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. Last Updated: 07/27/2016

Launder Case Opened With a Ransom in '98




An investigation into alleged money laundering through a U.S. bank began when ransom money in a Russian kidnapping case was traced by the FBI, The Wall Street Journal reported Friday.


U.S. investigators believe that Russian criminal figures may have laundered up to $10 billion through accounts at the Bank of New York over the past five years.


The investigation began in August 1998, the newspaper said, when the Russian national police asked the FBI for assistance in the kidnapping of a Russian citizen, Eduard Olevinsky.


Russian police asked the FBI to help trace a $300,000 ransom payment made to the captors, the newspaper said, citing unidentified sources.


The FBI tracked the money from a San Francisco account maintained by Olevinsky to an account at the Bank of New York, then to an offshore bank and finally to an account at Sobin Bank in Moscow, the Journal said.


It is unclear what Olevinsky did and the reasons for his kidnapping, but the ransom eventually made its way back to his account in San Francisco, the Journal said.


Soon after, a compliance officer at the Bank of New York alerted the FBI to unusual wire transfers involving an account controlled by Peter Berlin, the Journal said. Berlin controlled the Bank of New York account through which Olevinsky's ransom had passed, according to the newspaper.


Since the inquiry's start, the bank has fired a vice president in its Eastern European division, Lucy Edwards, who was married to Berlin. Neither has been charged with any crime.


In July, Sobinbank, together with Sberbank and Gazprombank, was named as one of the 1,000 largest world financial institutions by The Banker magazine.


Riding on a huge foreign exchange gain last year, Sobinbank became one of the most profitable banks around the globe, the monthly magazine reported.


Sobinbank received a major helping hand from LUKoil, the Rocket Space Corporation Energiya, based outside Moscow, and the Manezh Square shopping mall. These three companies late last year took over Sobinbank, and the bank rolled into 1999 with a whopping 900 percent increase in equity.


Sobinbank in return owns a 6 percent stake in the Manezh, which is 87 percent owned by the Moscow city government.


Meanwhile, The Boston Globe reported Friday that more than $2 million flowed through BankBoston Corp. to a company under investigation in the Russian money-laundering scheme. Some of the BankBoston money went to Bank of New York accounts held by Benex International Co., a trading company being investigated, the Globe said, citing unidentified sources. Berlin is listed as a director of Benex.