The Eighth Man in the Russia Meeting Laundered Russian Money

This article first appeared on the Just Security site.

It is now widely reported that that Irakly “Ike” Kaveladze, the so-called eighth-person in the Trump campaign meeting with Russians on June 9, 2016, played a key role in an effort that moved more than a billion dollars into U.S. banks via shell companies on behalf of Eastern European and Russian clients in the late 1990s.

At the time, Kaveladze referred to allegations against him as a “witch hunt,” but this was not the first time for him to call such attention to Russian crime syndicates a witch hunt. He wrote it up in an Op-Ed.

Kaveladze was found by investigators with the U.S. Government Accountability Office (GAO) to have helped move more than $1.4 billion on behalf of a large number of Russian and Eastern European clients through accounts with Citibank in New York and Commercial Bank in San Francisco.

After arriving in New York from the Soviet Union in 1991, Kaveladze got to work registering more than 2,000 Delaware corporations and corresponding U.S. bank accounts on behalf of Russian operators that were used to launder offshore cash coming into the United States, according to investigators.

GettyImages-610602704 Donald Trump and Donald Trump Jr. after the first presidential debate at Hofstra University in Hempstead, New York on September 26, 2016. JEWEL SAMAD/AFP/Getty

While Kaveladze apparently indicated to the banks that he knew who owned the shell companies, their so-called beneficial owners, he didn’t reveal their identities when registering the Delaware corporations.

The GAO U.S. Government Accountability Office and Citibank’s own investigators ultimately found nothing illegal in these actions, despite the fact that they appeared to have found a blatant pattern of money laundering. Unsurprisingly, Kaveladze denied doing anything illegal, describing the investigation as a “witch hunt,” in a 2000 interview with the New York Times .

But this was not the first time for Kaveladze to call such efforts a witch hunt. He laid the groundwork months before news broke of the congressional investigation into his actions.

In August 1999, the New York Times broke a story of a Russian crime syndicate apparently laundering around $10 billion using the Bank of New York. As the Wall Street Journal wrote in 2007, that episode quickly became “one of the most scandalous chapters of post-Soviet capitalism.”

The Bank of New York settled the case six years later for $38 million, and U.S. authorities stated that the bank “accepted responsibility for its criminal conduct.”

In September 1999, Kaveladze took to writing. He accused the media coverage of ethnic bias against Russians. Just Security is providing the text of the Op-ed. Kaveladze’s closing two paragraphs are worth reproducing in full:

The American press not only seems eager to be used by all sides in the election campaigns in the two countries, but to lower the level of the debate. Even on the pages of respectable publications, the Russian businessman and the Russian-American have become stock villains from Central Casting.

While such stereotyping is obviously unfair to Russian-Americans, it is also a disservice to readers. An ethnic witch hunt has been substituted for a serious discussion of complex issues and disturbing processes taking place in Russia–which remains a nuclear superpower.

Ryan Goodman is co-editor-in-chief of Just Security. Ryan is the Anne and Joel Ehrenkranz Professor of Law at New York University School of Law. He served as Special Counsel to the General Counsel of the Department of Defense (2015-16).

John Reed is the managing editor of Just Security.

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