Notable Cases Dormant in USAO-SDNY

Martin Sheil
10 min readJun 12, 2018


Photo by Matt Borsic on Unsplash

Excluding the Michael Cohen case, a pattern of dormancy has been detected in the Southern District of New York(SDNY) with regard to several cases with some interesting connects that may, or may not relate to RussiaGate. Geoffrey Berman was appointed US Attorney(USAO) for the SDNY on January 5, 2018 by President Trump. This appointment never received Congressional approval, and Berman was compelled to receive his permanent appointment from a panel of Federal Judges in May 2018. Berman was recused from the Cohen matter by senior DOJ officials not named Jeff Sessions or Rod Rosenstein. It should be noted that President Trump personally interviewed Berman for the top job in a highly criticized move, and in contravention of past US Attorney appointment protocol. Deputy US Attorney Khuzami assumed direction of the Cohen matter, which SDNY has tackled by most accounts, with energy and legal resourcefulness. But the same cannot be said for the following sensitive USAO-SDNY cases that lay inactive:

1. Deutsche Bank $10Bn Russian Money Laundering via “Mirror Trades.”

2. Beny Steinmetz — Foreign Corrupt Practices Act(FCPA) — Alleged Multi-million dollar bribe of the President of Guinea for Iron ore rights

3. Bank Hapoalim — Alleged Facilitation of Tax Evasion for a multitude of American taxpayers via concealment of bank accounts held in Israel.

The Deutsche Bank “Mirror trades” Russian money-laundering investigation of over $10Bn laundered by Deutsche Bank’s Moscow branch, through their London and New York branches to various offshore entities, lay dormant in the USAO-SDNY. The United Kingdom’s Financial Conduct Agency(FCA) has fined Deutsche $204M, and New York State’s Department of Financial Services fined Deutsche $425M, simultaneous to FCA’s fine in January 2017. These gigantic fines were asserted on Deutsche Bank for failing to have proper controls to stop customers from transferring Billions of dollars from Russia to offshore bank accounts, using Mirror trades during the period 2011–2015, in violation of Anti-Money Laundering regulations. These massive fines were announced just a few short months after Deutsche Bank granted Jared Kushner’s company a $285M loan to finance the purchase of the top floors of the NY Times building in the Times Square area of NYC. Deutsche was already on the hook for over $360M in real estate loans to Kushner’s father-in-law Donald Trump.

While a November 2017 CNN report advised that DOJ Money Laundering Section had joined an ongoing SDNY criminal investigation of the Deutsche Bank Mirror Trades, it is unclear as to exactly when this investigation was initiated, just whom is supervising this potentially explosive investigation in NY, in Washington DC, and just why no one appears headed to prison for this nefarious scheme.

Further complicating matters, it is noted that Robert Khuzami was made the Deutsche Bank General Counsel in 2004. Khuzami brought Berman in from Rudy Giuliani’s old firm, Greenberg Traurig, to do legal work for Deutsche Bank. Berman represented several Deutsche Bank executives who were not charged but were swept up in a big tax evasion case. Khuzami left Deutsche Bank in 2009 to become Enforcement Chief at SEC. After Berman was selected by Trump to be the US Attorney for SDNY, he brought his old associate Robert Khuzami in to be his Deputy.

A possible contributing factor to the dormancy of this case is confusion over just what role if any, AG Jeff Sessions has with regard to the Deutsche Bank matter.

Democratic Congresswoman Maxine Waters voiced her concerns back in March 2017 and sent a letter to the Chairman of the House Financial Services committee requesting answers to some of the above questions. The letter further went on to note that “the suspicious ties between President (Donald) Trump’s inner circle and the Russian government … raise concerns that the Department may fail to implicate those who benefitted from Deutsche Bank’s trading scheme.”

One year later and no answers have been forthcoming. Texas Republican Congressman Mike Conaway stated to CNN, “I don’t see the link at this stage.” He further commented, “Deutsche Bank is a German bank — I don’t see the nexus.” Asked about explaining Russian-Trump business transactions, Conaway was not moved. “I bet every big bank has a Russian customer somewhere.” This laissez-faire Congressional perspective may help explain the sleepy DOJ SDNY approach to date, or not.

Is there a link? A New Yorker article by Ed Ceasar shed some light on the beneficiaries of Deutsche’s mirror trades, “Bloomberg News suggested that some of the money diverted through mirror trades belonged to Igor Putin, a cousin of the Russian President, and to Arkady and Boris Rotenberg. The Rotenberg brothers own Russia’s largest construction company, S.G.M., and are old schoolboy judo friends of Vladimir Putin. They are on the U.S. government’s list of sanctioned Russians, (which was recently amended to include Igor Rotenberg, son of Arkady). According to the U.S. Treasury, the Rotenberg's have “made billions of dollars in contracts” that were awarded to their company by the Russian state, often without a transparent bidding process.”

