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OCT 3 \ ^
\BV
UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA June 1996 Grand Jury UNITED STATES OF AMERICA,
CR 96-
Plaintiff,
I N D I C T M E N T
V.
[18 U.S.C. § 371: Conspiracy t o Coimnit an Offense Against the United States; 18 U.S.C. § 1343: Wire Fraud; 18 U.S.C. § 1957: Money Laundering; 18 U.S.C. § 2: Causing an Act t o Be Done and Aiding and Abetting; 18 U.S.C. § 982:
Criminal F o r f e i t u r e ]
SERGUEI ADONIEV, and, VITALY RASHKOVAN,
Defendants.
The Grand Jury charges as f o l l o w s :
COUNT ONE
[18 U.S.C. § 371]
I.
indictment, i n Los Angeles County, w i t h i n the Central D i s t r i c t o f
C a l i f o r n i a , and elsewhere:
The Republic o f Kazakhstan
INTRODUCTORY ALLEGATIONS
A.
During the time relevant t o t h i s
The Republic of Kazakhstan
("Kazakhstan"),
country i n Central Asia, was, p r i o r t o i t s obtaininc
SGL
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1991, one o f the 15 republics o f the Union of Soviet S o c i a l i s t
Republics.
Karakum Desert, Kazakhstan depends on importation from other
countries f o r many o f i t s food s t a p l e s , i n c l u d i n g sugar, because
most o f i t s minimal farmland i s devoted t o pasture.
B.
As a landlocked country dominated by steppes and the
Since gaining independence, the government o f Kazakhstan
has attempted t o s h i f t from a communist economy dependent on Moscow,
Russia, t o an i n t e r n a t i o n a l , f r e e - e n t e r p r i s e based economy.
of t h i s e f f o r t , the government o f Kazakhstan established the
As p a r t
I n t e r n a t i o n a l Center o f Business Cooperation f o r Kazakhstan and
Central Asia ( " I n t e r n a t i o n a l Center"), which, as an agent and
i n s t r u m e n t a l i t y o f the government, s o l i c i t s and negotiates trade
agreements w i t h f o r e i g n companies and investors. The I n t e r n a t i o n a l
Center was run by V a s i l i y Krasnov.
The Defendants and Their Scheme t o Defraud Kazakhstan
C.
Defendants SERGUEI ADONIEV and VITALY RASHKOVAN,
unindicted co-conspirators Bakhytjan Oralbekov and Oleg Popov, who
i s deceased, and others known and unknown t o the Grand Jury, were
corporate o f f i c e r s employed a t MEGABUCKS TRADING CORPORATION
("MEGABUCKS"), an alleged import/export company located a t 433 North
Camden Drive, Beverly H i l l s , C a l i f o r n i a .
D.
I n e a r l y 1993, while working a t MEGABUCKS, defendants
ADONIEV and RASHKOVAN, and u n i n d i c t e d co-conspirator Popov,
established a business c a l l e d METAL AND CRYSTAL WORKS ("MCW") that
operated out o f the MEGABUCKS o f f i c e s .
ADONIEV and RASHKOVAN and t h e i r co-conspirators created a scheme t o
defraud and o b t a i n money by f a l s e and fraudulent misrepresentations
i n t h a t , under the name o f MCW and using wire communications i n
Thereafter, defendants
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i n t e r s t a t e and f o r e i g n commerce, they negotiated a fraudulent
c o n t r a c t w i t h the government o f Kazakhstan and the I n t e r n a t i o n a l
Center whereby defendants ADONIEV and RASHKOVAN and t h e i r co-
conspirators agreed, i n exchange f o r approximately $6.7 m i l l i o n i n
United States currency, t o d e l i v e r t o Kazakhstan approximately
25,000 tons o f Cuban sugar, which they knowingly n e i t h e r had i n
t h e i r possession nor could ever l e g a l l y , f i n a n c i a l l y or p r a c t i c a l l y
s e l l under the terms o f the c o n t r a c t .
E.
Defendant ADONIEV and u n i n d i c t e d co-conspirators Popov and
Oralbekov were p r i m a r i l y responsible f o r n e g o t i a t i n g the fraudulent
sugar c o n t r a c t w i t h the government o f Kazakhstan and the
I n t e r n a t i o n a l Center, and defendant RASHKOVAN was p r i m a r i l y
responsible f o r operating the MCW o f f i c e and p r o v i d i n g
a d m i n i s t r a t i v e support f o r the scheme t o defraud by f i l i n g the
i n c o r p o r a t i o n papers f o r MCW, s e t t i n g up and managing the bank
accounts, preparing needed documentation,
telephone.
