Accord­ing to the FBI and Israeli Intel­li­gence, Semion Mogile­vich Rules Over an Arms-Trafficking, Money-Laundering, Drug-Running, and Art-Smuggling ‘Red Mafia’

by Robert I. Fried­man
THE VILLAGE VOICE

In two posh vil­las out­side the small town of Ricany, near Prague, one of the most dreaded mob fam­i­lies in the world sav­agely mur­ders its ter­ri­fied vic­tims. The mob’s young enforcers, trained by vet­er­ans of the Afghanistan war, are infa­mous for their extreme bru­tal­ity. Their quarry, usu­ally busi­ness­men who have balked at extor­tion demands, are repeat­edly stabbed and tor­tured, then muti­lated before they are butchered. The car­nage is so hideous that it has scared the day­lights out of com­pet­ing crime groups in the area.

The tor­ture cham­bers are run by what inter­na­tional police offi­cials call the Red Mafia, a noto­ri­ous Russ­ian mob fam­ily that in only six years has become a nefar­i­ous global crime car­tel. Based in Budapest, it has key cen­ters in New York, Penn­syl­va­nia, South­ern Cal­i­for­nia, and as far away as New Zealand.

The enig­matic leader of the Red Mafia is a 52-year-old Ukrainian-born Jew named Semion Mogile­vich. He is a shad­owy fig­ure known as the ”Brainy Don”–he holds an eco­nom­ics degree from the Uni­ver­sity of Lvov–and until now, he has never been exposed by the media. But the Voice has obtained hun­dreds of pages of clas­si­fied FBI and Israeli intel­li­gence doc­u­ments from August 1996, and these documents–as well as recent inter­views with a key crim­i­nal asso­ciate and with dozens of law enforce­ment sources here and abroad–describe him as some­one who has become a grave threat to the sta­bil­ity of Israel and East­ern Europe.

”He’s the most pow­er­ful mob­ster in the world,” crows Monya Elson, who is listed in clas­si­fied doc­u­ments as one of Mogilevich’s clos­est asso­ciates and part­ners in pros­ti­tu­tion and money laun­der­ing rings. The Brighton Beach­based Elson, who once led a pack of thugs and killers known as Monya’s Brigada, is cur­rently in the Met­ro­pol­i­tan Cor­rec­tional Cen­ter in lower Man­hat­tan await­ing trial for three mur­ders and numer­ous extortions.

In July 1993, after Elson was griev­ously wounded by rival mob­sters in a bloody shoot-out out­side his Brook­lyn apart­ment build­ing, Mogile­vich spir­ited him out of the coun­try. Mogile­vich then set up his Russ­ian Jew­ish refugee friend in an alleged mas­sive money-laundering scheme in Fano, Italy, where he was even­tu­ally arrested and extra­dited back to Amer­ica. Elson, an inte­gral part of the Red Mafia, had been one of the most feared mob­sters in Brighton Beach, ground zero for Russ­ian orga­nized crime in Amer­ica, which has exploded here fol­low­ing perestroika.

”If I tell on Mogile­vich, Inter­pol will give me $20 mil­lion,” boasted Elson. ”I lived with him. I’m his part­ner, don’t for­get. We are very, very close friends. I don’t mean close, I mean very, very close. He’s my best friend.” Nev­er­the­less, after exten­sive inter­views over the course of the last six months, Elson ulti­mately con­firmed some of the details about Mogile­vich con­tained in the clas­si­fied FBI and Israeli documents.

