov recruited the Miami businessmen to establish “a complex system of entities” to launder the allegedly stolen money. That included creating the Optima Ventures network that prosecutors say “had a convoluted ownership structure that constantly shifted as new entities were created to move money, disguise ownership of assets and otherwise launder funds.”

Optima Ventures claims the U.S. lacks authority to prosecute violations of Ukrainian law, saying legal action over property owned indirectly by Kolomoisky and Boholiubov — as Ukrainian citizens — is subject to arbitration under the 1996 bilateral investment treaty.

Veteran trial attorney Marc E. Kasowitz, who is representing Korf and Laber, called the government’s allegations “patently false and meritless” in a statement Sunday.

“Court after court in Ukraine has ruled—after carefully analyzing the evidence—that contrary to the DOJ’s allegations, the proceeds used to acquire the U.S. properties at issue stemmed from entirely legitimate Ukrainian loan transactions,” he said. “This fact is also fatal to the DOJ’s forfeiture theory.”

The Justice Department could not be reached Friday for comment.

The businessmen and their property investment firms are represented by Howard M. Srebnick and Robert T. Dunlap of Black Srebnick Kornspan and Stumpf PA.

The government is represented by Shai D. Bronshtein and Rachel Goldstein of the Justice Department.

The Stemmons Towers case is United States of America v. The Promissory Note With a Principal Amount of $5.7 Million, Executed on December 19, 2019 by 8787 Ricchi LLC, Payable to 87STE Lending LLC, case number 1:22-cv-20238, in the U.S. District Court for the Southern District of Florida.

The other Texas case is United States of America v. Real Property Located at 7505 and 7171 Forest Lane, Dallas, Texas 75230, case number 1:20-cv-23278, in the U.S. District Court for the Southern District of Florida.

–Additional reporting by Humberto J. Rocha. Editing by Patrick Reagan.

This story has been updated with comments from an attorney for Mordechai Korf and Uriel Laber.