Now that the money-laundering part is clear, let us see what the embezzlers were doing to scrub their tarnished reputations clean, and that is where the fraud saga took a stunning plot twist.

Just to be clear, Leontiev and Zheleznyak did not embark on a reputation-laundering journey because they suddenly got filled with remorse for the crimes they had committed and sought to start with a clean slate. Of course, not. It was about the money and their own safety.

Indeed, making enemies seems to be part and parcel of someone pilfering one billion bucks. There are the victims of the scam naturally seeking justice and reimbursement. Then there are the foreign financial intelligence agencies busting their chops to build an airtight court case. The fraudsters are in for quite a ride. Here they have their accounts frozen. Others want them to be extradited. And they can never discount the odds of being prosecuted for money laundering in a Western country.

But once you have conjured up a reputation as a victim of an autocratic rule and convinced everyone that the embezzlement charges are politically motivated, you get a shot at having your assets back and winning an extradition court case. Therefore, investing in your suddenly revamped reputations can pay off big time.

But invoking politics was not exactly Leontiev’s or Zheleznyak’s brainchild. The two had notable predecessors.

In 2011, Andrei Borodin, the former president of Bank of Moscow, fled Russia and applied for political asylum in the U.K. At the time, the bank came under scrutiny over using a shell firm to withdraw over $400 million.

Sergei Pugachev, Mezhprombank’s beneficiary, also insisted he was being persecuted as a political dissenter. As a result, his name got struck off Interpol’s wanted list, even though in 2010, the official inquiry uncovered a $2B gap in Mezhprombank’s finances.

How were the devious banksters supposed to cook up a credible theory proving their political affiliations, seeing as they had none?

The most popular methods include cooperating with famous organizations or non-profits, doing charity work, and mingling with well-respected public figures.

The banksters decided to go for the ACF affiliations. They took part in the foundation’s events, snapped pictures of them alongside the famous members, donated the money, and even infiltrated the company’s management structure. The ACF employees were penning letters of support and publicly pledged their trust in the bankers’ reputation. They could not have asked for more, right?

The second tactic is doctoring the media coverage. Ordering a couple of puff pieces, making sure the smear mentions are limited to a bare minimum, and hiring seasoned public relations wizards with great command of the local media landscape.

In October 2021, an American lawyer named Jonathan Reich made an appearance on Free Russia’s Foreign Office podcast. The host and the attorney discussed how Russia “manipulates the anti-money laundering systems.”

Now, what makes Mr. Reich and the podcast episode he appeared on worthy of a separate chapter? The thing is, Jonathan Reich hails himself as a provider of “creative legal strategies.” Besides, he represents Sergei Leontiev. Credit where credit is due: the strategy he came up with for Leontiev was creative indeed. Under it, his client is posing as an exiled political dissident targeted by the Russian regime.

But back to the podcast. The episode in question features Mr. Reich breaking down Leontiev and Zheleznyak’s criminal defense strategy leveraging the motif of honest entrepreneurs being politically persecuted. Go ahead and give it a listen or read the episode’s transcript.

Throughout the episode, the host and the guest discussed if Russian authorities could at all be trusted when it came to financial crime. After all, Russia is an autocracy and a kleptocracy that cannot be taken seriously. Reich doubts that European financial intelligence agencies should seize any assets in countries like Switzerland solely based on the Russian oversight agency’s claims that those were stolen from Russia.

Besides, he goes on to question the integrity of Western financial intelligence units investigating Russian entrepreneurs and their money because these institutions may, too, be bribed by the Putin regime.

Reich then argues that any money withdrawn from the Russian banks should be, by default, considered clean without even bothering to look into the evidence offered by the Russian side. In addition, he basically says there is essentially nothing wrong with money laundering. According to him, it is merely the movement of assets. After all, honest money can, too, be shoved back and forth to hide the origin of these funds.