Alle­ga­tions of Mogilevich’s dev­il­ish array of crim­i­nal activ­i­ties are exten­sively detailed in the reports:The FBI and Israeli intel­li­gence assert that he traf­fics in nuclear mate­ri­als, drugs, pros­ti­tutes, pre­cious gems, and stolen art. His con­tract hit squads oper­ate in the U.S. and Europe. He con­trols every­thing that goes in and out of Moscow’s Shereme­tyevo Inter­na­tional Air­port, a ”smug­glers’ par­adise,” says Elson. Mogile­vich bought a bank­rupt air­line in a for­mer Cen­tral Asian Soviet repub­lic for mil­lions of dol­lars in cash so he could haul heroin out of the Golden Tri­an­gle. Most wor­ri­some to U.S. author­i­ties is Mogilevich’s appar­ently legal pur­chase of vir­tu­ally the entire Hun­gar­ian arma­ments indus­try, jeop­ar­diz­ing regional secu­rity, NATO, and the war against terrorism.

In one typ­i­cal crim­i­nal deal, Mogile­vich and two Moscow-based gang­sters sold $20 mil­lion worth of pil­fered War­saw Pact weapons from East Ger­many, includ­ing ground-to-air mis­siles and 12 armored troop car­ri­ers, accord­ing to the clas­si­fied Israeli and FBI doc­u­ments. The buyer was Iran, says a top-level U.S. Cus­toms offi­cial who requested anonymity.

In another deal, an FBI infor­mant told the bureau that one of Mogilevich’s chief lieu­tenants in Los Ange­les met two Rus­sians from New York City with Gen­ovese crime fam­ily ties to bro­ker a scheme to dump Amer­i­can toxic waste in Rus­sia. Mogilevich’s man from L.A. said the Red Mafia would dis­pose of the toxic waste in the Cher­nobyl region, ”prob­a­bly through pay­offs to the decon­t­a­m­i­na­tion author­i­ties there,” says a clas­si­fied FBI report.

Mogile­vich is par­tic­u­larly intrigued by art fraud. In early 1993, he reached an agree­ment with the lead­ers of the pow­er­ful Sol­nt­sevskaya crime fam­ily in Moscow to invest huge sums of money in a joint ven­ture: acquir­ing a jew­elry busi­ness in Moscow and Budapest. The busi­ness, accord­ing to clas­si­fied FBI doc­u­ments, was to serve as a front for the acqui­si­tion of jew­elry, antiques, and art, which the Sol­nt­sevskaya mob had stolen from churches and muse­ums in Rus­sia, includ­ing the Her­mitage in St. Peters­burg. The gang­sters also robbed the homes of art col­lec­tors and even broke into syn­a­gogues in Ger­many and East­ern Europe to steal rare reli­gious books and Torahs.

Mogilevich’s oper­a­tion, again in col­lu­sion with the Sol­nt­sevskaya mob, also pur­chased a large jew­elry fac­tory in Budapest. Russ­ian antiques, such as Faberge eggs, are sent to Budapest for ”restora­tion.” Mogilevich’s men ship the gen­uine Faberge eggs to an unwit­ting Sotheby’s auc­tion house in Lon­don for sale, then send fake Faberge eggs as well as other ”restored” objects back to Moscow.

Mogilevich’s early years are murky. Soviet author­i­ties first learned of his crim­i­nal activ­i­ties in the 1970s, when he was a mem­ber of the Liu­bert­skaya crime group that oper­ated in the Moscow sub­urb of the same name. He was involved in petty thefts and counterfeiting.

But Mogile­vich made his first mil­lions fleec­ing fel­low Jews. In the mid 1980s, when tens of thou­sands of Jew­ish refugees were hur­riedly immi­grat­ing to Israel and Amer­ica, Mogile­vich made deals to buy their assets–rubles, fur­ni­ture, and art–cheaply, promis­ing to exchange the goods for fair mar­ket value and send refugees the pro­ceeds in ”hard” cur­rency. Instead, he sold their valu­ables and pock­eted the con­sid­er­able profits.

