Attorney General Merrick Garland met on Tuesday with Ukraine’s prosecutor general, Iryna Venediktova.Credit…Nariman El-Mofty/Associated Press
WASHINGTON — Attorney General Merrick B. Garland said during a surprise trip to Ukraine on Tuesday that a veteran prosecutor known for investigating former Nazis would lead American efforts in tracking Russian war criminals.
Mr. Garland’s visit, part of scheduled stops in Poland and Paris this week, was intended to bolster U.S. and international support in helping Ukraine identify, apprehend and prosecute Russians involved in war crimes and other atrocities.
His overseas travel comes at a particularly tense moment in his tenure at the Justice Department, on a day of dramatic congressional testimony about the Jan. 6 attack on the Capitol that prompted many Democrats to renew their call for him to prosecute former President Donald J. Trump and his allies.
Mr. Garland met for an hour with Ukraine’s prosecutor general, Iryna Venediktova, in the village of Krakovets, about a mile from the border with Poland, to discuss the technical, forensic and legal support that the United States could provide, department officials said.
“The United States is sending an unmistakable message” to those who have committed atrocities, Mr. Garland said: “There is no place to hide.”
“We will pursue every avenue available to make sure that those who are responsible for these atrocities are held accountable,” he added.
After the meeting, Mr. Garland said he was tapping Eli Rosenbaum, the former director of the Justice Department’s Office of Special Investigations, to create a war crimes accountability team that would work with Ukraine and international law enforcement groups.
Mr. Rosenbaum, 67, is best known for his work for the World Jewish Congress in the 1980s investigating the hidden history of Kurt Waldheim, a former United Nations secretary general whose army unit was implicated in war crimes against Jews and Yugoslavian partisans during World War II.
His work, during a 36-year career in the department, and in stints outside government, earned him the nickname “Nazi hunter” from historians, a sobriquet he dislikes.
In the department’s criminal division, Mr. Rosenbaum has also been instrumental in the prosecution and deportation of Nazis living in the United States and Jews who committed atrocities against their own people in concentration camps. In recent years, his portfolio has taken on a broader mission, as former Nazis die off, and now includes a wider array of human rights cases, at home and abroad.
The new team will include Justice Department staff members and outside experts. In addition to offering assistance to Ukrainian officials, the department said in a statement that Mr. Rosenbaum would investigate “potential war crimes over which the U.S. possesses jurisdiction, such as the killing and wounding of U.S. journalists covering the unprovoked Russian aggression in Ukraine.”
This line of work is, in a sense, part of Mr. Rosenbaum’s family business. His father, Irving, escaped Dresden in 1938, the year of the Kristallnacht attacks against Germany’s Jewish population, joined the U.S. Army, eventually served in an intelligence unit that interrogated German soldiers — and collected information at the Dachau concentration camp.
Mr. Rosenbaum was set to retire before Mr. Garland asked him about a week ago to lead the new unit. He agreed immediately, according to a senior Justice Department official with knowledge of the exchange.
The department is also assigning additional personnel to expand its work with Ukraine and other partners to counter Russian use of illicit financial methods to evade international sanctions — detailing a Justice Department expert to advise Ukraine on fighting kleptocracy, corruption and money laundering, officials said.
“We will pursue every avenue available to make sure that those who are responsible for these atrocities are held accountable,” added Mr. Garland, whose own family immigrated to the United States after fleeing antisemitic pogroms in Eastern Europe in the early 1900s.
After stopping in Poland, Mr. Garland flew on to Paris, where he was scheduled to join the homeland security secretary, Alejandro Mayorkas, in a series of bilateral meetings with European counterparts to discuss efforts to combat terrorism and carry out a strategy of holding Russia accountable for its brutal invasion of Ukraine.
Mr. Garland and Ms. Venediktova last met in May in Washington.
In April, Mr. Garland and the F.B.I. director, Christopher A. Wray, said they would work with investigators and prosecutors in Ukraine, a signal that the Biden administration intended to follow through on its public condemnation of atrocities committed by Russian forces that have been documented during the war.
His team has also been working with the State Department to provide logistical support and advice to Ms. Venediktova and the leaders of other ministries in Ukraine.
“We’ve seen and have determined that a number of war crimes have been committed by Russia’s forces,” Beth Van Schaack, the State Department’s ambassador at large for global criminal justice, said at a briefing in Washington last week.
“What we are seeing is not the results of a rogue unit,” she added, “but rather a pattern and practice across all the areas in which Russia’s forces are engaged.”
WASHINGTON, June 16 (Reuters) – Law enforcement in the United States, Germany, the Netherlands and Britain dismantled a global network of internet-connected devices that had been hacked by Russian cyber criminals and used for malicious purposes, the U.S. Justice Department said on Thursday.
The network, known as the “RSOCKS” botnet, comprised millions of hacked computers and devices worldwide, including “Internet of Things” gadgets like routers and smart garage openers, the department said in a statement.
RSOCKS users paid a fee of between $30 and $200 per day to route malicious internet activity through compromised devices to mask or hide the true source of the traffic, the department said.
“It is believed that the users of this type of proxy service were conducting large scale attacks against authentication services, also known as credential stuffing, and anonymizing themselves when accessing compromised social media accounts, or sending malicious email, such as phishing messages,” it said.
Several large public and private entities have been victims of RSOCKS, including a university, a hotel, a television studio and an electronics manufacturer, the department said. It did not name any of them.