But again, like we said in the chapter on money laundering, an attempt to hide the funds’ origin is considered a felony regardless of the origin’s “cleanliness”.

Nonetheless Reich’s musings clarifies the logic that underlies Leontiev and Zheleznyak’s whole criminal defense strategy. That very logic spawned the political aspect narrative with regards to Probusinessbank’s fraud allegations.

What is the upside to this narrative? If swallowed by the foreign courts, it will lead them to drop the charges without trying the case on the merits. They will refuse to look into the official records or interrogate the witnesses in a bid to find out if the money has indeed been stolen and needs to be returned to its rightful owners. The political argument will outweigh it all and help the fraudsters keep the money and remain free.

But it takes more than just fleeing abroad and declaring yourselves political exiles and regime critics for the persecuted bankers narrative to get off the ground. The courts are not exactly known for their disarming credulity, and this excuse may prove a tough sell. It is further exacerbated by the evidence pointing to Probusinessbank’s scheming.

Importantly, these events were unfolding in the mid-to-late 2010s when Russia was not yet a pariah state. Russia’s law enforcement was still fruitfully cooperating with their foreign counterparts in the anti-money laundering department. The bankers needed solid proof of their story. In July 2017, the duo got a lucky break.

In late May 2017, the Liechtenstein authorities froze the accounts of the three companies run by Leontiev on the money laundering allegations tying it all in with Probusinessbank.

On Jul. 26, 2017, two months after Leontiev’s accounts were frozen in Liechtenstein, Vladimir Ashurkov, the then-ACF’s executive director, traveled to the U.S. to submit a statement. His statement would then solidify the banker’s legal and political defense strategy in Europe. For example, the Polish court cited the statement as it declined to extradite Yaroslav Alekseyev, Probusinessbank’s former vice-president.

Ashurkov’s statement tells the story of Alexei Navalny and the repression he and Ashurkov himself were subjected to. He goes on to bring up the 2012 plan to issue the Navalny card together with Bank24.ru. This project will be described below.

Although the statement does not explicitly claim it, the implication is that Bank.24 was forced to cease operations following that episode. “This outcome was a setback to Mr. Navalny's Anti-Corruption Foundation but was not surprising given the Putin Administration's history of stifling the political opposition, including the illegal seizure of banks and business assets

'<...>'

It is very possible that the arrests, false charges and the seizure of the banking group which happened in respect of LIFE, its executives, and its members was a result of their attempt to help Alexei Navalny and Anti-Corruption Foundation in its absolutely legal civil work.”

The statement shrugs off the charges brought against Zheleznyak and Leontiev as trumped-up and politically motivated. We now know they were not trumped-up. Later, we will explain why they were not politically motivated, either. But for now, bear in mind that Ashurkov’s statement was used as a major piece of evidence portraying Leontiev and Zheleznyak as political exiles.

ACF dismisses the document as being an actual affidavit since it wasn't offered under oath. However, neither Ashurkov nor ACF dispute the statement itself substantively.

The bankers began to extensively donate to, and work with, ACF.

Leonid Volkov told Financial Times that starting in 2021, Leontiev had been donating $20,000 a month, or $240,000 a year, to ACF. He may have been donating before 2021, but this data was not revealed. Currently, ACF is not reporting these donations.

Besides, Zheleznyak, Probusinessbank’s former chairman of the board, founded ACF’s U.S. branch. He was and still is the organization’s CFO. ACF has various titles registered across the U.S. But public records see him mentioned as either vice-president or CFO or principal officer.

Here is an example of Zheleznyak signing the important documents on behalf Anti-Corruption Foundation Inc. On behalf of the foundation's New York branch, Zheleznyak authorized the incorporation of ACF's affiliate into the Virginia jurisdiction.

ACF’s public support of the bankers makes the political persecution narrative a compelling case both for the courts and for the public opinion.

The political persecution narrative could be boosted by the support from top-tier politicians, preferably the U.S. policymakers. That is why in 2016, Sergei Leontiev began his lobbying efforts with various U.S. institutions.

