Karen Azaryan lives in a nondescript house on the outskirts of Yerevan, the capital of Armenia. He had wanted to travel to Europe and in early 2018, he finally got his chance when a childhood friend, who now lives in Russia, offered him a deal. Azaryan could travel to Prague if he agreed to serve as a proxy director of a UK company and open a bank account. That company, Eltex Trade LLP, has been mentioned in a document to the Moldovan prosecutor’s office regarding the theft of $1 billion from Moldova in 2014.
Azaryan is one of nearly 100 Armenian citizens who, since 2017, have served as proxy directors for a network of shell companies that have been used by prominent oligarchs to move hundreds of millions of dollars out of Eastern Europe, evade taxes, and pay for lobbying services in the United States. Proxy directors help obscure the real owners of a company and can make it easier to avoid suspicion from a bank.
Reporters from Forensic News and Hetq interviewed many of the directors and analyzed invoices, court cases, and bank records to get an understanding of how the scheme worked.
The scheme appears to be similar to the so-called Russian laundromat, where tens of billions of dollars were moved out of Russia, through Moldova, and into the European Union.
Previous large money laundering schemes have used Baltic banks to move money into the European Union. However, in this case, many of the companies are registered in and use banks in Central Europe and Southeast Asia.
Reporters spoke with multiple banking experts who said that after repeated scandals, Baltic banks have gotten stricter with the companies they work with. As a result, criminals have been forced to take their businesses elsewhere.
One country that is commonly used in this scheme is the Czech Republic. Many of the directors traveled to Prague to open bank accounts for their respective companies. Marek Chromy, a senior analyst at Transparency International Czech Republic, said that law enforcement in the Czech Republic could be rather lax about enforcing company registration requirements, which can create loopholes in the enforcement process.
The Directors and the Laundromat
Azaryan’s company Eltex Trade is not the only Armenian-owned company with connections to the Russian laundromat. Many of the U.K. companies in the laundromat were incorporated by a company service provider named ArranConsult, which incorporated a number of the firms used in the Moldovan scandal.
Two Armenian-owned companies, Dackon LP and Balfern LP, appear on an archived version of Arran’s website. Both of those companies are co-owned by Roza Grigoryan, who is also director of the Polish company Worldtex Sp z o.o. According to a company report, Worldtex’s bank accounts were blocked in January 2019 by the Polish prosecutor’s office on suspicion of money laundering and terrorist financing.
When reporters questioned Grigoryan, she first denied any knowledge and said she had never been to Poland. However, when reporters found pictures of her in Warsaw and Prague on her Facebook account, she admitted that she was aware of the companies, but refused to talk further about them.
“It’s my problem and I’ll deal with it,” Grigoryan said.
Araqs Abrahamyan served as the director of an Austrian company called Equinto Handels GmbH. In 2017 and 2018, she traveled to Austria and Prague, with Naira Varderesyan, who was director of Builmast Handels GmbH. Abrahamyan also traveled to Thailand as recently as December to serve as director of a company there, indicating the laundromat is ongoing.
Equinto, Builmast, and two other Austrian companies in the laundromat, Norta Handels GmbH and Tarso Handels GmBh, appear to have direct links to organized crime. The power of attorney for Equinto and Norta belongs to a man named Konstantin Makarenko. Austrian magazine Profil previously did a series of articles on Makarenko. He is alleged to have owed Austria 100 million euros in taxes and helped to launder money for Russian organized crime. Makarenko’s daughter and wife are co-directors of Tarso and Builmast.
When reporters went to visit Abrahamyan at her house in Yerevan, her father told them to go away. Abrahamyan’s father and mother serve as shareholders of a U.K. company called Dastinway LLP, which was involved in a cryptocurrency scam.
One of the most prominent entities in the laundromat is a Polish company called Agrofusion Sp z.o.o., owned by Gevorg Setyan. Setyan traveled to Warsaw and Prague to open accounts for the company. When reporters visited Setyan at his house, he refused to say who orchestrated his travels but did admit to giving his passport to several banks.
