Captain from America.

Investigation into how the family of hockey player Vyacheslav Fetisov acquired an apartment at the Trump Tower

Daniil Sotnikov, Siranush Sharoyan with input from Roman Badanin, September 16, 2020

 Русская версия


Vyacheslav Fetisov is a celebrated Russian ice hockey player who later became a public official. The circumstances in which his family acquired a luxury apartment at the Trump Hotel & Tower in New York are rather peculiar. While serving as Russia’s sports minister, Fetisov was involved in setting up a sports lottery that laid the foundations for a highly lucrative gambling empire run by his friend, Alexander Varshavsky. In return, Varshavsky used a convoluted scheme to transfer $7 million to the former minister, who then purchased the New York apartment.

The godfather of Soviet hockey

One of the first and most notable transfers in Russian hockey in the 1990s, following the fall of the iron curtain, was the move to New Jersey of CSKA defender and USSR hockey captain, Vyacheslav Fetisov. Before long, the National Hockey League was recruiting ever growing numbers of Russian players. According to media reports, young players who had relocated across the ocean would often be met with interest by the locally based Russian mafia. One such story was used in the plot of the acclaimed film, ‘Brother 2’, where the protagonist travels to Chicago to assist his Russian friend who plays in the NHL and gets entangled with the mafia.

Fetisov was no exception and was written about in a mafia context, the press even dubbing him ‘the Godfather’. Both the player and the NHL have always denied any criminal associations . Fetisov himself claims that he earned the nickname simply by virtue of having been captain of the national team in the 1980s × . Be that as it may, while he was playing abroad the future Russian official did forge a friendship with one well-known fellow immigrant from the USSR , according to Fetisov’s friend ×  — the businessman Alexander Varshavsky who was a naturalised US citizen and, like Fetisov, lived in New Jersey.

Fetisov after his move to the United States
Alexander Varshavsky

In the 1990s, Varshavsky set up a car dealership on the US East Coast called the New York Motors Corporation. In 1997 , according to the Avilon website × , he incorporated a business in Russia which grew to become Avilon — one of the largest car dealerships in Russia — largely thanks to generous state contracts with security, defence and law enforcement agencies.

By the end of the 1990s, 90% of Mercedes vehicles used by Russia’s Interior Ministry, the FSB, Federal Protection Service, Investigative Committee, Prosecutor’s Office and the Department of Presidential Affairs were supplied by companies associated with Varshavsky , as estimated by Novaya Gazeta in 2010 × .

Since 2006, Avilon has sold vehicles worth ₽28.5 billion to the state. There has been media speculation that such levels of success can partly be attributed to informal contact with high-ranking security officials. One of Varshavsky’s car dealership business partners, Kamo Avagumyan, was an Armenian assistant prosecutor general and official representative of the Armenian prosecutor’s office in Russia. Avagumyan made a joint investment in a Greek hotel business with the son of Russia’s prosecutor general, Yury Chaika . Avagumyan later explained that he invested in the hotel upon a proposal from his business partner, Samvel Karapetyan, and that he does not get involved in personal dealings with Russian prosecutors or their relatives × .

In 2019, the founder of Rolf (a rival Russian car dealership), Sergei Petrov, who fled Russia following the instigation of criminal proceedings against him, described how for six months prior to the proceedings and right up to the time of the first search raid, Varshavsky would periodically call him offering to buy out his business. Later, Petrov clarified that Varshavsky had convinced him he had nothing to with the criminal case.

NHL the Russian way

Upon leaving the NHL and returning to Russia in 2002, Fetisov quickly carved out a career in public office. It all started when Putin personally put him forward for the role of head coach of the national hockey team ahead of the Winter Olympics in Salt Lake City. “It is a well-known fact that the Russian president is extremely fond of Fetisov” — such were the comments of the Olympic Committee after the winter Games, when the hockey player was appointed head of the State Committee for Sports (the body that preceded the formation of the sports ministry). Fetisov remained in that post until 2008, then becoming a senator in the Federation Council, and subsequently a member of the State Duma where he works to this day. Throughout his career in public office, Fetisov maintained a strong relationship with Varshavsky , recalls their mutual friend × .

Those who knew Fetisov recognised that he had access to the very top of the political pyramid. “He was on good terms with Putin, and many more. Everyone understood that he was Putin’s personal hockey coach and that for him the president was always just a phone call away”, recalls Fetisov’s friend. Fetisov claims to be the one who came up with the idea of teaching the president to skate. “I never knew skating would be so joyful” — was the president’s reaction, according to Fetisov. He was also responsible for transforming hockey into a central sport for the elite, and was one of the founders of the Night Hockey League. The amateur tournament will be best remembered for blowout victories by a team in which a striker named Putin scores ten goals per game.