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Reporting by Rami Ayyub; Editing by Leslie Adler
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NEW YORK/MUNICH, May 17 (Reuters) – Germany’s Allianz SE (ALVG.DE) agreed to pay more than $6 billion and its U.S. asset management unit pleaded guilty to criminal securities fraud over the collapse of a group of investment funds early in the COVID-19 pandemic.
Allianz’s settlements with the U.S. Department of Justice and U.S. Securities and Exchange Commission are among the largest in corporate history, and dwarf earlier settlements obtained under President Joe Biden’s administration.
Gregoire Tournant, the former chief investment officer who created and oversaw the now-defunct Structured Alpha funds, was also indicted for fraud, conspiracy and obstruction, while two other former portfolio managers entered related guilty pleas.
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Once with more than $11 billion of assets under management, the Structured Alpha funds lost more than $7 billion as COVID-19 roiled markets in February and March 2020.
Allianz Global Investors US LLC was accused of misleading pension funds for teachers, bus drivers, engineers, religious groups and others by understating the funds’ risks, and having “significant gaps” in its oversight. read more
Investors were told the funds employed options that included hedges to protect against market crashes, but prosecutors said the fund managers repeatedly failed to buy those hedges.
Prosecutors said the managers also inflated fund results to boost their pay through performance fees, with Tournant, 55, collecting $13 million in 2019 and becoming his unit’s highest or second-highest-paid employee from 2015 to 2019.
Investigators said the misrepresentations began in 2014, and helped Allianz generate more than $400 million of net profit.
At a news conference, U.S. Attorney Damian Williams in Manhattan said more than 100,000 investors were harmed, and that while American prosecutors rarely bring criminal charges against companies it was “the right thing to do.”
Investors “were promised a relatively safe investment with strict risk controls designed to weather a sudden storm, like a massive collapse in the stock market,” he said. “Those promises were lies…. Today is the day for accountability.”
BLAMING COVID
Also known for its insurance operations, Allianz is among Germany’s most recognizable brands and an Olympic sponsor.
Its namesake arena near its Munich headquarters, meanwhile, houses Bayern Munich, one of world’s best-known soccer teams.
The settlement calls for Allianz to pay a $2.33 billion criminal fine, make $3.24 billion of restitution and forfeit $463 million, court papers show.
Williams said the fine was significantly reduced because of Allianz’s compensation to investors.
Even so, the payout is close to twice the $3.3 billion in corporate penalties that the Justice Department collected for all of 2021.
An Allianz lawyer entered the guilty plea at a hearing before U.S. District Judge Loretta Preska in Manhattan.
Allianz also accepted a $675 million civil fine from by the SEC, one of that regulator’s largest penalties since Enron Corp and WorldCom Inc imploded two decades ago.
Shares of Allianz closed up 1.7% in Germany, with the payout broadly matching reserves that the company previously set aside.
Tournant, of Basalt, Colorado, surrendered to authorities on Tuesday morning.
The U.S.-French citizen appeared briefly in Denver federal court, and was released after agreeing to post a $20 million bond. An arraignment was set for June 2 in New York.
Tournant’s lawyers, Seth Levine and Daniel Alonso, said the investor losses were “regrettable” but did not result from a crime.
“Greg Tournant has been unfairly targeted [in a] meritless and ill-considered attempt by the government to criminalize the impact of the unprecedented, COVID-induced market dislocation,” the lawyers said in a joint statement.
The other two portfolio managers – Stephen Bond-Nelson, 51, of Berkeley Heights, New Jersey; and Trevor Taylor, 49, of Miami – agreed to plead guilty to fraud and conspiracy, and cooperate with prosecutors. Their lawyers declined immediate comment.
VOYA PARTNERSHIP
Allianz’s guilty plea carries a 10-year ban on Allianz Global Investors’ providing advisory services to U.S.-registered investment funds.
As a result, Allianz plans to move about $120 billion of investor assets to Voya Financial Inc (VOYA.N) in exchange for a stake of up to 24% in Voya’s investment management unit. It expects a final agreement in the coming weeks.
Regulators said the misconduct included when Tournant and Bond-Nelson altered more than 75 risk reports before sending them to investors.
The SEC said projected losses in one market crash scenario were changed to 4.15% from the actual 42.15%, simply by removing the “2.”
Allianz’s alleged oversight lapses included a failure to ensure Tournant was hedging, though prosecutors said only people in his group knew of the misconduct before March 2020.
“No compliance system is perfect, but the controls at AGI didn’t even stand a chance,” Williams said.
Bond-Nelson, at Tournant’s direction, also lied to Allianz’s in-house lawyers after the company learned about the altered reports and the SEC probe, prosecutors added.
“Unfortunately, we’ve seen a recent string of cases in which derivatives and complex products have harmed investors across market sectors,” SEC Chair Gary Gensler said in a statement.
Investors have also filed more than two dozen lawsuits against Allianz over the Structured Alpha funds.
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Reporting by Jonathan Stempel in New York and Tom Sims and Alexander Huebner in Munich
Additional reporting by Luc Cohen in New York
Editing by Chizu Nomiyama, Tomasz Janowski and Matthew Lewis
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Skyscrapers of the Moscow International Business Centre, also known as “Moskva-City”, are seen from Ostankino tower on a frosty winter day in Moscow, Russia January 8, 2017. REUTERS/Maxim Shemetov/File Photo
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NEW YORK, April 6 (Reuters) – The West’s punishment of Moscow over its invasion of Ukraine ramped up this week following the discovery of civilians shot dead at close range in the Ukrainian town of Bucha, seized from Russian forces. read more
Below are details on Westernsanctions so far:
BANKS & FINANCIAL FIRMS read more
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The U.S. imposed “full blocking sanctions” on Sberbank (SBER.MM), which holds one-third of Russia’s total banking assets, and Alfabank, the country’s fourth largest financial institution. That means U.S. persons cannot do business with the lenders, while any of their assets that touch the U.S financial system are frozen.