In the 1980s, he estab­lished a petro­leum import-export com­pany, Arbat Inter­na­tional, and reg­is­tered it in Alder­ney, one of the Chan­nel Islands, which is known to be a tax haven. One of his partners–with a quar­ter share of the company–was Vyach­eslav Ivankov, the leg­endary Russ­ian crim­i­nal who in March 1992 became God­fa­ther of the Russ­ian mob in Amer­ica. Ivankov was con­victed in 1996 of extort­ing two Russian-born Wall Street stock­bro­kers. He now resides in Ray­brook, a Fed­eral prison in upstate New York.

In early 1990, Mogile­vich fled Moscow, as did many other dons, to avoid the gang­land wars that were then roil­ing the cap­i­tal. Mogile­vich and his top hench­men set­tled in Israel, where they received Israeli cit­i­zen­ship. He ”suc­ceeded in build­ing a bridge­head in Israel” and ”devel­op­ing sig­nif­i­cant and influ­en­tial [polit­i­cal] ties,” says an Israeli intel­li­gence report.

Mogile­vich is mar­ried to a Hun­gar­ian national, Katalin Papp. That mar­riage allowed him to legally emi­grate to Budapest, Hun­gary, in 1991, where he began to build the foun­da­tions of his global crim­i­nal empire. He bought a string of night­clubs in Prague, Riga, and Kiev–called the ”Black and White Clubs”–that has become one of the world’s fore­most cen­ters of pros­ti­tu­tion. Monya Elson is a part­ner in the clubs, accord­ing to his own admis­sion and clas­si­fied FBI doc­u­ments. The Black and White Club in Budapest b
ecame the hub of Mogilevich’s oper­a­tions. He quickly built a highly struc­tured crim­i­nal orga­ni­za­tion, in the mode of a tra­di­tional Amer­i­can mafia fam­ily. Indeed, many of the organization’s 250 mem­bers are his relatives.

To the con­ster­na­tion of inter­na­tional law enforce­ment offi­cials, Mogile­vich began to legally pur­chase much of Hungary’s arms indus­try. The legit­i­mate com­pa­nies he bought include:

• Mag­nex 2000: a giant mag­net manufacturer.

• Digep Gen­eral Machine Works: an artillery shell, mor­tar, and fire equip­ment man­u­fac­turer, which was financed by a $3.8 mil­lion loan from the Lon­don branch of Banque Fran­caise De L’orean.

• Army Co-op: a mor­tar and anti-aircraft gun fac­tory. Army Co-op was estab­lished in 1991 by two Hun­gar­ian nation­als, both in the local arms indus­try, who were look­ing for a part­ner. Mogile­vich has bought 95 per cent of Army Co-op through another Chan­nel Island hold­ing com­pany, Arigon, Ltd., and also deals exten­sively with the Ukraine, sell­ing oil prod­ucts to the Ukrain­ian rail­way administration.

These trans­ac­tions enabled the Mogile­vich orga­ni­za­tion to become a direct owner of the Hun­gar­ian arma­ments indus­try. In 1994, he pur­chased a license enabling him to buy and sell weapons. Now a legit­i­mate arma­ments man­u­fac­turer, one of his com­pa­nies par­tic­i­pated in at least one arms exhi­bi­tion in the U.S., where it dis­played mor­tars mod­i­fied by Israel.

Like mob bosses every­where, Mogile­vich couldn’t sus­tain his empire with­out the help of cor­rupt police and politi­cians. There is one doc­u­mented exam­ple of a crim­i­nal asso­ciate of Mogile­vich min­gling with Amer­i­can politi­cians. In March 1994, Vah­tang Ubiriya, one of Mogilevich’s top lieu­tenants, was pho­tographed by the FBI at a tony Repub­li­can Party fundraiser in Dal­las, says an FBI report. Ubiriya, a high-ranking offi­cial in the Ukrain­ian rail­way admin­is­tra­tion, has a prior con­vic­tion for bribery in the Ukraine.