In the U.S., all lobbying activities are reflected in public records listing both the areas of interests and the stakeholders’ names. Everyone can access a government website and find the information on the lobbyists, their interests, and the agencies or government structures they are working with.

We have gleaned the publicly available information on Sergei Leontiev’s lobbying campaign. In 2016, he registered as a lobbyist and reached out to the Department of State with an eye to the banking system and international relations. In 2017, he promoted his agenda with the Department of Justice and the DoS. In 2018, he lobbied the DoS and the FBI.

In 2018, he re-registered as Grid Market Research, a firm that keeps lobbying the U.S. agencies to this day.

Grid Market Research had a prominent role in this story. At least once, in October 2015, it received a payment from the Latvian account owned by Wonderworks, the stolen money receptacle. In 2021, Grid Market Research was listed as one of ACF’s top donors. It also shares the company address with Anti-Corruption Foundation USA.

Upon registering as a lobbyist, Grid Market Research has invested a ton of money to carry on with Leontiev’s lobbying endeavors. Both Leontiev and his company have spent a total of more than $2.5 million lobbying the agencies.

What does a typical lobbying scheme look like? One example we know of is that Grid Market Research donated to the Atlantic Council, a famous U.S. think tank. According to the organization’s 2018 report, the donation amount was between $50,000 and $100,000.

In 2018, the Atlantic Council ran an expertly report on the way Russia was “interfering” with the U.S. judiciary. The piece cited Alexander Zheleznyak and Sergei Leontiev as the alleged victims of the unlawful bank seizure. The article claimed that the innocent duo was being targeted by a lawyer whose name was on the Magnitsky list, which is true in that the ASV had hired an attorney sanctioned by the U.S. under the Magnitsky Act. However, the bankers were being targeted for the real crime they had committed.

We cannot definitively say if Leontiev and Zheleznyak’s attempts to lobby the members of the U.S. Congress panned out. Nevertheless, in July 2020, three U.S. representatives wrote letters to Liechtenstein’s ambassador to the U.S., looking to have the Princely Court reconsider its account freeze orders.

These letters claim Leontiev was stripped of his business because of his support for the Russian political opposition and his commitment to the anti-corruption cause. As proof, they cite the Magnitsky case, which had nothing to do with Probusinessbank, and the Polish court ruling based on Ashurkov’s statement.

On May 16, 2022, two U.S. representatives published a letter to President Joe Biden. The letter tried to bring his attention to the Deposit Insurance Agency (DIA, ASV) because it led the “Kremlin-directed efforts to nationalize the assets of targeted Russian financial institutions, funneling the assets of privately owned businesses to now-sanctioned Russian state banks such as Sberbank, VTB and Gazprombank.”

According to the high-profile letter-writers, many of those businesses (closed banks) were owned by “shareholders and entrepreneurs who lack sufficient political protection from these kinds of schemes or have been blacklisted as political targets of the Russian state.”

The letter called on the ASV to be sanctioned to counter the ASV legal team’s attempts to recover the assets. According to the congressional representatives, it would help curb financial aid that bankrolled the war effort and, lo and behold, “protect the assets of Russia’s private financial institutions.”

Importantly, the ASV has never boasted a spotless reputation. This is a corrupt agency that takes advantage of the insider information to blackmail and leverage thievish bankers and hires the unscrupulous lawyers mentioned in the Magnitsky list.

But in this case, the pushback against the ASV had nothing to do with malpractice or its ties to Russia’s autocratic political regime. Far from it, they were attempting to undermine the ASV’s crusade to reimburse the scammed Probusinessbank customers.

This initiative worked, and the ASV ended up sanctioned. The banksters must have breathed a sigh of relief.