Britain also on Wednesday froze Sberbank’s assets.
U.S. President Joe Biden on Wednesday was set to sign an executive order prohibiting new investment in Russia by U.S. persons, which includes a ban on venture capital and mergers, U.S. officials said. read more
Previous sanctions by the U.S., Britain and other Western allies in the days following Russia’s Feb. 24 invasion of Ukraine, which it calls “a special military operation,” kicked the vast majority of Russian banking assets out of those countries, although some activities were allowed to continue.
U.S. banks were required to sever correspondent banking ties, which allow banks to make payments between one another, with Sberbank. Russian lenders VTB, Otkritie, Novikombank and Sovcombank, were also subject to full blocking sanctions.
European Union sanctions hit 70% of the Russian banking system. read more
INDIVIDUALS
The United States on Wednesday announced sanctions on Russian President Vladimir Putin’s two adult daughters, Russian Foreign Minister Sergei Lavrov’s wife and daughter, and senior members of Russia’s security council.
Separately, the U.S. Justice Department on Wednesday said it charged Russian oligarch Konstantin Malofeyev with violating existing sanctions, saying he provided financing for Russians promoting separatism in Crimea. read more
The U.S. government on Feb. 25 joined European countries in slapping sanctions on Putin and Lavrov.
More than 100 Russian elites, including members of Putin’s inner circle, members of the Russian parliament, and Russian executives and businessmen, have been sanctioned since Feb. 24 by Western nations. read more
SWIFT BAR read more
The United States, Britain, Europe and Canada in February and March blocked certain Russian lenders’ access to the SWIFT international payment system, preventing the lenders from conducting most of their financial transactions worldwide.
The movealso placed restrictions on the Russian central bank’s international reserves, the nations said in a joint statement. read more
SWIFT is used by more than 11,000 financial institutions in over 200 countries.
SOVEREIGN DEBT & CAPITAL MARKETS
This week, the United States stopped the Russian government from paying holders of its sovereign debt more than $600 million from reserves held at U.S. banks.
Under earlier sanctions, foreign currency reserves held by the Russian central bank at U.S. lenders were frozen, but the Treasury had allowed Moscow to use those funds to make coupon payments on dollar-denominated sovereign debt on a case-by-case basis. On Monday, Washington decided to cut off Moscow’s access to the funds, according to a U.S. Treasury spokesperson.
In late February, Britain, the European Union and the United States put new restrictions on dealing in Russian sovereign debt. read more
Britain announced a ban on Russian sovereign debt sales in London, the European Union banned EU investors from trading in Russian state bonds, and U.S. investors, who were already barred from investing in Russian sovereign debt directly, were banned from purchasing it in the secondary market from March 1.
ENERGY
U.S. President Biden on March 8 imposed an immediate ban on Russian oil and other energy imports and Britain said it would phase out imports through the end of 2022. read more
Berlin on Feb. 22 halted the certification of the Nord Stream 2 Baltic Sea gas pipeline project designed to double the flow of Russian gas direct to Germany. The following day the United States imposed sanctions on the company in charge of building the pipeline. read more
The United States and the EU already had sanctions in place following Moscow’s 2014 annexation of Crimea on Russia’s energy and defense sectors, with state-owned gas company Gazprom (GAZP.MM), its oil arm Gazpromneft and oil producers Lukoil, Rosneft and Surgutneftegaz (SNGS.MM) facing various types of curbs on exports/imports and debt-raising.
CURBING TECHNOLOGY
Sanctions proposed by the European Union on Tuesday, which the bloc’s 27 member states must approve, would bar Russian imports worth 9 billion euros ($9.8 billion) and exports to Russia worth 10 billion euros, including semiconductors and computers, and stop Russian ships entering EU ports. read more
The EU earlier vowed to introduce measures to crimp Russia’s technological position in key areas – from high-tech components to cutting-edge software.
The U.S. Commerce Department imposed export controls that severely restrict Russia’s access to semiconductors, computers, telecommunications, information security equipment, lasers, and sensors that it needs to sustain its military capabilities.
Similar measures were deployed during the Cold War, when sanctions kept the Soviet Union technologically backward and crimped economic growth.
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Reporting by John McCrank in New York, Michelle Price in Washington, Karin Strohecker and Catherine Belton in London; Editing by Chris Reese
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WASHINGTON — As Russian troops retreat from northern Ukraine and focus operations on the country’s east and south, the Kremlin is struggling to scrape together enough combat-ready reinforcements to conduct a new phase of the war, according to American and other Western military and intelligence officials.
Moscow initially sent 75 percent of its main ground combat forces into the war in February, Pentagon officials said. But much of that army of more than 150,000 troops is now a spent force, after suffering logistics problems, flagging morale and devastating casualties inflicted by stiffer-than-expected Ukrainian resistance, military and intelligence officials say.
There are relatively few fresh Russian troops to fill the breach. Russia has withdrawn the forces — as many as 40,000 soldiers — it had arrayed around Kyiv and Chernihiv, two cities in the north, to rearm and resupply in Russia and neighboring Belarus before most likely repositioning them in eastern Ukraine in the next few weeks, U.S. officials say.
The Kremlin is also rushing to the east a mix of Russian mercenaries, Syrian fighters, new conscripts and regular Russian army troops from Georgia and easternmost Russia.
