Global Policy Forum

By Timothy L. O´Brien

New York -- Federal authorities arrested a former Bank of New York employee Tuesday on charges of making false statements to investigators in a money laundering inquiry involving the bank and its clients in Russia. She entered a plea of not guilty. According to a criminal complaint filed Monday and unsealed Tuesday in federal court in Manhattan, the former employee, Svetlana Kudryavtsev, of Brooklyn, lied about dealings with Lucy Edwards and Peter Berlin, a married couple at the center of the investigation.

Ms. Edwards formerly worked as a vice president in the Bank of New York's Eastern European division, while Berlin ran two money transfer businesses known as the Benex International Co. and Becs International. More than $7 billion flowed from Russia through accounts held by those companies at the Bank of New York. An undetermined portion of the money may have come from criminal activities, investigators say.

The Federal Bureau of Investigation and the U.S. attorney for the Southern District of New York have been examining that movement of funds since September, 1998, but no money laundering charges have been filed. Ms. Edwards, Berlin and a business associate, Aleksey Volkov, were indicted by a federal grand jury in September on criminal charges of illegally running a money transfer business. The Bank of New York has not been accused of any wrongdoing.

Ms. Kudryavtsev, 49, was fired by the bank last August for failing to cooperate with the investigation. She earned about $42,000 a year in Ms. Edwards' division and, according to the complaint, received about $30,000 from Ms. Edwards and her husband between 1995 and 1999. Some of that money was paid through Benex and Highborough Services, another company said to have been controlled by the couple. The complaint said that Ms. Kudryavtsev lied to investigators in August about having received money from the couple and also lied about having any knowledge of their business activities.

Her lawyer, Charles D. Adler of Manhattan, said, "Svetlana Kudryavtsev is not charged with any kind of financial crime. She is only charged with false statements to two FBI agents who subjected her to a surprise interrogation in a language with which she is not completely comfortable and which appears to have been designed to trap her." He added, "Ms. Kudryavtsev is a longstanding and close friend of Lucy Edwards. Any small amount of money that passed between them was the product of that friendship."

Ms. Kudryavtsev was released on $30,000 bail and had to forfeit her passport. She faces a maximum sentence of five years in prison and at least $250,000 in penalties if found guilty of the charges against her. Her husband, Vladimir Kudryavtsev, who the complaint said also received money from Ms. Edwards and Berlin, was not charged with wrongdoing and could not be reached for comment. According to court documents, Ms. Kudryavtsev first met Ms. Edwards in St. Petersburg, Russia, about 15 years ago and was originally recommended for a job at the Bank of New York in 1993 by Ms. Edwards.

Among documents investigators discovered in Ms. Kudryavtsev's work space at the Bank of New York was a letter, written in Russian and postmarked earlier this year, from Ms. Edward's father, Zinovi Pritsker, explaining that Pritsker was sending Ms. Kudryavtsev $1,100 at Berlin's request. Shortly after receiving the letter, Ms. Kudryavtsev deposited $1,100 into her personal bank account at the Bank of New York. The complaint also said that Berlin told an unidentified Bank of New York employee who had responsibility for the Benex and Becs accounts to call Ms. Kudryavtsev about those accounts if Berlin could not be reached. Similarly, an employee at the Torfinex Corp., a company run by Berlin's business associate, Volkov, also told investigators that a "Svetlana" at the Bank of New York could resolve any problems involving Benex or Becs.

Prosecutors still face serious challenges. The charges against Ms. Edwards and Berlin, now in London, fall short of money laundering charges, which are typically difficult to prove. The couple have declined to comment. Earlier this month, the U.S. attorney's Office in Manhattan asked a federal judge to adjourn its case against the couple for 60 days because it was having difficulty securing jurisdiction over them...