They gave $25 million to Jewish nonprofits. Was some of that laundered money from Ukraine?
The Lubavitch Educational Center, a set of schools in South
Florida teaching toddlers and Talmud scholars alike, nearly went out of
business in 2013.
Past due on an $8 million loan, the center was facing
foreclosure on three properties, including its main campus, an
84,020-square-foot behemoth on seven acres. A company made up of the center’s
supporters won the foreclosure auction and gave it a long-term lease. Among the
benefactors who helped the schools make up outstanding debts were Mordechai
Korf and Uriel Tzvi Laber, partners in business and philanthropy whose $1.4
million donation was part of a philanthropic portfolio that pumped about $25
million into Jewish nonprofits between 2006 and 2018.
Now these two men, who represent the pinnacle of generosity
to many religious Jews in Florida, are among the the targets of a lawsuit
stemming from a Ukrainian money-laundering scheme that calls into question the
legitimacy of years of their philanthropic contributions.
Korf and Laber owned more than $6 million worth of shares —
at least 7% — in PrivatBank, which, according to a 2018 report by the National
Bank of Ukraine, “was subjected to a large, coordinated money-laundering scheme
and bank fraud” to benefit the shareholders’ and their affiliates’ “business
and personal interests.”
Ukraine nationalized PrivatBank in 2016, financing a bailout
of more than $5.5 billion to save it from collapse as a result of the fraud,
according to the NBU, which is a federal entity that regulates banks.
PrivatBank was re-privatized in 2018, and the new owners filed a civil lawsuit
in Delaware last May naming Korf and Laber as two of three U.S. “agents” who
helped the the bank’s majority shareholders, two Ukranian billionaires, launder
up to $470 billion — more than the GDP of Austria.
Korf, 47, and Laber, 48, declined through a representative
to be interviewed or answer any questions related to their businesses or
charitable giving.
Their lawyer, Marc Kasowitz, said via email that the
allegations against them are “100% false and defamatory,” and the lawsuit
“nothing more than a fictional orchestrated political attack” on the
Ukrainians, who vocally opposed the president at the time.
The accusations “will be shown to be complete fabrications
when the evidence in this case comes out,” said Kasowitz, who has also
represented President Donald Trump in matters related to Russian interference
with in 2016 presidential election. “Our clients have earned a well-deserved
reputation for honesty and high integrity over the past 20+ years.”
Indeed, Korf and Laber, who each live in white-columned
mansions in Miami Beach. are key supporters of the Chabad network in Florida,
one of the movement’s largest, strongest and wealthiest communities in the
world.
The Greater Miami Jewish Federation estimates that 42% of
Jewish homes with children in the area have engaged with Chabad’s various
branches and programs. The two men have donated and raised a total of more than
$11 million for Chabad-related causes across Florida, according to their own
foundations’ tax filings. Korf is one of the nine children of Rabbi Abraham
Korf, the beloved founder of Miami’s Chabad center, and many local Chabad
groups that received Laber and Mordechai Korf’s donations are run by Korf’s
relatives.
Florida, with $11 million in donations over a dozen years,
and New York, with $10 million, are the focal points of their Jewish giving.
But the pair has also given money to Jewish organizations in Connecticut and
Canada, Massachusetts and Montana, Denmark and Jerusalem. They give to
synagogues, to schools, to summer camps and to Zionist organizations, with
individual grants ranging from $180 to more than $1 million.
Weeks of investigation into Korf and Laber turned up new
questions with each answer. It is unclear how they made their money; their
businesses are nearly all implicated in the bank scheme. Their charitable
foundations do not appear to be registered in Florida, as is required by law.
Phone calls to their organizations became circular games of cat and mouse.
It is difficult to specifically track how money from
PrivatBank’s loans may have filtered through Korf and Laber’s foundations to
the Jewish nonprofits, and there is no evidence that any of the recipients were
aware of the two men’s connection to the laundering. But if the lawsuit
succeeds, the nonprofits could face demands to return the funds, a phenomenon
called a “clawback.”
