Leader Of Miami Crew Sentenced To 63 Months In Prison For Defrauding Banks And Cryptocurrency Exchange Of More Than $4 Million
Geoffrey S. Berman, the United States Attorney for the Southern District of New York (“SDNY”), Brian A. Benczkowski, the Assistant Attorney General for the Criminal Division of the Department of Justice (“DOJ”), Don Fort, Chief of the Criminal Investigation Division, Internal Revenue Service (“IRS-CI”), and Patrick J. Lechleitner, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (“HSI”) Washington, D.C, announced today the filing of criminal charges against GULNARA KARIMOVA, a former Uzbek government official who is the daughter of the former president of Uzbekistan, and BEKHZOD AKHMEDOV, the former general director of Uzdunrobita, an Uzbek subsidiary of Moscow-based MOBILE TELESYSTEMS PJSC (“MTS”), the largest mobile telecommunications company in Russia and an issuer of publicly traded securities in the United States, in connection with one of the largest Foreign Corrupt Practices Act (“FCPA”) bribery schemes ever charged, a decade-long corrupt scheme to pay KARIMOVA more than $865 million in bribes. AKHMEDOV, who helped orchestrate the massive bribery scheme on behalf of MTS and two other telecommunications companies, VimpelCom Ltd. (“VimpelCom”) and Telia Company AB (“Telia”), and their Uzbek subsidiaries, is charged with one count of conspiracy to violate the FCPA and two counts of violating the FCPA. KARIMOVA and AKHMEDOV are each charged with one count of conspiracy to commit money laundering based on numerous international financial transactions they conducted to promote and conceal the bribery scheme. The case is assigned to U.S. District Judge Kimba Wood.
Yesterday afternoon, criminal charges were filed against MTS and another of its Uzbek subsidiaries, KOLORIT DIZAYN INK LLC (“KOLORIT”), for conspiring to violate the FCPA by paying more than $420 million in bribes through AKHMEDOV to KARIMOVA. KOLORIT pled guilty yesterday in Manhattan federal court before U.S. District Judge J. Paul Oetken to a criminal Information charging the company with conspiracy to violate the anti-bribery and books and records provisions of the FCPA. MTS entered into a deferred prosecution agreement (“DPA”) with SDNY and DOJ in connection with a criminal Information charging the company with one count of conspiracy to violate the anti-bribery and books and records provisions of the FCPA and one count of violating the internal controls provisions of the FCPA. Pursuant to the DPA, MTS agreed to pay a total criminal penalty of $850 million to the United States, including a $500,000 criminal fine and $40 million in criminal forfeiture that MTS agreed to pay on behalf of KOLORIT. MTS also agreed to the imposition of an independent compliance monitor for a term of three years and to implement rigorous internal controls and cooperate fully with SDNY’s and DOJ’s ongoing investigation, including their investigation of individuals such as KARIMOVA and AKHMEDOV.
In related proceedings, MTS reached a civil settlement with the SEC. Under the terms of its agreement with the SEC, MTS agreed to pay a $100 million civil penalty, which SDNY and DOJ agreed to credit toward the financial penalties imposed as part of their agreement with MTS. Thus, the combined total amount of criminal and regulatory penalties paid by MTS to U.S. authorities in connection with the FCPA bribery scheme will be $850 million.
U.S. Attorney Berman said: “This is the third installment in a trilogy of cases arising from an almost $1 billion bribery scheme that reached the highest echelons of the Uzbekistan government and was orchestrated by some of the largest telecommunications companies in the world. By funneling multimillion-dollar bribe payments through the U.S. financial system, the companies and individual defendants corruptly tried to tip the global economy in their favor and line their own pockets. But they are now paying the price. Today, my Office and our law enforcement partners are sending a bold, unequivocal message that the U.S. financial system is not in business to enable foreign bribery or money laundering. This Office stands ready to prevent, prosecute, and penalize foreign corrupt practices wherever in the world we find them.”
Assistant Attorney General Benczkowski said: “Gulnara Karimova stands accused of exploiting her official position to solicit and accept more than $865 million in bribes from three publicly traded telecom companies, and then laundering those bribes through the U.S. financial system. The indictment and corporate resolution announced today, together with two prior corporate resolutions involving bribes allegedly paid to Karimova, demonstrate the Department’s comprehensive approach to foreign corruption: we will aggressively pursue both corrupt foreign officials and the companies and individuals who bribe them in order to gain unfair business advantages, and we will do everything we can to keep the proceeds of that corruption out of the U.S. financial system.”
IRS-CI Chief Don Fort said: “With the increase in globalization and ease with which funds can be moved, criminals think their financial transactions cannot be tracked – but they would be wrong. We will continue to investigate violations of the Foreign Corrupt Practices Act to ensure our country’s financial institutions are not used for devious purposes. We are committed to aggressively pursuing all who engage in corruption, money laundering, and bribery for their own personal gain and at the expense of the United States government.”