In Europe and Rus­sia, the ”cor­rup­tion of police and pub­lic offi­cials has been part of the Semion Mogile­vich Organization’s modus operandi,” says a clas­si­fied FBI doc­u­ment. ”The cor­rup­tive influ­ence of the Mogile­vich orga­ni­za­tion appar­ently extends to the Russ­ian secu­rity sys­tem. Dur­ing 1995, two colonels from Depart­ment of the Russ­ian Pres­i­den­tial Secu­rity Ser­vice . . . trav­eled to Hun­gary under com­mer­cial cover to meet with Mogile­vich . . . seek­ing infor­ma­tion for use in the Russ­ian polit­i­cal cam­paign.” An Israeli asso­ciate of Mogile­vich met with the two colonels and pro­vided intel­li­gence. Mogile­vich also paid off a Russ­ian judge to secure Vyach­eslav Ivankov’s early release from a Siber­ian prison, where he was doing hard time for rob­bery and tor­ture, accord­ing to U.S. court records and clas­si­fied FBI documents.

On April 28, the Ger­man national tele­vi­sion net­work ZDF reported that the BND (the Ger­man intel­li­gence agency) had entered into a secret con­tract with Mogile­vich to pro­vide infor­ma­tion on the Russ­ian mob. The charges were made by sev­eral sources, includ­ing Pierre Delilez, a highly regarded Bel­gium police inves­ti­ga­tor who spe­cial­izes in Russ­ian Orga­nized Crime. Because of this deal with the BND, police in Bel­gium, Ger­many, and Aus­tria have com­plained that it is now impos­si­ble to inves­ti­gate the ”Brainy Don.” If the tele­vi­sion report is accu­rate, one pos­si­ble motive for BND’s deal, says a U.S. law enforce­ment expert on the Russ­ian mob, is that the Ger­mans recently ”pulled their peo­ple out of Moscow because they didn’t like the level of coop­er­a­tion they were get­ting from the Russ­ian author­i­ties on the Russ­ian mob.” Gang­sters, said this source, often talk to intel­li­gence agen­cies about their rivals.

Mogilevich’s main activ­ity in the U.S. appears to be money laun­der­ing, says a clas­si­fied FBI report. He has set up com­pa­nies in Los Angeles–FNJ Trade Management–and New­ton, Pennsylvania–YBM Mag­nex International–as well as dozens of shell com­pa­nies, which have received more than $30 mil­lion from Arigon, Ltd., the cen­ter of Mogilevich’s finan­cial operations.

Last Fri­day, U.S. Attor­ney Robert Court­ney, head of the organized-crime strike force, led a a joint FBI, IRS, INS, and Cus­toms raid of YBM’s offices in New­ton. Car­tons of doc­u­ments were seized, with Cana­dian and U.S. police cit­ing the company’s alleged ties to Russ­ian orga­nized crime. YBM is pub­licly traded on the Toronto Stock Exchange, and two days before Friday’s raid, trad­ing in its stock was sus­pended by Cana­dian authorities.

The pres­i­dent and CEO of YBM is Jacob Bogatin, a pro­fes­sor of phys­i­cal met­al­lurgy. In May 1996, he con­tacted the FBI in Philadel­phia to find out why the INS had denied visas to YBM employ­ees arriv­ing from Hun­gary and the Ukraine. When he was rebuffed, he had inter­me­di­aries step for­ward and pester the FBI. The State Depart­ment has banned Mogile­vich him­self from obtain­ing a U.S. visa because he’s on the department’s watch list of inter­na­tional organized-crime fig­ures. Nev­er­the­less, he has sur­rep­ti­tiously entered Amer­ica under aliases and on vis­i­tor visas issued in Tel Aviv to visit Elson and Ivankov.

Bogatin admit­ted dur­ing a tele­phone inter­view that Mogile­vich owns his com­pany. When asked if he knew that numer­ous law enforce­ment agen­cies here and abroad con­sid­ered Mogile­vich to be a leader of one of the most ruth­less organized-crime fam­i­lies in recent times, Bogatin replied, ”We have an investors rela­tions guy. You want to talk with him about this stuff.” He added that he had read alle­ga­tions in the East­ern Euro­pean press that his boss was a Mafia don, but didn’t believe them. YBM vehe­mently denies that it is con­nected to Russ­ian orga­nized crime or has engaged in any crim­i­nal activities.