Fetisov’s passion for hockey did not pass on to Varshavsky , as two of his friends recall × , but the two of them found they shared other, rather lucrative interests.

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A close family friend

As noted by mutual acquaintances, “Not a single [Avilon] event was complete without Fetisov”. The former hockey player continues to attend new showroom launch parties as well as anniversaries of Russia’s largest car dealership. At one point, that relationship acquired a financial component.

Fetisov with TV presenter Yulia Baranovskaya at the launch event for Avilon Legend dealership centre. Source: Avilon Legend website.

In late 2007, Fetisov’s wife — the former actress and model, Ladlena — took on the role of Deputy CEO of AvtoLogistika LLC and AvtoLogistika-Trans LLC (both of which are part of Varshavsky’s business empire) with monthly salaries of ₽425,000 and ₽200,000 respectively . The Project has inspected a copy of the employment agreement and Mrs Fetisova’s record of employment, both of which feature in the legal proceedings described below × . That income is higher than Varshavsky’s formal rate of pay for his role as President, which stands at ₽250,000 per month , as revealed in the criminal case file described below × . According to a former manager of the company, Fetisov’s wife allegedly did not perform any tasks in fulfilment of those roles.

They were so close that Varshavsky even assisted Fetisov’s family when it came to financial matters. In 2008, the Avilon owner personally picked up the phone to ProBusinessBank. “He called and asked the bank to arrange a meeting with Ladlena Fetisova to discuss placing her funds with ProBusinessBank. He remarked that he was close friends with the Fetisov family as well as the family of ProBusinessBank co-owner, Alexander Zheleznyak, and that the Fetisovs should receive top-notch service and be treated as well as Varshavsky himself.” — that is a quote from the affidavit of Natalia Abramova, a copy of which is in The Project’s possession. Abramova was head of the VIP client department at ProBusinessBank . She was personal account manager for Varshavsky as well as Avilon).

“Varshavsky and Fetisov are old friends. They used to spend a lot of time together, and I often saw them at Avilon” — confirmed Zheleznyak in conversation with The Project. In 2015, ProBusinessBank’s licence was revoked and criminal proceedings for embezzlement were commenced against its owners and managers. The bank’s owners, including Zheleznyak, fled abroad where they are now litigating against the Russian authorities, trying to prove the bank’s downfall was caused by political motivations. Two years after the bank’s collapse, the Fetisov family approached Russian prosecutors accusing Abramova of fraud. Abramova denies all accusations and has set out her position in an affidavit, the contents of which she subsequently verbally confirmed to The Project. In support of her position, she has provided documents evidencing the bank’s relationship with the Fetisov family.

Fetisov with wife Ladlena at red carpet arrivals for the Moscow Film Festival in 2014. Yury Martyanov/Kommersant

Following Varshvavsky’s request, the bank duly opened a savings account for Fetisova , as is evident from bank documents copies of which are held by The Project × . But that was not the end Varshavsky’s micromanagement of the Fetisovs’ finances. “Varshavsky called me several days later to say that another large amount would be deposited into Ladlena’s account, and that it should be placed under a bill of the Life collection agency, at 18% per annum payable at the end of the term — in the same way that Varshavsky’s own money would have been placed at that time” — recalls Abramova in her affidavit (! , copies of promissory notes evidencing the transaction history are in The Project’s possession × .

Thus began the long saga of topping up Ladlena Fetisova’s accounts , out of a total of ₽47 million, Fetisova asked for ₽7 million to be placed in her name, and the remaining ₽40 million in the name of her mother, Valentina Rodionenko, × and purchase of promissory notes , copies of all relevant documents are in The Project’s possession × . By 2015, Fetisova and her mother held promissory notes worth ₽50 million.

Materials in the criminal case make clear just how closely the interests of the public official and the businessman became intertwined. Varshavsky’s generosity was not confined to salary payments out of Avilon: Fetisov’s wife received a total of $7 million from companies affiliated with him, which were ostensibly used for the purchase of a luxury apartment at the Trump International Hotel & Tower in New York.

Fetisov’s lucky number

“In March 2009, Varshavsky called me saying that a $7 million loan needed to be issued to Ladlena Fetisova, with whose family he was on very friendly terms. He said he was willing to lend his own money for this purpose, and subsequently one of his Cypriot companies, KSPT Holdings Ltd, transferred the required amount”, — Abramova recalls in her statement. The Project has followed the payment trail from the primary documents.

