Skyscraper’s Ties To Laundering Cut After Sale, Judge Told

By Nate Beck 

Law360 (January 22, 2024, 5:10 PM EST) — Two Miami businesspeople told a Florida federal judge that a pair of Ukrainian oligarchs lost their investment in a Louisville, Kentucky, skyscraper when an entity turned over the deed to avoid foreclosure on the property in 2018, countering the government’s claim of a connection to a money laundering scheme.

Mordechai Korf and Uriel Laber argued Friday that the government has failed to show more than an incidental connection between investments in Louisville’s PNC Plaza tower and the Ukrainian oligarchs Ihor Kolomoisky and Gennadiy Boholiubov, who are accused of laundering more than $5 billion they took from Ukrainian lender PrivatBank by snapping up properties in the U.S. using contacts from Korf and Laber.

Korf and Laber claimed the Ukrainians contributed $13.1 million to fund the bulk of joint venture Optima 500 LLC that assumed an existing $65.7 million mortgage on the tower in 2011. The government argues that money came from PrivatBank, in an example of how Kolomoisky and Boholiubov siphoned off the bank’s money for their own benefit. Prosecutors are seeking $9.1 million.

The tower’s connection to the Ukrainians, however, did not survive the joint venture’s decision to turn over the deed to the property as it faced foreclosure from U.S. Bank in 2018. A separate joint venture that later bought the tower for $27 million in a government-supervised sale doesn’t bear any ties to criminal activity, Korf and Laber argued.

“Like a bank account or an investment account, equity interests in PNC Plaza are dynamic and change over time, with new owners investing money then selling,” the Miami men said in the Friday brief backing their December motion to dismiss the government’s case.

In four consolidated civil forfeiture actions, the government claims Korf and Laber helped Kolomoisky and Boholiubov, who once led PrivatBank, launder money with real estate investments through entities using variations of the name “optima.” The civil litigation over the Kentucky tower is on hold after U.S. District Judge Darrin P. Gayles hit pause to preserve a related criminal investigation. The three other cases have been on hold since 2021.

Motions in the civil case have continued despite the stay, however, with Korf and Laber arguing the case is time-barred and that the government has failed to make connections between property purchases and laundered money.

Ukraine nationalized PrivatBank in 2016 as it sought to clean up the country’s financial system, a move the Ukrainians have blamed on a feud between Kolomoisky and former Ukrainian President Petro Poroshenko.

On Friday, the Miami men argued the case should be tossed on jurisdictional grounds, claiming the government has failed to cite a case in support of the venue. Additionally, prosecutors haven’t alleged that the Ukrainians kept an interest in PNC Plaza after their joint venture gave up the deed to the property.

“In short, the joint venture in which claimants are members obtained the right to foreclose on PNC Plaza exclusively through clean money, it elected to satisfy the mortgage via a deed-in-lieu of foreclosure, and none of Optima 500’s allegedly tainted equity transferred over,” Korf and Laber argued.

Korf and Laber are represented by Robert T. Dunlap, Velvel Freedman and Colleen Smeryage of Freedman Normand Friedland LLP, Howard M. Srebnick and Zaharah Markoe of Black Srebnick, and Marc E. Kasowitz, Mark P. Ressler and Joshua N. Paul of Kasowitz Benson Torres LLP.

The government is represented by Shai D. Bronshtein and Rachel E. Goldstein of the U.S. Department of Justice’s Money Laundering and Asset Recovery Section.

The case is USA 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 Joyce Hanson and Caroline Simson. Editing by Haylee Pearl.