The Art Industry and U.S. Policies that Undermine Sanctions/Section 3A

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Rotenberg Case Study
The Art Industry and U.S. Policies that Undermine Sanctions (2020)
by the Permanent Subcommittee on Investigations
Art Advisor Gregory Baltser
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​A. Attorney Mark Omelnitski and the Markom Group

Evidence suggests that the Rotenbergs were assisted in their efforts to evade U.S. sanctions by Mark Omelnitski, one of the founders of the Markom Group. Mark Omelnitski is a British citizen who was born in Moscow, Russia.[1] The Rotenbergs reportedly used Mr. Omelnitski's services to set up a number of offshore shell companies.[2]

In 2019, a Markom Group website identified Mr. Omelnitski as the Head of Compliance and Client Relations and a member of the Management Committee of the Markom Group.[3] That website is no longer active and is only available through internet archives. On the archived website, Mr. Omelnitski was described as "a co-founder of Markom Group, Mark is Managing Director of Markom Management Limited, a founding company of the group. Mark is a member of a ​number of professional bodies and has over 20 years' experience in fiduciary services, corporate management, project administration, real estate, investment, and finance."[4]

The archived Markom Group website also stated that the organization was "a group of companies established in 2004, which provides global fiduciary, trust, corporate business management, project administration and real estate investment services."[5] According to the archived website, the Markom Group included Markom Management Limited, described as:

[T]he founding company of Markom Group. It provides fiduciary, management, administration, bookkeeping, and accounting services relating to the UK, Malta, Hong Kong, Luxembourg, the Isle of Man, British Virgin Islands, and St. Lucia registered companies, partnerships and private equity funds. Markom Management Limited is authorized by [Her Majesty's Revenue and Customs] of the United Kingdom to provide trust and corporate administration services under AML Regulations Act.[6]

In addition to reviewing the archived Markom Group website, during the course of its investigation, the Subcommittee also obtained a copy of the Markom Group of Companies Staff Handbook (5th Edition). That document stated:

Markom Group is a group of six companies registered in different jurisdictions providing fiduciary, trust, corporate business management, corporate business administration, and real estate services. With headquarters based in Tortola on the British Virgin Islands, we also have offices in the United Kingdom, Cyprus, Spain, and New Zealand, and provide extensive services in more than 30 countries around the world. At Markom Group, we provide a variety of services that go beyond the common concept of corporate and fiduciary services. We bring business services together with the latest financial, corporate, and investment expertise. [7]

The Markom Group handbook includes a Company Price List for the creation of companies in the following jurisdictions: United Kingdom; British Virgin Islands; Marshall Islands; Seychelles; Republic of Panama, and Cyprus.[8] The specific ​prices for services provided in the United Kingdom and British Virgin Islands are as follows:[9]

Description Cost
(in Euros)
United Kingdom
Incorporation of a company in the United Kingdom with standard Memorandum and Articles of Incorporation and standard Share Capital 1000
Annual Management of Company in the United Kingdom and provision of Registered Address 2200
Annual Management of Company in the United Kingdom and provision of Registered Address and Company Officers 3500
Annual Management of Company in the United Kingdom and provision of Registered Address and Company Officers with full admin, invoicing, cash management, and annual filing From 31,200
Incorporation of a Limited Liability Partnership in the United Kingdom with standard Limited Liability Partnership Agreement 1200
Annual management of Limited Liability Partnership in the United Kingdom and provision of Registered Address 2500
Annual management of Limited Liability Partnership in the United Kingdom and provision of Registered Address and Nominee Members 3750
Annual management of Limited Liability Partnership in the United Kingdom and provision of Registered Address and Nominee Members including full admin, invoicing, cash management, and annual filing From 31,200
Description Cost
(in Euros)
British Virgin Islands
Incorporation of a Company in the British Virgin Islands with standard Memorandum and Articles of Incorporation and standard Share Capital 1000
Annual Management of the Company in the British Virgin Islands and provision of Registered Address 1200
Annual Management of Company in the United Kingdom and provision of Registered Address and Company Officers 2500

The Markom Group Handbook also listed prices for creating documents within the United Kingdom, British Virgin Islands, Marshall Islands, and Seychelles.[10] The ​specific prices for creating documents in the United Kingdom and the British Virgin Islands are as follows:[11]