The loan was almost immediately transferred to the personal bank account of Ladlena and Vyacheslav Fetisov in the United States , as stated by Abramova and confirmed by bank statements in The Project’s possession × .

The structure of the transaction was highly complex. Abramova describes it in her affidavit which is backed up by evidence in the form of copies of contemporaneous documents and correspondence. Simultaneously with the bank issuing $7 million to the Fetisovs, Varshavsky transferred the same amount from his Cyprus-based company KSPT Holding Ltd , Varshavsky did not feature as a company owner in the official extract from the Cypriot business register. The company was dissolved in 2016 × , via two offshore entities by the name of Finbay Group Ltd and Biovilac Ltd, to the Russian OOO TechSpecUniversal. The Russian company then used that money to purchase a ProBusinessBank promissory note worth $7 million and pledged it to secure Fetisova’s loan. When the time came to repay the loan, the $7 million made its way back to the Finbay Group Ltd offshore which ultimately repaid the loan . The Project has traced this scheme by reviewing the bank documents and employee correspondence exhibited in the criminal case file × .

Despite its convoluted nature, the purpose of the deal was simple. $7 million had been transferred into the Fetisovs’ US account. As is evident from court documents, just two weeks previously that money belonged to a Cyrpiot company associated with Varshavsky. In August of the same year, the Fetisov family purchased an apartment at the Trump International Hotel & Tower in Manhattan for $6.4 million. Three bedrooms and three bathrooms, totalling over 200 square metres overlooking Central Park. In 2012, the same apartment was available to rent for $27,000 per month  — the advertisement remains in Google’s cache × . When he was a senator, Fetisov duly included his wife’s US apartment (of a similar size to this) in his declaration of assets, explaining that she obtained the relevant funds from the sale of other real estate as well as earnings “through friends”.

View over Central Park from the Fetisovs’ apartment. Photograph from the private archive of Vyacheslav Fetisov, ‘Itogi’
Photographs of the apartment from estate agent website. An advertisement for its rental, together with image previews in low resolution, have remained in Google’s cache files

In 2016, the apartment disappeared from Fetisov’s asset declaration, as it had been transferred into the name of his 26-year old daughter, Anastasia-Alexandra, who remains its registered owner to this day  — an extract from the property register is in The Project’s possession × .

“I don’t know, I am not a financier and I do not comment on subjects of which I have little experience” — Fetisov responded when we asked him about the loan scheme and his purchase of the apartment. He noted that he does not recall anything to do with receiving bank funds.

Was Varshavsky’s input into the Fetisovs’ financial affairs simply a friendly gesture? Perhaps. But it is important to recognise that at that particular time Fetisov’s status as a public official enabled him significantly to benefit Varshavsky’s business interests.

Is there an obligation on a minister to disclose any close friendships with business figures?

“At the relevant time, there were no grounds for a formal complaint against the minister in connection with his wife’s employment at a friend’s business, as Russian anti-corruption legislation did not yet exist”, explains deputy director of Transparency International, Ilya Shumanov. The Law on Countering Corruption entered into force in late 2008. “On the other hand, when a minister’s wife works for his friend and that friend subsequently derives a financial benefit in the field for which the minister is responsible — that, of course, must be covered by ethical restrictions. The minister should declare a personal interest”, says Shumanov.

Bingo!

Picture the scene: it is summer, and aboard a suburban train two ordinary-looking fishermen are perusing a catalogue choosing an expensive yacht. Women sitting nearby are picking out golden earrings, and a group of soldiers are studying a private jet. “Get ready for things to look up” — such was the announcement on state television of the return of a national sports lottery. Gosloto was essentially a revival of the Soviet ‘Sportloto’, whose profits had helped finance the 1980 Moscow Olympics. Sportloto had been so effective that it managed to raise almost half the funding necessary to run the Games , the chairman of the 1980 Olympic organising committee, Vladimir Koval, noted in his book Notes of an Olympic Treasurer × .

Gosloto, the modern equivalent of the Soviet Sportloto, pursued similar aims. Between 2006 and 2015, Gosloto was intended to raise almost ₽27 billion for the state budget , according to an Audit Office report. When the new lottery was first launched, its press relations service promised “over ₽30 billion” by 2013 × . In 2007, Russia was awarded the right to host the Winter Olympics in Sochi, and a year later State Duma member Irina Rodnina announced that the building work for it would partly be paid for with lottery receipts.