On May 18, 2017, the Liechtenstein authorities froze the accounts owned by Sergei Leontiev and his companies, alleging the money had been embezzled from Probusinessbank. The court decision spurred a flurry of pro-Leontiev publications in the German-language media. They hailed him as a political exile and “Navalny’s banker” and compared his persecution with that of Magnitsky, Khodorkovsky, and Navalny himself.

On Dec. 5, 2020, Liechtenstein’s largest daily newspaper ran an interview with Leontiev’s attorney. According to the lawyer, the Russian justice system was targeting the dissident banker because of the Navalny card project the way it had formerly cracked down on Khodorkovsky and Magnitsky.

In 2022, the Austrian-based profil.at penned three articles on the subject, including an interview with Leontiev. He was repeatedly referred to as a government critic, a dissident, and “Navalny’s banker.”

In November 2020, Schweizer Radio und Fernsehen (SRF, Switzerland) ran a story on Probusinessbank, Sergei Leontiev, and, you guessed it, the Navalny card project. According to SRF, the Russian government pressed charges against Probusinessbank because of their collab with ACF. But the outlet never mentioned the stolen money or the fraud scheme.

And that is by far the most obnoxious aspect of the story. Sergei Magnitsky exposed a government corruption scheme and subsequently died in pretrial detention. Alexei Navalny was the biggest government critic for years and ended up assassinated in a prison colony. Mikhail Khodorkovsky lost his Yukos company and spent ten years behind the bars. It takes a particular brand of cynicism to invoke these cases for the defense of those fraudsters.

And it was not about extraditing the duo to Russia. It was intended to help the banksters brush off the claims of the defrauded customers who tracked down their stolen money and sought to recover it.

What else could “corroborate” the political persecution cover story? One way would be producing an expert assessment by someone with intimate knowledge of Russia. In January 2018, Sergei Leontiev hired Professor Anders Åslund, an economist specializing in Eastern Europe and Russia, in particular. In the early 1990s, he served as Prime Minister Yegor Gaidar’s advisor. He was well-versed in Russia’s economic landscape and authored several academic papers on the Russian economy. Besides, he has always been a staunch critic of the Putin regime.

On Jan. 12, 2018, he testified in the U.S. District Court, Southern District of New York, where he offered an overview of “the political and economic state of affairs in Russia” in the context of Probusinessbank’s closure.

Basically, he just outlined the basic facts about the current Russian system: no rule of law, poorly protected property rights, the government’s obsession with the preservation of power and personal enrichment.

Both the judiciary and the prosecutor-general’s office are totally corrupt. The government stripping entrepreneurs of their businesses is a common practice. He illustrated his claims with the Khodorkovsky and Magnitsky cases. The Central Bank, he continued, is corrupt, too. Some of the banks were deliberately bankrupted to take over the assets. The delicensing and shutdown of Probusinessbank, he concluded, was just one of those cases.

Fair enough. On the one hand, the Russian system is indeed utterly corrupt and cannot be trusted. It can plunder a private bank or jail a businessperson that has gotten in their way. It seems that Western courts should be particularly discerning and be treating the charges on a case-by-case basis to tell a politically motivated case from the actual embezzlement cases.

However, the only caveat was that Professor Åslund was arguing against deciding the case on the merits just because it happened in Russia and there was no point in chasing that rabbit hole.

In February 2019, the Polish authorities arrested Yaroslav Alekseyev , the vice-president for corporate finance at Probusinessbank, in the Probusinessbank embezzlement case.

Alekseyev could be extradited, and that is when he applied for political asylum. At first, he claimed he was a Jehovah’s Witness, a denomination that had just been outlawed by the Russian government. However, during the trial, his defense strategy revolved around him being politically persecuted by the Russian regime over his dissenting views.