I I . OBJECTS OF THE CONSPIRACY
and answering the
On or before J u l y 13, 1993, and continuing t o on or a f t e r
October 26, 1993,
o f C a l i f o r n i a , and elsewhere, defendants SERGUEI ADONIEV and VITALY
RASHKOVAN, and others known and unknown t o the Grand Jury,
u n l a w f u l l y and knowingly combined, conspired, confederated and
agreed t o commit wire fraud by knowingly devising and p a r t i c i p a t i n g
i n a scheme t o defraud and t o o b t a i n money by means of f a l s e and
f r a u d u l e n t pretenses and representations and causing wire
communications i n i n t e r s t a t e and f o r e i g n commerce t o be used i n
i n Los Angeles County, w i t h i n the Central D i s t r i c t
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execution o f t h i s scheme, a l l i n v i o l a t i o n o f T i t l e 18, United
States Code, Section 1343.
I I I . MEANS BY WHICH THE OBJECTS OF THE CONSPIRACY WERE TO BE
ACCOMPLISHED
A.
I n order t o achieve the objects o f the conspiracy, between
about July 13, 1993, and about October 26, 1993, defendant ADONIEV
and unindicted co-conspirators Popov and Oralbekov, and others,
t r a v e l l e d t o Kazakhstan on several occasions t o negotiate a contract
t o d e l i v e r sugar w i t h the government of Kazakhstan and the
I n t e r n a t i o n a l Center.
August, 1993, MCW agreed t o s e l l 25,000 tons o f Cuban sugar t o
Kazakhstan f o r approximately $6.7 m i l l i o n i n United States currency.
Under the agreement, the government o f Kazakhstan would loan the
money t o purchase the 25,000 tons o f Cuban sugar t o the
I n t e r n a t i o n a l Center, which would i n t u r n send the money i n
i n s t a l l m e n t s by way o f bank wire t r a n s f e r s from Kazakhstan t o the
MCW bank account a t Wells Fargo Bank, 9600 Santa Monica Boulevard,
Beverly H i l l s , C a l i f o r n i a (account 0645-022278) ("MCW Wells Fargo
Bank account"). However, as defendants ADONIEV and RASHKOVAN and
t h e i r co-conspirators w e l l knew when they contemplated, negotiated
and entered the c o n t r a c t , MCW was not i n the business o f s e l l i n g
sugar, and, furthermore, d i d not have the l e g a l , f i n a n c i a l , or
p r a c t i c a l a b i l i t y t o obtain 25,000 tons o f Cuban sugar under the
terms of the agreement, which at p r e v a i l i n g market rates would have
been w e l l i n excess o f $9,500,000.00.
B.
Under the terms o f the contract f i n a l i z e d i n
I n furtherance o f the scheme t o defraud, defendant ADONIEV
and RASHKOVAN and others sent, v i a co-conspirator Oralbekov,
approximately $650,000.00 from MCW i n Beverly H i l l s , C a l i f o r n i a , t o
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Vladimir Kroupenev, the personal a s s i s t a n t t o the President of
Kazakhstan and a very i n f l u e n t i a l government o f f i c i a l i n Kazakhstan
(the equivalent o f the Chief of S t a f f i n the United S t a t e s ) , as a
bribe i n order t o ensure the success of the fraudulent scheme. The
money was sent t o Kroupenev v i a an account i n the name o f
Mediterranean Trade Investment a t the Scandinavian Bank, Stockholm,
Sweden, which account was c o n t r o l l e d by a casino located i n Moscow,
Russia, and was owned and operated by associates o f defendant
ADONIEV and co-conspirators Popov and Oralbekov.
The money was then
personally d e l i v e r e d by co-conspirator Oralbekov t o Kroupenev.
exchange f o r the money, Kroupenev repeatedly assured V a s i l i y Krasnov
of the I n t e r n a t i o n a l Center and other government o f f i c i a l s t h a t MCW
was a l e g i t i m a t e company and t h a t Kazakhstan should do business w i t h
defendants ADONIEV, RASHKOVAN, and t h e i r co-conspirators.