“The lottery will succeed as long as it is transparent and easy to understand. <…> It will allow us to finance our sport”, Fetisov commented at the launch of Gosloto . The body he presided over — the Federal Agency for Physical Education and Sports (Rossport) — was disbanded 20 days prior to the launch of the lottery. It was replaced by the Ministry of Sports, headed by Vitaly Mutko × .

These grand plans were destined to fail. Despite promises of transparency, the lottery did not make it through to the Olympics in its original form as it went through an opaque change of ownership as well as bankruptcy, and the cost of the Olympics themselves had ballooned to ₽1,5 trillion  — that was the total spend as estimated by the chairman of VTB24 Bank, Mikhail Zadornov × . The real winners of the lottery turned out to be Fetisov’s friends.

You could say Gosloto was the brainchild of the former hockey player. It was conceived by Rossport back in 2005 when, headed by Fetisov, the public body obtained permission to conduct lottery draws.

In Russia, lotteries are organised by public agencies which use competitive bidding to select private companies to operate the lotteries. The operators sell tickets, hand out winnings, make a profit and return the remaining funds to the state budget. Gosloto’s first lottery draw was issued in 2008, with Orglot as its operator. Orglot had been incorporated in 2006 by Gazprombank, with the bank later withdrawing from the business (before the lottery launch) as it was deemed unprofitable , as reported by the Audit Office × .

In 2007, a 49% stake in the lottery operator came under the control of a little-known company by the name of Converse-Sport. Its ultimate beneficiary long remained unknown, but market participants suspected that Varshavsky might be the mastermind behind it  , as reported in Kommersant in 2009 × . Varshavsky himself has always denied any involvement in the lottery business.

That denial is not quite the truth, as discovered by The Project from documentary evidence. In 2010, 100% of Converse-Sport was transferred into the control of the Cyprus-based KSPT Holdings Ltd — the same offshore entity that had been used by Varshavsky to repay Fetisova’s loan.

As reported in the media, the remaining 51% stake in Orglot was sold by Gazprombank in 2008 to the Hungarian property developer Shandor Demyan, who already managed lotteries in a number of countries. Shortly afterwards, a dispute arose between Orglot’s shareholders and as a result in 2011 Gosloto passed over into the hands of Varshavsky’s friend and business partner, Armen Sarkisyan.

Varshavsky’s ‘Olympian’

Aside from the lottery, Varshavsky and Fetisov had at least one other joint project combining business and sport , recalls a friend of both Varshavsky and Fetisov × . It was the Olympian Hotel and Park, originally built in the Moscow suburbs to accommodate national teams ahead of the 1980 Moscow Olympics.

The Olympian Hotel and Park. Source: hotel website

In 2008, Varshavsky’s Avilon Plaza bought the Olympian. According to a mutual friend, Fetisov and Varshavsky had discussed the possibility of setting it up as a base for accommodation and training by national sports teams who would be sent there by Rossport, which was headed by Fetisov at the time , according to the accounts of two people from Fetisov and Varshavsky’s circles × . The hotel is owned by the Avilon holding company to this day  — 100% of ООО Olympiets is owned by Avilon Holdings Limited × .

Fetisov always stayed abreast of Varshavsky’s lottery business , according to three of Varshavsky’s acquaintances × . Whenever Gosloto was mentioned “everyone at Avilon understood that it was managed by the Minister”, explains a former Avilon employee.

The lottery monopolist shares its premises with Varshavsky’s Avilon. Source: Stoloto website.

The office of Gosloto was even based in the Avilon Plaza building in Moscow. Many Avilon employees moved across to work at Gosloto , according to a source close to the Avilon management × , and in 2009 the role of president was taken up by Armen Sarkisyan, Varshavsky’s business partner and long-time friend. It was Sarkisyan who would later become the face of the Russian lottery market, following a massive overhaul of the business.

In June 2014, a law was passed banning all private lotteries. As the market was cleared, out of 455 lotteries only state and international ones remain. They are operated by three private companies, and as has been widely reported in the media, all three are controlled by Sarkisyan. The operators are AO State Sports Lotteries, OOO Sportloto, and the retailer AO TK Centre. Their total revenue has grown year on year, reaching ₽54,5 billion in 2019. All three are based in the same Avilon Plaza building belonging to Varshavsky. What started out as a friendly project between minister Fetisov and businessman Varshavsky to create a single state lottery, has grown into a private empire with a multi-billion rouble turnover.

“I have no comment to make” — said Fetisov when we asked him about Gosloto and Varshavsky, upon which he hung up the phone.

Varshavsky requested a list of questions to be sent to the Avilon press office. At the time of this article going to press, we have not received a response.

Translated by Kate Vtorygina