Document Price by Jurisdiction Cost
(in Euros)
United Kingdom
Certificate of Incorporation 273.00
Memorandum and Articles of Incorporation 273.00
Certificate of Good Standing 78.00
Nominee Shareholders Declaration 296.00
Nominee Directors Declaration 296.00
Share Certificate 296.00
Contract Creation From 1200
Contract Review From 150
Document Creation 75.00
Document/Contract/Instruction Signing 15.00
Legalization of Documents 191.00
Power of Attorney 345.00
British Virgin Islands
Certificate of Incorporation 340.00
Memorandum and Articles of Incorporation 340.00
Certificate of Tax Exemption 440.00
Certificate of Good Standing 446.00
Certificate of Incumbency 446.00
Nominee Shareholders Declaration 296.00
Nominee Directors Declaration 296.00
Share Certificate 296.00
Contract Creation From 1200
Contract Review From 150
Document Creation 75.00
Document/Contract/Instruction Signing 15.00
Legalization of Documents 300.00
Power of Attorney 345.00
Certificate of Legal Validity 1,155.00

In April 2016, The London Times reported that, according to the Panama Papers, Arkady and Boris Rotenberg used the Markom Group to set up a number offshore companies.[12] The news article included a quote from Mr. Omelnitski who ​told the publication: "All our clients' dealings are bona fide transactions in accordance with the law."[13]

1. The Markom Group Established Rotenberg-linked Shell Companies

In spring 2016, the International Consortium of Investigative Journalists ("ICIJ") published information related to a collection of over 11.5 million documents originating from the Panama-based law firm of Mossack Fonseca & Co. ("Mossack").[14] The documents spanned a more than thirty-year period from 1977 to 2015.[15] ICIJ disclosed that Mossack was "one of the world's top creators of shell companies, [which are] corporate structures that can be used to hide ownership of assets."[16] ICIJ explained that the Mossack documents consisted of files that "contained information on 214,488 offshore entities connected to people in more than 200 countries and territories."[17] ICIJ also disclosed that the documents included "emails, financial spreadsheets, passports and corporate records revealing the secret owners of bank accounts and companies in 21 offshore jurisdictions, from Nevada to Singapore to the British Virgin Islands."[18] Those Mossack documents became known as the "Panama Papers."[19]

Rotenberg-related BVI companies. The Panama Papers included an email chain made public by ICIJ and dated August 27, 2010 from Helen Okell at Mossack to Dorota Skowronska at Mossack with a copy sent to Mark Omelnitski under the subject line "BVI companies—audit."[20] The email identified nine companies formed in the British Virgin Islands ("BVI") for the Rotenbergs.[21] For each Rotenberg-related company, the email provided the company name, ultimate beneficial owner, a key contact, and company activities as follows:[22]

​

Company Ultimate Beneficial Owner ("UBO") Contact Activities
Beechwood Associates Inc. Arkady Rotenberg Dmitry Protsenko Investments
Breckenridge Global Management Limited Arkady Romanovich Rotenberg Dmitry Protsenko Investments
Causeway Consulting Limited Arkady Rotenberg Dmitry Protsenko Investments
Culloden Properties Boris Rotenberg None Investments
Highland Business Group Limited Igor Rotenberg Dmitry Protsenko Investments
Highland Ventures Group Limited Boris Rotenberg Dmitry Protsenko Investments
Kendrick Overseas Ltd. Rotenberg Dmitry Protsenko Holding
Stormont Management Limited Igor Rotenberg Dmitry Protsenko Investments
Stormont Systems Limited Igor Rotenberg Dmitry Protsenko Investments

The email chain provides evidence that Mr. Omelnitski, through the Markom Group, had a business relationship with the Rotenbergs.[23] It also provides evidence that Arkady, Boris, and Igor Rotenberg established at least eight BVI companies for use in activities related to "investments" and one holding company.[24] Two of these companies, Highland Business Group Limited and Highland Ventures Group Limited, played key roles in their art investments as described further below. In addition to the Panama Papers, evidence of links among the Rotenbergs, Mr. Omelnitski, the Markom Group, and the listed shell companies were the subject of an internal investigation performed by Barclays Bank ("Barclays") and provided to the Subcommittee. Following the release of the Panama Papers in 2016, Barclays reviewed the companies formed by Mr. Omelnitski and the Markom Group. A Barclays internal investigatory memorandum concluded:

