America Airlines – Flight of the Monarch: US Gov’t Contracted Airline As soon as Owned by Russian Criminals
An American airline that has been transporting protected witnesses for the U.S. authorities was as soon as part-owned by two Russian organized crime figures, and continues to be owned by the son of their enterprise accomplice, an OCCRP investigation has discovered.
These males, Anatoly Golubchik and Vadim Trincher, have been jailed in 2014 for working an unlawful playing and extortion ring out of an residence in Trump Tower in New York Metropolis. U.S. prosecutors mentioned they have been a part of a “far-reaching Russian-American organized crime ring” generally known as the Taiwanchik-Trincher Group, beneath the safety of infamous Russian crime boss Alimzhan “Taiwanchik” Tokhtakhounov.
Two different traders who ran the airline afterwards additionally had authorized troubles, and one fled a warrant for his arrest within the U.S. and stays on the lam.
Nonetheless, an OCCRP investigation reveals Monarch Air Group has received greater than 120 U.S. authorities contracts worth over $6 million, and was making authorities flights as not too long ago as September.
The airline and its affiliate, WAB Worldwide, have been awarded contracts for delicate jobs comparable to shifting gasoline in Israel for the Division of Protection (DoD), flying folks round Afghanistan, and transporting protected witnesses within the U.S. for the Marshals Service. WAB Worldwide reported incomes some $70 million from work for the U.S. army in 2013 alone.
“The negligence is startling,” mentioned Gary Kalman, director of the U.S. chapter of Transparency Worldwide. “Airlines with a history of criminal affiliation contracted by the government to transport protected witnesses is something we’d expect to see in a spy novel, not in a news report.”
In a 2013 courtroom doc, prosecutors claimed Golubchik acted as Tokhtakhounov’s “enforcer,” and accused the boys of laundering about $100 million on behalf of “high-level criminals” — a few of it via Monarch and one other airline firm Golubchik and Trincher owned within the U.S. referred to as Skyway Worldwide.
On one event, customs brokers in Miami found 16 kilograms of cocaine on one among Monarch’s planes. Prosecutors famous the seizure at Golubchik’s bail listening to in 2013, including of the airline: “We do not believe this business is legitimate.”
The U.S. Marshals Service instructed reporters that it positioned protected witnesses on Monarch planes via contracts overseen by the General Providers Administration (GSA), which offers leasing, administration, and different skilled providers to U.S. authorities businesses. The GSA didn’t reply to a request for remark.
Golubchik and Trincher each left Monarch in 2012, earlier than the airline received the DoD and the GSA contracts. Monarch was audited by the GSA in 2013, the identical 12 months Golubchik and Trincher’s arrest was broadly reported, and the company awarded the airline a 10-year contract in 2014 beneath which the U.S. Marshals service employed them to move protected witnesses. The corporate is at the moment owned by the son of Golubchik and Trincher’s former enterprise accomplice.
A spokesperson for the Protection Logistics Company, which manages the U.S. army’s provide chains, mentioned the company adopted the right procedures when vetting Monarch for a contract awarded in 2012 to ship gasoline to a army base in Israel. Neither Golubchik nor Trincher have been “involved in the bidding or performance of the contract,” he added in an e mail.
Federal Acquisition Rules require contractors like Monarch to supply particulars of any legal offenses by its workers, even when they don’t relate on to the contract, in line with Jessica Tillipman, a professor at George Washington College Regulation Faculty with experience in anti-corruption and authorities contracting. The company is then required to make additional enquiries, and it’s at their discretion to determine whether or not to work with the corporate.
Alina Gavrushenko, Monarch’s director of selling and public relations, mentioned the airline has not been affiliated with Golubchik or Trincher since 2012.
“Like many startups, especially in aviation, the company has changed ownership and evolved its business model over the years,” she mentioned, including: “Our business operations are conducted with full integrity and transparency.”
The present proprietor of Monarch, David Gitman, didn’t reply to a request for remark.
U.S. authorities have awarded Monarch greater than 120 contracts over the previous eight years.
A Russian Takeover
With the 2008 monetary disaster threatening to floor Monarch Air, then a small Florida-based air cargo firm, its proprietor, profession pilot Paul Slavin wanted an injection of funds.
Slavin, who had labored within the aviation trade for 35 years, began trying round for backers. A “trusted aircraft broker” he knew launched him to 2 Russians, who agreed to speculate whereas staying out of the airline’s day-to-day operations. For some time, it appeared a perfect resolution.