So that is at least three Russian customers for you Mr. Conaway, but wait there are more dots to connect here.

The recent Special Counsel indictment of London based Skadden Arps attorney Alex Van Der Zwaan is illuminating, in that Van Der Zwaag was charged with making false statements to the FBI about communications he had with Rick Gates in 2016. These communications allegedly covered work he did with the Ukrainian political Party of Regions, which employed Paul Manafort as a consultant. Van Der Zwaag is the Son-in-law of German Khan, a billionaire Russian oligarch who is a director and co-owner of Alfa Bank, and one of three key leaders of its parent company, the colossus Alfa Group Consortium. Mikhail Fridman and Petr Aven are the other two plutocrat leaders of Alfa.

Mikhail Fridman was the driving force behind the development of a large mobile phone company in Russia called VimpelCom(part of the Alfa Group) which benefited from a multi-million dollar Deutsche loan to help get it off the ground. Robert Mercer’s high flying hedge fund Renaissance Technology, itself a major Deutsche Bank client, invested substantially in VimpleCom(VIP) and has profited handsomely. VIP rebranded itself as VEON and is now estimated to be the sixth-largest mobile phone carrier in the world.

Petr Aven presented Deutsche Bank with an award in Moscow in 2006 honoring their substantial commitment to Excellence in foreign investment in Russia. Aven presented this award in partnership with the Lauder Institute, which is associated with Trump’s boyhood friend Ron Lauder. and his brother Leonard, inheritors of the Estee Lauder cosmetics fortune. Leonard Lauder is remembered in Donald Trump’s book, as the host of the Manhattan luncheon in 1986, wherein Donald Trump first opened his eyes with regard to the possibilities of investing in Moscow.

Russian oligarch Oleg Deripaska was reputedly the richest Russian in the land when he received a huge loan from Deutsche Bank over a decade ago, in order to finance a massive Austrian construction company he owned by the name Strabag Construction. Deripaska is best known in the states as the Russian tycoon close to Putin who employed Paul Manafort starting around 2006, with a contract that paid Manafort $10M yearly, for the purpose of Manafort promoting Russian interests in the States, and assisting Putin acolyte Victor Yanukovych, get elected to the top spot in Ukraine. When the recession hit Strabag in 2008/9, the Austrian bank Raiffeisen Bank International came to the rescue. Raiffeisen was run at the time by Herbert Stepic a close associate of the Chairman of Straberg’s Supervisory board, Alfred Gusenbauer.

Gusenbauer was the Austrian Chancellor from January 2007-December 2008, and head of the Austrian Social Democratic party from 2000–2008. Politico writers Josh Gerstein and Theodoric Meijer, recently wrote an article wherein they speculate that “it appears that” Gusenbauer is a member of what Manafort has allegedly termed, “the Hapsburg Group.” Manafort is alleged to have provided the Hapsburg Group with 2M Euros to promote Ukrainian interests in Washington. Manafort is alleged to have termed the Hapsburg Group’s efforts SUPE VIP in an EYES ONLY memo cited in the first superseding Manafort indictment. Gusenbauer was alleged to have met with Republican Congressmen Ed Royce, Tom Marino, and Robert Aderholt in the above-noted effort.

Photo by Ed Robertson on Unsplash

Gusenbauer was embarrassed by revelations of extensive offshore banking activity. He was listed by the Paradise Papers, as a Director and Legal Representative of Novia Management Ltd., a company registered in Malta. Herbert Stepic ex-chief of Raiffeisen Bank is also listed as a Director of Novia. Stepic resigned his position with Raiffeisen after his offshore connections became public in 2013. It should be noted that Novia Management is a shareholder of Nokia Funds Sicav Plc — a Maltese company that lists among its shareholders Gusenbauer’s former campaign adviser, Tal Silberstein(Paradise Papers spell as Zylbersztein). Silberstein is an Israeli political consultant who has advised 17 heads of state on their various political campaigns including Ukraine, Romania, Hungary, Austria, Israel, Bolivia, Italy and Serbia. Silberstein is a protege of American political consultant, and master of negative political campaigns — Arthur Finkelstein.

A Politico article by Matthew Darnitschnig titled Haus of Cards, associated Silberstein with “subversive Facebook sites,” with regard to a 2017 Austrian election campaign. In another article in The Times of Israel in 2017, “Israeli political adviser Tal Silberstein has acknowledged being behind the Facebook platforms suggesting that a rival party’s head has Anti-Semitic sentiments. Austria’s Social Democratic party is facing charges of violating anti-Nazi laws.”