C.
In
Having negotiated the fraudulent c o n t r a c t , defendants
ADONIEV and RASHKOVAN and t h e i r co-conspirators, between September
8, 1993, and October, 30, 1993, caused wire t r a n s f e r s t o t a l l i n g
approximately $4,040,780.00 i n United States currency t o be
t r a n s f e r r e d i n i n t e r s t a t e and f o r e i g n commerce from Kazakhstan t o
Wells Fargo Bank, Beverly H i l l s , C a l i f o r n i a , which money was
subsequently used by defendants ADONIEV and RASHKOVAN t o purchase
luxury automobiles and other expensive items f o r personal
consumption, and which money was not used t o buy and d e l i v e r 25,000
tons o f Cuban sugar.
D.
I n furtherance o f the scheme t o defraud, and i n order t o
respond t o concerns raised by the government o f Kazakhstan and the
I n t e r n a t i o n a l Center t h a t Kazakhstan had not received any sugar,
defendants ADONIEV and RASHKOVAN ordered 1000 tons of sugar from
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Sucden Kerry, a food broker i n London, United Kingdom, worth
approximately $380,000.00, f o r d e l i v e r y t o Kazakhstan, which sugar
i n f a c t came from a f a c t o r y w i t h i n the country o f Kazakhstan.
IV. OVERT ACTS
I n order t o carry out the objects o f the conspiracy, defendants
ADONIEV and RASHKOVAN, along w i t h others known and unknown t o the
Grand Jury, committed and caused t o be committed the f o l l o w i n g overt
acts, among others, i n the Central D i s t r i c t o f C a l i f o r n i a and
elsewhere:
1.
On or about J u l y 13, 1993, defendant ADONIEV wrote a
l e t t e r on MCW s t a t i o n a r y s t a t i n g t h a t co-conspirator Oralbekov had
l e g a l a u t h o r i t y t o act on behalf o f MCW.
2.
I n about J u l y , 1993, unindicted co-conspirator
Oralbecov met w i t h o f f i c i a l s o f the government o f Kazakhstan on
behalf o f MCW o f f e r i n g assistance i n b r i n g i n g f o r e i g n investment t o
Kazakhstan.
3.
On or about August 17, 1993, defendant ADONIEV and
unindicted co-conspirator Popov checked i n t o Hotel Dostyk i n Alma-
Ata, the c a p i t a l o f Kazakhstan.
4.
On or about August 26, 1993, MCW entered i n t o a
contract w i t h the government o f Kazakhstan and the I n t e r n a t i o n a l
Center t o supply 25,000 tons o f Cuban sugar.
5.
On or about August 28, 1993, defendant ADONIEV and
unindicted co-conspirator Popov checked out o f Hotel Dostyk i n Alma-
Ata, the c a p i t a l o f Kazakhstan.
6.
On or about September 8, 1993, defendants ADONIEV and
RASHKOVAN received approximately $809,885.62 from Kazakhstan i n t o
the MCW Wells Fargo Bank account.
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7.
On or about September 10, 1993, defendant ADONIEV
bought a Bentley automobile i n Beverly H i l l s , C a l i f o r n i a , f o r
approximately $114,484.00 i n proceeds obtained from the MCW Wells
Fargo Bank account.
8.
On or about September 10, 1993, u n i n d i c t e d co-
conspirator Popov bought a Mercedes Benz automobile i n Santa Monica,
C a l i f o r n i a , f o r approximately $135,486.00 i n proceeds obtained from
the MCW Wells Fargo Bank account.
9.
On or about September 13, 1993, defendants ADONIEV
and RASHKOVAN received approximately $638,139.00 from Kazakhstan
i n t o the MCW Wells Fargo Bank account.
10. On or about September 29, 1993, defendants ADONIEV
and RASHKOVAN received approximately $638,502.99 from Kazakhstan
i n t o the MCW Wells Fargo Bank account.
11. On or about September 30, 1993, defendants ADONIEV
and RASHKOVAN received approximately $170,212.20 from Kazakhstan
i n t o the MCW Wells Fargo Bank account.
12. On or about October 5, 1993, defendants ADONIEV and
RASHKOVAN received approximately $983,982.00 from Kazakhstan i n t o
the MCW Wells Fargo Bank account.