HSI Special Agent in Charge Lechleitner said: “Corruption of this level and reach poisons our integrity as a participant in the global marketplace. Thanks to our skillful and collaborative investigators at ICE and the IRS-CI, Karimova and Ahkmedov’s exploitive crimes will be presented before the resolute and just eye of our courts and no longer will such corruption be permitted to metasticize across our borders.”
According to allegations contained in the Indictment filed today against KARIMOVA and AKHMEDOV and criminal Informations filed yesterday against MTS and KOLORIT, the Statement of Facts set forth in the DPA, and statements made during public proceedings in Manhattan federal court:
Between approximately 2001 and 2012, KARIMOVA and AKHMEDOV agreed that AKHMEDOV would solicit and obtain corrupt bribes for KARIMOVA from telecommunications companies, including MTS and KOLORIT, so that the companies could obtain and retain telecommunications business in Uzbekistan. The bribes were paid to KARIMOVA, who, in exchange, exercised her corrupt influence over Uzbek telecommunications industry regulators to allow the telecommunications companies to obtain lucrative business and operate in the Uzbek market. MTS and KOLORIT structured and concealed the bribes through various payments to shell companies that certain members of MTS and KOLORIT management knew were beneficially owned by KARIMOVA. In total, AKHMEDOV and others conspired to pay KARIMOVA more than $865 million in bribes. KARIMOVA, AKHMEDOV, and others agreed to launder those funds in order to promote and conceal the bribery scheme. For their part, MTS, KOLORIT, and affiliated entities paid KARIMOVA more than $420 million in bribes. A substantial portion of the illicit funds were transmitted through financial institutions in the Southern District of New York before they were deposited into bank accounts controlled by KARIMOVA in various countries around the world.
The resolution with MTS and KOLORIT, reached in coordination with the SEC, marks the third such resolution by a major international telecommunications company for bribery in Uzbekistan. On February 18, 2016, Amsterdam-based VimpelCom and its Uzbek subsidiary, Unitel LLC, entered into a resolution with SDNY and DOJ and admitted to conspiring to pay more than $114 million in bribes to KARIMOVA between 2005 and 2012. On September 21, 2017, Stockholm-based Telia and its Uzbek subsidiary, Coscom LLC, entered into a resolution with SDNY and DOJ and admitted to conspiring to pay more than $331 million in bribes to KARIMOVA between 2007 and 2010.
The investigation has thus far yielded a combined total of more than $2.6 billion in global fines and disgorgement, including more than $1.3 billion in criminal penalties paid to the United States. In related actions, DOJ has also filed civil complaints seeking the forfeiture of more than $850 million held in bank accounts in Switzerland, Belgium, Luxembourg, and Ireland, which constitute bribe payments made by MTS, VimpelCom, and Telia, or funds involved in the laundering of those bribes, to KARIMOVA
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KARIMOVA, 46, a citizen of Uzbekistan, was charged with one count of conspiracy to commit money laundering. AKHMEDOV, 44, a citizen of Uzbekistan currently residing in Russia, was charged with one count of conspiracy to violate the FCPA, two counts of violating the FCPA, and one count of conspiracy to commit money laundering. KARIMOVA and AKHMEDOV remain at large.
KOLORIT was charged with, and pled guilty to, one count of conspiracy to violate the anti-bribery and books and records provisions of the FCPA. MTS was charged with one count of conspiracy to violate the anti-bribery and books and records provisions of the FCPA and one count of violating the internal controls provisions of the FCPA.
Mr. Berman thanked the Fraud Section of the DOJ’s Criminal Division for their collaboration and praised the outstanding investigative work of IRS-CI, the IRS Global Illicit Financial Team, and HSI. Mr. Berman also thanked the SEC’s Division of Enforcement for its assistance and cooperation in the investigation. Mr. Berman expressed his appreciation to the DOJ’s Office of International Affairs for its significant assistance in this matter and to law enforcement colleagues in Austria, Belgium, Cyprus, France, Ireland, Isle of Man, Latvia, Luxembourg, Norway, the Netherlands, Switzerland, Sweden, and the United Kingdom.
The prosecution of this case is being handled by SDNY’s Complex Frauds and Cybercrime Unit and the FCPA Unit of the Fraud Section of DOJ’s Criminal Division. Assistant U.S. Attorney Edward A. Imperatore, Assistant Chief Ephraim Wernick, Senior Litigation Counsel Nicola Mrazek, and Trial Attorney Elina Rubin-Smith are in charge of the prosecution. Trial Attorney Michael Khoo of the DOJ Criminal Division’s Money Laundering and Asset Recovery Section (“MLARS”) is prosecuting the forfeiture case with substantial assistance from former MLARS Trial Attorney Marie M. Dalton, now an Assistant U.S. Attorney in the Western District of Washington.
The charges contained in the Indictment against KARIMOVA and AKHMEDOV are merely accusations, and the defendants are presumed innocent unless proved guilty.