Peter Henning, a law professor at Wayne State University who
prosecuted bank fraud at the Department of Justice, said launderers frequently
slide money into charities to evade taxes and scrutiny, or to get “pats on the
back.”
“If you’re going to funnel money to a charity, no one’s
going to ask a lot of questions,” he said. “If you’re willing to give money,
they’re going to take it.”
The Jewish pioneers of South Florida
Korf, who is married and has at least five children, is part
of one of the Chabad movement’s most prominent families. His parents, Abraham
and Rivka, arrived in Miami from Brooklyn in the early 1960s as emissaries of
the Lubavitcher Rebbe, Menachem Mendel Schneerson. After decades in which
Florida’s Jews had been concentrated in Jacksonville, a northern port city,
snowbirds from other states and Jewish immigrants from Latin America and the
Carribean were quickly making Miami the center of the Sun Belt’s Jewish
universe.
At the time, kosher food was hard to come by in South
Florida. So, the story goes, Rabbi Korf slaughtered chickens himself and
Rebbetizin Rivka salted and soaked them.
One of the couple’s daughters, Leah Jacobson, recalled in an
interview published on Chabad.org that the family lived on “a shoestring
budget,” and had very little time with their rabbi-father, who raised them not
to make life decisions based on money. The Korfs ran Shabbat retreats in their
home, inviting college students and quizzing the children on their studies, and
the kids took a lot of “inner pride” in their father’s mission, Jacobson said.
Mordechai, the seventh of the nine children, studied for the
rabbinate in Brooklyn, and at 19, left for Ukraine on a humanitarian mission
run by his father’s organization, according to a 2017 article in the Miami
Herald. For three years, he learned Russian and navigated the culture of
Ukraine, eventually meeting his future business partners.
Laber has been active in Ukraine since at least the early 2000s,
and is quoted in a 2001 book by the journalist Larry Tye saying that he was
introduced to business partners in Russia by Shmuel Kaminezki, an Israeli who
was serving as chief rabbi of an industrial part of Ukraine. (This was a
different person from the prominent American Haredi rabbi Shmuel Kamenetsky.)
In 2006, Laber told the Jerusalem Center for Public Affairs
that Ukranian Jewish donors expect a “pay-in, pay-out” policy, and that money
held in endowments or other stagnant funds in Ukraine would be “abused.” In
other words, donors to Ukrainian nonprofits expect to be able to pull money
from the pool of funds they help build.
The largest money-laundering scheme in history?
The 2019 lawsuit by PrivatBank’s new owners accuses Korf and
Laber of racketeering, conspiracy and fraud in what it and the National Bank of
Ukraine report the year before described as a scheme involving hundreds of
fraudulent loans, a complicated network of dozens of shell companies in
Delaware and elsewhere, metallurgical assets and commercial real-estate
transactions in Cleveland.
At the center of the scheme, according to the lawsuit and
the report, were two Ukrainian billionaires, Igor Veleryevich Kolomoisky and
Gennadiy Borisovich Bogolyubov, who founded PrivatBank in the early 1990s. The
lawsuit contends the two made fake loans to their partners, including Korf and
Laber, obscured the paths of the loans using their businesses and spent the
money to “enrich themselves” from 2006 through 2016.
The NBU — whose responsibilities include ensuring the
stability of Ukraine’s currency, licensing banks, inspecting them for
compliance and applying corrective measures when they break the law — said that
95% of PrivatBank loans over a decade were issued to parties related to the
shareholders. They were either used to pay back other loans, a phenomenon
called “loan recycling,” or were woven through a series of transactions to
obscure the final use of the loan, often the purchase of real estate or metals
processing facilities, the report contends.
It describes “a concerted attempt to disguise the true
nature of the economic purpose” of the loans from regulators and other
stakeholders “for the benefit of the former shareholders.”
