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BNY in $10B Russian scam
August 19, 1999: 11:49 a.m. ET

Employees allegedly laundered Russian gangsters' funds through bank
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NEW YORK (CNNfn) - The Bank of New York was used by members of a Russian organized-crime gang to launder as much as $10 billion since early last year, the bank confirmed Thursday.
     The bank suspended two high-ranking employees in its Eastern European division with pay this week in connection with the case. Both employees, identified as Natasha Gurfinkel Kagalovsky and Lucy Edwards, are married to Russian businessmen.
     Bank officials maintain that thus far there have been no allegations of wrongdoing leveled against the $68 billion institution, the nation's 16th-largest commercial bank based on year-end 1998 statistics.
     The investigation, which is being run by the U.S. Attorney's Office for the Southern District of New York, apparently focuses on the use of the bank as a conduit for funds from Russia into other countries.
     The accounts under investigation are linked to Semyon Yukovich Mogilevich, who investigators say runs a veritable one-stop shopping center of crime, according to the New York Times, which first reported the story Thursday.
     Mogilevich is engaged in arms trafficking, extortion and prostitution, according to law enforcement and intelligence sources, the Times reported.
     Money laundering refers to the practice of moving illegally gained funds in and out of a series of accounts, eventually hiding the money's origins.
     British investigators reported suspicions about money laundering at the bank to their U.S. counterparts more than a year ago. While investigators kept watch, the money flowing through the suspect accounts grew from $4.2 billion to as much as $10 billion. Back to top


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