Whether this weakened but still very lethal Russian force can overcome its blunders of the first six weeks of combat and accomplish a narrower set of war aims in a smaller swath of the country remains an open question, senior U.S. officials and analysts said.
Borodianka, a Ukrainian commuter town near Kyiv, was among the first places to be hit by Russian airstrikes. Credit…Ivor Prickett for The New York Times
“Russia still has forces available to outnumber Ukraine’s, and Russia is now concentrating its military power on fewer lines of attack, but this does not mean that Russia will succeed in the east,” Jake Sullivan, President Biden’s national security adviser, said on Monday.
“The next stage of this conflict may very well be protracted,” Mr. Sullivan said. He added that Russia would probably send “tens of thousands of soldiers to the front line in Ukraine’s east,” and continue to rain rockets, missiles and mortars on Kyiv, Odesa, Kharkiv, Lviv and other cities.
U.S. officials have based their assessments on satellite imagery, electronic intercepts, Ukrainian battlefield reports and other information, and those intelligence estimates have been backed up by independent analysts examining commercially available information.
Earlier U.S. intelligence assessments of the Russian government’s intent to attack Ukraine proved accurate, although some lawmakers said spy agencies overestimated the Russian military’s ability to advance quickly.
As the invasion faltered, U.S. and European officials have highlighted the Russian military’s errors and logistical problems, though they have cautioned that Moscow’s ability to regroup should not be underestimated.
The Ukrainian military has managed to reclaim territory around Kyiv and Chernihiv, attacking the Russians as they retreat; thwarted a ground attack against Odesa in the south and held on in Mariupol, the battered and besieged city on the Black Sea. Ukraine is now receiving T-72 battle tanks, infantry fighting vehicles and other heavy weapons — in addition to Javelin antitank and Stinger antiaircraft missiles — from the West.
Anticipating this next major phase of the war in the east, the Pentagon announced late Tuesday that it was sending $100 million worth of Javelin anti-tank missiles — roughly several hundred missiles from Pentagon stocks — to Ukraine, where the weapon has been very effective in destroying Russian tanks and other armored vehicles.
Burned-out remains of Russian armored vehicles littered a forest road near Dmytrivka, Ukraine, on Saturday.Credit…Ivor Prickett for The New York Times
American and European officials believe that the Russian military’s shift in focus is aimed at correcting some of the mistakes that have led to its failure to overcome a Ukrainian army that is far stronger and savvier than Moscow initially assessed.
But the officials said it remained to be seen how effective Russia would be in building up its forces to renew its attack. And there are early signs that pulling Russian troops and mercenaries from Georgia, Syria and Libya could complicate the Kremlin’s priorities in those countries.
Some officials say Russia will try to go in with more heavy artillery. By focusing its forces in smaller geographic area, and moving them closer to supply routes into Russia, Western intelligence officials said, Russia hopes to avoid the logistics problems its troops suffered in their failed attack on Kyiv.
Other European intelligence officials predicted it would take Russian forces one to two weeks to regroup and refocus before they could press an attack in eastern Ukraine. Western officials said that President Vladimir V. Putin of Russia was desperate for some kind of win by May 9, when Russia traditionally celebrates the end of World War II with a big Victory Day parade in Red Square.
“What we are seeing now is that the Kremlin is trying to achieve some kind of success on the ground to pretend there is a victory for its domestic audience by the 9th of May,” said Mikk Marran, the director general of the Estonian Foreign Intelligence Service.
Mr. Putin would like to consolidate control of the Donetsk and Luhansk regions of eastern Ukraine, and establish a land bridge to the Crimean Peninsula by early May, a senior Western intelligence official said.
Russia has already moved air assets to the east in preparation for the renewed attack on the heart of the Ukrainian military, and has increased aerial bombardment in that area in recent days, a European diplomat and other officials said.
Emergency workers removing debris on Wednesday in Kharkiv, Ukraine.Credit…Tyler Hicks/The New York Times
“It’s a particularly dangerous scenario for the Ukrainians now, at least on paper,” said Alexander S. Vindman, an expert on Ukraine who became the chief witness in President Donald J. Trump’s first impeachment trial. “In reality, the Russians haven’t performed superbly well.Whether they could actually bring to bear their armor, their infantry, their artillery and air power in a concerted way to destroy larger Ukrainian formations is yet to be seen.”
Russian troops have been fighting in groups of a few hundred soldiers, rather than in the bigger and more effective formations of thousands of soldiers used in the past.
“We haven’t seen any indication that they have the ability to adapt,” said Mick Mulroy, a former senior Pentagon official and retired C.I.A. officer.
The number of Russian losses in the war so far remains unknown, though Western intelligence agencies estimate 7,000 to 10,000 killed and 20,000 to 30,000 wounded. Thousands more have been captured or are missing in action.
The Russian military, the Western and European officials said, has learned at least one major lesson from its failures: the need to concentrate forces, rather than spread them out.
But Moscow is trying to find additional forces, according to intelligence officials.
Russia’s best forces, its two airborne divisions and the First Guards Tank army, have suffered significant casualties and an erosion of combat power, and the military has scoured its army looking for reinforcements.
The British Defense Ministry and the Institute for the Study of War, a Washington think tank that analyzes the Ukraine war, both reported on Tuesday that the Russian troops withdrawing from Kyiv and Chernihiv would not be fit for redeployment soon.
“The Russians have no ability to rebuild their destroyed vehicles and weapon systems because of foreign components, which they can no longer get,” said Maj. Gen. Michael S. Repass, a former commander of U.S. Special Operations forces in Europe who has been involved with Ukrainian defense matters since 2016.
