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COVID relief loans went to Ukrainian tycoons accused of money laundering, records show

Robert F. Kennedy Department of Justice Building in Washington, D.C. in July 2012. (Another Believer/Wikimedia Commons)

This article was originally published by Radio Free Europe/Radio Liberty and is reprinted with permission.

Five American companies owned by Ukrainian tycoons who are accused of laundering money and using the misappropriated funds to help buy U.S. assets were approved for as much as $13.3 million in loans through a federal program aimed at saving jobs during the pandemic, according to U.S. government records.

CC Metals & Alloys, Felman Production, Felman Trading Americas, Optima Management Group, and Optima 777 were among the more than 600,000 U.S. businesses approved for loans of $150,000 or more under the federal government’s Paycheck Protection Program, commonly called the PPP, Treasury Department records show.

The U.S. Justice Department filed a civil complaint on August 6 that accuses Ukrainian billionaires Ihor Kolomoyskiy and Hennadiy Boholyubov of laundering hundreds of millions of dollars from a Kyiv-based bank and using the misappropriated funds to help purchase assets in the United States, including alloy and steel plants as well as real estate.

The two men control CC Metals & Alloys, Felman Production, Felman Trading Americas, Optima Management Group, and Optima 777 with their U.S. associates, Uriel Laber and Mordechai Korf, according to the Justice Department’s lawsuit.

At least four of the companies are formally run by Laber and Korf from their headquarters on the penthouse floor of a Miami skyscraper.

The FBI on August 4 raided their Miami office as well as Optima Management Group’s office in Cleveland, Ohio, where they own three commercial buildings. The FBI has not charged anyone with a crime; its investigation is continuing.

Kolomoyskiy denies the laundering accusation, saying the money he and his partner used to purchase the U.S. assets came from their sale of Ukrainian steel assets to a Russian company for about $2 billion. The sale was completed in 2008.

Laber and Korf, through their lawyer, also deny the charges, saying they are part of a politically motivated attack against Kolomoyskiy and Boholyubov, whose relations with then-Ukrainian President Petro Poroshenko began to sour in 2015.

Kolomoyskiy fled Ukraine in 2017, months after PrivatBank, his main funding vehicle and the largest commercial bank in Ukraine, was nationalized over a $5.5 billion hole caused by what banking regulators said was reckless lending to entities connected to him and Boholyubov.

He returned to Ukraine in May 2019, after Volodymyr Zelenskiy, a comic and television star who ran for president with the informal backing of the tycoon’s media firm, beat Poroshenko in a presidential runoff election.

CC Metals & Alloys, a Kentucky-based producer of ferrosilicon alloys used in the manufacturing of iron and steel, was approved for a PPP loan on April 14 of between $2 million and $5 million to help support 145 jobs, according to the data.

CC Metals & Alloys shut down temporarily due to the coronavirus pandemic on July 1, according to a company press release.

Felman Production, a West Virginia-based producer of silicon manganese, which is also used in steel production, was approved for a loan of between $1 million and $2 million to help support nearly 100 jobs. The Ukrainian tycoons and their U.S. partners have invested tens of millions of dollars into Felman Production since purchasing it out of bankruptcy in 2006. Through their lawyer, Korf and Laber say their investments have helped revive “depressed” U.S. industrial assets.

Felman Trading Americas, a ferroalloys trading company that the Justice Department said was set up by Korf and Laber to hide the tycoons’ ownership, was approved for a loan of between $350,000 and $1 million.

Optima Management Group, which managed the tycoons’ U.S. commercial real estate, was approved for a loan of between $150,000 and $300,000.

Finally, Optima 777, which owns the Westin Hotel in Cleveland, was approved for a loan of between $2 million and $5 million to support 240 jobs.

Sage Hospitality Group, a Denver-based hotel manager, owns a minority stake in the Westin, its spokeswoman Kelly Bajorek told RFE/RL. Bloomberg News in July reported that Optima 777 was approved for a PPP loan.

A spokesman for Korf and Laber declined to say how much of the $13.3 million in approved loans their companies received.

The low-interest PPP loans are designed to keep employees on the payroll during the pandemic.

The PPP program has not avoided controversy. Some well-connected or well-funded businesses were approved for loans.

Korf had hired some of his relatives at the firms he ran for the tycoons, including his nephew, Menachem Sossonko, who had been employed at Felman Trading. The spokesman for Korf declined to say whether Sossonko was still employed.

Korf and Laber are also listed as managing members of Transenergy USA, a Texas-based trucking company for the energy industry.

Transenergy was approved for a PPP loan in May of between $350,000 and $1 million to help support 200 jobs.