Bogatin is no stranger to the mob, how­ever. His brother, David, a top Russ­ian crime fig­ure who once served in North Viet­nam for the Sovi­ets in an anti-aircraft unit, is now serv­ing an eight-year term in a New York State prison for a multimillion-dollar gaso­line tax fraud scheme. Just prior to trial, he had jumped bail, flee­ing to Poland. There he set up the first com­mer­cial banks, which moved vast sums of money con­trolled by Russ­ian wiseguys. (This after hand­ing over his mort­gages for five pricey Trump Tower apart­ments to a Gen­ovese asso­ciate. The mort­gages were liq­ui­dated and the funds were moved through a mafia-controlled bank in Chelsea.) Even­tu­ally he was caught and returned to the U.S. In the mean­time, he lived like roy­alty in a five-star Vien­nese hotel, sur­rounded by a prae­to­rian guard of 125 Pol­ish para­chutists, some of them bedecked in shiny gold uniforms.

Mogile­vich has not refrained from asso­ci­at­ing with known killers in Amer­ica, prime among them Elson and Ivankov. A con­fi­den­tial infor­mant told the FBI that Vladimir Berkovich, an L.A. res­i­dent, is a chief lieu­tenant in Mogilevich’s orga­ni­za­tion and has arranged con­tract killings here, sup­ply­ing the weapons and spir­it­ing the killers out of the coun­try. The visas, says the report, were obtained through the Palm Ter­race restau­rant, a water­ing hole for Russ­ian gang­sters, which Berkovich owns. Berkovich told the Voice that he is aware of the government’s charges, and that they are ”total bull­shit.” Although he has no crim­i­nal record in the U.S., Berkovich’s son, Oleg, was con­victed in Los Ange­les of solic­i­ta­tion to com­mit mur­der on Octo­ber 11, 1989. He was sen­tenced to four years. Oleg’s busi­ness card iden­ti­fied his employer as Mag­nex, Ltd., a com­pany owned by Mogile­vich in Budapest. Oleg was recently arrested in Hun­gary on unspec­i­fied charges but was released.

Oleg’s uncle, the col­or­ful Lazar Berkovich, whose last known address was New York City, arrived in the Big Apple after hav­ing sur­vived a shootout with Ital­ian gang­sters, says his brother Vladimir. The FBI report claims that Lazar was head of Russ­ian crim­i­nal activ­i­ties in Italy prior to his com­ing to Amer­ica to recu­per­ate from his wounds, though Vladimir Bercovich denies that Lazar was ever con­nected to the Russ­ian mob.

Israeli and U.S. law enforce­ment sources agree that the Red Mafia, though in exis­tence
for a mere six years, has become one of the most for­mi­da­ble Russ­ian organized-crime fam­i­lies in the world. Strongest in the Ukraine, Hun­gary, the Czech Repub­lic, and the U.S., Mogile­vich has increased his strength by forg­ing ties with other pow­er­ful Russ­ian mob groups as well as with the Ital­ian Camorra. His reported ties to the Ger­man BND and ex­police offi­cers in Hun­gary keep him informed of police efforts to pen­e­trate his orga­ni­za­tion. ”He also ingra­ti­ates him­self with the police by pro­vid­ing infor­ma­tion on other [Russ­ian crime] groups’ activ­i­ties, thus appear­ing to be a coop­er­a­tive good cit­i­zen,” says a class­fied FBI report. This, along with his strong lead­er­ship qual­i­ties, his acute finan­cial skills, his tal­ented and highly edu­cated asso­ciates, and his use of cutting-edge tech­nol­ogy, has so far made the “Brainy Don” imper­vi­ous to prosecution.