According to invoices and contracts, Agrofusion, which has accounts at ING Bank Slaski and Bank Ochrony Środowiska S.A, has been used to send and receive millions of dollars from companies in Russia, Ukraine, and Moldova. In March 2018, the company sent $446,001.67 to ExecuJet, a private jet charter company. A note from Agrofusion said that the payment was on behalf of Almondine Limited, an Isle of Man company, which owned a Dassault Falcon 7X jet. A contract accompanying the note said that Agrofusion was acting on behalf of Mountain Group Limited, a Seychelles company that reincorporated in Cyprus in 2019. Corporate records show that one of the shareholders of Mountain Group Limited is Ardarma Limited. Ardarma is ultimately owned by Alexander Mamut, a billionaire Russian oligarch, who has been sanctioned by Ukraine.
Mamut’s son Nikolay also appears in the scheme as well. Nikolay is the owner of Lynwood Capital Management Fund Limited, which has shares in the Russian mining company Polymetal. According to bank records, in April 2020 Lynwood sent $395,590 to a Malaysian company called Protech Distribution Sdn. Bhd. for equipment. Protech is owned by Arshavir Arzumanyan. Reporters visited his house in Yerevan and spoke to his mother and wife, both of whom denied that he had ever been to Malaysia.
Agrofusion also paid $167,995.30 for transport services to Overstar Trade LLP. Overstar is owned by Oleksii Vekla, an employee at Ukraine’s Windrose Airlines, which is owned by Ukrainian oligarch Ihor Kolomoisky, who has been sanctioned by the U.S. and accused of laundering hundreds of millions of dollars through properties in the American midwest.
In some cases, some of the companies were used to obscure criminal activity, according to court records.
Two Czech companies, Venus Commercial Sro and FuelCorp Czech Sro, were used to hide financial arrangements that several Ukrainian companies had with Gazpromneft and other Russian entities concerning the Nord-Stream 2 pipeline.
In the Netherlands, a woman was scammed by the Shtern Group, an unlicensed brokerage firm that the Malta Financial Services Authority called “a scheme of dubious nature with a high risk of loss of money.” One of the companies that the Shtern Group told the woman to pay was Equiprom Sro, which is part of this laundromat and also has several accounts with Alfa-Bank Belarus.
Chaudet Associates Limited, based in Cyprus, has investments in a plethora of Russian businesses, company filings reveal. Chaudet is owned by a British Virgin Islands company called Mellerud Holdings Ltd. Radio Svoboda linked Mellerud to a Russian company that has won contracts to service flights for the Wagner mercenary group.
In 2013, Chaudet acquired nearly $1 million worth of shares in Emerging Travel Inc., which is an online travel booking service based in the United States. It also owned Russian telecom company Komiten that same year.
Some of the laundromat companies received money from banks whose assets were embezzled by their owners. Agrofusion received a loan of $1.78 million from a Cypriot company called Volandia Reserve Limited. Volandia Reserve reportedly received the Russian portfolio from Lithuania’s Bankas Snoras, whose owner Vladimir Antonov was arrested after siphoning off the bank’s assets.
The U.K.-based Final Active LP is listed as a related party in the bankruptcy of the Russian bank Unicorbank. Unicorbank is connected to Russian oligarch Aleksey Alyakin, who was arrested for embezzling funds from Pushkino Bank.
Nearly $1 million of laundromat money was used to pay for foreign lobbying services in the United States, including a large lobbying effort on behalf of Ukrainian politician Yulia Tymoshenko.