Omelnitski and his company, Markom Group, created shell companies for sanctioned individual [Arkady] Rotenberg, a Russian oligarch, who is a close friend of the President of the Russian Federation, Vladimir Putin. Omelnitski is listed as a beneficial owner for the three companies owned by [Arkady] Rotenberg. Omelnitski and his company are nominee directors of multiple unidentifiable shell companies formed in Panama by Mossack Fonseca and the majority of these shell companies are owned by Russian individuals. Markom Group had ​created multiple shell companies for . . . [the] majority shareholders of Idealbank, which was investigated due to its possible connections to terrorist financing and money laundering concerns and subsequently was stripped of its banking license in Russia.[25]

The same Barclays memorandum noted, "[T]he ownership of these shell companies appears to be intentionally structured to be opaque in order to hide the identity of the true beneficiaries."[26]

Barclays closed all Markom Group and Gregory Baltser-related accounts. Following the investigation, in August 2017, Barclays worked to close all "198 accounts under the Markom relationship," of which 59 were U.S. dollar accounts.[27] Barclays also closed all accounts related to Mr. Baltser.[28] Documents provided to the Subcommittee indicate that in 2018 Baltzer Limited subsequently began paying for art from an account at Ameriabank in Yerevan, Armenia.[29] In 2018, the U.S. State Department listed Armenia as a "major money laundering jurisdiction" and noted that "money laundering crimes in Armenia [would] likely continue to go unreported and undetected."[30]

2. Rotenberg-Linked Shell Companies were Used to Purchase Art

The Subcommittee identified three shell companies connected to the Rotenbergs and used in the purchase of art both before and after the imposition of U.S. sanctions: (1) Highland Business Group Limited; (2) Highland Ventures Group Limited; and (3) Advantage Alliance. The known ties to the Rotenbergs are explained below.

a. Highland Business Group Limited

The Subcommittee traced certain art purchases to Highland Business Group Limited ("Highland Business") prior to the imposition of U.S. sanctions on Arkady and Boris Rotenberg in March 2014. According to ICIJ, Highland Business was incorporated on January 14, 2010 and registered in the British Virgin Islands.[31] ​Markom Nominees Limited is listed as a shareholder of Highland Business beginning on January 14, 2010.[32] Mossack is listed as the company's agent.[33]

The Panama Papers email chain described above listed Igor Rotenberg as the ultimate beneficial owner for Highland Business.[34] But other evidence suggests that Highland Business Group received its funding from entities associated with Arkady Rotenberg. For example, $47,000 was transferred from Advantage Alliance Limited ("Advantage Alliance") on March 27, 2012 with the payment details: "as per agency agreement."[35] As explained below, a Barclays' internal investigation linked Advantage Alliance to Arkady Rotenberg.

b. Highland Ventures Group Limited

The Subcommittee traced funds for certain art purchases to Highland Ventures Group Limited ("Highland Ventures") following the imposition of U.S. sanctions in March 2014 on Arkady and Boris Rotenberg. Conflicting evidence collected by the Subcommittee regarding the ownership of Highland Ventures places Arkady, Boris, and Igor Rotenberg as the owners of the company at various points in time. As explained below, the strongest evidence suggests that Arkady Rotenberg funded the shell company, which would make him the UBO.

Evidence of Ownership by Arkady Rotenberg. Wire transfers in U.S. dollars sent by Milasi Engineering Limited ("Milasi Engineering"), a company owned by Arkady Rotenberg to Highland Ventures suggest that the true UBO of Highland Ventures was Arkady Rotenberg.

Arkady Rotenberg owned Milasi Engineering. Documents produced to the Subcommittee as part of an investigation conducted by Barclays included a December 31, 2014 Milasi Engineering Report and Financial Statements.[36] That document listed "Arkadiy Rotenberg" as the company's UBO.[37] That same document stated that Milasi Engineering was incorporated in Cyprus on September 6, 2007 and "the principal activities of the company . . . are the holding of investments and loan financing."[38]

Milasi Engineering funded Highland Ventures.[39] Wire transfers produced to the Subcommittee show that Milasi Engineering transferred millions of U.S. dollars ​to Highland Ventures. According to one wire transfer, on January 30, 2013, Milasi Engineering transferred $69,600,000 from its account at SMP Bank in Moscow to Highland Ventures' account at The Pictet Group, a private bank with offices in Geneva, Switzerland.[40] Payment details for the wire transfer described the funds as "dividends for 2011 year," suggesting Highland Ventures—or its beneficial owner—was one of Milasi Engineering's shareholders.[41] A second wire transfer on December 18, 2013, shows Milasi Engineering transferred $54,451,493.49 from its account at Gazprombank in Moscow to the same Highland Ventures account at The Pictet Group.[42] That wire transfer described the funds as "dividends for 2012 year."[43] Together, the two transfers to Highland Ventures from Milasi Engineering exceeded $124 million.

