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Treasury Dept. Freezes Russian’s Access to $1B Held in Delaware Trust

July 1, 2022 by Tom Ramstack
Treasury Dept. Freezes Russian’s Access to $1B Held in Delaware Trust
People look on from the super yacht Amadea as it arrives to the San Diego Bay Monday, June 27, 2022, seen from Coronado, Calif. The $325 million superyacht seized by the United States from a sanctioned Russian oligarch arrived in San Diego Bay on Monday. A multinational task force designed to seize Russian oligarchs' wealth has blocked and frozen $30 billion in sanctioned individuals' property and funds in its first 100 days. (AP Photo/Gregory Bull, File)

WASHINGTON — The U.S. Treasury on Thursday blocked a Russian oligarch’s access to more than $1 billion of his funds hidden in a Delaware-based trust as part of the Biden administration’s effort to enforce sanctions for the invasion of Ukraine.

The oligarch, Suleiman Abusaidovich Kerimov, is a politician and billionaire with ties to Russian President Vladimir Putin. He also secretly managed the Heritage Trust, an investment company.

Treasury Department officials said Kerimov concealed the money through a series of sham business transactions that made it hard to trace.

Freezing Kerimov’s funds is only the latest U.S. move in an international effort to enforce sanctions against Russia and seize assets of its oligarchs as its war against Ukraine grinds on.

Kerimov appeared to be using an offshore finance system to hide money and property from law enforcement, creditors and public scrutiny, Treasury Department officials said. The offshore system offers the very wealthy an opportunity to take advantage of foreign countries’ laws by paying financial advisors to set up shell companies and business deals for them.

Some of the preferred countries are Belize, Singapore and Switzerland. U.S. states like Delaware and South Dakota also are popular because of their laws that protect corporate directors.

Kerimov’s assets in the Heritage Trust are among the largest frozen by the U.S. government since Russia invaded Ukraine last February.

“Treasury continues using the full range of our tools to expose and disrupt those who seek to evade our sanctions and hide their ill-gotten gains,” Treasury Secretary Janet Yellen said in a statement. “Even as Russian elites hide behind proxies and complex legal arrangements, Treasury will use our broad enforcement authorities … to actively implement the multilaterally coordinated sanctions imposed on those who fund and benefit from Russia’s war against Ukraine.”

The order to block Kerimov’s access to Heritage Trust followed an extensive investigation, the Treasury Department said.

“Kerimov and his proxies used various layers of U.S. and non-U.S. shell companies to hold formal titles to assets and to conduct transactions in a manner that concealed his interest,” its statement said.

Kerimov’s worth is estimated at $13.3 billion, according to the Bloomberg Billionaires Index. His money comes from family ownership of Polyus, a gold production company, and $42 million in real estate holdings.

In May, the government of Fiji seized a $300 million yacht Kerimov owned. The seizure warrant for the 348-foot luxury ship was executed with help from the FBI.

Kerimov represents the Republic of Dagestan in the Russian government’s upper chamber, or Federation Council of Russia.

Since the international sanctions against Russia started, the United States and its allies have blocked or frozen “more than $30 billion worth of sanctioned Russians’ assets” and “immobilized about $300 billion worth of Russian Central Bank assets,” according to the Treasury Department.

The Treasury Department’s hold on the Heritage Trust comes only weeks after the Justice Department obtained a warrant to seize two luxury aircraft valued together at $400 million from a different Russian oligarch.

Roman Abramovich, whose fortune is estimated at more than $14 billion, had his customized Boeing 787-8 Dreamliner and Gulfstream G650ER flown out of the United States in March as Justice Department officials investigated him.

The Gulfstream was flown to Russia while the Dreamliner went to the United Arab Emirates, both without export control waivers required by the Commerce Department. Neither of them has been seized yet.

Abramovich is a former Russian politician who made his fortune in the energy industry.

The international effort to sanction Russian oligarchs included the April seizure in Mallorca, Spain, of a $90 million yacht owned by Russian billionaire Viktor Vekselberg.

Tom can be reached at tom@thewellnews.com or on Twitter at @tramstack.

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