The New York Times-20080126-Russian Police Arrest A Suspected Racketeer

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Russian Police Arrest A Suspected Racketeer

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Semyon Y. Mogilevich, a reputed kingpin of the Russian mob, was arrested in Moscow this week on tax evasion charges.

Western law enforcement and intelligence agencies have identified Mr. Mogilevich, a native of Ukraine with Russian citizenship, as a pioneer in using sophisticated Western financial instruments to launder money in the former Soviet Union.

Russian police arrested Mr. Mogilevich, who appears in his F.B.I. wanted poster as a portly and balding man in a sports blazer, outside a central Moscow office building late Wednesday after he had met with the owner of a cosmetics company. He was accused in a $2 million tax evasion scheme at the company, a charge unrelated to F.B.I.'s allegations against him.

Mr. Mogilevich, 61, has in the past denied links to organized crime, and his lawyer denied the new charge Friday, Russian media reported. It was unclear why the announcement of his arrest was delayed until Friday.

On its evening broadcast, Russia's NTV television showed video clips of agents escorting Mr. Mogilevich down a snowy street and into a police van.

On its Web site, the F.B.I. lists eight aliases for Mr. Mogilevich; Russian authorities said he had used 17 different names. When he was arrested, he was using the name Sergei Schneider, Russian media reported.

His renown as a criminal figure in the West had not hampered his ability to live and move about freely in Moscow.

The F.B.I. is seeking Mr. Mogilevich for racketeering, money laundering and defrauding investors through a suburban Philadelphia company, YBM Magnex International. The company, which supposedly dealt in industrial magnets, was one of Mr. Mogilevich's more elaborate scams.

It was unclear Friday whether the United States would seek extradition, which would be unlikely to be successful as Russia and the United States have no extradition treaty.

British and American investigators have said Mr. Mogilevich made a fortune in a career of violent street crime as the Soviet Union fell apart, and later pioneered a new form of money laundering using publicly traded companies during the bull market of the 1990s.

Mr. Mogilevich's move into the North American equity markets came through YBM Magnex, the publicly listed magnet business which issued glossy annual reports and had a Web site. The scheme began to unravel after the auditor Deloitte & Touche refused to sign off on the company's 1997 accounts.

The F.B.I. shut it down in 1998, revealing the company as a sophisticated cover for Russian money-laundering operations. Investors lost $150 million, according to the F.B.I.

A year later, investigators say, Mr. Mogilevich used a company called Benex Corporation to launder money through the Bank of New York. That eventually unraveled, resulting in convictions for some American employees of the bank and a fine for the bank, though Mr. Mogilevich was not charged.

In Ukraine, after the 2004 street protests known as the Orange Revolution led to a change of government, a former director of Ukraine's secret police agency claimed that Mr. Mogilevich played a prominent role in natural gas trading in Ukraine.

RosUkrEnergo, a joint venture between the Russian natural gas giant Gazprom and two Ukrainian investors that was established as the monopoly trader in 2006, has denied any ties to Mr. Mogilevich.

[Illustration]PHOTO: Semyon Y. Mogilevich inside a police van after his arrest. (PHOTOGRAPH BY NTV, VIA AGENCE FRANCE-PRESSE -- GETTY IMAGES)