Three months later, on March 18, 2014, two days after President Obama signed EO 13661, which authorized sanctions on individuals providing material support to the Russian government, Highland Ventures moved $39,588,000 from its account with The Pictet Group in Geneva, Switzerland to its account at Gazprombank in Moscow, Russia.[44] Two days after that, on March 20, 2014, the U.S. Treasury Department designated Arkady and Boris Rotenberg as sanctioned

​individuals or specifically designated nationals blocked from doing business with U.S. persons.[45]

The multi-million dollar transfers between Milasi Engineering and Highland Ventures are strong evidence of the shell company's link to Arkady Rotenberg.

A United Kingdom government agency determined Arkady Rotenberg owned Highland Ventures. In addition to the fund transfers described above, a 2018 letter by Barclays indicates that a UK government agency concluded that Highland Ventures was owned by Arkady Rotenberg.[46] On May 18, 2018, the Head of Financial Crime Policy at Barclays Bank sent a letter to Alexandre Manfull, the Assistant Director of Sanctions Compliance & Evaluation at OFAC, stating "in August 2017, Barclays was contacted by [a UK government agency] who provided Barclays with a list of entities that [it] believed to be owned or controlled by Arkady Rotenberg, including . . . Highland Ventures."[47]

A Societe Generale investigation linked Highland Ventures to Arkady Rotenberg. An investigation by Societe Generale determined that an account at another financial institution owned by Highland Ventures was "utilized as a pass-through account for layering activities to channel and conceal a flow of funds. . . ."[48] Further, Societe Generale "was unable to rule out that the processed funds did not originate from a sanctioned individual, the father of Igor Rotenberg," Arkady Rotenberg.[49]

An art purchase through an independent dealer linked Highland Ventures to Arkady Rotenberg. An invoice and transfer of funds associated with a private art purchase investigated by the Subcommittee provided another piece of evidence suggesting Arkady Rotenberg was the UBO of Highland Ventures. As further explained below, the private sale of a famous painting by René Magritte called La Poitrine listed Highland Ventures on the invoice as the buyer.[50] The Markom Group assisted with the purchase of La Poitrine; Anna Wilkes (Finance Director and Managing Director for the Markom Worldwide Group) signed the invoice as the Director of Highland Ventures.[51] The invoice listed Advantage Alliance as the entity that provided payment for La Poitrine, which totaled $7.5 million.[52] As ​explained below, the Subcommittee traced that $7.5 million payment to another company owned by Arkady Rotenberg, Senton Holdings Ltd.[53]

Barclays also linked Advantage Alliance to Highland Ventures. An internal Barclays' investigation linked Highland Ventures to Advantage Alliance through two wire transfers to Highland Ventures from Advantage Alliance between November 2015 and March 2016, which totaled $381,347.70.[54] Details provided about the payments indicated: "as per agency agreement."[55]

Together, the Milasi Engineering transfers, the UK government agency conclusion, and the facts surrounding the purchase of La Poitrine suggest Arkady Rotenberg is the UBO of Highland Ventures.