13. On or about October 6, 1993, u n i n d i c t e d co-
conspirator Popov sent a l e t t e r from MCW t o the government of
Kazakhstan s t a t i n g t h a t MCW was shipping 1000 tons o f sugar from a
f a c t o r y i n Kazakhstan.
14. On or about October 7, 1993, defendants ADONIEV and
RASHKOVAN received approximately $300,000.00 from Kazakhstan i n t o
the MCW Wells Fargo Bank account.
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15. On or about October 15, 1993, defendant ADONIEV
bought a Jeep u t i l i t y v e h i c l e i n Los Angeles, C a l i f o r n i a , f o r
approximately $29,711.00 i n proceeds obtained from the MCW Wells
Fargo Bank account.
16. On or about October 15, 1993, defendant RASHKOVAN
withdrew approximately $18,000.00 i n proceeds from the MCW Wells
Fargo Bank account.
17. On or about October 18, 1993, defendants ADONIEV and RASHKOVAN caused a L e t t e r o f Credit f o r approximately $373,680.00 t o
be sent from Barclays Bank, London, United Kingdom, t o Sucden Kerry
f o r payment o f shipment o f 1000 tons o f sugar t o Kazakhstan.
18. On or about October 19, 1993, defendant RASHKOVAN
sent a l e t t e r from MCW t o the M i n i s t e r o f Trade i n Kazakhstan
s t a t i n g t h a t sugar was on i t s way t o Kazakhstan.
19. On or about October 20, 1993, defendant RASHKOVAN
bought a Lambhorgini automobile from Beverly H i l l s Rolls Royce f o r
approximately $202,018.00 i n proceeds obtained from the MCW Wells
Fargo Bank account.
20. On or about October 26, 1993, defendants ADONIEV and
RASHKOVAN received approximately $500,000.00 from Kazakhstan i n t o
the MCW Wells Fargo Bank account.
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COUNTS TWO THROUGH THIRTEEN
[18 U.S.C. §§ 2, 1343]
THE SCHEME TO DEFRAUD
The Grand J u r y r e p e a t s and r e a l l e g e s each o f t h e a l l e g a t i o n s
c o n t a i n e d i n S e c t i o n s I t h r o u g h IV s e t f o r t h above i n Count One as
d e s c r i b i n g t h e manner and means by which defendants ADONIEV and
RASHKOVAN, and o t h e r s known and unknown t o t h e Grand J u r y , d e v i s e d
and i n t e n d e d t o d e v i s e a scheme and a r t i f i c e t o d e f r a u d t h e R e p u b l i c
of Kazakhstan and f o r o b t a i n i n g monies and p r o p e r t y by means o f
f a l s e and f r a u d u l e n t p r e t e n s e s , r e p r e s e n t a t i o n s and promises.
THE WIRE TRANSFERS
On o r about t h e d a t e s s e t f o r t h below, i n Los Angeles County,
w i t h i n t h e C e n t r a l D i s t r i c t o f C a l i f o r n i a , and elsewhere, defendants
ADONIEV and RASHKOVAN, and o t h e r s known and unknown t o t h e Grand
J u r y , f o r t h e purpose o f c a r r y i n g o u t and a i d i n g and a b e t t i n g t h e
f r a u d u l e n t scheme d e s c r i b e d above, caused t h e f o l l o w i n g s i g n s ,
s i g n a l s and sounds t o be t r a n s m i t t e d by means o f w i r e , r a d i o , and
t e l e v i s i o n communication i n i n t e r s t a t e and f o r e i g n
COUNT
DATE
FROM
TO
WIRE COMMUNICATION
9/8/93
Kazakhstan
W e l l s Fargo Bank Beverly H i l l s , California
Wire t r a n s f e r i n amount o f $809,885.62
9/15/93
MCW
9/13/93
Kazakhstan
commerce:
9/28/93
MCW
Mediterranean Wire t r a n s f e r i n Trade Investment amount o f Stockholm, $100,000.00 Sweden W e l l s Fargo Bank Beverly H i l l s , California
Wire t r a n s f e r i n amount o f $638,139.00
Mediterranean Trade Investment Stockholm, Sweden
Wire t r a n s f e r i n amount o f $180,000.00
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COUNT
DATE
WIRE COMMUNICATION
Kazakhstan W e l l s Fargo Bank Beverly H i l l s , California Wire t r a n s f e r i n amount o f $638,502.99 Kazakhstan Wells Fargo Bank Beverly H i l l s , California Wire t r a n s f e r i n amount o f $170,212.20 Mediterranean Trade Investment Stockholm, Sweden Wire t r a n s f e r i n amount o f $120,000.00 9/30/93
