Investigation: Did Two U.S. Jewish humanitarian volunteers Help Ukrainian Tycoons Launder Millions?
In the early 1990s, Mordechai Korf and Uriel Laber traveled to Ukraine as Jewish humanitarian volunteers as the country gained its independence and ended Soviet restrictions on religion.
Korf was still a teenager just out of a rabbinical institute when he arrived in 1991. His friend Laber, whom he met at a religious school in Detroit, came a few years later.
When they returned to the United States more than a decade later, they were -- on paper at least -- running a commercial empire from Miami whose assets ranged from steel and alloy plants to industrial tires and real estate that cost more than $1 billion to cobble together.
Korf and Laber purchased lavish homes in Miami Beach. Each were donating millions of dollars to Jewish charities, earning themselves reputations as generous philanthropists.
Now the story of two young humanitarian workers with little to no business experience striking it rich during Ukraine's turbulent -- and sometimes violent -- transition to a market economy is under question.
They are accused by the U.S. Justice Department of helping two Ukrainian tycoons over the course of a decade launder hundreds of millions of dollars in misappropriated funds from a Kyiv-based bank and then invest the ill-gotten wealth in U.S. assets, profiting handsomely in the process.
One of the tycoons is one of Ukraine's wealthiest and most influential citizens, a businessman who helped propel a former stand-up comedian and TV actor into Ukraine's presidency in 2019.
That man, Ihor Kolomoyskiy, and his associate, Hennadiy Boholyubov, have denied the accusations, saying the money used to purchase the U.S. assets that Korf and Laber now run came from the sale of their Ukrainian steel business to a Russian competitor for $2 billion.
Neither the tycoons nor the Miami businessmen have been criminally charged; the Justice Department lawsuit announced on August 6 is a civil action aimed at seizing assets deemed to have been ill-gotten. The department says, however, that its investigation is continuing.
Two days prior to the Justice Department's announcement, FBI agents raided the Miami penthouse office of Korf and Laber from which they run the companies beneficially owned by Kolomoyskiy and Boholyubov.
Korf and Laber, through their attorney Marc Kasowitz, denied the U.S. government's allegations, asserting they were "part of an orchestrated political attack" against Kolomoyskiy and Boholyubov by shareholders of PrivatBank.
Ukraine Heritage, Dnipro Beginnings
Over the years, Korf and Laber have rarely, if ever, referred to Kolomoyskiy and Boholyubov in press releases issued by various companies sharing the name Optima. But their ties go back at least 20 years and span a wide range of industries, from telecommunications and metals to oil and gas.
The rise of Korf and Laber as wealthy businessmen began in Kolomoyskiy's hometown of Dnipro (then still known as Dnipropetrovsk), Ukraine's fourth-largest city and a major industrial hub with about 1 million residents.
They did not end up there randomly.
Dnipro is also the former hometown of a rabbi whom many in the Orthodox Jewish movement known as Chabad-Lubavitch consider to be a religious messiah. Korf and Laber both belong to the movement.
The rabbi, Menachem Mendel Schneerson, made reviving Judaism in Dnipro a priority as the Soviet Union eased religious restrictions. Schneerson's father was Dnipro's chief rabbi for decades until he was arrested by the Soviet government in 1939.
Schneerson had also officiated at the marriage of Korf's parents in New York and sent Korf's father to run a Chabad-Lubavitch community in Miami.
In 1990, Schneerson sent 25-year-old Rabbi Shmuel Kaminezki to Dnipro to help rebuild the Jewish community. A year later, Korf, whose father fled from Soviet Ukraine decades earlier, arrived in Dnipro. Laber came in 1994.
At the time, the country was struggling with the wrenching shift to a capitalist economy. Shortages of consumer goods were common and savvy entrepreneurs were making millions of dollars importing products from abroad.
Korf, whose formal education appears to have ended at the religious school he attended in New York, was one of them. By 1995, Korf and Laber set up a Florida-registered company called Optima International of Miami.
In an interview in 2017, he recalled his early days in Ukraine, saying that he began trading products such as light bulbs and hammers "back and forth."
On a larger scale, Korf and Laber began buying up shares of oil and natural gas companies as part of a privatization process that, like Russia, Ukraine undertook in the 1990s. For savvy investors, it became a way to take control of major companies. The industrial center of Dnipro had some of the country's most attractive assets.
A media strategist who published a glowing post about the two men in 2019 alluded to a famous line from a U.S. comedy film, The Blues Brothers, to describe their supposed remarkable success. "In the history of great partnerships, few people can attribute their origins to having been on a Mission from God," the article said. "Mordechai Korf and Uriel Laber fit that bill."
According to the post, published on the financial blog Seeking Alpha, Korf and Laber set up tables near factories to buy shares from workers -- a common practice in those days -- and sell them a year or two later "for a tidy profit."
RFE/RL sent questions to Korf and Laber regarding their participation in the privatization process, including where the men got the money to buy shares in the first place. They declined to answer.
When contacted by RFE/RL regarding his post, the author of the article said he did not work for Korf and Laber and declined to answer any further questions.
Exactly when and how Korf and Laber began working with Kolomoyskiy and Boholyubov, who consolidated stakes in Ukrainian energy companies in the 1990s, is unclear.