Evidence of Ownership by Igor Rotenberg. There is also some evidence that the true UBO of Highland Ventures was Arkady's son, Igor Rotenberg. First, a Barclays investigator summarized this finding in an April 6, 2017 email stating:

Markom Management Ltd have confirmed that Highland Ventures Group Ltd was never owned by Boris Rotenberg. It has in fact always been owned by Igor Rotenberg since it was incorporated on [February 18, 2010] . . . Igor is not subject to the current US sanctions, however, as you are already aware he is the son of Arkady Rotenberg who is a sanctioned individual.[56]

The April 2017 email also pointed to evidence provided by Markom Management that Igor Rotenberg owned Highland Ventures.[57] That evidence included a Trust Deed between Igor Rotenberg and Markom Nominees Ltd dated February 18, 2010 stating that Igor Rotenberg had granted 50,000 shares of Highland Ventures to Markom Nominees Ltd as trustee.[58]

Saffron Nominees Limited held Highland Ventures. In addition, Markom Management provided documents to Barclays that indicated that Igor Rotenberg owned Highland Ventures through another company named "Saffron Nominees Limited."[59] A document titled "Register of Shareholders" for Highland Ventures stated that Markom Nominees Ltd held 50,000 shares from February 18, 2010 to ​March 5, 2016.[60] On March 5, 2018, all 50,000 shares were transferred to Saffron Nominees Limited.[61]

Barclays also produced documents from Markom that provided additional information on share ownership. These documents included a "Nominee Declaration" dated August 5, 2016 stating that Saffron Nominees Limited held shares of Highland Ventures for Igor Rotenberg.[62] In addition, Barclays produced a Certificate dated November 21, 2016 and filed with the Cyprus Ministry of Energy, Commerce, Industry, and Tourism Department of the Registrar of Companies and Official Receiver Nicosia that listed Saffron Nominees Limited as the owner of shares of Highland Ventures.[63]

Arkady Rotenberg transferred ownership of Milasi Engineering to Igor Rotenberg. Four months after the United States imposed sanctions on Arkady Rotenberg, Markom Group assisted in transferring Arkady Rotenberg's interest in Milasi Engineering to his son Igor Rotenberg at a time before Igor was subject to U.S. sanctions. Markom Group executed this transfer by transferring shares in two holding companies that, together, owned the majority of shares in Milasi Engineering. The transfer of ownership of the two shell companies from Arkady Rotenberg to Igor Rotenberg amounted to also transferring the ownership of Milasi Engineering, since the two shell companies owned the company.

According to documents provided by Mr. Omelnitski to Barclays, prior to July 2014, Milasi Engineering was owned by Beechwood Associates and Kendrick Overseas.[64] Causeway Consulting owned Kendrick Overseas.[65] Arkady Rotenberg owned both Beechwood Associates and Causeway Consulting.[66] Arkady Rotenberg's ownership of Beechwood Associates and Causeway Consulting was also suggested by information in the Panama Papers email chain cited above.[67] In addition, as previously mentioned, the December 31, 2014 Milasi Engineering Report and Financial Statement listed Arkady Rotenberg as the company's ultimate beneficial owner.[68]

Markom Group facilitated the transfer of ownership for Beechwood Associates and Causeway Consulting. Documents provided by Markom Group to Barclays documented the transfer of Beechwood Associates and Causeway Consulting. On July 28, 2014, Arkady Rotenberg transferred his shares in Beechwood Associates ​Ltd and Causeway Consulting Ltd to Highland Ventures.[69] To document the transfers, Joseph Amin, Deputy Chairman of the Markom Group, sent letters on Markom Group letterhead to Arkady Rotenberg regarding both companies stating: "following the sale of this company to the third party we hereby inform you of the termination of our services to you in regard to the above mentioned company."[70] The Markom Group asserted the transfer of ownership of these two companies effectively transferred ownership of Milasi Engineering to Igor Rotenberg. The Markom Group provided to Barclays a Deed of Trust dated February 18, 2010, making Markom Nominees the trustee of 50,000 shares of Highland Ventures on behalf of Igor Rotenberg.[71]

The Barclays investigator requested information from Markom Group on the consideration Highland Ventures paid for the shares in Beechwood Associates and Causeway Consulting "to ensure that the companies were not merely being transferred by Arkady to his son Igor."[72] Markom Group responded to the request as follows:

Both Beechwood Associates and Causeway Consulting had been advanced loans by Highland Ventures Group Ltd. As neither Beechwood nor Causeway were able to repay these loans, the loan liability was converted into Share Purchase Agreements ("SPAS") through which Highland Ventures Group Ltd became the new shareholder of the companies. The overall consideration price for the shares of Beechwood that was paid amounts to 6 billion Rubles [approximately $99,889,020.00]; and the consideration price paid for Causeway was 3 billion Rubles [approximately $49,950,000.00].[73]

The Markom Group provided Barclays with the following chart to explain the ownership structure:[74]