However they quickly invited extra traders on board, and inside three years the clique had taken management of the corporate. In response to Slavin, they began withholding funds and making “operational decisions that conflicted with my standards.” He says he offered his shares in 2011 for a token quantity. The brand new group started aggressively increasing the enterprise, opening new workplaces and bidding for U.S. authorities contracts.
Slavin says he didn’t know that two of his traders had ties to Russian organized crime. “If they were involved in any illegal activity outside of the airline it was never revealed to me,” he mentioned in an e mail to OCCRP.
David Gitman’s father, Jacob Gitman, was among the many first traders to hitch Monarch Air after it hit monetary turbulence in 2008.
The elder Gitman was born within the Soviet Union, the place he labored as an engineer earlier than immigrating to the U.S. within the early 1990s. He has been linked to dozens of U.S. companies in every part from logistics and healthcare to aluminium smelting.
In 2017, Gitman was discovered liable in a civil lawsuit of deceptive traders about expertise, experience, and potential earnings from an operation to supposedly convert used tires into gasoline. The plaintiff, Blizzard Power, was awarded $3.eight million in damages, and the case is now beneath attraction. Gitman declined to remark because the case continues to be ongoing.
Golubchik additionally joined as an investor in 2008, whereas Trincher, his legal accomplice within the playing, cash laundering, and extortion ring, got here aboard in 2011. One other immigrant from the previous Soviet Union, Trincher was an expert card participant who has reportedly made greater than $1.2 million in dwell event earnings throughout his profession, together with profitable the 2009 World Poker Tour Foxwoods Poker Traditional.
Together with Tokhtakhounov, the Russian crime boss who continues to be on the run, the 2 males operated what New York prosecutors described as an unlawful “large-scale sports book” that was used to launder roughly $100 million from former Soviet Union nations via Cyprus-registered shell corporations. Prosecutors mentioned round $50 million of that sum discovered its solution to the U.S.
“Their clients were multi-millionaires and billionaires, oligarchs in Russia,” the prosecutors famous in courtroom paperwork.
Their group additionally ran a high-stakes poker sport that attracted not solely shoppers from Russia, but in addition main American actors like Ben Affleck, Leonardo DiCaprio, and Matt Damon, in line with the trade publication Poker Information. The rise and fall of the star-studded poker sport was later made into the movie “Molly’s Game,” that includes Jessica Chastain and Idris Elba.
The Taiwanchik-Trincher Group and its sister crime ring, co-run by Trincher’s son Illya, have been damaged up in 2013, reportedly after the FBI spent two years accumulating info on the Russian money-laundering community utilizing a wiretap hidden inside unit 63A in Trump Tower.
Jacob Gitman instructed OCCRP he had met Golubchik in 2006, however declined to elucidate how. He mentioned he had by no means met or spoken with Trincher. “I don’t have any business relations with them since 2013,” he mentioned in an e mail.
Nonetheless, public data present that Gitman partnered with Golubchik and Trincher in a minimum of 4 aviation corporations. Panama-based SkyWay Worldwide Holding nonetheless lists all three males as company officers. Gitman mentioned the Panamanian firm was by no means lively, and had by no means facilitated any transactions or opened bank accounts.
An necessary addition to Monarch’s group was businessman Boruch “Bob” Freedman, who joined the corporate in April 2011. Freedman was already concerned in air transport in Afghanistan, however he didn’t have the certificates or expertise to acquire direct authorities contracts. Monarch did. The 2 determined to hitch forces and, together with Gitman’s son, David, they shaped WAB Worldwide, which signed a profit-sharing and reimbursement association with Monarch.
Freedman was well-known within the aviation world because the nephew of Alexander Mashkevich, a Kazakh enterprise titan with hyperlinks to the Eurasian Pure Sources Company (see field beneath), in line with John Dawkins, the top of a logistics firm that labored with Freedman on a authorities contract in Afghanistan.
“Boruch was a middleman,” Dawkins mentioned. “He was plugged into everyone using his uncle’s reputation to gain entry and relevance.”
Freedman, who fled the U.S. after a warrant was issued for his arrest for not paying a court-mandated nice, didn’t reply to a request for remark.
🔗A Kyrgyz Investor With a Troubled Airline of His Personal
In 2011, Gennady Gryaznov, a former director of Kyrgyzstan’s Division of Civil Aviation, additionally purchased into Monarch. Gryaznov already owned Sky KG Airlines, a Kyrgyz airline that’s banned from working within the European Union as a consequence of security considerations.
