PrivatBank of the Ukraine Sues Its Founder In Delaware State Court to regain control and prevent ongoing fraud and money laundering

IMG_0094-300x225PrivatBank, a Ukrainian based institution, is suing one of its original founders in U.S. court in an effort to gain control of the bank and prevent future fraud. The lawsuit was filed on May 21st in the state of Delaware against Ihor Kolomoyskiy and Hennadiy Boholyubov. However, executives of PrivatBank worry that Kolomoyskiy’s wealth and political connections may decrease their chances of a positive outcome in the lawsuit.

Kolomoyskiy founded PrivatBank in 1992, but has been living in exile for over two years. With connections to the newly appointed president, Volodymyr Zelenskiy, Kolomoyskiy has returned from exile and now seeks to regain control of PrivatBank. However, according to the lawsuit, Kolomoyskiy is responsible for numerous fraudulent acts using the bank’s funds.

Along with Boholyubov, Kolomoyskiy is accused of using PrivatBank to lend money to the various companies and entities that they controlled. These funds were then laundered through Delaware, which is known for its corporate-friendly laws, and used to acquire numerous properties in the United States.

The lawsuit states that Boholyubov and Kolomoyskiy “used PrivatBank as their own personal piggy bank — ultimately stealing billions of dollars from PrivatBank and using United States entities to launder hundreds of millions of dollars’ worth of PrivatBank’s misappropriated loan proceeds into the United States to enrich themselves and their co-conspirators,”.

The relationship between Zelenskiy and Kolomoyskiy has raised a long list of concerns regarding the bank’s future, as many feel that the president could give Kolomoyskiy control of the bank. However, Zelenskiy has previously stated that he does not plan to do so as it would be damaging to the country’s relationship with the International Monetary Fund, which has loaned billions to Ukraine in an effort to end its corruption.

However, Kolomoyskiy’s control of the bank is dependent on another important factor. Prior to his exile, Kolomoyskiy made moves to nationalize the bank, which was later deemed as illegal but still remains in effect. During this time, $6 billion of taxpayer money was also used to prevent the bank’s collapse due to his fraudulent activities using the bank’s funds. Upon ruling that the move to nationalize the institution was illegal, a Ukrainian court also noted that the nationalization may increase Kolomoyskiy’s chances of regaining control of the bank in the future.

In addition to Kolomoyskiy and Boholyubov, three individuals from Miami, Florida have also been named in the lawsuit for aiding in the activities that lead to the bank’s bailout.

While the outcome of the lawsuit is uncertain, it appears as though Ukraine will continue to recover the losses from the PrivatBank, as well as others, and work to end the corruption that plagues its well-being, especially under the pressure of the International Monetary Fund.

To learn more about this case or other forms of fraud, check out the Jeffrey Newman Law Whistleblower Help Center and blog!