Russian forces arriving from Abkhazia and South Ossetia, two secessionist statelets that broke away from Georgia during the 1990s and then expanded in 2008, have been conducting peacekeeping duties and are not combat ready, General Repass said.
Russia’s problems finding additional troops is in large measure why it has invited Syrian fighters, Chechens and Russian mercenaries to serve as reinforcements. But these additional forces number in the hundreds, not thousands, European intelligence officials said.
The Chechen force, one of the European intelligence officials said, is “clearly used to sow fear.” The Chechen units are not better fighters and have suffered high losses. But they have been used in urban combat situations and for “the dirtiest kind of work,” the official said.
Russian mercenaries with combat experience in Syria and Libya are gearing up to assume an increasingly active role in a phase of the war that Moscow now says is its top priority: fighting in the country’s east.
The number of mercenaries deployed to Ukraine from the Wagner Group, a private military force with ties to Mr. Putin, is expected to more than triple to at least 1,000 from the early days of the invasion, a senior American official said.
Wagner is also relocating artillery, air defenses and radar that it had used in Libya to Ukraine, the official said.
Moving mercenaries will “backfire because these are units that can’t be incorporated into the regular army, and we know that they are brutal violators of human rights which will only turn Ukrainian and world opinion further against Russia,” said Evelyn N. Farkas, the top Pentagon official for Russia and Ukraine during the Obama administration.
Hundreds of Syrian fighters are also heading to Ukraine, effectively returning the favor to Moscow for its helping President Bashar al-Assad crush rebels in an 11-year civil war.
A contingent of at least 300 Syrian soldiers has already arrived in Russia for training.
“They are bringing in fighters known for brutality in the hopes of breaking the Ukrainian will to fight,” said Kori Schake, the director of foreign and defense policy studies at the American Enterprise Institute. But, she added, any military gains there for Russia will depend on the willingness of the foreign fighters to fight.
Stiffer-than-expected Ukrainian resistance has left much of that original Russian forces of more than 150,000 soldiers a spent force, military and intelligence officials say.Credit…Daniel Berehulak for The New York Times
“One of the difficult things about putting together a coalition of disparate interests is that it can be hard to make them an effective fighting force,” she said.
Finally, Mr. Putin recently signed a decree calling up 134,000 conscripts. It will take months to train the recruits, though Moscow could opt to rush them straight to the front lines with little or no instruction, officials said.
“Russia is short on troops and is looking to get manpower where they can,” said Michael Kofman, the director of Russian studies at C.N.A., a research institute in Arlington, Va. “They are not well placed for a prolonged war against Ukraine.”
In July 2012, a shell company registered in the British Virgin Islands wired $20 million to an investment vehicle in the Cayman Islands that was controlled by a large American hedge fund firm.
The wire transfer was the culmination of months of work by a small army of handlers and enablers in the United States, Europe and the Caribbean. It was a stealth operation intended, at least in part, to mask the source of the funds: Roman Abramovich.
For two decades, the Russian oligarch has relied on this circuitous investment strategy — deploying a string of shell companies, routing money through a small Austrian bank and tapping the connections of leading Wall Street firms — to quietly place billions of dollars with prominent U.S. hedge funds and private equity firms, according to people with knowledge of the transactions.
The key was that every lawyer, corporate director, hedge fund manager and investment adviser involved in the process could honestly say he or she wasn’t working directly for Mr. Abramovich. In some cases, participants weren’t even aware of whose money they were helping to manage.
asked Congress for more resources as it helps to oversee the Biden administration’s sanctions program along with a new Justice Department kleptocracy task force. And on Capitol Hill, lawmakers are pushing a bill, known as the Enablers Act, that would require investment advisers to identify and more carefully vet their customers.
Mr. Abramovich has an estimated fortune of $13 billion, derived in large part from his well-timed purchase of an oil company owned by the Russian government that he sold back to the state at a massive profit. This month, European and Canadian authorities imposed sanctions on him and froze his assets, which include the famed Chelsea Football Club in London. The United States has not placed sanctions on him.
a pair of luxury residences near Aspen, Colo. But he also invested large sums of money with financial institutions. His ties to Mr. Putin and the source of his wealth have long made him a controversial figure.
Many of Mr. Abramovich’s U.S. investments were facilitated by a small firm, Concord Management, which is led by Michael Matlin, according to people with knowledge of the transactions who were not authorized to speak publicly.
Mr. Matlin declined to comment beyond issuing a statement that described Concord as “a consulting firm that provides independent third-party research, due diligence and monitoring of investments.”
A spokeswoman for Mr. Abramovich didn’t respond to emails and text messages requesting comment.
Concord, founded in 1999, didn’t directly manage any of Mr. Abramovich’s money. It acted more like an investment adviser and due diligence firm, making recommendations to the directors of shell companies in Caribbean tax havens about potential investments in marquee American investment firms, according to people briefed on the matter.
Paycheck Protection Program loan worth $265,000 during the pandemic. (Concord repaid the loan, a spokesman said.)
Concord’s secrecy made some on Wall Street wary.
In 2015 and 2016, investigators at State Street, a financial services firm, filed “suspicious activity reports” alerting the U.S. government to transactions that Concord arranged involving some of Mr. Abramovich’s Caribbean shell companies, BuzzFeed News reported. State Street declined to comment.
American financial institutions are required to file such reports to help the U.S. government combat money laundering and other financial crimes, though the reports are not themselves evidence of any wrongdoing having been committed.
But for the most part, American financiers had no inkling about — or interest in discovering — the source of the money that Concord was directing. As long as routine background checks didn’t turn up red flags, it was fine.