Sky KG caught the eye of the United Nations Safety Council the next 12 months when it started leasing the plane that reportedly served as the previous presidential airplane of Romanian dictator Nicolae Ceaușescu to the highly effective Somali pirate boss Mohamed Abdi Hassan. A U.N. report alleged that Hassan added Gryaznov’s airplane to his personal small airline — which he used, together with different companies, for the “laundering of piracy proceeds” — earlier than he was arrested in Belgium.
Gryaznov didn’t reply to a request for remark.
Golubchik and Trincher appeared in Monarch’s paperwork till 2012, the 12 months the airline received its first contract with the DoD. They’re final talked about as traders in a report from April that 12 months, and data present they have been step by step changed as managers by Freedman-controlled entities.
By 2015, company data present that Jacob Gitman owned 90 p.c of Monarch, however he mentioned he offered his majority shareholder place the next 12 months. His 37-year-old son, David — who didn’t reply to a request for remark — is now listed because the CEO and sole proprietor of the airline.
Whereas Slavin had initially welcomed his new traders, the partnership turned bitter.
“Unfortunately for me it became obvious that Boruch Freedman wanted control of the airline and used withholding of funds to affect the daily operation of the airline,” mentioned Slavin. “I was then double-crossed by Jacob Gitman, who gave his and Golubchick’s voting shares to Freedman.”
Slavin mentioned he was voted out as CEO in 2011. At first he stayed on as director of operations, however left when he felt the brand new house owners began reducing corners on security.
Monarch posted this picture on the corporate’s Fb account final 12 months, accompanied by a quote attributed to Henry Ford: “When everything seems to be going against you, remember that aircraft take off against the wind, not with it.”
When Slavin first launched Monarch Air Group in 2005, his cargo planes flew to only one vacation spot: the Bahamas, a Caribbean island chain starting 80 kilometers off the southeast Florida coast, and generally known as an easy-access playground for American vacationers, celebrities, and international elites.
Monarch expanded its flight routes when the brand new traders got here on board, and commenced carrying passengers in addition to cargo. Then in 2011, in line with a submission from prosecutors at Golubchick’s bail listening to two years later, Florida customs brokers found 16 kilograms of cocaine hidden in one among its planes.
A former Monarch pilot, who was not on the flight, instructed OCCRP the airplane was searched by customs brokers when it returned to Fort Lauderdale Worldwide Airport from Haiti. They discovered a duffle bag stuffed with cocaine inside. The crew was detained for a number of hours, he mentioned, together with the one who had chartered the flight, a frequent buyer whose title he didn’t recall. The pilot thought it was unusual that the plane was then launched.
“I’ve seen in previous years, when the airplane was involved with drugs and it was in a hanger and it was not to be moved,” he mentioned. “It was under the control of customs.”
The U.S. Customs and Border Safety Company refused to launch any details about the invention of the cocaine, or clarify why nobody was arrested.
Gavrushenko, Monarch’s spokesperson, mentioned the cocaine belonged to a passenger. “We have worked with the relevant authorities to develop and enhance existing procedures, to prevent this from happening again,” she mentioned. “In our 15 years of operations, this was the only occurrence.”
Within the two years following the bust, U.S. authorities businesses continued contracting Monarch. The DoD saved up its subcontracts with WAB to supply helicopter transport for passengers and cargo in Afghanistan. Courtroom data present WAB subcontracted the roles to a small Kazakhstan-based aviation firm, JSC Airline Burundaiavia.
The DoD contracts ceased after a helicopter crash in Afghanistan, in line with courtroom paperwork. In early May 2013, two Burundaiavia choppers took off from a U.S. army ahead working base about 40 miles outdoors Kandahar, in southern Afghanistan. A short while later, the engines failed in one of many helicopters and it went down over a populated space, “causing much damage and destruction to the village.”
The courtroom paperwork say Burundaiavia failed to research the incident, as was required beneath worldwide, Afghan, and U.S. regulation. The crash “tarnished” the corporate’s popularity, in line with a courtroom submission made by Burundaiavia, and it was by no means awarded one other U.S. authorities contract.
The incident seems to have led to a falling out between the enterprise companions, culminating in a lawsuit in Florida. Burundaiavia efficiently sued WAB in 2015 for failing to pay virtually $eight million in charges it owed. A warrant was issued for Freedman’s arrest the next 12 months after he was held in contempt of courtroom for not paying the nice. U.S. Marshals have been unable to trace him down, and he now lives in Israel, in line with a courtroom doc.