Tal Silberstein was arrested in Israel in August 2017 along with Israeli Diamond magnate Beny Steinmetz on charges of Money laundering and then released. Silberstein was also connected to an alleged illegal restitution scheme relative to Romanian businessman, Remus Truce in 2015, in association with Shimon Sheves and Beny Steinmetz.

If Beny Steinmetz sounds familiar, it is probably because he was placed under investigation by DOJ in SDNY several years ago for alleged violations of the Foreign Corrupt Practices Act(FCPA), suggesting that he bribed high government officials in Guinea, millions of dollars for iron ore mining rights. Beny Steinmetz is also under investigation for the same violations in Switzerland, Israel, and Guinea. Alan Dershowitz is Beny’s attorney with regard to the case in SDNY, and Dershowitz advised the NY Times that “he believed that the Federal investigation of Mr. Steinmetz and his companies was no longer active.”

It should be noted that Beny Steinmetz is uncle to Raz Steinmetz who is the main honcho of Gaia Investments, a large Israeli based real estate business, which has partnered in recent years with Kushner’s Companies, concerning investments in multiple apartment buildings in Manhattan, Jersey City and commercial property in Brooklyn. Raz Steinmetz has publicly denied any joint investment activities with Uncle Beny, but records reviewed by the NY Times, show that Raz and Beny have shared offshore investment vehicles, employed the same company director, and were once connected to the same Swiss bank accounts.

Beny Steinmetz is known to have been an investor in Elliott Broidy’s Markstone Capital Investors company, investing as much as $10M prior to Broidy’s dismissal as Chairman of Markstone, after Broidy admitted he had paid nearly $1M in bribes to NY State officials. It should be noted that Markstone Capital was invested in Israeli telecom giant Bezeq, which is the subject of a criminal investigation in Israel that may have embroiled Israeli Prime Minister Bibi Netanyahu.

ICIJ has associated Beny Steinmetz with many offshore entities and bank accounts. Beny Steinmetz controls one such entity called BSG Capital Markets. BSG stands for Beny Steinmetz Group. BSG Capital Markets has been associated with an entity believed to be controlled by the Lauder family, and possibly Leonard Lauder, called Lenbro Holdings. Leonard Lauder is Ron Lauder’s brother. Ron Lauder is a major Republican and Trump campaign contributor and investor in Ukrainian and Israeli media. He is closely associated with the upper echelon of the Israeli government. Ron Lauder has a long association with George Nadar, who has recently indicated cooperation with Special Counsel Mueller’s investigation, and whose association with Elliott Broidy is under scrutiny.

Nadar and Lauder conducted shuttle diplomacy between Syria and Israel years ago. More recently, Ron Lauder has sponsored Art Gallery showings with Russian oligarch and Alfa exec Petr Aven in Manhattan. Lauder has a longtime leadership role with the World Jewish Congress which brought him into contact with Alexander Mashkevitch, head of the Eurasian Jewish Congress. Mashkevich is one of the Kazak trio that is alleged to have invested heavily in Trump Soho — a deal that included substantial involvement by Felix Sater.

Clearly, there exists any number of avenues that a more intense investigation by USAO-SDNY could explore, should the Beny Steinmetz investigation incur a fresh infusion of prosecutorial energy.

The last dormant investigation in SDNY to be explored is the Bank Hapoalim case. DOJ & IRS opened up an investigation of Bank Hapoalim in NY, at the same time that the US Attorney in Los Angeles initiated a criminal tax case on Bank Leumi around 2012. Both Israeli headquartered banks were suspected of facilitating(aiding & abetting) tax evasion by American taxpayers who maintained undisclosed bank accounts overseas. Bank Hapoalim and Bank Leumi were alleged to have concealed these accounts from the IRS. Bank Leumi settled their case in December 2014 and accepted a fine of $300M for their role in the tax evasion. Bank Hapoalim’s case status in SDNY as of May 2018 — dormant.

It should be noted that Bank Hapoalim, which is the largest bank in Israel, has extended four (4) substantive loans to Jared Kushner and/or his business in the past few years, and was alleged to be involved in the money laundering of Bill Browder’s Hermitage stolen tax funds.

While it is possible that there are extenuating circumstances that explain the inactivity by USAO-SDNY with regard to their lengthy investigations of Deutsche Bank, Beny Steinmetz, and Bank Hapoalim, the above narrative outlines clear links and connections to Trump/Kushner/Russia. If the USAO-SDNY has limited interest in actively pursuing the above open investigations, or are being impeded, perhaps recusing USAO Geoffrey Berman would re-ignite these cases ala Michael Cohen.

We will see.

Martin Sheil

Retired Supervisory Special Agent IRS Criminal Investigation

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Martin Sheil

Retired Special Agent IRS Criminal Investigation; Federal Contractor Deloitte & DOJ OCDETF; Letters of Commendation from Directors FBI Louis Freeh & Comey