​
A diagram showing ownership of companies

The Barclays investigator determined the transfer to Igor Rotenberg was intended to evade U.S. sanctions on Arkady Rotenberg. The investigative report explained:

It should be noted that A[rkady] Rotenberg was listed as an SDN on or about March 20, 2014, over four months before the ownership of Beechwood and Causeway was transferred to his son. Furthermore, such transfer to a non-SDN close relative taking place at the time of sanctions designation does not appear to be a proper transfer to a bona fide purchaser acting at arm's length as defined by the Office of Foreign Asset Control ("OFAC"). Barclays NY believes the transfer of ownership to I[gor] Rotenberg was intended as circumvention of sanctions.[75]

Barclay's investigation concluded with regard to Mr. Omelnitski and the Markom Group:

​

Companies organized by Omelnitski and his group suggest that Markom may potentially have created numerous companies for Russian oligarchs and close acquaintances of Russian President, Vladimir Putin, who have been previously implicated in questionable undertakings. Furthermore, the ownership of these shell companies appears to be intentionally structured to be opaque in order to hide the identities of true beneficiaries.[76]

Evidence of Ownership by Boris Rotenberg. Finally, evidence also exists that Highland Ventures was owned by Boris Rotenberg. The strongest evidence is the Mossack email chain cited above and released with the Panama Papers, which listed Boris Rotenberg as the UBO of Highland Ventures.[77] According to ICIJ, Highland Ventures was incorporated on January 14, 2010 and registered in the British Virgin Islands using Mossack as an agent.[78] As noted above in the chart, Mossack listed the activities of Highland Ventures as "investments."[79]

Summary of Evidence on Ownership of Highland Ventures Group. The evidence is not conclusive as to whether Arkady, Boris, or Igor Rotenberg, or possibly some combination of the three, qualified as the UBO of Highland Ventures. But the evidence is clear that one or more of the Rotenbergs controlled the company. As a result, the clear implication is that the Rotenbergs directed and funded purchases of high-value art in the United States.

c. Advantage Alliance

In addition to Highland Business and Highland Ventures, the Subcommittee examined the ownership and activities of a third shell company, Advantage Alliance. The Subcommittee became interested in Advantage Alliance due to its role in the purchase of La Poitrine, as explained above.[80]

As mentioned above, evidence suggests that Advantage Alliance had ties to Arkady Rotenberg. A 2017 Barclays internal investigation observed that "Advantage Alliance. . . appears to have received payments from an entity which [the bank] has learned is owned by [Arkady Rotenberg]."[81] Barclays identified the entity that made the payment to Advantage Alliance as Highland Ventures.[82]

​Barclays also investigated Advantage Alliance's links to the Markom Group and Mr. Omelnitski. A Barclays investigatory memorandum noted that Advantage Alliance's account with the bank was opened in the name of MP Intermediary Services Limited in 2008.[83] The memorandum continued: "The beneficial owner was listed as Alexander Druzhinin, a Russian national. . . . The third party signatories were listed as [Anna] Wilkes, Joseph Amin, and [Mark] Omelnitski. Internet research identified Amin as the Managing Director of Markom Media and Druzhinin as a director of Markom Partners Plc."[84] Ms. Wilkes is identified in another related Barclays investigation as the Finance Director and Managing Director for the Markom Worldwide Corporation.[85] In short, all three account signatories for Advantage Alliance were Markom Group employees. And other evidence previously described established that the Markom Group formed companies and performed related corporate services for the Rotenbergs.

The Barclays investigation of Mr. Omelnitski also noted that when the Advantage Alliance account was opened at the bank, the expected annual turnover for the account was £3 million or about $3,746,670.[86] Despite this expectation, the account was involved in 129 wire transfers from March 2012 to May 2016 totaling $60,972,491.89.[87] The Barclays investigation found that Advantage Alliance engaged in transactions with a wide range of entities, including traders of cocoa products, a security firm, traders of metals, a sourcing company, a brokerage firm, a construction company in Russia, and a supplier of used cooking oil.[88] The Advantage Alliance transactions also included a payment directly to an art dealer for the purchase of La Poitrine, which was sold to Highland Ventures, as further discussed below.[89]

Barclays determined that the wire activity "does not appear to be in line with [Advantage Alliance]'s expected line of business."[90] As such, "the account was closed on October 24, 2016 as Barclays Corporate identified spikes in activity seen during April and May, with large transfers in sent straight out in full as Int[ernational] Payments, which did not match expectations for the nature of the business."[91] Further, Barclays suspected that these funds may be the proceeds of a crime.[92]

​In the end, although the Subcommittee was unable to determine with absolute certainty the ultimate beneficial owners of Highland Business, Highland Ventures, or Advantage Alliance, the evidence is strong that all three companies were connected to and controlled by the Rotenbergs.

