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Strategies & Market Trends : Scamthony Cataldo -- Ignore unavailable to you. Want to Upgrade?

To: scion who wrote (28)	1/14/2004 4:42:14 PM
From: scion	Read Replies (1) \| Respond to of 137

Organized crime connections with banks also complicate matters. The August crisis left banks in dire straits and badly in need of capital. The Russian Central Bank estimated that by the end of 1994, 160 of 2436 banks were affiliated with organized crime. 64 Tax Police Major General Viktor Khvorostyan, head of the Federal Tax Police Service’s Operations Department, claimed that by 1998 over 3,000 organized gangs in Russia specialized in legalizing revenues from illegal activities with half of them establishing their own businesses to launder money.65 The money is often invested in wines, spirits, gambling, show business, high yield securities and companies with large cash balances.66 The ruble crash in August of 1998 left banks undercapitalized and willing to ignore what few laws were being enforced.67 The most difficult scenario to trace is the stereotypical man with a suitcase of cash who shows up to make a deposit — leaving no paper trail, nor any explanation of the funds’ origin. The banks, desperate for capital, welcomed the capital and asked few questions about the origins of the funds.68 The timing of the fund transfers after the August crash made it difficult to differentiate money from fraudulent or illegal activities from those transactions in which Russians understandably wished to move their savings in to more stable currencies.69 These business practices often combine with corrupt government officials in the banking sector.70 One such practice is Russian “bank lending” to the government through prearranged deals in which the government would fail to repay the loans and then hand over substantially undervalued enterprises as collateral, or to related companies within so-called financial industrial groups whose “investments” were in either inflated Russian debt market or convenient offshore accounts.71 Another bank scheme involved using bogus investment companies offering 100 percent interest for one month’s worth of investments, with the sole purpose of laundering money. The bogus investment company could afford to pay such high rates because of the vast sums contributed for money laundering.72 Of course, the August crisis ended the lucrative trading in short term government bonds when it defaulted on them.73 .html.