In the lawsuit, the new bank owners contend that in one
case, four companies controlled by the two bank co-founders drew down a
combined $187 million from PrivatBank. They then allegedly ping-ponged the
money through a series of 24 transactions over five hours involving seven shell
companies controlled by Korf, Laber and Korf’s brother-in-law Chaim Schochet,
ending in a purchase of a metals facility in Kentucky.
Korf and Laber owned and managed shell entities in the
United States and bought other businesses using laundered money, the lawsuit
says. It claims that the deals not only netted Korf, Laber and Schochet
millions of dollars, but also turned Kolomoisky and Bugolyubov, the Ukrainian
bank founders, into the largest commercial real-estate holders in Cleveland.
Unlike his brother-in-law Korf, Schochet has only donated
modestly to Jewish causes, according to tax documents such charities are
required to file — a single gift of $7,200 in 2014 to the Miami Beach-based
Turkish Friends of Chabad
The new owners of PrivatBank have also filed lawsuits
related to the laundering scheme in the United Kingdom and Israel, as well as
the United States. The Daily Beast reported in April that the FBI is
investigating Kolomoisky. An appeals court in London this fall ordered
Kolomoisky and Bogolyubov to pay legal costs totaling more than $14 million to
PrivatBank after the bank won an appeal that will allow it to move forward with
a fraud claim.
Liliia Zubaryeva, a spokeswoman for PrivatBank, said in a
statement that the bank “remains fully committed” to “recovering the losses it
has suffered.” She said the laundered money was “used to acquire and support
various United States business and commercial real estate.”
Building lives of luxury
It is unclear how, when or where Korf and Laber met, and how
they grew wealthy enough to purchase real estate and metallurgical facilities
across the United States, or donate so much to so many different groups. Korf’s
father described Mordechai’s job in a 2010 blog post as a “philanthropist” and
“supporter of Chabad institutions worldwide.”
Public records show that Korf and Laber live less than a
10-minute walk from each other in homes overlooking Sunset Lake, with pools and
exterior walls bleached white in the Florida sun. Laber’s seven bedroom,
nine-and-a-half bathroom home was assessed at $14 million in 2018; Korf’s,
which has nine bedrooms and eight baths, at $7.7 million.
A review of business records and news reports shows that
their main venture is called Optima International of Miami, a company they
co-founded in 1995 that owns real estate and raw materials processing
businesses. Another venture, the Delaware-based Optima Acquisitions — which is
co-owned by Korf, Kolomoisky and Bugolyubov, and for which Laber has served as
president, vice president and secretary since 1995 — was, according to the
lawsuit, the primary vehicle used to buy metallurgical assets with the fake
loans.
All of the 19 active business entities in which Korf is
listed as an officer in Florida, Texas and Indiana are cited in the Delaware
lawsuit as having been involved in the laundering. Of the 20 active entities in
Florida and Connecticut that list Laber as an officer, all but five are
mentioned in the suit; none of those five appear to have websites or any digital
footprint, and only one has a unique street address.
‘Let’s build something nice.’
Korf and Laber are each the president and chief executive of
Florida-based philanthropic organizations — the Korf Family Foundation and the
Laber Foundation — whose first tax filings available online are from 2006, the
same year the NBU report says the money-laundering scheme started. Korf’s
foundation received tax-exempt status in 2008, and Laber’s in 2009.
In Tye’s book, Laber described his attitude toward
philanthropy: “It’s the whole concept of wealthy Jews helping the community,”
he said. “Let’s build something nice.”
It is not clear what year the foundations were incorporated,
because neither organization appears in Florida’s charity database. That
suggests they are not registered, as is required by law. Leonard Kreigel of
Sosin and Kreigel, the accounting firm that helped both foundations file tax
documents, declined to provide registration numbers or say when the foundations
were incorporated. Mike Sitrick, a spokesman for Korf and Laber, also declined
to provide the registration numbers and said only that “the foundations are
registered with the appropriate entities.”
