Edmond de Rothschild hit with $100m fraud swimsuit by ex-Rosneft boss


A outstanding Russian businessman has accused Edmond de Rothschild, the Swiss non-public financial institution, of partaking in a kickback scheme that pilfered tens of millions of {dollars} from his funding fund and in the end value him greater than $100m.

The lawsuit was filed by Sergei Bogdanchikov, the previous head of Rosneft, the Russian oil firm. Mr Bogdanchikov alleges {that a} senior Rothschild government with shut ties to Baroness Ariane de Rothschild, the financial institution’s chairwoman, conspired with jap Europeans dwelling in Brooklyn, New York, to dupe him.

The case, filed in New York state courtroom late on Wednesday, seeks greater than $100m in damages. It additionally claimed that the alleged scheme was carried out with the help of Mossack Fonseca, the now defunct legislation agency whose work organising secretive offshore firms was uncovered with the discharge of the Panama Papers.

“Rothschild, probably the most rarefied names in all of western banking, went rogue — in New York,” stated Tibor Nagy, a lawyer representing Mr Bogdanchikov, accusing the agency of utilizing “sham brokers and shady funding managers” to embezzle cash from his shopper.

Edmond de Rothschild declined to remark.

Mr Bogdanchikov had beforehand sued the financial institution in Luxembourg and Switzerland however solely lately realized of the alleged involvement of the New York events, paving the best way to sue within the US.

Mr Bogdanchikov was appointed president of Rosneft, the Russian oil group, in 1998, and helped to stabilise it after the tumultuous post-Soviet period. He was later pushed apart after Igor Sechin, a detailed ally of President Vladimir Putin, took management of Rosneft.

The criticism stated Carlo Thewes, a former senior Rothschild government, offered himself to Mr Bogdanchikov as being a detailed confidante of the baroness — her “eyes and ears” on the financial institution — as he sought to win his belief. Mr Thewes even invited the Russian — an engineer who was supposedly naive about investing — to the baroness’s opulent Chateau de Rothschild palace on the outskirts of Geneva.

“The fraud thus started with a easy phantasm: use the 250-year-old lustre of the Rothschild title to encourage belief — after which abuse that belief by a kickback scheme,” the lawsuit stated.

Starting in 2001, Mr Bogdanchikov entrusted greater than $150m to Rothschild by a automobile named Fortinvest. He ordered Mr Thewes to speculate the cash conservatively, in line with the lawsuit.

As a substitute, the criticism stated, Mr Thewes discovered intermediaries in New York who charged inflated charges to deal with Fortinvest’s funds. A few of these charges had been then kicked again to him and Rothschild.

One of many alleged intermediaries was Fontanelle Capital, run by Vladimir Oblonsky and his spouse Olga from an workplace in Brooklyn.

In response to the criticism, Fontanelle steered among the Fortinvest cash to a different New York funding agency, OIM, that was run by a person named Mikhail Filomonov. It ended up shedding $10m of Mr Bogdanchikov’s cash after shopping for convertible bonds issued by what turned out to be a fraudulent Indian satellite tv for pc firm.

The Oblonskys and Mr Filomonov didn’t return calls in search of remark.

Mr Bogdanchikov didn’t be taught of the alleged fraud till 2016, in line with the criticism, as a result of Rothschild was sustaining two units of books to hide his losses. The financial institution had additionally enlisted Mossack Fonseca, in line with the lawsuit, to arrange sham firms that allowed it to push by Fortinvest transactions with out his information.

Along with the tens of millions of {dollars} spent on extra charges, Mr Bogdanchikov claims to have misplaced $86m on reckless investments of which he was unaware. The criticism claimed that Mr Thewes, who left Rothschild in 2016, and Fontanelle intentionally sought out funding managers not primarily based on their ability or document however on their willingness to take part within the kickback scheme.


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