  1. ↑ SOT-000353.
  2. ↑ Sean O'Neil & Tom Parfitt, How Putin's cronies moved millions around the world, London Times (Apr. 5, 2016), https://www.thetimes.co.uk/article/how-putins-cronies-moved-millions-around-the-world-jbegjh9vr.
  3. ↑ Markom Group, Key Staff, (May 17, 2019), https://web.archive.org/web/20160807231415/http://www.markomgroup.com/key-staff/.
  4. ↑ Id.
  5. ↑ Markom Group, (Jul. 26, 2019), https://web.archive.org/web/20160811024803/http://www.markomgroup.com/.
  6. ↑ Markom Group, Markom Companies (Jun. 11, 2018), https://web.archive.org/web/20160808093702/http://www.markomgroup.com/markom-companies/.
  7. ↑ SOT-172224-356.
  8. ↑ Id.
  9. ↑ Id.
  10. ↑ Id.
  11. ↑ Id.
  12. ↑ Sean O'Neil & Tom Parfitt, How Putin’s cronies moved millions around the world, London Times (Apr. 5, 2016), https://www.thetimes.co.uk/article/how-putins-cronies-moved-millions-around-theworld-bcgjh9vr.
  13. ↑ Id.
  14. ↑ The Panama Papers: Giant Leak of Offshore Financial Records Exposes Global Array of Crime and Corruption, Int'l Consortium of Investigative Journalists (Apr. 3, 2016), https://www.icij.org/investigations/panama-papers/20160403-panama-papers-global-overview/.
  15. ↑ Id.
  16. ↑ Id.
  17. ↑ Id.
  18. ↑ Id.
  19. ↑ Id.
  20. ↑ SGA_PSI_00053-82. The same document is also publicly available and can be accessed through the ICIJ's Organized Crime and Corruption Reporting Project website at: https://cdn.occrp.org/projects/panamapapers/putindeal/P4.1_Earliglow_benefic_owners_contact_person_Protsenko.pdf.pdf.
  21. ↑ Id.
  22. ↑ Id.
  23. ↑ Id.
  24. ↑ Id.
  25. ↑ BARC_006752-61.
  26. ↑ Id.
  27. ↑ BARC_005547-51.
  28. ↑ BARC_007036.
  29. ↑ See, e.g., SOT_202090-95; Christies-PSI-00066049.
  30. ↑ U.S. Dep't of State, Bureau of Int'l Narcotics & Law Enforcement Affairs, International Narcotics Control Strategy Report, Vol. II, Money Laundering (Mar. 2019), https://www.state.gov/wp-content/uploads/2019/03/INCSR-Vol-INCSR-Vol.-2-pdf.pdf.
  31. ↑ Highland Business Group Limited, Int'l Consortium of Investigative Journalists, https://offshoreleaks.icij.org/nodes/10139350.
  32. ↑ Id.
  33. ↑ Id.
  34. ↑ SGA_PSI_00053-82.
  35. ↑ BARC_006752-61.
  36. ↑ BARC_006014-43.
  37. ↑ Id.
  38. ↑ Id.
  39. ↑ It should be noted that Barclays determined a minority portion of Milasi Engineering shares were held by Culloden Properties Limited ("Culloden"). See BARC_006068–69. Barclay's investigation determined that Culloden "has always been owned by Boris Rotenberg since it was incorporated" and following sanctions on Boris Rotenberg "Markom continued with the transfer of the company to Cyprus." See BARC_006068-69. After the transfer of Arkady Rotenberg's interests, Milasi Engineering was majority owned by Igor Rotenberg who, at the time, was not yet sanctioned by the United States. This was presumably purposeful to comply with the Treasury Department rule that a company is only considered blocked if it is majority owned by a sanctioned individual. See U.S. Dep't of Treasury, Revised Guidance on Entities Owned by Persons Whose Property and Interests in Property are Blocked (2014), https://www.treasury.gov/resource-center/sanctions/Documents/licensing_guidance.pdf. Therefore, the fact that sanctioned Boris Rotenberg owned a minority share did not affect Milasi Engineering's status as a sanctioned entity. As with Highland Ventures, Milasi Engineering made U.S. dollar transfers labeled as dividends to Culloden. On January 30, 2013 Milasi Engineering transferred $63,880,000 from its SMP Bank account in Moscow to Culloden's account at The Pictet Group with the wire instructions "Dividends for 2011 Year." See JPMorgan Chase (Nov. 7, 2018), SB981623-FI US Wire Search, Milasi Engineering, line 5. On October 8, 2013, Milasi Engineering sent $15,000,000 from its SMP Bank account to Culloden's Societe Generale account in New York with the same wire instructions. See JPMorgan Chase (Nov. 7, 2018), SB981623-FI US Wire Search, Milasi Engineering, line 9. Milasi made two large transfers from its Gazprombank account to Culloden's accounts at The Pictet Group and Societe Generale in New York on January 9, 2014 for $41,711,697.34 and $19,999,963.34, respectively. Both payments included the wire instructions "Dividends for 2012 Year." DBAG00000019, lines 34 & 35. Mr. Omelnitski admitted to Barclays during its investigation that Culloden was owned by Boris Rotenberg, and explained he was in the process of transferring Culloden to Cyprus in May 2016. See BARC_006811-17.
  40. ↑ JPMorgan Chase (Nov. 7, 2018), SB981623-F1 US Wire Search, Highland Ventures Group, line 2.
  41. ↑ Id.
  42. ↑ DBAG0000013, line 10; DB AG00000019, line 32.
  43. ↑ Id.
  44. ↑ DBAG0000013, lines 17-18.
  45. ↑ Press Release, U.S. Dep't of Treasury, Treasury Sanctions Russian Officials, Members of the Russian Leadership's Inner Circle, and an Entity for Involvement in the Situation in Ukraine (Mar. 20, 2014), https://www.treasury.gov/press-center/press-releases/Pages/j123331.aspx.
  46. ↑ BARC_005572-74.
  47. ↑ Id.
  48. ↑ SGA PSI_01570.
  49. ↑ Id.
  50. ↑ Documents on file with the Subcommittee.
  51. ↑ Id.
  52. ↑ Id.
  53. ↑ BARC_000002, lines 24 and 25; BARC_006912-15.
  54. ↑ BARC_006752-61.
  55. ↑ Id.
  56. ↑ BARC_006068-71.
  57. ↑ Id.
  58. ↑ BARC_006117-20.
  59. ↑ BARC_006068-71.
  60. ↑ BARC_00221.
  61. ↑ Id.
  62. ↑ BARC_06116.
  63. ↑ BARC_006075-76.
  64. ↑ BARC_006013.
  65. ↑ Id.
  66. ↑ BARC_006068-71; BARC_006013.
  67. ↑ SGA_PSI_00053-82.
  68. ↑ BARC-006014-43.
  69. ↑ BARC_000227; BARC_006122; BARC_006124 (Causeway Consulting) and BARC_000231; BARC_006126; BARC_006077 (Beechwood Associates).
  70. ↑ BARC_006077 (Beechwood Associates); BARC_006124 (Causeway Consulting).
  71. ↑ BARC_006046-49.
  72. ↑ BARC_006068-71.
  73. ↑ BARC_006068-71; BARC_006804-10.
  74. ↑ BARC_006013.
  75. ↑ BARC_006804-10.
  76. ↑ Id.
  77. ↑ SGA_PSI_00053-82.
  78. ↑ Highland Ventures Group Limited, Int'l Consortium of Journalists, https://offshoreleaks.icij.org/nodes/10143427.
  79. ↑ SGA_PSI_00053-82.
  80. ↑ See infra.
  81. ↑ BARC_005572-95.
  82. ↑ Id.
  83. ↑ BARC_006752-61.
  84. ↑ Id.
  85. ↑ BARC_006762-65.
  86. ↑ BARC_006752-61.
  87. ↑ Id.
  88. ↑ Id.
  89. ↑ Id.
  90. ↑ Id.
  91. ↑ Id.
  92. ↑ BARC_005514-21.
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