Reputed Russian mobster indicted over fraudulent magnet co.
By DAVID B. CARUSO
The Associated Press
4/24/03 5:13 PM
PHILADELPHIA (AP) -- A reputed Russian mob boss was the brain behind a Pennsylvania industrial-magnet company that fleeced investors of at least $150 million, federal prosecutors said in an indictment unsealed Thursday.
Semion Mogilevich, 56, and three alleged lieutenants are accused of concocting a complex scheme to make it appear as if YBM Magnex International, a Newtown, Pa., firm with a single factory in eastern Europe, was a major corporation with huge profits.
In just four years, YBM saw its stock soar from 10 cents a share to around $14 a share on Canadian stock exchanges before officials halted trading in 1998.
U.S. Attorney Patrick Meehan said the company was no more than "a well disguised illusion," worth a fraction of the value it claimed in financial reports.
"Books were cooked. Auditors were deceived. Bribes were paid to accountants," Meehan said.
FBI agents arrested YBM's former chief executive, Jacob Bogatin, Thursday morning at his home in Richboro.
Mogilevich could be harder to find. A native of Ukraine, he holds citizenship in Israel, Hungary and Russia and his exact whereabouts are unknown, investigators said.
He was last believed to be living in Moscow, said FBI Special Agent Jeffrey Lampinski, head of the bureau's Philadelphia field office.
Russia does not have an extradition treaty with the United States, and there is no guarantee that authorities there would arrest Mogilevich at the FBI's request, although they have promised to help locate him, Lampinski said.
The 45-count indictment, filed in Philadelphia, charges Mogilevich and partners Igor Fisherman and Anatoly Tsoura with racketeering, money laundering, falsification of books and records, and a number of wire, mail and securities frauds.
It is the first time Mogilevich has been charged with a crime in the United States. For years he has complained to European newspapers that he is a legitimate businessman being set up by the FBI.
Investigators said they are also unsure of the whereabouts of Tsoura and Fishman.
The indictment claims the group set up companies in the United States, Canada, eastern Europe and the Caribbean, to launder money, prop up the value of YBM and hide its ownership.
YBM recorded fictitious sales, made up phony customer lists and set up sham offices to make it appear that its business was booming when, in fact, it had been only marginally productive, investigators said.
The company's plant in Budapest, Hungary, did produce precision neodymium magnets, but far fewer than YBM claimed, authorities said.
When the scheme collapsed, YBM had a total market capitalization of $450 million, authorities said. Mogilevich personally pocketed $18.5 million, the indictment said.
In 1999 a federal judge fined the company $3 million and ordered it to repay more than $77 million to defrauded investors. YBM, as a corporation, pleaded guilty to fraud and agreed to sell its $6.3 million headquarters to settle its debt.
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