Dallas Real Estate Entangled in Fed’s Money Laundering Probe

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DALLAS — For decades, the eight-story office building in Forest Lane in North Dallas stood as a sign that Dallas was a welcoming place for businesses looking to grow profits and prosper in the booming North Texas city.

In the 1970s, the complex was home to Electronic Data Systems, the large Dallas technology company founded by Ross Perot. In the 1990s, it became the headquarters of CompuCom Systems Inc.

Today, the building and its surrounding 20-acre property are part of a federal probe into what the Justice Department says is an international, multimillion-dollar money-laundering scheme being run at the behest of two Ukrainian oligarchs.


What You Need To Know

  • U.S. attorneys want to seize the former CompuCom complex on Forest Lane in North Dallas as part of the Dept. of Justice’s probe into an international money laundering scheme

  • Federal investigators allege Ukrainian oligarch Ihor Kolomoisky laundered hundreds of millions of dollars in U.S. commercial real estate purchases, including two in Dallas

  • The former Mary Kay headquarters building on North Stemmons Freeway was sold in January by a company believed to be involved in Kolomoisky’s scheme

Last month, the government filed a civil forfeiture complaint to seize the Forest Lane property in the U.S. District Court for the Southern District of Florida. The complaint accuses the owners of the property, the Miami-based Optima 7171 LLC, of purchasing the commercial complex in 2010 with funds U.S. investigators said were accumulated through embezzlement, misappropriation, and fraud.

As a result of the ongoing investigation, the Forest Lane property remains in limbo, undeveloped, unoccupied, and somewhat of an irritant to the surrounding affluent Preston Hollow community of multi-million dollar homes, golf courses, and upscale office complexes and medical facilities. 

“The whole situation is quite unfortunate,” said Larry Ginsberg, the president of the Lake Forest Home Owners Association, which represents property owners in the surrounding residential developments. “The community is shaped like a donut with the former campus in the middle of it. Neighbors would like to see it redeveloped because you come down Swan Lake and run right into that chainlink fence.”

The property is a clear example of how international financial crimes can have a rippling effect on the U.S., even in quiet, unsuspecting neighborhoods of northwest Dallas like Preston Hallow.

The case “shows that dirty money is not necessarily concentrated in the big cities and real estate but can penetrate the real economy,” wrote Anders Aslund, an economist and senior fellow at the Atlantic Council, a think tank in Washington, D.C., in an article for the organization last year after details of the case against the dealings of the Ukrainian oligarch, Ihor Kolomoisky, emerged. Aslund is the author of Russia’s Crony Capitalism: The Path from Market Economy to Kleptocracy.

The Case Against the Ukrainian Oligarch

The government’s efforts to seize the Forest Lane complex stems from a May 2019 civil lawsuit filed in Delaware by PrivatBank, a Ukrainian bank. The suit accuses two of the bank’s former owners, Ukrainian oligarch Kolomoisky and his business partner, Gennady Boholiubov, of an elaborate scheme it says bilked the bank out of nearly $800 billion from 2006 through 2016.  

According to the Treasury Department’s Financial Crimes Enforcement network, money laundering is defined as “the process of making illegally-gained proceeds (i.e., “dirty money”) appear legal (i.e., “clean”).”

Investigators with the U.S. attorney’s office said that “the basic idea was simple: Kolomoisky and Boholiubov requested money from PrivatBank, which (based on their control and ownership) they always received, and rarely paid it back, except for through new loans,” the court document states.

The businessmen obtained loan after loan for their businesses based on fraudulent applications, according to the lawsuit. 

The civil suit alleges that the two Ukrainian oligarchs then sought to invest money obtained from fraudulent loans outside of Ukraine, as a way of laundering the profits and making them untraceable. 

The suit claims the men enlisted the assistance of U.S. citizens based in Miami, Mordechai Korf and Uriel Laber, who set up a network of about 19 limited liability companies, or LLCs, across the country. Most of the companies included the name Optima in their titles, such as the former CompuCom complex’s owner, which is Optima 7171 LLC, according to the Dallas County Tax Assessor’s office and the civil suit’s filings. The name corresponds to the property’s address at 7171 Forest Lane. 

Kork and Laber are listed along with Kolomoisky and Boholiubov as defendants in the civil cases. Lawyers for the accused men did not return phone calls seeking comment. 

The U.S.-based associates went on a buying spree across the U.S., spending hundreds of millions of dollars on commercial real estate from Florida to Oregon, according to U.S. investigators. The Optima investors sought properties outside of the country’s largest cities, such as New York or Los Angeles. Instead, they bought steel plants in Kentucky, a cell phone manufacturing plant in Illinois, and other properties in West Virginia and Michigan. 

Investigators believe the Optima companies eventually bought hundreds of millions of dollars in American real estate, including at least two significant properties in Dallas. 

An Optima LLC is also behind the recent sale of another Dallas commercial real estate icon, the Optima Business Park. The Richi Group purchased the commercial property at 8777 North Stemmons Freeway in January from Optima Stemmons LLC, another Miami-based business owned and operated by the same principals as Optima 7171 LLC. The Stemmons Freeway property was famed for its gold glass exterior towers, which once housed the headquarters of the Mary Kay cosmetics company.

In Cleveland, Ohio, the Optima scheme allegedly bought up vast swaths of the city’s commercial real estate, including one of its iconic skyscrapers, The Huntington.

According to investigators, many of the Kolomoisky purchases in the U.S. were never redeveloped or their businesses revitalized to bring benefits to local communities, as the Optima LLC buyers promised. In some cases, property taxes were not paid, cheating the local U.S. communities of needed income.

Records with the Dallas County Tax Assessor indicate that both properties once owned by the Optima groups had paid their tax bills in full.