Paulson & Company, the hedge fund run by John Paulson, received investments from a company that Concord represented, according to a person with knowledge of the investment. Mr. Paulson said in an email that he had “no knowledge” of Concord’s investors.
Concord also steered tens of millions of dollars from two shell companies to Highland Capital, a Texas hedge fund. Highland hired a unit of JPMorgan Chase, the nation’s largest bank, to ensure that the companies were legitimate and that the investments complied with anti-money-laundering rules, according to federal court records in an unrelated bankruptcy case.
“corporate governance services” to investment managers.
The Russia-Ukraine War and the Global Economy
Card 1 of 6
Shortages of essential metals. The price of palladium, used in automotive exhaust systems and mobile phones, has been soaring amid fears that Russia, the world’s largest exporter of the metal, could be cut off from global markets. The price of nickel, another key Russian export, has also been rising.
Financial turmoil. Global banks are bracing for the effects of sanctions intended to restrict Russia’s access to foreign capital and limit its ability to process payments in dollars, euros and other currencies crucial for trade. Banks are also on alert for retaliatory cyberattacks by Russia.
For $15,000 a year, plus other fees, HighWater would provide an employee to sit on the board of the financial vehicle that the fund manager was expected to launch to accept the wealthy family’s money, according to emails between the fund manager and a HighWater executive reviewed by The New York Times.
The fund manager also brought on Boris Onefater, who ran a small U.S. consulting firm, Constellation, as another board member. Mr. Onefater said in an interview that he couldn’t remember whose money the Cayman vehicle was managing. “You’re asking for ancient history,” he said. “I don’t recall Mr. Abramovich’s name coming up.”
The fund manager hired Mourant, an offshore law firm, to get the paperwork for the Cayman vehicle in order. The managing partner of Mourant did not respond to requests for comment.
He also hired GlobeOp Financial Services, which provides administration services to hedge funds, to ensure that the Cayman entity was complying with anti-money-laundering laws and wasn’t doing business with anyone who had been placed under U.S. government sanctions, according to a copy of the contract.
“We abide by all laws in all jurisdictions in which we do business,” said Emma Lowrey, a spokeswoman for SS&C Technologies, a financial technology company based in Windsor, Conn., that now owns GlobeOp.
John Lewis, a HighWater executive, said in an email to The Times that his firm received four referrals from Concord from 2011 to 2014 and hadn’t dealt with the firm since then.
“We were aware of no links to Russian money or Roman Abramovich,” Mr. Lewis said. He added that GlobeOp “did not identify anything unusual, high risk, or that there were any politically exposed persons with respect to any investors.”
The Cayman fund opened for business in July 2012 when $20 million arrived by wire transfer. The expectation was that tens of millions more would follow, although additional funds never showed up. The Cayman fund was run as an independent entity, using the same investment strategy — buying and selling exchange-traded funds — employed by the fund manager’s main U.S. hedge fund.
The $20 million was wired from an entity called Caythorpe Holdings, which was registered in the British Virgin Islands.
Documents accompanying the wire transfer showed that the money originated with Kathrein Privatbank in Vienna. It arrived in Grand Cayman after passing through another Austrian bank, Raiffeisen, and then JPMorgan. (JPMorgan was serving as a correspondent bank, essentially acting as an intermediary for banks with smaller international networks.)
A spokesman for Kathrein declined to comment. A spokeswoman for JPMorgan declined to comment. Representatives for Raiffeisen did not respond to requests for comment.
The fund manager noticed that some of the documentation was signed by a lawyer named Natalia Bychenkova. The Russian-sounding name led him to conclude that he was probably managing money for a Russian oligarch. But the fund manager wasn’t bothered, since GlobeOp had verified that Caythorpe was compliant with know-your-customer and anti-money-laundering rules and laws.
He didn’t know who controlled Caythorpe, and he didn’t ask.
In early 2014, after Russia invaded the Ukrainian region of Crimea, markets tanked. The fund manager made a bearish bet on the direction of the stock market, and his fund got crushed when stocks rallied.
The next year, Caythorpe withdrew its money from the Cayman fund. Caythorpe was liquidated in 2017.
The fund manager said he didn’t realize until this month that he had been investing money for Mr. Abramovich.
Susan C. Beachy and Kitty Bennett contributed research. Maureen Farrell contributed reporting.
Behind a set of imposing metal doors in an easy-to-miss office building in a New York City suburb, a small team manages billions of dollars for a Russian oligarch.
For years, a group of wealthy Russians have used Concord Management, a financial-advisory company in Tarrytown, N.Y., to secretly invest money in large U.S. hedge funds and private equity firms, according to people familiar with the matter.
A web of offshore shell companies makes it hard to know for sure whose money Concord manages. But several of the people said the bulk of the funds belonged to Roman Abramovich, a close ally of President Vladimir V. Putin of Russia.
Concord is part of a constellation of American and European advisers — including some of the world’s largest law firms — that have long helped Russian oligarchs navigate the Western financial, legal, political and media landscapes.
both said they were leaving Russia. A spokeswoman for another large firm, Debevoise & Plimpton, said it was terminating several client relationships and would not take any new clients in Moscow. Ashurst, a large London-based law firm, said it would not “act for any new or existing Russian clients, whether or not they are subject to sanctions.”
The accounting giants PwC, KPMG, Deloitte and EY — which have provided extensive services to oligarchs and their networks of offshore shell companies — also said they were leaving Russia or severing ties with their local affiliates.
wrote a letter to the White House arguing that Russia’s Sovcombank shouldn’t face sanctions, citing the bank’s commitment to gender equity, environmental and social responsibility.