The Justice Department said the Miami businessmen sold a stake in Optima to Kolomoyskiy and Boholyubov, but did not give details on the timing, size, or cost of the transaction. Korf and Laber declined to say when they sold the stake.
By 2000, Korf and Laber were doing business with the tycoons on various investments, including privatizations and acquisitions, according to the Seeking Alpha article. Kolomoyskiy and Boholyubov eventually named Laber to the board of Ukrnafta, Ukraine's largest oil producer.
In a 2002 book about Jewish diaspora communities, Laber was quoted as saying that he was introduced to his "Russian partners" -- an apparent reference to Kolomoyskiy and Boholyubov, as many people in eastern Ukraine speak Russian as their first language -- by Kaminezki, the rabbi who arrived in Dnipro in 1990.
Kolomoyskiy and Bohlyubov, who have Israeli citizenship, are close to Kaminezki and major supporters of Jewish culture in Ukraine and abroad.
"I didn't know who was honest and who wasn't, who we could work with, all the problems you run into in this part of the world. Without [Kaminezki] saying that 'this is an honest person' we wouldn't have known," Laber was quoted as saying. "Anyone can introduce you to another person; the point here is the reliability. He knows what's up, basically."
Kaminezki's characterization of Kolomoyskiy -- as recounted by Laber -- clashes with those who view the tycoon as among the country's worst corporate raiders.
Kaminezki's connections went beyond the local Jewish community to the city's most influential people. In 2008, he was recognized by a Ukrainian publication as one of the 15 most "powerful foreigners" in the country.
There is little public information about the various investments the Miami businessmen made with the tycoons in Ukraine.
One investment in which Korf was involved in the early 2000s related to a Ukrainian telecommunications venture that he and Kolomoyskiy fought to take control of, according to several Kyiv Post articles.
As part of the fight for the operator, called Ukrainian Radio Systems, the two reportedly ordered that a group of Koreans who were helping manage the operation be physically removed from a company building.
In 2010, Korf was sued in Florida by two Ukrainian investors who accused him of stealing a 10 percent stake in the operator and parking it in an offshore shell company. That stake was later sold to a bigger Russian telecom operator for $23 million.
The lawsuit ultimately went nowhere: one of the investors later dropped out, while the other settled with Korf, according to court records.
Whatever success the Miami businessmen and the tycoons achieved together in Ukraine, it was not matched in the United States, where they went through bankruptcies, shutdowns, and foreclosures.
According to corporate records, Korf and Laber ran four sizable businesses, including a specialty steel firm, a ferroalloy holding, a commercial real-estate business, and an industrial tire company.
Their steel company, Optima Specialty Steel, owned seven plants in five states. It filed for bankruptcy in 2016, resulting in the loss of roughly $200 million that Korf and his partners had invested in the business.
Ohio-based Warren Steel permanently shut down in 2016. Michigan-based Steel Rolling was idle for the majority of the time the men owned it before they sold it in 2015, according to media reports.
Another company, Georgian-American Alloys, has faced repeated work stoppages at its two U.S. plants over several years. Its Kentucky division is temporarily closed while its West Virginia business has only one of three lines operating, and the West Virginia operation has lost money most of its operating life, its chief financial officer said in 2013.
The men also invested in commercial real estate in various U.S. cities through a company called Optima Ventures.
They paid $16 million for an empty Illinois-based commercial campus but never found a tenant to occupy it. They sold it eight years later for $7 million less after having paid several million in property taxes and utilities.
However, Optima's actual loss was likely much greater due to taxes and maintenance costs that it paid over those eight years, according to Charles Eldredge, director of an economic development corporation in the region where the building is located. "It became quite clear from the beginning that they were speculators who thought they bought property at an inexpensive price and then would be able to resell it at a profit," Eldredge told RFE/RL. "And that did not work out for them."
Another office building in Dallas, Texas, has been without a tenant since 2016, while a building in Louisville, Kentucky, saw a massive fall in occupancy following a bank merger. Optima Ventures paid about $125 million for the two buildings, according to court documents; the Justice Department, which is seeking to seize the two properties, now estimates they are worth just $70 million.
The FBI, which is an arm of the Justice Department, said following their August 4 raid that their investigation is continuing.
For his part, Kolomoyskiy has rejected the U.S. accusations of embezzlement, fraud, and money laundering, saying the funds used to purchase the U.S. assets came from the sale of his stake in Ukrainian metals assets to a Russian giant called Evraz. He says he and his partners received $2 billion from the sale.
Kolomoyskiy fled Ukraine in 2017 amid concerns over prosecution and a falling out with then-President Petro Poroshenko. He returned to the country a month after Volodymyr Zelenskiy defeated Poroshenko in April 2019 to win the presidency.
He is now locked in a bitter battle for control of PrivatBank, which was nationalized in December 2016.
A civil lawsuit filed in Delaware court in the United States claims Kolomoyskiy and his partners laundered $780 million into the U.S. financial system through a series of bogus loans issued to companies they control.
PrivatBank has dubbed the alleged fraud the Optima Schemes because the U.S. assets were largely controlled by companies with the name Optima.
Kolomoyskiy has denied the allegations.
By Todd Prince, August 19, 2020, Published on RFE/RL