That claim was supported by the statement Ashurkov had signed while in the U.S. The court ruled against the extradition, the Polish prosecutors challenged the ruling, but then the court of appeals literally quoted Ashurkov’s statement:

“<...> the evidence presented in the criminal proceedings against Mr. Yaroslav Alekseyev raise considerable suspicions. The evidence suggests that the criminal charges may be politically motivated

<...>

The Probusinessbank employees’ alleged cooperation with Alexei Navalny, one of Russia’s major opposition politicians, has a profound effect on the ongoing litigation, for there is reason to believe that the charges brought against Mr. Yaroslav Alekseyev may be part of a repression campaign seeking to terminate said cooperation.”

That is how the political persecution claims were officially mentioned by a European court, which further boosted the political persecution cover story.

Let us get back to the Liechtenstein part of the money saga. On May 17, 2017, the Liechtenstein prsecutors office launched a probe into Leontiev's money-laundering case. On May 18, the $116 million transferred from Morgan Stanley were seized.

In March 2022, the Liechtenstein authorities eventually dropped the charges against Leontiev. On Apr. 28, 2022, the court declined to pursue new charges.

The investigation failed to trace the funds' true origin and dropped the case citing a political aspect thereof. The account freeze was apparently lifted.

But how come? What did they do to make the court reconsider and subsequently refuse to return the smuggled funds to their rightful owners?

The answer is simple. They found the right words suggested by a shrewd attorney. The Liechtenstein court that was considering the reimbursement of the bank’s creditors cited two reasons for calling off the litigation. One was that the charges were allegedly politically motivated. Secondly, the ASV was a sanctioned state-run corporation representing an unfriendly country that could not act as a plaintiff in the Princely Court of Vaduz.

So, the court dismissed the case as politically motivated, referencing the ruling of the Polish court that had allegedly made an evidence-based decision.

Meanwhile, the Polish court that handled the extradition case chose its words carefully. According to the Polish judiciary, the case “might” have been politically driven, for it “might” have targeted the bank’s bankruptcy and its subsequent acquisition by the government.

Besides, according to the court records, the bulk of evidence, including witness testimony and Vladimir Ashurkov’s statement arguing for the bankers’ ties to Navalny, stoked reasonable doubt as to the criminal charges brought against Yaroslav Alekseyev. Ashurkov’s statement is, in fact, even quoted in the resolution.

But the Liechtenstein court could push further, try the case on the merits, and peruse the official records obtained outside of Russia’s jurisdiction. Moreover, it was related to the money laundered via Wonderworks that wound up frozen in Leontiev and his companies’ Liechtenstein accounts. Sadly, the Liechtenstein court decided against pressing on. Instead, it just referenced the Polish court ruling.

According to the Princely Court of Vaduz, based on the Polish court filings, “the Russian criminal prosecution targeting Mr. Yaroslav Alekseyev and the second plaintiff <...> is politically motivated.” Odd that. The Polish court did not state it. It only invoked reasonable doubt.

Based on that conclusion, the preliminary probe the Liechtenstein prosecutors had conducted for several years was dismissed without ever being decided on the merits. The creditors’ appeal seeking to resume the litigation was dismissed, too.

Ashurkov’s statement played a major role in both litigations. The statement convinced the Polish court there might have been a political aspect to it, and stopped it from getting to the bottom of Alekseyev’s dealings. The Liechtenstein court then merely referenced the Polish court decision and discontinued the preliminary investigation.

There is an ongoing trial in Liechtenstein that already features the bank’s customers trying to recover their seized funds. Vladimir Ashurkov will be tried as a witness. Most likely, he will be insisting the case is politically motivated.

Meanwhile, the litigation is ongoing in Liechtenstein. The banks's customers—this time, without the ASV's mediation—are trying to recover their money from Leontiev. The latest decision in one of these trials, the one that came in May 2024, appointed the witnesses to be tried. Leontiev insisted that they reach out to Vladimir Ashurkov who could explain «the real state of affairs.» The court granted Leontiev's request. It will give Ashurkov the floor for a two-hour witness deposition.

(Because it is an ongoing trial, the lawyers advised that we withhold the information unrelated to Ashurkov's statement.)