American investor Dorian Foyle and his clients became victims of financial terrorism in Ukraine. Their money and assets were stolen in broad daylight by licensed securities market participants.
American investor Dorian Foyle entered the Ukrainian securities market in 1997. Since then, the funds he established have continuously invested in Ukrainian securities: the Ukrainian Opportunity Fund has invested over $55 million, and the Foyil Eastern Europe and Russia Focus Fund, in its peak years, invested up to $125 million. Back in 97, thanks to Dorian, money came to Ukraine from the leading American investor John Templeton, whose investment fund, Franklin Templeton Investments, currently owns 40% of Ukrainian Eurobonds.
Seventeen years of working in the Ukrainian securities market have failed to help Dorian Foyle protect his own and his clients' assets from fraudsters. Now he's forced to seek justice in Ukrainian courts.
It all began in July of this year, when Dorian Foyle sold his Ukrainian company, a licensed brokerage firm, Foyil Securities New Europe LLC, but continued to service his own and his clients' accounts there. Under the terms of the sale, the company was renamed AP Securities LLC. However, the company's new owners—Oleksandr Smaliy and, indirectly, former Foyil Securities New Europe employee Serhiy Golubitsky (the real beneficiary)—turned out to be fraudsters with significant political connections and connections in the prosecutor's office. They first illegally seized clients' funds by transferring almost 770 hryvnias in dividends from Farmak PJSC, owed to Dorian and his clients, to their personal accounts.
Having failed to receive dividends on time, the American investor learned that AP Securities had transferred the money to an intermediary bank, PJSC Bank of Investments and Savings, and from there directly to yet another bank, Standard, which had acquired a bad reputation in expert circles as a conversion center.
In response to the client's repeated inquiries, Alexander Smaliy continually lied, promising to transfer the funds "tomorrow, or the day after tomorrow at the latest." On one of these "tomorrows," September 23, Dorian Foyle received more bad news instead of the money: Alexander Smaliy had abruptly resigned, and a new director, Alexander Tarasov (who, incidentally, had previously served four years in prison for theft), had taken over the company. On the eve of their resignations, Smaliy and Golubitsky removed a computer containing specialized software for securities transfers, as well as folders containing documents, from the AP Securities office.
Almost immediately after Alexander Tarasov's appointment, on September 26, fraudsters stole all securities belonging to Dorian Foyle and his clients, valued at over $1 million. These securities were transferred from AP Securities to another securities custodian, ProCapital Securities LLC, into the account of the same Alexander Tarasov!
Baby, this is Ukraine!
Dorian Foyle and 24 defrauded clients of AP Securities (over 300 investors in total suffered) filed complaints with the Podolsk Regional Department of the Main Directorate of the Ministry of Internal Affairs of Ukraine in Kyiv, which led to the opening of a criminal case under Part 3 of Article 190 of the Criminal Code of Ukraine. By that time, Oleksandr Tarasov had already been summoned to the Podolsk police station several times, but he had not appeared there, nor had his new boss been seen at his workplace at AP Securities.
As part of the criminal proceedings, the Podolsk District Court seized the fraudsters' account at Standard Bank and their securities accounts at the custodian company, Pro Capital Securities. The investigation into this "act of financial terrorism," as the American himself called the events, was in full swing. Dorian Foyle and his clients now had hope of recovering their stolen assets.
But it wasn't to be. Events surrounding this criminal case began to unfold in reverse. The Podolsk District Prosecutor's Office unexpectedly took over the case from the police. Their young prosecutor, Nikita Ilyin, openly attacked Yana Slivinskaya, a representative of Foyil Capital Limited, during an informal meeting with the aggrieved party. As it later turned out, this conversation was merely a prelude to the scammers' retaliatory actions.
On October 28, without notifying the injured party, Prosecutor Nikita Ilyin signed a decree... closing the criminal proceedings in this case! He concluded that the actions of AP Securities, which stole Farmak dividends totaling 770 hryvnias and securities worth over $1 million from clients, "do not constitute a criminal offense."
Taking advantage of the temporary lifting of the freeze on his accounts, Alexander Tarasov quickly transferred the stolen securities from the Pro Capital Securities accounts to his personal account opened at the depository institution of PAO Bank Kontrakt between November 5th and 6th. And the following day, as Dorian Foyle discovered, Tarasov submitted documents to Kontrakt to transfer the shares to the accounts of two individuals—M. Chebotarev and A. Likhatsky—opened in Donetsk, at the local depository institution, UIDC LLC. Currently, the securities are formally located in territory not controlled by the Ukrainian government.