There is no way to trace whether any of Korf and Laber’s
donations to Jewish charities included money that the Ukrainian authorities
claim was laundered. But at least three shell entities named in the lawsuit
have given hundreds of thousands of dollars since 2013 to the Korf Family
Foundation, which in turn donated to Jewish charities.
Between 2006 and 2018, according to tax filings, the two
foundations gave more than 160 Jewish nonprofits about $25 million. Three
non-Jewish charities also received grants — two that assist former residents of
the Soviet Union and one involving cancer research.
The foundations’ most generous year was 2010, with
$3,116,463 in donations. Close behind that was 2013, the year the Lubavitch
schools in the Miami area faced foreclosure and received more than $1.2 million
from Korf, the largest of their donations during the 12 years.
In all, the men made donations in 15 states and Washington,
D.C., plus Canada, Israel and Denmark.
Many of the grants went to organizations led by Korf family
members.
Friends of Lubavitch of Florida Inc, which lists Rabbi
Abraham Korf as an officer, has received more than $6 million directly from
Korf and Laber’s foundations since 2006, according to tax documents.
Accountants for Friends of Lubavitch of Florida did not respond to a request
for comment.
Rabbi Bentzion Korf, one of Mordechai’s brothers, is the
president of the Lubavitch Educational Center, which has received nearly
$700,000 in direct donations from the foundations since 2006. The National
Center for Life & Liberty, a nonprofit that provides legal assistance to
the Lubavitch Educational Center, said the group’s leaders — including Bentzion
Korf — were “totally unaware” of the lawsuit against Korf and Laber, and will
rely on their lawyers if there is any attempt to recoup the funds.
Other recipients of large donations, including groups named
Keren Peulos, Jewish Educational Media and Beis Medrash Levi Yitschak, also did
not return phone calls and emails. They do not appear to have any direct ties
to Korf’s family, but Laber has served as a director for Jewish Educational
Media.
Mordechai’s eight siblings are all entrenched in the Chabad
community across the U.S., especially in Florida. Yosef Yitzchok Korf is the
spiritual leader at Hollywood Community Synagogue in Florida. Bentzion Korf is
the director of the Lubavitch Educational Center and Chabad Mid-Miami Beach.
Zalman Korf is a co-director at Chabad of Walnut Creek. All of those
organizations received donations from Korf, Laber or both. They did not respond
to requests for comment.
The tax filings also show $2.8 million in donations over 12
years to
the Federation of Jewish Communities of the CIS, which
provides aid to Jewish communities in the former Soviet Union. When first
contacted by a reporter on Feb. 10, the organization’s U.S. office director,
Mindy Zalmanov, said the group “never received” that money; she followed up
three days later with an email saying the group does not comment on donations
or expenditures.
Asked about Zalmanov’s claim that they never received the
donations, Kasowitz, the lawyer for Korf and Laber, said “the storyline you are
trying to manufacture” is “false and defamatory.”
“Each and every organization that the foundations have
generously contributed to, has in fact been received by the intended
recipient,” he wrote in an email, apparently meaning each donation has been
received. “We are proud of the tremendous positive impact that these donations”
have had “on the respective Jewish communities.”
Some of that impact was on display last week, as
conservatively dressed men and women streamed into a 2,200-seat arena a few
blocks from the beach for a $200-a-head tribute dinner and concert to celebrate
60 years of Chabad in Florida.
At the concert, the movement dedicated a school building it
had purchased for $5 million in 2017. It had come a long way from salting
chickens and avoiding foreclosure.
The late leader of Chabad, Rabbi Schneerson, once said Miami
should be “the Jerusalem of Jewish exiles,” observed one concertgoer,
29-year-old Rabbi Matisyahu Devlin, “and it has been done.”
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