Sovcombank had agreed to pay the lobbyist’s firm, Mercury Public Affairs, $90,000 a month for its work.
The Biden administration recently imposed sanctions on Sovcombank. Within hours of the announcement, Mercury filed paperwork with the Justice Department indicating that it was terminating its contract with Sovcombank.
As recently as mid-February, the British law firm Schillings represented the Russian oligarch Alisher Usmanov, a longtime ally of Mr. Putin.
Two weeks later, the European Union and the U.S. Treasury placed sanctions on Mr. Usmanov. Nigel Higgins, a spokesman for Schillings, said the firm is “not acting for any sanctioned individuals or entities.”
say on its website that it represents “some of Russia’s largest companies,” including Gazprom and VTB. The firm said it was “reviewing and adjusting our Russia-related operations and client work” to comply with sanctions.
In Washington, Erich Ferrari, a leading sanctions lawyer, is suing the Treasury on behalf of Mr. Deripaska, who is seeking to overturn sanctions imposed on him in 2018 that he claims have cost him billions of dollars and made him “radioactive” in international business circles.
And the lobbyist Robert Stryk said he had recently had conversations about representing several Russian oligarchs and companies currently under sanctions. He previously represented clients targeted by sanctions, including the administrations of President Nicolás Maduro of Venezuela and former President Joseph Kabila of the Democratic Republic of Congo.
Mr. Stryk said he would consider taking the work if the Treasury Department provided him with the necessary licenses, and if the prospective clients opposed Russia’s aggression in Ukraine.
online profiles of current and former Concord employees.
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Gas supplies. Europe gets nearly 40 percent of its natural gas from Russia, and it is likely to be walloped with higher heating bills. Natural gas reserves are running low, and European leaders have accused Russia’s president, Vladimir V. Putin, of reducing supplies to gain a political edge.
Shortages of essential metals. The price of palladium, used in automotive exhaust systems and mobile phones, has been soaring amid fears that Russia, the world’s largest exporter of the metal, could be cut off from global markets. The price of nickel, another key Russian export, has also been rising.
Financial turmoil. Global banks are bracing for the effects of sanctions intended to restrict Russia’s access to foreign capital and limit its ability to process payments in dollars, euros and other currencies crucial for trade. Banks are also on alert for retaliatory cyberattacks by Russia.
Wall Street bankers and hedge fund managers who have interacted with Concord and its founder, Michael Matlin,said it oversaw between $4 billion and $8 billion.
It isn’t clear how much of that belongs to Mr. Abramovich, whose fortune is estimated at $13 billion.
Mr. Abramovich has not been placed under sanctions. His spokeswoman, Rola Brentlin, declined to comment on Concord.
Over the years, Concord has steered its clients’ money into marquee financial institutions: the global money manager BlackRock, the private equity firm Carlyle Group and a fund run by John Paulson, who famously anticipated the collapse of the U.S. housing market. Concord also invested with Bernard Madoff, who died in prison after being convicted of a vast Ponzi scheme.
panel focused on European security, requested that the U.S. government impose sanctions on Mr. Abramovich and seize the assets at Concord, “as this blood money presents a flight risk.”
The work performed by law, lobbying and public relations firms often plays out in public or is disclosed in legal or foreign agent filings, but that is rarely the case in the financial arena.
While Russian oligarchs make tabloid headlines for shelling out for extravagant superyachts and palatial homes, their bigger investments often occur out of public view, thanks to a largely invisible network of financial advisory firms like Concord.
Hedge fund managers and their advisers said they were starting to examine their investor lists to see if any clients were under sanctions. If so, their money needs to be segregated and disclosed to the Treasury Department.
Some hedge funds are also considering returning money to oligarchs who aren’t under sanctions, fearful that Russians might soon be targeted by U.S. and European authorities.
Paradise Papers project, involved the files of the Appleby law firm in Bermuda. At least four clients owned private jets through shell companies managed by Appleby.
When sanctions were imposed on companies and individuals linked to Mr. Putin in 2014, Appleby jettisoned clients it believed were affected.
The Russians found other Western firms, including Credit Suisse, to help fill the void.
Ben Freeman, who tracks foreign influence for the Quincy Institute for Responsible Statecraft, said Russians were likely to find new firms this time, too.
“There is that initial backlash, where these clients are too toxic,” Mr. Freeman said. “But when these lucrative contracts are out there, it gets to be too much for some people, and they can turn a blind eye to any atrocity.”
David Segal contributed reporting. Susan Beachy contributed research.
WASHINGTON, Dec 24 (Reuters) – A New York state judge on Friday ordered the New York Times to return internal documents to the conservative activist group Project Veritas, a restriction the newspaper said violates decades of First Amendment protections.
In an unusual written ruling, Justice Charles Wood of the Westchester County Supreme Court directed the New York Times to return to Project Veritas any physical copies of legal memos prepared by one of the group’s lawyers, and to destroy electronic versions.
Wood had entered a temporary order against the New York Times last month, drawing criticism from freedom of the press advocates. read more
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Project Veritas, led by James O’Keefe, has used what critics view as misleading tactics like secret audio recording to expose what it describes as liberal media bias. The group is the subject of a Justice Department probe into its possible role in the theft of a diary from President Joe Biden’s daughter, Ashley, pages of which were published on a right-wing website.
Project Veritas objected to a Nov. 11 Times article that drew from the legal memos and purported to reveal how the group worked with its lawyers to “gauge how far its deceptive reporting practices can go before running afoul of federal laws.”