MKW Group, who lobbied for Tymoshenko, received $40,000 from Balfern LP, which was listed on the website of ArranConsult, the company formation agency involved in the Russian laundromat. Law firm Wiley Rein, who also lobbied for Tymoshenko, received $63,000 from three different entities; Singapore-based Vizientas Pte Ltd and Fenix Invest Pte Ltd, and the Czech company Venus Commercial Sro. Finally, a Maryland company called ITBC LLC, owned by a Ukrainian-American named Sergei Krasnitski, received $360,000 from Vizientas and Venus Commercial, for the Tymoshenko campaign.
In 2018, Ukrainian politician Valentyn Nalyvaichenko hired a little known lobbyist named Michael Esposito to set up meetings with Vice President Mike Pence, Secretary of State Mike Pompeo and National Security Advisor John Bolton. However, Esposito’s contract wasn’t with Nalyvaichenko directly. Instead it was with a Polish company called Zeset Sp z o.o., owned by Hovhannes Hovhannisyan, whose signature appears on the contract.
According to the FARA filing, in the section where it says to state the foreign principal’s business activity, Esposito appears to have simply copied text from Zeset’s website. Esposito received $400,000 from the company.
The contract came at a time when Nalyvaichenko was attempting to investigate Russian-backed allegations that Ukraine interfered in the 2016 election, and that then Vice President Joe Biden did political favors for a gas company that his son Hunter was on the board of.
Finally, former Ukrainian politician Andrii Artemenko received $74,450 from the Czech company Oilprom Sro. Forensic News previously revealed that Artemenko had purchased polling data from the 2019 Ukrainian presidential election for a television channel owned by oligarch Viktor Medvedchuk, whose daughter’s godfather is Vladimir Putin. Yet for unknown reasons, Artemenko was paid through Oilprom, which is owned by Arman Simonyan. When questioned by reporters, Simonyan initially denied knowing about Oilprom. However, he then admitted he was aware of the company, but refused to speak further about it.
Reporters obtained records showing that at least 12 of the companies in the laundromat appear to use two Bulgarian brokerage companies to move millions of dollars.
One of the firms is called MK Brokers, run by a group of former Bulgarian bankers. The executive director of the company is Tsanko Kolovksi, who was formerly the executive director of Investbank.
According to bank records, from February 2021 to May 2021 alone, MK Brokers transferred $8.3 million to a company called Danon LP with an account at Alfa-Bank Belarus. Danon has also sent emails with instructions to MK Brokers about securities trades to execute. The emails purport to be signed by Danon’s owner Armen Afandyan. They are written in English, even though Afandyan does not speak English and lives in Yerevan.
When a reporter contacted Kolovski and asked him if he thought it was odd that dozens of companies with Armenian owners were moving large sums of money through his firm, he replied “that’s how people do business in this part of the world.” He promised to have another conversation with the reporter the next day, but instead blocked him.
Protech Distribution, which received money from Nikolay Mamut’s company, is also a client of MK Brokers. According to a contract the two companies had, a man named Vladlen Petrenko was hired to manage investments for Protech. Petrenko has several connections to former Ukrainian banks.
He was the liquidator for Finrostbank, which had its banking license revoked after it was discovered that from 2012-2014, 1 Billion UAH ($27 million) were embezzled from the bank.
Petrenko was also the director of Finexbank, which self-liquidated in 2016. Finexbank was co-owned by Ukrainian businessman Sergei Osmukhin.
The other brokerage company is called Intercapital Markets and appears to work closely with MK Brokers.
Reporters obtained records showing that Intercapital Markets facilitated dozens of securities trades for Agrofusion and other laundromat companies from 2018 to 2021.
Nicolay Mayster, the executive director of Intercapital Markets, told reporters that all client transactions were confidential.
The issuer of many of the securities transactions is an Estonian company called FMLA OU. The contact person for FMLA is a man named Arnis Celmins, a financial advisor in Finland who previously worked for Parex Bank in Latvia. Parex, which had links to the Russian mafia, failed in 2008 after a series of money laundering scandals.
Celmins did not respond to requests for comment.
This article was developed with the support of Journalismfund Europe.