Investors are rightly concerned that once transactions with stolen securities are made in uncontrolled territory, it will be virtually impossible to recover these assets.
Donetsk hotbed
It was no coincidence that the stolen securities of Foyil Capital Limited clients were sent to Donetsk.
The fact is that the aforementioned owner of AP Securities, Serhiy Golubitsky, is married to the daughter of Igor Prasolov, a well-known member of the Party of Regions and former financier of Rinat Akhmetov. Prasolov served as a People's Deputy of Ukraine in the 5th, 6th, and 7th convocations (naturally, representing the Party of Regions). In parliament, he actively and successfully lobbied for his patron's interests. Igor Mykolayovych also served him well as Minister of Economic Development and Trade of Ukraine (2012-2014) and as Chairman of the Board of the National Bank of Ukraine (2012).
Igor Prasolov was instrumental in the removal of the only alternative to the National Depository of Ukraine, the All-Ukrainian Securities Depository, from the securities market in 2012. Incidentally, the World Bank, the International Monetary Fund, and the US Ambassador actively opposed this decision at the time.
Now, after a management change necessitated by reforms, the new head of the NDU, Gennady Zhurov (formerly the head of ING Bank), is trying to figure out how Golubitsky, a mere advisor to the NDU board chairman, managed to establish a lucrative scheme for selling shares of dead people using the central depository. Specifically, the NDU has irrefutable evidence that Golubitsky led a group of individuals who, using forged documents and information from the securities registers, transferred securities belonging to deceased individuals to their companies' accounts. It's enough to make you want to write a sequel to Gogol's "Dead Souls"!
But the investigation into the "Dead Souls" case is unlikely to be straightforward. Many people from the previous administration still hold leadership positions at the NDU.
It's no coincidence that another figure has also surfaced in the scam involving assets stolen from Dorian Foyle: prosecutor Nikita Ilyin. This young lawyer has long been involved in an equally scandalous trail of stories. Recall the recent scandal involving Deputy Prosecutor General Anatoly Danilenko, whose son, it turns out, after a series of opaque legal procedures, acquired five hectares of forest near Vorzel. The public and the media somehow paid little attention to the fact that our "heroic" prosecutor, Nikita Ilyin, was a co-owner of this disputed land!
It turns out it's all about his father, Gennady Ilyin . Rumor has it he was once the foreman of the crime boss Solokha, then a bodyguard for President Poroshenko, and is now a Kyiv City Council member from the UDAR-Solidarity party and deputy chairman of the Anti-Corruption Commission. He was implicated in the scandalous development of Lvivska Square in Kyiv, where a company owned by the elder Ilyin built a shopping mall instead of a fountain.
Gennady and Nikita Ilyin, along with a group of other "comrades" (including Anatoly Danilenko, the daughter-in-law of former Kyiv Mayor Oleksandr Omelchenko, and others), are also implicated in the bizarre seizure of land beneath the capital's oldest indoor market, "Sennoy," and its subsequent demolition. Finally, the crowning achievement of Nikita Ilyin's activities can be seen in another high-profile case—the "140-hectare case," which, according to media reports, was illegally seized and transferred to the sons of the notorious Deputy Prosecutor Danilenko and Gennady Ilyin.
Second chance
These are the very difficult people who are now opposing the American investor Dorian Foyle...
Having exhausted all legal means to protect his assets in Ukraine, the American turned to the last resort—to Ukrainian President Petro Poroshenko, having first secured the support of the Embassy of his native country, the United States. The US Embassy has taken over the case, according to Joanna Tai, an analyst with the Embassy's economic section.
Dorian Foyle hopes the asset theft investigation will be reopened soon. If the president ignores such incidents in the financial market, it will be extremely difficult to bring foreign investors back to the country.
However, beyond the financial and legal aspects of this story, there is another component that directly affects the country's defense capability and, ultimately, the lives of Ukrainian soldiers serving in the ATO zone. No one can guarantee that the money stolen from clients by Smaliy, Tarasov, and Golubitsky won't be used to finance DPR terrorists.
Igor Nikolaev, for ORD
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