28-Year-Old Businessman Accused of Stealing $1 Billion From Moldova

An anonymous reader writes: You could be excused for not knowing much about Moldova — the small, Eastern European country has a population of around 3 million and occupies about 13,000 square miles of territory. Its GDP is just over $6 billion — which makes accusations that 28-year-old Ilan Shor stole close to a billion dollars from the country's banks quite interesting. A recent report (PDF) says Shor led a group that bought controlling stakes in three Moldovan banks and then passed transactions between them to increase their liquidity. The banks then issued massive loans to companies owned or related to Shor. $767 million disappeared from the banks, and the country's central bank thinks that total will rise to $1 billion. It was forced to bail out the banks to keep the economy from crashing. Widespread corruption led to many records of Shor's actions being "lost" or outright deleted. He's now charged and placed under house arrest while the investigation continues.

Comments

Amateurs

[Anonymous Coward]

As far as Eastern European country bank heists go, this guy is an amateur. The way professionals do it is by first controlling the government and the media. Then you steal the money (say some 7-8 billion) by funneling them through a chain of hollow companies to offshore accounts. Finally you set one of your partners with whom you have unsettled depth as the fall guy, while you yourself use your political connection to become the head of the local equivalent of the FBI:

Bulgaria's CorpBank: A Tangled Web Of Fraud

Re:Bailout

[Anonymous Coward]

It is immaterial to the perpetrator of the fleecing here whether the government bails out the banks or not. The perpetrator has already taken the money via having it loaned, so whether the bank goes bankrupt or not doesn't matter to them, but it does matter to the government.

Banks are in an interesting position since they have control over assets that can far exceed the bank's actual value. Of course, legally the bank cannot just take these assets since they are storing deposits on behalf of customers, but they can lend out this money (minus a % they have to keep in hand at all times per regulation).

So a scheme could work like so:

- Buy a controlling interest in a bank, one where the purchase cost is a small fraction of the deposits the bank manages.
- Make transactions (selling debt, taking loans, etc) to allow the bank to have as much cash on hand as possible.
- Lend out all of this cash to companies you control, with no collateral on the loans.
- Have those companies pay the money to other companies you control for services etc.
- The first set of companies now all default on their loans, and there is no collateral to pursue.
- Bank goes bankrupt (or gets bailed out), doesn't matter to you either way.
- Roll around in your money, which is now off-shore so it can't be seized.

Re:Manipulation?

[Copid]

I'm pretty sure in general it's illegal to take out a loan with no intention of paying it back. That's the bare minimum I can think of. There's also the fact that while he had a controlling share of the banks, it doesn't sound like he completely owned them, so he defrauded the other shareholders of the bank. Then there are the main victims--all of the bank's customers. It's pretty blatantly illlegal to set up a bank, take deposits, and then walk off with them. This is doing exactly that but using some other companies to do the walking off part. I'd be stunned if there were enough loopholes for this guy to plausibly claim that what he did was illegal. However, I wouldn't be totally surprised if he was friendly enough with the government to get off with a slap on the wrist. I have no idea how the legal system works over there, but I do know that he has a lot of money to spread around if he needs to.