Cleveland office tower tied to Ukrainian oligarch defaults on $18.5 million loan

CLEVELAND, Ohio – The once-flourishing Cleveland property venture tied to a Ukrainian oligarch under FBI investigation has been rattled by more financial problems.

Optima 55 Public Square LLC defaulted on a $18.5 million loan, owing its lender, 55 Bridge Lending of Cleveland, more than $14.5 million in principal, interest and property taxes, according to records filed this week in Cuyahoga County Common Pleas Court.

The 22-story office tower is one of Cleveland’s most prominent skyscrapers, as it faces the city’s main square.

The judgment comes as federal authorities investigate the oligarch Igor Kolomoisky and his associates. They are accused of laundering tens of millions of dollars through U.S. real estate through a host of businesses under the Optima umbrella.

Documents filed by federal attorneys in a civil case in U.S. District Court in Miami allege that Kolomoisky and his associates used misappropriated money from a Ukrainian bank to acquire 55 Public Square and other Cleveland properties.

From about 2008 through 2015, Optima was one of the largest downtown landlords. It owned more than 2 million square feet of office space, and its investments in Cleveland totaled more than $100 million, according to court records.

Optima’s image, however, has changed in recent years.

Optima 55 Public Square obtained the loan for the office tower in May 2018. It failed to pay $340,000 in property taxes on time, a $500,000 principal payment due in August and monthly interest payments since September, according to court filings and county tax records.

Optima bought the office tower in 2008 for $34 million. Today, the county estimates its value at $20 million, records show. The building also has a seven-story garage.

The 55 Public Square property and others in the city are ensnared in the federal investigation. The documents filed in Miami allege that Kolomoisky helped siphon $5 billion from PrivatBank, a Ukrainian bank that he and Gennadiy Boholiubov opened in 1992.

The men fleeced the bank out of loans from about 2008 to 2016, repaid the loans with more loans and then poured some of the money into Cleveland properties, according to court documents.

The loan agreement for 55 Public Square was signed by Mordechai Korf. In documents, federal attorneys identified him as a Miami-based associate of Kolomoisky and Boholiubov.

“He helped to acquire and manage the Ukrainian oligarchs’ business empire in the United States, which included ferroalloy companies and real estate holdings in Ohio, Florida, Kentucky and West Virginia, among other places,” the documents say.

In a letter to Korf dated Sept. 16, an attorney for the lenders of the Cleveland office tower said 55 Public Square “is in deteriorating condition and requires urgent and extensive repairs.”

“The property is currently non-sellable, non-financeable and declining in value,” wrote the attorney, Brent Silverman, who represents 55 Bridge Lending of Cleveland.

Attorneys representing Korf and Kolomoisky could not be reached.

Optima’s financial issues come as federal attorneys in Miami are conducting a civil investigation that involves the forfeiture of properties, while prosecutors in Cleveland are handling the criminal probe.

An FBI spokeswoman confirmed Friday that the investigation is continuing, but she declined to comment further. A spokesman for the U.S. Attorney’s office in Cleveland would not discuss the matter.

The criminal probe became public Aug. 4, when federal authorities raided the offices of Optima Management Group at the One Cleveland Center at East 9th and St. Clair Avenue. Two days later, federal prosecutors sought to seize more than $70 million in property in Texas and Kentucky that is tied to Optima.

Two months after the raid, Cleveland International Fund of Cleveland Heights filed a lawsuit in Common Pleas Court that says Optima 777 owes $35 million in unpaid principal of a mortgage for the 484-room Westin Hotel on St. Clair.

Optima 777 also owes nearly $2 million in late fees and interest, according to the lawsuit. The case is pending.

Kolomoisky gained attention last year in the United States when The New York Times reported that he refused to set up a meeting with President Trump’s personal attorney Rudy Giuliani and Ukrainian President Volodymyr Zelensky.