Wood said in Friday’s ruling that the Project Veritas legal memos were not a matter of public concern and that the group has a right to keep them private that outweighs concerns about freedom of the press.
“Steadfast fidelity to, and vigilance in protecting First Amendment freedoms cannot be permitted to abrogate the fundamental protections of attorney-client privilege or the basic right to privacy,” Wood wrote.
A.G. Sulzberger, publisher of the New York Times, said the newspaper would appeal the ruling.
Sulzberger said the decision barred the Times from publishing newsworthy information that was obtained legally in the ordinary course of reporting.
“In addition to imposing this unconstitutional prior restraint, the judge has gone even further (and) ordered that we return this material, a ruling with no apparent precedent and one that could present obvious risks to exposing sources should it be allowed to stand,” Sulzberger said.
Libby Locke, a lawyer for Project Veritas, said in a statement that the New York Times’ behavior was “irregular,” and that the ruling affirms that view.
“The New York Times has long forgotten the meaning of the journalism it claims to espouse, and has instead become a vehicle for the prosecution of a partisan political agenda,” Locke said.
Project Veritas has been engaged in defamation litigation against the New York Times since last year, when the newspaper published a piece calling the group’s work “deceptive.”
The Times had not faced any prior restraint since 1971, when the Nixon administration unsuccessfully sought to block the publication of the Pentagon Papers detailing U.S. military involvement in Vietnam.
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Reporting by Jan Wolfe;
Editing by Mary Milliken and Leslie Adler
Our Standards: The Thomson Reuters Trust Principles.
But Judge Joan L. Larsen, a Trump appointee, dissented, arguing — as had the Fifth Circuit panel before her — that the agency had exceeded its legal authority.
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Pfizer vaccine in younger children. The company said that a low dose of its coronavirus vaccine did not produce an adequate immune response in 2- to 5-year-olds in ongoing clinical trials. The setback threatens to keep the vaccine from younger children for longer than many had hoped.
U.S. surpasses 800,000 deaths. This past week, Covid deaths in the United States surpassed 800,000 — the highest known number of any country. About 75 percent of those deaths have involved people 65 or older. One in 100 older Americans has died from the virus.
“The mandate is aimed directly at protecting the unvaccinated from their own choices,” Judge Larsen wrote. “Vaccines are freely available, and unvaccinated people may choose to protect themselves at any time. And because the secretary likely lacks congressional authority to force them to protect themselves, the remaining stay factors cannot tip the balance.”
All of the judges on the Fifth Circuit panel that had blocked the rule were conservative Republican appointees.
Challengers to the decision could appeal directly to the Supreme Court, which is controlled by a conservative bloc of six Republican appointees. (The Supreme Court this month refused to block New York’s requirement that health care workers be vaccinated against the coronavirus even when they cite religious objections.)
Challengers could also appeal to the full U.S. Court of Appeals for the Sixth Circuit. Of its 16 sitting judges, five were appointed by Democrats and 11 were appointed by Republicans. (However, one of the Republican appointees, Judge Helene N. White, was originally a nominee of a Democratic president, Bill Clinton, before being renominated by a Republican one, George W. Bush, as part of a political deal.)
Conditions on the ground are rapidly changing, with new cases surging, apparently because of the more-infectious Omicron variant. The Justice Department last month warned that keeping the mandate from coming into effect “would likely cost dozens or even hundreds of lives per day, in addition to large numbers of hospitalizations, other serious health effects and tremendous costs.”
The OSHA rule, alongside a separate requirement for federal contractors, has helped drive a number of large companies to announce a form of vaccine mandate, including Procter & Gamble, IBM and American Airlines. Others, like Tyson Foods and Google, introduced mandates on their own, in the face of the rising risk of the Delta variant.
Under the crush of thousands of lawsuits, Purdue filed for bankruptcy restructuring in September 2019, which automatically put a hold on all the claims against it.
Nearly two years later, Judge Robert Drain, the bankruptcy court judge in White Plains, N.Y., confirmed a plan that had been approved by a majority of creditors who voted. Purdue would be formally dissolved and would re-emerge as a new company called Knoa Pharma that would still produce OxyContin but also other drugs. The new company’s profits would go to states and communities to fund opioid treatment and prevention efforts.
The Sacklers would renounce their ownership, eventually sell their foreign pharmaceutical companies as well, and contribute $4.5 billion of their fortune to the state and local opioid abatement funds.
In exchange, all lawsuits against Purdue would be extinguished, a benefit typical of bankruptcy. What made the settlement so contentious was the Sacklers’ insistence on being released from all Purdue-related opioid claims, although they had not personally filed for bankruptcy.
In court, lawyers said there are more than 800 lawsuits that name the Sacklers.
After Judge Drain approved the plan, it was immediately appealed by the United States Trustee, a branch of the Justice Department that monitors bankruptcy cases; eight states, including Maryland, Washington and Connecticut; the District of Columbia; and about 2,000 individuals. The appeal was filed in federal district court.
Lawyers challenging the plan argued that the Sacklers had essentially gamed the bankruptcy system. Moreover, they argued, Judge Drain lacked the authority to shut off a state’s power to pursue the Sacklers under its own civil consumer protection laws.
Judge Colleen McMahon of the U.S. District Court for the Southern District of New York in Manhattan.Credit…Caitlin Ochs for The New York Times
“Today’s ruling is a critical development that restores the state’s ability to protect the safety of Marylanders by holding fully accountable those who created or contributed to the opioid crisis, particularly members of the Sackler family,” said Brian E. Frosh, the Maryland attorney general.