The Aug. 6 forfeiture complaint also seeks to seize a Louisville, Ky., office tower known as PNC Plaza. Together, the properties are worth about $70 million, according to the government’s complaint.

“These guys would come in and offer a significant price when no one else was offering, and they would offer to bring in jobs and revitalization or to bring in tenants to unoccupied buildings,” said Casey Michel, an investigative journalist who is writing a book about how money laundering works in the U.S. real estate market. “These guys said all the right things and they had the money.”

Legally, real estate agents for the sellers and the buyers are not required to check who is the flesh-and-blood person behind an LLC seeking to purchase commercial real estate in the U.S. 

Corruption watchdog groups and many lawmakers argue that a lack of U.S. law preventing anonymous LLCs from making large, often all-cash, purchases of commercial property creates fertile ground for money laundering. 

“Beyond the moral issue of allowing dirty money to be invested on U.S. soil, a national security threat emerges when such purchases are made by proxies of American adversaries such as the Russian or Chinese governments,” said Joshua Rudolph, a fellow for Malign Finance at the Alliance for Securing Democracy. The Alliance is housed at the German Marshall Fund, a non-partisan policy institute in Washington, D.C. 

In recent years, investigative reports such as the 2016 Panama Papers have shed light on how hundreds of politicians, arms dealers, celebrities, and rogue actors hid their massive wealth in hard-to-trace companies and tax havens. 

“Wars are no longer just being fought by tanks and missiles,” Rudolph said. “Modern authoritarian aggression operates through these corrupt channels to influence our political systems.” 

The U.S. is playing catch up when it comes to outlawing anonymous shell companies. Other developed countries, such as the United Kingdom and European nations, already have such laws in place.  

However, there are areas where the U.S. is stronger than other nations when it comes to preventing financial crimes. The U.S. has a relatively strong track record of enforcing the laws against financial crimes that are already in the books. The U.S. Treasury and Justice Dept. have levied multibillion-dollar fines on U.S. banks for non-compliance with terrorist financing and money-laundering rules.

But, the U.S. legislation and record of enforcement of banking regulations “is not enough when great power politics are back and our adversaries have taken the form of kleptocracies engaging in political warfare,” Rudolph said.

A version of the bill has passed the House as an amendment to the National Defense Authorization Act, or the NDAA, for 2021. It did not pass in the Senate’s version of the NDAA, and is currently in a joint congressional committee, where supporters of the proposal are hoping it will be reattached before final approval. 

If it passes, the law would make it difficult for anonymous shell companies, such as the ones federal investigators believe Kolomoisky used in Dallas and elsewhere, to purchase large real estate investments without revealing the true owner.

Already, the U.S. restricts anonymous LLCs from purchasing expensive residential real estate in select American cities. The Treasury Dept.’s Financial Crimes Enforcement Network, or FinCEN, currently requires U.S. title insurance companies to identify the human behind an LLC, making an all-cash purchase for residential real estate properties valued at over $300,000 in Boston, Chicago, Dallas-Fort Worth, Honolulu, Las Vegas, Los Angeles, Miami, New York City, San Antonio, San Diego, San Francisco, and Seattle.

The Men Behind the Money

Kolomoisky and Boholiubov are two of Ukraine’s most powerful businessmen, having made their fortunes in the energy, metals, and media industries in that former Soviet republic. 

Their businesses are grouped together as the Privat Group, and one of its key holdings is PrivatBank, which at one point enjoyed 25 percent of the country’s banking business and held more than one-third of the population’s money. 

But in 2016, after the National Bank of Ukraine took control of PrivatBank amid an economic crisis as the bank teetered on collapse, the government infused it with $5.5 billion in state funds to save it. A collapse of PrivatBank would have been fatal for Ukraine, which was, in 2016, still reeling from Russia’s annexation of Crimea as well as a violent military conflict with Kremlin-backed separatists in the east. That conflict has cost more than 13,000 lives and continues today.

Kolomoisky played a bit role in Pres. Donald Trump’s impeachment hearings because of his association with Ukrainian President Volodymyr Zelensky, who, before being elected to lead Ukraine, was a comedic actor in a hit television show airing on a station owned by the oligarch. 

Kolomoisky has called the government nationalization of PrivatBank politically motivated and denied any accusations of fraud or money laundering. He and Boholiubov have said their U.S. real estate purchases were made with profits from the sale of a Ukrainian steel business. 

Phone calls seeking comment from the legal teams defending Kolomoisky and Boholiubov were not returned. Messages left at the Optima Optima International of Miami were not returned. Lawyers defending Korf and Laber did not return messages seeking comment. 

The case remains a civil suit, meaning no criminal charges have been filed against Kolomoisky or his alleged partners at this time. The U.S. attorney’s office in Cleveland is also investigating Kolomoisky for possible money laundering. 

The FBI’s International Corruption Unit, the Internal Revenue Service, and the U.S. Customs and Border Protection are also investigating the case into how Kolomoisky ended up buying so much U.S. real estate. The FBI last month, before the Aug. 6 filing to seize the Dallas property, raided the office of Optima Management Group in downtown Cleveland as well as an Optima office in Miami.

Meanwhile, the former CompuCom complex on Forest Lane has attracted some buyer interest in recent years, including a serious redevelopment project for consideration by Dallas-based Provident Realty Advisors. But, for now, the building remains frozen in a legal battle and unavailable for sale or development. 

Kolomoisky and Boholiubov “used PrivatBank as their own personal piggy bank—ultimately stealing billions of dollars from PrivatBank and using United States entities to launder hundreds of millions of dollars’ worth of PrivatBank’s misappropriated loan proceeds into the United States to enrich themselves and their co-conspirators,” the U.S. attorney’s Aug. 6 forfeiture claim said.

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