TO 9/29/93
FROM
10/8/93 MCW 10/5/93 Kazakhstan W e l l s Fargo Bank Beverly H i l l s , California Wire t r a n s f e r i n amount o f $983,982.00
10/7/93 Kazakhstan Wells Fargo Bank Beverly H i l l s , California Wire t r a n s f e r i n amount o f $300,000.00
10/8/93 MCW Mediterranean Trade Investment Stockholm, Sweden Wire t r a n s f e r i n amount o f $120,000.00
10/15/93 Mediterranean Trade Investment Stockholm, Sweden Wire t r a n s f e r i n amount o f $250,000.00
10/26/93 Wells Fargo Bank Beverly H i l l s , California Wire t r a n s f e r i n amount o f $500,000.00
MCW
Kazakhstan
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COUNTS FOURTEEN THROUGH TWENTY
[18 U.S.C. §§ 2, 1957]
THE SCHEME TO DEFRAUD
The Grand Jury repeats and realleges each of the a l l e g a t i o n s
contained i n Sections I through IV set f o r t h above i n Count One as
d e s c r i b i n g the manner and means by which defendants ADONIEV and
RASHKOVAN, and Others known and unknown t o the Grand Jury, devised
and intended t o devise a scheme and a r t i f i c e t o defraud the Republic
of Kazakhstan and f o r o b t a i n i n g monies and property by means of
f a l s e and f r a u d u l e n t pretenses, representations and promises.
THE MONEY LAUNDERING
On the dates set f o r t h below, defendants ADONIEV and RASHKOVAN,
and others known and unknown t o the Grand Jury, i n Los Angeles
County, w i t h i n the Central D i s t r i c t of C a l i f o r n i a , and elsewhere,
knowing t h a t the property involved i n the monetary transactions
represented the proceeds o f some form of unlawful a c t i v i t y , and
which property was,
v i o l a t i o n of T i t l e 18, United States Code, Section 1343 as described
above, knowingly and w i l l f u l l y conducted, attempted t o conduct, and
aided, abetted, counselled, commanded, induced, and procured the
f o l l o w i n g monetary transactions a f f e c t i n g i n t e r s t a t e and f o r e i g n
commerce, i n t h a t defendants ADONIEV and RASHKOVAN caused t o be
deposited wire t r a n s f e r s i n the f o l l o w i n g approximate amounts, the
proceeds of which had been generated by the above-described
t o defraud, i n t o the MCW bank account at Wells Fargo Bank, 9600
Santa Monica Boulevard, Beverly H i l l s , C a l i f o r n i a (account 0645-
022278):
i n f a c t , the proceeds of a scheme t o defraud i n
scheme
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COUNT
DATE
AMOUNT OF DEPOSIT
9/8/93
$809,885.62
9/13/93
$638,139.00
9/29/93
$638,502.99
9/30/93
$170,212.20
10/5/93
$983,982.00
10/7/93
$300,000.00
10/26/93
$500,000.00
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COUNT TWENTY-ONE
[18 U.S.C. § 982]
Upon c o n v i c t i o n f o r the offenses charged i n counts fourteen
through twenty, defendants ADONIEV and RASHKOVAN s h a l l f o r f e i t t o the United States, pursuant t o T i t l e 18, United States Code, Section 982, a l l property, r e a l or personal, involved i n each said offense and a l l property traceable t o such property, i n c l u d i n g but not l i m i t e d t o a l l deposited funds and a l l i n t e r e s t and proceeds traceable t h e r e t o c r e d i t e d t o account number 0645-022278 a t Wells
Fargo Bank, 9600 Santa Monica Boulevard, Beverly H i l l s , C a l i f o r n i a ,
and a l l accounts i n the name o f MCW a t M e r r i l l Lynch, 468 North
Camden Drive, Beverly H i l l s , C a l i f o r n i a .
A TRUE BILL
M. MANELLA
es Attorney
Assistant United States Attorney Chief, Criminal D i v i s i o n
JAMES P. WALSH
Assistant United States Attorney Chief, Organized Crime and Racketeering S t r i k e Force
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