🔗Burundaiavia’s Controversial Homeowners
Patokh Chodiev, Alijan Ibragimov, and Alexander Machkevich — recognized of their residence nation as “the trio” — have been the founders of the Eurasian Pure Sources Company (ENRC). Britain’s Critical Fraud Workplace has been investigating ENRC since 2013, probing allegations that the corporate paid bribes to safe “substantial mineral assets” within the Democratic Republic of Congo. ENRC has counter-sued to regain $93 million in authorized charges, alleging that its personal lawyer colluded with the Critical Fraud Workplace to concoct the case.
In 2011, prosecutors in Belgium dropped legal prices in opposition to the trio in return for the boys paying a nice to settle the long-running case with no request for forgiveness. The trio had been accused of laundering about $55 million in commissions from a Belgian engineering agency. That case reportedly prompted Swiss and U.S. authorities to look into associated offshore bank accounts linked to Kazakh officers, however no indictments have been made.
The Eurasian Sources Group, which purchased ENRC in 2013, didn’t reply to a request for remark.
The trio are finest generally known as traders within the Bayrock Group, which was listed as a “strategic companions” within the now notorious Trump SoHo lodge.
In 2017, the Marshals Service twice employed Monarch to move folks within the witness safety program and the Justice Prisoner and Alien Transportation System, which strikes prisoners across the nation.
Gary Kalman of Transparency Worldwide mentioned the truth that Monarch was capable of transport protected witnesses, regardless of the doubtful backgrounds of its former house owners, reveals the necessity for extra thorough checks on corporations which are awarded public contracts.
“Common sense says that contracts should be clearly vetted before going to entities with a history of criminal affiliation, but there is no legal mandate that we check,” he mentioned. “That is a significant gap in the law, and this story is a prime example of how such a gap might be dangerously exploited.”
The Marshals declined to remark, saying the GSA was answerable for vetting the corporate. Monarch’s spokesperson mentioned the corporate was audited by the GSA as a vendor in 2013 and received its contracts “with full transparency and open competition.”
The GSA didn’t reply to a request for remark.
Monarch’s air provider license was revoked in 2016, although it’s nonetheless capable of dealer constitution flights with different FAA licensed airways.
Between January and April 2016, Monarch’s director of operations, chief pilot, and upkeep director all stop. A pilot who spoke to OCCRP anonymously mentioned workers resigned after Monarch stopped paying them, and the airline struggled to seek out replacements.
In May that 12 months, the airline requested the FAA take away its solely plane from its “Operation Specifications,” a authorized designation that allowed it to run industrial operations like non-public chartered flights. With none planes that met FAA necessities, or key workers members to run them, its air provider certificates was revoked in February 2018.
However Monarch continues to be licensed to dealer constitution flights with different FAA-certified air carriers.
Evaluation of public paperwork discovered U.S. authorities have awarded Monarch greater than 120 contracts over the previous eight years, totalling greater than $6 million. The airline continues to be making flights beneath an open-ended 10-year contract awarded in 2014.
The majority of Monarch’s contracts have been with the DoD and concerned transporting gasoline to Har Keren in Israel, the place the U.S. army has a mountaintop radar facility generally known as Website 512. These gigs occurred between 2012 — the final 12 months Golubchik and Trincher have been recognized to be concerned within the firm — and 2015.
Seto Bagdoyan, director for audit providers on the U.S. Authorities Accountability Workplace’s (GAO) Forensic Audits & Investigative Service, mentioned the shortage of transparency in contracting buildings presents a danger to the federal government.
“A recent GAO report … flagged a number of fraud and national-security risks to DoD acquisition posed by contractor ownership structures that may not be fully transparent,” he mentioned. “Whereas GAO didn’t particularly deal with background checks, this may very well be an necessary facet
of DoD’s evaluation of its numerous controls.”
Along with U.S. federal contracts, the Monarch Air Group lists worldwide shoppers together with the United Nations World Meals Program, and Canada’s Division of Nationwide Defence. Most not too long ago, David Gitman boasted in a journey publication of Monarch’s “great synergy” with U.S. embassies to deliver residence residents stranded in Latin America because of the COVID-19 disaster.
Within the 12 years since Slavin welcomed new traders, his small air cargo firm has grown from a struggling begin up, with only one path to the Bahamas, into a world operation. However despite the fact that he has not been capable of “share in the prosperity,” he mentioned he isn’t bitter.
“I am done reliving this chapter of my life that I closed 10 years ago,” Slavin mentioned.